Vehicle customers say they like their dealerships' service departments more this year than last. And that may be a silver lining for dealers--most of whom are seeing less revenue from new-vehicle sales, warranty and routine service. According to J.D. Power and Associates Customer Service Index, a yearly study in its 28th year, satisfaction with dealer service has improved 6 points (on a 1,000-point scale) so far this year, after being flat since 2005. The study measures satisfaction among vehicle owners who visit the dealer service department for maintenance or repair work in the first three years of ownership, the period covered by most warranty programs. Per the firm, the proportion of customers bringing their vehicles to the dealer for repair work has declined to 35%--a historic low this year--because vehicle quality has improved in recent years for all brands. Currently, about 65% of service visits are for maintenance; and customer satisfaction with repair work is up 9 points since 2007. David Sargent, VP/Automotive Research at J.D. Power, says dealers realize service is important because it will keep customers coming back for routine vehicle work versus defecting to, say, Jiffy Lube, and will also bring them back when they are in the market for a new car. "Loyalty is key because [dealers] are losing a lot of their customers to the independent sector for routine stuff like oil, tires and shocks," he says. "When a vehicle gets out of warranty after two or three years of ownership, owners they don't feel they need to go to the dealership for maintenance service--so if the dealer hasn't given them outstanding service, it is very hard for them to hold on to customers." He says the survey--based on responses from 87,302 owners and lessees of 2005 to 2007 model-year vehicles in the first four months this year--asks customers where they will go next for service and, ultimately, for their next vehicle. "They strongly say that the more satisfied they are with service, the much more likely they are to stay loyal to dealership for service and sales." The top brand in dealer service, for the second year, was Jaguar, followed by Cadillac and Buick. Sargent says the brands with big gains in dealer service versus last year were Cadillac, Lincoln, Acura, Honda, Mercedes, Chrysler and Ford, as well as VW, Suzuki and Land Rover. The study suggests that the things that make customers happy in auto service are probably the same as in medical intervention: communication, clear, cogent explanation before and after to explain the procedure and charges and why the charges and work were fair and appropriate. Per Sargent, 78% of customers who rate the fairness of charges as "outstanding" said they would return to the dealership for routine maintenance after their vehicle warranty expires, while only 49% of customers who report fairness as "average" say the same. Also, as in the world of medical work, when the patient is returned to the owner cleaner than it was received by the practitioner, satisfaction scores average 48 points higher than scores provided by customers whose vehicles showed no difference in cleanliness. By contrast, satisfaction plummets 202 points, on average, if vehicles are returned dirtier than when they were received.
Sony Electronics put a little magical realism in its latest VAIO HDNA integrated marketing campaign launched this week in the U.S., evangelizing the company's innovation in technology. The campaign speaks to consumers through print, television, cinema, online, in-store and out-of-home to convey that VAIO is "Born out of Sony HD technology." Graham Douglas, writer at ad agency 180LA, along with creative director Phillip Cho spearheaded the campaign, fusing nature and electronics to symbolize the birth process. The campaign illustrates that Sony VAIO's HD PC/TV and HD Blu-ray disc notebooks are "born out of" other high-definition (HD) products. The message needed to branch off Sony's broader HDNA theme--the idea that every Sony HD product shares the same genetic code, or DNA. Juxtaposing nature with electronics seemed a fresh way to solve the problem. The biggest challenge became making something so abstract seem believable and real, Douglas says. "We wanted it to seem like a situation that could happen in your living room when you step out," he says. "The visuals are delightfully odd." "Vines" will begin running in cinemas today. Another TV ad, "Flytrap," began airing this week on late-night TV shows, and cable and HD networks. In the 60-second "Vines" spot, a BRAVIA HDTV grows electronic vines, picks up a Blu-ray Disc player and brings it to the screen. The vine-covered screen and Blu-ray Disc player are engulfed until flowers bloom. The vines release to reveal the birth of a shiny Sony VAIO LT HD PC/TV, which combines HDTV technology and a computer. The system features a BRAVIA screen and Blu-ray Disc player. The announcer says: "The Sony VAIO LT PC and HD TV. Born out of Sony HD technology. High definition. It's in our DNA." Working with visual effects house Motion Theory, which directed and post-produced the campaign, the content was created through live-action and computer graphics. Shot in various positions with Sony Genesis cameras during a four-day shoot, models and puppets were used to create live-action pieces that that tied in with computer graphics to create a touch of magical realism. From the live-action rough cuts, the spots then underwent an intense post phase with 30 people working around the clock on illustration, heavy visual effects, design, animation and compositing to bring these spots to life. The spots aim to leave the viewer wondering what this would look like if it were real. Sometimes metaphors can go horribly wrong because there's a disconnect between the consumer and symbolism, says Amy Shea, EVP at marketing research firm Brand Keys. "The great thing about metaphors is you can convey and explain a lot about a product or service," Shea adds. "The ads must stimulate interest, not confusion, and leave people intrigued. After you get their attention and make sure they can identify the brand, the ad must motivate an action. Not necessarily a purchase, but drive them to the Web for more information." The TV spots are scheduled to run on "The Tonight Show with Jay Leno," "Late Night with Conan O'Brien," and "Jimmy Kimmel Live." The ad will also appear on cable networks Adult Swim, Comedy Central, ESPN, TBS, VH1, Discovery HD, HD Net, HD Net Movies, MHD, MGM HD, Mojo, and Universal HD, as well as in movie theaters. The print campaign showcases the VAIO HD notebook in Wired, Rolling Stone, US Weekly and Blender. Consumers will see one- and two-page spreads hitting newsstands August through October in issues of Best Magazine, Conde Nast Traveler, Details, Entertainment Weekly, ESPN Magazine, Laptop, Men's Health, Men's Vogue, Self and Sports Illustrated. Sony also will conduct a national search for VAIO PC owners who can show they have enough HDNA qualities to be dubbed "Techsperts" by creating online video essays integrating Sony HD technology. Authentic evangelists of the brand who personify VAIO style--superior Sony HD technology + multimedia experience--are encouraged to step up and show their HDNA. Consumers can enter via a dedicated site for the contest that goes live in August.
The countdown to the Beijing Olympics is just weeks away, which can only mean one thing: Athletic-shoe companies are preparing to give armchair athletes goosebumps. And expect them to pull out all the emotional stops, hoping that consumers will overlook the soft U.S. economy and go shoe shopping. Nike is first out of the gate, unveiling "Courage," a spot that uses only still photography and the pulsing alt-rock rhythm of The Killers' "All These Things That I've Done." The final image is of South African sprinter Oscar Pistorius, who recently won the right to compete in Beijing on his high-tech prostheses. "Everything you need is already inside," the ads say. Nike describes the spot as "a mosaic of 'Just do it' moments," and says that the ad also celebrates the 20th anniversary of "Just do it." "The fast-paced cut takes viewers on an inspiring journey highlighting obstacles athletes at every level must face and overcome," Nike says in its release introducing the ad. The TV commercial--already circulating on YouTube and Nike sites-- kicks off in Asia and the Americas Saturday; in Europe, the Middle East and Africa regions on July 25; and in the U.S. on Aug. 8, when the Olympics officially begin. (This year's games conclude Aug. 24.) The ad will run in addition to Nike's ongoing marketing efforts, including a major push for the Hyperdunk basketball shoe, developed with Kobe Bryant and rolled out in stores this month. (Team USA will wear it and other Nike gear on the court in China.) Adidas has also begun rolling out a series of its own inspirational ads. The international print ads focus on how many people it takes to propel an athlete to Olympic levels. "I run with 600 million legs," says an ad featuring Jeremy Wariner. TBWA/Tequila Hong Kong created the campaign. And Reebok, now a division of Adidas, is launching this week its latest: The VY Electrify football cleat and trainer, a line named for Vince Young, quarterback for the Tennessee Titans. A national marketing campaign, including TV ads that follow Young from his Pop Warner days to the present, will support the line. Ads were created in-house.
The International Motor Press Association's monthly lunch scrum usually gets a friendly speaker from the motor sports world, or from one of the OEMs: engineers, executives, or the stray marketer. But Thursday's speaker was John Felmy, chief economist for the American Petroleum Institute--a controversial but welcome choice. He was aware of the popularity issue, noting after the audience clapped before his speech: "That's the warmest welcome I've gotten. People usually clap when I'm finished." The speech was timely, since Congress is voting on the DRILL (drill responsibility in leased lands) Act, which would promote domestic production of oil and natural gas, particularly in Alaska's National Petroleum Reserve. Felmy explained that the global supply and demand drives gasoline prices, not Big Oil, which is just doing what it has to do to eke out slim per-barrel profits from gasoline refining. "Crude closed at $145 [Wednesday], which is $3.20 per gallon," he said. "Adding tax, that means the base cost of the raw material before refining is getting close to $4. That's the real story." Felmy said that crude oil costs are actually increasing faster than gasoline prices--$1.21 per gallon, versus 78 cents per gallon for gas. "So manufacturing cost has increased faster than the price of gasoline." He said that gasoline prices are actually down a percent because consumers are responding to prices by driving less. By contrast, diesel demand is up 6 to 7%. "Because we are importing a million barrels a day of gasoline, we have lots of gasoline supply and weak demand. In diesel you may have had record production as well, but there is also strong demand and weaker imports because the entire world is moving toward diesel," he said. As for crude oil, Felmy said the price is up for the simple reason that demand in markets like China and India is up, although U.S. demand is down 2%. "If you look this year, there's a struggle: a continued demand growth with supply challenges. Last year, demand was up a million barrels a day and supply was down because of OPEC." The bad news, at least in the short term: Chinese demand will increase a lot prior to the Olympics. "They will want an adequate supply of everything, and we have seen their imports and demands going up," said Felmy, who added that Indian demand is also increasing as service-based economy growth is being augmented by new growth in heavy industry there. By 2030, he says, demand will go up 50% because of strong economic growth in developing counties and population growth, expected to be 20% in the U.S. alone. Worldwide, he said, there will be 9% more demand for liquid fuels, and 18% more energy demand, with electricity demand growing 30%. Felmy said Congress should be more helpful to the oil companies by not arguing for higher taxes, or for quicker exploration of leased lands. He says the latter is impossible because it is expensive and time-consuming to explore. "The argument is that the industry should focus on [property] that doesn't have drilling going on; well, oil leases don't come with Mapquest."
