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On March 1, Southwest Airlines implements some substantial changes to its customer loyalty program known as Rapid Rewards. Announced in early January, and followed by extensive communications through both electronic media and traditional direct mail, the revised Rapid Rewards program offers some ostensible improvements – such as “no blackout dates” – but trades the simple currency of 8 round trips = 1 free ticket for a more complex reward system that considers the fare’s price in the reward level. (And, as you might guess, when you purchase more expensive flight options, you will attain free flights faster.)

For the type of person who has never been put off by Southwest’s famous “cattle call” seating system, the generous Rapid Rewards loyalty program was ideal. It was simple, predictable and egalitarian. By comparison, the new system sounds complicated, variable and, may we say, elitist?

As a huge fan of Southwest Airlines, I am not ready to criticize the new program – and I very much appreciate the early and transparent communications Southwest has undertaken to explain the new system to members. But most people don’t welcome change – especially if they think the change might be robbing them of a benefit they were accustomed to receiving as part of their rewards program.

In June 2010, the online financial web site TheStreet.com named the five best (and worst) customer loyalty programs. (Rapid Rewards was not on either list.) According to its report, consumers belong to an average of 14.1 loyalty programs, but only actively participate in 6.2 of those programs (44%). The better programs have higher participation because they are more readily accessible, simpler to track, and easier to accumulate rewards; the most popular programs also tend to have partner networks or other ways to accumulate points (and/or more places to redeem them).

Among TheStreet.com’s top picks were Starbucks (lots of perks and “free stuff” even at the entry level); Best Buy (simple 1:1 point system and lots of members-only offers); and Intercontinental Hotels (4,400 qualifying properties in over 100 countries). Both Starbucks and Best Buy have recently revamped their rewards program to make them simpler and provide more immediate gratification to new members.

Among the worst loyalty programs, TheStreet.com criticized Subway for taking a popular and simple reward program (the Sub Club, which until 2005 gave customers a free meal each time their Sub Club card filled with stamps) with a new point system in which “rewards were slimmed to Jared-like proportions.”

While preliminary response to the new Rapid Rewards has been mixed, it will be months or even a year until most members really know if the news system is an improvement or a rip-off. If Rapid Rewards members are treated fairly in regards to rewards or points they had accumulated before the transition – and if they can continue to understand how many trips they need to take to earn a free flight – Southwest will most likely keep its loyal fan base flying high.

Business, Communications

As the winter weather is coming to a crescendo here in the Midwest, cold and flu season has finally hit our family. I’ve been spared so far, I believe, by what I like to call “pre-emptive NyQuil.” This involves taking a full dose of NyQuil for the first night (or two) that I feel a cold coming on, and allowing the sublime sleep it fosters to cancel out my cold symptoms. It’s been a very successful strategy.

Interestingly, NyQuil seems to be on a pre-emptive mission of its own. Its current packaging includes the traditional tamper-evident shrink seal which envelopes the dosage cup – but on the shrink seal itself, NyQuil now broadcasts the following message: Vicks does not make store brands.

Store brands have taken a huge bite out of name brand sales, especially since the economy hit a tail spin in 2008. According to the Private Label Manufacturer’s Association, “nearly 1 out of 4 products bought in U.S. supermarkets last year was a store brand and market share rose to all-time record highs of 18.7% dollar share and 23.7% unit share…. Store brands accounted for almost 90% of all new revenue in the (supermarket) channel. In drug stores the results were equally positive with records set for private label dollar share at 14.1% and unit share at 16.3%. Private label was responsible for more than half of all sales gains.”

Cough and cold products such as Vicks NyQuil are sold at both supermarkets and drug stores, and the private label versions are often 25% to 40% less expensive than national brands. In a strategy called “price shielding,” retailers often discount both the name brand and its competing store brand at the same time to maximize sales of both alternatives. Other strategies include carrying more than one store brand – a “national brand equivalent” (NBEs) positioned at the same or higher quality than the name brand, and a “value brand” that competes exclusively on price.

There is also the common consumer perception that many store brands are actually manufactured by the same companies that make the name brands – and in many cases this is true. Consumers figure if the same company is making their NBE ibuprofen, dextromethorphan or pseudophedrine, they might as well buy the option that costs less.

In an age when consumers are trying to spend as little as possible, it would be tempting to look for a less expensive NyQuil alternative that works equally well as the name brand. But thanks to their pre-emptive marketing message, I won’t even try to find one. I don’t have time to miss even one night’s solid rest.

