Once again, wandering around on the Web leads to a blog post topic. This time it was The Hotel Bed Jumping blog, which helps Hotels By City.net differentiate itself and compete against online giants like Travelocity and Expedia.

It was inspiration to tackle the subject of niche marketing in general. But then two problems reared their ugly heads:
1. There’s a lot to get your arms around. In a way, all marketing can be thought of as niche marketing. It’s just that some niches are smaller and more targetable than others.
2. It’s hard to find any genuine strategic thinking on the subject. A quick Google search finds lots of “MAKE BIG BUCK$$$ - SECRETS OF NICHE MARKETING REVEALED” and little else.

So this post takes the ever-popular “marketing extremes” path. The writers of the RandM blog like to take notice of the very good, the very bad, the just plain bizarre. We freely admit a shallow motive for this. Extremes like the ones described below are fun to read about and fun to write about.

Help like minds share good times together. The Web lets people with very specialized tastes find and communicate with each other. Royal Caribbean takes it a step further, getting them together face to face with a cruise for fans of the film “Abbot & Costello Meet Frankenstein.”

Target customers who still need a hard-to-find obsolete technology. One obvious way: Sell parts for typewriters. A less obvious (and extremely lucrative) way: Sell music cassette tapes to prison inmates, who are not allowed to own CDs because they can easily be made into shivs.

Offer the right remedy for “whatever ails you.” Social limitations are one side effect of medical conditions. Prescription4Love helps customers overcome them with a dating-for-singles service for people with matching diseases.

Cash in on celebrity obsession. Despite its name, Kabbalah Energy Drink’s target market is not Jewish mystics. (Imagine bearded, sidelocked Hasids skateboarding on half pipes.) Instead, its appeal is to those forlorn wannabes who follow the careers of Madonna, Paris Hilton and other show-biz Kabbalah followers for whom Red Bull is just too mainstream.

Leverage the fear factor to sell fashions. No, not the “does my butt look big in this?” factor.  In Colombia, tailor Miguel Caballero offers a wide range of fashionable bulletproof clothing to prospects with a very real fear of assassination.  Want a job with Miguel? You start out in quality control - CNN reports that one condition of employment is being shot by the boss.

There’s also a deeper motive for looking at extremes like these. You may not have to go this far to market to a niche.  But they do help set your thinking free.  And they show what you need to succeed, because there’s more to niche marketing than just buying the right Google AdWords. First, you’ve got to have the right product - something that scratches your niche’s itch.

What kind of innovation makes marketing succeed?  From reading the trade press, you’d think that the classic marketing mix had only three Ps. Most of the news is about Product, Price and Promotion.

But you don’t read that much about the fourth P – Place, or distribution.
•    Agencies overlook it because they can’t do much about it. It’s already in place, a given, something that most clients don’t want agencies to mess with. So agencies tend to focus on creating Product ideas, improving Price/value perception and developing Promotion.
•    On the client side, it’s often in the domain of the sales department, where the marketing department may fear to tread.  And it can involve nitty-gritty issues of transportation and trade relations that the average marketing manager knows little about.

It’s among key retailers that real innovations are rising. They know that where something is sold (preferably at their store) and how it gets there is just as important as what it is, what it costs and how it’s marketed.

Four distribution innovations

Recent examples of innovation in the fourth “P” – retail Point of distribution –include:

• Integrating virtual and “real” worlds. 7-Eleven stores will now invite online gamers to pay for virtual world purchases using real money at 7-Eleven stores, as the humble c-store bridges the gap between the virtual and the real world.

• Generating content. Wal-Mart and Procter & Gamble are partnering to produce family-friendly TV programs, starting with a made-for-TV movie premiering in April 2010.

• Determining prices. Amazon.com and MacMillan, the publisher, confronted each other over the retail price of e-books sold for use on Amazon’s Kindle reader. (MacMillan won for now. But maybe not for long.)

• Making money mobile. Target store customers can now store their gift cards on the store’s mobile site, and present a web-enabled phone to the cashier to pay.

Catch the common thread in these four? It’s not just the importance of the Internet; it’s also because the “product” in each of the four is digitally-delivered information.

These are just a few examples gleaned from recent news. We think that smart agencies and client-side marketers, both of them in the information business, will see this as a wake-up call. They’ll start expanding their vision of the fourth P – distribution – beyond its traditional role as a generic pipe between manufacturer and end-user.

(The following was delivered to Robinson & Maites in a plain brown bag in the dead of night. We do not attest to its veracity.)

“Suckers.
Easy marks.
Chumps.
But now they tell me we gotta call them ‘best prospects.’”

