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Natural Light Imitates Art

1/23/2021

5 Comments

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

Often those fortunate enough to earn a college degree proudly display their diploma in their office or another personal location.  Now the credentials of one large group of college grads are on exhibit in a much more public place—New York City's Grand Central Terminal.  But, at a station known for transportation, is the art’s creator paying homage to higher education or throwing a college degree under the bus?
 
The intensely competitive alcohol industry has led many beer manufacturers to become very creative marketers: from elaborate point of purchase displays in retail stores to highly produced commercials during Super Bowls.  Now the world’s biggest brewer, Anheuser-Busch InBev, has found an especially innovative way to broadcast a brand message—a work of art, in the heart of New York City, valued at $470 million!
 
The exhibit, called “the Da Vinci of Debt,” is a collection of 2,600 real diplomas that Natural Light, one of Anheuser-Busch’s signature brands, has rented from degree earners.  Resembling a blizzard of super-size snowflakes, the white diplomas cascade downward from ceiling to floor of Grand Central Terminal’s Vanderbilt Hall.  It’s an installation that’s both impressive in its grandeur and appealing to the eye.
 
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So, what’s behind Natural Light’s foray into ‘fine art’ and its claim to have constructed “the most expensive piece of art in the world”?  The company says it wants to bring attention to the burgeoning problem of student debt, which helps explain the firm’s valuation of the exhibit at $470 million--the average total cost of a four-year college education times 2,600 degrees.
 
As someone who’s taught in higher education for 20 years and paid for two children to attend college, Natural Light’s cost estimate seems right:  $470 million divided by 2,600 diplomas is $180,769 per degree, or $22,596 per semester.  Unfortunately, this price has risen precipitously over the years, increasingly exceeding families’ abilities to pay, save for significant financial assistance, often in the form of student loans.
 
To some extent, faculty members like me are responsible for the extreme price up-tick:  Employee salaries often represent organizations’ biggest costs.  However, higher ed’s steeply-sloped expense history is more complicated.
 
When those who attended college several decades or more ago visit campuses today, they’re often awestruck by the number and nature of amenities today’s students enjoy:  from beautifully-appointed apartments, to state-of-the art classrooms, to expansive sports centers.  These expensive and largely consumer-driven upgrades also have contributed to rising college costs.
 
Regardless, it’s important to affirm Natural Light’s suggestion that student debt is a serious problem.   That doesn’t mean, though, that the Da Vinci of Debt is an impeccable piece of art:  A real concern is that the exhibit conveys a misguided message:  That a college education is not worth its price.
 
Some may not gather that interpretation from the exhibit, which is good; however, it’s reasonable to believe that many who see or hear about the art will draw the conclusion that those willing to part with their diplomas must feel dissonance about their degrees.
 
Unfortunately, some do get a less-than-ideal return on their college investments for various reasons that can include choosing the wrong school or major but more likely stems from failing to take their academics seriously—a tragic misstep that’s ironically related to Natural Light.  I’ll say more about that and two other 'art ironies' in a moment.
 
First, it’s important to note that the experiences college students enjoy and the relationships they form are often invaluable, or at least defy quantification.  At the same time, some like Georgetown University’s Center on Education and the Workforce have calculated the typical financial payback a college education offers:
  • A Bachelor’s degree is worth $2.8 million on average over a lifetime.
  • Bachelor’s degree holders earn 31 percent more than those with an Associate’s degree and 84 percent more than those with just a high school diploma.
 
So, is a college degree expensive?  Yes.  Is it worth the cost?  Yes, provided that the student properly ‘consumes the product,’ which leads to the three art ironies referenced above.
 
Irony #1:  Most Anheuser-Busch executives hold one or more higher education diplomas.
 
Here is a partial list of Anheuser-Busch’s U.S. leadership team members and their degrees:
  • Nick Caton, U.S. Chief Financial Officer:  Bachelor of Science in mathematics from Stanford University; Juris Doctorate from Yale University
  • Agostino De Gasperis, U.S. Chief People Officer:  Bachelor of Commerce degree from the University of Toronto
  • Ingrid De Ryck, U.S. Chief Sustainability and Procurement Officer:  bachelor’s and master’s degree in business engineering from the Katholieke Universiteit Leuven
  • Benoit Garbe, U.S. Chief Strategy Officer: MBA from Harvard Business School
  • Craig Katerberg, General Counsel:  degrees from the University of Chicago and from Northwestern University School of Law
  • Elito Siqueira, U.S. Chief Logistics Officer:  a degree in mechanical engineering; two executive MBAs; completed supply chain programs from the Massachusetts Institute of Technology and Stanford University​
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This list could include several other Anheuser-Busch executives, with equally impressive pedigrees, all of whom appear on the company’s website.  It’s unusual for businesses to mention their leaders’ academic credentials so prominently, which makes Anheuser-Busch’s higher ed highlighting even more unique.
 
Moreover, given the positions these individuals hold with a firm that ranks #205 in Fortune’s Global 500, it seems that all have gotten good returns on their college and master’s degrees.  I wonder if any of them regret the educational expenses they incurred, or if they chose to include their diplomas in the Da Vinci display.
 
Irony #2:  Beer and higher education are notoriously bad partners.
 
Unfortunately, alcohol abuse on college campuses is legendary:  If you haven’t witnessed it personally, you’ve likely seen it portrayed in movies or on TV.  I’ve written two other pieces that have highlighted the coed alcohol epidemic:
  • Alcohol Ads and College Athletics Don't Mix
  • Coopting Commencement
 
The first piece questioned Dos Equis being made “The Official Beer Sponsor of the College Football Playoff.”  In light of the destruction alcohol has done to so many young lives, I argued that college-related events should never have a “beer sponsor.”
 
The second piece had a similar theme, but this time the event was graduation and the sponsor was . . . wait for it . . . Anheuser-Busch.  Yes, Natural Light was making the same dangerous association of beer and books, attempting to put an intoxicating brand spin on what should be a very meaningful if not solemn ceremony.
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I wonder how many people have had their college careers completely derailed by alcohol, or graduated but so frequently missed classes or walked around buzzed that they failed to gain nearly what they should have from their college experience.
 
Such lackluster collegiate performance correlates with low GPAs and lack of good post-college employment opportunities.  I wonder how much alcohol abuse has increased the cost of college and made it more difficult for graduates to pay off their diploma-related debt?
 
Irony #3:  Anheuser-Busch doesn’t mention student debt relief among its social initiatives.
 
In 2018, to the company’s credit, Anheuser-Busch launched “an annual College Debt Relief program” that annually awards “$1 million to students under financial pressure.”  The plan is to pay out $10 million toward college debt relief over 10 years.
 
Of course, $10 million is a ‘drop in the keg’ compared to the $1.7 trillion level college debt is projected to reach in 2021, but no one company can be expected to do it alone.  By the same token, however, Anheuser-Busch had total operating income of over $16 billion in 2019, and in the same year spent $1.53 billion in the U.S. on advertising.  
 
A million bucks a year is a nice donation, yet it does seem somewhat paltry for a firm dealing in billions of dollars.  Perhaps that’s the reason Anheuser-Busch makes no mention of education or student debt relief on its social responsibility website page, “Purpose Beyond Brewing.”  The one CSR area that comes closest is “Economic Impact,” but that page just describes the company’s commitment to care for employees, support the restaurant and bar industry, and create jobs for farmers. 
 
