Tag Archives: Marketing

Honda Accord Crosstour: New Age Media Ain’t For Everybody

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New age media is here to stay whether we like it or not. The advent of internet has brought a new channel for advertiser to be used creatively or just as a simple tool in the already diverse medium to advertise. The use of emails to advertise was deemed effective as it has 100% delivery rate to the intended person or group mail account if the matter in question involves group mail or mailing lists. As years goes by, advertising through emails are now considered an act of annoyance and people dubbed this effort as spamming. As modern email accounts and clients have active spam filters, advertising through emails are not deemed effective anymore.

The emergence of social networking sites like Friendster, Twitter and Facebook is like an oasis in the dessert. Advertisers do not have to worry anymore with cluttered air space of traditional media like prints, TVs, and radios where the seemingly crowded space never guarantees the message get through the intended target market without significant cost of high frequency. Advertisers can easily targets groups of people according to age and interests just by seeing what group these people follows in their respective social networks. It mimics the success of advertising through emails before advertisers cluttered the channel and making people go against it.

Moonfruit, a hosting/Web Design Company in America, used twitter to promote themselves, with great result. The participant only needs to write Moonfruit on their twitter update and they are in to win a Macbook Pro. The resulting effort becomes viral, and Moonfruit popularity soared sky high as even local TV news (CNN) picked up the story, making the company seemingly “free advertisement” had become a global phenomenon which attracts far beyond the planned target audience. As such, some perceive the internet as the best tool in modern marketing currently available.

The Fall of Perception

Honda of America, as one of the leading automotive company in the United States was also intrigued to use this newly established channel to advertise. Using Facebook, Honda did teaser marketing on their launch of new line of car called Accord Crosstour (click to visit Crosstour Facebook page). At no cost at all to join Facebook and establish a product page, Honda of America CPM is nonexistent, but it manage to reach hundreds of thousands (if not millions) of Facebook users. When the teaser pictures revealed one by one on Honda Facebook page, the responds were good, Facebook users and follower of Honda Crosstour Facebook account cannot wait to see a new line of car based on the successful Honda Accord series.

Crosstour unique fascia

It is not until the car was completely unveiled, the unexpected happened. The curiosity comments became violently negative. Hate words came out from the masses and Honda Crosstour comment page was filled with negative comments. Honda even had to delete several comments (28) and one comment from Honda own product planner (click to see the link). Several online automotive media picks up the story and even more damaging publicity ran loose on the internet. Honda damage control was by putting notes on the Crosstour Facebook page by saying things like “the car was accepted very well by the demographics/target market per their internal research”, “and several comments were out of line and not in line with Honda corporate effort”. Honda even stated that the car was not pleasant to look at on the angles that were on the pictures when the car was finally unveiled. Honda changed the color from silver to red and features more photos from different angles. Photos from Honda own press kits that should not be displayed yet until the car official launch later this year. The damage is done and Honda notes further fuel the flame of bad words to new high.

No Wrong Step Just Wrong Channel

My analysis of this incident is that Honda is too eager to use new age media and misjudge the capacity and channel usage of the demographics. Speaking technically, The Crosstour is a good car. The car was a crossover between full size sedan and an SUV. Low center of gravity means driving dynamics would not be as compromised as in tall SUV. It’s a hatch, meaning people of all sizes can access the cargo bay with ease. Honda press kit reads that the seating position will be elevated like in SUV, giving great driving view. The car will features four wheel drive system which will allow it to go on snowy, muddy, wet areas without problem. The engine itself reportedly will use Accord own 3.5L which offers more than enough power to satisfy Americans with their preference of power over efficiency. A good car technically, but visually, it has some questionable lines. The car has huge blocky front end, a design cue taken straight from Accord. However, it has a sloping rear hatch which does not go very well with the symmetrical front end.

Aerodeck/fastback design is clean

I would guess visually, Honda deliberately made the car to look like Honda Accord; after all, the Accord is Honda of America top 3 biggest selling cars. Marketing wise, Honda would want to associate Crosstour with the Accord to indicate lineage and thus relying on Accord brand equity to push sales; hence the name, Accord Crosstour.

Regarding the demographics, Honda did not reveal any specifics but here is my definition of the targets based on the available facts. Accord Crosstour targeted demographics are established people, somebody who values practicality (hatchback), have excess disposable income to fuel the thirsty car (big engine + 4WD system), and is associated with Accord (mature). Looking at the simple facts the car brought, we can see clearly the intended target market. Roughly sketching from their slice of life, I conclude that Accord Crosstour demography is aged around 34-45, SES A to A+, economically stable with excess income, senior managers or higher, sensible and practical.

