Hong Kong’s future is pre-ordained

HK protests June 2019Hong Kong is part of China. That may seem obvious and yet recent news has confirmed for me that the Hong Kong of the not-too-distant future will be nothing like what people remember.

Having traveled to Hong Kong more than a handful of times, I regretfully have not been there in nearly 5 years as my professional travels have not included Hong Kong and China for some time.  Now this week, as nearly everyone has seen, Hong Kong is experiencing new protests from citizens three years after the ‘Umbrella Movement’ or ‘Occupy’ movement ended nearly five years ago – with no changes made to the way electable candidates were chosen.

I will keep saying that Hong Kong is one of the most interesting cities I’ve ever visited. It’s a fascinating mix of cultures, history and human behavior and there’s no place like it elsewhere on the planet. The current protest movement centers on the possible extradition of Hong Kongers and anyone visiting HK, to China. While the current Hong Kong Governor Carrie Lam has seemingly backed off on the impending vote, the die had long ago been cast, as the Chinese government remains fixated on ‘managing’ Hong Kong since the handover from the British in 1997. Years ago my friend Tom who lived in Hong Kong for 5 years remarked that China would rather have Shanghai as the financial center than have it be Hong Kong. It made sense to me at the time and still does today. That makes me sad. People that I know have told me that Hong Kong is definitely ‘not the same’.

The function of Hong Kong as an international financial center has been eroding ever since China re-took control more than 20 years ago. The Chinese government is smart. Smart enough to know it could not just arbitrarily shut down Hong Kong as a banking and finance center. However that does not mean that China can work to deemphasize Hong Kong’s importance. Changing laws to make Hong Kong more ‘Chinese’ have been part of the effort.

Westerners like myself can be more than a bit melancholy when thinking of the way Hong Kong was in 2007 much less 1997 and before. The mix of Europeans, local Chinese and all kinds of Asian people is what makes Hong Kong such an interesting melting pot. The melding of food cultures is particularly amazing in Hong Kong. The area itself from Victoria Peak to Kowloon Harbor is both beautiful and sometimes mysterious. Trips to Lantau Island and Macao are very pleasant memories for me.

What happens next will be up to the Chinese Government. However it’s inexorable that China will continue to exercise more controls on Hong Kong as there’s little or no chance of any form of a truly ‘democratic’ Hong Kong happening under the current Chairman if ever. I am hoping that ten years from now, when visiting Hong Kong, it will have echoes of the diversity of culture and interaction that has been its hallmark for such a long time. Hoping for, but not counting on it.

 

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Direct response has to go beyond ‘just get the order’

In the classic sense, direct response has always been about getting the first order, meeting or beating breakeven, then keeping that new customer in the funnel long enough to actually make a profit. Keeping customers in for a couple of cycles and THEN losing them was acceptable.  Winners and losers are the only scorecards. CLTV – Customer Lifetime Value is the scorecard of consumer direct response. At least it used to be.

It’s not that CLTV has become unimportant, but the importance of customer satisfaction has become the new driving force as inertia is no longer a strong enough force to keep customers from canceling and saying good-bye. There are a number of reasons for this which include increased consumer sophistication and ease of returns on platforms like Amazon.com. Returning something used to be a much bigger hassle than it is today. That puts power back in the hands of consumers (a good thing) and forces marketers to deliver a better product, offer better service, and create a sense of trust between the customer and the company.

As a side note this does not mean I personally like getting emails from EVERY Amazon company from which I buy something asking me about my ‘experience’ and also asking how many stars would I give the company. I received something I bought in the mail when promised, as promised. There was not one exceptional thing about the ‘experience’. And that’s fine! Marketers on Amazon could do a much better job of following up than asking for a rating every single time.

Yet it’s not a bad thing that companies from which I buy things on Amazon are interested (seemingly) in my satisfaction. It makes them try harder. Although were I to be unsatisfied, I surely would not be waiting for a rating email to get me to contact the company to try to rectify the problem.

I am seeing this from friends, customers, and associates of mine who are longtime direct response professionals. For them the days of ‘go get the order and we’ll hang onto them as long as possible’, whether that be by mail, TV, radio, digital or otherwise, are waning. The idea of creating a brand – and one of high value, is finally intersecting with the transactional nature of direct response advertising. This can be seen in the approach of the new guard of direct response advertisers like Casper, Harry’s, Dollar Shave, Warby-Parker and others. The products from these companies are for the most part unexceptional. The creation of a cool and interesting brand along with compelling offers (a big direct response element) makes for a deeper and longer lasting customer relationship. These companies will have to continue to deliver value for their customers even when the customer is not an active buyer. You might not be in the market for another mattress but there are other bedding products that Casper would like to sell you until you’re ready to buy another mattress.

