Stephen Ilagan's Blog

In light to today’s class discussion on Branding, I cam across an interesting article that coincidentally, relates to my previous post about athlete endorsements. Ahead of next month’s Women’s Hockey World Championship in Ottawa, Hockey Canada unveiled new jerseys that feature the yellow and gold colour scheme of cancer charity Livestrong in an effort to raise awareness for cancer research. The jerseys are part of a greater “Fight With Us” campaign run by Livestrong and sponsors Nike and Sport Chek. The only problem? The Livestrong Foundation was started by none other than Lance Armstrong, the disgraced cyclist who admitted to taking performance enhancing drugs throughout his career last January.

While Livestrong undoubtedly  remains true to their cause (Armstrong has since stepped down as head of the Foundation), and Hockey Canada’s support of cancer research has to be applauded, the association to Armstrong and what he now symbolizes to North Americans – a cheater and a liar – is impossible to put aside. As Howard Bloom puts it, “Livestrong and Lance Armstrong are married at the hip”.

Is this a mistake? To me, the message that the jersey sends out is a conflicting one. While it supports an incredibly positive cause, that cause has unfortunately been victimized by a man who has lost the respect of a nation and is now dealing with a bevy of lawsuits in light of him being stripped of all his Tour de France titles. Surely, there must have been other cancer charities – The Canadian Breast Cancer Foundation, for instance (teams have worn pink equipment before). Despite this, however, I believe that Hockey Canada’s decision is a sound one. Why? Simply for the fact that the controversy has light up news channels. People are talking about it. Especially for the women’s game, which doesn’t get as much attention as the men’s game, getting a lot of people to be aware of the campaign is better than having a few people support it.

pink skates… a better option?

The Oscar Pistorius case  that occurred last month doesn’t just have Reeva Steenkamp’s family in mourning. This is Nike’s third major case of athlete endorsement gone wrong ever since the Tiger Woods sex scandal in 2009. Woods, Lance Armstrong (for doping), and now Oscar Pistorius – the “bladerunner” paralympian who made headlines last year after he competed in the London Olympics – have all gotten in trouble with the law and have turned Nike’s multimillion dollar investment sour (11% of their $8.4 billion advertising budget was spent on endorsements).

From a marketing standpoint, the decision whether to keep these athletes on Nike’s endorsement payroll is an incredibly tough decision. They cut ties with Armstrong and Pistorius almost immediately. However, they decided to keep Woods on their payroll and have since re-branded him. They released the controversial commercial below, re-positioning Tiger as someone who is human and makes mistakes – a stark contrast to the God-like status Nike bestowed on him before.

[youtube=https://www.youtube.com/watch?v=5NTRvlrP2NU]

Since then Nike has slowly moved back to focusing on Tiger as a golfing figure, recently airing a commercial with another Nike signing: Rory MacIlroy:

[youtube=https://www.youtube.com/watch?v=2NCDYjHtEcU&list=PL82EB32A8DE8F2E55&index=2]

In the end, I look at their decisions on what to do with athletes who have gained negative pr as one based on value. Armstrong and Pistorius are icons, no doubt. However, Armstrong is retired and was more of a spokesperson who’s image was based on the integrity he’d built up in his career. By admitting to using performance-enhancing drugs, he effectively eliminated that integrity – Nike’s asset in the partnership. Pistorius, meanwhile, proved to be expendable. An unfortunate timing with his murder trial – Nike had drafted up an ad with Pistorius before the events with the words “I am the bullet in the chamber” – coupled with that fact that he isn’t as on high a level as some of Nike’s other athletes, meant that the future value just wasn’t there. Woods meanwhile, hasn’t lost what made him so marketable in the first place – his golf talent. That, coupled with the fact that he is one of the most recognizable people in the world, meant that there was still marketing value to be had from keeping Woods with Nike.

For more on the Nike endorsement story, check out this article by Gabrielle Douglas (Associated Press)

As I was watching The Lang and O’Leary Exchange, an interesting interview with Unilever CEO Paul Polman caught my attention. In it, Polman elaborated on Unilever’s Sustainable Living Plan, which was launched in 2010. The 10-year plan has completely remoulded how home product giant (Vim, Dove, Q-Tips, Becel, Knorr, etc.) has approached business.

Now, I personally have been skeptical of businesses getting into sustainability movements. The way I see it, jumping on the sustainability train has either been businesses capitalizing on a social trend to boost sales or its an ill-fated strategy that isn’t maximizing profit.

Polman, however, brought up some interesting points based on not just value-based marketing, but value-based business as a whole. Polman debunked several negative perceptions around sustainability movements. A common argument against the movement has been that it adds unnecessary expenses to the bottom line. Polman said that simply isn’t true. In fact, the sustainability movement has allowed Unilever to save $50 million on transportation costs for moving factory waste to landfills.

The line that really resonated with me, however, was Polman’s statement that “sustainability makes good business sense when it becomes an integral goal.” For example, the free distribution of Unilever household goods to 3rd world countries to raise living standards isn’t a money sink. Rather, its an investment for a whole new consumer base. Polman reasoned that solving a problem like the lack of handwashing in underdeveloped countries – through the distribution of cheaply manufactured soap – exposes more people to Unilever’s products.

