Our recent class discussions about keeping "true" to one's brand made me think of a particular project I was part of in my past life at an industrial design firm. Just as we take care to remain true to the meanings which are associated with brands, in product design similar considerations are made with respect to design language. The two printers above are an example of this (the old model is on the left and the new model on the right). If one were to look at a side view of each of these printers, the side view is almost identical. The new design concept on the right was chosen partially because of its friendly familiarity with the old product it was replacing. The idea of design language also relates to the Toyota article: "How do we evolve a Camry to a new generation, yet have it still be a Camry?" Great designs like the Volkswagen Beetle and the newer Ford Mustang do this well. In the design world, people spend countless hours tweaking curves and surfaces to make this happen. The result is often very subtle so that all that is noticed is a feeling of new vitality or freshness...
Tuesday, January 30, 2007
Brand Image and Industrial Design
Our recent class discussions about keeping "true" to one's brand made me think of a particular project I was part of in my past life at an industrial design firm. Just as we take care to remain true to the meanings which are associated with brands, in product design similar considerations are made with respect to design language. The two printers above are an example of this (the old model is on the left and the new model on the right). If one were to look at a side view of each of these printers, the side view is almost identical. The new design concept on the right was chosen partially because of its friendly familiarity with the old product it was replacing. The idea of design language also relates to the Toyota article: "How do we evolve a Camry to a new generation, yet have it still be a Camry?" Great designs like the Volkswagen Beetle and the newer Ford Mustang do this well. In the design world, people spend countless hours tweaking curves and surfaces to make this happen. The result is often very subtle so that all that is noticed is a feeling of new vitality or freshness...
Is the Camry set to get old and stuffy?
This article in MSN warns that Toyota needs to update their Camry image for younger generations. "Camry buyers are on average in their low to mid-50s, and if Toyota doesn’t change the trajectory ... the Camry will become the Oldsmobile or the Buick of 20 years from now,” he said. “Their customers will be the oldest Americans, who are dying out of the market every day. Toyota is adamant that they are not going to let this happen, but they may be powerless to change it.” As discussed in class, Toyota has the challenge of marketing to a younger generation without alienating their core group of consumers. Do they make the Toyota Camry appealing for everyone or do they create a sub-brand to target younger consumers? Initial results appear that Toyota is trying to capture the younger consumer through launching their less expensive Scion brand and by also trying to update the Camry to a sportier version.
Do you think Toyota can appeal to a younger audience? Do you think Toyota is doing the right thing by updating the Camry? Will these updates drive the baby boomer generation, their core audience, to "older" style cars like Oldsmobile? Toyota's claim to fame is that once you buy a Toyota, you become a repeat buyer. Will this remain true with a younger generation or is the Toyota brand name going to become interchangeable with other auto makers?
Is Camry this generation’s Buick?
Popular sedan becoming this generation’s Buick, Oldsmobile
By Roland Jones
Business editor
MSNBC
Updated: 4:19 p.m. ET Jan 24, 2007
For several years in the late 1970s and early 1980s, the Oldsmobile Cutlass was the best-selling car in America, boosted by popular designs, positive reviews and the perception of quality and reliability.
How times have changed. Today, the once-venerable General Motors brand lies defunct, phased out in 2004 after steadily declining sales. The Olds was killed by its image as old and stuffy, despite an attempt to revive it with a public relations campaign in the late 1980s that promised the new models were “not your father’s Oldsmobile.”
It’s a cautionary tale worth noting, especially for the Toyota Camry, the best-selling car in the United States for eight of the past nine years. Statistics compiled by consulting company Global Insight show that, up to the 2002 model year, the average age of U.S. buyers of Toyota’s popular sedan rose by one year for every year that passed. The brand is in danger of becoming outdated.
“This is the price you pay for making a connection with a generation,” said John Wolkonowicz, senior auto analyst for North America at Global Insight. Wolkonowicz notes that Toyota’s bread-and butter sedan, known for dependability and comfort, has made a solid connection with baby boomers, typically born between the mid-1940s and mid-1960s.
“Camry buyers are on average in their low to mid-50s, and if Toyota doesn’t change the trajectory ... the Camry will become the Oldsmobile or the Buick of 20 years from now,” he said. “Their customers will be the oldest Americans, who are dying out of the market every day. Toyota is adamant that they are not going to let this happen, but they may be powerless to change it.”
Brand changes aren’t always successful, despite the best marketing makeovers. But Toyota shouldn’t be underestimated, Wolkonowicz added.
Since the 1990s, the Camry sedan has transitioned from its boxy beginnings to a more athletic exterior, while retaining a reputation for reliability, affordability and good fuel economy. Toyota sold 450,000 Camrys in 2006, up nearly 4 percent from 2005, according to Autodata, and well ahead of the No. 2 Accord, which sold 354,000 units, a decline of about 4 percent.
Still, before the Camry came the Ford Taurus, which held the position as the nation’s best-selling car between 1992 and 1996, only to lose its perch at the top of the automotive tree to the Camry in 1997. Ford produced its last Taurus last year.
Jack Nerad, executive market analyst for Kelley Blue Book, which tracks the automotive industry, says there does seem to be a natural arc for a successful car brand. Older nameplates like Buick, Pontiac and Mercury are all struggling, he said, although none of them are showing signs of going away.
“But it’s interesting because a few years ago you would have added the Cadillac brand to the list of struggling brands, and now it is resurgent,” he said. “It has shown that a brand that is on its last legs can find a new market given the right product and the right marketing strategy. Thanks to the CTS, Cadillac has a younger market; it has become youthful and edgy.”
Capturing the Generation X and Y demographics — generally speaking, those born after 1965 — is the aim of most carmakers, said Wolkonowicz. These consumers are more interested in BMWs than Camrys, he said, and many of them are buying premium models on the used market.
Toyota is working to capture this demographic with its lower-cost Scion brand. The initial Scions — the xA subcompact, the xB wagon, and to a lesser extent the tC sport coupe — received middling reviews. The next generation xB and the new xD, the successor to the xA, will be unveiled next month at the Chicago auto show.
“My guess is these new models will yet again be steps along the way,” Wolkonowicz said. “In typical fashion, Toyota is taking it slow and easy and getting better and better with every step. Scion will not be an overnight success. Ultimately, they will be a success, given Toyota’s might and money — it will just take time.”