So, under which of Anheuser-Busch’s expense lines does student debt relief really belong?  Is it serious social responsibility or is it a straightforward advertising-spend?
 
Regardless, I’m not sure how much the Grand Central Terminal art exhibit will make a positive impact for Natural Light.  The brand communicates many countervailing messages, such as images on its website that seem more like an ode to spring break in Fort Lauderdale than any serious concern for student well-being.  That disconnect and relative lack of exposure may doom Da Vinci.
 
Admittedly, the author of this piece has an employment-influenced bias in favor of higher education and against alcohol consumption by young people.  He’s also not an accomplished art critic.  Still, his professional opinion suggests that Natural Light’s Da Vinci of Debt is a monument to “Mindless Marketing.”
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Did Apple Make a Debundling Blunder?

12/21/2020

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

It’s a parent’s classic Christmas morning fail:  After having the foresight to purchase the holiday’s hottest new toy, they forget to buy the batteries!  By not including a charger with its newest ‘toy,’ has the world’s most valuable brand set up its customers for gift-giving/getting failure?
 
The introduction of almost any new Apple product, particularly an iPhone, is newsworthy.  Even people who don’t buy Apple are interested in the features the firm unfurls in its latest phones.  This time, though, it’s what Apple hasn’t included that’s made headlines.
 
The iPhone 12 packs many impressive features including an A14 bionic chip, an edge-to-edge OLED display, a ceramic shield, and night mode, but consumers won’t find in the box two items they’ve come to expect with any iPhone: EarPods and a charging adapter.
 
Given that many people are particular about what they put on/in their ears, and some wanting wireless, it’s not surprising that Apple decided to forgo ear accessories with its new phone models.  What is surprising, though, is that the iPhone 12 comes sans charger—something everyone needs in order to use the product.
 
A main reason Apple has omitted the charger is that it believes people already have one, which probably is true for many of those interested in the latest iPhone.  At the same time, if someone is willing to pay $800+ for the base model iPhone 12 or $1,000+ for one of the Pro versions, shouldn’t Apple oblige by including a comparatively inexpensive power supply?
 
Apple’s omission has challenged me to think of precedents for such a strategy, which seems akin to an automaker selling cars without spark plugs.  As suggested at the onset, some companies market toys and other low-end electronics with the package disclaimer “batteries not included,” but that’s increasingly rare.  Plus, batteries are inexpensive and easy to find . . . at least most are, which reminds me of a shopping experience I had a few months ago.
 
With both my gas-powered leaf blower and string trimmer on their last legs, I started searching for battery-powered replacements.  In the process, I noticed several units labeled “tool only,” which were often priced $100+ less than what looked like the same models.  I soon realized that some people only buy the implement because they already have one or more batteries and chargers from prior purchases of tools that use the same power system.  For those individuals, the manufacturers’ “unbundling” of the battery and charger from the tool is a big benefit.
 

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We’re used to seeing companies bundle products, i.e., market related items together and, in doing so, offer consumers an overall lower price, e.g., value meals at fast food restaurants, home and auto insurance policies.  Unbundling is the opposite:  A company realizes that consumers dislike paying for products they don’t want/use, so it deconstructs the bundle and sells products separately, usually at somewhat higher individual prices.
 
There’s a significant cost difference, however, between power supplies for yard tools and those for iPhones.  A battery and charger accounts for about half the price of a yard tool package, while the phone charger represents just a fraction of an iPhone’s cost.
 
That discrepancy suggests that, unlike most unbundling strategies, Apple’s approach was not driven by consumer’s desire to save money.  Lisa Jackson, Apple’s vice president of environment, policy, and social initiatives explained how the company had, instead, sustainability in mind:
 
"There are also over 2 billion Apple power adapters out there in the world, and that's not counting the billions of third-party adapters. We're removing these items from the iPhone [12] box, which reduces carbon emissions and avoids the mining and use of precious materials."
 
Apple’s website elaborates on the environmental ends the company aims to accomplish by omitting the iPhone 12 charger:
  • Carbon savings equal to 450,000 fewer cars on the road per year
  • Reduced mining and use of precious metals
  • A smaller phone package, allowing more boxes per shipment and fewer overall shipments
  • The elimination of 2 million metric tons of carbon emissions each year

Those intentions are certainly admirable.  It’s questionable, though, if that projected positive environmental impact will actually occur, given that consumer behavior will likely adjust as a result of the iPhone 12 coming without a charger.
 
Of course, some iPhone 12 buyers won’t have a workable adapter and will have to buy one, either from Apple or a third party.  However, even if customers already own a serviceable power supply, they still might decide to buy a new one for one or more of the following reasons:
  1. If they sell or gift their old iPhone, the recipient will probably want the charger.
  2. It can be convenient to have more than one charger (e.g., one for home, one for work).
  3. Consumers don’t usually want to use old accessories with new products.  For instance, few people want to put used tires on a new car or old laces in new shoes. 
  4. The old chargers are not completely compatible with the newest iPhones.  Although one can connect an iPhone 12 to an old power adapter using an old lightning to USB-A cable (the USBs with the large, wide connectors), the new iPhone won’t charge as fast as it will by plugging the included lightning to USB-C cable (small, compact connector) into a new adapter, purchased separately.
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In sum, many people will still want or need to buy an adapter, which “will now need to be packed and shipped separately from the phones, thereby increasing the environmental consequences.”

The change in buyer behavior is coupled with the fact that chargers from smartphones, tablets, etc., account for a very small percentage of all e-waste.  Ruediger Kuehr, head of the Sustainable Cycles (SCYCLE) Programme hosted by the United Nations University, estimates that Apple’s move could save at most 25,000 metric tons, or .05 percent of annual e-waste. 

Granted, any e-waste avoided is a good thing, but the packaging and transportation costs from secondary market charger sales could erase some or most of the environmental gains of keeping the charger out of the original package.
 
Apple is an environmentally-conscious company with a continually-improving track record for sustainability, which includes reducing toxic components in its hardware, nearing 100% use of recycled materials in its phone manufacturing, and aiming to be carbon neutral by 2030. 
 
Still, omitting an iPhone 12 charger doesn’t promise to be the “boon to the environment” that the company has suggested.
 
Apple’s unbundling was likely well-intended, but the reality of little environmental impact and negative consumer reaction, makes the strategy a case of “Simple-Minded Marketing.”
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Do We Really Want State Farm’s Rodgers Rate?

12/12/2020

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Aaron Rodgers and Jake from State Farm

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

“How much does it cost?”—That’s often the first question consumers ask and one that companies like to avoid until after they’ve described their products’ features and benefits.  A leading insurance company, however, has decided not only to buck that communication wisdom but to promote another precarious pricing strategy.
 
Market research apparently pegs football fans as key consumers of insurance, which would explain why televised games contain so many commercials for the likes of Liberty Mutual, Geico, and Progressive.  One of the biggest buyers of advertising inventory has been State Farm, whose ubiquitous ads feature a couple of top National Football League (NFL) quarterbacks expressing gratitude for scoring special insurance deals.
 
