Friday, February 23, 2018
I love the Kardashians. I don't watch the reality show, but I do keep up with them because I use them in hypotheticals in class and in exams for entity selection questions. The students roll their eyes, but invariably most of them admit to knowing everything about them. When the students can relate to the topic, it makes my job easier. That's why I used the SNAP IPO last year as our case study on basic securities law. Every year I pick a "hot" offering to go through some of the key principles and documents, and Snap was the logical choice because the vast majority of the students love(d) the Snapchat app. The company explained as its first risk factor "... the majority of our users are 18-34 years old. This demographic may be less brand loyal and more likely to follow trends than other demographics. These factors may lead users to switch to another product, which would negatively affect our user retention, growth, and engagement." I used myself as an example to explain that risk factor in class. I have over 100 apps on my smartphone, and I have a son in the target demographic, but I never open Snapchat unless my six-year-old goddaughter sends me something. I just don't get the appeal even though millions of celebrities and even mainline companies use it for marketing. My students were aghast when I told them that I wouldn't invest in any stock that depended on the vagaries of their ever-changing taste.
Enter Kylie Kardashian. She's the youngest Kardashian (20 years old), is worth at least $50 million, runs a cosmetics empire on track to earn a billion dollars, has 95 million followers on Instagram, and has 24 million followers on Twitter.
After she offhandedly tweeted that she doesn't really open Snapchat anymore yesterday, Snap lost $1.3 billion (6%) in value. This plunge added to an already bad week for Snap after Citi issued a sell rating and the company confirmed to 1.2 million change.org petition signers that its new redesign was here to stay. But it was Kylie's tweet that caused the real damage. Perhaps one of Kylie's lawyers or business managers alerted her to the fallout because she later tweeted out, "still love you tho snap... my first love." Kylie probably forgot how much power she really has. When she released a video about her pregnancy and childbirth, 24 million people watched in less than 24 hours because she had refused to allow any of her followers to see pictures of her belly. She knows marketing.
Meanwhile, after seeing Kylie's first tweet, cosmetics competitor Maybelline went on Twitter to ask its users if it should stay on Snapchat, noting that its Snapchat views had dropped dramatically. The company later deleted the tweet, but users had already voted 81% to 19% to leave on the Twitter poll.
Snap appears determined to stick to its unpopular redesign, and its CEO received a $637 million bonus last year after the IPO. Perhaps the CEO should use some of that money to pay for a new Kylie tweet. In 2016, when Kylie earned only $18 million, 20% of that haul came from social media endorsements. It looks like the President isn't the only one who can move markets with a tweet.
Wednesday, January 10, 2018
Swedish clothing giant H & M caused a huge stir this week with an ad campaign depicting a young black boy in a sweatshirt that proclaimed him the "Coolest Monkey In the Jungle." The company's misstep is surprising given the public condemnations of the use of the word "monkey" in Europe over the past few years when soccer fans have used it as a slur against black players. Notwithstanding H & M's many apologies, several megastars have denounced the company and some have even pulled their fashion collaborations. As usual, several have called for boycotts of the retailer. But will all of this really matter? The sweatshirt was still for sale in the UK days for days after the controversy erupted, and the Weeknd, one of the megastars who vowed to never work with H & M, still has his 18-piece H & M collection available online and available for purchase on the store's U.S. portal.
I'm headed out of the country tomorrow and in my quest for a new sweater, I glanced in the H & M store in my local mall earlier today. The store was packed and likely with fans of the artists who called for a boycott. No one was walking with picket signs outside. But as I have written about here, here, here, here and at other times on this blog, I'm not sure that young American consumers--H & M's fast fashion demographic--have the staying power to sustain a boycott. Perhaps the star power behind this boycott will make a difference (but I doubt it).Wall Street hasn't punished the store either. The stock did not take a major hit. Moreover, CNBC has reported that in December, the company reported its biggest quarterly drop in ten years. This means that H & M's pre-existing financial woes will make it even more difficult to determine whether a boycott actually affected the bottom line.
Time will tell regarding the success of this latest boycott effort but in the age of hashtag activism, I don't have much confidence in this latest boycott effort.
Monday, October 2, 2017
As some of our BLPB readers know, I am a habitual 12,000-step-a-day walker. I monitor my progress on steps, stairs, and sometimes sleep using a Fitbit "One" that I have had since Christmas Day 2012. Fitbit recently announced that it is discontinuing the One. So, if my existing One dies off, I will have to switch trackers. And, sadly, I am likely to have to switch suppliers. While Fitbit has been good to me, the rest of its trackers are not at all interesting or suitable for my desired uses. They are almost all wrist models, and the one clip-on tracker Fitbit sells is relatively bulky and antiquated.
