The Tom Dougherty Blog
Time to ditch your wallet.
It might be time to drop those wallets off at Goodwill.
Yesterday, Apple released a game-changing option to its Passbook application: Apple Pay.
If you are the owner of an iPhone 6 or 6 Plus, the 8.1 update (which installed Apple Pay to iPhones) is the invitation to the future of buying goods and services.
The process is pretty easy. All you need to do is add your credit cards to the Apple Pay system. All you need do then is hold your phone near a pay kiosk (it is read by a process called Near Field Communication), confirm payment by way of the touch sensor on your phone and payment is complete.
The process is quick and painless. Most of all, it’s safe. When you enter a credit card number, for example, “Apple replaces that number with a unique token that it stores encrypted in what the company calls its ‘secure element,’” says MacWorld. “Your information is never stored on your device or in the cloud.”
To me, this is huge. The United States alone accounts for nearly half of all of the world’s credit card fraud, and a quarter of credit card use. Apple Pay easily cuts out the concerns we might have (think of the Target fiasco last year, and most recently, one at Home Depot).
To date, more that 220,000 stores have adopted the pay method, including Walgreens, Nike and Whole Foods. You can use your Visa, MasterCard and American Express credit cards.
Not surprisingly, I’ve already added my credit cards to Apple Pay. I wouldn’t be surprised if you do the same soon, too.
The DirecTV ads are close to being great, but there is a fundamental problem.
I’m sure most of you have seen the Rob Lowe DirecTV ads in which there is good Rob Lowe (a DirecTV customer) and bad Rob Lowe (a cable TV customer). In the series, the bad Rob Lowe is the actor playing a creep (who likes to watch swimmers and smell people’s hair), a lowlife (with rotting teeth and a comb over) or a nerd (who is afraid of people).
Meanwhile, the ever-cool Rob Lowe is the DirecTV customer who tells us not to be bad Rob Lowe. Be a DirecTV customer.
The ads are related to the great “I’m a PC” and “I’m a Mac” ads that Apple ran some years ago, among the greatest brand ads ever aired. Do the DirecTV spots stand up to that?
Not really. DirecTV took the basic concept of that but it missed the basic ingredient in those Apple ads and, instead, raised the level of absurdity so its argument isn’t very believable.
The genius of the Apple ads, other than the positioning of who you are when you are a Mac user, was that the personalities of the two fit the personalities of the brands. “I’m a Mac” was relaxed, a believer in simplicity with an easy confidence. “I’m a PC” was likable, but over-complicated and a little too eager. That is, they were believable types (as Apple users saw them) and had an unforced rapport. You could even choose to be the PC, but it just wasn’t preferable.
That was part of the campaign’s allure. You liked PC.
In the DirecTV spots, there’s nothing to suggest that the alternative (cable) is an actual choice. Bad Rob Lowe is simply disgusting, which doesn’t tap into any belief systems about cable TV companies (as much as we may despise them). Bad Rob Lowe becomes a cartoon character, so the promise of being Good Rob Lowe isn’t believable. It’s not persuasive enough and positioned against a ghost.
That’s not to say the campaign is a total wash. The idea behind it is right, and the ads are memorable, but the strategy took the concept too far to be truly effective. DirecTV didn’t make it a fair fight.
A nice try, but not good enough to create true preference.
Oh United, why have your forsaken me?
This is by no means the first or the last time I have written about airlines. It’s just that they seem to be so bad at the most simple promise. Like appreciating our business.
I fly all the time because our client base is all over the globe. There might have been a time when this was something you bragged about. But certainly not any longer.
I remember when I thought traveling for business was a romantic idea. However, I assure you that my travel looks as much like Sean Connery’s 007 travel as I look like a debonair spy. Air travel today is as luxurious and glamorous as a city bus ride, but with much longer waits at the bus terminal.
Despite my complaints, I have a lot of miles under my belt and, as a result, United awarded me Global Services status the last few years. This is its highest level of recognition. According to United, this is only awarded to its most valuable customers. Global Services cannot be earned. It is awarded.
So what has happened to my trusted United Airlines? Well, the roof has collapsed on it. When US Airways left the Star Alliance (the frequent flyer program that includes United, Lufthansa, etc.), I lost most of the connecting flights out of my local North Carolina airport. In the past, I could book a flight on US Airways and United would credit me for flying on a Star Alliance partner.
So, when US Airways joined American Airlines a few months back, I lost a great deal of access. What would you do if you were United? Maybe add some flights to and from Greensboro to make up for that loss? Hardly.