Scion certainly seems to be holding its own. In a year of declining vehicle sales, Scion’s sales were up 10.6 percent in 2006 over 2005, and its share of the light vehicle market rose to 1.04 percent from 0.92 percent a year earlier.
The second part of the Japanese carmaker’s plan to capture younger consumers is to make the flagship Toyota brand more exciting by designing more expressive vehicles, adding emotion and horsepower, Wolkonowicz said.
“Toyota is known for reliability and good resale value,” he said. “Toyota is a rational purchase — it’s for people who care about making a smart purchase decision. It doesn’t get the adrenaline flowing.
“So it remains to be seen what they can accomplish here. The car business is like fashion, and like the fashion business, brands carry cachet. They also carry baggage, especially for younger people. It depends on whether they think the new styles are cool.”
Early signs suggest Toyota’s plan to rejuvenate the Camry with a sportier, more aggressive design is working, according to Bill Kwong, a spokesperson for Toyota. He says company data show the median age for the base Camry CE model buyers declined from 55 to 48 from 2005 to 2006.
“Yes, the age of Camry drivers was starting to get older,” Kwong said. “They are very loyal, so every time they come back to buy a new one they get a little older. But we think the new data show our buyers’ ages are decreasing.”
But Toyota faces other challenges, including questions about quality. The automaker last year faced an issue of engine damage caused by oil sludge that nearly resulted in a class-action lawsuit. More recently, Toyota said it will recall 533,000 Tundra pickups and Sequoia sport utility vehicles because of potential steering problems. The quality issues have led some to ask if Toyota is stretching itself thin to capture more U.S. market share.
And the Camry is a tempting target for rivals. At the recent Detroit auto show, General Motors unveiled a drastically restyled 2008 Chevrolet Malibu, aimed directly at the midsize sedan market.
Honda showcased a concept coupe design for its top-selling Accord, and the company stands to benefit down the road if Toyota falters, according to Wolkonowicz.
Many car consumers see Honda and Toyota the two brands as interchangeable as Coke and Pepsi, he said. But unlike Toyota, Honda enjoys strong appeal among Generation X and Y drivers as well as among baby boomers, he said.
“They have the attention of everyone born after 1954, and that’s a great position to be in,” he said. “So the company could come out of this looking good as the decades pass. But given Toyota’s huge cash position I think they will have the wherewithal to deal with all this.”
© 2007 MSNBC Interactive© 2007 MSNBC Interactive
http://www.msnbc.msn.com/id/16774146/page/2/
Do you think Toyota can appeal to a younger audience? Do you think Toyota is doing the right thing by updating the Camry? Will these updates drive the baby boomer generation, their core audience, to "older" style cars like Oldsmobile? Toyota's claim to fame is that once you buy a Toyota, you become a repeat buyer. Will this remain true with a younger generation or is the Toyota brand name going to become interchangeable with other auto makers?
Is Camry this generation’s Buick?
Popular sedan becoming this generation’s Buick, Oldsmobile
By Roland Jones
Business editor
MSNBC
Updated: 4:19 p.m. ET Jan 24, 2007
For several years in the late 1970s and early 1980s, the Oldsmobile Cutlass was the best-selling car in America, boosted by popular designs, positive reviews and the perception of quality and reliability.
How times have changed. Today, the once-venerable General Motors brand lies defunct, phased out in 2004 after steadily declining sales. The Olds was killed by its image as old and stuffy, despite an attempt to revive it with a public relations campaign in the late 1980s that promised the new models were “not your father’s Oldsmobile.”
It’s a cautionary tale worth noting, especially for the Toyota Camry, the best-selling car in the United States for eight of the past nine years. Statistics compiled by consulting company Global Insight show that, up to the 2002 model year, the average age of U.S. buyers of Toyota’s popular sedan rose by one year for every year that passed. The brand is in danger of becoming outdated.
“This is the price you pay for making a connection with a generation,” said John Wolkonowicz, senior auto analyst for North America at Global Insight. Wolkonowicz notes that Toyota’s bread-and butter sedan, known for dependability and comfort, has made a solid connection with baby boomers, typically born between the mid-1940s and mid-1960s.
“Camry buyers are on average in their low to mid-50s, and if Toyota doesn’t change the trajectory ... the Camry will become the Oldsmobile or the Buick of 20 years from now,” he said. “Their customers will be the oldest Americans, who are dying out of the market every day. Toyota is adamant that they are not going to let this happen, but they may be powerless to change it.”
Brand changes aren’t always successful, despite the best marketing makeovers. But Toyota shouldn’t be underestimated, Wolkonowicz added.
Since the 1990s, the Camry sedan has transitioned from its boxy beginnings to a more athletic exterior, while retaining a reputation for reliability, affordability and good fuel economy. Toyota sold 450,000 Camrys in 2006, up nearly 4 percent from 2005, according to Autodata, and well ahead of the No. 2 Accord, which sold 354,000 units, a decline of about 4 percent.
Still, before the Camry came the Ford Taurus, which held the position as the nation’s best-selling car between 1992 and 1996, only to lose its perch at the top of the automotive tree to the Camry in 1997. Ford produced its last Taurus last year.
Jack Nerad, executive market analyst for Kelley Blue Book, which tracks the automotive industry, says there does seem to be a natural arc for a successful car brand. Older nameplates like Buick, Pontiac and Mercury are all struggling, he said, although none of them are showing signs of going away.
“But it’s interesting because a few years ago you would have added the Cadillac brand to the list of struggling brands, and now it is resurgent,” he said. “It has shown that a brand that is on its last legs can find a new market given the right product and the right marketing strategy. Thanks to the CTS, Cadillac has a younger market; it has become youthful and edgy.”
Capturing the Generation X and Y demographics — generally speaking, those born after 1965 — is the aim of most carmakers, said Wolkonowicz. These consumers are more interested in BMWs than Camrys, he said, and many of them are buying premium models on the used market.
Toyota is working to capture this demographic with its lower-cost Scion brand. The initial Scions — the xA subcompact, the xB wagon, and to a lesser extent the tC sport coupe — received middling reviews. The next generation xB and the new xD, the successor to the xA, will be unveiled next month at the Chicago auto show.
“My guess is these new models will yet again be steps along the way,” Wolkonowicz said. “In typical fashion, Toyota is taking it slow and easy and getting better and better with every step. Scion will not be an overnight success. Ultimately, they will be a success, given Toyota’s might and money — it will just take time.”
