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Dirty Diesel was No Accident

9/26/2015

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by David Hagenbuch, Founder of Mindful Marketing
​“Everyone makes mistakes.”  “To err is human . . .” (Alexander Pope).  “All have sinned . . .” (Romans 3:23, NIV Bible).

It’s not surprising that people mess up. It’s also no wonder that organizations misstep; after all, they’re collections of people. What is amazing is when a group of very smart people puts their heads together and plans a misdeed, case in point: Volkswagen.

By now you’ve heard of the German automaker’s emissions scandal. In a brief, VW “cheated diesel emissions tests in the U.S. for seven years.”  More specifically, the company programmed the software in many of its diesel vehicles to recognize when they were undergoing an emissions test and to temporarily reduce emissions in order to trick the testing instruments.

Why did Volkswagen cheat? As you might guess, cost was a consideration. The company chose to save money by not installing in its vehicles what most manufacturers use to reduce auto emissions: “a urea-injection system, often called AdBlue, which uses a chemical catalyst to make sure unburnt fuel doesn’t get into the exhaust.”  Without AdBlue or similar technology, VW vehicles would pollute more than EPA emission guidelines would allow.  So, the company decided it would be more economical to trick the testing equipment than to legitimately lower emissions.

How a small lab in West Virginia uncovered the scheme of one of the world’s largest automaker’s is another fascinating part of the story, which I’ll not elaborate here. The end result is that about 11 million vehicles appear to have been affected, which has caused VW’s stock price to plunge and has led to the resignation of the corporation’s CEO, Marin Winterkorn.

Although huge, the number VW cars involved is still dwarfed by Ford’s “Failure-to-Park” recall of 1980, in which the American automaker had to foot the bill for over 20 million vehicles whose transmissions inadvertently shifted from park to reverse. This defect cost Ford around $1.7 billion, but more significantly, it led to about 6,000 accidents, 1,700 injuries and 98 deaths.

In the case of these auto recalls, some mistakes appear bigger than others because of the size of the human toll and other damages. VW’s emissions scam caused no direct harm to people or property; still, the German automakers’ emission scandal will live in infamy for another reason—its malevolence.

Most other auto recall cases have been the result of negligence, i.e., people overlooking critical details because they failed to perform their work as carefully as they should. The ensuing consequences were very negative, but they were largely accidental. Even if there were attempts later to cover up the carelessness, the original error was unplanned.

VW’s case appears to be the exact opposite: employees weren’t careless; rather, they were precise in their intent to implement a defeat device that would operate outside the limits of the law. Volkswagen’s actions demonstrated criminal forethought and deliberateness that constitutes malice: “the intention or desire to do evil.” Or, to use a morbid metaphor of killing, while other car companies’ recall-related actions might represent unintended manslaughter, VW’s would represent premeditated murder.

Volkswagen created considerable stakeholder value via the 11 million or so supposedly clean diesel vehicles it sold over seven years in the United States. Unfortunately, that value is rapidly eroding in the face of the company’s compromise of important societal values such as respect for the environment and fairness to consumers and competitors. The lowest reading on the Mindful Meter is “Mindless,” but VW’s actions suggest that perhaps there should be one level lower: “Malicious Marketing.”
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Dignity for the Deceased?

9/19/2015

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by David Hagenbuch, Founder of Mindful Marketing
How would you like to be remembered after your life on earth is finished?  Most people probably would like accurate accounts of their deeds and demeanor, and they’d hope that those recollections would be favorable.  Few people would want to be mocked in their mortality. 

Unfortunately one dearly departed person has recently become the object of derision: Harland David Sanders.  If you don’t recognize the name, it’s because most of us know him as Colonel Sanders, the iconic founder of and spokesperson for Kentucky Fried Chicken (KFC).

Sanders has been roasted in a series of television commercials that have depicted him in several shades of negative light.  In the first set of ads actor Darrell Hammond, of Saturday Night Life (SNL) fame, portrayed Sanders as a giddy simpleton who made silly small talk while shamelessly peddling his chicken products.

In a second series of TV ads, another SNL alum, Norm MacDonald, has replaced Hammond, pretending that he is the “real Colonel Sanders” and that Hammond was an imposter.  MacDonald’s caricature of the Colonel is somewhat more dignified than Hammond’s, which isn't saying much.  Although McDonald doesn’t come across as such a bumbling fool, the sense of the ads is still satirical.  They make fun of Sanders more subtly, for instance, through odd props like a big figurine of himself on his own desk, a calculator that scrolls paper incessantly onto the floor, and a giant chicken bucket from which the Colonel emerges.  McDonald also lampoons Sanders by reciting ridiculous lines (e.g., “after a long day of spontaneous road trips and breakdancing, well, you get hungry”) and by appearing in his long underwear in front of all.

