Post #10: Can't We All Just Get Along?

In a capitalist society, all industries contain several competitors who, in theory, fight for consumers' dollars, thereby driving down the market price. This is the essence of perfect competition, and it explains the success of low-price leaders such as Wal-Mart, Payless, McDonald's, and many others.

In several industries, smart firms with large market share have realized the mutually damaging effects of the price wars that are characteristic of the retail and fast food industries. This is especially true of the mid-quality beer industry.

As recently as five years ago, Budweiser and Miller combined to hold a majority share of the light beer market in the United States. They aired ads such as this one which directly compared their products to their competitors'. 

However, both firms soon changed their advertising philosophies. They learned that directly competing only allowed smaller competitors such as Keystone and Natty Light to eat up market share. By using ads which promote their own brands without hurting their competitors', Budweiser and Miller hope to grow the beer category while still maintaining their strong market positions.

Over the last several years, Miller and Bud ads have moved away from direct comparison. Instead, they attempt to create memorable scenarios which will prompt water-cooler conversations, and eventually sales. A few of the best new Bud ads are shown below. Note the conspicuous lack of direct comparison in the ads.

A Few Recent Bud Commercials

A Miller Commercial, for Good Measure

Post #9: Are Big Names Worth the Big Bucks?

Celebrity endorsements are as American as Apple Pie, Chevrolet, and credit card debt.

But are they effective? In recent posts, I've discussed firms' desire to humanize their brands in the hopes of forging an emotional bond with consumers. The message for the brands mentioned in my earlier post about anonymous spokespeople is something like "If our brand was a person, this is what he/she would be like."


For firms that use celebrity endorsers, however, the message is a little different. It reads more like "If Dwayne Wade were a drink, he would be Gatorade". 

This is a potent message, but also a dangerous one. Firms which lean too heavily on their celebrity spokespeople expose themselves to factors beyond the firm's control, such as criminal activity, immoral conduct, poor performance and other events which damage the celebrity's, and therefore the brand's, public image . While paid actors can be controlled, the firm has very little power over its celebrity endorsers.

The stories of Michael Vick, Tiger Woods, and many others should serve as cautionary tales to potential celebrity-seeking brand managers.

Even once brand managers have managed to see past the inherent risks in celebrity endorsement, another hurdle remains: the cost. Some endorsers, such as Tiger Woods, command 7- or 8-figure salaries. This is an enormous sum, even for companies like Nike and Gatorade.

At the end of the day, it is important for brand managers to realize that celebrity endorsers are not a cure-all for stagnant sales. They come with a set of costs and risks which must be carefully weighed against their potential benefits.

Want to see what a bad celebrity spokesman looks like? Please enjoy the example below.