Mindful Marketing - Mindful Matters Blog

Fixing iPhones

8/10/2017

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

One rainy morning many years ago, I was driving to work (my first career position after college) when a car hit me from behind and pushed me into another vehicle. It was a relatively slow-speed collision so the damage to my car wasn’t extensive, but the insurance adjuster called it “totaled” since the repair estimate exceeded the car’s low value. My car wasn’t worth fixing; I needed to get a new one.

That experience reminds me of the many products we use each day but seldom repair when they break. For instance, most of us don’t think of fixing a broken toaster; we look for a new one. This tendency to replace instead of repair places significant strain on our environment, but the practice becomes even more troubling when talking about expensive and easily ‘injured’ items like our ever-present smartphones.

If you own a smartphone and haven’t dropped it or had some other mishap, you’re either extremely careful or very lucky because, “Each year millions of cell phone owner’s drop, sit on, flush, swim with and even throw their phone, which normally results in some sort of damage.” After such an unfortunate occurrence, the question becomes whether to repair or replace the indispensable device, which probably cost at least a couple of hundred dollars, or several hundred-plus if you’re packing a newer iPhone or the latest Samsung Galaxy.

Fortunately, a variety of online outlets will repair broken phones, for example:

However, using an online organization for repairs requires a major sacrifice of time. Many people can’t be without their smartphone for a few hours, let alone several days or more. And, there’s the issue of trust: We don’t know these companies well and can’t watch them make the repair. How can we be sure they’re respecting our privacy when so much of our lives literally rests in their hands?

Also, again, there’s the issue of cost. Is it worth $100 or more to repair even a relatively new device when technology is changing so quickly? As a result, it’s easy to rationalize spending a few hundred more to have a new one.

You may be wondering, "Where are the smartphone manufacturers? Why don’t the cellphone companies have our backs when their products so easily and often get broken?" In the U.S., that criticism has hit especially hard at Apple, which has a whopping 44.6% share of the smartphone market.

For years, the only place iPhone users could get their cracked screens ‘officially’ replaced was at an Apple store. Unauthorized repair centers, like the three listed above, might be able to fix the phones, but if Apple later detected their work on the device, the warranty would be voided.

Apple would suggest that the reason it has kept a tight rein on screen repairs is that it wants them done right, especially “to ensure that the new screen is properly calibrated – and in particular to allow the Touch ID sensor to be replaced without bricking the phone or losing use of the sensor.” Those more cynical about the tech leader’s motives might suggest that Apple wants to drive business to its own stores in order to capture the repair revenue or, even better, to sell users new iPhones and other items, i.e, to replace, not repair.

In any case, there are currently about 270 Apple stores in the U.S. That number may seem high, but it’s not when you consider, for instance, that Illinois and Pennsylvania, the fifth and sixth most populous states in the nation have 12.8 million and 12.7 million residents, respectively, but only nine Apple stores each. Such ratios can mean a loooong time waiting at a Genius Bar.

The good news is that Apple has recently eased its repair site exclusivity. The firm has finally authorized a few select retailers to fix broken iPhone screens. How can Apple guarantee the quality of those third-party repairs? Well, the company has not conceded control completely.

Apple is giving each authorized repair center a highly-specialized and proprietary machine that not only replaces the screens but also tells “the iPhone’s processor, its silicon brain, to recognize a replacement sensor. Without it, the iPhone won’t unlock with the touch of a finger. Banking apps that require a fingerprint won’t work either, including the Apple Pay digital wallet.” Pictures of the closely guarded apparatus can be found on 9 to 5 Mac website.

Currently only a couple of Best Buy stores in California and Florida have these machines that are capable of making same-day screen repairs. However, by the end of this year it’s expected that the equipment will be present in “about 400 authorized third-party repair centers in 25 countries.”

So, the future is looking brighter for all of us clumsy iPhone users, but won’t the delegation of this service take a bite out of Apple’s business? What about its revenue from repairs, the loss of traffic in Apple stores, and the sale of new iPhones? All of the above are real considerations but they pale in comparison to one meta-goal for Apple: maintaining its strong brand.

Apple has become the most valuable brand in the world for a variety of reasons, but the overarching one is strong customer satisfaction. People who use Apple products are almost always delighted because of their look, their performance, and the aura around them. Apple smartly wants to avoid tainting that stellar reputation, which could occur if people become disenfranchised from inconvenient and lengthy repairs.

However, averting a negative product experience is probably only part of Apple’s plan. The company also needs to increasingly position itself as a good steward of resources and as an organization that cares about the natural environment. Allowing smartphones that still have significant useful life to prematurely become paper weights or other waste does not accomplish those objectives.

Likewise, as the market for smartphones becomes more and more saturated and competitors’ product features converge, factors like repair service and social responsibility will likely gain weight as decision-making criteria. Every point of difference matters in a mature market.

