Wednesday, February 11, 2009

What Scholastic, Inc. Doesn't Understand About Their Brand

One of the participants in Basic Marketing asked me about the Scholastic fiasco. (See the link here if you don't know what we're talking about.)

Yea, this is a mess. On the one hand, the ethics are fuzzy. Schools approve having the book clubs and, in return, participating schools get a kickback/commission on sales. So although selling "crap" along with books is not the point of the club - the the schools are complicit by allowing it. One of my close friends, Dr. Bryant Hudson at FAU, used to have the following quote as part of his e-mail signature that seems particularly relevant for this situation: 
"It is difficult to get a man to understand something when his job depends on not understanding it."
Upton Sinclair, US novelist & socialist politician (1878 - 1968)
Pointedly, Scholastic has 75% of schools in the U.S. signed up for book clubs!! That's an amazing market share!! And since the schools get a kickback - particularly in such tough economic times - cash-strapped schools are the least likely to complain about selling more "stuff" so they get more money. (I am, however, a little surprised the teachers' unions didn't blow the whistle on this a while ago.) This is the same reason schools were so reticent to remove soda machines from schools, even though they were detrimental to students, learning, and family budgets: the schools got a cut of the action and didn't want to give it up!! So they rationalized that it was "OK."  

From a marketing standpoint, the concept is simple: Scholastic essentially has a monopoly distribution channel to target kids in school. The kids nag their parents for this stuff (both books and, more questionably, other stuff) and the school gives the whole thing legitimacy. Scholastic is trying to maximize their profits (and a review of investor information on their website confirms this) - and adding more things for the target market to buy only increases profits.....  

HOWEVER, I think Scholastic has monumentally screwed up! Their brand was probably one of the purest "good for kids" brands in the world. Literally. (Multiple puns intended.) Look, I still know the brand's been awhile since I've read a Scholastic book. Plus, access to 75% of K-8 classrooms in the U.S.? That's amazing!! But by putting junk into the channel (book clubs), Scholastic is sullying their brand meaning as valuing profit-seeking over reading! I think now that the "Campaign for a Commercial-Free Childhood" has released their assessment and gotten a ton of press, I think we'll be seeing a lot more schools, like The Bradford School referred to at the end of the article, terminating their relationship with Scholastic. This is going to be painful!! 

The bottom lines, from a marketing perspective, are to
1) ALWAYS understand how your target customers understand your brand, 
2) realize that brands are "living" constructs and a company's actions will change brand meaning, and
3) think of your brand as a reputation - which really is what most brands are - and ask yourself, "If I do X, how might that affect how customers view my brand/reputation."

By the way, lots of companies have made similar missteps. At one point Howard Schultz drank too much coffee and didn't realize what the "Starbucks" brand really meant. He announced that Starbucks could sell anything they put their name on and planned on selling furniture on-line. The stock promptly plummeted by more than 10%... It's never really recovered. The stock was at $11.20 in March 2000. Today, it's at $9.93.

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