I am not the only one who is unhappy about the discontinuation of the One tracker. Fitbit has discussion boards for members of its "community." The discussion board titled "Is Fitbit One being discontinued?" (which was started over the summer) has lit up over the past week. As of the time of this post, there were 519 posts in the Fitbit forum.
I have been impressed by the passion of the folks who have posted comments and responses. Many posted reviews of other Fitbit products and competitor products that might be adequate substitutes for the One for some users. But I have been fascinated by the nature of several posts, including a number that focus on corporate governance and finance matters. Community members were motivated to check into and comment on Fitbit's published financial statements, litigation profile, and trends in the mix of product sales. Some encouraged calling either Fitbit's customer service line or mutual funds that hold Fitbit shares (and they named the funds) to express concerns. One member of the community posted that he is worried about Fitbit's employees, customers, and shareholders in the event Fitbit's business goes South.
The comments made on the Fitbit community discussion board reminded me of Hillary Sale's work on publicness, including her article entitled Public Governance. In that article, she observes:
Publicness is both a process and an outcome. When corporate actors lose sight of the fact that the companies they run and decisions they make impact society more generally, and not just shareholders, they are subjected to publicness. Outside actors like the media, bloggers, and Congress demand reform and become involved in the debate. Decisions about governance move from Wall Street to Main Street.
Friday, June 23, 2017
Brooks paid each participant $100 for 90 minutes.
The group was well-facilitated, and the group members stayed incredibly engaged. The 90-minutes flew by.
The research Brooks was conducting on both shoe design and marketing was extremely qualitative. It was essentially a brainstorming session. I do think Brooks could have gotten more out of the time if they would have had everyone privately write down their own ideas first, as there were about three or four of the ten of us who dominated the discussion.
While this type of focus group was not cheap---$1000 in payment plus renting the room plus travel for two employees from Seattle---it was surely a very small fraction of their production and marketing budget. And I do think Brooks got some valuable ideas. Brooks does this sort of thing all over the country, and their employees said that they do start to hear patterns in the responses. It is those patterns that Brooks acts on, as they can't possibly address every one-off comment.
This focus group made me think that universities should consider similar focus groups with applicants and with local companies. I know a bit of this happens informally at most places, and perhaps it happens formally at some places, but I do wonder if it is done with the same regularity and intensity as for-profit firms like Brooks. I think the insights would be valuable, and even if the insights are poor, the organizing institution does get to explain itself (and show it really cares) to the focus group participants.
Friday, June 16, 2017
Next week, I will write about my focus group experience with Brooks Running.
Last week, on Global Running Day, Brooks announced “the biggest athlete endorsement deal in sports history” saying that they want to endorse everyone who runs….with $1 and a chance to win Brooks running gear.
This would have made a decent April Fools Day joke, but as a serious attempt at building brand value, it is pretty weak.
Brooks would have done much better to follow the lead of Oiselle, a women's athletic apparel company that I have spoken and written about before in regard to their multi-level team of professional, semi-pro, and recreational athletes. The main differences between Brooks and Oiselle is that Oiselle provides value to the team members and creates shared experiences. Oiselle athletes get team gear (even though the recreational runners pay for the gear), and they get invited to numerous group events. Oiselle has state team leaders and helps connect the team members for training and races. The “birds”, as they call themselves, really seem to support each other.
Now, the Oiselle method is definitely more complicated, and it probably comes with various legal risks. For example, what if one the team leaders turns violent or what if a team member gets hit by a car on a run led by a team leader or what if someone gets a bit out of control at one of their camps or parties? (I am sure Oiselle has everyone sign waivers, but as we know, waivers don't always prevent costly litigation and liability). There is also a fair bit temporal and financial costs involved in creating the team singlet, sending out newsletters, updating social media, planning events, etc. But building real community and brand value is almost never easy. (And Oiselle is far from perfect and has its critics, but I applaud Oiselle's effort. That said, if they are still requiring the recreational athletes to both pay and only post photos of themselves on social media in Oiselle gear, that seems overly restrictive. If they are going for authentic, they should provide suggestions instead of mandates. With sponsored athletes, I better understand the restrictions, though even with sponsored athletes you can usually tell a difference between organic and forced marketing posts.)
Sadly, Brooks' “endorsement” isn’t about building community, rather it is a pretty transparent attempt to buy your e-mail address and lure potential customers for $1. (Also, I uncovered in the fine print that they limited the $1 payment to the first 20,000; they have over twice that many signed up already).
As I will write next week, I was impressed with the people running the Brooks focus group, but they didn’t ask us about this “endorsement” idea, and if they asked others about it, I think they got bad advice. Brooks might get a bit of press, and they will probably even get a fair number of email addresses from curious people, but I doubt they will get much of lasting value.
[I wonder how many people who signed up read the fine print. For example, there is a Code of Conduct that will be sent to participants. Also, see the clause below the break seemed incredibly broad.]