If the name Interstate Bakeries doesn't ring any bells, how about Hostess Twinkies or Ding-Dongs, Drake's Coffee Cakes, and Wonder and Home Pride Breads. It seems long about three years ago, Interstate faced a dismal business outlook. The company carried a heavy debt load; competition for shelf space and market share was fierce; and consumers were increasingly concerned about their kids eating too many Twinkies and other junk food leading to childhood obesity and had themselves started counting carbs, ergo dropping bread out of their diets. The situation appeared dire and senior executives at the Interstate were unsure how it would be possible to reverse its string of annual losses.

Taking the intuitive approach to a flailing business, management looked for ways to cut costs and stumbled upon the success company chemists had had extending the shelf-life of Zingers. New additives made Zingers, and subsequently the line of Hostess products, stay soft and fresh looking longer without compromising taste. At the same time, a supplier to the industry had developed enzymes that promised a longer life for bread as well. Increasing shelf-life of products meant the company could reduce spoilage and waste—a big savings. Bread usually only lasted three days, forcing the company to maintain more than 60 bakeries so that no truck had to drive very far and drivers could check and restock stores at least every couple of days. But a longer shelf-life would mean bakeries could close and fewer deliveries would be necessary—a colossal savings.

"Our extended-shelf-life program will continue to play a significant role in cost control," proclaimed Charles Sullivan, Interstate's Chairman and CEO at the time. Executives promised Wall Street, "cost cutting like never before," as James Elsesser, a legendary cost-cutter at Ralston-Purina, took over for Sullivan and continued to champion the shelf-life plan.

Unfortunately, the company didn't give the significant customer-side implications a second thought as they forged ahead with the shelf-life plan. First of all, from a strategic point of view, there's the fact that the idea of bread having a longer shelf-life was unlikely to appeal to consumers who were increasingly looking for fresh and "right out of the oven" baked goods. So there was no added value to consumers of a product with a longer shelf-life thanks to additives and enzymes; there was nothing that would further differentiate Interstate brands or give customers a compelling reason to buy them and more often.

Most importantly, however, increasing the shelf-life of products meant meddling with a recipe that consumers loved. While the taste and appearance of Twinkies et. al. didn't seem to be affected by the additives required to increase shelf life, bread was another story. The recipe corporate deemed successful worked inconsistently in the field. Loaves turned out gummy and doughy, and often caved in the center. Nevertheless, the company mandated the product go to stores. Consumers started complaining soon after and reported they were switching to other brands.

Before the shelf-life plan, delivery people would spruce up shelves so the product didn't looked picked over and would remove damaged goods every couple of days. But when the company cut the number of deliveries, the Interstate areas on store shelves looked disheveled or were empty for several days at a time. Not only did the product look and taste bad in many cases, it looked worse on messy or empty shelves—which pleased neither retailers nor customers. The company eventually acknowledged it had cut service too deeply and began adding back driver routes, but the damage was already done to retailer and consumer relationships.

The cost-cutting program a flop, Interstate filed for bankruptcy and Elsesser resigned at the end of September. According to the Wall Street Journal, analysts responded to the bankruptcy filing with the strong suggestion that "the company's highest priority ought to be improved marketing and increased sales, rather than cost cutting." Clearly we agree.

The problem with having cost-cutters in charge, running companies with famous, high equity brands, is that they don't draw a line between an unnecessary and necessary expense. They fail to recognize that certain "costs" are vital to supporting a brand's positioning, maintaining quality, or sustaining customer loyalty. Interstate had alternatives; the company could have rolled out new products—a multi-grain bread, a new favorite among consumers and the bread industry's hottest product, for instance—launched a reinvigorating ad campaign for Twinkies and Ding-Dongs, or both. Instead, management looked for ways to cut costs and their brands have suffered the consequences.

While Senator John Kerry, consumer activist Ralph Nader, and incumbent President Bush continue to hammer home how they as individuals differ from each other, what characteristics, attitudes, opinions, and beliefs separate average-Joe members of the three major political parties?

Using data culled from a recent National Opinion Research Center(NORC)-Roper General Social Survey, we investigated the differences between American adults who self-proclaim themselves as Independent, Democratic, and Republican. Interestingly, we found those who describe themselves as "Independent" held the most extreme position on many social issues and was the youngest by far, with significantly larger proportion of members falling in the 18-29 age bracket and only 17% falling in the 60+ age bracket.

The study, based on interviews with a national probability sample of more than 2,500 men and women over the age of 18, found that more self-proclaimed Independents support the legalization of marijuana and making birth control available to 14-16-year-olds, believe it's OK to live together if not married, and say it should be easier to get a divorce. In spite of their far left-stance on these issues, a majority of Independents support the death penalty. Because the group skews younger, it has the lowest average annual household income of the three parties at $43,000 and, subsequently, the lowest levels of satisfaction with their financial situation. Perhaps a reflection of their frustration with the status quo, fewer Independents believe they have a good chance to improve their standard of living compared to the other parties and are much less religious.

