Sitting on Wings: McDonald's Lesson in Positioning

Photo: businessinsider.com

We're not trying to pick on McDonald's, though the fast food chain has provided several good case studies lately.

Recently, we highlighted how the chain's decision to add more items to the menu had negatively impacted wait times and customer service. Management is taking steps to streamline and make the process run more efficiently.

The latest snafu involves the company's attempt to go up against Buffalo Wild Wings by offering a product it called Mighty Wings. The problem? Customers were lukewarm to the product and, as a result, McDonald's is reportedly sitting on 10 million pounds of frozen chicken. Yikes!

One article I read gave several good reasons why the Mighty Wings effort, well, flopped. Many of the reasons can be linked to MBA 101.

The wings, which sold for 97 cents to $1.23 each depending on the packs, were overpriced relative to the typical Micky D's menu item. It seems as though the company tried to position itself in the same quadrant as Buffalo Wild Wings without offering the same sit-down experience (or big screen TVs). That is a big miscue - trying to be something that you are not and getting out of position.

Along those lines, Business Insider observed that the pricing seemed a bit too high for customers who are continuing to have financial struggles. Those folks will still go to the Golden Arches, but would opt for standby items such as the Big Mac or Dollar Menu items.

Looks are important, too, leaning on the adage that 'eye appeal is buy appeal.' BusinessWeek noted a while back that the Mighty Wings looked a lot like McNuggets with bones. KFC, in contrast, rolled out a boneless wing option, which seems to involve a lot less work to consume.

Finally, McDonald's CEO Don Thompson noted that the spiciness of the wings seemed to clash with customers' palettes. That goes to show how important it is to use focus groups, pilots, etc. Maybe McDonald's did that and, if so, the results must have contrasted with those of a full roll-out.

Interested in Speaking at Next Year's TEDxGreensboro?

www.tedxgreensboro.com

Organizers of the next TEDxGreensboro event are looking for the next collection of thought leaders to discuss ways to make the future brighter in the local community. The event is set for May 8.

Roughly a year ago, organizers began planning the initial TEDxGreensboro program, which we featured in a blog that can be found here.

This year's event brought in a wide range of speakers that included playwrights, young professionals, vocalists and other optimists for an event never seen here before.

This year's event is focusing on "The Future, Regardless..." According to the nomination site, organizers are looking for people "who will affect the future" through personal action, research and technology, business pursuits and/or community development. You can nominate someone, or yourself, by clicking here.

This is a great opportunity for some of our young and emerging business/thought leaders to step up and share their stories. I would strongly encourage people to go to think about topics that are important to our future and volunteer someone to discuss it during this important event.

McDonald's Learns Sometimes Less is More

Photo: wikipedia

I found an interesting article for operations management folks.

McDonald's has realized that its addition of so many new products is creating service issues. It goes to show that, by adding too many items or making the ordering process more complicated, you can create bottlenecks and reduce customer satisfaction. That is never a good thing.

The article quotes Jeff Stratton, president of McDonald's USA, who acknowledges that the company's torrid introduction of menu items "created challenges for the restaurants." Looking back, Stratton adds that he "would have taken more time" to study how introducing new items would impact service.

Turnaround times are a big deal. I know that I have left other fast-food restaurants after walking in the door to realize how long I would have to wait. A number of restaurants try to address this issue; Chick-fil-A, for instance, adds order takers to its drive through lines during the lunch rush to handle more
volume.

Apparently, McDonald's service times took a hit this year, posting the slowest turnaround in the 15 years that QSR Magazine, a trade publication, has been keeping track. In response, McDonald's plans to introduce new preparation tables to accommodate more ingredients and, thus, accelerate the assembly process.

It will be interesting to see how such a subtle change in the kitchen will influence the turnaround times.

Too Much Gourmet? We Need a New Word for Quality

One of many 'gourmet' shops in the Atlanta airport.

It has been quite awhile since my last post. And for that I apologize.

My employer occasionally sends me on business trips. I get to travel to parts of the country that I have never visited before ... but I also find myself so swamped that I don't have enough time to blog. Tradeoffs are so much fun!

During one of my trips I was walking (more like sprinting) through the airport in Atlanta. As I was passing by the numerous stands and cafe offerings, I noticed something.

Food vendors sure seem to rely heavily on the word gourmet. Gourmet coffee. Gourmet salads.

Gourmet sandwiches. Gourmet everything. I could not believe it. You would think that, eventually, some enterprising restaurateur would go to Thesaurus.com and rustle up a synonym for that word. I don't know why this got on my nerves so much, and then it hit me.

