As my readers know, I’ve been fixated on the concept of value for quite some time. Any random post may not seem to fit this theme, but just about all of them do: turning store returns into a great shopping experience; Visa offering upscale bathrooms to attendees at a festival; a company that lets you leave a voicemail for a person without running the risk of actually having to speak to the person (eww!).  All of these are examples of real, observable value.

money-tree.jpgFor all intents and purposes, this is my first post on the general state of marketing since the US economy imploded. I haven’t said a whole lot because I’m still forming my own opinion on what brands need to do to survive and maintain consumer loyalty. What I am ready to say is that the key is value.

I believe the key distinction now, however, is between real and perceived value. Perceived value is what I talked about when I happily acknowledge(d) buying $250 Gucci sunglasses. I am fully aware that I could derive the same amount of real value from $10 shades bought on Canal Street.  Shield eyes from sun? Check.  but I saw a level of psychic value in the brand for which I was willing to pay an enormous premium. I measured that psychic value by how the world around me recognized that value. Looking at myself in the mirror wearing Gucci sunglasses gets old quickly. But having people reinforce my purchase – every day – as I walk around the city? Priceless. Value has two ingredients: (1) the real value that delivers functionality, and (2) the “psychic premium” I’m willing to pile on top so that the world sees me (and I see myself) in a certain way.

It turns out that it is not just beauty – but also value – that is in the eye of the beholder.

This is why even people “with money” have slowed their spending… why even luxury goods are seeing a decline in sales. It’s no longer fashionable to display the same brand names that only months ago were a mark of prosperity. Those marks are now seen as an indication of greed, of phony superiority, of foolishness. It’s not cool to show you have lots of discretionary income when everyone else is suffering. That’s why Mrs. Dick Fuld is still shopping at Hermes but now demands the store place her purchases in a plain white bag. It’s why Danny Meyer says his restaurants are actually selling the same amount of wine (as before the crash) but fewer bottles, his supposition being that people have decided that a bottle sitting on the table is an unwanted signal of wealth. It’s why DeBeers’ new ad campaign attempts to position diamonds as something to be kept forever in a world filled with “disposable distractions.”cutting-credit-card-debt.jpg

Don’t get me wrong: there will always be rich people who wear big big diamonds in environments where everyone else is doing the same. That’s not going to change, but that’s also not what fueled the success of Coach and Vuitton and even Starbucks in the US: what did was millions more not-so-rich people over-extending themselves to buy that Vuitton bag (or Gucci sunglasses) because they liked the world’s reaction. These behaviors are at the heart of the “trading up” phenomenon in America. Take away both (a) the people who couldn’t afford their purchases in the first place, and (b) those who can afford expensive things but who will no longer get the thrill of everyone else’s desire, and you’ve got major, major problems. Products and services that run on perceived value need to make a new plan, Stan, and fast.

This will not happen overnight. As I said, some people who can still afford to buy status-driven things will continue to do so. Others will wean themselves off instead of going cold turkey. Read the Wall Street Journal editorial, “I Once was Chic, But Now I’m Cheap,” written by an Apple buyer who vows that his family’s next computer purchases will be PCs. The piece reads like a therapy session. The writer’s preparing for the DT’s.

I’m also not particularly convinced that this is some sort of seismic global shift in values; the current economic situation may simply repress luxury consumption for awhile. But until that happens, consumers will either live without or discover products and services that deliver more real value: and once a shopper discovers that a store brand whitens his teeth as well as your brand, he may never come back.

stephanie-fierman-treat-customers-right1.jpgDraw your loyal customers closer, now.  Add value, if you can.  Remind your customers why they buy from you.  Get them to tell others, and you may just be able to stay flat (which is, after all, the new up).  The water level is going down, gentle readers, and all that’s underneath are the brands that deliver enough usefulness to hang tough until the next tide comes in. And that could take quite some time.

The teenage jury is in: Abercrombie & Fitch’s cross-channel marketing/ hype machine leaves just about everyone else in the dust.  Launched in 1892, I suspect that former shoppers Teddy Roosevelt, Ernest Hemingway, Amelia Earhart and Clark Gable would scarcely recognize the clothier whose soft-core porn advertising/experience that has turned the chain into a cultural icon (well, maybe Gable would feel at home…).

Since rebooting the brand in 1988, A&F has broken from the teen pack by courting controversy everywhere it goes.  Let us count the ways…

Because just about every retailer has a catalog and everyone’s catalog is free (ho-hum), A&F created a separate lifestyle magazine full of black-and-white photographs taken by Bruce Weber, the photographer best known for highlighting “the beauty of youth in male nude photography” (as taken verbatim from his own website).   There were so many protests over A&F Quarterly (which the company sells – further stoking desire among teens)  that the company suspended publication for awhile; it’s hard to say whether it was the magalog’s porn star interviews or the b&w shots of Santa and Mrs. Santa Claus in flagrante that pushed thousands of parents and a few governors and attorneys general over the edge… who’s to say?