Even if the model is to create and sell a variety of products direct-to-consumer, creating a strong brand to support product sales is more important today than ever before. It’s where I’ve always stood and where we stand as a strategy and execution shop. We’re in the right place at the right time and the trend in my view is positive.

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Medical Device Marketing and Advertising are two different things

It’s different than advertising

The back and forth between sales and marketing in companies have been around from the start of corporate business enterprises.

Our shop has done a great deal of medical device advertising and promotion. We’ve helped internal marketing departments with messaging clarity and brand consistency. The two are symbiotic but far from being alike. Advertising and promotion for medical devices is newer than for pharmaceutical products.

Most medical device companies that I’ve encountered have been and remain focused on what they term as ‘marketing’. This includes creating the value proposition (super-critical), as well as the various conduits to sell/market the device (i.e. hospitals, medical device distributors, surgeons and practices directly). These are no small tasks and are made more complicated in considering clear demonstration of the patient benefits, patient privacy, and yes, reimbursement. What they are not is advertising and promotion for the brand, to patients or even to providers and practitioners.

Does advertising for pharmaceuticals actually work? In 2019 the total spend on pharmaceutical marketing and advertising will be more than $30 billion.

Were it not effective that number would be decreasing not increasing. I’m not here to defend the incessant stream of Direct to Patient advertising on traditional TV, digitally and otherwise. It’s often amazing to me to see so much pharmaceutical advertising while watching television. Televised live sports are a hotbed for pharmaceutical advertising, since it is viewed by older (more than younger) men.

We were early to the idea of direct-to-patient advertising and promotion for medical device products and brands. We felt confident that since the results were very positive, (more inquiries, more procedures), more of those device companies would be interested in not only building a great internal and external sales team, but they’d want to support that team with consistent brand messages to patients and professionals. Important Note: Those messages are never the same.

Advertising to patients and professionals is fuel to support your sales team’s efforts. But it’s even more than that. Consistent advertising creates a stronger brand and builds confidence both for patients and practitioners as well as the sales team. In the medical device industry things have been done the same way for a long time.

It’s not natural to think about promotion of a medical device to patients since the actual sales are not made to patients but rather to professionals (see hospitals, distributors, and practices above). This explains a general reticence to make advertising and promotion one of the legs of a device’s marketing and sales effort. Because pharma has been so successful using advertising to drive patient and professional inquiries, I felt it to be only a matter of time until medical device companies followed suit. Over the five plus years we’ve been working for medical devices it’s surprising that it still is not happening with any regularity.

The trap is that in the past, advertising and promotion of medical devices direct to the patient has not been employed so there’s little track record of success (or failure). Therefore device companies may be reticent to move forward. However, today with patients and professionals having the ability to exhaustively search the web for information, all are able to become more informed about various conditions, treatments, and options. Consequently device companies are missing the boat by not trying to build their brand’s awareness with the patient.

Medical device sales are by nature, difficult. They can be aided by advertising and promotion. All that is needed is a budget commitment over time. One other note, it does not require pharmaceutical-like mega-budgets to create, deploy, measure and manage. Just a willingness to test and refine over a defined period.

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Wireless earbuds – wearing them and hating them at the same time

You see them everywhere on the streets of Manhattan as well as in and around major cities in the United States. The wireless earpod craze started with the Apple Airpods and Apple as usual has done a very good job of delivering on its brand promise.

Since I am an Android guy when it comes to phones, the bizarre-looking earpod equivalent does not exist for Samsung and other non-Apple users (which still make up more than 50% of the mobile device owning population). After some inexplicable period of resistance, this week I broke down and bought an inexpensive pair of earbuds from Weepo , (not the highly regarded Galaxy buds). No I had never heard of them before. But they were $45. Apple Airpods are more than $150 and Galaxy buds are around $130. I didn’t know if I would like the earpods so spending $100 less was meaningful.

