The 1% Speak Out: "I am a fat cat. I'm not ashamed"

A recent Bloomberg article describes how wealthy Americans are speaking out in response to attacks from the Occupy Wall Street movement. Top U.S. earners have been criticized for not paying enough taxes and contributing to the increasing income inequality, which, in 2007, was greater than that of China and Iran.

Arguments from the richest 1% include their right to earn and keep their income (particularly given high government spending) and how few low-income Americans pay taxes. One recent persuasive letter to President Obama is from Leon G. Cooperman,  a hedge-fund manager. In this video, Peter Schiff, investor, author, and commentator, defends the wealthy in discussion with Occupy Wall Street protestors.

Contrast this perspective with that of billionaire investor Warren Buffett. In August, Buffett wrote an opinion letter in the New York Times called Stop Coddling the Super-Rich.

Most millionaires agree with Warren Buffett and support a tax increase, as reported on wsj.com:

A new survey from Spectrem Group found that 68% of millionaires (those with investments of $1 million or more)  support raising taxes on those with $1 million or more in income. Fully 61% of those with net worths of $5 million or more support the tax on million-plus earners.  

Assignment Ideas:

• Research different perspectives of this story further: look at the Occupy Wall Street website, read the Bloomberg article, and find letters and videos of executives and others to get a complete picture of both sides of the argument.
• Write an assessment of all persuasive arguments. How does each side use logical arguments, emotional appeal, and credibility to explain their perspective?
• In small groups, choose one line of reasoning and defend your position. How can you support your view with research about the issue?

Victoria's Secret Responds to Child Labor Allegations

A Bloomberg report paints a grim picture of a West African 13-year-old girl who sleeps on a thin, plastic mat; works in 100-degree heat; is beaten; and is fed once a day some days, but not at all on others. Clarissa works for a farm certified as organic and fair trade-and supplies cotton to Victoria's Secret. Video on Bloomberg.

Although only a small amount of cotton for Victoria's Secret comes from this region, the company has issued a response, vowing to investigate the situation. In its statement, the company explains the original goals of the program in the region:

In 2007, we established a pilot program to purchase Fairtrade-certified organic cotton from primarily women farmers in Burkina Faso, a landlocked country in West Africa that struggles with endemic poverty. We were committed to this initiative because of its potential to generate life-changing opportunities for some of the world's poorest women.

In the statement, Victoria's Secret maintains its "goal of improving the lives of women and children in a country where a large portion of the population lives on less than a dollar a day. "

Discussion Starters:

• If you're a Victoria's secret customer, does the news affect your buying decisions? Does the company's response affect your buying decisions?
• Read Victoria's Secret entire response. What do you consider the strongest and weakest arguments presented? How do you assess the company's focus on their goals of helping women and children?

UC-Davis Chancellor and Faculty Speak Out

The "Occupy" movement has spread to college campuses, with UC-Davis students protesting tuition raises and education cuts. Videos showed campus police pepper-spraying students, which led to an outcry from students and some faculty.

In a short speech to students, Chancellor Linda Katehi apologized to students, saying "I am here to apologize" and "I feel horrible for what happened."

English professors have posted a statement on the department website, calling for Chancellor Katehi to resign and for the UC Police Department to be disbanded. [ View website image.] (The police chief is now on administrative leave.)

Cynthia Carter Ching, an associate professor of learning and mind sciences, wrote a letter to students apologizing "Because we left the wrong people in charge." She explains her view in one part of the letter:

You see, with few exceptions, the people running this campus up in Mrak Hall think of themselves as administrators, not as educators.  Because, with few exceptions, these are people who haven't seen the inside of a classroom in years, if not decades, if ever.   These are people who don't have you guys.  They don't have students to remind them every single day on this campus why they are here, simply by stopping by their offices with a friendly, "Hey, Professor, I just had a question about something…"  These are people who don't have you all to keep them humble by (to use a personal example) reminding them that they almost forgot to collect the paper that's due in class today, or pointing out the typos on their final exams.

Discussion Starters:

• Assess the three messages mentioned here: the Chancellor's apology, the English Department's webpage statement, and the professor's letter. What persuasion tactics does each use? Which do you consider the most and least effective?
• What else, if anything, should UC-Davis communicate at this point? What messages are important for the administration to convey?

More Tears for J&J

Consumer groups are protesting Johnson & Johnson because of what they claim are carcinogens in shampoo for babies. According to a report, Baby's Tub Still Toxic, a formaldehyde-releasing ingredient is found in Johnson's "No More Tears" Baby Shampoo in the United States, Canada, and China, although the company distributes a formaldehyde-free formula of the shampoo in several other countries. In a letter, the Campaign for Safe Cosmetics referred to meetings with J&J representatives and urged the company to reformulate the shampoo.