The last two years have seen a proliferation of advertising targeting air travelers in transit, the ultimate captive audience. Soon it will be hard to look anywhere on a plane without seeing an ad. But do advertisers risk damaging their brands by associating themselves with airlines, which are suffering an image crisis due to delays, cancellations, price gouging, bad customer service, and general incompetence? The latest sally brings advertising to boarding passes, undoubtedly a high-engagement medium as they tend to be closely scrutinized by air travelers at least once. The participating airlines--American, Continental, Delta, Northwest, United, and US Airways--are partnering with a new ad company, Sojern, to put ads, coupons and promotional announcements on boarding passes. Currently, the ads are appearing only on electronic boarding passes that travelers print out at home, and travelers have the option of printing tickets without ads. But there's no reason the practice can't extend to boarding passes obtained at the airport. This is just the latest step in a steady march of advertising into the physical space surrounding air travelers. It began with billboards and posters inside the airport. Clear Channel Airports, for example, claims to reach six out of 10 American air travelers every day (and is now rolling out digital signage). Advertisers could also reach air travelers via the custom-published airline magazines, distributed free in the facing seat pocket. And place-based video networks, like CNN Airports, offered TV air time. Then JetBlue began installing video screens in the facing seatback, inspiring a wave of imitators. The key selling point of all these media--the opportunity to reach a captive audience--has drawn innovators looking to exploit the same connection via new platforms. In 2003, Las Vegas-based SkyMedia International introduced service that prints removable ads directly on tray tables; the first airline partner, America West Airlines, launched with advertisers including Mercedes-Benz, Bank of America and the History Channel. Storage bins also carry ads. A company called Advent Advertising, based in Raytown, Mo., offers a service to print ads--measuring 8 inches by 20 inches--on the outside of storage bins. In 2006, a company called SecurityPoint Media, based in St. Petersburg, Fla., began testing ads in carts, tables and bins for personal belongings at security points in LAX. Subsequently, SecurityPoint Media scaled up the program through partnerships with airports around the country. There are now so many ad platforms in planes and airports, in fact, that companies are popping up to aggregate them--giving media buyers a single point of purchase. One such company, InterAir Media, offers platforms including plane exteriors or "wraps," cocktail napkins, "sponsored seats," carpets, in-flight handouts, beverage carts, ticket jackets (to complement the boarding pass), beverage cups, meal trays and gift bags. Among InterAir's more interesting offerings: lavatory doors and airsick bags. One campaign for Capital One, centering on images of piggybanks painted on the outside of planes, also included "piggy noses" for passengers and "piggy hats" for flight attendants. But given the general decline in the quality of air travel in recent years, has the phrase "captive audience" taken on a more sinister meaning? Do advertisers risk consumer backlash by positioning themselves on every available surface, when passengers are distraught and angry at the airline itself? According to the "Air Travel Consumer Report" issued by the U.S. Department of Transportation, the overall percentage of domestic flights arriving on time in the United States fell from 74.2% in the fourth quarter of 2007 to 70.8% in the first quarter of 2008. Meanwhile, the number of passengers denied boarding involuntarily because flights were oversold rose at 8 out of 18 airlines tracked by the USDOT, including AirTran, United, Southwest, US Airways, American Eagle, Comair, and Atlantic Southeast. Given the vagaries of human psychology, it doesn't take much for a brand to get mixed up with these failings in the minds of consumers, according to Denise Lee Yohn, a branding consultant who has worked with companies including Sony and Jack in the Box. Yohn warns that brands should be careful about advertising in environments "like unpleasant travel venues" because of the human tendency to "subconsciously associate the emotions we feel with the environments we experience them in." Because these associations tend to get ingrained, Yohn explains, "by advertising in the usually highly stressful and negative environments of air travel, brands risk subconsciously associating themselves with the stress, fatigue, and frustration that people feel in those environments." Worse still, there's the possibility that "people will subconsciously experience those emotions when they encounter the brand in other environments." Yohn adds that travelers may also make these connections at the conscious level: "Brands make statements about themselves by where they're seen. By advertising on tray tables and even luggage carousels, brands are saying they are a part of the air travel experience." This may give advertisers pause, considering that many travelers view the experience as a painful necessity at best.