I’ve only been using the Weepo US X a couple of days and I am not sure if I love them or hate them. Part of my ambivalence is borne out of the fact that ever since the Sony Walkman came around, the idea of walking around the city tuning out the sounds around you seemed self-defeating to me. If you are going to live and work in a major city among other things you know that it’s going to be somewhat noisy and somewhat dirty. Over the many years I’ve changed the way I feel and look at headphones in general, as they became so … normal to see people wear.

Let me note that I believe Wireless headphones are a great idea. Particularly where exercise is concerned. What’s different about the earpod ‘revolution’ is that now more than ever, when someone walks by you wearing them you don’t know if they are talking to someone else, listening to music or a podcast, or wearing them just in case someone calls. In the process what seems to happen is that everyone is ignoring everyone else – more so than usual. Because people kind of look like they are paying attention when they are wearing earbuds, in fact the legions wearing them are appearing to be engaged when in their head they are miles and miles away. In a big city it can be quite impersonal sometimes and earpods are making it worse.

At the same time I LOVE listening to music while I walk around the streets of New York. The Weepo earbuds are small and have no dangle so it looks a little like a hearing aid in both ears. (That’s how you know it’s NOT a hearing aid and please pardon me if I am being a little over-sensitive in my advancing age). The carrying case is more of a hassle to tote around than the old wired earbuds, which easily fit in every pocket. The need for regular charging is also a bit of a pain and requires forethought so I don’t run out of juice. I assume I will adapt my behavior accordingly.

I am not sure why, but when I am not listening to music or something else, or talking on the phone I can’t help feeling a bit pretentious in wearing earbuds. There’s still a certain cachet in wearing them which will die out fairly soon in my opinion. But for now it’s hip and cool to have earbuds in all of the time.

I understand the overall usefulness of earpods. The ability to tune out the honking, rumble, and bustle of the city with your selected groove is fantastic at times. I just feel guilty tuning out from my fellow commuters, pedestrians, taxi, Uber and Lyft drivers. I am part of the vibe of the city and with that comes the responsibility to be part of the community in any number of ways.

With the increasing ability to disengage in the presence of others, (for what it is worth Instagram is truly a black hole in which I see people on constantly), the intention to further disengage seems to me to be a negative trend. My guess is that I will overweight the positives of using wireless earbuds and continue to wear them, just not all the time.

 

 

 

 

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Regional accents and behaviors are declining in the U.S

I recently returned from an annual trip to Myrtle Beach, South Carolina to play golf with what are now friends for more than 20 years. Obviously the South is very different from the Northeast. To add to that I am also a city person and Myrtle Beach might be considered a city but to me it’s really a beach town.

There are many things I like about Myrtle Beach. Not the least of which is the South Carolina accent. I like that I am referred to as ‘darlin’ and ‘honey’ as that is indicative of the warmth and spirit that is evident in so many places there. Over the years however, I’ve noticed there are more and more non-native Americans (not to mention southerners), that haven’t adopted the Southern drawl. And that southern drawl isn’t as prevalent as I recall. That’s not really surprising when I think about it since even in New York accents in general aren’t as strong as they were years ago.

Television, radio and video have done much to homogenize regional accents. We hear news and commentary delivered by talking heads that have worked to flatten whatever accent they might have had growing up. In the New York City area a Brooklyn accent used to be discernable from one from Staten Island or Long Island. Today it is more difficult to tell the difference. A New York accent still exists but in general it is not as pronounced. It’s not as if accents are disappearing entirely, but I am concerned that at some point in the future it will be harder to tell where someone comes from by their regional accent. I don’t feel this is a good thing but nothing can be done about the march to homogeneity when it comes to accents.

When I go to Myrtle Beach I enjoy eating grits. Grits are rarely served in restaurants in the northeast (or the Midwest or the West coast), and I look forward to being able to get them at every breakfast. Speaking of breakfast, Myrtle Beach is replete with pancake houses, lots and lots of Pancake Houses. There are more than 20 on the Grand Strand alone.

All seem to open at 6AM and close at 2PM. Most appear to have many customers throughout the period to serve vacationers and locals alike. I am impressed that these large buildings can afford to only be open 8 hours per day (7 days a week) and wonder how long this pancake house thing will last? In general people even in the U.S. are trying to eat fewer carbs and healthier overall. Grits, biscuits and gravy, bacon, and eggs with hollandaise are opposed to that end. Sure you might like to spoil yourself every now and again but good old-fashioned diners have been in decline in the U.S. for years which I wrote about, and I fear the same will be eventually true of pancake houses in Myrtle Beach.