Yes, it is important to position your offerings as high-quality fare. But when you use the same verbiage as your competition, you run the risk of having your message get lost in the clatter. That's how I felt. I never really noticed what type of salad was for sale, or the name of the vendor selling coffee. All I saw was gourmet, gourmet, gourmet, until it was all one big foodie blur.

Vendors in the Atlanta airport ... be daring and differentiate. If so, I might by a sandwich from you the next time I speed through between flights.

Debating Data Sharing, Security Post-Snowden

Photo: npr.org

I was in my car listening to NPR this morning when I heard a segment on Edward Snowden and the NSA leak scandal. This segment, which featured an interview with the agency's chief technology officer, seemed highly relevant to the field of IT management.

The NPR report focuses on how Snowden obtained classified information. Apparently, the U.S. government had created an information-sharing protocol so that members of various agencies could review data from other organizations.

As the report noted, an investigation into the Sept. 11 tragedy determined that information sharing could have proven useful in the days that preceded the terrorist attack.

In response to the Snowden scandal, government agencies are beefing up security and protecting sensitive information. The overarching question is whether these reforms will inhibit the type of file sharing that could prove useful in thwarting future attacks.

This conundrum exists in the corporate world as well. Companies must consider the level of security they employ to protect financials, internal communication, marketing strategy, etc. At the same time, it can prove beneficial to have a system in place where employees from different departments, or a cross-functional team, can access such information.

Here is the link to the NPR segment. It is well worth the listen.

Making the Pitch: Advertising and Demographics

I have been thinking quite a bit about targeting marketing, particularly from the perspective of identifying and going after the ideal demographic group(s). I am putting together a pitch book for my blogging/social media services and, in the process, have been paying considerable attention to how other businesses approach marketing.

This weekend, I happened across two marketing moves that I want to highlight.

The first example comes from the legal profession. While at the Taste Carolina Wine Festival on Saturday, Chad Garrett, a Greensboro, N.C., lawyer, had a booth where he was handing out hangover kits to attendees that included Alka-Seltzer, Advil, and a business card.

Garrett's specialization? Cases involving DUI offenses and traffic tickets. Given that hundreds of people were sampling wine from nearly 20 vendors, there was a decent likelihood that some of them would overdo it. If they were pulled over they would have conveniently had Garrett's business card in their goodie bag. Opportunistic? Sure. Brilliant? Absolutely!

This morning, I noticed that Wake Forest University took out a three-page advertisement touting its business school in the upcoming in-flight magazine for U.S. Airways. Specifically, the article promotes the university's program for working professionals. Hannah Sherk wrote a sharp piece, entitled "The Wake Forest Way," that promotes the school's academic philosophy, engagement and long-term financial benefits for graduates.

There are several reasons why Wake Forest might have elected this tactic to market the evening program. Nearly 40% of U.S. Airways' travelers are considered working professionals, based on the airline company's official media kit. U.S. Airways also claims that more than 3.2 million people will have the opportunity to see the article when it runs next month.

Apparently, U.S. Airways allotted space in the October edition to feature one executive education program. By seizing the opportunity, Wake Forest presumably kept other programs (Kenan-Flagler, Fuqua, etc.) out of the magazine. You could also argue that, by advertising the Wake Forest brand, the university hopes to draw attention to the other programs in its business school (full-time, MA, etc.)

It is unclear exactly how much the ad cost Wake Forest; U.S. Airways typically charges about $22,000 for a four-color, full-page advertisement, but they could have promotional rates for specialized content.

I did have some questions about the targeted marketing of the article.

Evening students work and live near the school's Winston-Salem and Charlotte campuses in North Carolina. A high percentage of U.S. Airways travelers would be unable to participate. The campaign would also fail to reach working professionals who do not fly, or those who use Delta, United or another carrier.

I do have one theory for the broad marketing pitch. Could Wake Forest be planning an online/distance learning program for working professionals? It isn't that far-fetched; Wake Forest announced on Thursday that it will be joining Semester Online by offering a bioethics course. And there is scuttlebutt from people who have been to see Farrell Hall that Dean Reinemund may be cooking up a game changing strategy for the program.

Only time will tell if this theory pans out.

Is Business School Turning Into Drunken Debauchery?

Photo: www.designinstruct.com

John Byrne, editor-in-chief of C-Change Media, just posted an article on his LinkedIn page that is sure to get the attention of business school students, administrators and prospects.

Byrne pieces together a number of recent articles and events to make the case that MBA programs are becoming more like raves and less relevant as prep for C-suite jobs.