Apple’s decision to outsource and broaden its repair network will be very helpful for consumers. The strategy also will prove very beneficial for the firm. As it’s done many times before, Apple has made an adept move that can be called “Mindful Marketing.”

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Scary Good Marketing

6/23/2017

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

Parents of young children face many challenges as they try to get their kids to do things they don’t want to do, like pick up their toys, take a bath, and go to sleep! Perhaps the biggest battle involves having them eat healthy food, especially vegetables. Is it possible that better vegetable marketing can make this age-old impasse a thing of the past?

When I first saw The Wall Street Journal (WSJ) article titled, “How Schools can get Children to Eat their Vegetables,” I was skeptical. Generations of very capable moms and dads have tried for decades to push produce with relatively little success. How could school districts suddenly crack the code?

What’s more, I’ve spoken to groups about the simplistic approaches that some marketers take, trying to sell vegetables to young people. For example, several years ago an alliance of carrot farmers led by Bolthouse Farms spent a couple of million dollars on a marketing initiative aimed at positioning baby carrots as junk food.

The strategy relied heavily on promotion, including over-the-top television commercials and “extreme” packaging, but it did nothing to make the product itself more appealing to young people. Although media embraced the campaign and suggested it was successful in two test markets, several years later I still haven’t come across the rebranded carrots in supermarkets or seen anyone eating them.

Marketing aimed specifically at kids also can be a concern. Compared to adults, children have less developed cognitive skills and more limited life experience, which makes them more susceptible to marketing tactics based on deception, coercion, and manipulation.

So, I started reading the WSJ article about kids and vegetables with more than a little disbelief. The article did a good job, however, highlighting and synthesizing research results that in general found that kids were more likely to eat vegetables when schools employed several specific strategies. I’ve summarized those strategies here and categorized each (in parenthesis) using the traditional 4Pmarketing mix:

1. Putting vegetables at the front of the cafeteria: When children saw vegetables first, they were more likely to take them, as primacy effect would predict. (Place)

2. Offering vegetables as snacks: Another study found that timing mattered in as much as kids were likely to take vegetables when they were the only thing offered as snacks outside of regular meals. (Place)

3. Making food easy to eat: Children, especially those with braces, were more likely to eat fruit that was sliced into pieces, rather than try to eat a whole apple. (Product)

4. Creating an appealing presentation: Like adults, kids ‘eat with their eyes,’ which explains why children took more healthy food when it was placed in colorful bowls instead of in gray industrial tubs. (Product)

5. Using enticing promotion: Similarly, researchers at Cornell found that kids ate more fruits and vegetables when those items were promoted via attractive signage and brands (e.g., an Elmo sticker on an apple). (Promotion)

6. Tracking purchases: Two elementary schools in Chicago used digital technology to track the food kids took from the cafeteria line and what they threw away. As in a business environment, this kind of data proved valuable for deciding which menu items to keep and which to cut. (Product)

7. Hiring professional chefs: A key factor in making food taste good is its preparation. So, it’s not surprising that when experts were brought in either to cook the food or design menus, the vegetables tasted better and kids ate more of them. (Product)

8. Educating about vegetables: For many people, food will not make it into their mouth unless they know what it is. That’s why children who were taught about vegetables in their classrooms or on field trips were more likely to try them. (Promotion)

It’s worth noting that out of the eight strategies just described, two involved putting vegetables where and when it was most convenient for kids to eat them (i.e., Place) and four involved enhancing the vegetables themselves or their presentation (i.e., Product). Meanwhile only two of the strategies involved messaging designed to put a good spin on produce (i.e., Promotion). In contrast, promotion was by far the main focus of the ultimately ineffective baby carrots campaign described above.

So there’s empirical evidence to support that more systematic, serious marketing strategies can be effective in getting kids to eat vegetables, but what about the issue of marketing directly to children? Is it fair to use such tactics to target impressionable young people who are not seasoned consumers?

If that question were asked about many other, less edifying goods and services, the answer would be “no, it’s not right.” A society needs to protect people who might easily be taken advantage of by unscrupulous others. However, it’s hard to imagine anything but good coming from increased vegetable consumption, especially when the ones eating them are growing children.

There’s also a greater societal good here. The United States is suffering an obesity epidemic in which one in three adults is obese and another third is overweight. Meanwhile, about one in five school-age children (6-19 years old) is obese, which represents a threefold increase since 1970.

Of course, obesity poses serious health risks for individuals, e.g., high blood pressure, diabetes, heart disease, stroke, and certain cancers. Aggregated across the population, such sickness presents a great strain on health systems and comes with considerable financial cost. In 2008, the medical costs of obesity were estimated at about $147 billion, while obesity-related absenteeism was believed to be responsible for lost productivity costing between $3.38 billion and $6.38 billion.

Furthermore, there is the social estrangement the comes with being obese. “Overweight and obese individuals are often targets of bias and stigma, and they are vulnerable to negative attitudes in multiple domains of living including places of employment, educational institutions, medical facilities, the mass media, and interpersonal relationships.” Add to this the unfortunate fact that kids are now experiencing body shaming at younger ages than ever.