In the ad campaign, Super Bowl champions Aaron Rodgers and Patrick Mahomes take turns conversing with casually-cool insurance agent, “Jake from State Farm,” who sports some stylish stubble, a snug-fit State Farm t-shirt, and the obligatory khaki pants.
 
The sports stars convey gratefulness to Jake for landing them 'exclusive' insurance deals.  In one ad, Rodgers plays fetch with his dog while thanking the representative for giving him “the Rodgers rate” on his insurance, which Jake firmly denies: 
 
“Here’s the deal.  There’s no Rodgers rate.  State Farm just has surprisingly great rates.”  “We do offer it to anyone, literally anyone.”
 
Jake has practically the same conversation with Mahomes in a similar spot, as the two play corn hole.  Like Rodgers, Mahomes thanks Jake for the “Patrick Price” on his insurance, but again, the agent resists:

“Here’s the deal, Patrick.  State Farm offers everyone surprisingly great rates.”
 
At first glance, it seems like State Farm’s pricing play could work.  In a celebrity-centered, influencer-driven world, people love to eat, drive, and wear what famous people do.  So, why not add insurance to the list of endorser-inspired products? 
 
The company’s ‘one-rate-for-all’ ads also could appeal to a value for of equality by suggesting that everyone should be able pay the same prices for the same products.  Of course, charging people different prices would be unfair . . . or would it?
 
Legally, organizations can’t charge certain consumers more because of personal traits like gender and race.  In terms of moral principles, it would be unfair to give more favorable treatment to some people and not others because of such characteristics.  However, there are some legitimate reasons for price discrimination, for instance:


  • Quantity Discount:  People who purchase more deserve to pay lower unit prices, e.g., buying a six pack of soda versus a single can.
  • Lower Risk: Individuals who objectively are less likely to default on credit terms should receive more favorable rates, e.g., a person with a very good credit score who puts a 50% down payment on a home versus another with a low credit score and 20% down.
  • Buy Now:  Because of the time value of money, as well as companies’ needs to maintain cash flow and reduce inventory, consumers often receive incentives for purchasing sooner rather than later.
  • Peak Demand:  Many people want to do the same activities at the same times, like going to the beach in the summer and to the movies in the evening, which is why hotels offer off-season rates and theaters have matinees.    
 
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There’s one other reason for price discrimination that’s not as clear cut—ability to pay.  On one hand, companies shouldn’t be like the mechanic in National Lampoon’s Vacation:  When Clark Griswold innocently asks him how much his car repair costs, the unscrupulous repairman boldly asks, “How much you got?” then demands “all of it, boy.” 
 
On the other hand, it seems compassionate to charge specific consumer groups less because of their typically lower incomes, e.g., senior citizens.
 
In the industry in which I work, higher education, price discrimination is routine practice.  Government and a variety of organizations collaborate with colleges and universities to offer tuition-lowering aid financial aid and scholarships, particularly to families with the greatest need.
 
That brings us back to Rodgers and Mahomes.  Perhaps as spokesmen they receive State Farm insurance for free, but if they are paying something for it as the commercials suggest, these two multimillionaires certainly wouldn’t be getting a break on their rates because of inability to pay.
 
According to NFL.com, Mahomes’ $45 million a year salary is the league’s highest, and Rodger’s $33.5 million annual take is not far behind.  Companies of all kinds strive to win the business of such high equity individuals, largely because they can afford full fare, i.e., they don’t require discounts.
 
Although you and I are less affluent, we understand that dynamic and wouldn’t want to pay the prices that Patrick and Aaron pay for anything.  Hook us up, instead, with the rates their chauffeurs and gardeners are getting.
 
Of course, the commercials are meant to be funny, and we shouldn’t pretend we have the same buying power as NFL quarterbacks.  Still, State Farm appears serious about uniform pricing by repeatedly suggesting that it offers “surprisingly great rates” to everyone without exceptions.  That fixed pricing is the main flaw of the firm’s strategy; in fact, it’s a mistake from which one well-known retail chain is still struggling to recover, years later. 
 
In November of 2011, JCPenney made a bold move in hiring as its new CEO former Apple retail executive Ron Johnson.  In his effort to make JCPenney more Apple-esque, Johnson upgraded the stores' interiors and, more significantly, implemented Apple’s everyday ‘value’ pricing.  If the no-sales strategy worked for the world’s most sought-after electronics brand, it should work for a clothing and housewares retailer, right?
 
Unfortunately for Johnson and JCPenney the strategy failed miserably.  The firm’s revenue fell by almost $5 billion in one year and its operating loss grew to nearly $1 billion.  Johnson was ousted from his job in March of 2013, just 14 months after he started.  
 
The main failure in what some have called “the biggest retail disaster in history” was forgetting that people love sales.  Many of us are captivated by the ‘thrill of the hunt,’ and we relish knowing that we got a great deal, whether it be versus regular prices or in comparison to what others have paid.  I’m one of those people who is not above bragging about his consumer conquests.
 
A few years ago when gas prices were on the rise, I shared a fill-up receipt with my wife so she could see how I paid a paltry $1.78 per gallon thanks to an abundance of grocery store reward points.  Then, just this past week, I saved 43% on purchases at a drugstore chain thanks to various special discounts stacked atop a 30% off everything coupon.  I hadn’t told anyone about that shopping feat, but I’m bragging about it now!


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It’s not just me.  Over the years, I’ve heard many others describe their exceptional purchases, a behavior I believe equity theory helps explain.  As humans, we continually measure our inputs against their outcomes, including what we spend versus what we get for our money.  We’re also constantly comparing our input/outcome ratios to those of others in order to gauge how well we’re doing at shopping or anything else.
 
Although usually effective, offering sales or running specials doesn’t work in every situation.  For prestige products that command premium prices, like those of Apple, it can be counterproductive to offer frequent discounts, as doing so can diminish the brand’s perceived quality and cachet.  However, in cases involving little or no product differentiation, businesses that ignore discounting often do so to their detriment.
 
Many insurance companies do offer discounts for things such as safe driving and bundling multiple policies (e.g., home and auto).  In fact, State Farm is one of those firms; it offers a “Drive Safe and Save” discount of up to 30% on auto insurance.  For some reason the company gives that program much less media exposure.
 
Aside from promoting or not promoting discounts, State Farm doesn’t help its cause by suggesting that all its customers pay the same rates whether they’re a multimillion-dollar quarterback or a more frugal football fan.
 
Price equality sounds nice, but there are legitimate reasons for charging people different prices, including allowing consumers to self-select and shop for prized discounts.  At the end of the game, charging everyone the Rodgers rate really is “Simple-Minded Marketing.”
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Profiting on Others' Pain

5/17/2020

6 Comments

 
Face mask made of money

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

You’ve heard the saying, “Misery loves company.”  Here’s an even hotter take: Misery makes money.  Oftentimes the bigger the problem, the bigger the payout for solving it, but is it right for companies to monetize consumer misfortune, particularly during a pandemic?
 
Even as industries from airlines to entertainment struggle to survive the COVID-economy, some firms are enjoying record levels of revenue.  For instance, Peloton, maker of those expensive in-home ‘exer-cycles,’ has seen sales surge so much that it plans to reduce advertising spending by 50% over the next three months.
 