Scion certainly seems to be holding its own. In a year of declining vehicle sales, Scion’s sales were up 10.6 percent in 2006 over 2005, and its share of the light vehicle market rose to 1.04 percent from 0.92 percent a year earlier.
The second part of the Japanese carmaker’s plan to capture younger consumers is to make the flagship Toyota brand more exciting by designing more expressive vehicles, adding emotion and horsepower, Wolkonowicz said.
“Toyota is known for reliability and good resale value,” he said. “Toyota is a rational purchase — it’s for people who care about making a smart purchase decision. It doesn’t get the adrenaline flowing.
“So it remains to be seen what they can accomplish here. The car business is like fashion, and like the fashion business, brands carry cachet. They also carry baggage, especially for younger people. It depends on whether they think the new styles are cool.”
Early signs suggest Toyota’s plan to rejuvenate the Camry with a sportier, more aggressive design is working, according to Bill Kwong, a spokesperson for Toyota. He says company data show the median age for the base Camry CE model buyers declined from 55 to 48 from 2005 to 2006.
“Yes, the age of Camry drivers was starting to get older,” Kwong said. “They are very loyal, so every time they come back to buy a new one they get a little older. But we think the new data show our buyers’ ages are decreasing.”
But Toyota faces other challenges, including questions about quality. The automaker last year faced an issue of engine damage caused by oil sludge that nearly resulted in a class-action lawsuit. More recently, Toyota said it will recall 533,000 Tundra pickups and Sequoia sport utility vehicles because of potential steering problems. The quality issues have led some to ask if Toyota is stretching itself thin to capture more U.S. market share.
And the Camry is a tempting target for rivals. At the recent Detroit auto show, General Motors unveiled a drastically restyled 2008 Chevrolet Malibu, aimed directly at the midsize sedan market.
Honda showcased a concept coupe design for its top-selling Accord, and the company stands to benefit down the road if Toyota falters, according to Wolkonowicz.
Many car consumers see Honda and Toyota the two brands as interchangeable as Coke and Pepsi, he said. But unlike Toyota, Honda enjoys strong appeal among Generation X and Y drivers as well as among baby boomers, he said.
“They have the attention of everyone born after 1954, and that’s a great position to be in,” he said. “So the company could come out of this looking good as the decades pass. But given Toyota’s huge cash position I think they will have the wherewithal to deal with all this.”
© 2007 MSNBC Interactive© 2007 MSNBC Interactive
http://www.msnbc.msn.com/id/16774146/page/2/
TJX's Recent Troubles May Impact Their Brand
The following articles are from the Boston Globe and concern TJX's recent security breach which compromised millions of TJX's customers' personal data. The first article was published last week, on January 26, and chastised TJX CEO Ben Cammarata for his lack of response to the incident. The article compares TJX's response to that of Tylenol's notable response to the cyanide incident and mentions that TJX's brand names might be adversely impacted. As the author writes, "This is retailing we're talking about, the most Darwinian of businesses, where only the strongest survive. If I can't trust the Marshalls brand, why not go to Target?". The second article mentions some of the tactics taken by TJX within the past few days to respond to directly to its customers, such as taking out full-page ads in several newspapers and posting a video on the TJX website.
What do you think- is it too late for TJX to repair the damage done to its brands? Does TJX really care about its customers, or is the company just responding to pressure from the media?
Elephants don't dance
By Steve Bailey, Globe Columnist January 26, 2007
TJX is no Johnson & Johnson. And right now Ben Cammarata is looking like no James Burke.
A quarter of a century after the bold decision by Burke, then chairman of Johnson & Johnson, to pull 31 million bottles of Tylenol capsules off the shelves remains the gold standard in corporate crisis-management. Seven people died from Tylenol laced with cyanide, and the Madison Avenue crowd was saying one of the world's best brands would never recover.
Burke succeeded by putting the customer first. Going against the advice of government agents and his own executives, Burke ordered a massive recall, which cost the company $50 million after taxes. Rather than hunkering down, Burke went on "60 Minutes" to explain what happened and dedicated the firm to the investigation. When Tylenol returned to the stores, it was in new triple-sealed packages and J&J gave away 80 million $2.50 coupons redeemable toward any Tylenol product.
The result: Tylenol regained more than 80 percent of its market share within a year. You'll find
it in my medicine cabinet today.
The crisis that has engulfed TJX is not about life and death. But it is about consumer trust. This is retailing we're talking about, the most Darwinian of businesses, where only the strongest survive. If I can't trust the Marshalls brand, why not go to Target?
Millions of credit and debit cards may have been exposed by a security breach at Framingham-based TJX in what could become the nation's largest case of stolen consumer data. In the first line of its first public disclosure about the breach, TJX said it was "victimized by computer systems intrusion." Wrong. It is TJX's customers who were victimized by the criminals and TJX itself.
There is plenty of blame to go around. It is not news that identify theft and credit card fraud are problems, but government -- federal and state -- has been slow to act. The credit card companies and the banks have been noisy in pointing the finger at TJX -- no small irony from an industry that stuffs our mailboxes every day with yet another low-low credit offer.
But this particular problem belongs first to TJX. It was TJX that left a window open and let the bad guys sneak in and make off with its customers' credit data. What about it, Ben Cammarata? Did you wait a month to tell your customers because the cops asked you to or because you were in the middle of the Christmas selling season? Why are you still "considering" whether to offer free credit monitoring to customers? Why have customers who had their license numbers stolen not gotten so much as a letter from you?
Debra Gibbons of Needham, a long-time TJX shopper, wants to know. She got a call from her credit card company saying her account was on fraud alert. Said Gibbons: "To close the account or not to close the account, that was the question. I closed the account . . . TJX owes the public something more than lip service. We want answers and we want them now."
Cammarata is a world-class retailer who preaches the value of "sweaty palms" -- that is, always sweating the suppliers until the last minute for the best prices. But as a leader amid one of the company's worst crises, he has been invisible. If TJX were a different kind of company and Cammarata a different kind of leader, company and chairman could become the champion for the need to do something about identify theft and credit card theft. But then elephants don't break dance, either.
Now it is TJX's customers doing the sweating. Repeat after me, Chairman Cammarata: The victim is the customer, not the company. The victim is the customer, not the company. If TJX takes care of its customers, the customers will take care of TJX. If not, there is always Target.