What kind of portrayal does the Colonel deserve?  To answer this question it’s helpful to understand Harland Sander’s history.  Sanders was born into a poor family in Henryville, IN, in 1890.  Hardworking and entrepreneurial, Sanders opened a Shell service station in 1930, at which he started to sell food, including some  tasty fried chicken.

The service station evolved into a restaurant, but in 1955 a new highway bypassed the restaurant, causing the 65-year-old Sanders to close shop and take to franchising his secret-recipe chicken.  By 1963, 600 restaurants were serving “Kentucky Fried Chicken.”  At the age of 74 in 1964, Sanders decided he needed to dial-back his workload, so he sold the business for $2 million, but he continued to serve as the spokesperson and visual identity of the company, which grew to be worth $285 million in 1971.  Sanders passed away in Louisville, Kentucky, in December 1980.

So, Sanders was a driven and successful businessman, but what kind of a person was he?  He was a perfectionist who always wanted his chicken prepared right and who had little tolerance for mediocrity, which elicited his sometimes volatile temper.  At the same time, he also must have harbored good people-skills in order to win-over so many franchisees and to serve as the trusted face of one of America’s most prosperous fast food brands.  In fact, he is said to have had a soft side that included a heart for children.  Above all and in contrast to the current commercials, Sanders was sharp and creative, clearly not a bumbling idiot.

Former Kentucky Governor John Y. Brown Jr., who opened 3,500 KFC stores in seven years after buying the secret recipe in 1964, takes issue with the caricature of the Colonel.  In a phone interview with USA Today, Brown said, “I don't think you make a gimmick out of somebody . . . they are making fun of the Colonel.  It is such a fascinating story, I hate to see them tarnish it.”

So, who’s ruining the reputation of Harland Sanders?  Ironically it’s KFC—the company that retains the promotional rights to the Colonel and that stands to benefit the most from the preservation of his brand.  A review of the KFC website, however, reveals a crazy combination of images consisting of both actual photos of Sanders and outtakes from the outrageous ads.

For instance, in one of the site’s slideshows, a stately portrait of Sanders with the quote “One of my lifetime philosophies is you get back what you give,” is followed by a picture of McDonald in his long underwear.  It will be interesting to see what KFC “gets back” from lampooning its legendary founder.  The new ads are unusual enough to capture attention and retain interest, but it’s doubtful whether the buzz they create will translate into any significant increase in sales, or create meaningful stakeholder value.

Meanwhile, KFC and its parent company, Yum brands, have sacrificed an important societal value by disrespecting the very man who made the franchise possible.  Sanders was not perfect; yet, he should be remembered with dignity.  Neither he nor other deceased persons deserve to be the objects of “Mindless Marketing” tactics.


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Is Ad Blocking Bad?

9/12/2015

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by David Hagenbuch, Founder of Mindful Marketing
Many companies do newsworthy things each day, but nobody nabs headlines like Apple. At this past week’s much-anticipated Apple event, CEO Tim Cook and other execs unveiled the iconic brand’s latest product plans, which included a controversial one: ad blocking.

The firm’s soon-to-be released iOS 9 software “will allow owners of Apple’s newer mobile devices to download Web browser extensions that can block advertising from being shown while they browse the Web.”  The extensions can be set to eliminate all ads, but by default they will only block ones that are judged to be “annoying.”

How is such ad-blocking possible?  The software works “by detecting and stripping out scripts in the code of web pages meant to make browsers pull content from ad networks' computer servers.”  Apple won’t produce the browser extensions itself; rather, consumers will be able to download them from the App Store, just as they do other third-party products.

In order to pacify the media organizations that are justifiably distressed by the ad-blocking announcement, Apple also will include with iOS 9 an app called News, which “will allow publishers to bypass blockers to serve their own ads or let Apple sell ads and share the revenue.”

Internet ads are one of those things that people tend to detest.  Certainly the content and methods of some digital ads deserve disdain, but is it right to block all internet ads?  For a more circumspect perspective on the issue, it might be helpful to consider another example.

For instance, what if there were an app that could help people avoid paying restaurant bills?  While eating, you activate the app, which identifies your table number, associates it with your order, hacks the restaurants’ computer system, and adjusts your entrée price to zero so it appears that your meal has been comped!

Unfortunately, there probably would be people who would purchase such an app.  Most consumers, however, would recognize the inherent immorality—it’s not fair to the restaurant to eat a meal and not pay for it.  Unless businesses intentionally offer us things for free, it’s only right to compensate them for what we consume.