“Spinning” isn’t the only pastime the pandemic has accelerated.  People are more often binge-watching movies, having dinner delivered, and meeting friends online, which have boosted the bottom-lines of companies like Netflix, DoorDash, and Zoom.
 
Of course, there also are firms that have benefited even more directly from people’s fear of infection:  those manufacturing face masks, hand sanitizer, etc.  Clorox and Lysol, in fact, are selling antibacterial wipes so fast, their production can’t keep pace with demand.
 
In a non-pandemic world, the notion of companies making money gives many people pause, so the illness-associated timing of the latest corporate windfall has likely caused even more to wonder:  Is it right for firms to profit from people’s pain?
 
When you start to think about it, there are actually a number of businesses that appear to profit perpetually from consumers’ misfortunes, for example:
  • Auto collision centers
  • Divorce attorneys
  • Fire and flood restoration firms
  • Funeral homes
  • Pest control companies
 
These enterprises don’t exist unless individuals experience: crashed cars, ruptured relationships, domestic disasters, lost loved ones, and belligerent bugs.  How do the owners of these organizations sleep at night, knowing that their gain comes from their own customers’ pain?
 
The third industry on the above list reminds me of a disastrous 
event our family experienced on a cold January morning several years ago.  A pipe burst in our house, sending water streaming through several rooms.  The remedy included, among other disruptions, gutting our kitchen and having workers walking around our home for several months.  Fortunately, insurance covered the costs and the recovery company did a great job.

Water damage in kitchen

Did the restoration firm profit from our pain?  I’m sure it did, but it also ‘healed our house’ and helped us recover from the catastrophe.  When you think about it, all of the companies on the list above do the same sort of thing in different ways.  They’re all in the ‘restoration business.’
 
If one defines pain as an unmet need, or when an actual state is different than a desired state, almost every organization is in the pain management business.  Hospitals help people recover from physical and mental pain, grocery stores and restaurants overcome hunger pains, and educators try to alleviate the prospective pains of ignorance and unemployment.
 
So, it’s not just organizations that profit from other’s pain, individual consumers do too.  When I buy a pair of shoes that work well, the benefits I enjoy exceed the price I paid, meaning I profited from the retailer’s pain—its need to sell shoes.
 
Provided that the pain management goes both ways, or there’s mutual benefit, profiting from others’ pain is a good thing,
 
Unfortunately, however, there can be cases in which rewards are one-sided, such as when a firm’s business model depends on its own customers’ failure, thus purposefully prolonging their pain.
 
One example involves predatory lenders.  Such financiers intentionally choose customers who hold high credit risk and, therefore, are unlikely to meet their payment obligations.  When the debtor defaults, the lender comes out ahead by foreclosing on the home, repossessing the car, etc.  Any business model based on win-lose outcomes is unconscionable.  
 
Another more controversial example involves casinos.  I have no firsthand experience, but it seems self-evident that these companies don’t make money unless the vast majority of their patrons lose theirs.
 
A reasonable argument may be made that gamblers are really purchasing entertainment and an adrenalin rush, just like spectators at an exciting sporting event or theater performance.  A telltale sign of the difference, though, is that ads for Broadway shows don’t carry a disclaimer, “Musical addiction?  Dial 1-800-HAM-ILTON.”
 
Is it wrong for companies to profit from people during a pandemic or any other time?  It’s fine if firms enable win-win outcomes in which consumers profit back by getting good value from the hand sanitizer, face masks, food, clothing, Netflix, or whatever else they need.  Mutual profit is often a sign of “Mindful Marketing.”
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The Business of Forgiveness?

4/18/2020

3 Comments

 
The Business of Forgiveness?

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

​“To err is human, to forgive is divine.”  Alexander Pope’s adage applies to every person who has overlooked another’s offense or asked for forgiveness of their own, yet organizations often seem immune to any such ‘mercy mandate.’  At a time when many people are showing others unusual grace, should companies also be forgiving others?
 
The COVID-19-induced economic slowdown has derailed demand in most industries, leaving some businesses on the brink of insolvency.  The U.S. Federal Reserve has promised $2.3 trillion in programs aimed at undergirding small and medium businesses; still, organizations of all sizes face immediate pressures to meet payroll, remit rent, and settle obligations with suppliers.
 
Many firms find themselves beholden to creditors like never before.  While simply dismissing others’ debt may sound nice, such kindness cuts against the very grain of capitalism:  Companies can’t remain competitive and profitable by giving away their goods and services.  It may sound callous, but isn’t it just good business to forgo forgiveness?
 
Among the many hats I wore while a partner in our family’s promotional products company, was that of debt collector.  At times, I would pick up the phone and call customers who had invoices that were 60, 90, or more days overdue.  It wasn’t a job I enjoyed, but if enough of that revenue remained outstanding, it would take a significant bite out of our small business’s bottom-line.  Although I worked to keep the conversations amicable, I wasn’t calling to offer forgiveness.
 
Fast forward a couple of decades—As I watched the April 9, 2020 installment of CNBC’s Squawk on the Street, the show’s often insightful and easily excitable Jim Cramer became uncharacteristically subdued while considering the pandemic’s unprecedented economic impact.  In order to battle through the shared struggle, he recommended that businesses offer each other financial “forbearance.”
 
How surreal to hear the former hedge fund manager of Mad Money fame, who aims to help ordinary people understand the stock market and invest profitably, offer business advice that appeared tantamount to fiscal heresy.  Had the Mad Money host gone mad?  Or, has a time come when companies should be extending financial forgiveness?
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Jim Cramer, Squawk on the Street

To answer these questions, it’s important to differentiate forgiveness from forbearance.  These definitions of the two verb infinitives seem especially relevant:
  • Forgive:  to cancel an indebtedness or liability of
  • Forbear:  to be patient or self-controlled 
 
So, my earlier conflation of the two terms was somewhat misleading.  While any forgiveness naturally includes forbearance, forbearance does not necessarily involve forgiveness.  For example, a landlord can choose to forgive a month’s overdue rent, i.e., never collect it; or, he/she can forbear, i.e., give the tenant more time to pay. 
 
In the Squawk on the Street segment, Cramer did aptly apply forbearance, suggesting that firms should be patient with their debtors.  At the same time, he didn't preclude forgiveness, i.e., if a company can afford to reduce or cancel a specific debt, even better.    
 
Such recommendations prompt two more important questions:  Who exactly should forbear or forgive and why?  The following story may offer answers.
 
The owner of a small grocery store was many months overdue on a $1,000 invoice from a large produce supplier.  Unable to pay, the store owner begged his creditor for more time: “Please be patient and I’ll pay the bill.”  The produce company owner felt sorry for his customer, so he told him, “It’s okay; we’ll cancel this invoice.  You don’t owe us anything.”
 
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The same day, a regular customer, who was recently out of work, came into the grocery store and asked the owner.  “I’ve been shopping here for years and just lost my job.  Could I get $10 worth of food to feed my family tonight?  I can pay you tomorrow when my unemployment check comes.”
 
