by Stephanie Fierman

I like McDonald’s.  I do.  Always have.

Recently, though, I’ve noticed something annoying on my receipts: either an “eat in” tax (if you eat at the restaurant) or an “eat out” tax (if you take your order to go).

Either way, there’s a “tax.” 

A tax??  McDonalds is taxing us, literally coming and going? 

This makes no sense.  Corporations can’t just invent their own taxes.  What is this?
 
Turns out it’s just plain old state tax.  In Connecticut, where I dined recently, the tax is 6%.  6% in, 6% out, 6% if you take your fries and you shake ‘em all about…

The 8.5% “eat in” (aka state) tax in San Fran at the time of this purchase

6%. Period.  [Note: State sales tax laws on prepared food are notoriously kooky, but whatever they are in the state in which you're ordering is what you'll end up paying]

So why would a marketing icon like McDonald’s turn a charge that it is forced to apply into a fee that looks like an assessment from the company? I am flummoxed by this.

A Google search of “McDonald’s eat in tax” and “McDonald’s “eat out tax” yields lots of other folks with their “britches in a bunch” over this (like HERE and HERE and HERE).  A couple of them actually posted the “tax” to sites like ripoffreport.com.

Now, this fellow claims that it’s because some states (e.g. California) actually have a take-out tax, so an establishment doing business in that state must be able to discriminate a meal served at the restaurant vs. one taken elsewhere.  His supposition is that it would be cost prohibitive for a company to use software that could apply the tax rules state by state, and that it would be hard to administer.  

I would be surprised if it’s a matter of cost.  McDonald’s had $6.8 billion in U.S. operating income in 2009: how much could such a system cost?  And how does that cost shape up against the reputation cost of such bad publicity?

Is there something else going on here?  Anyone?

by Stephanie Fierman

Tiffany & Co has impressed me over the years.  It’s been able to show some restraint when it comes to mucking with the brand while still responding to shifts in the consumer zeitgeist. 

The company has been particularly wily in its introduction of new non-jewelry items and jewelry pieces at lower price points.  Leather, scarves, fragrance and the like serve multiple purposes: the products expand Tiffany‘s reach among existing customers; they help Tiffany establish earlier brand engagement among the base of young women most likely to become the core Tiffany customer; and I would expect that it’s helped the gift business, as well, particularly as tableware’s centrality in the wedding business wanes.

Its moves in its core business, jewelry, have borne fruit.  31% of the company’s sales last year coming from its lowest-priced merchandise: sterling silver jewelry at an average price of $200.  The silver, in particular, is a good example of how Tiffany has made and executed on long-term commitments that have helped achieve a higher level of market accessibility. Its Paloma Picasso, Elsa Peretti and Frank Gehry lines of jewelry have built their own bases of loyal fans over the years. The company’s website top navigation makes it easy to find these pieces, and the first entry behind the “Designers & Collections” tab is currently “Elsa Peretti $250 & Under.”

Nice touch.

So what’s another potential category? Handbags.  Although it may strike some as odd, sales of handbags priced at $200 or more have actually grown 15% in the year ending this past June. Many of the leaders are the usual suspects, but – if Tiffany wants a model to study – Coach has shown everyone how it’s done.

Coach’s 2009 successful launch of the more youthful, lower-priced  Poppy line of bags and accessories with the positioning “Are You A Poppy Girl?” – but with bag prices starting at $200 – sparked a lot of wonder.  It’s not that there wasn’t a space in the market, but $200? Hardly the “budget” youth collection, as one fashion blog optimistically coined it.  Andy yet: it’s selling.  A lot.  Why?

To a certain extent, the answer comes back to the ill-defined but highly desirable ”affordable luxury” moniker that so many brands want to claim.  Two thoughts here: (1) If a woman can get her fix with a $300 bag from a favorite brand (when she might have chosen a $1,200 one in the past), she’s more likely to make that choice, and (2) A woman needs a bag every single day.  No one ”needs” non-wedding jewelry. So if I’m going to buy a bag anyway, the thinking goes, it’s penny wise and pound foolish to buy an unremarkable bag when I could just spend another $100 or $200 or even $300 and buy a bag from a brand I truly love – a brand that will “show” well on a daily basis.

Sidebar: I have two core daytime bags: one for fall-winter, the other for spring-summer.  The spring-summer bag was $400, which felt expensive.  Now that I get no less than, say, two compliments on the bag every single week – and the credit card charge is only a hazy memory - I’m sorry I didn’t buy two.

And just to finish it off, notice that these purchases are literally BIG: much larger in size than a bracelet or ring that I might get at the same price.  More status mileage for the dollar.

