"Advertise, or go under"

Panera's simple strategy: targeting people with money

Yesterday's Wall Street Journal ran a piece about Panera Bread Company and how it is using a unique approach in the recession:  instead of cutting prices they are holding the line and, in some cases, actually raising prices (selling a $16.95 lobster sandwich in their New England Stores). A sample of their thinking:

"Most of the world seems to be focused on the Americans who are unemployed," says Panera Chief Executive Ron Shaich. "We're focused on the 90% that are still employed."

The strategy seems to be paying off. While Panera is not setting records, same store sales are up, profits are holding, and key indicators like average customer check are rising.

There are always particulars to consider in any case. Panera is a very well run company with tight controls. They know what they're doing and they have a good track record in testing products with real customers, pushing hard when they succeed, and not being afraid to pull back when they fail.

There are some interesting strategy lessons here:

Segmentation: how do we know if it's worthwhile?

I've been giving a lot of thought lately to segmentation. For a long time, I've had a hunch that it's often an over-rated concept and that marketers may spend too much time trying to finesse their messaging and their targeting by over-thinking segments. 

Let's just take some really crude examples--a commercial segmentation system such as PRIZM^NE, which is very well-constructed and quite elegant. Nielsen Claritas, the company that sells this product, provides a list of life style and media behavior indexes that accompany these segments. In the more extreme cases, you will find indexes that highlight some very strong behavior trends. For example, the Movers & Shakers segment indexes at 497 for owning an Infiniti or a Lexus, and at 312 for buying home furnishings on the Internet. 

The real power of social network marketing

Starbucks has 1.5 million fans lined up on its Facebook page. Most brands aren't going to attract that kind of following unless they have that kind of cache--but it's useful to think about what using a channel like Facebook can realistically produce for you. 

Social network marketing of the Facebook model is really just bargain-basement customer relationship management. CRM has a well established niche in the marketing world, but running a big, robust CRM program can be very expensive. You need category experts either in-house or on contract, you need powerful database software, and you need to regularly tap into contact channels to stay in touch with your customers. Moving through those channels costs money and you can't succeed if you let up. 

The interesting thing about Facebook is that it suddenly puts a glamorous face onto what

Twitter, the signal-to-noise ratio, and ritual

I've never been a leading edge adapter in technology, but I usually am at the front of the second wave. Therefore, I ignored Twitter for a considerable amount of time, but now I've jumped into it. 

There is a lot about it that is still idiotic. My son just mentioned to me that one of its deficiencies is that essentially it just channels a lot of the chatter you hear around you, like when you're riding the subway and the other passengers are engaged in animated conversation. Your relationship with the people with you on a subway car is about as deep as your relationship with the people who follow you on Twitter. And most of what they say means nothing to you.