To me regional attitudes and behaviors are big reasons to visit different areas of the county in the first place. It’s interesting and diverse. While we are far from the U.S. having zero regional differences (perish that thought!), where things were more isolated before mass media, the trend is away from strong regional accents and behaviors. I feel this is not a great thing but there’s little to be done to forestall the trend.

It’s too hackneyed to think of the world still being filled with ‘Southern Belles’ and ‘City Slickers’. Both are still in evidence but you’d be wrong to think just because someone lives in a southern town or a northeast city they will behave in a particular way most of the time such as ‘Southern Belles’ wearing petticoats and serving sweet tea or New Yorkers saying ‘fuggedaboutit’.

Importantly, as marketers we have to fight these kinds of biases or else we will miss opportunities and successes. Challenging your own biases helps you to get closer to the truth of what really is happening.

 

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Blue Apron has a tough row to hoe

A couple of years ago I wrote about my ‘mental pricing bias’. I referenced Blue Apron in that post as being emblematic of an interesting service that I did not personally want to make the effort to sustain.

Recently Blue Apron hired Linda Kozlowski at CEO. No not the one from Crocodile Dundee movie fame. She’s someone I’ve met and have worked with (while she was at Alibaba.com) in the past. From my experience she’s sharp and mission-focused. I feel she will need all her abilities and then some to have any chance of ‘fixing’ Blue Apron.

Every good direct response marketer knows that the right target, a compelling offer, and engaging creative all need to combine in order for there to be success. But also of critical importance is that the premise itself has to be intriguing.

Blue Apron delivers well on the intrigue front – delivering fresh food meals to your home with all the ingredients you need right in the package – is interesting and intriguing. Customers receive a certain number of meals per week by subscription with clear directions on how to prepare that fresh and tasty meal right in the kitchen. Cool.

But wait, there’s more. YOU HAVE TO COOK THE MEALS YOURSELF! OK, you knew that before you gave it a try but… you still have to cook the meals. And it’s not as if most of the meals can be prepared in 15 minutes or less. And once you are subscribed the meals come every, single, week. It makes me wonder how many of the Blue Apron meals never get made and are simply thrown away – before cooking.

Which leads me to, who are the targets? If health-conscious urbanites – young and old, are the target (the meals are not cheap nor are they expensive). Three 2-person meals for a week is $59.94 with an intro first week special at 33% off ($39.94). The offer of 6 fresh and health meals for $40 is reasonable even if you are cooking it yourself. $10 per meal cooking it yourself (or yourselves), becomes more of a value-proposition type decision. A one-week trial discount of $20 is not exactly the most compelling offer ever. Yes you can cancel anytime (as I did). But moving up to $20/meal after the first week is definitely pricier. Yes, it is cheaper than takeout (especially in big cities) but you are doing all the work except for the shopping.

Maybe the idea is that a couple will come home from work, not have to stop at the market, they’ll open a bottle of wine and cook together and then sit down to a nice dinner. Norman Rockwell paintings come to mind. Of course the urbanites would have to actually need to have a kitchen! I know a good many city folk that have kitchenettes at best, and never use them anyway.

The target can’t be the proverbial soccer mom can it? The busy working mom and dad – maybe. Basically I cannot really figure out who the real target is. It’s almost like it’s a solution looking for a problem to solve.

I know I am picking on Blue Apron and there are other sites like Plated that are in the same boat. What’s behind it all in my mind is that meal delivery services – at least in the United States, aim to change consumer behavior. Yes people intuitively would like to eat healthier meals at home. However when the default behavior is to go out to dinner, bring in takeout, or do something simple and low-effort when cooking at home, changing that behavior to being motivated to spend 35 minutes on average to make it happen seems unsustainable to me. It’ll take a week, maybe a month, but eventually people will tire of it and find it be limiting instead of enabling.

Why aren’t grocery stores quick to jump in on the meal delivery services horse? Meshing meal delivery services with grocery deliveries would acknowledge existing behavior and certainly save on delivery costs. I suspect Ms. Kozlowski and others are thinking of all sorts of ways to increase trials and retention. It was even put out there this week that packaging for meal delivery services are ‘greener than thought’, which I personally like, but don’t believe that to be a highly compelling a value proposition.

I acknowledge that meal delivery services have had some success in some places like San Francisco. But it’s hard for me to accept that there’s great opportunity to scale these business nationally and beyond. The problem for Blue Apron remains that as fast as the funnel can be filled at the top, customers are leaking out of the bottom of the bucket at too high a rate.