So into this environment comes Tiffany’s new handbag line, created in partnership with the designers of the Lambertson Truex luxury label (which the jeweler purchased post-bankruptcy last year). The products are priced from $395 for a small suede tote to $17,500 for a large crocodile handbag, and all carry the imprimatur of Tiffany, whether it be in the clasps, the colors or the silver. 

I’m waiting to see how they promote the line.  The evening “Holly” bag has gotten a lot of press, but such a bag has limited use cases and narrows the market; I hope to see some creative promotion and messaging that emphasizes day and weekend bags, as well. 

And not to state the obvious, but I know that Tiffany will be mindful of the fact that women already knew Coach as a handbag maker, so Poppy was an immediate “get” for the consumer.  Poppy is to Coach as Elsa Peretti is to Tiffany: an extension of the core business.  Jeweler Tiffany will need to build some real promotion and personality if it wants to move a lot of product. [Paging Christmahanukwanzaakah, come in Christmahanukwanzaakah...]

by Stephanie Fierman

If a pop culture phenomenon is white-hot, and you saunter up to it and ask it out to dinner, will you become its best friend?

Check out my second blog, Marketing Mojo, for the answer.

by Stephanie Fierman

There’s been a bit of a scramble among brands seeking to leverage AMC’s popular series, Mad Men.  BMW is one of the largest and most frequent sponsors, prompting an auto site to gush, “BMW’s underwriting for Mad Men is mad marvelous.”

Maybe so.  After all, the series is about an advertising agency and the supposed glamour of the post-War period, all glowy and wistful.  It’s an unusual opportunity to create a fresh and fun message… IF it makes sense for the brand.

BMW did two things right. First it aligned itself with the overall  je ne sais quoi of the show: the ambience, the characters, their lifestyles, their appearance, their tastes, the physical environment. That provides a very broad base upon which to construct an association.  BMW is already an upscale, luxury brand, so this association is more of a positive reinforcement than a flat-out creation. 

Second, this attachment is even further strengthened because BMW’s ads run during the episodes themselves.  As the show transitions almost seamlessly from content, to commercial, and back again, the company and its cars place themselves directly alongside the target of their (and your) dreams.  The viewer sees both in the same sitting; the brain experiences both in the same moment. The connection is made in real time. 

London Fog‘s new Mad Men-related ads, on the other hand, miss on both these counts.

Unlike BMW, London Fog’s owner, Iconix, chose to bet all its chips on one single character, Joan Holloway (aka Christina Hendricks).  This demands a plausible or at least believable connection between what the product and the individual represent, which is not present here. 

Today, London Fog is generally utilitarian, functional, male (androgynous?), classic (tired?) and generally unremarkable, while Hendrick’s Joan is nearly the polar opposite: voluptuous, sexy, powerful, womanly, stimulating. She’s brightly-colored cotton candy in a dress.  When you watch the show, her sexual  presence makes her nearly every man’s fantasy at one point or another.  She’s unattainable, like a rare luxury item. 

London Fog is the opposite.  By its own admission, the brand has far-flung distribution and high consumer awareness: it holds little mystery, no magic, no unattainability. Mad Men‘s Joan would not wear a London Fog, and no woman  (consciously or unconsciously) believes that she will be “more Joan”  by wearing the brand.  The effect is double-whammy, given that the clothes (which might look fine on “normal” people) appear boring, dull and awkward draped on Hendrick’s frame.  The two zeitgeists are just too far apart.

Iconix may have thought that Joan’s essence would rub off on the product.  And, prior to Hendricks, Iconix enlisted Eva Longoria and Giselle Bunchen for its ads, presumably with the same objective.  The problem is that consumers cannot make brand connections that aren’t there or – worse – pulling in opposite directions. 

Forcing an otherwise adequate brand into an environment that makes it appear inadequate is sad and unnecessary: an embarrassing kind of brand dissonance that can do the brand more harm than good. 

Lastly, the Joan ads do not have the benefit of being absorbed in the same moment as the story itself. The connection failure is particularly dramatic when experienced in the middle of a fashion magazine, surrounded by circa 2010 fashions, photos and messaging.

Managing a brand – particularly one trying to meld a perhaps very different past with the present – is a fine art. The brand steward must have an unblinking grasp on what the brand is and is not, what it might become, how fast such a change in direction might be made and how to begin.  If that direction is wrong, or the speed too fast, the desired messaging won’t find its target and you may needlessely displace the neutral-to-positive feelings most people have about the brand in favor of all the characteristics the brand does not possess.  It’s work grounded in an almost DNA-level of understanding of brands, consumer desire and human behavior.

Most brands have positive if not wonderful attributes to emphasize.  Show yours in its best light.  Avoid whatever might be hot right this second if it just doesn’t fit, and create an environment in which the product can truly shine.