J&J has responded to the criticism with a statement that describes Johnson's Natural (an alternative product line), assures consumers that their products are safe, and describes steps they have been taking to reduce "preservatives that release tiny amounts of formaldehyde to guard against bacterial contamination."

Discussion Starters:

• Evaluate the consumer group's letter. Which are the strongest and weakest arguments? How does the group use logical arguments and emotional appeal?
• Evaluate J&J's response statement. Same questions: which are the strongest and weakest arguments? How does the company use logical arguments and emotional appeal?  

Herman Cain's "Smoking" Video Goes Viral

Campaign manager Mark Block is a one-man show in a promotional video for Republican candidate Herman Cain. Speaking to a severely close camera, Block encourages Americans to take action:

Tomorrow is one day closer to the White House. I really believe that Herman Cain will put united back in the United States of America, and if I didn't believe that, I wouldn't be here. We've run a campaign like nobody's ever seen. But then, Americans never seen a candidate like Herman Cain. We need you to get involved because, together, we can do this. We can take this country back.

Then, Cain takes a drag of a cigarette. Cue the patriotic music, show the award-winning Herman Cain smile, and you have yourself a viral video.

Asked about the video, Cain said, "We weren't trying to send any subliminal message whatsoever. Many of us found it hilarious because we know Mark Block."

The video has received a lot of attention. On the Colbert Report, Stephen Colbert pokes fun of the ad by lighting up a cigarette and showing his own version of Cain videos.

Discussion Starters:

• What is Mark Block's strategy with this video? Do you believe he was successful?
• What ethical issues do you see in connection with this ad?
• What are the potential ramifications for Herman Cain and his candidacy?

Barnes and Noble Pursues Borders Customers

Now that Borders has closed its doors, Barnes and Noble has purchased some assets -- including Borders' customer list. With an email, Barnes and Noble is luring Borders' former customers to its stores. The subject line was an odd choice: "Important Informatio​n Regarding Your Borders Account." (The last time I saw a similar subject, I received 18 emails about a security breach.)

Another curious choice in the CEO's email was the vacillating tone -- at times bold ("Our intent in buying the Borders customer list is simply to try and earn your business") and at times legalistic:

"As part of Borders [sic] ceasing operations, we acquired some of its assets including Borders brand trademarks and their customer list. The subject matter of your DVD and other video purchases will be part of the transferred information. The federal bankruptcy court approved this sale on September 26, 2011."

Barnes and Noble makes an additional pitch on its website: "Four Convincing Reasons to Stay in the Barnes & Noble Family."

Discussion Starters:

• How do you assess the Barnes and Noble email? What are the most and least persuasive arguments?
• What examples of credibility, logical arguments, and emotional appeals do you see in this message?
• Where are the direct sales messages in this email? Do you consider these subtle or too much?

Assignment Idea:

•  Rewrite Lynch's email in your own words. What improvements can you make to the message?

RIM CEO Apologizes for BlackBerry Outages

After four days of outages affecting millions of BlackBerry users, Research in Motion (RIM) CEO apologized and tried to explain the situation. In a video "Service Update" message, Mike Lazaridis said little about the technical problems, which elsewhere were described as a hardware failure (a core switch) within its network.

Although the video lacked detail and made no promises about when the service issue would be "fully resolved," Lazaridis delivered an emotional appeal:

"I apologize for the service outages this week. We've let many of you down. But let me assure you that we're working around the clock to fix this. You expect better from us, and I expect better from us."

Lazaridis also acknowledged, "We know that you want to hear more from us."

No surprise, public reaction was vehement. After all, people have been resorting to using the telephone and (horror!) the fax machine. Some of the more than 10,000 Facebook comments compliment BlackBerry's previous service, others bash the iPhone, but many vent their frustration:

In April, Lazaridis was in the news for his emotional reaction during a BBC interview. In July, the company announced layoffs. Clearly, the outages are another challenge for RIM.

Discussion Starters:

• In Lazaridis' video, what examples of persuasive strategies do you see? Which do you find most and least effective?
  
• Lazaridis didn't give a lot of detail in the video. Do you think this is an appropriate strategy? Why or why not? If not, what could he have done differently?
  
• How do you evaluate Lazaridis' delivery skills in the video? What does he do effectively, and where does he fall short?

