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February 2008

The Decline of Sharper Image and Lillian Vernon

For those who missed it, take a few minutes to read Denny Hatch's  column this week on the bankruptcy filings by Sharper Image and Lillian Vernon.

Denny makes two points that were not followed by either company:

1. Violation of the Core Principles for "Why People Buy":

People buy for three reasons:

* Price. Wal-Mart has become the largest corporation in the world (equal to the GDP of Poland) because it is seldom—if ever—undersold.

* Service. If an organization is a joy to do business with—helpful staff, ironclad guarantee, easy return policy and great customer satisfaction—people will pay a little more to do business there.

* Exclusivity. If a buyer really wants a specific item—Glenlivet Single Malt, Hermes, Rolls-Royce, Rolex—the guy who stocks it will get the order.

2. The second reason is that both cmpanies failed to adhere to the words of the late Joan Throckmorton

"As direct marketers, we’re not here primarily to make a sale; we’re here to get a customer. Sales are important, of course. (Where would marketers be without them?) But the name of the game is repeat sales rather than one-shots. And to have that, you need a customer."

To quote the end of the Denny's post:

"Richard Thalheimer and Lillian Vernon started out as kids with no schooling in direct marketing. Both tested single products using space ads, and both had huge successes with their first shots.

Both started by selling tchotchkes—amusing little stand-alone impulse items. Both founded businesses based on finding more tchotchkes and selling them to their original demographic group.

In the end, Lillian Vernon had 3 million buyers whose average order was $56, while the average sale to the 293,000 Sharper Image catalog buyers was $185."

They both failed to generate customers or in the words of Seth Godin in his column today points out via a quote from Gavin Potter,

“The 20th century was about sorting out supply, the 21st is going to be about sorting out demand.”

I guess that makes it 3 strikes and they are out.

The Barak Obama Movement vs. the History of Hillary Clinton

If you want to understand the difference between a vote for Barak Obama and Hillary Clinton you just have to look at the welcome pages of their website.

Hillary Clinton asks visitors to "make history" while Obama's site opines that you should join the movement.  The choice of language is interesting.  Obama invites you to become part of something that will be bigger with you than without you.  Hillary asks that you support her so that she can achieve her individual goals and in turn work on your goals.  Hillary keeps you at arms length while Obama invites you in.

Hillary's site today is all about raising money as is Obamas'.  The difference is that Obama wants you to be part of the 1,000,000 people that are in the movement he leads/represents.  Hillary wants you to help close the funding gap between herself and her opponent.

In marketing we continue to see the power of language in establishing a value proposition for a brand or in this case a candidate.  In the case of , it's the difference between saying "come use us because we print business documents with the highest quality materials overnight vs. saying we are reinventing the process for how business documents can used by the enterprise.  It's two different companies.  And in the case of Hillary and Obama, it's clear that we have two different candidates (by the way, I happen to like both).

Who is the Brand Leader - Barak Obama or Hillary Clinton

Share leadership doesn't always equate to perceptual leadership.  The recent democratic primary is a great example and explains why Hillary Clinton's lead is fleeting.

Brands rarely change position.  I suspect that HIllary Clinton was never the brand leader.   For many she was the best choice in a field with little choice.  The problem she  has is that for  Barak Obama's followers believe he is a true leader.   You can see it in the way they donate money to the campaign and in the numbers he attracts to his speaking engagements.  While I like Hillary, there is little she can do to unseat Obama beyond hoping that Obama slips (the minor speech plagiarism claims will not have a major effect) or she discovers her voice in time to assert leadership in the remaining states.

My Bank Thinks I'm an Idiot

Sometimes I get the feeling that the financial institutions I do business with think I'm an idiot.  Not all of them, just the ones that feel the need to communicate with me everyday.

Memo to Chase bank.  Stop asking me to borrow more money and go into greater debt.  Taking out a home equity loan is not a good thing.  Every finance class I have ever taken starts with the line....debt is bad and equity is good.  Why do they keep on asking me to take on more debt instead of suggesting ways to grow my equity.  Asking once in a while is fine.  Asking every time I enter a branch, receive a weekly telemarketing call and go online is not.  I know you don't really care, just stop proving it to me everyday.  It's irritating.

Memo to Citibank.  Today's email has the headline "If we could hug you right we would", "Thank you for being a great customer".  At first I thought it was the bank sending me a valentines day card.  My thank you... the ability to access my account online in order to check balances and pay bills.  Is this news?  Is this a thank you?  Am I an idiot?  In the eyes of Citibank I guess I am.

How should they message me?  What am I really interested in?  All they have to do is ask.

Obama the Google President

When responding to a question from Steve Croft on 60 Minutes about his experience, Barak Obama smartly used Google as a metaphor for himself.   To quote Fred Wilson's blog; "Barack Obama responded that there are many old, established companies in America, but only one Google, young, rich and successful."

That sounds like someone that should be our President.  I like HIllary, but have found that each candidate isn't connecting with me.  The Obama comment is the first candidate that showed a world view similar to my own.  Maybe Hillary should take a lesson from Bill Clinton's "bridges to the future" speech.  Stay away from the details and point us to the future.

Should Microsoft buy Yahoo?

Sometimes I feel like the "Yoda" of marketing where you just sense when a brand is trying to tamper with the natural order, otherwise known as "the force".  Here you have powerful Microsoft seeking to buy Yahoo so that they can have a better shot at competing with Battleship Google.  The people at Microsoft do not seem to notice that they do not need Yahoo to compete with Google since there is no number 2 brand in the category.  Yes Yahoo has share leadership, but it doesn't have perceptual leadership.   

The force is about to be disrupted.  If I were I'd be trying to sneak into 2nd place right about now by positioning the service as the best alternative to Google.  Not as a Google replacement, or something that is better because nothing can be better than the number 1 brand.  I'd stake out my territory as a competent #2 and just hope that Microsoft and Yahoo are distracted while they are holding the door open for me.  Given the size and resources these companies have I'd act fast since the door will not be open for long.

To quote Yoda: "It (understanding the force) is choosing a whole new life. It is remembering who you are and forgetting all of the limitations you have put upon yourself."