There is "a growing feeling by many that MBA programs have devolved at many top schools into two years of boozy partying, hookups and travel - with a job search thrown in," the article asserts.

Apparently, platinum programs such as Harvard Business School are gaining reps for "decadent, alcohol-infused parties and lavish travel."

Jeffrey Pfeffer, a professor at Stanford University, told BloombergBusinessweek that the MBA experience can be easily summed up as "booze, cars and houses."

Any thoughts on this? Is there a class divide in business school? Have MBA programs disintegrated into a big social scene?

Survey: Whom Do You Trust for College Information?

Wake Forest Sets Date for Farrell Hall's Official Debut

Photo: jaffeholden.com

Wake Forest University students are already enjoying the school's newest building: Farrell Hall.

Outsiders will get a chance to check out the state-of-the-art facility on Nov. 1, according to a notice I received late yesterday.

I'm very interested in this. When I ran the business school's official blog, I was among the first people to report on plans for the then-unnamed project. (It beceme Farrell Hall after the late Mike Farrell pledged a huge sum to assure its construction.)

My report was in April 2010. At that time, Dean Steve Reinemund pledged a fall 2013 opening even though he had raised just half of the funds. Needless to say, he met both the fund-raising and construction goals.

It will be interesting to witness what the Winston-Salem, N.C., school did to improve education (and leisure) at its business school. (The groundbreaking was held in April 2011.)

Photo: www.flick.com

Based on information from the school, the building is a 130,000-square-foot facility that cost about $55 million. There's space for 1,300 students, including 18 classrooms and offices for 170 faculty and staff. A full-service cafeteria meets a need that had long gone unmet at the business school.

School administrators seem particularly proud of the 400-seat auditorium that was funded by the Broyhill Family Foundation. They are already showcasing the venue, hosting retired P&G CEO Bob McDonald last week (here is a video of his talk so you can see the auditorium).

Students can lounge in the spacious Founders Living Room, and there's outdoor space to mingle when the weather cooperates.

Which Famous Economist Can You Relate With?

Photo: www.ncipl.org

Need something to do for, say, 20 minutes or so? You can take a short quiz and find out which famous economist you agree with the most.

The University of Chicago's Booth School of Business runs the IGM Economic Experts Panel, which includes economic blogs and regular polls that involve well-known economists such as Eric Maskin, Raj Chetty and Austan Goolsbee.

The poll covers a wide range of public policy issues in an effort to either reach consensus or stir up debate among the economists.

Chris Said, a fellow at Insight Data, crafted a 105-question quiz that mimics the economist polling. You take some time, answer the questions and - voila - you can find your ideological soul mate (in a sense).

Curious? Click here to take the quiz and find your economic theory doppelganger, then feel free to share your results in the comments section below.

Google Goes Old-School with Snail Mail Advertising

Image: www.thinkprogress.org

I just received a form letter from Google (GOOG), one of the biggest beneficiaries of Web advertising, encouraging me to make better use of its online advertising services.

I found it quite ironic that the online juggernaut spent money on snail mail in an effort to get me to "give it a go," as the mailer exhorts. (After all, this blog is part of the Google suite of online services). 

Adding to the humor, Google is offering its AdSense clients a promotion that provides a $100 advertising credit to people who spend $25. Google is actually discounting a service in hopes of luring more business. (Its a very traditional marketing gimmick for a tech firm.)

Google, you are becoming so old-fashioned and traditional in your advanced age.

"You might be surprised at the number of people who are searching Google for exactly what you have to offer," Brett Willms, a member of the company's AdWords team, wrote in a form letter included with my offer.

I am moderately surprised at Willms' assertion about Google search. More importantly, I am significantly surprised that Google is kicking it old school with snail mail, a form letter and a promotional campaign for online advertising.

I am far from naive; Google must advertise to drum up business and spread the word about new products and services. In fact, the company was among the 50-biggest advertisers last year, with a projected budget of $340 million, according to Ad Age. That represented a roughly 66% spike from 2011. The company reportedly spent just $56 million in 2010.

The bulk of Google's spending involved online ads, though television spots made up roughly one-third of its marketing expenditures in 2011, according to Kanter Media. Beyond that, its typical ad strategy has featured newspaper and magazine ads. So mailers seem atypical.

So what does this all mean? One could assume that postal delivery is poised for a comeback now that the powerhouse such as Google is making use of traditional mailers. I find that highly unlikely.

Maybe this was the only way they could reach me? Nope. Google clearly has my email ... they probably know everything there is to know about me.