United has three main hubs in the East: Newark, Washington Dulles and Chicago (even if it is technically a mid-western airport). I fly to Europe regularly and my closest United hub is Washington Dulles. I did not enjoy the long layover in DC for my flights to Europe, but I lived with it and appreciated the direct connecting flights with almost every destination in the world from Dulles.
Domestic flights were my only problem with US Air’s departure. I say “were” because suddenly international connections are a problem too. United has decided that I no longer need an early morning arrival in DC and has eliminated all but the late afternoon flights to Dulles. This means I can’t make ANY international connecting flights our of that hub.
I feel abandoned by United. I am going to have to find another airline to abuse me. Here is one Global Services flyer that United has pushed to the curb. I never really thought it appreciated my business. I knew “sit back, relax and enjoy your flights” was just meaningless jargon. Now I know United sneered at me when it said, “We know you have lots of choices and we appreciate your business.”
HBO to unleash a game-changer.
The revolution to rid ourselves of cable and satellite TV providers took a long-awaited step forward yesterday when HBO announced that it will offer its HBO GO-like app to those who are not subscribers to either cable or satellite.
If you don’t think this is a big deal, think about this. If all the TV content developers (like HBO) decide to skip the middlemen (cable, satellite) and go directly to viewers, cable and satellite TV is effectively finished.
For the HBOs of the world, this is a chance to ride the current wave of Internet viewing and collect revenue without paying fees to the cable and satellite companies. For viewers, it’s a chance to “cut the cord,” as so many have already done and gain the control of their viewing habits.
For the cable and satellite companies, it spells doom.
The content developers knew this was coming, already offering apps that show current shows and, in some cases (HBO), offer its entire library. But you had to be a subscriber to either cable or satellite to use it.
The argument from some content developers has been that going the entire Internet route would inhibit the ability for them to develop other channels or shows because many companies own more than one channel. Viacom, for example, owns MTV, Nickelodeon, TV Land, Comedy Central and many others. But CBS announced today that it will offer an all-access subscription service (although it won’t include its NFL package).
Therefore, I think even Viacom will eventually go the HBO route. If you’ve watched any programs on these kinds of apps (such as FXNOW), you see other shows on FX being advertised during breaks. The companies could do the same thing for new channels or make it a package deal.
I’ve noted this before, but the final move that will shut off the cable and satellite lights forever is live TV, especially sports. Of course, you can buy an HD receiver that gets you the local channels on which many sports are carried. However, if ESPN (or any of the other sports channels) goes the HBO route, it’s really over.
The sports leagues themselves could offer packages that go directly to consumers, and DirecTV and the NFL are running some pilot programs at universities with that strategy. But the NFL, for example, still needs someone to cover the game and that league in particular gets billions from its television contracts. So don’t expect that anytime immediately.
The day is coming when cable and satellite providers are no more, or nothing more than Internet providers. You do see them thinking ahead somewhat with DirecTV now developing its own TV shows.
But make no mistake. This move by HBO is a game-changer.
Converse finally realizes the design is also part of the brand.
The old-fashioned Chuck Taylor All Stars seem to be everywhere. I see them all the time on both kids and adults. In fact, the girl I sat next to on a flight yesterday had them on. At least I thought she did. As I let her out to deplane, I noticed that her shoes lacked the “All Stars” badge on the back of the heel.
I have seen them in Old Navy, H&M and even in Ralph Lauren, but they are not Chuck Taylors at all. They are store brand knock-offs and they’ve been around for quite some time. They are nearly identical in design and, being made of canvas, they are cheap to manufacture.
But why did it take so long for Converse to say, “Stop”? This is a good question and one that may ultimately doom their lawsuit. I wonder if the powers that be at Converse (or Nike, which owns Converse) thought that they didn’t have to protect the design because they weren’t the Chuck Taylor brand? What I guess Converse failed to realize earlier is that, in fashion, brand and design are one of the same.
Brands need to be protected and fought for as their value comes from their uniqueness. Otherwise, they become nothing more than a commodity. And Chuck Taylor’s may be just that.
Should Amazon even offer a tablet?
A few weeks ago, Amazon announced a new line of tablets: the Fire HDX 8.9, 7, 6 and Kid’s Edition, as well as an updated E-Reader that Amazon is calling the Kindle Voyage.
I’m telling you these names for one simple reason — I anticipate you, like many of us, were just as unaware of the names of any of these Amazon products as me. These five new devices hardly made a blip on anyone’s interest radar because the brand architecture makes little sense. What’s the difference between them all?
That’s quite the opposite of the frenzy surrounding the new iPhone line and potentially updated iPad (slated to be introduced this Thursday) or the Samsung Note 4 or Galaxy Tablet. These products are on most everyone’s radar because, in part, their architecture is easy to understand.