According to Internet & American Life Project (PEW), these sort of people falls into the Gen X category. A mature older generation which still embrace change and technology, unlike past generation baby boomers. However, this is where I find a fault in Honda approach on using Facebook to unveil the new Accord Crosstour.

Stark differences in habits of browsing according to survey

PEW research data (click to download original survey data) clearly indicates that Teens and Gen Y are the majority users of social networking sites; whereas the Accord Crosstour was targeted at the Gen X group. This discrepancy alone should already warned Honda at the impending comments thrown out by non targets especially those who still consider fashion over function (teens and the young at heart). The biggest problem of all is not just about the negative comments, but the amount of negative comments is there. When Honda entered the social networking site, they should be aware of the normative social influence phenomenon which dictates a group behavior as a whole.

Social networking sites are in essence a meeting place of groups of people. Those who are not a group will join a group and with the metaphysical bonds of internet it’s a group bonded with fragile existence. In their book, Aronson, Wilson & Akert (Social Psychology), normative social influence dictates that to belong, a person will join a group cohesive respond. As such, internet users are susceptible to mass opinion which has been initially created. In this case, negative comments for Honda Accord Crosstour. The anonymity aspect of internet commenter is also at play here. Under the disguise of nicknames and email accounts, a person can speak to their heart content without needing to heed manners of speaking.

Tread Slowly and Take The Right Step

Some believe that any publicity is a good publicity, as it will make the object in question will be at the top of the mind. Coupled with coverage from other media, it is hoped becoming viral, creating buzz marketing. However, personally I found this is disturbing to say the least. Bad publicity is bad publicity no matter how we look at it. It might become a top of mind, but a top of mind on negative terms or at least not the perceived value they wanted. Awareness might be high, but it will prevent the masses or wider target audience even from entering “Interest” aspect of AIDA. While our competitors are trying to do what they can to tease our intended target market sway towards them, using the bad publicity we have gathered as a leveraged towards them.

The use of Internet as a medium to advertise is a great idea. However, I concur that when selecting media to advertise, we need to go back to the basic by analyzing which media to use based on the target market preference. Most companies which successfully advertised using social networking media usually works around the internet itself, thus the relevance of using the internet as medium.

Honda Accord Crosstour Facebook fiasco was caused by Honda eagerness to adopt new age media, without considering thoroughly who the majority user of social networking was. Free advertising is one thing, but targeted media coupled with creative approach are still the key success factor to win the attention of target markets in today’s crowded media.

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This short analysis was actually a case study I submitted to an agency when I applied for a planner position. A bit much I think, but considering that I’ve been working on client side for quite a while, a case study to showcase what I can deliver to them should be sufficient.

In short, does Honda made a mistake using Facebook to market the Crosstour? Personally I think is yes, it’s a blunder. Most people (including me) always look at face value, that we draw conclusion based on what I see first/first impression. When the Crosstour was revealed, it just looked weird on the photos, no specs, no driving impression, just weird car on photos.

I wonder why Honda didn’t just used the same ol’ media outlet like automotive reviewers? Because reading every bit review of the car net brilliant result. Not much cargo space, but refinement, driving, and comfort scores full marks. The reviews creates positive marks for the Crosstour, and Honda can utilize this reviews rather than using Facebook.

Burn Your Marketing Budget Through Recession!

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Recession is here whether we want to accept that fact or not. Customers spending lowers, tertiary product prices gone up, massive financial institution layoff, undulating stock charts, and everything in between. So what should we, as a marketer has to do to face the crisis? The one thing big companies do when sales are down usually is to cut marketing budget outright, citing that sales makes the money, not advertising. Well, couldn’t be truer than that… Hell, as a marketing manager, I consider myself a second child to the product/sales manager as what they did is to sell products and create income for the company… Me? I’m spending that hard earned money to gain something that cannot be quantifiable in literal sense.

So what should we do? Well, I don’t know about you, but for me, its business as usual. Some seminars I attended about marketing cited that today is the best day to spend that marketing budget like crazy. Because everybody thinks just like what I wrote on the opening paragraph… Companies are afraid to spend money on unquantifiable things and are saving more for rainy days. That means, your competitors are likely to do the same. If your competitor cut their marketing spending, it means less noise on the market place now, so you can scream to your heart content in the middle of the market and net some considerable market share, at least if that market share doesn’t have the money to buy your product, you get some mind share and can reap the benefit at later date when the economy has recover.