Steve Bailey is a Globe columnist. He can be reached at bailey@globe.com or at 617-929-2902.
TJX faces class action lawsuit in data breach
Firm won't offer credit monitoring, CEO says in video
By Jenn Abelson, Globe Staff January 30, 2007
A class action lawsuit was filed yesterday in US District Court in Boston accusing TJX Cos. of negligence for failing to maintain adequate security of customer credit and debit card data and not disclosing the breach for a month.
The suit was filed on behalf of Paula G. Mace of Horner, W.Va., who had her debit card information stolen from the company's computer system. It is seeking credit monitoring services and any damages incurred by affected customers, according to Jonathan Shapiro , a partner with Stern Shapiro Weissberg & Garin of Boston, one of two firms that brought the case.
"Because of TJX's actions, hundreds of thousands or even millions of its customers have had their personal financial information compromised, have had their privacy rights violated, have been exposed to the risk of fraud and identity theft, and have otherwise suffered damages," according to the suit.
Both Mace and Sherry Lang, a TJX spokeswoman, would not discuss the case.
The lawsuit came as TJX chairman Ben Cammarata spoke out yesterday for the first time since the Framingham discounter disclosed on Jan. 17 that a hacker stole customers' personal data from its computer system dating as far back as 2003. TJX, which last week was considering offering credit monitoring for customers whose personal data was compromised, yesterday said it would not provide that service.
"Based on the type of data involved in the breach of our systems, we don't believe that such monitoring will be meaningful to customers," Cammarata said in a seven-minute video posted on TJX's website.
The chairman, in the video and full-page advertisements in several New England newspapers, also tried to clarify why the company waited more than a month to talk about the incident.
Banking officials and retail consultants have estimated that millions of customers could be affected in what may be the biggest loss of customer data in US history.
Cammarata sought to reassure customers that it's safe to shop at TJX's more than 2,500 stores, including T.J. Maxx, Marshalls, and HomeGoods.
"By delaying a public announcement, with the help of top computer security experts, we were able to contain the problem and further strengthen our computer network to prevent further intrusion," Cammarata wrote in a full-page advertisement that appeared in the Boston Sunday Globe. "Therefore, we believe that we were acting in the best interest of our customers."
Cammarata also said the company now believes that customer transactions at Bob's Stores, and transactions using debit cards issued by Canadian banks, were not compromised in the breach.
Still, some consumers and crisis communications executives said Cammerata's comments are not only late but inadequate, and criticized TJX for refusing to disclose how many customers were affected and for leaving too many other questions unanswered. TJX has not said how many customers have been affected, but the Massachusetts Bankers Association has already reported credit- and debit-card fraud connected to the breach for unauthorized purchases made from Florida to Hong Kong. So far banks have reissued hundreds of thousands of cards.
Some security experts also challenged Cammarata's video statement yesterday that it would be extremely unlikely for thieves to commit identity fraud with the information that was stolen in this incident. Besides card numbers, TJX has said that a small number of customers' driver's license numbers, names, and addresses may also have been taken.
Steven D. Bearak , chief executive of Identity Force, a Framingham identity-theft-solutions company, said thieves who have only credit or debit card numbers can steal identities by combining them with other information, such as names, addresses, and Social Security numbers sold or traded on the black market, to piece together what he calls a "synthetic identity."
And while credit monitoring typically only watches for new credit lines opened in someone's name, Bearak said, credit-card monitoring services can be useful to detect potentially fraudulent charges on individual credit or debit accounts.
"Customers are at a high risk. This was an intentional, malicious intrusion into TJX's system," Bearak said. "This appears to have been an attack, well thought out, well planned, and well executed."
Separately, TJX also disclosed yesterday in a regulatory filing that TJX group president Alexander Smith resigned, and that Gary Crittenden, chief financial officer of American Express Co., stepped down from TJX's board.
TJX spokeswoman Lang said Smith left for an opportunity with another retailer. When asked whether Crittenden's resignation was connected to the security breach, Lang said the company doesn't comment on resignations of directors.
The changes come as TJX president Carol Meyrowitz assumed the chief executive's post on Sunday, as planned. Cammarata had been acting as chief executive and will remain chairman.
Jenn Abelson can be reached at abelson@globe.com.
What do you think- is it too late for TJX to repair the damage done to its brands? Does TJX really care about its customers, or is the company just responding to pressure from the media?
Elephants don't dance
By Steve Bailey, Globe Columnist January 26, 2007
TJX is no Johnson & Johnson. And right now Ben Cammarata is looking like no James Burke.
A quarter of a century after the bold decision by Burke, then chairman of Johnson & Johnson, to pull 31 million bottles of Tylenol capsules off the shelves remains the gold standard in corporate crisis-management. Seven people died from Tylenol laced with cyanide, and the Madison Avenue crowd was saying one of the world's best brands would never recover.
Burke succeeded by putting the customer first. Going against the advice of government agents and his own executives, Burke ordered a massive recall, which cost the company $50 million after taxes. Rather than hunkering down, Burke went on "60 Minutes" to explain what happened and dedicated the firm to the investigation. When Tylenol returned to the stores, it was in new triple-sealed packages and J&J gave away 80 million $2.50 coupons redeemable toward any Tylenol product.
The result: Tylenol regained more than 80 percent of its market share within a year. You'll find
it in my medicine cabinet today.
The crisis that has engulfed TJX is not about life and death. But it is about consumer trust. This is retailing we're talking about, the most Darwinian of businesses, where only the strongest survive. If I can't trust the Marshalls brand, why not go to Target?
Millions of credit and debit cards may have been exposed by a security breach at Framingham-based TJX in what could become the nation's largest case of stolen consumer data. In the first line of its first public disclosure about the breach, TJX said it was "victimized by computer systems intrusion." Wrong. It is TJX's customers who were victimized by the criminals and TJX itself.
There is plenty of blame to go around. It is not news that identify theft and credit card fraud are problems, but government -- federal and state -- has been slow to act. The credit card companies and the banks have been noisy in pointing the finger at TJX -- no small irony from an industry that stuffs our mailboxes every day with yet another low-low credit offer.