Such outrage, of course, only pushed the Quarterly to greater, more mythical heights, stoking the company’s good-but-bad-boy (emphasis on “boy”) reputation.  Go online right now to witness the hysteria it generated in 2003. Totally un-cool Bill O’Reilly, a series of religious organizations and others called for boycotts, and articles concerned with “cultural decay” screamed out with headlines like “Abercrombie & Fitch Stops Selling Porn.”  Parental boycotts? Porn?  Thongs for pre-teens, according to Bill O’Reilly? [Don’t think too much about that one.]  All like catnip to your underage kitty.  Meee-ow!

A&F Quarterly has recently been reintroduced (in Europe, not the US) with a promise from the company that it would no longer be sold to individuals under the age of 18 and that there would be less of everything that made it hot in the first place.  Nevertheless, I wouldn’t expect any A&F articles on the virtues of abstinence anytime soon.

On the ground, it appears that the company used the Quarterly‘s hiatus period to begin focusing on customer service and the stores.  A new CEO was brought in from Gucci which – at 46,000 feet – now boasts the largest luxury store in the world right here on New York’s Fifth Avenue.  Gucci knows how to push the rags.  The CEO beefed up store staffing and there are now greeters at the front of every store, in addition to at least one employee inside covering each sales section.  But what is A&F’s spin?  A&F hires male models as greeters, who may literally be standing out on the sideway, stirring up – whatever.  The company further inflates the aspiration by “casting” for such greeters on its website, where the pages pulsate with club music accompanying a video of store events where the models are decidedly half-naked and the customers are clearly under 18.  If you are interested in becoming a model for A&F, you’re asked for a photo, your height, your weight… and the name of the mall nearest you.   ‘Cuz you may be pretty, but don’t ever forget why you’re here.

A&F’s been knocking around in my head for some time, but the impetus for this post was an experience this past Labor Day weekend.  Marketing Mojo was merrily cruising down NYC’s Fifth Avenue until running headlong into a case of gridlock at 57th Street.  What could it be?  Celebrities (pretty typical in these here parts…)?  No, it was a huge mass of people standing in front of A&F’s flagship store, waiting to get in and taking pictures of what definitely seemed to be a highlight of their day.  There were two beautiful young male models standing at the door controlling entry, and a line of people behind a velvet rope that snaked around the corner.  A velvet rope.  2008’s version of Studio 54/Limelight/China Club (all of which the Mojo’s under-18 friends snuck into) is… Abercrombie & Fitch. 

There is no question that A&F has made some wrong moves, particularly in the area of diversity.  Several years ago, the company made t-shirts that it considered fun and tongue-in-cheek.  Just about everyone else, including many college student organizations, considered them racist.  And in 2004, the company settled a $50 million class action lawsuit brought by former employees who claimed that the company was happy to hire African-Americans, Asians, Filipinos and other minorities… as long as they worked in the stores’ stockrooms and not out on the selling floor.   

Ergo, the stupid, screwed up (and illegal) side of presenting the “Caucasian, football-looking, blonde-hair, blue-eyed, skinny, tall male” as everyone’s ideal.  

Fast forward to 2008, and the company is making progress.  Today, the company claims that minorities make up 32% of its sales staff.  It also has a  huge “Diversity” section on its website.  Of course this is A&F, so the section plays a video loop that features Asians, Latinos and African-Americans – all of whom are gorgeous and (most of whom are) in some state of undress.  The company can’t give up everything!

[Nota bene: An employee recently claimed that A&F has simply shifted its discriminatory ways toward not hiring “ugly” people, with the company’s “hierarchy of hotness” dictating just about everything.  And not hiring unattractive people (across all ethnic groups) is very hard to outlaw, according to a lawyer who represented the plaintiffs in the original 2004 case.] 

Based on 20 years of business experience, the Mojo has absolutely no doubt that A&F’s lawyers and senior management are fully cognizant of what they’re doing, and believe that a nuisance lawsuit or two is worth preserving the highly profitable fantasy world they’ve created.  And by doing so, A&F taps into its target consumer’s impressionable zeitgeist like few others do – or have the nerve to do.

Abercrombie & Fitch  back to school shopping  clothing retail

So I was sitting in a meeting just a few days ago, and someone I like and respect said something about “the long tail.”  A couple people sort of nodded, and I thought, “Oh my, are people still talking about that?”