Are vegetables the cure for obesity? No, but eating more of them and less of other food, especially simple carbohydrates, definitely helps. Likewise, marketing that is effective in getting kids to eat more vegetables is good because it is in the best interest of the children and society on-whole. In short, strategies that work to get young people to pick produce represent “Mindful Marketing.”

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Eating Out at IKEA

4/21/2017

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

“It’s a big country. Someone’s got to furnish it.” If you remember that slogan, you’re either an advertising geek, a big fan of IKEA, or both. Recently the Sweden-born company known for its simple-design furniture, sold in airport-hanger-sized stores, made a surprising announcement—It’s considering opening standalone restaurants. Add a new slogan: “It’s a big country. Someone’s got to feed it.”

Seventeen-year-old Ingvar Kamprad founded IKEA in Sweden in 1943, as a mail-order business. He began selling furniture in 1948, opening his first physical store ten years later. The company, now headquartered in the Netherlands, owns and operates nearly 400 stores in 48 countries and has annual sales of about $39 billion, making it the world’s largest furniture retailer.

With so much experience in furniture over the company’s 74-year history, why would it now want to start focusing on food? Yes, people use some kinds of furniture to store food, and we often sit on furniture while we’re eating, but beyond those things, what’s the connection?

In his classic business book, In Search of Excellence, Tom Peters (1982) concluded that companies should “stick to the knitting,” or focus on doing what they know best and not become too far flung in their operations. Perhaps IKEA execs never read Peters.

However, IKEA already has restaurants in its stores, which are pretty popular. In fact, some people go to IKEA just to eat, which almost sounds like going to a baseball game to get a couple of hotdogs. Actually, it’s quite different.

IKEA’s restaurants are popular for some good reasons. While the menu is understandably small, it offers a nice selection of Swedish-inspired, yet American-friendly, dishes that are apparently very tasty. I’ve never eaten at IKEA, but I’ve often been tempted by the enticing pictures and smells.

Equally important, IKEA prices its restaurant fare very reasonably, just as it does its furniture. For instance, one can buy a plate of Swedish meatballs with lingonberries, seasonal vegetables, mashed potatoes and cream sauce for just $4.99, hot smoked salmon for $6.99, and Swedish waffles for only $1.99. There’s also a kid’s menu with a variety of options for $2.49 each.

“So, the furniture retailer sells some meatballs”—not exactly. According to Fortune, 650 million people in 48 countries ate at IKEA in 2016, generating revenue of $1.8 billion. For comparison sake, that’s about the same as T.G.I. Friday’s total sales U.S. in 2011. In addition, IKEA already has some standalone restaurant experience via pop-up stores it has temporarily run in London, Paris, and Oslo.

The reason IKEA would want to sell food within its furniture stores is fairly obvious. The longer people stay in a store, the more they buy, and a café located inside the store keeps them from leaving when they get hungry. Or, as Gerd Deiwald, head of food operations for IKEA’s U.S.A., says, "We’ve always called the meatballs ‘the best sofa-seller.”

But, why would an expert sofa-seller want to take the risk of peddling food in standalone restaurants? The short answer is “because it can.” More specifically, the company has the wherewithal to do food service well, so it can capitalize on the market opportunity, which will provide another source of revenue and profit.

The move also would help diversify the firm’s product portfolio somewhat, giving it a valuable buffer in the competitive retail furniture market. Globally, much growth in that market is likely to come in China and India—two countries that are often difficult for foreign retailers to penetrate.

Another advantage that IKEA might realize in running standalone restaurants is cross-promotion. It would be shocking if the furniture retailer didn’t use its own tables, chairs, and other dining accessories in its restaurants. So, as you’re eating Swedish meatballs you’re imaging your home with a new IKEA kitchen table set.

But isn’t that a sneaky way of selling furniture—get people to try it out, so they’ll want to buy it? No. That kind of trial is exactly what helps consumers make informed buying decisions. What better way to decide if you’ll like a particular chair than to sit in it for a couple of hours. People aren’t going to buy any furniture they don’t really want, and the restaurants are a good way for customers to get a better idea of what will work well for them.

Should IKEA, then, open a hotel chain so people can try out its bedroom sets? Probably not—at least not until it gets some experience accommodating customers overnight. In the meantime, the company’s significant food service experience and strong brand equity should give it confidence to jump with both feet into the restaurant industry.

It won’t be easy for IKEA. There’s much more culinary competition outside the walls of a big box furniture store. The company also likely will need to make its menu broader and continually update it. Still, if IKEA does open standalone restaurants, they’ll stand a good chance of success, and offer a fine example of “Mindful Marketing.”

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Divided Over Shopping

11/18/2016

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

Before and since the election, our nation has gone through trying times. Thanksgiving should cause people to put aside political differences and seek common ground, but even the upcoming holiday has elicited polarized opinions: whether or not to shop on Thanksgiving Day.