But this particular problem belongs first to TJX. It was TJX that left a window open and let the bad guys sneak in and make off with its customers' credit data. What about it, Ben Cammarata? Did you wait a month to tell your customers because the cops asked you to or because you were in the middle of the Christmas selling season? Why are you still "considering" whether to offer free credit monitoring to customers? Why have customers who had their license numbers stolen not gotten so much as a letter from you?
Debra Gibbons of Needham, a long-time TJX shopper, wants to know. She got a call from her credit card company saying her account was on fraud alert. Said Gibbons: "To close the account or not to close the account, that was the question. I closed the account . . . TJX owes the public something more than lip service. We want answers and we want them now."
Cammarata is a world-class retailer who preaches the value of "sweaty palms" -- that is, always sweating the suppliers until the last minute for the best prices. But as a leader amid one of the company's worst crises, he has been invisible. If TJX were a different kind of company and Cammarata a different kind of leader, company and chairman could become the champion for the need to do something about identify theft and credit card theft. But then elephants don't break dance, either.
Now it is TJX's customers doing the sweating. Repeat after me, Chairman Cammarata: The victim is the customer, not the company. The victim is the customer, not the company. If TJX takes care of its customers, the customers will take care of TJX. If not, there is always Target.
Steve Bailey is a Globe columnist. He can be reached at bailey@globe.com or at 617-929-2902.
TJX faces class action lawsuit in data breach
Firm won't offer credit monitoring, CEO says in video
By Jenn Abelson, Globe Staff January 30, 2007
A class action lawsuit was filed yesterday in US District Court in Boston accusing TJX Cos. of negligence for failing to maintain adequate security of customer credit and debit card data and not disclosing the breach for a month.
The suit was filed on behalf of Paula G. Mace of Horner, W.Va., who had her debit card information stolen from the company's computer system. It is seeking credit monitoring services and any damages incurred by affected customers, according to Jonathan Shapiro , a partner with Stern Shapiro Weissberg & Garin of Boston, one of two firms that brought the case.
"Because of TJX's actions, hundreds of thousands or even millions of its customers have had their personal financial information compromised, have had their privacy rights violated, have been exposed to the risk of fraud and identity theft, and have otherwise suffered damages," according to the suit.
Both Mace and Sherry Lang, a TJX spokeswoman, would not discuss the case.
The lawsuit came as TJX chairman Ben Cammarata spoke out yesterday for the first time since the Framingham discounter disclosed on Jan. 17 that a hacker stole customers' personal data from its computer system dating as far back as 2003. TJX, which last week was considering offering credit monitoring for customers whose personal data was compromised, yesterday said it would not provide that service.
"Based on the type of data involved in the breach of our systems, we don't believe that such monitoring will be meaningful to customers," Cammarata said in a seven-minute video posted on TJX's website.
The chairman, in the video and full-page advertisements in several New England newspapers, also tried to clarify why the company waited more than a month to talk about the incident.
Banking officials and retail consultants have estimated that millions of customers could be affected in what may be the biggest loss of customer data in US history.
Cammarata sought to reassure customers that it's safe to shop at TJX's more than 2,500 stores, including T.J. Maxx, Marshalls, and HomeGoods.
"By delaying a public announcement, with the help of top computer security experts, we were able to contain the problem and further strengthen our computer network to prevent further intrusion," Cammarata wrote in a full-page advertisement that appeared in the Boston Sunday Globe. "Therefore, we believe that we were acting in the best interest of our customers."
Cammarata also said the company now believes that customer transactions at Bob's Stores, and transactions using debit cards issued by Canadian banks, were not compromised in the breach.
Still, some consumers and crisis communications executives said Cammerata's comments are not only late but inadequate, and criticized TJX for refusing to disclose how many customers were affected and for leaving too many other questions unanswered. TJX has not said how many customers have been affected, but the Massachusetts Bankers Association has already reported credit- and debit-card fraud connected to the breach for unauthorized purchases made from Florida to Hong Kong. So far banks have reissued hundreds of thousands of cards.
Some security experts also challenged Cammarata's video statement yesterday that it would be extremely unlikely for thieves to commit identity fraud with the information that was stolen in this incident. Besides card numbers, TJX has said that a small number of customers' driver's license numbers, names, and addresses may also have been taken.
Steven D. Bearak , chief executive of Identity Force, a Framingham identity-theft-solutions company, said thieves who have only credit or debit card numbers can steal identities by combining them with other information, such as names, addresses, and Social Security numbers sold or traded on the black market, to piece together what he calls a "synthetic identity."
And while credit monitoring typically only watches for new credit lines opened in someone's name, Bearak said, credit-card monitoring services can be useful to detect potentially fraudulent charges on individual credit or debit accounts.
"Customers are at a high risk. This was an intentional, malicious intrusion into TJX's system," Bearak said. "This appears to have been an attack, well thought out, well planned, and well executed."
Separately, TJX also disclosed yesterday in a regulatory filing that TJX group president Alexander Smith resigned, and that Gary Crittenden, chief financial officer of American Express Co., stepped down from TJX's board.
TJX spokeswoman Lang said Smith left for an opportunity with another retailer. When asked whether Crittenden's resignation was connected to the security breach, Lang said the company doesn't comment on resignations of directors.
The changes come as TJX president Carol Meyrowitz assumed the chief executive's post on Sunday, as planned. Cammarata had been acting as chief executive and will remain chairman.
Jenn Abelson can be reached at abelson@globe.com.
Monday, January 29, 2007
Smaller Brands Hitch Ride With Coke Distributors
Smaller Brands
Hitch Ride With
Coke Distributors
January 29, 2007;
Some frustrated Coca-Cola Co. bottlers are letting upstart drinks that the Atlanta beverage giant doesn't market hitch a ride on their trucks.
Honest Tea Inc. has had a devoted following ever since the Bethesda, Md., company won its first order in 1998 to brew 15,000 bottles of its organic iced tea for Whole Foods Market Inc. But beverage giants like Coke and PepsiCo Inc. had such a tight grip on distribution through their bottlers that it was hard for Honest Tea to get space on supermarket shelves and in convenience-store coolers.
Suddenly, though, Honest Tea has struck deals with Coke bottlers in California, Colorado and Pennsylvania to distribute Honest Tea. Several distributors for Anheuser-Busch Cos. and other large beer companies also have begun carrying its Heavenly Honey Green, Pomegranate White Tea with Acai and Peach Oo-La-Long flavors.
Two flavors from Honest Tea, which some Coke bottlers now carry.