Retail monolith Wal-Mart has taken the plunge and changed its identity. While I'm referring specifically to the logo and all the design elements that support it, a new identity can also indicate a shift in a company's corporate identity in a more universal sense. Changing a corporate or brand identity is a big undertaking. When done right, it sends a powerful signal to the outside world. It makes you sit up and take notice, ready to hear the rest of the story. But if there is no story ... well, it can do more harm than good. Changing a logo, to use a personal analogy, is a little like changing your "look": new wardrobe, new hairstyle, new glasses, etc. It sends a signal that something about you has changed. When the loveable but slightly scruffy and lazy mailroom guy suddenly shows up to work clean-shaven and wearing a bespoke suit, people will notice. The message he's sending is, "I'm not lazy anymore! Give me the chance and I'll prove it to you!" And if, in fact, he changes his lackadaisical ways and becomes more disciplined and pro-active, then management may truly see him in a new light, and potentially give him new opportunities. But if the new suit is simply a cover-up for the same old lazy habits, the message he is sending is hollow, and will quite likely bring even more scrutiny. The same principle is true for companies and brands. Truth be told, perceptions of the highly profitable Wal-Mart have started to suffer from decades of aggressive business practices and dubious employment policies. Now, the bulk of the revenue-generating customer base might not be paying much attention to those issues. But on top of that, the world's richest company has always had a decidedly un-cool, low-end, bargain-basement image. There's no question that a re-positioning on some level is in order. So what's Wal-Mart's new story? Well, based on cryptic postings like this (sourced from identityworks.com), it sounds like a touch-up: "This update to the logo is simply a reflection of the refresh taking place inside our stores and our renewed sense of purpose to help people save money so they can live better. The updated logo won't begin to appear on storefronts until the fall." In contradiction, the logo seems to be signaling a bigger personality shift than that. The former bold, all-caps, industrial strength typography has been replaced with a lighter, friendlier, upper-and-lower case treatment. This makes the name feel more approachable, as though being used in a conversation instead of an institutional pronouncement. The deep, monopolistic blue has been traded for brighter, less ominous cyan. This adds a certain freshness and energy to the mark. The military-style star has turned into a bright yellow spark. While not the most own-able symbol one could choose, it certainly feels more contemporary, optimistic, and yes, lively. And the hyphenated WAL-MART has become the single word Walmart, making it feel like a proper name, instead of a coined reminder of the mega-retailer's somewhat humble roots. All-in-all, the logo change sets expectations for a pretty different version of the Wal-Mart experience. The store environments themselves need play a big role in that experience. The obvious competitor in the mega-retail space is Target, who has always understood the value of good design in all aspects of the brand experience, and whose favorability scores overtook Wal-Mart's last year in CoreBrand's Brand Power Analysis. Shopping at a Target (while not exactly like browsing specialty shops and boutiques in, say, Paris) is certainly a different experience than shopping at a Wal-Mart. Much of the merchandise at Target tends to be better designed; the graphics and packaging are more sophisticated; the overall environment feels downright warm and inviting compared to Wal-Mart's stark, fluorescent, Five-and-Dime glare. Revamping the in-store experience for Wal-Mart should be a large part of signaling change. What those changes are remain to be seen. So what's the rest of the story? At a cursory glance, certain changes are noticeable. Wal-Mart is stocking and promoting many "green" products, demonstrating not only environmental-consciousness, but purportedly allowing families to save money in energy usage. Its new high-production-value commercials feature lifestyle and benefit messaging, a shift from the pure price-slashing message from before. And new licensing deals are being sought out, such as an exclusive clothing line from rapper Master P, to add a hip, contemporary edge to its image. It's certainly a start. Wal-Mart is a mighty big ship to turn around, with a fair amount of brand baggage to purge before perceptions can really begin to change. Sheer scale, longevity, aggressiveness and ubiquity have woven Wal-Mart quite firmly into a very specific part of American, and increasingly World, culture. The new logo signals a pretty big change. Can they back it up? We'll just have to wait and see.