Another retail casualty: the CEO of Stein Mart

The retail industry is under siege, if you haven’t already noticed. Stores are closing, CEOs are leaving (being either fired or retired) and few know what to do in the battle against Amazon.

I have written plenty about this issue, maybe even more than you know. I am a regular contributor to RetailWire, which you can read about here. The single biggest question asked is, “Where do retailers go from here?”

Stein Mart
The resignation of the Stein Mart CEO is another demonstration that retail is dying.

The latest shoe to drop is the resignation of Stein Mart CEO Dawn Robertson, who left after same-stores sales declined 4% this past quarter. You sense a trend here. Office Depot and Staples, once thought to be merger partners, are looking for new CEOs. Macy’s is closing stores even though it promoted a national holiday hiring day.

It’s a mess out there for retailers.

The problems facing Stein Mart and others

The problems are two-fold for retailers, such as Stein Mart. First, they have never gotten the basic strategies of creating preference right. Secondly, they are behind the curve when it comes to online retailing.

Retailers were once powerful, thriving during the days when malls took over the marketplace. Malls were a community of stores, aping a downtown marketplace. Shopping at a mall was efficient and easy for buyers. Retailers reaped the rewards of shoppers buying more than they intended. (Think the Sam’s Club model. You go for a great deal, but stroll up to the checkout counter with loads of merchandise.)

In good times, brands often get lazy. They live off their success, thinking that there’s nothing they need to do to prepare for change. So few, if any, actually built brand preference. Instead, retailers fought over price, some adopting the Walmart model of always having a low price with others holding sales every week (that’s what has gotten Stein Mart in trouble). When you do that, you teach audiences to shop on price because you haven’t given them any other reason to choose.

So shoppers choose Amazon.

That second issue, failing to be a strong presence online, caught retailers with their pants down. They were slow to prepare and any preference they did have disappeared. In essence, retailers have reaped what they sowed.

What do retailers do now? They have to go back to the basics. Build a brand that actually stands for something, one that is different and better. That better part is difficult, but the different part is what has befuddled them. The retail choices all look, sound and, frankly, are the same. There’s not a squat of difference between Stein Mart and Kohl’s from the point of view of the customer.

No wonder we all shop on Amazon. At least we know what’s different there.

Population health is an opportunity

Population health is a top concern, but it represents an opportunity

The Affordable Care Act has affected everything for hospitals, including the struggle to be financially successful.

Notably, however, it prompted the switch from a fee-for-service reimbursement model to a pay-for-performance one that emphasizes the value of the healthcare service.

This in turn has prompted hospitals to take population health more seriously because their reimbursements are now dependent on the success of outcomes. For that reason, hospital CEOs have listed population health as one of their greatest concerns.

Population healthHospital CEOs now need their hospital systems to be further integrated into their communities, working with local organizations and instituting programs that help population health. By doing so, hospitals earn more money based on the pay-for-performance reimbursement. Better population health means a better bottom line.

While many administrators see this as a hindrance, it can actually be an advantage for hospitals looking to steal market share from its competitors. It represents an opportunity to create preference.

Hospitals struggle to create preference

Traditionally, hospitals have grown organically. A new facility creates a new audience, whether if it’s at a new location or represents a new specialty. A system starts with a name usually associated with a location, a founder or a prominent contributor from the community.

Hospitals rarely see themselves as marketers who are creating for preference as much as they are seeking awareness. They also often consider the internal audience (physicians, staff, contributors) more than they do prospective patients. They take the care of their patients seriously, as they should, so they focus on acquiring talent, technology and new training.

But the changing landscape of healthcare, especially when it comes to reimbursement, has made investing in the hospital brand more important. There is now more competition, with greater regulatory oversight and technologies creating savvier patients.

Hospitals now have to think of themselves as a true brand, analyzing the competition, conducting market research and putting more dollars into their marketing. The competition has simply gotten too fierce. The world has also gotten more complex.

Population health is an opportunity

The regulations surrounding the Affordable Care Act can be confusing for the hospital, the patient and even insurance companies. Those are the ones forcing the pay for performance model because they don’t want to pay out as much money. Insurance companies also want to see better population health because it results in fewer claims.

The knee-jerk reaction is to promote the hospital’s various partnerships and programs to raise the community profile of the hospital. That’s all fine, well and good. But those alone don’t raise preference. They are simply the proof points to your brand promise.