Honest Tea's expansion is just one of a growing number of unusual alliances between beverage companies and distributors. Grappling with sluggish sales of their core brands and eager to expand, some distributors are making deals with new companies that market small, faster-growing beverages.
Coca-Cola Bottling Co. Consolidated, Coke's second-largest U.S. bottler, created a wholly owned subsidiary, BYB Brands Inc., in May 2006 to develop new types of drinks that it wasn't already getting from Coke in Atlanta. One such drink, a "premium coffee latte drink" called Cinnabon and created with retailer Cinnabon Inc., was launched last summer and is already being distributed in 41 states through agreements with Cadbury Schweppes Americas Beverages, a subsidiary of Cadbury Schweppes PLC and three Anheuser-Busch distributors, in addition to Coke Consolidated bottlers. Coke Consolidated is also selling a vitamin-enhanced water called Respect and Tum-E Yummies, a flavored water from BYB Brands.
Coca-Cola Enterprises Inc., Coke's largest U.S. bottler, recently signed a pact with Hornell Brewing Co. to distribute versions of Arizona iced tea. In the heyday of the cola wars, it was red trucks versus blue trucks, Coke versus Pepsi, but those days are receding. Lately, consumers are drawn to new, smaller brands "started out of garages" that aren't sold on a mass scale like Coke or Pepsi, says Norm George, president of BYB and Coke Consolidated's former marketing chief and chief customer officer. "You've got to have brands people want," he says.
Coke and its bottlers are separate companies, although Coke owns sizable stakes in its largest bottlers, such as CCE and Coke Consolidated. Coke bottlers have always distributed a few outside products; many sell Dr Pepper, which is owned by Cadbury. But those brands were generally big. And bottlers previously haven't started their own brand companies, as Coke Consolidated has.
It is too soon to say whether the moves have cut into Coke sales. The volume of Coca-Cola Classic sold in North America has declined since the late 1990s, although Coke's overall North American volume rose 2% in 2005. Data for 2006 are not yet available.
Even so, the moves present a conundrum for the Atlanta-based company, which relies on its bottlers to push its new drinks into the market. Late to the noncarbonated beverage wars, Coke lags behind Pepsi in those types of drinks. Its bottlers want the beverage giant to move more quickly to bring out new drinks in fast-growing categories such as iced tea.
Coke and Pepsi have also rankled their bottlers by channeling some noncarbonated drinks outside the traditional bottler system. A group of small Coke bottlers sued Coke and its biggest bottler last year over a plan to deliver Powerade to Wal-Mart Stores Inc. stores through an alternative distribution system; the sides are close to an agreement now to dismiss the suit, according to Beverage Digest.
"Clearly, we would prefer that our bottlers distribute our own brands," says Coke spokesman Dan Schafer. "Our role is to create innovation in our categories and we are working closely with our system to do that." He says Coke has recently picked up the pace of introducing new drinks. For example, the restructuring of a joint venture with Nestlé SA has given Coke greater flexibility to develop and introduce coffee and tea drinks.
Pepsi bottlers haven't embraced other companies' drinks the way Coke's have, partly because Pepsi's noncarbonated stable is stronger, bottlers and industry observers say.
For beer distributors, nonalcoholic drinks offer a way to offset rising costs as beer sales remain relatively flat. Dave Peacock, vice president of business operations for Anheuser-Busch, said in a statement that the company offers its distributors drinks such as Monster Energy and gives incentives to wholesalers that carry only its brands or those in which it has an interest.
Seth Goldman, president and "TeaEO"of Honest Tea, first reached out to Coke bottlers about six years ago. "They were hospitable, but we didn't get anywhere," he recalls. Then last year, bottlers and major beer distributors "started reaching out to us," at trade shows, he says.
Now, Honest Tea is appearing at Costco, Kroger, Chevron stations and other mainstream outlets. The company had $13.5 million in sales in 2006 (compared with Coke's $23.1 billion in global revenues for 2005, the latest full-year figure available). Honest Tea plans to fund its expansion with a $12 million equity infusion from investors including organic-food producer Stonyfield Farm, now owned by Danone SA, and Inventages Venture Capital Investment Inc., a private-equity firm whose limited investment partners include Nestlé.
By BETSY MCKAY
http://online.wsj.com/article/SB117003288942590723.html?mod=mm_media_marketing_hs_left
Hitch Ride With
Coke Distributors
January 29, 2007;
Some frustrated Coca-Cola Co. bottlers are letting upstart drinks that the Atlanta beverage giant doesn't market hitch a ride on their trucks.
Honest Tea Inc. has had a devoted following ever since the Bethesda, Md., company won its first order in 1998 to brew 15,000 bottles of its organic iced tea for Whole Foods Market Inc. But beverage giants like Coke and PepsiCo Inc. had such a tight grip on distribution through their bottlers that it was hard for Honest Tea to get space on supermarket shelves and in convenience-store coolers.
Suddenly, though, Honest Tea has struck deals with Coke bottlers in California, Colorado and Pennsylvania to distribute Honest Tea. Several distributors for Anheuser-Busch Cos. and other large beer companies also have begun carrying its Heavenly Honey Green, Pomegranate White Tea with Acai and Peach Oo-La-Long flavors.
Two flavors from Honest Tea, which some Coke bottlers now carry.
Honest Tea's expansion is just one of a growing number of unusual alliances between beverage companies and distributors. Grappling with sluggish sales of their core brands and eager to expand, some distributors are making deals with new companies that market small, faster-growing beverages.
Coca-Cola Bottling Co. Consolidated, Coke's second-largest U.S. bottler, created a wholly owned subsidiary, BYB Brands Inc., in May 2006 to develop new types of drinks that it wasn't already getting from Coke in Atlanta. One such drink, a "premium coffee latte drink" called Cinnabon and created with retailer Cinnabon Inc., was launched last summer and is already being distributed in 41 states through agreements with Cadbury Schweppes Americas Beverages, a subsidiary of Cadbury Schweppes PLC and three Anheuser-Busch distributors, in addition to Coke Consolidated bottlers. Coke Consolidated is also selling a vitamin-enhanced water called Respect and Tum-E Yummies, a flavored water from BYB Brands.