I would surmise that Google is getting to a saturation point in terms of its online reach, particularly as it pertains to marketing AdSense. A company can only send so many online messages, or display pop-up boxes, before they turn someone off to the product or service. 

My best guess is that online ad spending is slowing down for some reason. Google warns about advertising's cyclical nature in quarterly regulatory filings. So this postal campaign could be another attempt to mine revenue with a more traditional form of marketing.

A mailer is a more passive way of pitching a product, meaning it isn't as "in your face" as a pop-up ad. That is the major head-scratcher for me. Why is Google employing an antiquated form of communication to market to a web-savvy customer? And why are they sending out letters, when a hefty percentage are likely to end up in the bottom of a recycling bin?

Farmers Adapt to Circumvent Government Regs

Picture: office.microsoft.com

The Associated Press put out an informative article on farmers who have abandoned the "organic" label after the Department of Agriculture decided to regulate the industry a decade ago. More than 700 farms across 47 states have formed a confederation of sort and now called their produce "certified naturally grown."

In many ways, this is a study in branding, marketing and legal loopholes because most of the farms are using the exact same growing methods that were employed when they promoted products as organic.

Scrapping the organic label is saving farmers from added record-keeping requirements and fees that can equal up to 6% of a farm's gross sales.

Other farmers told the AP that the pricing premium for growing "organic" produce justifies paying the fee to the government.

The Stigma of Executive Coaching

Photo: office.microsoft.com

A recent study from Stanford University has found that few CEOs actually receive external leadership advice, reinforcing long-held concerns about a "stigma" associated with executive coaching for those in the corner office.

The study, conducted by the Stanford Graduate School of Business, the Miles Group and Stanford's Rock Center for Corporate Governance, discovered that roughly two-thirds of CEOs do not receive leadership advice or coaching from outside consultants. Half of the more than 200 respondents did not receive any outside mentoring.

"Given how vitally important it is for the CEO to be getting the best possible counsel ... it's concerning that so many of them are 'going it alone,'" Stephen Miles, CEO of the Miles Group, said in a press release announcing the study's results. "Even the best-of-the-best CEOs have their blind spots."

More than 75% of the CEOs who do receive coaching said it was his or her idea to seek outside assistance. And those who receive coaching assistance rarely, if ever, divulge to co-workers or board members that they have received help.

Several areas were mainstays among CEOs who sought out leadership advice: delegation, conflict management, mentoring and team building. Conversely, few leaders asked for assistance in areas such as empathy and persuasion/motivational skills.

Hamburger Helper Gets Marketing Makeover

blessedbeyondwords.com

A short article from BusinessWeek looks at how General Mills is revamping its Hamburger Helper product line.

Among the planned changes:

• The company is ditching "Hamburger" from the product's name. It makes sense since the line has expanded in recent decades to dress up other meats.
• They are adding a new line, to be called "Ultimate"
• General Mills will use a new slogan, "Need a dinner idea, we're here to help," which will replace the age-old, "Real good, feel good meal."
• A new social media campaign is planned, which will target men ages 18 to 30. That's a departure from the product's early days as a short-cut for housewives
• A new Helper food truck will also become incorporated in the market, along with Josh Marks, a spokesman for Real Men Cook

One thing isn't changing ... the product will still use the well-known four-fingered glove Lefty to promote the revamped meals.

Explaining a Decline in Hot Dog Sales

If you have time, check out this Bloomberg BusinessWeek article looking at the decline in hot dog sales in recent years.

There are a number of great lessons to learn – covering marketing, demographics and economics – to explain why frankfurter sales fell more than 3% in 2012 compared to a year earlier.

Some of contributory factors highlighted in the article:

• Americans are having fewer children, which shrinks the market since kids are the biggest consumers of hot dogs.
• Immigration patters could play a factor.
• Raw material costs for wieners are rising, particular beef. That increases the cost at the grocery story and slightly undermines the product's status as the perfect recessionary food. This makes me think about price elasticity of demand.
• Still, the overall sales price of a hot dog is low. As a volume-driven business, the factors listed above are vital to revenue

The story notes that hot dog sales remain brisk at baseball stadiums. The last time I went to big league game, I was at Fenway Park and ordered a bowl of clam chowder.

Cable's Conundrum: Why Charging More Doesn't Work

Paul Davis

Cable companies are really struggling.

I'll start by sharing my own experience. Earlier this week, I received a letter from Time Warner informing me that my next cable bill would include a 17% rate hike. They tried to put a positive spin on the increase; the bill could have gone up by 41%.