Marketing, Packaging

As the year comes to a close, a lot of us will be making New Years’ resolutions. According to various Top 10 lists of New Year’s Resolutions, “losing weight,” “eating better” and “exercising more” all make it onto most lists.

If that is true, then Kellogg’s is taking the right approach with this year’s Special K Challenge. It is using a combination of television and print advertising, as well as social media, to promote its 2011 Special K Challenge. Later tonight, they will even undertake a special promotion in Times Square that will broadcast women stepping onto scales in a most public manner, and sharing their weight-management resolutions by describing their goals in inspirational words and phrases instead of hard numbers.

What’s different – and refreshing – about Special K’s 2011 challenge? This year, they are focusing more than ever on the personal benefits that individual women hope to achieve with a renewed commitment to better nutrition. Their marketing message – “What will you gain when you lose?” – plays on the widespread appeal of television shows like The Biggest Loser, but it is a legitimate and attainable health message for a broad spectrum of women whose primary goal is to manage their weight. It also helps women focus on the emotional benefits of being healthy, instead of a number on a scale.

To support the marketing message, Special K has an easy-to-navigate website that allows women to select a meal plan from one of four plans (Classic Plan, Mix-It-Up Plan, On-the-Go Plan, and even a Chocolate Lover’s Plan) and then customize each plan based on food preferences. Each plan carries a person through two weeks of dieting that is heavily comprised of Kellogg’s products.

Will two weeks of protein shakes, cereal bars and sandwiches lead to a lifetime of better health habits? Maybe or maybe not…. But if women can combine the goal-setting that is so successful for men with the emotional and social strategies that have traditionally helped females stick to their resolutions, 2011 could be a healthier year for everyone – including Kellogg’s.

Uncategorized

Earlier this fall, I gave up on my local drive-thru coffee shop in favor of making better coffee at home. As a result, I’m buying ground coffee much more frequently, and often receive those nifty store-generated coupons designed to make me buy more packages each time I purchase. Last week, I was surprised to get one for Eight O’Clock Coffee that showed a brand new package design on the coupon. “Fresh new look, same great taste,” it promised me.

When I got to the coffee aisle, sure enough, the new packaging had replaced Eight O’Clock Coffee’s traditional red bag. First, I was impressed that my local grocery store’s couponing system was current enough to issue the coupons so close to the time the packaging was changed in-store. Second, I was curious to know more about why Eight O’Clock changed its packaging now, when just eighteen months ago it scrapped plans to let consumers decide what its new packaging would look like in favor of retaining its 150-year-old identity.

According to a news release issued in October, “The new look was developed with extensive consumer input, including last year’s Eight O’Clock Coffee Packaging Makeover Sweepstakes, which was timed to coincide with the brand’s 150th Anniversary.” The new look is almost identical to the package design that won that contest (although at the time, more customers said they wanted Eight O’Clock to retain its iconic packaging instead of making any changes at all).

Seeing Eight O’Clock Coffee’s packaging evolve since my March 2009 blog post made me wonder which of my other posts deserve revisiting. So, I researched two of my favorite topics that were each due for further resolution by now.

First on my list was the law suit filed in December 2009 by a company called Bing! Information Design, LLC. They were suing Microsoft for using the name Bing for its Google-competitive search engine, and claimed they had been using the name since 2000. (However, they had not trademarked their name until May 2009, on the same day Microsoft purchased the domain bing.com; Bing! Information Design previously owned the bing.net URL.) Although financial details on the issue are sketchy, Microsoft settled with Bing around September 27, and the bing.net URL now directs me to the Bing search engine, so I’m assuming the settlement was sufficient enough to make Bing! Information Design part with its recently-trademarked identity. If Bing! has given up its name and chosen a new one, I was not able to find that information online.

Next, I was curious to see if CofactorGenomics ever determined what has enabled Ozzy Osbourne to enjoy a successful and relatively long life of sex, drugs and rock & roll. It turns out that they did: According to the St. Louis Business Journal, Ozzy “has a rare combination of warrior and worrier genes.” While Cofactor and its partner, a company called Knome from Cambridge, Massachusetts, think this is an extremely rare combination, Ozzy himself says it explains a lot. “Being a warrior — the crazy bat-eating Prince of Darkness — has made me famous. Being a worrier has kept me alive when some of my dearest friends never made it beyond their mid-20s.”