However, maintaining that marketing budget is not the be all end all solution to maintain the needed market share today, especially in recession time. Customers just don’t have the money to spend, period. So rather than buying the unneeded tertiary products, people will opt to primary goods just to pass daily affairs. If you are let say… A fancy hair shampoo brand, you don’t spam advertising about fancy-all-natural-after-shower-anti-frizz-hair-conditioner-hair-coloring-combo, that costs a lot and is considered as tertiary product, you scale down and advertise about the basic necessity shampoo. At least you scale down the exposure level to that of your most mainstream product. It keeps your brand exposure level high enough with constant media frequency (if that marketing budget is maintained) and actually advertise something that people can still afford.

But what about companies that solely produce expensive tertiary products, like the automotive company? After all, car prices are going up especially for those countries which mainly import their products. Well, the mantra is still the same, you still burn that advertising budget, but with a little twist. You don’t allocate the entire budget into advertising, but move back a level and spend it on promotion mix level.

Remember the promotion mix? Advertising, Personal Selling, Public Relation and Promotion? Well, big companies often forget that a successful marketing campaign consists of all four of promotion mix elements. This is critical because when homogeneity is achieved especially as technology advances, there will be no more Honda’s i-VTEC, no more Toyota’s VVT-i, it would only be a car with variable valve timing technology. Thus, burning your marketing budget on expensive advertising about how advance your product is becoming a moot point. You can still advertise the expected perceived difference and market segmentation of your product, but not about its advancement anymore… Unless it’s very unique in a way no other competitor has something even remotely similar.

Then, you twist that marketing budget to leverage other key success factor of the company. Invest in Personal Selling, increase the training level and make sure that any people came in contact with your sales force immediately make your product as their point of reference. No need for sales to happen yet especially in this tough time, but do remember, for this to be successful you need to employ a super salesman. Spend on your Promotion, pull strategy is no longer working especially when dealers have exhausted their shared marketing budget. You push your marketing effort towards the customer, award your customers by buying your products with enticing yet attainable prizes… Not “buy a moose get (draw lottery ticket to get another) a moose“. It’s gambling! And not true marketing effort some say, and even I actually. Then, do some Publicity Stunt, make future customers literally fall in love with your company. In this tough time, nobody wants to part with their hard earned money especially to some jack ass company whose only purpose is to make their CEOs and owners fat. But if your company is the people’s company, giving out scholarship, increasing the livelihood of the surrounding community… People will literally threw money at you! Off course, there’s buzz marketing effect, do a perfect publicity stunt and watch how people will talk about your company and watch the the positive wind picking up.

Together, if you just came back towards your roots in the marketing front, I guarantee you will survive the crisis… Disclaimer: If your competitors doesn’t read this blog entry and have bigger marketing budget than you…  All in all, just do that integrated marketing stuff marketing people are raving about nowadays.

And… You’re still here… Which means, your boss still didn’t approve to maintain the marketing budget right? Don’t worry, there is still another potent way (read silently: cheap) to do marketing effort in this tough time. Embrace… The Internet.

Hell, there’s too much channel today that is free and targets effectively to groups of scrumptious target market on the internet. You can post free on interest group emails, forums, your own website, and every conceivable Internet channels. There’s them tube, that book of faces, that other social networking that used to be famous before that book of faces came, that multiplication thing, and many others… Fancy words for youtube, facebook, friendster, and multiply.

What is more important than all of the tactics used in this article is clearly your head and quoting Spongebob Squarepants, “a little bit of eee-magin-nation”. What’s written in this article is the basics of basics, you still can screw it up by following it blindly. Every company faces different sets of problems, and not every trick in the book is applicable, there’s still a mix and matching that needs to be done on reality side of things.

So… Research your customer/competitors, get back to SWOT analysis, adapt your strategy and like Takeo Fukui san, ex Honda President said and I would like to quote “Toward this end, Honda will closely monitor the marketplace and then carefully determine what actions need to be taken. Once decisions are made, Honda will take quick action as the company realizes the situation is very urgent and a slight delay in making management decisions could be critical“. So, if a multi[B]illion dollar company is doing it, so should your company.