That’s what an anonymous informant known only as Louie told Crime Times, the trade journal for ethically-challenged entrepreneurs (AKA “crooks”) in their report on Blippy.com, the new social media service.

It’s an extreme example of how small business is embracing new technology to improve their marketing. Legitimate small businesses are using Facebook and YouTube.  But burglars, muggers and blackmailers are reaping the benefits Blippy users posting all their credit card and online purchases online for the world to see. According to Blippy.com:
•    “Blippy is a fun and easy way to see and discuss the things people are buying.”
•    “Share your favorite purchases from any credit card or these online stores.”

According to Louie: “I don’t know nothing about this target market segmentation stuff. But why get wasted trying to figure out who’s the chump – uh, sorry, I meant to say prospect - when with Blippy I can get them to raise their hands and tell me what they’ve got that’s worth stealing?”

Before Blippy the bad guys would expend enormous man-hours trying to find the right score. Burglars cruised neighborhoods looking for mail and newspapers piled up on porches. Muggers watched for show-offs with big bankrolls in their pockets. And blackmailers rooted through garbage cans looking for “No Tell Motel” register receipts.

“No more of this hanging around in dark alleys in the rain at three in the morning,” Louie told Crime Times. “Now crime’s more like a 9 to 5 desk job. I can tell people I’m into marketing. It’s even inspired a new motto for my business. With Blippy I just grab my mouse and go:
Click click,
Now I’m slick.
I take my pick
Of conspic-
Uous consumers.”

Louie is even thinking of sponsoring an annual marketing award for most effective campaigns using Blippy.com. “We’ll call it the solid gold shopping cart.  Actually it’s someone else’s idea that I found online. But what the hell, I’m a thief.”

The more things change, the more they stay the same. The old-time traveling medicine show has evolved into the “experiential” road show.  The obsolete cigar store Indian is now the giant inflatable display. And now Brandweek reports that the traditional Tupperware-type sales party has transformed itself into the new venue for high-tech and high-ticket products from Ford, Verizon and Microsoft.

But we believe there’s an even bigger opportunity for companies to be the life of the party, when they match their marketing with the right kind of party.  After all, you wouldn’t promote chewing tobacco at a wine and cheese party, or retirement communities at a rave, would you?

Party in a pigpen
So why should Tide detergent restrict itself to tennis superstar promotion, when it can go where it’s really needed? Tide can party hearty at down and dirty Mudfest events in Louisiana, Missouri, Texas, Florida and more.  Both participants and spectators are perfect prospects for Tide, and it’s the ideal showcase for the Tide Mobile Laundry truck.

Party with pride
For McCormick Spices, forecasting flavor trends is marketing that preaches only to the foodie choir. The people who really need McCormick are the cooks and the diners at the West Virginia Roadkill Cookoff. McCormick can party with pride, because they’ll be continuing a long historical trend: The Spice Trade was driven by the need to disguise the taste of spoiled food.

Companies can also create their own parties, especially if they’re marketing products that even satisfied customers are unlikely to recommend to their friends.

Provocative parties
One example that comes to mind is condoms. The Trojan brand’s recent advertising campaign has been pretty suggestive, but it’s difficult to turn that kind of attention into action. Even in our supposedly sexually-liberated times, guys’ locker room talk rarely turns to a detailed comparison of condom performance. But party marketing is the ideal opportunity for sampling. Should the parties be coed? Should the samples actually be “test driven” at the party, or just distributed there? We’ll leave that up to the condom company that pioneers this kind of party.

Hold a “party’s over” party
Another example of party-partial product categories is caskets. Brands like Batesville experience an insurmountable barrier to word-of-mouth advertising success, because even their most satisfied customers have nothing to say. Up until now the big news in casket marketing has been free next day delivery, and distribution at Walmart. But now casket marketers can invite Major League Baseball fans to game night parties, where they can try on a casket with their favorite team’s logo. Party marketing puts the “fun” into “funeral.”

Just when a marketing technique seems old, worn out and irrelevant, it comes creeping back in a new disguise.  If the lingering Tupperware association still bothers you, think of party marketing as social media marketing, with the “social” part being accomplished the old-fashioned way: Real flesh people interacting face to face.

Competition is supposed to be good for marketing. But sometimes it sucks, just like the grill of the 1957 Edsel that looked like “an Oldsmobile sucking a lemon,” according to Time magazine.  Bad design was only the beginning; Edsel’s problem went much deeper, giving us a classic example of how internal competition can drive external failure, in the marketplace.  That us vs. them approach can be for money and manpower resources, for the same customers, between marketing disciplines, between distribution channels and more.