The open-or-closed Thanksgiving Day decision continues to be a hot-button issue in retail. While some consumers appreciate companies that allow them to get an early start on their holiday shopping, others, bemoan store hour creep, which invades special times that should be shared at home with family and friends, not with strangers in department stores.

As might be expected, there are retailers supporting both sides of the consumer debate. Some of the stores that will be open for business this Thanksgiving are: JCPenney, Best Buy, Walmart, Walgreens, Bass Pro Shops, Sears, Dollar General, Macy’s, Toys R Us, Target, Kohl’s, Kmart, Dick’s Sporting Goods, and Fossil. The hours these store will keep varies. For instance, Bass Pro Shops will be open from 8 am to 6 pm, but Best Buy won’t open until 5 pm and will stay open until 1 am Friday morning.

Meanwhile, there’s a growing list of retailers that have decided to remain closed on Thanksgiving Day, which the New York Times suggests is the most recent trend. Among those taking Thanksgiving off this time are Nordstrom, Lowes, Staples, Sam’s Club, Game Stop, Costco, Home Depot, Marshalls, Barnes & Noble, Home Goods, Ikea, Patagonia, PetSmart, Publix, HH Gregg, Bed Bath and Beyond, and Cabela’s. Even the Mall of America will be closed on Thanksgiving Day.

So, who’s right about Thanksgiving Day shopping? With ‘A-List’ retailers supporting both sides of the debate, it appears that compelling arguments can be made for each case.

For instance, those in favor of being open on Thanksgiving can argue that retailers are in business to meet consumers’ needs. So, if people want to shop on the holiday, it’s fitting for companies to help satisfy that desire. Businesses also need to make money in order to remain viable, which an extra day of sales should help, especially at the height of the holiday shopping season.

On the other hand, perhaps the retailers that are open on Thanksgiving need to work smarter not longer. The companies closed for Thanksgiving are making a go of it, maybe by more effective promotion or more efficient operations. Furthermore, there are examples like Chick-fil-A, which is closed not just one day a year, but one day each week. Taking off every Sunday hasn’t seemed to hurt the restaurant; in fact, it probably has contributed to its success. When it comes to the bottom-line, maybe less is more.

Still, one shouldn’t evaluate Thanksgiving Day shopping only through an economic lens. There’s also the relational impact. Sure, shopping can be a social activity, but what’s the likelihood of shopping strengthening relationships versus a variety of other things people can be doing with family and friends on Thanksgiving Day? Often when families go together to stores they scatter, each to his/her area of interest. Ultimately products take priority over people.

The preceding argument also fails to consider another very important group of people—employees. I was talking recently about the holiday shopping season with one of my marketing classes, when a student spoke up to say that a friend of his resented being forced by his employer, a large and well-known retail store, to work on Thanksgiving Day. The young man wanted to spend that special time with his family, but he couldn’t, short of quitting his job.

One can only imagine how many times similar scenarios play out in households across America. Such situations tear at the fabric of families. Here’s where the economic and social rationales for staying closed reconvene. If the retailers that stay open on Thanksgiving are actually doing a disservice to consumers and jeopardizing their employees’ well-being, they’re also not doing any long-term favors for their bottom-lines.

Two years ago, I wrote a brief blog titled “A Time for Shopping” about stores being open on Thanksgiving Day, and I argued it was “Mindful” for retailers to remain closed. Last year, however, I shared the story of George’s Senate & Coney Island Restaurant, which is not only open on Thanksgiving, it also offers a free meal to anyone who is alone. So, which Mindful Matters blog was right? I’d like to think they both were, for the following reasons.

Some people simply have to work on Thanksgiving Day and other holidays, for example, police officers, nurses, and firefighters. Our lives are too dependent on their services to risk being without them for even one day. Some other occupations are not as critical, but are still very important, especially on and around holidays, for instance, hotel and restaurant workers. Not everyone can be at home and cook for themselves, so these individuals give up some of their holiday so many others can enjoy theirs. George’s Restaurant represents this second category.

One can argue, therefore, that the work of people in pubic safety and the hospitality industry is critical, or at least very important, on holidays. No one’s life or well-being is on the line, however, if Best Buy, Dick’s Sporting Goods, and Fossil fail to open their doors on Thanksgiving Day. However, their employees, like the young man mentioned above, realize that they are sacrificing their holiday for less-than-compelling reasons, which doesn’t bode well for these retailers in the long-run.

As more retail moves on-line, the effect of Thanksgiving Day shopping on employees should decrease, but it won’t go away. What’s more, there will continue to be the impact that holiday commercialization has on consumers wherever they are, particularly as digital connectedness grows and retailers reach them even more frequently through those virtual avenues. Taking a break from buying and selling once in a while, especially on a holiday like Thanksgiving is a good thing. Being grateful for what we already have and putting people ahead of products is always “Mindful Marketing.”