So what I do then on my company? Did I get to maintain my marketing budget? Did I employ all this ridiculously basic marketing principle? Well, like I said above, every company faces their own set of problems… And with my imagination… Even children does not need to cry and scream for their parents to be noticed… It’s wordplay, if you know where I work… then that bolded sentence would mean everything.

P.S. Sorry for the lack of reference, I base it off my experience and from a marketing seminar which I couldn’t or don’t know how to refer here. However, the marketing term here are all basic marketing principle anyway.

The Making of Honda Accord Euro Teaser Ad analysis (Part 1)

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That’s right, there’s a short video of a short video of an advertisement. If that’s not a brand new marketing concept… I don’t know what is.

I stumbled upon Difficultisworthdoing.com, and I noticed they are displaying a behind the scene for a teaser ad of Honda latest sexy lady, the Accord Euro. Witty comments and three behind the scenes video after the click… Continue reading →

Taktik Kotor Melawan Pendatang Baru

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Komunikasi adalah konsep yang paling sering kita gunakan, dari berbicara hingga menyampaikan pesan secara tak langsung. Tak hanya dapat membentuk sebuah tujuan baik, komunikasi kini juga kerap digunakan tujuan jahat. Black campaign yang mendera Nissan Livina dan kartu GSM Axis baru-baru ini di Indonesia merupakan salah satu bentuk “demarketing” yang tak pandang bulu.

Continue reading →

Saying Sorry Still Works In This Crazy World

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On my previous post, I’ve mentioned about perception and what power it beholds. Truth be told, perception is everything in the marketing world as far as I know. You can have the best product in the world, but if perception dictates otherwise, you do not have the best product in the world. When you launched a so so product early in its life cycle and develop it to be perfect later on, people will perceive the product to be so so, especially if said people didn’t purchase/use that product again later in its life cycle.

However, perception can be created or altered even though it takes time to do it. XBOX 360 for example, this latest gaming system from Microsoft is considered to be the next generation system with the widest range of game available to date. Nintendo Wii might be the most popular and Sony PS3 might have the popularity “heritage” from its PS2 days, but XBOX 360 with Microsoft first mover advantage has gained considerable market time and game availability that surpass both Sony and Nintendo next generation console. However, Microsoft’s XBOX 360 isn’t exactly reliable as every console there is in the world, because of the tragic red ring of death. But, thanks to Microsoft swift response, the warranty has been extended for the XBOX 360 and people can replace/repair their damaged system for free. At least in the USA, or every country which they have an official representative… Sadly my country is not in the list, and I have to repair my XBOX 360 to a local technician, but it gets the job done as the problem has been isolated to weak cooling mechanism.

With people perceiving that Microsoft has failed delivering a reliable gaming system, it’s only a matter of time before people jump ships to other next generation gaming system right? Well not really… Microsoft reputation was blemished for sure with the XBOX 360 fiasco but their constant marketing effort to “apologize” to their customers is highly regarded. Microsoft blew the cooling mechanism, and they offer an extended warranty, XBOX live downtime, and they offer free download of games. It seems that saying sorry is still applicable in this crazy world after all, if not, people would just flock to PS3 and Wii (if only their games library is as extensive as XBOX 360).

Now this is one example I share to all of you how perception can be altered. Next up, we will talk about how perception creates brand image through the means of knowledge and experience, and how it brings down Acura marquee.

More Dangerous Than Nuclear Bomb & Compound Interest… Perception!

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Nuclear bombs decimate two of Japan’s city with casualties exceeding thousands of lifes, and compound interest… Well, let’s just say that because of it, lots of people lost their everything. The Romans once even ban compound interest in their law (although we know compound interest is very lively nowadays). But there is something more than those two combined, well, what else is there except for perception.

Now first, let’s talk about what is perception means literally. Because I don’t have my trusty library next to me, I will define perception with the help from the almighty internet itself. The meaning of perception varies a lot from sources to sources, I was even kind of shocked by how many meanings it contain. However… I noticed some similarity between them, therefore this is what I interpret about perception from the various sources (link at the end of the article). Perception is our disposition towards something related through our past experience… Now that’s a new definition of perception.