Let’s hope we can all learn a lesson from Ozzy’s balanced approach. Eight O’Clock Coffee looks like it’s balancing old equity with new design sensibilities. It’s yet to see how Bing! Information Design reinvents its brand, or even if it needs to. Maybe an undisclosed settlement from Microsoft is better than slogging it out for a new URL.

Marketing, Packaging

I have been responsible for marketing PLA (corn resin) plastic bottles for approximately five years, and I’ve been attending the Wal-Mart Sustainable Packaging Expo for four. Each year, I follow the progress of NatureWorks, the maker of IngeoTM PLA resin, which is used for everything from shrink films to disposable silverware to vitamin bottles. PLA, or polylactic acid, is a compostable material that meets ASTM 6400, a standard established by the Biodegradable Products Institute.

Although my working knowledge of PLA is somewhat limited to rigid plastic bottles, my consumer experience with the bioresin includes the much-criticized Sunchips bag, which apparently creates more decibels of noise than the average subway train.

The noise is interesting, but not necessarily surprising when I think about how we used to tell which bottles in our trade show booth were traditional clear plastic, and which were PLA: We’d flick our fingers onto the bottom of the bottles, and if we heard a dull thump, we knew the bottles were PET plastic. However, if we heard a more high-pitched “clink,” we knew it was PLA.

Packaging, Sustainable Packaging

Earlier this week, I heard the YMCA is changing its logo and its “everyday name” to “the Y,” because that’s how most people refer to the youth-focused non-profit. According to Mamie Moore, national spokeswoman for YMCA of the USA, “What we’re doing is calling ourselves ‘the Y’ because that’s what everybody calls us. But YMCA is still our legal name.”

YMCA, of course, is already short for Young Men’s Christian Association, and some media speculate the organization is trying to remove the “Christian” reference from its acronym. However, the Y contends that it put two years of research into the name change and new logo, and that they are really just trying to connect with a hip young audience that does not understand what the Y’s mission is. (I’m a little confused how shortening the name to ‘the Y’ helps explain that mission any better or differently than ‘YMCA’ did, and even more confused because both the old and new logo emphasized the letter Y and both have a proportionately smaller “YMCA” as part of the mark.)

The Y is not the first well-known entity to shorten its name to shed old perceptions or connect with new customers. In 1991, Kentucky Fried Chicken changed its name and simplified its logo to KFC. At that time, KFC management was trying to make itself a chain of the 1990s, introducing healthier menu items, enforcing stricter operating standards, and ultimately rebranding the company that Colonel Harlan Sanders first franchised in 1952. KFC not only resonated with customers who already referred to it by its initials, but also allowed the company to drop the emphasis on “fried.”

A few years later, Federal Express officially became FedEx, and not just because that’s what most people already called it; FedEx also spent several years researching the name change and creating the new logo. Key issues identified through research showed that Federal Express sounded too similar to a growing field of global competitors. Also, the word “Federal” – originally chosen to convey an official and reliable alternative to the U.S. Postal Service – had become associated with government bureaucracy in the minds of consumers. The new logo, which had to reinforce the company’s goal of being “big and bold but friendly and accessible” had an added bonus: While spelling out ‘Federal Express’ only allowed for 58-inch letters on the side of a delivery truck, the letters spelling FedEx now stand six feet tall on most trucks.

Each of these high-profile name changes were backed by months or years of research, hundreds of thousands of dollars in media and PR, and an overall broad awareness by consumers of what these companies already provided. But also this week, I read about a small local company – currently known as The Cupcakery – that is changing its name to The Cup later this month.

According to the news article, the multi-location cupcake bakery, started in 2007 in St. Louis, is changing its name to avoid confusion with other cupcakeries opening across the nation. (The news release didn’t specify, but I’m guessing they are referring to cupcake franchises such as Cupcake Station and Original Cupcake.) But I can’t help wondering if they are inviting a whole new source of confusion; to me, their new name says nothing of cupcakes and says everything about being a coffeehouse. (It also doesn’t help that The Cupcakery’s Flavor of the Week is Mocha Cappucino.)

The new logo does include a cupcake with some swirly icing, but the new illustration is not nearly as “cupcake-y” as the previous logo with the clearly-fluted brown baking cup below the generous green icing.