For their part, self-proclaimed Democrats are a more diverse group with the highest percentage of female and non-white members. A majority report little confidence in the executive branch of the government, but more Democrats than Independents and Republicans have confidence in the press. Members tend to be pro-union and pro-environment, and overwhelmingly believe women should have paid maternity leave. For all of their liberal positions, surprisingly Democrats are almost as likely as their Republican counterparts to believe in using spanking to discipline a child.

Republicans generally fit the stereotype of their party: the vast majority is white and the group has the highest average annual household income of $54,000. Members of this self-identified group are more likely to favor increased defense spending and agree that men are better suited for politics than women. Strongly religious, Republicans are also more likely to have a gun in their home and believe in the death penalty. Satisfied with their work and more comfortable with their financial situation than their counterparts, Republicans donate more to charities than either Democrats or Independents.

Here are more discriminating characteristics:

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The term "product placement" has come up so much recently—we can't get through a conversation with a marketing communications practitioner without some mention of it—we felt compelled to share our thoughts on the subject.

It seems companies are negotiating with networks and studios as part of media buys and other sponsorships exclusive deals to supply branded products for the opportunity to get logo exposure and perhaps even a mention in the script. Talent agencies, with close ties to movie studios in particular, are brimming with requests to get all manner of items into the next promising network or Hollywood blockbuster. Nielsen has expanded on its tracking system so network execs can understand all the details of deals for products shown during programming, and other firms are working on monitoring technologies. Suddenly everybody's talking about product placement—there are articles at least once a week in the Wall Street Journal, Ad Age, and others detailing the mad rush for choice product placements slots. It's all the buzz about town.

Product placement itself is not a new phenomenon. Studios have traditionally preferred to use real brand name products as opposed to contrived names—Coke or Pepsi versus Acme Cola, for instance—to add to the realism of a program or movie, and for years there's essentially been a cottage-industry of small product placement firms that offered a steady supply of real-world brands. These firms cultivated relationships with prop managers on sets and when a prop manager needed, say, a bicycle for a scene, the product placement firm would either offer up the products from a client or call a company, such as Schwinn, and convince them to be the supplier. If the placement firm came through, the prop manager owed it a favor and would then use an actual client company in a future scene. Really everybody won in this quiet, symbiotic relationship—the prop managers saved money to help make shows more profitable and marketers got their logo and sometimes a script mention on air during a primetime show.

Yet as advertising effectiveness continued to decline along with ROI and ad skipping technologies like TiVo became more common, marketers in large numbers have started talking about product placement as if it's the second coming—as if the answer to poor advertising performance is as simple as getting a logo in front of a viewing audience during an actual program rather than the commercial break.

Of course that is a ridiculous notion. It's just more brand juice, what we call the beautiful logos, clever tag lines, creative "essence" advertising, edgy names, flashy Web sites, big ticket giveaway promotions, splashy launch parties, and all-manner of attention-grabbing publicity stunts. These are all supporting tactical elements of branding, but should not, under any circumstances, be confused with strategic fundamentals such as targeting and positioning.

Sure, exposure is important, but giving away a car to every member of Oprah's studio audience will only have people talking until the next big giveaway or placement. Sure, having a popular actor or actress use a product on a show may give someone a reason to buy in the short-term (i.e., "I saw Amanda Bynes [the teen sensation and star of the WB show "What I like about You"] eating Fruity Pebbles in the last episode, so I'm going to buy it today") but it's not a long-term competitive advantage, especially if everyone else is doing the same thing with similarly popular actors and hit shows.

If marketers want to get swept up in the mad rush to get products on air, that's their business. But product placements will not fix underlying strategic problems no matter how popular a show is.

For more insightful marketing discoveries, visit http://www.copernicusmarketing.com/discover/index.htm

Have a hot discovery for our next release? Contact us at ami.bowen@copernicusmarketing.com

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We always enjoy reading Seth Godin's books—they're fun to read with great nuggets of inspiration and information about developing new products and building stronger relationships with customers. We're especially interested in the guidance Godin offers in Free Prize for selling an idea for a new product, service, or program into an organization. In our own work, inertia within an the organization and unsupportive senior management are often the biggest barriers to successful implementation of a new strategy or program. Godin's extensive advice on engaging others and getting them behind an idea is reason enough to read this book.

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The first takes place on January 12-14, 2005, in Miami: the Institute of International Research's Return on Marketing Investment, The New Era of Accountable Marketing, "the premiere conference for cross-industry learning on the organizational, tactical, and strategic aspects of building accountability and linking marketing to solid financial returns." Copernicus chairman and CEO Kevin Clancy will give what is sure to be one of the most talked about presentations of the year, "Beyond STM and Marketing Mix Modeling: The Evolution to Marketing Navigation Stations." Click this link for the full agenda and registration information: http://www.iirusa.com/accountablemarketing/

The American Marketing Association's Strategic Marketing Conference on May 9-11, 2005, in Chicago, also has us excited. Once again, the conference will feature the best and brightest thinkers, books, and ideas in marketing and a speaker line-up like no other! The 2004 conference sold-out in record time, so register early to reserve your spot at the 2005 conference. For more information, visit: http://ecommerce.ama.org/strategic.htm

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