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Pokémon Peril

7/23/2016

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by David Hagenbuch, Founder of Mindful Marketing

There are many reasons why we stare at our smartphones, oblivious to the world around us—emails, text messages, the Internet, etc. A new reason, however, has quickly become one of the greatest causes ever of digital distraction— Pokémon Go. While the game fuels fun for tens of millions of users worldwide, it’s also subject to significant safety concerns that call into question the apps’ use.

If you’re not familiar with Pokémon Go, here’s how it works. After downloading the app onto their smartphones, users try to catch little monsters called Pokémon, which appear to be in the players’ real world environments. This combination of the virtual world with the physical world occurs courtesy of smartphones’ forward-facing camera and some special technology called augmented reality, which “allows for graphical elements to be displayed over a real-world environment.” So, as users’ look through their phones’ screens at the area around them, they periodically see superimposed in those places Pokémon that they try to capture.

Some may think that augmented reality is the same as virtual reality, but the two technologies are quite different. In virtual reality, participants are essentially transported from their physical realities into self-contained virtual environments, where what they seem to be doing (e.g., flying), isn’t actually happening. In augmented reality, however, the physical and virtual worlds are combined such that if people trip and fall while running after a Pokémon, they actually hit the ground and potentially get hurt.

Of course, we risk injury in many things we do, including some of the games we play, so why worry about Pokémon Go? First, as the previous paragraph suggested, augmented reality is very unique in attempting to strike a balance between the real and virtual worlds. That mixture can prove difficult for people to manage, particularly when they get caught up in the moment, trying feverishly to both navigate their physical environments and capture virtual monsters. Although Pokémon Go is still very new (version 1.0 hit Apple’s App Store only on July 5, 2016), there already have been several serious automobile accidents, for instance:

A Maryland driver distracted by Pokémon Go hit a parked Baltimore police car.
A driver in Auburn, AL ran into a tree.
A man caused a multi-car accident on a Massachusetts highway when he stopped his car in the middle of it to try to catch Pikachu.

There also have been a variety of mishaps involving Pokémon-playing-pedestrians, inadvertently walking into other people and into things. More seriously, some players have gotten in the way of first responders, a Pennsylvania girl playing the game was hit by a car as she crossed the street, and two California men had to be rescued when they fell off a 90-foot ocean bluff while trying to collect the virtual characters.

In addition, Pokémon Go has resulted in a rash of trespassing as the little monsters have lured some players onto private property or into other restricted areas such as a nuclear plant and the Holocaust Museum and Arlington National Cemetery in Washington, D.C.

Unfortunately, there’s already been at least one death related to the game: A teen in Guatemala was recently ambushed and shot while he and his cousin were searching for Pokémon on a street in Chiquimula. This tragedy points to another real danger for Pokémon Go players—the risk of being targeted by others who know where vulnerable players are and what they’re doing.

Children are especially susceptible to such planned deception and abuse. Using one of the game’s “Pokestops,” a group of players in Missouri was lured to a specific location by armed robbers. As Boston nanny and Pokémon Go player Robin Jacks suggests, there’s a real risk of children developing a false sense of camaraderie and trust with strangers who are playing the game in the same location that they are.

The second, related reason to be concerned about Pokémon Go is the number of people playing it. In the U.S., just a few weeks after the app first became available, nearly 21 million people were daily active users, making it the biggest U.S. mobile game ever and the most downloaded free app in the Apple app store. Those user numbers continue to soar domestically, while abroad the game has become an “international phenomenon.”

What does all this mean? Well, unfortunately we live in a world where threats of terror and other violence seem to be increasing. Such perils should cause us to be more attuned than ever to our environments; however, many people are already dangerously distracted by their digital devices. Adding a game like Pokémon Go to the mix may make matters even worse, as people who are barely managing regular reality struggle to navigate an augmented one, thereby putting themselves and others at risk.

Japan, the birthplace of Pokémon, was not one of the first countries to allow Pokémon Go because the government had serious safety concerns. So, just ahead of the apps’ recent release in Japan, the country issued a nine-point safety bulletin that included warnings related to privacy and dangerous distractions.

Given the apps’ record-breaking success, it’s hard to deny that Pokémon Go is creating stakeholder value for its owners (Nintendo/Niantic Labs) and for the millions of people who are having fun playing it. However, the dangers to society of such a widespread augmented reality game are also very real. Unfortunately, therefore, Pokémon Go must be considered a case of “Single-Minded Marketing.”

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Soft Drinks for Adults Only

12/5/2015

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by David Hagenbuch, Founder of Mindful Marketing

A family with an elementary-age son is having lunch at a local eatery . . .

- Waitress: “What would you like to eat, young man?”

- Billy: “I want the smiley face pancakes.”

- Waitress: “Good choice. How about a drink?”

- Billy: “Pepsi!”

- Waitress: “Okay, but I’ll to need to see ID.”

Would a restaurant really card a kid for ordering cola?” Of course not, but some well-known restaurant chains have taken a significant step toward controlling children’s soft drink consumption. Both Applebee’s and IHOP have dropped soda from their children’s menus.