Now from the definition which I have filtered from various sources means that our judgment or perception will differs wildly because a person’s personal experience is up to God’s will and cannot be constructed as we hoped. This fact is actually quite new to me. I thought that perception is a response from a person directly when that situation arise. Then, about a week ago, I talk to my father about perception, he also added something new for me. In his book, he wrote about perception is a cumulative experience of a person PLUS our instinct… Instinct? What the hell… Then he describes that almost everybody are afraid of the dark although the intensity varies. Well, this is actually true because it is human nature to be afraid of the unknown, I think it goes back to our ancestors days.

So if I might summarize it all, perception is a person attitude towards a subject prior to their experience, knowledge and mood at the time they make a judgment. I put personal mood because sometimes, people makes decision based on feelings, just a bit personal experience there.

Now let’s get into the interesting part… The examples!

Now we have Suzuki and their SX4, Honda and their CR-V, Nissan and their Livina. In Indonesia, those respective cars delivery waiting period exceeds 3 months, and the question is what people perceives about the long delivery waiting period? To the majority of people, it means that all three cars are a hot item, but to the more wary people, it means that all three company fails to estimate the market absorption rate of their products. Me? I’m one of the wary people so I perceive Honda, Nissan and Suzuki has failed to estimate the market absorption rate of CR-V, Livina and SX-4. One would argue that the company could not do anything about it because their main headquarter established a fixed quota… Well, global warming is a natural cause anyway (sarcasm warning).

Then how about J.Co and Krispy Kreme strategy here in Indonesia? They play perception game quite well if I bold enough to speak. Well, this is my blog, I can write anything anyway… One peculiar thing I noticed about those spritely donut shops are how their cashier counter and queue line is set up. Most often than not, it revolves around one single line with two cashier waiting at the end of the line. This set up will always make a long queue line even when the customer load (people coming) is just medium to high. I consider this as a stupid management, but there are two advantage of doing this. One is there are more seating space because the queueing line is just a single file, and two, people will perceive that J.Co and Krispy Kreme products are so good even people willing to wait in long line just to purchase it. There you go… Perception…. Me? Again, as my personal experience are a bit bitter, I consider it as a hassle. I demand swift service, I want to go in and out as fast as possible, so I just consider J.Co and Krispy Kreme queue strategy as lacking management wise. However, us we are Asians who are typically does not want to be left out of the “loop” will consider this queueing line as something that is “hip” and we as people must follow that trend. Because we perceive that if people stand that long for just an over the top sugary treat or whatever it is must be extremely good… Me? I don’t like queue lines, when I buy donuts I bought Dunkin Donuts or Krispy Kreme, just because they have shorter queue line than J.Co.

So there you go, perception. I can go on and on about the examples of perception, but it is a little bit of a moot point because there are just too many examples out there already.

Until then, XOXO… (I’ve been watching too much Gossip Girl)

The Sources:

American Marketing Association definition of perception
International Federation of Library Associations and Institutions definition of perception
Canadian Food Inspection Agency definition of perception

The Shit That Follows (Counter Marketing Again… With Pictures)

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Okay, as I have wrote on my previous post about counter marketing, there are two Indonesian GSM providers who are currently involved in a marketing battle. I promised about posting a picture of a counter claim from Xplor whose image has been soiled by Indosat’s effort to gain a market share. First of all, Indosat put up this billboard complete with a plethora of similar TV and print ads.

crappy ad

The wording on the billboard means (loosely): Anything cheaper (tariff)? With Rp. 0 (free) next to the lady’s head. Then there’s the usual misconception problem about the ad as people accuses Indosat for making a misleading information. First of all, the Rp. 0 (free) is a tariff scheme whereby you used Rp. 5000 and you will get a free Rp. 5000 for the next one call on the same day. The call also only applicable for the same operator. The problem is that Indosat put up Rp. 0 that implies the call is free although it’s not, and a lot of people thinks it’s free.

Furthermore, the ad is a counter marketing for Xplor’s (another GSM provider) Rp. 1/second promotion. Xplor has this promotion of Rp. 1/second, and Indosat anything cheaper notion is specifically aiming at Xplor’s marketing effort. As I have mentioned on my previous post, this move is enough to send Xplor up in flames and decided to do a counter marketing. Then, Xplor made this billboard and its many variations through tv and print ads.

billboard

The wording on the billboard means: empty barrel sounds loud when hit… A famous Indonesian phrase hinting at those who exuberantly exaggerate things. In this case, the Rp. 0 Indosat claim is just one big bag of hot air, because it is not a tariff, it’s a bonus. I used Indosat as my personal GSM provider, but I do however side with Xplor on this… Indosat doesn’t have any “smart” thing to say about this, because Xplor is right. Rp. 0 is not tariff, unlike Xplor’s Rp. 1/second. Because the real Indosat tariff is around Rp. 8 /second, and after a cumulative of Rp. 5000 is amassed then the user got their bonus free call for Rp. 5000 duration.