Netflix Confuses Customers Again

In an about-face, Netflix CEO Reed Hastings undid the company split announced last month. In a brief blog post, Hastings wrote, 

"It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.

"This means no change: one website, one account, one password… in other words, no Qwikster."

Investors' concerns about the price hike and increasing costs of content caused the stock to fall, according to Reuters.

Update: Read an interview with Reed Hastings from The New York Times.

Discussion Starters:

• What could Hastings have done differently to avoid this situation?
• For future moves, how can Netflix include customer input to make better decisions?
• How can Netflix recapture lost customers at this point? Do you believe the executive team can do anything to restore the company's image?

Solyndra Legal Team Gets Into the Action

Solyndra executives had agreed to testify before the U.S. Oversight and Investigations Subcommittee, but their lawyers have since advised them to plead the Fifth Amendment. Solyndra, a solar-panel manufacturer that received $535 million in stimulus funding, has filed for bankruptcy and is now under criminal investigation. The executives maintain their innocence: "The company is not aware of any wrongdoing by Solyndra officers, directors, or employees in conjunction with the DOE [Department of Energy] loan guarantee or otherwise..."

Two letters from the legal team explain why executives Brian Harrison (CEO) and Bill Stover (CFO) will not answer questions that may incriminate them during Congressional hearings on Friday.

In response, U.S. committee members expressed their dissatisfaction:

"Who exactly are Solyndra's executives trying to protect, and what are they trying to hide?

"Despite repeated assurances that they would testify voluntarily and answer questions this Friday, today we received the news that these executives – who had plenty to say to federal officials when securing half a billion dollars in taxpayer funding for their venture – plan to invoke their Fifth Amendment right against self-incrimination and will not answer questions from Congress."

Discussion Starters:

• Compare the two legal letters for Solyndra executives. What minor differences do you see, and how do you account for these?
• How do you assess the U.S. committee chairmen's response to the news? What do you notice about the tone of their statement?
• Consider the politics involved in this situation. Who are the major players, and what is driving their actions?

Netflix CEO Apologizes and Announces Company Split

Netflix CEO Reed Hastings is trying to win back goodwill lost by the company's recent price hike. In an email to customers, Hastings admits "I messed up. I owe you an explanation." In a video, Hastings introduces his head of DVD operations to explain the latest change -- splitting Netflix into two companies: one that will handle streaming video (to retain the Netflix name), and another to manage DVDs by mail, called Quikster.

Critics say that the deal was hastily put together, citing, among other issues, the Twitter handle @Quikster, currently owned by an individual represented by an image of a pot-smoking Elmo (reported by TechCrunch). 

The Netflix blog post amassed over 15,000 comments within a day, reminiscent of the outcry after the July price hike.  Fans and former Netflix customers may remember the video parody about the public reaction.

Discussion Starters:

• Looking at the Netflix blog, how well do you think the company is currently handling comments? What recommendations do you have for the CEO to improve communication at this point?
• How successful do you find the video? What works well, and what, if anything, would you suggest that Hastings and Rendich change in their presentation?
• How justified do you consider the public reaction to the news? In what ways is this different from the anger expressed earlier from Netflix customers?
• Of Netflix's three main messages -- the email, the video, and the blog post -- which do you think is most effective and why?

In Full-Page NYT Ad, Starbucks' Schultz Promises No Campaign Donations

Howard Schultz, Starbucks CEO, has pledged to withhold campaign donations until Washington gets it together. As a full-page ad in Sunday's New York Times, Schultz communicated his frustration in an open letter. The pledge, which he says 100 business leaders have signed, includes two parts:

"First, to withhold political campaign contributions until a transparent, comprehensive, bipartisan debt-and-deficit package is reached that honestly, and fairly, sets America on a path to long-term financial health and security. Second, to do all we can to break the cycle of economic uncertainty that grips our country by committing to accelerate investment in jobs and hiring."

 Discussion Starters:

• Read Schultz's entire letter. Which arguments do you consider strongest and weakest in his appeal?
• How does Schultz balance logical arguments, emotional appeal, and credibility in his letter? What examples do you see of each?
• From a branding perspective, what are the benefits and risks of a corporate CEO publicizing a message such as this?
  

Hyundai Commercial NSFW or the Netherlands

A car with three doors? The Hyundai Velostar looks like a coupe and boasts a "functional 3rd door," according to the website description. In an odd twist, a commercial promoting the Velostar emphasizes the door, yet was banned by Hyundai's head office for its explicit content. Critics say that the commercial was designed to be viral and that the ban is simply part of the marketing plan. 

It is an interesting question: the third door is not listed among the Velostar's safety features, apparently the main point of the commercial.