Population healthThe danger is that hospitals will sport brands that are all about better health and caring medical professionals. But those aren’t the reasons to prefer one hospital to another. They are just definitions of a hospital.

Instead, the process of increasing preference is to find the emotional triggers that make those things – including the overall healthiness of a community – important to the prospective patient. Why are those important? What are the drivers for those patients so that they choose your hospital?

Creating preference

The key to gaining preference is to be early in a prospect’s decision tree. The earlier you are positioned, the greater your preference. The struggle for hospitals is that no one wants to think about a hospital. It spells danger, risk and potential death. Instead, you must be important enough to prospective patients that, when they need a hospital, they have already chosen you. Even if it’s subconsciously.

To accomplish that, hospitals must avoid the clichés and trite messaging that comes with most hospital branding. A few tips:

Understand your competition. To be a true choice, you have to be truly different and better in your messaging. If your main competition has messaging focused on caring and expertise, you have an opportunity. Audiences filter out those messages because all hospitals claim to care and have expertise. Those messages mean little.

Go deeper. Most marketing stops at the wants and needs, but those can be fulfilled by any number of healthcare providers. True preference is created when you understand the reasons why those wants and needs are important. That means uncovering the precepts that drive behavior and the self-identification those audiences treasure. Aligning your brand with that belief creates audiences who are incapable of choosing anyone else because they would, in effect, be choosing against themselves.

The opportunity with population health exists because hospitals can be more important to communities. They can position themselves differently. Improving population health offers a gateway to a meaningful brand that goes beyond traditional hospital marketing. It means the promises of your hospital have changed and now you have the proof points to show for it.

Your hospital is now in the results business. Think about that as a hospital brand.

Office Depot, Staples and new CEOs

What the future CEOs of Office Depot and Staples should know

Changes are afoot among the office supply chains with both Office Depot and Staples looking for new CEOs. This comes on the heels of the expected merger between the two retailers coming to an end over antitrust concerns.

That leaves both of them in a quagmire. What to do now? What do the future CEOs of these chains have to look forward to when they take office?

Office DepotFor one, they both will find declining sales and profitability. Office Depot will close hundreds of stores, including an exit out of Europe. Staples is doing much the same with sales declining 5% in the last quarter.

Both retailers have blamed the rise of internet spending for the kinds of products they both offer, and they are right about that. Amazon has become the go-to retail space and threatens the entire retail industry, not just the office supply chains.

From the perspective of consumers, why buy from office supply stores – especially in bulk – when shopping online is believed to be more convenient?

Where Office Depot, Staples stand now

The proposed Office Depot Staples merger was irrelevant anyway. Consumers never saw a true difference between them, so a Office Depot Staples merger would have largely gone unnoticed among them. (That is, until prices went up.)

Now that a federal judge has nixed the merger, both must think of the other as the enemy, not a potential partner. Stealing market share from Amazon is possible, but it’s impossible if target audiences cannot distinguish between the two suppliers. Consumers can’t choose either Home Depot or Staples when they cannot tell why they should choose one over the other. Audiences couldn’t tell you which is which.

Closing stores will mean nothing if consumers have no compelling reason to choose one of them over the competition. In fact, if Office Depot and Staples don’t uncover those reasons for choice, they will become the next Circuit City and Radio Shack.

Right now, neither has a brand claim that makes them relevant. The theme line for Staples is “Make More Happen.” Office Depot claims you shop there to “Gear Up for Great.”

StaplesWhat do those mean? Is either of them emotional enough to create preference? Both themes are used in current back to school advertising, but neither are emotional or say anything truly meaningful about who their individual customers are.

Taken at its word, the definition of a Staples customer is some one who wants to make more happen. The definition of an Office Depot customer is that they gear up for great.

Does either of these retailers truly believe these are the most emotionally intensive triggers for target audiences when buying office supplies?

What the CEOs of Office Depot and Staples should do

Let’s take one step back. Retail as a whole is an industry in crisis. Amazon has taken a big bite out of the market share of brick and mortar brands, and retailers have been late to respond. It’s not too late, but audiences prefer Amazon in greater and increasing numbers, thanks largely to its Prime membership.

But there are larger issues involved. Retailers have long taken for granted that the shopping experience will draw customers. Therefore, there is an entire science devoted to making the experience more fulfilling and enticing.