In a recent New York Times article, Dick Brass, formerly a vice president of Microsoft, talks about internal competition and why it sucks.  “America’s most famous and prosperous technology company no longer brings us the future, whether it’s tablet computers like the iPad, e-books like Amazon’s Kindle, smartphones like the BlackBerry and iPhone, search engines like Google, digital music systems like iPod and iTunes or popular Web services like Facebook and Twitter.”

Brass focuses mainly on product development, but he could be describing our agency’s own experience with internal marketing competition:
•    An famous electronics brand whose new, measurably-superior product failed because consumer marketing and trade marketing not only competed against each other, but were located in separate buildings.
•    A consumer products company where managers of the leading premium brand and its leading discount flanker fought over which customers each could target in retail promotion and direct mail.  Meanwhile, other companies’ brands nibbled away at both of their shares.
•    A major telecom that had to spend months breaking down silo walls between old (landline) and new (wireless, Internet) products and between distribution channels (direct mail, Internet, call center) before they could finally run the kind of successful integrated marketing program that external competitors had been doing for years.

Internal marketing competition also sucks when:
•    New products must fight for resources against established products with long-standing but low-value customer bases.
•    Departments suffer from the dreaded NIH syndrome.
•    Sales and marketing, or national and regional/local marketing, continuously confront each other.
•    Customer acquisition and retention operate in two separate universes.
•    Clients’ agencies compete against each other, especially when the agency that owns the “brand” (read: maker of TV commercials) is entirely divorced from the realities of consumer promotion, direct marketing, trade communications and so on…but still sucks up all the resources needed to do these right.

The real reason Edsel sucked

Internal competition is one key reason behind one of the most famous failures in business. Yes, the Edsel was ugly, it underperformed, and it had quality problems.  But the biggest reason for its failure was even more basic. Edsel was priced to compete directly against other brands of the Ford Motor Company. Ranked bottom to top, they included Ford, Edsel, Mercury and Lincoln. But “the most-affordable Edsel (the Ranger) cost 70 bucks less than Ford’s top-end Fairlane, while the most-expensive model (the Citation) cost more than a Mercury Montclair.” Prospective customers couldn’t figure out if an Edsel was supposed to help them keep up with the Joneses, or show off versus the Joneses.

Say “neigh” to bad marketing ideas

Everyone’s heard about Edsel, but few have heard about Ford’s short term attempt at a marketing fix. It has little to do with internal competition, but it is a great “whatever were they thinking?” story.  After months of frustrating failure, Ford tried to promote Edsels by giving away live ponies - you can read about it here.

DM News recently announced a dubious marketing achievement:  A first-of-its-kind escalation of hostilities between dueling loyalty programs.

In the Oscar-nominated movie Up In The Air, Ryan Bingham (George Clooney) and Alex Goran (Vera Farmiga) spend some time comparing their airline and hotel loyalty programs. Normal behavior, if you spend your life on the road.

In real life, road warriors can also visit various websites to compare airlines’ and hotels’ loyalty programs. This is also normal – the pursuit of best value.

But the new Intercontinental Hotels “Luckiest Loser” campaign is anything but normal, in the way that it appeals to members of their own Priority Club Rewards program who also belong to competitor Hilton Hotels’ HHonors program.
•    The Intercontinental member with the most HHonors points receives 2 million Priority Club points.
•    The top 20,000 “lucky losers” each get up to 20% of their current HHonors balance in Priority Club points, up to 20,000 points.
•    All members receive 1,000 points for just for responding.

The upside and the downside
In the short term, we applaud Luckiest Loser; it’s a powerful, creative customer retention and upsell campaign. But in the longer term, it aggravates The Great Loyalty Program Trap.
•    Luckiest Loser puts Intercontinental (and Hilton, and other hotel chains) in the position of competing almost solely on the basis of their loyalty programs, rather than on the tangible features and benefits they offer to guests, or on the intangible value of their brands.
•    “Earn points, get rewards” stops being the tie-breaker it was intended to be. Instead it becomes the one criterion for a hotel purchase decision, taking the place of comfortable rooms, excellent dining, business facilities, convenient location, quality of customer service and so forth.

The airlines who pioneered loyalty programs already know this. For them and for marketers in other categories, loyalty programs aren’t just another kind of promotion. They’ve become part of the product itself. These marketers find themselves damned if they do (because they have to spend significantly, just to keep running a program that isn’t part of the core value that they offer) and damned if they don’t (because customers will leave if they cut the program back). We’ve seen many of these marketers jump through creative hoops, trying to find exciting ways to get members to redeem points at lower liability.

So Intercontinental’s Luckiest Loser is an ingenious promotion.  But it may be helping to dig a hole that’s way deeper than marketers ever thought possible.