If you guys take a look closer at the wording under the girl who sits on the barrel is the Rp. 0 crossed out with font and visual styling of Indosat’s original Rp. 0 ad.

Indosat… Shame on you… Xplor, I have your back… I’m still keeping my subscription though, even though Indosat is expensive, my number has flew around the world.

Franchising The Final Frontier: Part Dos! (Warning: Long Read)

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Now, let’s continue my entry about franchising. Be warned though, this is a long read… Get some chips and dips, because I believe this will be interesting.

The last time I blabber about franchising, I talk about problematic brands that tried to extend its wing but seemingly didn’t have the strength to flap it out. Es Teler 77 probably a small example from a good pool out there, but it is good enough to illustrate. Let’s take a recap, this is weekend anyway where I usually wrap things up in weekend roulade.

Es Teler 77 is what I call a geographic resource centric business, meaning that it can’t operate at 100% efficiency outside the boundaries or places that it needs its resource to operate. Es Teler 77 needs ripe-fresh-and ready tropical fruits that can only be found… D’oh, in tropical countries. Opening a branch or selling a franchise on non tropical countries means that it has to deal with the hassle of exporting and importing fresh produces which in itself is a hassle. Creating Es Teler 77 signature product is not quite the easiest thing in the world. It’s like making Sushi, you have to select the best ingredient out there, ingredients which are best taken directly and used immediately from mother earth.

There’s also the problem of habit of eating when introducing Es Teler 77 signature product outside tropical countries. It’s not a dessert, it’s heavier, it’s not condiment, it’s something more, so what is it? Well for sure on four seasoned countries it can only be eaten on summer or at least best to, so there goes 9 months of potential revenue. What about culture? Here in Indonesia people love impulse buying, especially snacks. Almost anywhere in Indonesia you can find small stalls which sells snacks from simple fried cassava/banana/tofu/chicken, to traditional snacks. Mind you that these are not light snacks but can be considered as light meal. Now what countries have that kind of eating habit? Not much eh?

Speaking of habit of eating, let’s continue on to our second example, Krispy Kreme…

Donut’s as we know is an American thing, coffee and donuts, just like the cops on those movies always took in the morning or when they are in break. For years donuts are considered as snacks in Indonesia, made not so popular by Dunkin Donuts, the first Indonesian franchised store which sells donuts. Then suddenly, two years ago J.co, a locally owned donut retailers opened up its business and BOOM! Donuts are on its way to stardom baby! Donuts are now hip and a cool thing, far from so so image Dunkin Donuts has created for years. Indonesians love new things, they will always took that 1st chance to try anything new. In marketing term you can say that Indonesians are super early adopters. Sell anything that is new here and people will buy it, seriously! Nokia E90? We got it, there’s even engineering sample sold on a local mega store. Lexus? Seen it driven here and there, even though they are ridiculously overpriced (Lexus IS250 is more expensive than Mercedes E260, and Mercedes has better image and recognition here). Chinese cars? There’s few on the road, Chinese motorcycle, ditto.

Yes Indonesians are super early adopters, but they also put emphasize on satisfaction and expectation. When a product is bad, most often than not the product will be literally shunned by the community. After all we are talking about Easterners stereotype where word of mouth are more believable than advertising or promotion. Chinese motorcycle for example, about 4 years ago it’s super cheap and people (at first) flock on to it, anywhere it’s Chinese motorcycle for a while. However, just like flash flood, it’s over instantly (in this case less than half a year), as cheap also equals cheap quality and everywhere Chinese branded motorcycle dying on the roads, on the workshop, everywhere. 4 years later, only a handful of people bought Chinese branded motorcycle, and that even after extensive test driving and manually selecting the bike before purchasing.

Now let’s back to Krispy Kreme stuff. 1 year after J.co opens up its business, it seems that everything is fine and dandy, people still queue long lines to purchase even half a dozen of donuts. Now does this means J.co’s donuts are a success, you bet it is. However, hot on the tail of J.co is PT. Mitra Adi Perkasa, Indonesian Krispy Kreme franchiser who wants a piece of the donut so to speak (pardon the pun). There are rumors that J.co is using Krispy Kreme recipe therefore it is expected that with brand name and originality claim, it is expected that Krispy Kreme will do better than J.co.