Coca-Cola Enterprises Inc., Coke's largest U.S. bottler, recently signed a pact with Hornell Brewing Co. to distribute versions of Arizona iced tea. In the heyday of the cola wars, it was red trucks versus blue trucks, Coke versus Pepsi, but those days are receding. Lately, consumers are drawn to new, smaller brands "started out of garages" that aren't sold on a mass scale like Coke or Pepsi, says Norm George, president of BYB and Coke Consolidated's former marketing chief and chief customer officer. "You've got to have brands people want," he says.
Coke and its bottlers are separate companies, although Coke owns sizable stakes in its largest bottlers, such as CCE and Coke Consolidated. Coke bottlers have always distributed a few outside products; many sell Dr Pepper, which is owned by Cadbury. But those brands were generally big. And bottlers previously haven't started their own brand companies, as Coke Consolidated has.
It is too soon to say whether the moves have cut into Coke sales. The volume of Coca-Cola Classic sold in North America has declined since the late 1990s, although Coke's overall North American volume rose 2% in 2005. Data for 2006 are not yet available.
Even so, the moves present a conundrum for the Atlanta-based company, which relies on its bottlers to push its new drinks into the market. Late to the noncarbonated beverage wars, Coke lags behind Pepsi in those types of drinks. Its bottlers want the beverage giant to move more quickly to bring out new drinks in fast-growing categories such as iced tea.
Coke and Pepsi have also rankled their bottlers by channeling some noncarbonated drinks outside the traditional bottler system. A group of small Coke bottlers sued Coke and its biggest bottler last year over a plan to deliver Powerade to Wal-Mart Stores Inc. stores through an alternative distribution system; the sides are close to an agreement now to dismiss the suit, according to Beverage Digest.
"Clearly, we would prefer that our bottlers distribute our own brands," says Coke spokesman Dan Schafer. "Our role is to create innovation in our categories and we are working closely with our system to do that." He says Coke has recently picked up the pace of introducing new drinks. For example, the restructuring of a joint venture with Nestlé SA has given Coke greater flexibility to develop and introduce coffee and tea drinks.
Pepsi bottlers haven't embraced other companies' drinks the way Coke's have, partly because Pepsi's noncarbonated stable is stronger, bottlers and industry observers say.
For beer distributors, nonalcoholic drinks offer a way to offset rising costs as beer sales remain relatively flat. Dave Peacock, vice president of business operations for Anheuser-Busch, said in a statement that the company offers its distributors drinks such as Monster Energy and gives incentives to wholesalers that carry only its brands or those in which it has an interest.
Seth Goldman, president and "TeaEO"of Honest Tea, first reached out to Coke bottlers about six years ago. "They were hospitable, but we didn't get anywhere," he recalls. Then last year, bottlers and major beer distributors "started reaching out to us," at trade shows, he says.
Now, Honest Tea is appearing at Costco, Kroger, Chevron stations and other mainstream outlets. The company had $13.5 million in sales in 2006 (compared with Coke's $23.1 billion in global revenues for 2005, the latest full-year figure available). Honest Tea plans to fund its expansion with a $12 million equity infusion from investors including organic-food producer Stonyfield Farm, now owned by Danone SA, and Inventages Venture Capital Investment Inc., a private-equity firm whose limited investment partners include Nestlé.
By BETSY MCKAY
http://online.wsj.com/article/SB117003288942590723.html?mod=mm_media_marketing_hs_left
Saturday, January 27, 2007
Target the Brain, not the Taste Buds...
Which tastes better, Coke or Pepsi? With good branding, it doesn't matter according to neuromarketing research!
The following article is from the January 29 issue of Time Magazine, which can also be found at the following link:
http://www.time.com/time/magazine/article/0,9171,1580370,00.html
The following article is from the January 29 issue of Time Magazine, which can also be found at the following link:
http://www.time.com/time/magazine/article/0,9171,1580370,00.html
Marketing To Your Mind
Are you a Coke or Pepsi drinker? Do you pull into McDonald's golden arches or prefer to "have it your way" at Burger King? When it comes to toothpaste, which flavor gets you brushing, Colgate or Crest? If you think it's just your taste buds that guide these preferences, you may be surprised by what neuroscientists are discovering when they peer inside the brain as it makes everyday choices like these.Don't worry--no one's scanning your head as you stand in front of the beverage aisle or sit in line at the drive-through. Instead, brain scientists are asking volunteers to ponder purchasing choices while lying inside high-tech brain scanners. The resulting real-time images indicate where and how the brain analyzes options, weighs risks and rewards, factors in experiences and emotions and ultimately sets a preference. "We can use brain imaging to gain insight into the mechanisms behind people's decisions in a way that is often difficult to get at simply by asking a person or watching their behavior," says Dr. Gregory Berns, a psychiatrist at Emory University.
To scientists, it's all part of the larger question of how the human brain makes decisions. But the answers may be invaluable to Big Business, which plowed an estimated $8 billion in 2006 into market research in an effort to predict--and sway--how we would spend our money. In the past, marketers relied on relatively crude measures of what got us buying: focus-group questionnaires and measurements of eye movements and perspiration patterns (the more excited you get about something, the more you tend to sweat). Now researchers can go straight to the decider in chief--the brain itself, opening the door to a controversial new field dubbed neuromarketing.
For now, most of the research is purely academic, although even brain experts anticipate that it's just a matter of time before their findings become a routine part of any smart corporation's marketing plans. Some lessons, particularly about how the brain interprets brand names, are already enticing advertisers. Take, for example, the classic taste test. P. Read Montague of Baylor College of Medicine performed his version of the Pepsi Challenge inside a functional magnetic resonance imaging (fMRI) machine in 2004. Montague gave 67 people a blind taste test of both Coke and Pepsi, then placed his subjects in the scanner, whose magnetic field measures how active cells are by recording how much oxygen they consume for energy. After tasting each drink, all the volunteers showed strong activation of the reward areas of the brain--which are associated with pleasure and satisfaction--and they were almost evenly split in their preferences for the two brands. But when Montague repeated the test and told them what they were drinking, three out of four people said they preferred Coke, and their brains showed why: not only were the reward systems active, but memory regions in the medial prefrontal cortex and hippocampus also lit up. "This showed that the brand alone has value in the brain system above and beyond the desire for the content of the can," says Montague. In other words, all those happy, energetic and glamorous people drinking Coke in commercials did exactly what they were supposed to do: seeped into the brain and left associations so powerful they could even override a preference for the taste of Pepsi.
