Struggling for years with a decreasing market share and tumbling stock price, Nortel is going negative with a campaign against Cisco. This Wall Street Journal article details their PR blitz utilizing bloggers, YouTube, anti-Cisco websites, and trade show demonstrations. The message? Use Nortel to avoid “the Cisco energy tax.”
Nortel is countering with the argument that Cisco’s technology, as successful as it has been in the marketplace, is an energy hog. In its ads, Nortel claims that Cisco’s data networks “are costing you 100% too much.” At trade shows, Nortel staff attach wattage meters to comparable Nortel and Cisco gear in an effort to show that Nortel’s gear is much more energy-efficient. The company posted a film of the demo on YouTube.
Energy prices are finally rising to a point where being energy-efficient is not just something to make a consumer feel good, but something that affects purchasing decisions by price-sensitive customers. That Nortel is taking this message to large corporate customers is evidence that at least some people in corporate purchasing departments are concerned with cutting costs by conserving energy.
In a previous post, I talked about the strategy of going negative with marketing, and why it’s rarely done. This is one of those cases where a very small company with much to gain and little to lose takes on the market leader with a campaign aimed at gaining some awareness and hoping to steal just a bit of the leader’s market share. Or, as pointed out in the WSJ article, survive and keep their current customers as their competition makes persuasive presentations to switch. It’s not unusual for a smaller company to paint the larger one as evil, and it’s not that unusual to use an environmental rationale to make that argument. What might be unusual is that with the price of energy rising so quickly, customers might listen.
And frankly, Cisco’s response that “there are no industry standards to measure “green”; and Cisco’s gear meets the environmental requirements of the product-testing company Miercom” falls a bit flat with me. Not a counter-argument about green manufacturing or building initiatives, but a lack of industry standards? No pledge for improved performance or details of why the additional energy usage creates a superior product? This lack of rebuttal leaves me thinking Cisco either isn’t taking Nortel seriously or isn’t taking energy efficiency seriously - either case may not be a big mistake now, but could be a huge mistake in the future.
Posted in business, marketing
Tagged business, cisco, eco-smart, efficiency, energy, energy efficiency, environment, environmental, green, marketing, negative advertising, nortel, power, sustainability, sustainable, wall street journal, wsj
I generally tend to keep politics out of this blog, but I just read an interesting piece entitled “How Negative Advertising Works (and When It Doesn’t)” by John Quelch was included in this week’s issue of HBS Working Knowledge. Since my comment on the article will likely be edited shortened (brevity is not my forte), I’m including it here with a couple of links to materials mentioned in my comment (because I can’t pass up a chance to plug my favorite author):
I think that the key here is this :
“Unlike politicians, companies hardly ever run negative ads. Pepsi ads don’t tear down Coke; they build the brand image of Pepsi. Why? Because a tit-for-tat war of words would turn off consumers of both brands. And sales growth, not just market share, is what puts money in shareholders’ pockets.”
David Foster Wallace wrote an essay included in “Consider the Lobster” that is about to be reissued as a book called “McCain’s Promise” in which he talked at length about the impetus for political incumbents to go negative – going negative effectively turns off voters, shrinking the potential voter pool and favoring the candidate with a strong brand and deep coffers. Since new voters generally support the ‘outsider’ candidate, going negative usually starts with the incumbent, putting the challenger in a lose/lose (look weak by not fighting back, or fight back and open yourself up to charges of having gone negative yourself).
Thus generally creating the ‘better of two evils’ situation in which people choose not to vote as a form of protest. Which generally favors the incumbent, and allows even more money and effort to be spent on getting the party faithful out to the polls, because the undecided have been neutralized/disenfranchised/exhausted by the negative tedium of the campaign. Which explains why the far right and far left hold so much sway in the political process despite most Americans self-identifying as moderate – most Americans also don’t vote, and those that can be counted on to vote are at the poles (pun half-intended).
As Professor Quelch notes, Coke and Pepsi would prefer to grow the market, not shrink it in order to destroy competitors and gain market share. Even the Pepsi Challenge must have been somewhat welcomed by Coke, as its underlying message was “drink cola and find the one you like.”
One final sidenote – the Democratic primary this year is particularly interesting, as the ‘outsider’ candidate with less name/brand recognition has become the candidate with much deeper pockets.
Posted in marketing
Tagged coke, consider the lobster, david foster wallace, democratic, dfw, election, going negative, john mccain, mccain, mccain's promise, negative, negative advertising, pepsi challenge, politics, up simba