However, this is my critics lie upon Mitra Adi Perkasa, do they actually did a research about the eating habit of Indonesians rather than just following in J.co’s successful steps? Do they did a research that Indonesians like to eat donuts? This actually a classic condition where one fails to oversee the immediate surrounding or the market condition. Ya Kun Kaya, a Singaporean owned breakfast stall was a hit in Singapore even until today. When you visit Singapore, be sure to eat breakfast at one, the combination of milked tea and kaya sandwich are top notch. However here in Indonesia Ya Kun Kaya is positioned as a lavish upscale snack place in shopping complexes which opens at noon… WTF?? For years I saw mostly empty chairs and I’m just sad how a wonderful product was put out of its intended place. This is because Indonesians didn’t eat breakfast outside of their house, it’s just habit, custom, culture or whatever you might called it. Indonesians are communal individuals, they eat breakfast with the family in the morning, and if possible eat dinner together with the family. How about the singles? Well, they eat alone, but still at the comfort of home. Indonesia’s capital is not the friendliest place to travel you know, with traffic jams 24/7, there is not enough time to go anywhere to eat.

Does Mitra Adi Perkasa knows about donuts are not indigenous to the locals? I don’t know. Now let’s continue to the horror story that haunted Indonesia’s Krispy Kreme franchiser until today.

If you wanted to know how Krispy Kreme fair, please check my previous post about Krispy Kreme. I suspect that Mitra Adi Perkasa relies solely on J.co’s success and that Krispy Kreme is an international brand that they expect the franchise will be successful. However that’s just wrong. In my days of observing Krispy Kreme is that they are successful enough in the first months, queue line as long as J.co’s but it only lasts for a brief time. Now Krispy Kreme is like Dunkin Donuts, barren, devoid of customers except for the occasional people lured by the buy a dozen get two dozen more promo. So how can J.co survived but Krispy Kreme couldn’t? The answer is deceptively, and eerily simple.

While Mitra Adi Perkasa seemingly rely on promotion and Krispy Kreme brand, J.co actively pursue recognition in the form of pure marketing campaign. I’ve talked about habit of eating, where as donuts are not staple food or even snacks for Indonesians, so what does J.co did? They did a roadshow, taking donuts and coffee to universities and literally educate students to integrate donuts and coffee into their life. Now who wouldn’t target young aspiring future users these days? This conforms to Adam Morgan’s book, Eating The Big Fish (1999). He wrote about how second liner brands could outperform the number one brand. In this case, J.co used the classic approach of education, educating how to properly eat donuts and the likes. Who knows that glazed donuts are overly sweet because it is meant to be dipped into the hot coffee to soften the sweetness thus making the coffee sweeter along the way… I do, but most Indonesian’s don’t.

For J.co and Krispy Kreme, everything is already written in stone, as J.co aggressive marketing strategy seemingly defeat Krispy Kreme costly promotion. The defeat of Krispy Kreme lies not on its unattractive promotion, it is attractive indeed, you get triple for the amount you paid, but for what? Those who got “touched” by J.co will surely know how to eat and when to eat it properly. But those who eat Krispy Kreme just ate it because they bought it. Now it’s not just about Krispy Kreme lack of creative marketing effort, but also on its lack of improvement of the product they sell.

I’ve also noted on the last post about how Krispy Kreme franchise characteristic is its own down fall against creative competitors. It cannot changed its recipe because it’s a franchise company. Robert M. Grant wrote on his book (Contemporary Strategy Analysis, 2006) about evolutionary theory and organizational change. He mentions about organizational willingness to change and adapt to their surroundings if they see it fit. The lack of creativity out of Krispy Kreme might not be the fault of their franchisers, but attributed also to Krispy Kreme headquarter to not let local franchisers to introduce new products in its lineup.

I see Krispy Kreme Indonesia is dying, unless Mitra Adi Perkasa could introduce the same marketing concept as J.co, they might succeed, but for this time being, I’ll be watching from a distance, the slow death of Krispy Kreme Indonesia.

Do You Want To Start Your Own Business? Read On…

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Starting their own business is a dream for almost every person in this world. You work for yourself, you don’t have the nagging boss behind you, you set your own goal, and if you strike it good, you will get lots of money. Speaking of money, my father and I had a little conversation about setting up a business. We talk about how my friend wants to open up an upscale escort/transportation business with little start up capital.