It’s no coincidence that these two iconic American eateries have made the same decision. Each is owned by the California-based corporation DineEquity, which franchises more than 3,600 of the stores in 20 countries. What was the reason for the company’s bold move? DineEquity ha cited concerns about juvenile obesity and a desire to promote better health, in addition to forwarding the following statement:

“We believe in having a broad variety of selections so our guests have a choice that best meets their needs. While soft drinks are still available by request, we believe this is a small step in assisting parents when dining out, as parents are in the best position to determine the appropriate food and beverage choices for their children.”

So, it’s not that kids can no longer drink soda in these stores. Parents who want their children to have Pepsi products, which is the brand that both these restaurants serve, can still request them. However, instead of soft drinks, the children’s menus will list healthier options like white and chocolate milk, hot chocolate, and juice.

Actually, Applebee’s and IHOP aren’t the only restaurant chains that have made such a move. Others that earlier cancelled colas from their kids’ menus include Burger King, Chipotle, Dairy Queen, McDonald’s, Panera, Subway, and Wendy’s. So, these latest players are just extending the trend of pushing Pepsi and similar products out of children's reach.

It’s easy to argue that steering away from soft drinks is desirable, especially when one considers the well-being of children. America has an obesity epidemic, given that “more than one-third of adults and 17% of youth in the United States are obese.” Unfortunately, obesity is associated with “heart disease, stroke, type 2 diabetes and certain types of cancer, [which are] some of the leading causes of preventable death.” There’s also much evidence to suggest that “rising consumption of sugary drinks has been a major contributor to the obesity epidemic,” not to mention tooth decay. By the way, it’s estimated that each year soft drink producers spend about a half billion dollars marketing their products directly to young people age 2-17.

So, less soda seems like a good thing, but will restaurants’ removal of soft drinks from their kids’ menus make a difference? Here are a few related questions to consider:

Given the nutritional profile of the food found on kids’ menus of most of the aforementioned restaurants, is soda really the biggest problem? For instance, at Applebee’s the kid’s grilled cheese on sourdough bread has 1430 milligrams of sodium and 620 calories.

Do people really use beverages as a criterion in choosing a restaurant?

What kind of a message do kids receive if their parents still drink soda at these restaurants while the kids can’t?

Is taking soda off kids’ menus much different than if a grocery store placed an “Adults Only” sign over the candy in the checkout aisle?

In sum, the actions of Applebee’s, IHOP, and the other chains are well-intended: They uphold societal values like respect for people’s health and stewardship of financial resources. However, the restaurants’ soda restrictions are unlikely to make a significant marketing impact, or to create any additional value for the companies, the customers, or other stakeholders. As such, striking soda from kids’ menus seems like “Simple-Minded Marketing.”

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Open for Giving

11/28/2015

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by David Hagenbuch, Founder of Mindful Marketing

Many businesses gained positive publicity for their decisions to close for Thanksgiving in order to allow their employees to celebrate the holiday with family and friends and to encourage consumers to take a break from shopping. A few notable examples include: Barnes & Noble, Cabela’s, Nordstrom, REI, TJ Max, and Staples.

Why is it, then, that many are commending another company for doing the opposite—not only opening on Thanksgiving but promoting itself as a place to spend the holiday? It’s a small business most people haven’t heard of, but it’s certainly worth learning about: George’s Senate & Coney Island Restaurant.

Located in Northville, MI, a small suburb of Detroit, George’s Restaurant is in many ways a typical Greek diner, serving a wide variety of Greek and other ethnic dishes, as well as a deep selection of American fare ranging from lamb shank, to stir fry, to Philly cheesesteaks. Patrons seem to appreciate the restaurant’s good food, fast service, and low prices.

What really sets George’s apart, however, is what owner George Dimopoulos has done every Thanksgiving for ten years: He invites individuals who are alone for the holiday to eat at his restaurant for free for the entire day. Yes, that’s right: people who have no one else with whom to share Thanksgiving can have breakfast, lunch, and dinner at his restaurant at no charge. He announces the offer by hanging a large handwritten sign on his restaurant's front class door: “If anyone is home alone, come eat with us for free! All Day! Thurs. November 26.”

Many businesspeople likely look at Dimopoulos’s generosity and think, “That’s a great thing to do . . . if you want to lose money.” Of course, there is some truth to that criticism. For instance, last year’s Thanksgiving Day promotion attracted more than 80 lonely dinners. If variable costs like food and servers’ wages totaled $8 per meal, that’s $640 of pure expense, not offset by any revenue.

Dimopoulos is obviously a sharp and successful businessman, so why, then, does he donate so much free dining? Dimopoulos grew up in Greece as one of eight children in a very poor family that couldn’t afford to send him to school. At age 12 he left home for Athens where he lived homeless for some time, relying on the generosity of others to survive. He now believes the right thing to do is to share the fruits of his success with others who are in need, just as he once was.