The store owner berated the customer: “Get out of here!  I’m not running a charity!”  When the produce supplier heard about the incident he was enraged.  He phoned the grocery store owner:  “I cancelled all of your debt.  Why couldn’t you show some grace to one of your customers?”
 
Some may recognize this story, which is a modern paraphrase of the biblical parable from Matthew 18:21-35.  Whether two thousand years ago or now, the moral is the same:  We all should show grace to others because others show grace to us.
 
Over the past month, that point has been ‘brought home’ for me literally, as the pandemic has moved virtually all of higher education online.  My house is somewhat unique in that in one upstairs room there’s me, sometimes asking my students for patience as I adapt to teaching college courses online.  Meanwhile, down the hallway our son is taking classes from a different college, and his instructors are dealing with similar challenges.
 
As a college professor and the parent of a college student, I’m both a supplier and a consumer of higher education services.  If I’m going to ask my ‘customers’ for forbearance, the least I can do is extend similar forbearance to our family’s ‘educational service provider.’
 
Life’s winding paths often lead to unexpected outcomes.  Earlier I mentioned the collection phone calls I made decades ago for our family business.  I can no longer remember any of the overdue accounts I called, except one:  A company I had never seen that was located about 80 miles to the south that sold/rented lawn and excavating equipment.
 
I recall this account because it took what seemed like forever until I finally got to talk with the owner and kindly implore him to pay several long-past-due invoices.  Significant interest charges had accrued, but I told him, “Just pay the original amounts, we’ll forgive the interest,” and he did.
 
I also remember this account because after we sold our family business and I entered higher education, our family happened to move within a few miles of where that business is still located.  Now, I’m occasionally one of its customers.
 
As flawed people who work for imperfect organizations, we all need to extend and receive forbearance at times, especially during a crisis.  That doesn’t mean enabling those who take advantage of kindness, nor does it preclude going a step above and beyond to forgive an obligation entirely.  A healthy balance of forbearance and forgiveness is good for business and makes for “Mindful Marketing.”
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Sick and Healthy "Viral Marketing"

3/21/2020

15 Comments

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

Difficult times bring out the best and worst in individuals and organizations.  You’ve likely seen some of each during recent days.  Although it’s frightful to find our world battling a pandemic, it’s a healthy occasion to diagnose what is and isn’t Mindful Marketing.
 
One of the ‘sickest’ cases has involved two entrepreneurial brothers from Tennessee.  When Matt and Noah Colvin heard of the first U.S. death from coronavirus, they quickly began buying all the hand sanitizer and antibacterial wipes they could find—around Chattanooga, across Tennessee, and throughout Kentucky.
 
After emptying stores of the valuable virus-fighting products, they piled palettes of their pillage in a garage and began selling the items online for a premium: between $8 and $70 each for the first 300 bottles of hand sanitizer M. Colvin listed on Amazon. 

The gig lasted for about a day before “Amazon pulled his items and thousands of other listings for sanitizer, wipes and face masks” and “eBay soon followed with even stricter measures.”  The retailers’ swift actions and accusation of price gouging left Colvin sitting on over 17,000 bottles of sanitizer he couldn’t sell, even as people around the world were desperate to get their hands on the products and the product on their hands.
 
Was Colvin “profiteering from a pandemic,” or were Amazon and eBay unnecessarily constraining capitalism?  Colvin claimed he provided a “public service” by exploiting market inefficiencies and redistributing products to other parts of the nation where they were needed more. 
 
Could he be right?  Perhaps he was improving the supply chain.  Also, how different were his actions than someone making a significant purchase of a publicly-traded stock with the hope that their big investment will help push the security’s price upward?
 
First, it’s safe to assume that national and regional retailers like CVS and Walmart, with decades of logistics experience and cutting-edge supply chain processes, didn't need Colvin to help get products to places in the country where they’re in short supply.  Furthermore, any person with an internet connection could conceivable buy hand sanitizer online and have it shipped directly to them, no matter where they live.
 
Second, there’s a big difference between playing the stock market and ‘playing the hand sanitizer market,’ especially in the face of a pandemic.  People don’t need to own Apple, Tesla, or any other specific stock; however, Individuals do have to have products that can help them avoid contracting a serious illness that could kill them or someone they might infect.
 
The Colvin brothers’ actions were the epitome of “Single-Minded Marketing,” which quickly turned “Mindless” once Amazon pulled the plug on their online sales.  Such blatantly selfish actions are pretty easy to diagnose, but what about the wide continuum of tactics other organizations have employed amid the outbreak?
 
Some emails that have hit my inbox within the last few days seem tone-deaf to health advisories that have asked us to forgo nonessential services, to practice social distancing, and to be extra careful with hand hygiene.  Although less extreme than those of the Colvin brothers, these tactics also seem “Mindless”:
  • Groupon: specials on Swedish massage, axe throwing, ice skating, and even “group bowling”
  • Local Flavor: offers on experiences such as billiards, salt room, and climbing walls
  • Bed Bath & Beyond:  promotional copy reading, “Put a spring in your hosting game with fresh and EXCLUSIVE picks”; “Dazzle guests without breaking a sweat (or the bank)”
  • Old Navy: ad image showing two women walking with arms wrapped tightly over the other’s shoulders while smiling at each other, with faces about eight inches apart
 
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Meanwhile, certain other companies have shown healthier situational awareness by quickly adjusting their marketing communication from “Mindless” to “Mindful”:
  • Coors: pulled its “Official beer of ‘working’ remotely” spots that lampooned the nation's annual loss of productivity during March Madness
  • Hershey: removed ads that featured people shaking hands and hugging while sharing candy.
  • KFC: pulled its ‘finger lickin’ ads in the UK
 
There’s also been an abundance of vibrantly “Mindful” correspondence from companies aimed at calming our anxieties by describing what they’re doing to keep employees and us safe:
  • Enterprise: “Aligned with guidance from health authorities, we are implementing additional measures to clean and disinfect our locations and vehicles.”
  • Chase: “We've ensured that our branches, including ATM screens and keypads, are cleaned daily with EPA-approved disinfectants and we have hand sanitizer available in our branches.”
  • Best Buy: “The first [goal] is to protect our customers, employees and their families. The second is to do the best we can to serve the millions of Americans who are looking to us for increasingly vital technology tools to stay connected, as well as household necessities.”
  • Office Depot: “We’ve reinforced existing Office Depot policy encouraging employees who exhibit flu-like symptoms to stay home and consult with a medical professional.”
 
Finally, a few firms have ascended to the highest level of corporate health and community consciousness by going above and beyond what might be expected even for “Mindful Marketing,” for instance:
  • U-Haul is offering 30 days of free self-storage to students who need to move due to coronavirus.
  • Highmark Blue Shield has waived all copays, deductibles, and coinsurance for 90 days for those with telemedicine access “because the safest place for you if you’re sick is at home.”
  • Wiley is providing instructors and students who do not have an online learning solution free access to its courseware for the remaining spring 2020 term.
  • Martin’s Famous Pastry Shoppe has increased production of its popular potato rolls and other bread products in order to keep stores stocked during periods of intense demand.
 