Even though I’m in St. Louis, I’m not familiar with The Cupcakery, so I don’t know if they conducted research to show that this name and logo change resonate with their target demographics. (I hope they did.) I also have no idea if they are really changing their name to avoid confusion with other companies, or if perhaps they are being forced to change it because they did not trademark it and someone else did. I hope I’m wrong about this, but from the outside looking in, it seems like a case of making a change that will avoid one problem yet create many others.

Changing a name, logo or packaging is one of the most exciting and stressful things a company can do. When is the right time to change a brand, and how do you know if the change is a good one? Consumer research can point you in the right direction, but you also have to look at what you’re changing and ask yourself: Am I making it better, or am I just making it different?

Business, Communications, Marketing

A certain St. Louis Post-Dispatch columnist has said that as a city, St. Louis possesses an inferiority complex that prevents us from aggressively pursuing – and winning – things that are coveted by other cities. Corporate headquarters. Cultural institutions. Sports teams. One other thing that St. Louis is notable for missing out on is venture capital funding, which is generally required to lure healthy and interesting start-up companies to any town (or enable them to stay there).

But at least one emerging St. Louis company is not only making a mark in the Midwest. They are getting national (and international) press for a proprietary technology that even Ozzy Osbourne is interested in.

Cofactor Genomics LLC, an 8-person, $2.5 million company based in St. Louis, is working with two other companies to create a genetic map of the eccentric and hard-living rocker, and then interpret the results to provide insight into Ozzy’s genetics and ancestry.

The results of the project, which began when Ozzy Osborne approached a company called Knome to provide the genetic interpretation and data analysis, will be featured in the Prince of Darkness’s new health column in The Times of London. Cofactor will begin the gene sequencing process within the next two months, and the Knome’s data analysis will take several more months to complete.

Osbourne approached Knome because of its recent work interpreting the genetic maps of a dozen high-profile celebrities for the PBS Series Faces of America. According to Cofactor’s President and Chief Technology Office, Dr. Jarret Glasscock, the genetic analysis may, in part, explain how Ozzy Osbourne has been able to survive a life of sex, drugs, rock & roll, and occasional encounters with bats.

For now, the attention on Cofactor should cause excitement not just for that company, but for all new companies hoping to find the one bit of notariety that propels their company from start-up to stability.

“As more celebrities get involved, (genome sequencing) will become more mainstream,” Glasscock said in the St. Louis Business Journal on June 28. “As prices continue to fall and the technology continue to progress — over last four years, we have made huge leaps and bounds — this will become very common.”

If genome sequencing does indeed become common, we can thank a rather uncommon rocker for helping one local company make its mark early.

Marketing

Pantene is doing away with the metallic banding on its caps to reduce costs and simplify its packaging.

Pantene is on a mission to save money by, among other things, simplifying its packaging and abandoning the gold foil on its closures that is the last visual reminder of the striking gold caps that once set the brand apart. But last week it spent money on an interesting advertising event that combined the appeal of reality TV with a great public relations opportunity.

It was a clever gimmick: Encourage women with great hair to compete for the title of Tabloid TV’s “Mane Girl” and become the “World’s First Reality Hair Star.” The grand prize was the opportunity to star in the company’s first live commercial, which was filmed in the same ambush style that Publishers House Sweepstakes Winners learn of their great fortune.

Pantene embarked on this unique campaign because they are promoting the newest generation of “customized solutions based on hair structure.” To support the reality TV theme – and emphasize the many different personal interpretations of what makes great hair – Pantene enlisted reality show personalities Nicole “Snooki” Polizzi (MTV’s Jersey Shore), Lauren “Lo” Bosworth (The Hills), and Jill Zarin (Bravo’s The Real Housewives of New York City) and had each woman create You Tube videos giving their tongue-in-cheek explanation of why they should be Pantene’s Mane Girl.

None of the existing reality TV stars won the competition, of course. The honor went to Marissa Hopson, a Fort Lauderdale journalism student that Procter & Gamble says was “chosen based on her ability to be engaging and confident on camera, her personality, and of course – her beautiful hair.”

Pantene and P&G might wind up as the big winners, however, by connecting with a hip new audience through a medium they understand, and tempting us with the one thing every woman wants when she wakes up each morning: a really good hair day.

Marketing

April has been dominated by a single issue: Save the Earth. But at the end of a month filled with so many Earth-friendly themes, I am left wondering if most people understand which of their actions are really sustainable and which ones simply make them feel better about what they consume.

