Jennifer Warren, the head of marketing at Radio Shack is the New Poster Child of What’s Wrong with Marketing in High Technology Companies. According to metrics, RadioShack’s Super Bowl Ad was in the Top 10 and Ad Age believes it was the best of the bunch this year. Really?
That’s a lot of Money
By most accounts, a Super Bowl ad this year runs north of $5 million if you include production costs along with the media buy. Clearly looking for something “big” in her first year as SVP and CMO at RadioShack, she followed her career-long agency roots and led with advertising. This is a classic mistake consumer marketing folks make when entering the high technology realm. High technology marketing is different as I have discussed a while ago ……….. post.
Radio Shack is not Classic Retail
Retail in general may not be like other high technology businesses, but RadioShack is not like other retailers in so many ways:
- Small local stores (on a national scale) not large ones
- More like Fry’s Electronics than Sam’s Club or Walmart (two of her previous clients)
- A long history of being the “go-to” place for odd bits and electronic components of all types for those who want to DIY
- A brand image that has been in long term decline
I happen to like RadioShack for what they can do for me when I need something and don’t want the hassle of crowds or long trips for a battery, resistor, cable, or other part. However, their image will not change for me overnight. As I have often said, I really don’t matter, the voice of the consumer does.
What Advertising Does and Does Not Do
Advertising certainly can create awareness, but frequency is a key component. A single Super Bowl ad does not deliver frequency. More important is a key difference between high technology marketing and most non-capital consumer goods marketing in general. In consumer goods, advertising is much more dominant in persuading the consumer to “try” the product by going to a retail outlet and doing so. If you don’t like what you see or smell, or the fit, just walk away or try something else. Importantly, your purchase decision is very often under $100. Many high technology goods run $500 and up and the risk rises along with the price. Getting consumers to “try” Radio Shack” is actually quite similar to classic consumer marketing. Just walk in and see what you see. That means Radio Shack must deliver on the “promise” you made in your add. Any store that looks old does not deliver on that promise and radio shack has 5,000 stores to update … That investment is huge. Do some math with me. If we assume just $50 per square foot to renovate a store and and according to Radio Shack the average size store is 2,500 square feet, each store will cost an average of $125,000 or $625 million total for all 5,000 stores to get a consistent experience. That not only takes money, it takes time. A $6206 million investment is huge for a company with about $2.5 billion in annual revenue.
What’s the Strategy?
It seems Radio Shack has got the “cart before the horse” by starting with advertising. Where’s the proof that supports the assertion made in that advertising? I’m also not clear on Radio Shack’s strategy or how they want to position themselves from their competitors. They have tremendous local presence as an asset, but they seem to have abandoned the DIY segment, or as we now like to call them, “The Maker Movement”. Why not update and embrace that segment. There are always small projects that need to be done and expenditures can be relatively small. With a good experience, I would be more likely to come back. I’d take a look at some online companies like Parts Express to see what might make sense for Radio Shack as a way to establish some uniqueness compared to places like Best Buy and other electronics retailers. I’d also look at Home Depot’s workshops that help teach home improvement DIY skills for ideas.
One Example as Proof … Do it yourself high-quality speaker cables
To move the needle when re-positioning a company or product, you not only have to articulate your vision, you also need to product evidence of change. As just one example of how to do that, why not develop a workshop on how to build high-quality speaker cables for your home entertainment system? Companies like AudioQuest and many others sell a single high-quality speaker cable beginning at $100 for a 5 foot length. Yet you can buy excellent shielded very pure copper wire, banana plugs, cable pants, shrink wrap tubing and even a colored cable cover and assemble it yourself without soldering anything for less than $25! For $90, you can have 2 bi-wired cables, 5 feet long that would cost you north of $300 from others! For those of you who are not into audio, bi-wiring works with higher-end 2-way stereo speakers starting at about $300 per pair. There are 4 connection on these speakers and bi-wiring directs audio to separate speakers inside each speaker cabinet, rather than to one set that is separated by a “crossover” inside the cabinet based on frequency. “Experts” have differing opinions on whether or not this improves the quality of what you hear, but by doing it yourself for less than $100, there is nothing to lose! A workshop like this could cover standard and bi-wired cables and is something you can train all employees on with video instruction quickly. Importantly, you can show customers a great-looking (and performing) finished product for a very small investment. If I were at Radio Shack, I’d be working on things like this to prove we have changed. One could even begin by piloting the workshops in key metro areas that fit the right demographic. Let’s see what they do over the coming months.