To unpack the last example, there are few things as anxiety-inducing as walking into a grocery store during a crisis, only to find shelves empty of bread, which may be the most staple of foods for Americans.  However, people living in areas where Martin’s distributes can still find its products on their store’s shelves every day, even on Sunday.  Scott Heintzelman, vice president of finance and administration for Martin’s explains:
 
“Almost no commercial bakeries deliver [Sunday]. However, our awesome bakery and transport teams have been working around the clock to make and move truckloads of extra product to our warehouses.  The result is on Sunday morning, many of our amazing distributors and sales teams are out making deliveries to help feed people.  I am truly humbled by our team members.”
 
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As a writer, I should disclose that Martin’s is a faithful supporter of Messiah College, where I teach.  Also, Heintzelman, who I call “Scott,” was my college roommate, the best man in my wedding, and still a best friend.
 
During this moment of nearly unprecedented uncertainty, many people probably feel like Martin’s and other firms that have gone above and beyond to meet important, life-sustaining needs are their best friends.  It’s times like these when we really need friends, and when we can be especially grateful for organizations that practice “Mindful Marketing.”


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Marketing Giving

11/29/2019

33 Comments

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

Black Friday, Small Business Saturday, Cyber Monday . . . the biggest shopping season of the year can excite even the most apathetic shopper.  Some, however, would have us believe that we should do something different with our money, instead of buying things for ourselves or others.  But, isn’t shopping a key to holiday happiness?
 
Over the last few years, you’ve probably heard of an initiative that seems contrary to the capitalism often associated with holiday shopping.  In contrast to the plethora of promotion persuading us to buy more, “GivingTuesday” boldly encourages people to give to others.  The day targeted for philanthropy is typically the Tuesday after Thanksgiving; this year it’s December 3.
 
GivingTuesday’s website describes the initiative, which began in 2012, as “a global generosity movement” that “inspires hundreds of millions of people to give, collaborate, and celebrate generosity,” “unleashing the power of people and organizations to transform their communities and the world.”
 
Those are admirable and far-reaching claims, but is it really possible to market giving?
 
For many people, marketing is inextricably linked to buying and selling products, so much so that ‘marketing giving’ seems like an oxymoron, along the lines of jumbo shrimp and civil war.  If people give their money, they’re not spending it, which may seem antithetical to marketing.
 
However, marketing concepts can be applied to virtually any endeavor.  Besides marketing physical goods, like food, and intangible services, like haircuts, organizations and individuals can market ideas like “Don’t drink and drive” and mindsets like “Do well in school.”
 
So, there’s no reason that giving can’t be marketed, but effective marketing must include more than just a simple message like “give!”  Most of us have seen similar appeals in social media and elsewhere.  GivingTuesday, however, has created what many would consider to be a full-fledged marketing plan, incorporating each of the iconic Four Ps:

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

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

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

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

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Those are strong inputs, but what matters ultimately for marketing are outcomes, and
at least one person believes GivingTuesday isn’t effective for many organizations.
 
In an article in the Fundraising Authority, Joe Garecht praises GivingTuesday as “a noble effort,” yet he discourages nonprofits from participating in the initiative, particularly small and mid-sized ones.  His rationale includes reasons such as an overabundance of organizations asking for gifts at the same time and the encouragement of one-time “spot giving” versus building long-term donor relationships.
 
Garecht raises some valid concerns, particularly related to potential return on investment; however, if his two arguments mentioned above were applied to organizations marketing traditional products, companies wouldn’t participate in the holiday shopping season because: 1) their promotions would be lost among those of other companies advertising at the same time, and 2) first-time transactions wouldn’t lead to future purchases.  Clearly that rationale doesn’t apply to most for-profit firms during the holidays, and it probably isn’t relevant for many nonprofits either.
 
Instead, GivingTuesday appears to be an initiative that keeps gaining momentum.  Among nonprofit participants  who seem to find the program productive are World Vision, the American Red Cross, and St. Jude.  All together, GivingTuesday saw 3.6 million gifts given in 2018, including $400 million online.  In the U.S. alone, GivingTuesday has raised over $1 billion since 2012.
 
In his 1789 sermon titled “The Use of Money,” English cleric and theologian John Wesley famously urged listeners to “earn all you can, save all you can, and give all you can.”  In a 21st century sense, Wesley was ‘marketing’ giving.  Marketers today have many more tools at their disposal, yet any tactics that encourage organizations or individuals to give of their money or time to help others in need can be considered “Mindful Marketing.”


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Pay to Pray

11/16/2019

11 Comments

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

“The best things in life are free,” for instance, an evening with family, a walk on a sunny morning, a conversation with a friend.  For many people, going to God is another 'free'dom they cherish.  Why, then, does one religion appear to be putting a paywall between its people and God?
 
The Catholic Church recently surprised many of its parishioners and others by introducing an eRosary, “a wearable device connected to a mobile app that's activated by making the sign of the cross.”  While paying homage to traditional rosary bracelets, the new product’s black agate and hematite beads, paired with a “carefully finished” gunmetal-color cross, make the modern version appear very ‘apple-esque.’
 
Many have heard of people praying with rosary beads, but if you’re not familiar with Catholicism, here’s a quick primer.  The Holy Rosary, or Dominican Rosary, is a very important prayer for Catholics that is arranged in sets of prayers called decades.  Holding a rosary bracelet or chain in one’s hand and feeling each individual bead helps followers recite the prayer’s Hail Marys and other specific petitions in the proper sequence.
 
The Rosary is a central part of many Catholics’ spiritual lives, as praying it guards against trials and temptations and serves as a buffer against all types of evil.  Pope John Paul II declared that the Rosary was “among the finest and most praiseworthy traditions of Christian contemplation.”
 
The Vatican’s eRosary offers much more functionality than just feeling beads with one’s fingers.  Working with an app, the digitally-designed bracelet lets users choose the specific rosary they would like to recite (e.g., standard or thematic), then charts the devotee’s prayer progress and tracks completion with “the guide of special audiovisual contents.”
 
The Vatican suggests the device serves as “a meeting point between technology and spirituality” that “unites daily life and prayer,” helps one “pray deeply,” and unites people around the challenges that confront humanity and the mission of the Church.
 

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The eRosary also touches the physical realm, acting as a “personal health assistant” by recording fitness data and providing wellness information.  In doing so, the device encourages people to live healthier lives.
 
However, wearable technology can’t just do things; it also needs to look good on those wearing it.  Fortunately, the eRosary marries form and function.  The Pope’s Worldwide Prayer Network suggests that the device lies where “simplicity meets elegance” thanks to its stylish black and silver colors and its “simple lines and curves.”
 
So, why is the Vatican marketing a ‘faith-based fashionable Fitbit’?  Engadget suggests the Catholic Church is “hoping to attract tech-savvy youngsters.” It’s true that Gen Zs increasing expect digitally connected experiences.  Also, any organization that wants to stay in existence must remain relevant to the next generation of ‘consumers.’    

Still, we’re talking about the Church and faith.  Doesn’t technology distract from meaningful spiritual experiences?  Or, perhaps even more important, is it right for the Catholic Church, which has about 1.28 billion adherents, many in countries with low per capita income, to sell a product that costs 99€ (about $110) on Amazon?
 