What if shoppers don’t want to experience a store at all? What if they would rather do something else and leave the shopping chores (such buying back to school supplies) to Amazon for the convenience or Walmart for the prices?

Office DepotThe answer to those questions is simple, but difficult to achieve. You must create preference for your brand.

Strangely, retailers invest very little in their brands. Instead, most focus on products, sales and sub-brands. The problem with that strategy is that you train audiences to shop based on convenience – which store is closer – and that means opening more stores, not closing them. Convenience becomes the rational trigger because all retailers sell similar products, hold sales and promote sub-brands. Customers can get them anywhere (even online).

Instead, investing in the parent brand as the reason for preference gives the meaning to why those products, sales and sub-brands are important. It demonstrates the difference between you and your competition to offer a true choice.

It’s the reason why Nike has rarely talked about the advantages of its shoes, instead saying the Nike user will “Just Do It.” The Nike wearer is a winner, who does not have time for indecision.

For the new CEOs of Office Depot and Staples, there is also no time for indecision. There is a future where both chains could close and the new executives will wonder why they couldn’t prevent it. Don’t be that CEO.

American Fidelity. A case study in branding insurance.

The American Fidelity Case Study.

How we helped American Fidelity find the right brand promise.

American Fidelity is one of the leading providers of supplemental insurance and benefits, specializing in auto dealerships, education, municipalities and health care. Its core customers are employers who offer supplemental insurance to their employees in those segments.

American Fidelity
The old logo of American Fidelity had little brand meaning.

As a business, it operates in divisions based on those specialites. At issue was that American Fidelity had no overarching brand promise that brought the divisions together, increase preference with existing customers and attract new prospects.

Finding meaning for American Fidelity.

To achieve that, the project entailed qualitative and quantitative research with employers, employees and associations – both current customers and those who use a competitor. Also, an analysis of the competition and a brand audit was conducted to see where the current brand stood in the market and what it could claim.

Our competitive analysis found that competitors, which range from regional carriers to giants such as Aflac, focus solely on price, coverage and, in the case of Aflac, quick results.

American Fidelity
The new logo for American Fidelity redefines who its customers are: Those who always seek a different opinion.

The research demonstrated that administrators and employees believed all supplemental benefit providers were basically the same.

For the employer, who has complete control in selecting a supplemental benefits provider, the research clearly showed that they viewed their individual organization’s needs as unique. To find the right coverage for their particular needs, they seek something different.

Wanting something different was also part of their belief system, which is the emotional driver of human behavior.

Using an existing strength of the company – its niche focus – the new brand promise of American Fidelity stated that it represents a different opinion from the status quo because it is a specialist that knows there are no pat answers.

As the company says now, “When it comes to making health decisions, many seek a different opinion from a specialist. When choosing supplemental benefits, it’s important to seek a different opinion too.”

To reflect that brand, a new logo was developed that demonstrated American Fidelity being different and more important than the rest of the pack.

From advertising to collateral systems, signage to stationery systems, Stealing Share created a comprehensive brand structure for American Fidelity. Included was a brand standards guide that demonstrated cues for logo uses along with messaging and brand personality guidance. Stealing Share also conducted brand training for its thousands of employees.

Pharmaceutical Marketing Strategy

Pharmaceutical marketing strategy focuses on the mundane

Pharmaceutical marketing is faced with two issues: Its players must report the potential side effects of their drugs when promoting their uses and a increasingly prominent part of the market is generics, with most patents running out after 20 years.

Those are only a handful of the issues facing Big Pharma today. But pharmaceutical marketing strategy industry-wide is exacerbating the problems.

Pharmaceutical marketing strategyThe companies address those hurdles by running expected and non-differentiating advertising. They take on the generics by creating made up names that they believe will set them apart and give them a unique URL.

Let’s take these issues one by one. We’ll finish with what changes should be employed in pharmaceutical marketing strategy so its marketing becomes different and more effective.

The side effects question

We’ve all seen the ads. People are living a healthy and fulfilled life while they are walking, running, gardening, being with friends and family in them. Meanwhile, a voiceover explains some scary side effects: Nausea, paralysis, shortness of breath, even death.

Pharmaceutical marketing strategy aims for the patient to provide the pull through for doctors prescribing those drugs. But those regulated messages prevent much of that from happening.