Changing consumer behavior is one of the most difficult tasks a marketer can undertake. I’d be happy to try to help and wish Blue Apron, Plated.com (which was bought by Albertsons in 2017) and all the others luck. In order to sustain the weekly meal delivery model, they’re going to need it.

 

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Candy and Soda manufacturers have to adapt to survive

Much of my work these days is focused on healthcare marketing. What’s become important to keeping me fresh (or fresher) from getting healthcare-stale, are opportunities to work outside the healthcare space. My professional career has certainly had an, ‘adapt or perish’ aspect to it having invested many years into the increasingly shrinking commercial printing industry. There are many industries that have faced or are facing a similar inflection point.

Think about PepsiCo for example. How has a company founded in 1898 whose initial product was….soda pop (with sugar), managed to survive for more than 120 years? By adapting to what’s coming. Smart people have run PepsiCo. Former CEO Indra Nooyi recently stepped down and has left the company in good shape. Earnings remain solid. And the most recent quarter saw sales of soda actually rising. But the trend is away from sugary sodas.

Notable from the WSJ article:

“And while consumers cutting back on high-calorie soda has hampered some of the sugary brands, the company managed to post 3 percent growth for its overall Pepsi family in the U.S., fueled by a 29 percent surge in Pepsi Zero Sugar sales. The company is also getting a bump from Bubly, a sparkling water it released last year that’s taking share from established brands like LaCroix and Perrier.”

You probably know that PepsiCo has Frito-Lay as part of its portfolio of companies. Yet this does not stop me from wondering what is the future of a company that makes sugary sodas and salty snacks? Can PepsiCo truly transform itself into a health-oriented drinks and snack food manufacturer?   From my perspective, if they do not continue to try it will indeed perish.

What about the confectionary (ok the ‘Candy’) industry?   The commercial manufacture of candy products in the U.S. dates back to 1876 (by the Chase Candy company), making something called ‘Cherry Mash’.  Back then and for many years after, a sweet treat in the form of candy – be it a candy bar, candy bit, lollipop, sucker or whatever, had nobody worrying about sugar content. 143 years later things shall we say, are different.

Can candy companies transform themselves into being able to make a more healthful treat and still survive? Sweden consumes the most candy per year. From the Daily Meal – ‘A 2016 study done by Jordbruksverket, the Swedish Board of Agriculture, and featured in a recent article by The New Yorker, found that Sweden has the highest candy consumption per capita in the world — about 35 pounds per person per year. That means that the average Swede eats over half a pound of candy every week.’

Sugar consumption and candy consumption are closely correlated. From a study in 2016 published by Warrell, the average American leads the way, consuming over 126 grams of sugar daily. Germany is not far behind — their citizens eat about 103 grams of sugar a day. Coming in at just under that are the Dutch, where the average person enjoys 102.5 grams of sugar per day. At the low end, as you would expect, it’s the Asian countries. The Chinese consume only 16 grams a day, Indonesians a little over 15 grams and Indians, only 5 grams a day on average.

So, what does this all mean? One thing it means is that sugar and candy, especially chocolate, are staples of the Western diet. Is there anything wrong with that? Well, the World Health Organization recommends that people consume no more than 25 to 50 grams of sugar a day.

Mintel reported:

In November 2018 that the estimated total of the U.S. chocolate confectionery sales will have grown 15% since 2012 to reach $18.5B in 2018, with trends like bite size, functional ingredients and premium driving the overall category growth.  

Mintel data revealed the U.S. consumption of candy has been trailing that of chocolate in 2018, especially around the Halloween season. It also noted more than 27% of non-chocolate consumers said they ate less candy than last year (versus 15% eating more), due to sugar and calorie reductions.

So people are trying to eat less candy, apparently not all that successfully, but it has to start somewhere and overall mindset is the first step. Candy makers have to diversify and use their knowledge to introduce interesting new products – maybe not quite as sweet, but definitely healthier in general. The trend is clear that people are more aware of their intake of sugar than they’ve ever been in the past. Candy will remain popular but the opportunities for growth in the industry will likely come from products that are not pure confections.

We’ve recently taken on a client from the confectionary industry that is introducing a non-candy brand into the marketplace. It’s a bold move for them and we all understand that high stakes are at hand.

Adapt or perish. Why should it be different for companies than it is for human beings?

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