Discussion Starters:

• Do you consider the commercial too explicit for American TV? Why or why not?
• Do you think that pulling the ad was a planned marketing ploy by Hyundai -- or a genuine reaction to the commercial?
• What ethics are involved in this situation? Is the commercial ethical? If Hyundai planned for the video to be banned and viral, is that ethical?

Cornell University President Wants to End Fraternity Pledging

In an opinion letter in The New York Times, Cornell University president David Skorton demands an end to pledging, which he calls a "guise" for hazing. According to Skorton, pledging is not, as some fraternities purport, a way for students to prepare for membership, but "is often the vehicle for demeaning activities that cause psychological harm and physical danger." The impetus for this action, says Skorton, is a student death in February believed to be the result of fraternity hazing. Skorton is calling on the Greek community to offer solutions:

"Yesterday, I directed student leaders of Cornell's Greek chapters to develop a system of member recruitment and initiation that does not involve 'pledging' - the performance of demeaning or dangerous acts as a condition of membership."

As for any sound, persuasive argument, Skorton address the skeptic's question:

"Why not ban fraternities and sororities altogether, as some universities have done? Over a quarter of Cornell undergraduates (3,822 of 13,935 students) are involved in fraternities or sororities. The Greek system is part of our university's history and culture, and we should maintain it because at its best, it can foster friendship, community service and leadership."

Discussion Starters:

• Do you agree with President Skorton that the line between hazing and pledging is blurred? Why or why not?
• What do you consider to be the most persuasive argument in his letter? Least?
• What would convince fraternities to abide by this request? In other words, what is the best way to persuade fraternities to change?

Madonna + Smirnoff Social Media Campaign

Smirnoff has turned to Madonna for its next big promotion. For its Nightlife Exchange Project, Smirnoff and Madonna are looking for "the world's best dancer." In a video advertisement, people are encouraged to "Represent your country on the world's stage."

Smirnoff's Facebook page is a flurry of activity, but at least one fan is looking for clearer communication: 

 Discussion Starters:

• How will Madonna and Smirnoff complement each other's brand? Consider the target market for each. What are the risks of this association to each brand? (Think Gilbert Gottfried for Aflac.)
• Given your experience and what you know about social media, do you think this campaign will be successful? Why or why not?
• What persuasive strategy (or strategies) is Smirnoff using by associating with Madonna?

Assignment Ideas:

• Rewrite the video script to promote the campaign. Include clearer instructions for fans like Victor.
• Explore Smirnoff's Facebook page for instructions about the dance contest. Identify three ways to make information more accessible to fans.

Secret's Anti-Bullying Messages Are a Hit

Procter & Gamble's Secret deodorant is encouraging an end to "girl-to-girl meanness" with its "Mean Stinks" campaign. The brand created a Facebook page that has accrued more than 230,000 "likes" and has partnered with Amber Riley (Mercedes on the TV show Glee) to create this video:

The anti-bullying campaign seems to resonate with people and correlates with increased sales for Secret.

Discussion Starters:

• To what do you attribute the success of this campaign? In other words, why do you think this was successful?
• Compare this campaign to Old Spice's social media blitz. What parallels do you see, and where do you think Secret fell short? (This Old Spice video garnered almost 35 million views.)

Strike at Verizon: A Look at the Data

Verizon is asking for concessions from the Communications Workers of America (CWA), and so far, management isn't getting any. The company claims that poor performance in its landline division makes costs unsustainable, but the unionized employees don't agree. To change the cost structure, Verizon wants to implement a pension freeze, reduce the number of sick days, and raise employee contributions to health care insurance.

Verizon CEO Lowell McAdam sent a letter (download) to all employees explaining the company's position.

In its statement, CWA says that Verizon's initial list of concessions hasn't budged since June 22, when union bargaining started. 45,000 employees are now on strike and cite the following "Verizon Financials" to support their case:

• 2011 annualized revenues are $108 billion and annualized net profits are $6 billion.
• Verizon Wireless just paid its parent company and Vodaphone a $10 billion dividend.
• Verizon's top five executives received compensation of $258 million over the past four years.

According to a New York Times article, management and the union disagree about benefits payouts to employees:

Union officials dispute the company's estimate that each employee receives $50,000 worth of benefits each year. In that number, the company includes $14,700 for medical and dental insurance, $10,900 for retiree health care and life insurance, $10,800 for pension and $7,500 for time off.