You see, I am and always have been… a long tail doubter.  It’s true.  I’ve never said it out loud because the book was so very popular and the concept was picked up everywhere and it spread like wildfire, so I just kept my doubts to myself.  For two years.  Until now.

But first, a bit of history to catch us up to the present day.

Chris Anderson, editor of Wired magazine, made a huge splash with The Long Tail, which was first published by the magazine in 2004 and then as a book in 2006.  In a nutshell, the long tail theory says that the abundance and ease of choice on the Internet has shifted sales potential from a small number of mainstream “hits” (at the front of the demand curve) toward a near-endless number of lesser-known choices at the tail.  The term refers to the orange section of the demand curve shown here:


Furthermore, because retail economics restrict stores to carrying only the best-selling products, items that have already been created and have either lost their mojo or were never popular in the mainstream in the first place are pushed out – along with their sunk costs.  But lo the Internet, with its infinite “shelf space” makes every product discoverable and ready to be purchased.  The book has become something of a holy document in the Internet community where companies (“from Amazon to iTunes,” says Anderson on his website) want to find a way to sell old songs, movies, videos, ringtones, on-demand books and television shows from their infinite Web warehouses.  Case studies flew up everywhere. 

Personally, I thought it was bunk.  Or rather, I thought the concept vastly overdramatized the effect of a small minority of “committed seekers” dedicated enough to something (comic books, that lost Marvin Gaye song, Civil War spoons…) to search for and purchase a category’s flotsam and jetsam.

When I looked around, in fact, it seemed that the rest of us were doing quite the opposite.  The New York Times’ Most Blogged, Most Emailed and Most Searched lists.  Top TV Shows, Top Music, Top Movies on iTunes.’s influential Sales Rank, and its Bestsellers list (updated hourly).  The Netflix Top 10.  To me, the Internet appeared to be herding users more aggressively toward blockbusters, not away from them.

Like I said:  I kept this then un-hip and un-scientific opinion to myself.

Now there’s a professor at Harvard Business School who has researched the long tail. Based on sales data for online video rentals and songs, Professor Anita Elberse verifies my gut: not only do hits continue to be just as important online as they are online, but the Web is actually magnifying attention on the winners.

Elberse also discusses what she and others view as an incorrect subjective assumption that Anderson made when building the long tail, which is the idea that people want to go their own way.  They don’t want to listen/watch/read what everyone else does, and would rather wander down an untrodden hallway of the Web and find an otherwise discarded gem.  Who is he kidding?  Elberse cites additional research showing how intensely social people really are: how we like sharing experiences with others and that the mere fact that others like something makes us like it even more. 

And confirmation has come from another interesting source, as well.  Neil Howe, widely considered to be the expert on Millenials, draws a broad distinction between Gen X and this new influential group – the generation driving the most development and change on the Web. Among other things, while Boomers and Gen X “individuated,” born-in-the-80s Millenials gravitate toward the social:  chat rooms, instant messaging, Facebook.  They enjoy being with each other, forming friendships and shared preferences.  Rather than acting independently, Millenials who spend time customizing content on the Web do so for the purpose of sharing it with others (hello, YouTube). 

                                         (Click on the graphic for a larger view)

Howe says it is and will be “the most connected generation in world history,” and that their preferences will only solidify the popularity of mainstream, popular brands and products.
Finally, Elberse and The Wall Street Journal‘s Lee Gomes also believe that the Internet/tech community unconsciously may have wanted to back the theory because it flattered its citizenry.  Long tail strength would fortify the value of new digital assets created outside the walls of institutional, cultural power (let’s build a pet robot in my garage, shoot a video for YouTube and get rich!).  And bloggers drank the Kool-Aid, they say, because the long tail promises an audience for just about any goofy comment out there.  This is all probably true, but it’s a little sketchy so I’m not going to dwell here.

But I am very, very happy that some respectable people with significant research refute the long tail theory.  Because – while I may not be a Millenial – I do like company.

If you enjoyed this post and wish there was so much more… Check out my daily blog at Thank you!

Retail Cooperatives Move Online
Data cooperatives that track catalog purchase behavior have been around for decades.  Catalog retailers join the cooperative, submit their own anonymous but detailed purchase data and then can use the aggregated data to make targeting decisions.  Now this concept has jumped to the web, which could be very exciting.  An online cooperative called aCerno acts as a clearinghouse for retailers to share data collected from web transactions. “The system would allow an online retailer to contribute information, such as a cookie tied to a customer who bought a lawn mower. Another co-op member could then use that data to show the person an ad for a related product, like gardening supplies, with the supplier getting a cut.”

Online Video-Sharing Site Usage is Huge

43% of female and 53% of male adult Internet users visited an online video-sharing content site in 2007, and the %s in all age ranges soared.  Check this article for interesting and detailed stats.