This is not the case with Amazon.
In addition, Amazon has its hands in a bit too many cookie jars. Yes, the company has mastered the online retail experience, offering nearly everything you want (including its expertise). Yet, offering an abundance of mediocre tech devices on its main stage is unnecessary.
Take the Fire Phone, for instance. Amazon had high expectations for the device. The company set the bar high, pricing the device just as high as the iPhone 5S and Samsung S5. Yet, the public didn’t see the Fire as an equal. To date, the device has sold around 40,000 units prompting Amazon to quickly lower the price to 99 cents.
I wonder how many failed devices it will take Amazon to wake up? I’m reminded of the phrase: “Because you can should you?” No, unless Amazon adjusts its brand so it is a brand of services not products. Right now, that’s how consumers see its tech products, as simple delivery systems for its services.
If Amazon wants to be a brand about products that you hold in your hand, then a brand adjustment is needed to gain permission. And get rid of the crazy brand architecture.
Pizza Hut lays out a vision of the future, but it’s just the same old thing.
Ah, the three big pizza chains: Pizza Hut, Domino’s and Papa John’s. What are we to think about them?
I’ve lauded the advertising campaigns of Domino’s and they’ve had a positive effect on its market share. Papa John’s has smartly positioned itself within the sports realm, specifically the NFL. But its success depends on what you think of founder John Schnatter because the brand is linked so much to him. (God forbid if he gets involved in a scandal. Papa John’s will plummet.)
But what about Pizza Hut, long the market leader? David Novak, CEO of Yum! Brands, which owns Pizza Hut, told analysts recently that the pizza chain’s sales will fall below expectations in its third quarter annoucement but there are reasons to be optimistic. Revenue was flat in the third quarter and profit was down by two percent, but that is better news than the 17 percent decline it suffered earlier this year.
Novak is counting on menu changes (the addition of a dessert cookie and bacon & cheese-stuffed-crust pizza) as part of a turnaround plan that goes along with a new campaign that emphasizes Pizza Hut’s leadership and quality.
Basically, Pizza Hut is rolling out the same strategy it’s been doing for years: Playing defense. As a market leader, that is not a terrible strategy because, when all things are equal (the competition is marketing the same things as you are), the market leader becomes the default choice. It’s the reason why Walmart continues to be the retail market leader because so many of the other big box chains compete on Walmart’s forte. Price.
In the case of Pizza Hut, price, menu choices and quality have been the hallmarks of its leadership position. But Papa John’s has found a niche (while still playing the price card) and Domino’s has made great strides by positioning itself as a brand that’s willing to take chances.
The new “effort” by Pizza Hut will have limited effect as it continues to see its leadership erode. It has relied on the table stakes to be in the category, but the competition is getting better. Pizza Hut must stop using tired strategies and become something new. Because preference is shifting.
The lack of vision is what’s hurting the JC Penney and Sears brands.
The news in the retail sector today focuses on the contrasts between two old giants in the US retail market: Sears and JC Penney. According to one report, JC Penney is doing better than Sears in its attempt at turning things around. What I find amusing in the report is the acceptance of the status quo as the end game.
As you recall, JC Penney fired Ron Johnson some time back as the former Apple executive tried to lead the retailer into a new model of pricing with a de-emphasizing of discounting and promotion. It did not work.
But according to new reports, JC Penney has turned things around by reintroducing in-store promotions and private label brands to bring in more shoppers. What a great model this is. Discount and promote so that more shoppers will be lured in and will spend money on products without deep margins. JC Penney has once again taken its earned position of just another run-of-the-mill retailer.
Sears, according to the report, has tried to be a quasi-membership store. Hoping that what makes Costco so successful will bleed over into the Sears brand. This is visionary brand management at its zenith. Monkey the processes of another successful retailer without making real changes. A sure bet.
People choose Costco because it requires membership. Sears failed to notice that shoppers go to Costco because it promises retail discovery. Costco makes its money not on what I went there to buy but rather what I came home with as an additional and unplanned spend.
In both of these cases, reinventions of the brands are needed. As a result, they can reinvent the retailing market. Instead, both are relying on the same pool of retail experts that are responsible for the crazy mess the category finds itself in today.
I put it to you that Ron Johnson was almost right. He recognized that playing a “me too” game is a recipe for disaster. Eventually, it leads to failure.
The market needs reinvention. Sadly, the control resides with shareholders who have no stomach for investment in the future. They expect and get quarterly results. What we get is a market filled with vastly similar models and stores filled with vastly similar merchandise. The loser here is the shopper. Sears and JC Penney? Well, they lose because they have no vision.