On one hand, Dimopoulos’s lonely diner offer is a cash drain that makes little financial sense. On the other hand, however, the $600, $700, or more he’s giving away is a small investment compared to the goodwill and positive press he’s generated. News media all over the country have covered the story of this special restaurant and its owner, and a photo of the restaurant uploaded to Reddit has garnered almost 5 million views. It’s safe to speculate, therefore, that the eatery also has built considerable brand equity in the greater Northville area, which is likely driving some, if not much store traffic. It would be very hard to pay the same amount for advertising and enjoy similar impact.

Nevertheless, Dimopoulos doesn’t do what he does for a financial return. He gives away dozens of meals all Thanksgiving Day because he cares about people, especially those who are alone, and wants to brighten their day. As the restaurant’s owner, he’s free to be as philanthropic as he wants, which is what makes him happy.

But what about the idea of the restaurant being open on Thanksgiving Day? If big retailers like those mentioned above close their doors for the holiday, why shouldn’t a small Greek diner follow suit? The difference is that people can live without buying clothes or camping gear on Thanksgiving. They can’t, however, live without food. Sure, someone can eat and be thankful even if alone and without a special meal, but Thanksgiving is about celebrating our blessings with others in a special way, even if that’s in a restaurant with strangers.

Dimopoulos and the employees who work with him on Thanksgiving sacrifice some of their own celebration for the benefit of many others. It’s very likely, though, that those who prepare and serve the meals are blessed many times over because of their generosity.

George’s Senate & Coney Island Restaurant supports societal values such as stewardship and respect. At the same time, the kindness is not without its business benefits given the considerable goodwill the annual tradition elicits. Taken together, the Restaurant’s free Thanksgiving Day meals represent a generous helping of “Mindful Marketing.”

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Toys Just for Boys?

8/15/2015

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by David Hagenbuch, Founder of Mindful Marketing

What did you like to play with more as a child: dolls or trucks? If you said the former, you’re probably female; if the latter, you’re likely male. Of course, not everyone follows these gender patterns, so to what extent should retailers reinforce them?

Full-line discounter Target hit this question head-on several weeks ago when one particular “guest,” Ohio Mom Abi Bechtel, took exception to the retailer’s in-store signage that distinguished “Girls’ Building sets” from regular “Building Sets.” Her Twitter post set-off a social media firestorm that Target recently sought to extinguish by removing gender-specific signs from its children’s bedding and toy areas and by promising to avoid stereotypical colors like pink and blue on walls and shelves.

In a world that seems eager to abolish traditional gender labels and norms, it’s not surprising that many people have applauded Target’s efforts. For instance, Dr. Christia Brown, the author of Parenting Beyond Pink and Blue and a professor of psychology at the University of Kentucky, commended the retailer for taking action consistent with gender research that suggests that boys and girls are not born with predilections for certain colors and types of toys; rather they are socialized into these preferences.

Not all science, however, supports this notion of socialization. Other studies have suggested that male- and female-specific hormones are what determine gender tendencies. For example, a 2009 study from Texas A&M University found that 3- and 4-month-month-old boys’ interest in toy trucks (vs. dolls) was positively correlated with the infants’ testosterone levels. Likewise, researchers studying vervet monkeys found that when given an option, females chose dolls, while males selected wheeled vehicles like trucks.

So, while the nurture vs. nature debate over gender identity rages on, retailers like Target are left to decide whether to take a gender-specific or -neutral approach to their merchandising. From a marketing perspective, the right answer is likely “both.”

For instance, for products like toys, there’s little reason to use gender-specific signage or stereotypical colors, as it’s unlikely that either significantly helps consumers find or choose the right product. If other shoppers are like me, they’re peering down aisles and scanning shelves, rarely noticing signs. Colors can be important visual cues; however, it’s probably more important that wall and shelf shades aid in product presentation and overall store atmosphere than that they denote masculinity or femininity. In the end, a Pirates of the Caribbean building block set doesn’t care if the builder is a boy or a girl and neither should Lego or Target.

Of course, there are certain products that must consider gender because men and women are anatomically different, e.g., many types of clothes, from bathing suits to blazers. It’s important that such items are manufactured with gender in mind, and it’s helpful that most stores merchandise these items in ways that aid gender-specific selection. Furthermore, those gender references are even more critical for directing consumers' on-line shopping, where they often cannot see items until they’ve completed a search for them.

So, Target’s decision to make its toy and children’s bedding areas more gender neutral probably didn’t diminish stakeholder value, and perhaps it increased this value somewhat by removing the seeming gender constraints on certain items. At the same time, the retailers’ response also demonstrated important societal values like kindness and inclusiveness, without diminishing the beauty of gender differences. For these reasons, Target’s choice to merchandise toys neutrally for both girls and boys can be considered “Mindful Marketing.”

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Gookamoedoe--A New Bank!