First, it’s helpful to remember that technology influencing faith isn’t just a recent phenomenon; it’s interface dates back as least many hundreds of years.  In 1452, Johannes Gutenberg printed 180 copies of the now famous Gutenberg Bible. In many ways, the use of moveable type technology to mass print the Bible and other religious books democratized Christianity and formed the foundation for a revolution in the Church.

Over the years, other new technologies also have impacted people’s spiritual lives in, often in positive ways.  For instance, radio and television have allowed people to share religious information with others thousands of miles away.  Advances in construction have enabled the building of larger and more functional places of worship.  And, automobiles are what many people use to travel to those worship centers.
 
However, when one arrives at a church, synagogue, or mosque, there’s usually not a fee at the door.  The notion is that religion should be free to all.  ‘Growing closer to God shouldn’t be based on one’s ability to pay.’
 
Fortunately, there’s nothing to stop even the poorest person from offering prayers of petition and gratitude to the Divine.  And, if people are mobile, they might walk or share a ride with other believers to a place of worship where they can venerate God and learn together for free.
 
Some religions also make copies of their key texts available to others for free.  For instance, Wycliffe Bible Translators, a nonprofit mission organization, has translated the Bible into hundreds of different languages since its founding in 1942.  Likewise, the Gideons International gives away thousands of Bibles a year in most of the world’s countries.
 
Then, how do eRosaries, iPhones with Bible apps, and other faith-related merchandise fit with the notion that religion should be free?  All of the items that cost money to aid reverence are optional.  They may be helpful to those who can afford them, but they’re not essential for a relationship with God.
 
A useful metaphor might be a social medium like LinkedIn.  Some people who have needs for more advanced features pay for LinkedIn Premium.  In contrast, for many years I’ve used the free version of the platform, which meets all of my professional networking needs and more.  Just as I’m not precluded from enjoying LinkedIn because I don’t pay, people who don’t buy eRosaries or similar religious products are not prevented from relationships with God.
 
It is possible to live without digital devices.  Also, sometimes when we have them, we let them get in the way of fruitful living.  Used properly, however, it’s not hard to see how technology can benefit religious practice, much as it enhances other areas of life.  It’s great to be able to share prayer requests via email, send text messages of encouragement to others, study the Bible on an iPad, and listen to podcasts of sermons online.
 
Because I’m not Catholic, I’ve never experienced confirmation, gone to confession, or prayed the Rosary.  It appears, though, that an eRosary can help those participating in one of Catholicism’s central religious practices.  For people of faith, digital devices that enrich their spiritual lives and bring them into closer relationship with God and others, seem to be “Mindful Marketing.”


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Is it Too Risky for Kids to Rideshare Alone?

7/12/2019

1 Comment

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

Among a parent’s worst nightmares is this:  Your child climbs into a car alone with a stranger.  Just the thought of that scenario strikes fear into the heart of any mother or father.  So, why would a company create a business model based on that situation?
                                                                                                  
A few months ago, ride-sharing icons Uber and Lyft grabbed headlines and goodwill by saying that they do not allow those under age 18 to use their services.  Like others who heard the news, I applauded it: “That’s great—two for-profit firms forgoing income in order to protect young people.”
 
At the same time, the news made me wonder if there are other ride-sharing companies that don’t hold the same convictions and, instead, are willing to put kids into cars with whomever might be driving them.  That’s when I came across a company that doesn’t just transport minors occasionally, it specializes in chauffeuring them.
 
In 2014, three southern California moms who were struggling “to get their busy kids to and from school and all their activities,” founded HopSkipDrive, a transportation service specifically designed for those age six and up.  Just five years later, the firm has a staff of 50+ people, a presence in large metropolitan markets like Los Angeles and Washington D.C., and contracts with over 150 school districts.
 
How did a small, unconventional startup not only grow so quickly but even more importantly, persuade so many parents and others to trust the company with their most “precious cargo”? HopSkipDrive has achieved this rapid success through a combination of clear mission-focus and strict attention to detail.
 
Yes, busy parents who need to get their children to afterschool practices, lessons, etc., want to be sure that their kids arrive on-time, but their main concern, as mentioned above, is safety.  If someone else is driving, who is the person who will be alone with their child in a car?  Of course, the individual should be a skilled driver, but more importantly, can he/she be trusted?
 
Unfortunately, even with ridesharing companies that vet their drivers, you can’t always be sure ‘who you’re getting.’  Many of us have heard of rare but horrific incidents in which unstable drivers have harassed, raped, and even killed their passengers.
 
Nothing bad has happened to me while ridesharing, but my own recent  experience caused me to question driver-screening.  Our family had been staying at a resort for a few days and needed to get to a certain rental car center in order to continue our vacation.  Using the Uber app, I requested a ride and watched on my phone for several minutes as the driver made his way toward the resort.  Then, when he was only a minute away, he dropped the ride! 
 
I can’t be sure what happened, but here’s my guess:  A minute from where I was waiting, the resort had a gate where those entering the grounds via private vehicle needed to stop and show identification, i.e., a driver’s license.  It may not be the reason he bailed at the last moment, but it’s sobering to think that the person who was going to give me a ride either didn’t have a valid driver’s license or wasn’t responsible enough to bring it with him.
 
It’s one thing to imagine a questionable driver chauffeuring an adult, it’s another thing to think of a young child confined in that vehicle.  How could any company eliminate the risk inherent in such a situation?
 
When I first heard of HopSkipDrive, I was skeptical, not about demand for the service, but about the firm’s ability to ensure children’s safety in such an offering.  As a working dad who helped drive his busy kids for years to/from school and practices and who commiserated with parents in similar predicaments, I knew there was a need.  I wasn’t sure, though, how a company might manage the business model in a way that would give parents the confidence to say, “I’ll let my daughter or son ride with you.”
 
In light of such significant reservations, the main way HopSkipDrive maintains the trust of thousands of parents and schools each day is by painstakingly picking its drivers.  In fact, the company uses an exhaustive 15-point certification process that requires the following of each applicant:
  1. Worked with children and has at least 5 years of caregiving experience
  2. No criminal record
  3. Fingerprinted
  4. No sex offender record
  5. Valid driver’s license
  6. Good driving record
  7. Age 23 or older
  8. Owns or leases a vehicle not more than 10 years old seating 4-7 passengers
  9. Passes a 19-point vehicle inspection by a certified mechanic
  10. In-person meeting
  11. Completes in-person driver orientation
  12. Has personal auto insurance coverage
  13. Adopts the HopSkipRules
  14. Adopts our zero tolerance policy for smoking, drugs, and alcohol while driving
  15. Adopts the zero tolerance policy for illegal mobile device usage while a rider is in the car

Because of the meticulous selection process and the exceptionally kind and positive rapport those hired are expected to have with their passengers, HopSkipDrive doesn’t just call its personnel “drivers” but “CareDrivers.”
 
Special care and concern for safety begins as soon as CareDrivers arrive for a pickup.  They wear bright orange HopSkipDrive t-shirts and verify their identity by confirming their passenger’s code word and birthday.  Customers also can review CareDrivers’ profiles before pickup in order to know “who they are, what they look like, and the kind of car they drive.”
 
Throughout the ride, the company continues to leverage technology in order to ensure security.  Dedicated HopSkipDrive staff members monitor each ride remotely through its duration, and parents can do the same.  They also can receive alerts when their child has been picked up and dropped off.
 