On-line media is also something we consume, often at no financial cost to us.  We can scan CNN headlines, read New York Times editorials, and watch YouTube videos for free.  All of this media content, however, costs something to produce, which means someone must pay for.  Advertisers are those underwriters.  Firms fund online media that’s not their own because we will see and possibly respond to their ads.

Granted, some ads seem irrelevant to us and others are annoying, but it isn’t fair for consumers of on-line media to cut advertisers out of the equation when they’re the ones who make our media consumption possible.  To use software to block their ads is analogous to using the hypothetical restaurant app to dine and dash.

People need to pay for what they consume.  Our part in paying for on-line media is to allow digital ads to be directed to our laptops, tablets, and smartphones.  We don’t have to read or respond to the advertising, but we do need to allow it to appear.

However, there’s even more at stake than the potential inequity of us failing to uphold our end of the media arrangement.  Ad blocking also can precipitate some significant consequences.  In the absence of an incentive for advertisers to sponsor them, certain on-line media could fold, much like a restaurant would close if its patrons didn’t pay.

There’s little question that the Internet’s advertising clutter needs to be cleaned up.  People tend to avoid web pages where ads are especially intrusive, which defeats the purpose of the advertising.  At the same time, it’s unfair to block the output of advertisers—the very ones who finance the media and enable our on-line activities.  In the long-run, ad-blocking software will lead to some very adverse outcomes; however, in the present it seems to create value for the firms that produce it and for the people that use it, which makes ad-blocking a prime example of “Single-Minded Marketing.”



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Deals "Just for You"

9/5/2015

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by David Hagenbuch, Founder of Mindful Marketing
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I probably shouldn’t tell you this, but many companies treat me better than they do you.  How do I know?  Because they often send me special offers that are “just for you.”

For example, here are the subject lines of some emails I recently received:

  • Coupons Just for You & 130+ Bonus Buys!
  • David, exclusive offer to earn more miles
  • 2 COUPONS: $20 off and $10 off (just for you!)
  • You're on the list - up to $100 off! Just for you
  • We're serious, you've been picked to get Cyber WEEK Tuesday savings!
  • A special surprise is inside, just for you!
  • You're on our special list! Extra 5% - 15% off, just for you
  • We picked you! You seriously deserve this — Enjoy these amazing discounts
  • Seriously, you made the list! Because you're awesome

Why am I special?  I’m not sure, but apparently these firms have seen in me the same thing that my mother has long recognized.

You may be wondering whether it’s okay to treat some shoppers differently.  Of course, it’s wrong to discriminate against consumers or others based on traits like gender, age, and race.  In a commercial context, however, it is fair to follow quid pro quo: to give something in exchange for something.  Companies should reward their best customers because their best customers offer more business to them.  It’s right to repay such shoppers with special discounts, bonus points, and other incentives in order to thank them for their loyalty and encourage their continued commitment.

However, here’s what’s confounding:  I'm really not a loyal consumer for any of the organizations represented by the emails above.  I buy very infrequently from most of them, and for some it’s been a year or more since my last purchase.  So, then, why are they singling me out as special?

You probably suspected that I’m really not a special consumer to any of these companies, which means I’m probably not the only one getting these “just for you” promotional offers.  You likely receive them too.  If that’s the case, these companies’ email tactics are depending on deception.

Why would some firms intentionally misrepresent the exclusivity of their offerings?  They know that as consumers, most of us are constrained by scarce resources, i.e., we have limited means—a finite amount of money.  Consequently we try to conserve currency when possible.  A special offer sent “just” to us, therefore, suggests not only that can we attain a certain level of benefits at a lower than usual cost but also that the unique opportunity is rare with respect to the experience of the general populace.

In addition, many people are motivated to prevail over their peers, i.e., to attain something that none or few of their friends have.  In short, ostensibly personal promotions tap deviously into both our basic economic intuition and into our egos in order to encourage action that we otherwise might not take.

Of course, deception is not a societal value or any behavior we want to encourage.  The other question, then, is whether feigning exclusivity is effective—Do people respond favorably to individualized incentives?  One study suggests that they do . . . sometimes.  Based on my own experience, I suspect that people increasingly do not.  The more of these purportedly “exclusive offers” I receive, the more I ignore them.  Furthermore, the more I consider the deception underlying the deals, the more their authors alienate me.

So, if my experience and attitude are typical of most consumers, these deceptive discounts represent another instance of “Mindless Marketing.”




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    Mindful Marketing    & author of Honorable Influence

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