Top 10 Viral Videos of 2007
Here are Jack Myers’ picks.  The #1 most popular video had 20 million views on YouTube and needs no introduction.  On a personal note, I did not do so well with geography in elementary school myself, so this video makes me feel a lot better.

Taser Home Shopping Parties a “Stunning” Success
The Tupperware party idea has finally jumped the shark.  Proof positive that you can apply a high-pressure ponzi scheme to just about anything!

Match the Medium to what People Actually do with It
This is an article detailing some of Rupert Murdoch’s thinking re. the future of the Wall Street Journal and, of course, he’s a genius.  His simple point of view is that – in a multi-media, multi-channel, multi-screen world – each channel’s content should be based on the interest and needs of its users.  For example:  perhaps the long, long, long stories on the cover of the Wall Street Journal each day would be better off in the weekend edition, when readers could actually find the time to read them.  The WSJ shouldn’t be ESPN, but maybe a simply sports score chart would be useful to traveling businesspeople who might get yesterday’s scores by picking up the newspaper left outside her hotel room. 

This is the process that Time magazine must pursue if it is going to survive.  Forget about the past.  (1) Put index cards up on a bulletin board that say Website / Mobile Web / Mobile Text / Print.  (2) Decide who uses each, when and for what.  (3) Execute mercilessly.  This is the process that the Variety franchise pursued when I was at Reed Elsevier:  Variety online is best for quick visits and breaking news.  Daily Variety is great for finding out what you missed yesterday, with just enough context.  Weekly Variety offers long-form articles and a discussion of trends. 

The Trading Up Phenomenon is Recession-Proof
This is an article in The New York Times (01.20.08) that tries to tie the idea that consumers are reigning in spending at the moment to an overall “decline” of the idea that consumers who are not truly wealthy “trade up” to luxury brands when they have discretionary cash.  This blogger has discussed her interest in this concept before, and recommends Michael Silverstein’s and Neil Fiske’s book on the topic Trading Up: The New American Luxury.  Like Silverstein, who’s quoted in this article, I think the author of this article is way off track.  The whole point is that middle- to upper-middle class people trade down when they are low on funds, and up when they are flush.  “The trading up phenomenon is quite recession-proof,” Mr. Silverstein says.


Caption: Sharing a love for upscale accessories, mega-mom Angelina Jolie and daughter Zahara, 2, step out in matching mommy-and-me Valentino “Histoire” handbags during a trip to a New York City park. [PEOPLE MAGAZINE]

Naturally, because my first post on my first blog was about Neil Howe’s and William Strauss’ predictions of kids in the future returning to a more wholesome, positive-values, altruistic place in the world, I’ve found nothing but amusing individual cases to the contrary ever since.

And while I suppose that no one would expect celebrity kids to fit into this trend necessarily, starting with those who are literally pre-verbal is over the top. For most.


A teaser for Steven Levitt’s “Freakonomics” blog in The New York Times today caught my eye: What do Freakonomics and “High School Musical” have in common? Levitt’s initial answer is that both efforts became surprise hits that had little reason for mainstream success.

[Sidebar: because he thought the movie was “shockingly awful,” Levitt ends with a bit of humor by hoping that his book and the Disney movie have actually nothing in common. That’s ok: Mr. Levitt is not a member of the target audience – his kids, however, are completely addicted.]

For you non-fans, High School Musical was a made-for-TV movie that debuted in January 2006 to an audience of 7.8 million viewers. It’s made about $100 million in DVD and soundtrack sales so far. HSM2 drew 17.2 million viewers on its first night last month, and the soundtrack is #1 on the Billboard chart. And if you really want to drive yourself crazy: IMDB claims the original soundtrack took five days to make…I wonder if the success of a franchise that is so innocent – that harkens back to a much more wholesome, optimistic time – seems remarkable to anyone else. The news and adult conversation today are replete with terrorism, recession, lead paint, political hopelessness and schadenfreude. My mother thinks we should move to Canada. What’s with all these happy, singing kids? Neil Howe and William Strauss, authors of the compelling book, Generations, and the new Millenials Rising, think they have the answer. Howe and Strauss show how today’s pre-teens and teens are distancing themselves from their parents and the recasting the very image of youth from downbeat to positive, altruistic and engaged. The evolution is most profound with younger kids, who are moving away from even older teens’ more violent and sexually-charged world. Over time, these 12-15 year olds will not only entirely recreate what it means to be young but could become our next “great generation,” a la Franklin D. Roosevelt, and bring society back to a more honorable time.

What does this mean for marketers? What product and service categories could take particular advantage of this phenomenal evolution, and how do we get from hip-hop here to a more fanciful future?