My month started with a trip to Bentonville, Arkansas, for the Wal-Mart Sustainable Packaging Expo. For each of the past five years, Wal-Mart and Sam’s Clubs have invited over 100 packaging suppliers who offer sustainable packaging solutions to their key suppliers.

Last week, the nation celebrated the 40th anniversary of Earth Day.

And this week, I wrapped up the month by participating in a bioresin survey from Iowa State University.

A Wal-Mart winner: A package redesign by Body Fortress allows it to fit the same volume of protein powder in a canister that uses 30% less plastic.

The Wal-Mart Expo was notable for its many admirable materials and technologies that have little practical chance of succeeding in Wal-Mart’s “cost-neutral” business model. The room was full of vendors — manufacturers of plastic and aluminum bottles, paperboard, pallets, films and thermoformed trays — who all offer legitimate sustainable solutions. But the fact is that many of these solutions still come at a price premium, especially those products that contain some or all recycled materials or are made from bioresins. Wal-Mart is hoping that by mandating use of sustainable materials through its Packaging Scorecard, that the volumes they support will drive down prices for recycled feedstock. Eventually, that may happen. But for now, the only viable sustainable solutions that meet Wal-Mart’s cost-driven mantra are those that cost the same or less than the packaging they replace.

The Iowa State University survey was more proof that sustainable solutions — particularly bioresins — are having trouble gaining traction. The survey sought to find out why companies making products from bioresins (which in this country, are primarily corn-based) are making these products, what challenges they have encountered making them, and what barriers would need to be removed in order to have bioresins succeed on a large scale. Overall, the survey was well-designed and seemed to consider most of the factors that impact this young industry (cost, supply, certifications, government support and subsidies). However, I was somewhat surprised that “performance” was not among their list of potential barriers to large-scale adoption.

All of April’s activities (except for the horrific oil spill in the Gulf Coast) demonstrate steps in the right direction for the environment. Maybe by the 50th anniversary of Earth Day, we’ll have options for recycled packaging and bioresins that are not only at cost parity with traditional plastics, but also outperform them.

Packaging, Sustainable Packaging

Last year, you could hardly walk through Natural Products Expo West without consuming at least one beverage shot that promised to boost your energy. But this year, whether it’s because of a return to wholesomeness or a fascination with Lindsey Lohan, “milkaholics” can find dairy products that solve a whole host of problems. As a bonus, they almost always have clever branding and interesting packaging to draw you into the booth.

Do your children like bugs? Then they will love Lifeway ProBugs Organic Whole Milk Kefir. It’s a drinkable dairy product with probiotics (the “friendly bugs” – or bacteria – found in the stomach that boost the immune system) and great flavors like Sublime Slime Lime. Lifeway Kefir increases the level of good bacteria in the digestive systems of children and also promotes overall healthy digestion, and its colorful plastic pouches with funny bug illustrations make them an appealing Gogurt-like drink with added benefits.

Does your dog like frozen yogurt? Regular frozen dog treats are made mostly from water, dried whey, soy flour and animal fat. But yoghund frozen yogurt treats are not only made from real yogurt – they too have probiotics (or Yobiotics) to ensure the digestive health of your canine. First developed by dog boarders who saw common tummy troubles in canine guests, they can be given as a daily treat to enhance pets’ digestive and immune health. Also for dogs, Nature’s Milk offers a series of goat milk products – from protein-rich bite-sized bones to an entire line of goat’s milk shampoos and wipes – that are allergen-free for sensitive dogs.

Do you like ice cream too? All-natural dairy snacks from Late July Organic Snacks include its yummy Limited Edition Peppermint Chocolate Covered Sandwich Cookies. Late July’s evocative packaging shows a young child on an idyllic beach picnic with his family, and represents that “carefree time of year when your worries are a million miles away. A time so special it should only be paired with healthful, eco-friendly snacks that offer families the carefree choices they deserve.”

At the opposite end of the all-natural scale, Manitoba Harvest has a chocolate milk made not from dairy sources, but from hemp. The slightly-watery beverage is the chocolate-flavored equivalent of coconut milk – it sounds exotic, but is always a little disappointing. Manitoba Harvest says hemp protein is a truly organic plant-based protein that both carnivores and vegans can enjoy, and can be added to juices, smoothies and baked goods such as breads and pies.

Just about the only thing I haven’t seen milk paired with at Natural Products Expo West is alcoholic beverages – although I still have a whole day to visit the booths on the downstairs level. I’ll be watching out for throngs of milkaholics queuing up for free samples.

Packaging