Perhaps that is the reason why I had viewed the sustainability movement with skepticism. Few companies have done what Unilever has by making sustainability an integral part of the company. Most companies seem to just set aside cash and run sustainability “charities” that don’t really factor into the company’s value chain. Unilever, however, has re-worked its operations from top to bottom, forcing sustainable critical mass throughout the company’s supply chain – from suppliers, consumers, and even investors (Unilever has re-worked its investor information packages  to compensate for the fact that sustainability progress isn’t something that can be tracked in cyclical periods).

From a marketing standpoint, Unilever is creating a core competency that matches the values of their consumers. Unilever isn’t just running some fake for-show “I care about the planet” campaign. This is truly value-based marketing working to create value for all people stakeholders.

Need more proof that profit is matching value? Unilever’s stock price has doubled in the past 4 years.

Info Video for the Unilever Sustainable Living Plan:

Unfortunately, I could not post the actual Lang and O’Leary Exchange interview. However, if you go to the cbc player (link below), select the Feb. 14 episode you can watch it there (starts at around the 13:00 min mark)

http://www.cbc.ca/player/News/TV+Shows/Lang+%26+O%27Leary+Exchange/ID/2335277883/

With the end of an NHL lockout that was dubbed the “dumbest lockout in professional sports history” by Vancouver Sun columnist Iain Macintyre , the logical thing to conclude would be that the NHL would have to work extra hard to bring back fans who have made their anger felt throughout the lockout. After all, following the 2004 – 2005 lockout, the NHL invested into several nation-wide commercials such as the one below:

Following this lockout, however, there have been no such national promotions, despite the feeling this lockout supposedly angered the fans much more than the last one. In fact, the only national commercial concerning hockey has been Nike’s “Hockey Is Ours”, which implies a subtle emotion of anger towards the league.

https://www.youtube.com/watch?v=mQ4JTjFcU7Q

And despite all this, of the 15 opening weekend games, 13 sold out. It seemed as if all the anger disappeared. How could there be such a drastic shift in consumer attitude from an emotion of anger towards the league to an emotion of elation with so little push from the league? My theory is that fans saw the league and each team they support as two different entities / products. Fans are quick to point the blame of the lockout on league commissioner Gary Bettman. Their attitude towards him is still one of hostility, as fans believe he started the lockout, therefore they feel contempt towards him, and actively voice their displeasure. Their teams, however, are a different matter. For many loyal fans, some of which have been season ticket holders for multiple years. All throughout the lockout, Union leader Donald Fehr portrayed the players as victims in the whole process, feeding fans the idea that the players that they follow and adore are suffering as much as they are. Smartly, the NHL left most of the marketing initiatives to the individual teams to carry out local promotions among their fan base. It seems like it has worked wonderfully. The league recognized that fans still retained their endearing loyalty to their teams, so that was enough to compel them to buy tickets in a surprisingly successful opening weekend. Ironically, despite a negative attitude toward league’s top brass, the NHL still found a smart way to take advantage of the subtle difference between team and league to set off what is bound to be another strong (albeit shortened) season.

One of the most controversial figures of the information age isn’t going away anytime soon. Despite having his file-sharing website Megaupload shut down when he was indicted last year for copyright infringement, internet tycoon Kim Dotcom is setting up a new cloud-based file-sharing website named Mega. While the act of facilitating piracy through the internet is a major ethical dilemma in itself, the way that Dotcom has spread word of his newest venture raises ethical marketing issues as well.

In contrast to other peer-to-peer file sharing systems like Limewire, Grokster, or BitTorrent, Dotcom went full out in his advertising, holding a press conference in his New Zealand mansion, and granting interviews with newspapers. He has been incredibly open about how his criminal charges are wrong, as if Mega itself is a vindication of it. Media outlets have eaten it all up, and Dotcom is getting ridiculous amount of P.R. Consequentially, Mega had 500 000 users sign up within the first 14 hours of the announcement, prompting a delay in services due to excessive demand. The question to ask ourselves is how can something have such a negative stigma, yet generate such positive returns? And bearing that, is negative marketing ever acceptable or ethical?

Granted, internet file-sharing is a tricky “industry”, as the boundary between legal and illegal seems to become more hazy everyday. And Mega’s success may stem from that very fact. His method of advertising may be controversial, but it matches the controversy that surrounds internet privacy and file-sharing. His polarizing method is much more likely to attract extremists who support freedom of data across the internet. Forget “Any P.R. is good P.R”. It should really be revised to “P.R. that matches the situation applied – negative or positive – is good P.R.”. Is the website that Dotcom is creating unethical? Perhaps. But the marketing method he chose to utilize is just an effective assessment of the situation.