Union officials say total benefits average $25,000 a year. Mr. Kohl, the union official, disputed the $10,800 yearly figure for pensions, noting that Verizon's annual report said the company's 2010 contributions to the union's defined benefit plans "were not significant." Verizon officials said the $10,800 was an average annual amount.

Mr. Kohl also said the $10,900 retiree health care figure was greatly exaggerated, asserting that many retirees had worked years to pay for that care so the cost should not be attributed to current employees.

Mr. Kohl also quarreled with Verizon saying the value of time off - vacation, sick days and personal days - was $7,500. He dismissed that as double-counting because that number was already counted in wages.

Discussion Starters:

• Looking at the argument over employee benefits, whose version of the data do you accept?
• How convincing do you find the union's list of "Verizon Financials"? Do these numbers influence your thinking about whether the union should make concessions?
• The CWA refers to Verizon's annual report to defend its position that pensions should not be frozen. How do you interpret the note "were not significant" in the report? Is this a convincing argument?
• In CEO Lowell's letter to employees, what is his strongest argument? What is his weakest?
• What ethical issues do you see in this dispute? Do you side more with management or the employees in this case? Why?

Bloody Bandage Tests Pizza Hut's Response

In a classic case of apparent lack of company response, a customer went public with a distasteful story about Pizza Hut. The Wieczerza family ordered a pie from a NJ Pizza Hut and got a mouthful of bandage and gauze with droplets of blood. According to Mr. Wieczerza, after several attempts to have the company pay for a blood test, he decided to go public. Although the local store manager was apologetic, the couple said they tried to contact Pizza Hut's corporate offices more than 20 times and received no response.  The company did, however, reply to a News 10 request with this generic statement:

"The safety of our customers is our top priority. We take these matters very seriously and are conducting a thorough investigation of the alleged incident. We apologize for the inconvenience this has caused our valued customer."

One of customer's frustrations is the company's response that the dough from the customer's pizza didn't match a dough that Pizza Hut uses. As the customer said, "We didn't show anybody from Pizza Hut the pizza or the bandage and they basically called us liars. . . .I finally said enough is enough."

Discussion Starters:

• How do you assess Pizza Hut's response to the situation? What might be a more appropriate response?
• How can Pizza Hut best balance an apology with accepting blame? What if the story is a hoax?

Assignment Ideas:

• Write an apology letter to the Wieczerzas about the situation. 
• Write a public statement from Pizza Hut's spokesperson about the incident.

"Netflix Relief Fund" Video Parody

"Netflix has raised their prices. This is literally the worst thing that has ever happened to White people."

Jason Alexander stars in "Netflix Relief Fund," a video poking fun at customers' reactions to Netflix's recent price increase. (See story.) Comparing Netflix to Hitler, Alexander says that "tears are falling all over MacBook Pros and Pier One throw pillows all across this country today."

Netflix Relief Fund with Jason Alexander from Jason Alexander

Discussion Starters:

• How do you think this video came about? Who would have a stake in creating a parody like this?
  
• If you were Netflix's VP of corporate communication, what, if anything, would you do in response to this video? Before you answer, consider the heated customer reaction to the price increases over the past two weeks.

"Dear Netflix" Is Trending Because of a $6 Price Hike

Poor Netflix has been called a "manipulative greaseball pig" and worse. "Dear Netflix" is a popular topic on Twitter because of a substantial price hike -- from $10 to $16 for one DVD per month and unlimited streaming. Netflix has been overwhelmed with complaints, and at one point, could not handle the call volume (listen to the outgoing message). Apparently, Netflix is trying to kill its expensive DVD business.

In response to Netflix's plan change announcement, more than 11,000 customers within two days have posted comments like this one, which received 922 "Likes."

Discussion Starters:

• What is your reaction to the news? Is a 60% price increase reasonable in this case?
• Could Netflix have handled the announcement differently? What, if anything, could the company have done to make the news more palatable?
• How could Netflix handle the commentary at this point? If you were Reed Hastings, Jr., the company's CEO, what would you do to try to manage the situation?

When Twitter Becomes Triage

On the heels of Business Insider's "Most Hated Companies" list, I am increasingly annoyed at companies that can't seem to fix core problems. Rather, they put their customer service staff on the front line to appease people through Twitter and other channels.

A look at DirectTV's recent tweets, for example, reveals a company in distress: "DM us," "Have you called," "I'm sorry," "We need to escalate." Too many apologies for one day of work. Social media will do just so much to resolve systemic company issues, as this customer says:

Discussion Starters:

• How do you assess DirectTV's approach? Compare DirectTV's tweets to similar companies'.
• What is your best experience with a company response to a complaint? When have you complained to a company and had good results?