I was so excited about my "great new rate," as the cable company's letter put it, that I finally decided to call Time Warner and cancel my cable altogether. Talk about great monthly savings!

I'm not alone. Based on data from SNL Kagan, a research firm in Charlottesville, Va., roughly 7.4 million people scrapped cable between 2007 and 2011. Cable operators, desperately in need of revenue, have responded by jacking up rates.

Over the same 2007-2011 period, residential revenue for cable companies increased by an average of 4% annually. Monthly revenue per customer, which I will loosely compare to an average bill, went from $63 in 2007 to $82 in 2011. 

Charging loyal customers more to make up for defections is a ill-advised strategy. Cable companies are attempting to add more products and services, but they are continuously losing ground to Internet sites, Netflix, etc. They are in danger of becoming as obsolete as Blockbuster.

I decided to crunch some numbers for the cable industry, using SNL Kagan's 2000-2011 data as a guide. Over that period, cable customers defected at a 1% average annual rate, with defections accelerating in the last few years. Using that number, along with the average rate hikes I mentioned earlier, I built a chart showing what the cable model would look like if those changes were constant:

The cable industry's revenue model looks quite precarious over the next decade.

If the cable industry fails to rethink its business model, monthly rates would have to top $160 by 2022 in order for operators to maintain the same revenue trajectory of recent years. My research also indicates that these retention numbers are generous; in the last decade each $1 rise in monthly rates has correlated with the defection of roughly 250,000 customers. So defections would likely accelerate even more in the next decade.

The cable model is clearly unsustainable and in need up an upgrade. Promotional rates are no longer a solution. Digital options and shows on demand are nice, but people will reach a point where they are unwilling to pay up for those types of services. Cable companies will have to find a way to provide more services as a free added value or reduce overhead.

The only real way to retain customers is to keep rates in check, and that just isn't happening. The good news for me is that I will likely spend more time blogging and less time watching senseless cable programming!

Michael Jackson: The Power of Social Media

Paul Davis

For years, Michael Jackson set a standard for “big.” 

When at the top of his game, the Gloved One produced big hits, made big music videos, staged big concerts, and set dance and fashion styles that quickly overtook the elementary school I attended. Regardless of the medium, he seemed to own it with a unique style, talent and presence that I still do not fully understand.

By the time I reached high school, his popularity waned and his behavior become more bizarre. I was surprised when he unveiled plans at 50 to resurrect a career that many had relegated to a bygone era.

Even the press conference Jackson attended (video included below) seemed surreal and I was convinced the man behind the podium could not be the real Michael Jackson. I seriously doubted he would ever be “big” again. I was wrong.

www.wikipedia.org

What I remember about June 25, 2009, was how Michael Jackson's death introduced me to the power of social media. I had been contemplating an online venture tied to my upcoming MBA program, and had even set up a Twitter account, but wondered if there was legitimacy to it. 

Sure, I knew a number of social media enthusiasts but I doubted the ultimate popularity and reach of the medium. 

Much of my longstanding bias was shaped and molded by a career that had included stints in TV, radio and print media, and a belief that the Internet was something with potential though no one had figured out how to harness and direct it. I really needed a catalyst to fully buy into social media.

Those concerns quickly went away with each Facebook post, tweet, and blog account that without delay updated people on Jackson’s condition and death. My doubts about social media vanished with every celebrity and average Joe who responded to the news, outpouring their emotion or sharing their fondest memories. At least one last time, he was “big” by commanding a communication medium. Social media sites locked down over the volume of information passing through the system. It was stunning.

I post this not to exploit what happened four years ago. But I am continuously in awe at how freely we can communicate and how quickly news travels. It’s not just the Jackson tragedy. Just a week ago, a bank I cover restricted media access to an event, yet attendees’ tweets filled in gaps that were created by the absence of mainstream media. The same can be said for war torn areas, natural disasters, and other life-changing events now opened up to full review by empowered people to share their observations and perspective.

It is this empowerment that emboldens me to share my perspectives – both large and small – with you. In turn, I invite each of you to be an integral part of the process. If you feel compelled to post a comment … do so! This blog has never been about unilateral communication. It is, in its most sincere form, a dialogue among students, academics, and those intrigued about the business school experience.

Whether an instructional article or a free form method of discussing an experience, this blog is about uniting business school students and alumni and reaching out to those curious about obtaining an MBA. For lack of better words, this is what we do and why we do it. And in a way, I have to thank the events from 2009 for awakening me and showing me the powerful tool that rests regularly at my fingertips … and the amazing reach that it has across the globe!