Forbes Article

In response to Adrian Fung’s blog post “Is Social Entrepreneurship Really Possible?”, I would have to agree that Social Entrepreneurship is just another marketing ploy used by profit-driven businesses to attract sales. Adrian uses the examples of TOMS shoes and their “one for one” campaign. I have no doubt in my mind that this campaign only drives home the point that consumers should buy them as they are not only going to look fashionable, but they are helping other people. Ingenious, really. I side more with Milton Friedman when it comes to theories about how companies operate. The rise in “social responsibility”  is a response to consumer demand shifting to goods and companies that are environmentally and socially responsible. So really, Adam Smith’s “invisible hand” controlling the markets is still at play.

Of course, social entrepreneurs like Jamie Oliver and Muhammad Yunus are at play and do make a nice profit from their enterprises. However, these are extremely rare, and most of these social enterprises are focused on that – a social goal, rather than being a profit-driven business. The reconciliation of both is extremely difficult and most social enterprises end up functioning like charities, rather than businesses.

To find an innovative company, one simply needs to open the closest web browser. Google has completely redefined cyber space to the point where it is taken for granted. Google has gone even further than Schumpeter’s definition of the entrepreneur “revolutionizing the pattern of production”. Google has changed the way we think. That, in my opinion, is the true mark of an innovator, of someone who not only takes advantage of change, but pushes it forward as well.

When Larry Page and Sergey Brin launched Google in 1998, their mission was to organize the internet. Their “pursuit of opportunity” definitely exceeded “the resources they currently controlled” (Stevenson’s definition of an entrepreneur).

It hasn’t stopped at their search engine either. Google has constantly been trying to innovate; to take control of the fast-paced technology sector. In fact, in 2011, Google had over 50 acquisitions.

Their next big project? Google Wallet. If that isn’t innovation – completely changing a staple in our lives  and making it digital – I don’t know what is. As Drucker said, the entrepreneur “always searches for change, responds to it, and exploits it as an opportunity”. That is exactly what Google is trying to do in our digital age.

Target’s $1.8 billion purchase of most Zellers leases is old news, and many my fellow Comm101 bloggers (Akaash Bali and Karen Lee to name a few) have discussed the possibilities of what Target will bring to Canadian retail when the takeover happens, many people have forgotten what Zellers plans to do in the wake of a major liquidation.

In Tuesday’s Globe and Mail, an article titled “Zellers’ Last Christmas” outlined Zellers’ creative strategy for this holiday season. With the unique situation of having time before relinquishing their stores (Target’s takeover won’t be complete until March 2013), Zellers has the opportunity to plan out a strategy to maximize profits. Consequentially, with Zellers no longer focusing on gaining market share by trumping discount leaders (they’ll be gone soon, so whats the point?) they have started to stock inventory with higher margin items such as clothing and jewelry. Traditionally, Zellers had focused on advertising cheap, low margin goods (such as paper towels) during the holiday season. Now, Zellers is going digital in an attempt to maximize profits by advertising through Facebook, and letting consumers vote on weekly sales.

Its quite ingenious, really. Zeller’s unique situation makes it an ideal case study for  changing strategies and tactics in response to the business environment. As CEO Mark Foote says, “it’s a weird time”. Weird, but interesting. It is definitely worth following how Zellers handles the next year.

Here’s an article that all of us in Comm 101 should take a look at: The Top Eight Rules of Networking, by Kelly Eggers, a regular blogger in FINS finance. True, most of this is common sense, and a select few of us are well-practiced at applying these basic rules in real life, but it does point out a few intricacies such as the differences of how to look at a person during a professional or social conversation.

Interestingly enough, the article also pointed out that business cards are beginning to trump random resume passing. Coincidentally, it seems like I’ve had to hand out more and more resumes whenever I want a job just to get an interview. It seems like you have to know someone in the company for there to be even a remote chance at landing that job. For all those wanting holiday or summer jobs, take note. This is trend that is affecting us now and will affect us in the future: job hiring (and business in general, for that matter) is becoming more and more personal. The sparkly resume simply doesn’t cut it anymore. But hey, I guess that’s why we are all in Sauder, right?

For all you sport-nut Sauderites, here is a recommendation for a sports show that puts a business twist on topics. Tom Mayenknecht hosts a show on the TEAM 1040 (better known for rants and in the words of David Pratt, “yahoo callers”) every Saturday from 9am to 12 noon called “the Sport Market“. Mayenknecht is a 30-year veteran in sport marketing and brand management and his insights often reveal things that are overlooked for most spectators of sports.

Think of Mayenknecht’s show as BusinessWeek meets ESPN Radio. Concepts that we have been learning in class – from brand positioning to supply chain operations to the effect of technology – are applied in a sports context. The application of those concepts to a real-world entity makes classes exponentially more valuable. The fun part is, of course, it involves sports, which, for a sports fan, should be a real treat, as all the perks of your regular sports radio shows – athlete guests and caller opinion – still exist.

Take last week’s show, for instance. Mayenknecht was talking about this year’s small media market World Series and the implications on TV Revenue and Baseball’s dependence on the Series reaching seven games (which it did).

If you have nothing else to do on a lazy Saturday morning on campus, tune in to AM 1040, even if its just for a few minutes, for some entertainment and learning.