Now here are some problems we encountered during the conversation. With a small start up capital, does the bulk of the resource goes to the core of the business? And if it isn’t does the core of the business is allowed to expand later in the stages of its life cycle?

Now we know about product life cycle, where a product is devised, introduced, then it matured and then it finally falters. With a small start up capital, will the product/service being introduced has its core business 100% developed? To put it simply, my friend’s idea about starting up the escort/transportation business requires a hefty sum of money. However, because he didn’t have enough start up capital (he does actually, but he didn’t want to put all his eggs in one basket) he wants to introduce the business concept incrementally. Personally I thought that this is a bad idea… And why is that?

Here is the thing, my family ran our own business, and what we learn through the years is that customers only remembers us for the smallest mistake or the slightest lack of feature from our product/service. Here in my country, we have a saying that goes like this (loosely translated to English): a drop of coffee on a glass of milk and you throw away the milk jug. It means that people will judge us for the smallest mistake we made, not how many good deed we had done.

Back to the business part, what that old saying means is that we have to establish the core of the business 100% instead of introducing an incremental increase for a period of time. My friend’s business proposal for example, the escort/transport will first use cheap vehicles that contains only the essence of the true core business, then down the line he will introduce the more expensive vehicle. Now the example seems a bit convoluted, let’s talk about automotive service workshop.

Inside a workshop, we usually finds oil changing service, tire changing/balancing/spooring, engine maintenance, engine repairing, and the likes. How about if we open up an automotive service workshop providing only engine maintenance and engine repairing, but we put up general service workshop sign in front of the shop. People off course will be upset because your core business which is general repair is not fulfilled. If you has only limited start up capital, do make sure that your core business is intact, up and running. Use less man power, provides no-frill waiting room, whatever you do, don’t do the other way around. The waiting room on a service workshop acts as a support for the core business, and that should be the least thought out aspect of opening up a business.

Now people sometimes confuse what is the core business and what is the supporting factor. This is actually basic marketing once again, one of the 4 Ps, product. According to value based management.net, a product must have functionality, quality, appearance, packaging, brand, service, support, and warranty. When I helped a lecturer wrote a book for his professorship he divides product into three separate category, the core, the secondary and tertiary. The core is what defines the product itself, its function. The secondary defines the name, the specific category it places and the tertiary defines the supporting factor of the product such as warranty, after sales service and the likes.

Well, enough for the product description, I will write a separate article for that one. Back on topic, if you open up a business, you need to make sure that the core business is intact and fully running. Do not sell a broom without the whisk that’s for sure, and thus when you open up your business, always starts with your core business intact from introduction phase up to maturity in its life cycle.

Counter Marketing and The Shit That Follows

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Okay, I promised back then that I would dig deeper about how two big Indonesian GSM providers are duking out medieval style by throwing stones at each other directly. However, due to my lack of social life, and my lack of interest about local scenes I couldn’t find out more about the advertisements. However, I can give out some examples about counter marketing using the most renowned brand in the world… Coca Cola and Pepsi Co.

In the land of uncle Sam, everything is legal, even making a mockery out of your competitor. The most oblivious of this example is the ongoing battle of Coca Cola and Pepsi Co advertisement where they literally disgrace their competitors product to a high degree. I remember about reading an advertising book where there’s a picture of a kid using Coca Cola cans as a stepping tool to reach and buy a Pepsi from a vending machine… Boy, that was classic! But you know Coca Cola going to retribute right? Well of course they did. How about Pepsi Co, did they just be quiet about it? Of course not! They retaliate again.

Now this is what counter marketing is all about. Usually, to save face, a competitor who’s being targeted as the victim will retaliate, and the evil cycle continues. In the case of Coca Cola Vs Pepsi, they can manage to duke it out for so long because they have the resource for it. One word of advice, don’t get involved in a counter marketing, because the person/group/company/principle who have the most resource will win at the end. So be very careful about derogating your competitor, because once you get stuck inside a counter marketing situation, usually it will involve a lot of money…

Money you say? Yes, money. When you derogating a competitor, it means that you deliberately dragging down its image. Now how do you increase image standing again… Well, you can’t, at least in a short period of time. But what you can do is to counter it, and make the people sees that the person who derogating you is the one who doesn’t have the credibility.