As good as all of these systems are for onboarding employees and overseeing operations, they probably wouldn’t be effective if the company didn’t do something else very well:  Embrace a compelling mission.
 
HopSkipDrive doesn’t just see itself as a provider of transportation service, i.e., getting kids from point A to point B, or even as an alleviator of parental stress, which it certainly does.  Instead, this front-and-center statement on the company’s homepage communicates its mission:  “Success starts by showing up.  We help get them there.”
 
HopSkipDrive takes kids to school, piano lessons, basketball practice, and countless other developmental activities that are vital for children’s intellectual, social, and emotional growth.  Those formative in-person experiences help them thrive now and contribute to their success in life for years to come.  However, children can’t enjoy those activities unless someone ‘gets them there.’
 
In an interview with Yahoo Finance, HopSkipDrive’s CEO Joanna McFarland affirms that mission, saying “Oftentimes mobility is a huge barrier simply to access to education, and that’s something we’re helping to solve.”
 
It’s also confirming that employees appear to embrace the same purpose, such as one CareDriver who says “I feel really empowered being part of the greater good, getting kids safely where they need to go.”
 
As you might expect from the exacting service standards described above, “the greater good” does come at a higher cost.  McFarland acknowledges that HopSkipDrive is a “premium service” that has “much different economics” than those of Uber and Lyft.  Rides reportedly start at about $20.
 
However, the rates are comparable to what one would pay a caregiver.  McFarland suggests the same in saying, “We think about [HopSkipDrive] much more as a substitute to a babysitter that drives than a comparison to an Uber and Lyft.”
 
The bottom-line is whether a substantial number of consumers (families and schools) find value in HopSkipDrive’s services.  Apparently they do, as evidenced by the facts that the company is in seven markets and growing rapidly, has served over 6,000 schools, and has transported more than 650,000 children.
 
The most important validation, however, comes directly from those children—the actual riders—such as one young passenger who says, “They know my passcode, they talk to me, they make me feel very welcome.  I’m never like, nervous to get in.  In fact, I usually look forward to it because it’s a lot of fun.”  Her experience is the best evidence that HopSkipDrive’s ridesharing for kids is “Mindful Marketing.” 


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Pizza Protection

6/29/2019

7 Comments

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

Unfortunately, there are accidents in life.  Cars collide.  Homes flood.  People break bones.  Insurance lessens the impact of such events, but what about damage to pizza?  Well, Domino’s now offers protection for even that unexpected occurrence.
 
The nation’s pizza deliver leader is very good at getting its products from its stores to our doors, but it seems less confident about our ability to do the same.  For that reason, the company recently introduced “carryout insurance.”
 
Domino’s now promises: “If damage occurs to your carryout order after you leave the store, just bring it back and we’ll remake it for free.”  The firm lists a few reasonable provisos:  The order must be uneaten, with nothing missing, in its original packaging, and accompanied by a receipt. The firm also offers examples of accidents that qualify for a claim like slipping and falling, "my kid sat on it," and "a stranger sneezed on it."  In other words, it seems like the company will cover just about any claim consumers make.
 
How much does the pizza insurance cost?  According to Domino’s it’s “free for all customers.”  Some may be thinking, “But, there are no free [pizza] lunches,”—customers must be paying for the insurance indirectly.  That may be true; however, Domino’s doesn’t appear to have increased its prices.  The company needs to be careful that the costs of its pies stay in-line with those of Papa John’s and Pizza Hut in the highly competitive pizza market.
 
It’s also likely that pizza insurance claims haven’t taken a significant bite out of the firm’s bottom-line, which raises a key question, “Do people really need pizza insurance?”
 
Let’s say that someone spends $30 on a pizza pickup order, then drops it while taking it out of their car.  The accident may ruin their day, but it probably wouldn’t pose any significant financial hardship.  People who can afford to spend $30 on takeout food generally can afford to lose $30 worth of takeout food.
 
Contrast that loss to a serious car accident, a home fire, or the death of a family’s primary breadwinner.  Those events could prove financially devastating, if not insured.
 
Such scenarios remind me of advice my dad once gave me: Insure the big things that could break you; don’t bother to insure littler things like electronics and lawn mowers.  Even though they may be somewhat costly to replace, it’s worth the risk because replacement wouldn’t be financial catastrophic.  I also liked the line my Dad said to salespeople who tried to pressure him to insure small items: “All your talk of insurance is making me wonder about the quality of this product and whether I should be buying it.”
 
My father’s insurance advice is similar to that of Todd Erkis, a professor of finance and risk management at Saint Joseph’s University, who says that “Insurance is key to protecting yourself against financial ruin.”  Consistent with that view, Erkis suggests that new college graduates should buy just four types of insurance in order to hedge against possible financial hardship: health, long-term disability, renter’s, and car insurance.
 
Writing for Mint Life, Nicholas Pell adds just two other types of insurance to buy: home owner’s, which is analogous to renter’s, and life insurance.  New college graduates often don’t have dependents and, therefore, don’t really need life insurance, but those who do should use insurance to protect their survivors from poverty.
 
All this to say, people don’t need pizza insurance, even if it’s “free.”  So, what is Domino’s doing?  In the very crowded market for restaurant pizza, Domino’s is probably trying to gain a little bit of perceptual separation from its closest competitors.  Papa John’s and Pizza Hut don’t offer carryout insurance, which makes Domino’s distinct.
 
However, while Domino’s may have created a difference, the insurance doesn't deliver any real competitive advantage.  Again, people don’t need the insurance, so it probably won’t sway many purchase decisions.  Furthermore, who ever thinks they might drop their pizzas?  In sum, the insurance just doesn’t offer any measurable improvement to Domino ’s value proposition.
 
Still, Domino’s has savvy marketers.  The company wouldn’t be so successful if it didn’t.  The firm’s marketing team probably intends carryout insurance as more of a promotional strategy than a product enhancement.  In other words, it doesn’t matter if the insurance causes people to buy more pizzas, as long as publicity and word-of-mouth about the unusual offering helps keep Domino’s top-of-mind.  That added exposure, in turn, should lead to more pizza purchases.
 
But would the firm really go to such lengths just for promotion?  It's done so before.
 
Prior to carryout insurance, the company’s “Paving for Pizza” campaign represented a similar strategy.  Domino’s promised to patch potholes around the country so the road hazards wouldn’t wreck pizza deliveries.  Of course, a company as far-flung as Domino’s could never repair enough roads to actually make a significant delivery difference in most of its locations.  However, the notion of a pizza company patching roads was so novel it captured press attention, as well as created some community goodwill.  In short, the program seemed to be a very effective, albeit unconventional, means of pizza promotion.
 
Will carryout insurance, work as well for Domino’s?  I doubt it.  Despite the fact that I’m writing about it now and you’re reading about it, I don’t believe the company’s newest ploy will capture the interest or hearts of people like the paving program did.
 
There’s nothing wrong with Domino’s promising extra protection for pizzas; in fact, it’s a nice extra benefit, if anyone ever needs it.  However, that lack of real consumer value, teamed with minimal promotional impact, places carryout insurance in the box of “Simple-Minded Marketing.”


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