4/4/2015

If you’re thinking of starting a new business, three retail categories you probably should avoid are: malls, fast-food burger restaurants, and banks. A recently-founded financial institution in Lancaster County, PA, however, decided not to heed this advice.

The Bank of Bird-in-Hand is headquartered in its namesake town, a small rural community, composed of many Amish and Mennonite families, located about seven miles east of Lancaster. In the wake of the 2008 financial crisis, which saw many banks struggle and succumb, virtually no one was thinking of developing a new depository, except for the founders of Bird-in-Hand Bank.

In the three decades before the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, about 100 new banks opened each year in the U.S. Since Dodd-Frank, Bird-in-Hand Bank has been the ONLY new bank in the nation to open.

Why in the world would some Lancaster County capitalists buck a trend that saw “more than half of the 18,000-plus banks opened in the mid-1980s” merge or close by the beginning January 2014? Didn’t they realize the revolution of reduction taking place in banking or hear how extraordinarily difficult it had become to secure the FDIC’s approval for a new financial institution?

Bird-in-Hand Bank’s founding President and CEO, Brent Peters and his business partners did know what they were up against. They also saw a unique opportunity to serve a special market niche. Besides a robust agricultural base, the area had “a growing collection of woodworking, tourist and specialized manufacturing businesses” that were underserved in terms of banking.

These businesses needed a local bank that understood the close-knit community and that was willing to modify its marketing to meet the unique needs of many Amish and Mennonite patrons. So, for instance, Bird-in-Hand Bank catered to its constituents by designing “a drive-through window that can accommodate a horse and buggy.”

Since its opening in November of 2013, Bird-in-Hand Bank appears to be doing well. Loan demand at the bank is very strong. As of December 31, 2014, Bird-in-Hand Bank had assets upwards of $72 million versus liabilities of about $58 million and total deposits of over $50 million—not bad for a bank with one branch in a largely agrarian community.

For itself and for its patrons, Bird-in-Hand Bank seems to be creating stakeholder value. Likewise, the Bank’s investment against-the-odds in a small, rural Pennsylvanian community, suggests strong support for societal values such as fairness, decency, and respect. In sum, those familiar with the Bank of Bird-in-Hand can confidently say “Gookamoedoe!” [Pennsylvania Dutch for “Look at that!”]—an excellent example of “Mindful Marketing.”

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Do Coffee & Race Relations Mix?

3/28/2015

You’re at the front of the line; it’s your turn to order: “I’d like an Iced Caffè Mocha, Grande, with whipped cream.” “Sounds good,” the barista replies; “What’s your name and how do you feel about racial inequality?”

Surprised by the second part of the question? You’re not alone. Many Starbucks customers were recently jolted from their java when their cup came back with the phrase “Race Together” printed on the side. Even more shocking were the efforts of baristas to “discuss race issues with customers.”

Why would the global coffee company want to tackle such a tumultuous topic? Starbuck’s CEO Howard Schultz felt unsettled by the nation’s racial unrest and believed it was irresponsible for his firm to remain silent on this important issue. Certainly Schultz was under no illusion that Race Together would solve the problem; however he did see the program as “an opportunity to begin to re-examine how we can create a more empathetic and inclusive society – one conversation at a time.”

Unfortunately, many Starbucks customers and others found mixing coffee beans with complex conversations about human beings to be a bizarre blend. Some doubted the efficacy of forcing these discussions, while others wondered how any meaningful dialogue could be distilled down to such an ephemeral exchange.

True, some consumers passing through retail checkout lines covet extended conversations with cashiers, but most do not. Furthermore, even chatty customers don’t necessarily want to delve into a discussion as delicate as race with someone they hardly know. The Race Together initiative also placed considerable pressure on Starbucks’ baristas, who had to act as ambassadors for race relations while completing their normal job responsibilities in a timely way.

In other words, because of the initiative, Starbucks jeopardized a key part of its core value proposition: efficient counter service, which wasn’t effective marketing. Furthermore, as customers’ reactions to the program suggested, this decreased utility unfortunately wasn’t offset by a noticeable gain in goodwill.

People do appreciate when firms embrace corporate social responsibility, but that CSR needs to feel genuine, not forced. Likewise, it’s best when business benevolence is strategic; i.e., it logically connects to what the company does to deliver value and produce profit. This type of integrated approach to CSR makes more sense to consumers and is more effective for marketers.

Brewing coffee and counseling on race relations is an awkward assembly. Starbucks seems now to have recognized the ill-conceived combination and pulled back on its Race Together program. In sum, the company can be commended for its noble intent to address a very important social issue, but the program’s apparent ineffectiveness along with its likely negative impact on operations makes Race Together a recipe for “Simple-Minded Marketing.”

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Fixing iPhones

Scary Good Marketing

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Divided Over Shopping

Pokémon Peril

Soft Drinks for Adults Only

Open for Giving

Toys Just for Boys?

Gookamoedoe--A New Bank!

Do Coffee & Race Relations Mix?

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