The regulatory rule reads that you must state the side effects if you state the benefits. That causes a dilemma for pharmaceuticals because they can’t avoid it. Therefore, they plop that verbal footnote in the middle of the ad so they can tell the good stuff at the beginning and the end. They are praying viewers forget about the side effects.

However, they would be more effective if the ads projected more interesting visuals than just the living my life images.

Some try different things. In an ad for Toujeo, a diabetes drug, a woman walks through a white-paper world that reflects her journal and her feelings.

Animation is the go-to tactic for many pharmaceuticals, often to uneven effect. The Toujeo spot is more visually interesting than most (thus slightly overcoming the side effects problem) while others are just stupid.

Internet circles have been alive over Movantik ads with a woman walking around carrying a suitcase of poop. Of course, that suitcase is supposed to represent constipation. But it visualizes something else.

The unintended hilarity does not mask the verbal footnote of side effects. It actually increases the awareness of it. The voiceover says: “Movantik may cause an increase in stomach pain or abdominal pain, or diarrhea and vomiting.” The dialogue narrates the images of the female character walking through a park with her suitcase of waste and an opioid capsule.

Showcasing a boring lifestyle imagery only places more focus on the side effects because the imagery is so expected and dull.

Even though the recent spots for Entresto sport a nice effect of its cast singing, “Tomorrow,” the spot looks like everything else.

Interesting visuals do not completely pull companies over the hump. But can’t pharmaceuticals be more imaginative? And provide imagery that is more meaningful?

Generics

To tackle generics, pharmaceutical marketing strategy focuses on blockbuster products. Pharmaceuticals have a limited window to capture an audience before generics and other competitors take hold. So they go big.

So each spends around $5 billion (billion, not million) on advertising, focusing on the blockbuster drugs that will capture large amounts of attention. It’s not a bad strategy. But it’s akin to movie studios depending entirely on blockbusters rather than the middle ground where most movie classics are produced.

Pharmaceutical marketing strategyPharmaceuticals are so dependent on the blockbuster nature of their drugs that they figure the drug alone will sell the ad. They believe they don’t have to change the same imagery and tone. It’s like they are all feel playing from the same playbook.

In fact, they may be. Like many other industries, pharmaceuticals hire ad agencies long experience in creating drug commercials. That is, they believe experience is the key to producing good pharmaceutical advertising, not groundbreaking strategy.

That kind of thinking leads to ruts, much like what the automobile industry has been experiencing for years. The ads themselves are not creating preference. In fact, unless you are paying close attention, it’s difficult to separate one pharmaceutical ad from another.

Pharmaceutical marketing strategy
This imagery is typical for pharmaceutical marketing

The incestuous nature of using the same ad agencies over and over again creates this situation. If an ad stands out, it’s usually because the people in it – generally, not actors – have a particular quality that makes them seem human rather than stock figures.

If pharmaceuticals are determined to create preference in light of the cheaper costs of generics, then they need to do better.

Creating preference

Pharmaceutical marketing strategy has simply gotten lazy. Companies hire the same agencies, trot out similar advertising and rarely create long-term preference either for the parent brands or the individual products.

That’s because creating actual preference is difficult work. Launching quantitative research that asks the emotional questions that drive behavior is not easy. The usual attitude & usage studies the industry has traditionally relied on don’t do the entire job.

Pharmaceutical marketing strategyCreating preference means looking past the status quo to create advertising that is truly different and better.

Parent brands also need to create their own preference because creating preference for each individual product is expensive. (Hence, the $5 billion advertising bill.)

It would be much more efficient if the parent brands of Pfizer, GlaxoSmithKline, Merck and others were the generators of preference. Doctors and patient could more easily navigate all the offerings.

If, for example, Pfizer’s brand was focused on being less harmful than any other, that brand promise would filter to its products. So, Eliquis, a drug to reduce the risk of stroke, would be known as a less harmful way to treat that risk. Eliquis by Pfizer would mean something and give direction to its advertising that goes beyond the boring clichés of today’s marketing. (Such as an old guy pretending to play guitar.)

Pharmaceutical marketing strategy must address the advertising rut as few, if any, are creating anything that works. To make their dollars count, those companies should be looking toward brand. It’s cheaper, more effective and is the directional power all of them need.