Friday, January 26, 2007
Cingular Wireless rebranded as AT&T - Is this a good idea?
Does anybody think it is foolish of AT&T to rebrand the Cingular brand as AT&T?
I think this is a mistake since I perceive AT&T to be an old-style brand while I consider Cingular to be modern. Most of Cingular's features that generate higher revenues are geared toward the young crowd. I am not sure if this segment will embrace AT&T especially since Verizon is so well known.
Here is an article from the Wall Street Journal for those who are interested.
Bye, Cingular, in AT&T Rebranding
By DIONNE SEARCEYJanuary 12, 2007; Page B3
AT&T Inc. will rebrand its Cingular Wireless service with the AT&T name starting Monday, a move aimed at bringing together the company's newly acquired entities and services under a single moniker.
The rebranding comes just a few weeks after San Antonio-based AT&T completed its $85.8 billion purchase of BellSouth Corp. and took over sole control of Cingular. Before, the two had owned Cingular together.
The new name is a step back in time for Cingular, which bought the old AT&T Wireless in 2004 and eventually dropped the AT&T name altogether. AT&T executives hope a sole brand will signal to consumers that the company is a one-stop shop for myriad services including wireless, TV and land-line phone. But the coming months may be confusing for some Cingular customers who not long ago were absorbed from the old AT&T Wireless.
A Cingular print ad
"I think what we're going to see is initially there may be some concerns caused by, well, who are you?" said Scott Lerman, chief executive of Lucid Brands LLC, a New York brand-consulting firm.
The service will be sold as "Wireless from AT&T." Initially, AT&T ads will combine Cingular's logo, an orange X-shaped character named Jack, with the round AT&T trademark. AT&T executives say using both logos will train consumers to recognize that Cingular is now AT&T.
Over the coming months, AT&T will phase out the Cingular name altogether. This move might prove unpopular with young consumers who prefer it over AT&T's stodgy brand, according to branding and advertising experts. Cingular has cultivated an image of being a hip company, most recently with its partnership with Apple Inc. to offer the iPhone.
But in the long term, Mr. Lerman said, AT&T will benefit from the efficiency of having its well-known name appear on all its services. AT&T executives wouldn't say how much the rebranding will cost as they change signs in roughly 2,000 stores as well as employee uniforms and billing letterhead. But executives estimate 20% of the expected operating-expense savings from the merger will come from advertising, because of the single AT&T brand.
"AT&T is not trying to go back to being the old AT&T," said Karen Jennings, a senior executive vice president for AT&T. "We know we have to freshen up our brand attributes."
AT&T has plans to push its wireless service to corporate customers and consumers while increasing advertising revenue. With its 58.7 million customers, Cingular is the biggest wireless company in the U.S. by subscribers.
Placing the AT&T brand on wireless service could dredge up bad memories for some consumers who had numerous service problems with AT&T Wireless. Customer experiences have improved since Cingular took over that company, Ms. Jennings said.
AT&T will begin airing TV ads merging the two company's logos as soon as Monday. One ad shows harvesters leaving trails of Cingular's trademark five bars in a field of grain, which morph into the AT&T circular logo. New employees have been added in wireless stores to tout other AT&T services such as broadband and TV.
I think this is a mistake since I perceive AT&T to be an old-style brand while I consider Cingular to be modern. Most of Cingular's features that generate higher revenues are geared toward the young crowd. I am not sure if this segment will embrace AT&T especially since Verizon is so well known.
Here is an article from the Wall Street Journal for those who are interested.
Bye, Cingular, in AT&T Rebranding
By DIONNE SEARCEYJanuary 12, 2007; Page B3
AT&T Inc. will rebrand its Cingular Wireless service with the AT&T name starting Monday, a move aimed at bringing together the company's newly acquired entities and services under a single moniker.
The rebranding comes just a few weeks after San Antonio-based AT&T completed its $85.8 billion purchase of BellSouth Corp. and took over sole control of Cingular. Before, the two had owned Cingular together.
The new name is a step back in time for Cingular, which bought the old AT&T Wireless in 2004 and eventually dropped the AT&T name altogether. AT&T executives hope a sole brand will signal to consumers that the company is a one-stop shop for myriad services including wireless, TV and land-line phone. But the coming months may be confusing for some Cingular customers who not long ago were absorbed from the old AT&T Wireless.
A Cingular print ad
"I think what we're going to see is initially there may be some concerns caused by, well, who are you?" said Scott Lerman, chief executive of Lucid Brands LLC, a New York brand-consulting firm.
The service will be sold as "Wireless from AT&T." Initially, AT&T ads will combine Cingular's logo, an orange X-shaped character named Jack, with the round AT&T trademark. AT&T executives say using both logos will train consumers to recognize that Cingular is now AT&T.
Over the coming months, AT&T will phase out the Cingular name altogether. This move might prove unpopular with young consumers who prefer it over AT&T's stodgy brand, according to branding and advertising experts. Cingular has cultivated an image of being a hip company, most recently with its partnership with Apple Inc. to offer the iPhone.
But in the long term, Mr. Lerman said, AT&T will benefit from the efficiency of having its well-known name appear on all its services. AT&T executives wouldn't say how much the rebranding will cost as they change signs in roughly 2,000 stores as well as employee uniforms and billing letterhead. But executives estimate 20% of the expected operating-expense savings from the merger will come from advertising, because of the single AT&T brand.
"AT&T is not trying to go back to being the old AT&T," said Karen Jennings, a senior executive vice president for AT&T. "We know we have to freshen up our brand attributes."
AT&T has plans to push its wireless service to corporate customers and consumers while increasing advertising revenue. With its 58.7 million customers, Cingular is the biggest wireless company in the U.S. by subscribers.
Placing the AT&T brand on wireless service could dredge up bad memories for some consumers who had numerous service problems with AT&T Wireless. Customer experiences have improved since Cingular took over that company, Ms. Jennings said.
AT&T will begin airing TV ads merging the two company's logos as soon as Monday. One ad shows harvesters leaving trails of Cingular's trademark five bars in a field of grain, which morph into the AT&T circular logo. New employees have been added in wireless stores to tout other AT&T services such as broadband and TV.
Monday, January 22, 2007
Hello and welcome to MK854!
Hello all! Welcome to MK854's Spring 2007 blog. Please contact Neha Mathur if you have any technical questions about this tool.
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