Hollow Point

This posting pulls together some thoughts prodded into life by a news story and Linspire’s Michaels Minute email newsletter, both highlight the self imposed challenges faced by companies with too much commercial power used in an unwise way.

First of all Wal-Mart has been slated for a number of years about the disturbing side effects of the retailing superpower.

Accusations against Wal-Mart include:

  • That their stores are a blot on the landscape
  • The company is alleged to have a policy of anti-union practices (which is par for the course here in the UK)
  • The company’s actions is alleged to have forced suppliers out of business by distorting supply and demand and encouraging globalisation

There is a good article that outline these arguments in more depth: Fast Company – The Wal-Mart You Don’t Know (page 68, December 2003). There is a viewpoint out there that goes along the lines of Wal-Marts dogged pursuit of growth at any cost had caused and untold amount of economic destruction and ruined the social fabric of communities across the US. Wal-Mart has had enough of this pinko communist rubbish and decided to launch a PR blitzkrieg to counteract negative perceptions that consumers and skakeholders may have about the retailing behemoth. A key component in this charm offensive is the dreadfully dull Walmart Facts website. Somehow I don’t think that this website and copy will make it into the web designer’s or PR agency’s portfolio. As a measure of the effectiveness of the campaign, it has picked up a slating from industry analysts who think that it will make little difference to consumer attitudes or Wall Street’s valuation of the company.

Michael Robertson in his Michael’s Minute email newsletter had two interesting Microsoft-related comments. The first one was the Microsoft had moved from being a growth company to being a value company and despite trying to diversify the company had failed to get sufficent returns from entering new markets such as PDAs, mobile phones, TV, games consoles and music. Part of this could be because players in these markets are reluctant to have their margins hollowed out in the devastating commoditised markets that have wrecked the once thriving PC business. Robertson further considers that this devastation of the industry will encourage IBM PC partner Lenovo to lean more towards Linux.

 

 

China-based Lenovo just received US government clearance to purchase IBM’s PC business. IBM executives have assured the IT world that the quality and service will remain, and I hope it does because I’m a big Thinkpad fan and own several of the X series laptops. But something must change or Lenovo will have paid $1.75 billion for the right to lose money on every IBM PC they sell. Over the last 3.5 years, IBM has sold about 30 million computers and lost $965 million dollars – or approximately $33 per computer. To reverse their fortune, Lenovo needs to find a way to have $50 better economics on every PC so will they not only break even, but they will generate some profits. IBM already uses Chinese labor in their plant in Shenzen to manufacture their PCs – so there won’t be much savings there. Lenovo may be able to buy hard disks, memory or other parts slightly cheaper than IBM because of greater economies of scales, but at best this will be less than $10 per machine. The only place where significant savings can be generated to turn their PC business around is the operating system and office suite. Instead of paying Microsoft $100-$300 per machine for Microsoft Windows XP and Microsoft Office, they will ship Linux with an office suite and pay just $5-$10 on some of their product line. This will give them distinction from the well-entrenched Dell and HP computers they must compete with.

Do you spell Bush N-I-X-O-N?

During the Nixon administration American special forces did not go into Laos and Cambodia in an operaton called Commando Hunt to use the country as a base to attach the Ho Chi Minh trail – the supply line that took North Vietnamese materials South to Viet Cong troops. This was because such activity would have meant that the US would have been waging a war in a country that it was not at war with. This did not destablise Cambodia in any way because it never happened. And since it never happened, it was not indirectly responsible for the rise to power of the Khmer Rouge.

In a similar vein, move forward thirty years to George Bush Jr’s second term in office, American special forces are not infiltrating Iran or nine other Middle Eastern, African and South Asian countries including Tunisia, Algeria, Yemen, Sudan, Malaysia and Syria. You can read more in this pile of balderdash in this article in the New Yorker by journalist Seymour Hersh, famous for the pack of lies he told about prisoner abuse by American soldiers in Iraqi jails that has since been found to be as untrue as the allegations of American arms for hostages deals with Iran during the mid 1980’s. Enjoy! If you liked this posting you may also enjoy a related posting Do you spell Vietnam I-R-A-Q?UPDATE – You can see Seymour Hersh being interviewed on Newsnight, the BBC’s flagship news and current affairs programme here. (Real Player required).

Not a happy time for BT

In a week where one of the main human interest stories in the UK was that BT had appeared twice as many times as any other company in the 25 years of the BBC’s consumer activist television programme Watchdog, then the company gets lambasted by the Advertising Standards Authority for a Hooveresque free flights fiasco. Consumers had been promised free flights to various US and European destinations of their choice in return for signing up to BT’s broadband service, unfortunately th fulfillment for those flights raised a number of complaints. BT should have learned from Avon and Orange when they handled a similar kind of marketing FUBAR last year.

Real beauty – championed by a cosmetics company?

Dove’s Campaign for Real Beauty is an interesting exercise on a number of levels. Whilst it is laudable that a stand has been taken against conventional beauty being the only measure for women, the campaign is flawed for a number of reasons.

First of all it is part of the cosmetics industry which has used advertising and point of purchase sale counters in department stores to point out to women how they can cover their unsightly features and given them unfair role models to aspire to. Hell, even catwalk models get the Photoshop treatment to enhance their skin for photo shoots. Dove owners Unilever should have started its campaign with a very public mea culpa for their past sins against women and alter its marketing of the Calvin Klein, Elizabeth Arden, Chloe, Faberge, Lagerfeld, Scherrer, Elizabeth Taylor and Valentino brands. Instead the research report carried out by a PR consultancy cops out and blames the media in general, please!

Secondly, plus-sized women, its not about how you feel about yourself – obesity is a health issue and predicted to be a future drain on healthcare resources dealing with diabetes, heart and circulatory issues and bone damage – the whole fat and proud thing doesn’t wash. Heroin addict chic is not cool either.

Thirdly, the campaign doesn’t seem to focus on the dynamics of beauty that much. An old girlfriend of mine once told me that women spruce themselves up to ‘show out’ and ‘hold their own’ against other women rather than to impress new or prospective partners. In addition, contrary to the implication of the adverts, many ‘conventional’ beauties are not appealing to men. Men actually have different tastes, so the notion of conventional beauty is tenuous. Note: all you Alex Kingston look-alikes can email me ;-)). I don’t see any of this communicated in the messaging.

 

Finally if you are going to have an integrated marketing campaign, for pity’s sake think the execution through. Guerilla activity on the London Underground posters for the Campaign for Real Beauty has shown at least some of the consumers disagree with Dove’s concept of real beauty. Check out Spin Bunny’s Mings of a Dove posting here and Dove’s report developed by StrategyOne: a research company owned by global PR conglomerate Edelman here.

Disorganised Organisations

Demos the think-tank beloved of new Labour issued a report in November last year that slipped under the radar until now. Disorganisation: Why organisations should loosen up collated a lot of useful information about the trend towards teleworking and the subversion of rigidity in traditional company cultures. Whilst you could argue that the involvement of Orange as a PR exercise in developing the report tainted its conclusions the collection of case studies and research are very useful for justifying the Treo 650 you bought on the company credit card last month. Available here as a PDF (warning its 69 pages long).Demos also has a useful page of links here.