Archive for February 13th, 2009

The mortgage market: when government intervenes …

February 13, 2009

Ken’s Take: It continues to amaze me how Congress and past Presidents are able to deny their part of the blame for the mortgage crisis …

Excerpted from IBD, “What Happened To Business Prudence?”, Bradley, February 06, 2009

For decades, government has intervened in the mortgage market, in the name of the “public interest.” There was the creation of Fannie Mae and Freddie Mac, the Home Mortgage Disclosure Act of 1975 and the Community Reinvestment Act of 1977, the Financial Institutions Reform Recovery and Enforcement Act of 1989 and the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

There was the demand in 2000 by HUD that Fannie Mae dedicate 50% of its business to low- and moderate-income families. And there was President Bush pushing homeownership for all as the way to prosperity.

In 2000, for example, the Fannie Mae Foundation identified the “Outstanding Accomplishment” of Countrywide Financial Corp. as making almost one-sixth of its mortgages to blacks, Hispanics and Native Americans.

And Countrywide was hardly alone in the assault on invisible-hand decision-making. A decade ago, a senior managing director at Bear Stearns said this about mortgages made pursuant to the Community Reinvestment Act:

“While credit scores can be an analytical tool with conforming loans, their effectiveness is limited with CRA loans. Unfortunately, CRA loans do not fit neatly into the standard credit score framework. We believe a broader array of credit analysis data is needed to get a clearer perspective of the situation.”

Certainly, the people formerly employed by Bears Stearns now have a clearer perspective on the value of those mortgages.

Government regulation and political correctness are at the root of recent organizational failures that, in turn, have resulted in massive taxpayer-financed bailouts. New government intervention is trying to address the problems created by prior intervention — and futilely, it appears.

Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=318815966519210 

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Posted in Government & Politics, Mortgage Crisis | 2 Comments »

For sale: state owned aircraft … yeah, right

February 13, 2009

Now that the Feds have bailed out the states, will the governors have to be like the bank CEOs and give up their state owned airplanes & helicopters?

I know they have them … rode on a couple of them a few years ago.

Let’s have Barney Frank make the governors come in and raise their hands if they have one.

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Advertising moves from TV and mags… to store aisles

February 13, 2009

Excerpted from Strategy+Business, “Major Media in the Shopping Aisle” by M.Egol and C. Vollmer, Jan 12, 2009

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Marketers are using digital and video technology to reach shoppers at the moment that matters most … During the last few years, marketers, retailers, and media companies have intensified efforts to increase the impact of in-store advertising and make it a bigger part of the marketing mix …

A few numbers make it easier to see the growth potential of in-store media. Advertising spending in traditional media … grew by less than 2% annually during 2006 and 2007. But spending for online advertising grew by more than 20% annually … This shift reflects marketers’ desire for greater targeting, interaction with consumers, and measurability — all qualities offered by in-store media.

A similarly significant trend is the movement away from so-called measured media, such as advertising … to “below-the-line” marketing categories such as promotions, loyalty programs, word-of-mouth, events, and any form of retail store display or shopper marketing …

Within the realm of below-the-line marketing, in-store advertising promises to attract substantial marketing dollars, for a number of reasons. First … Since people make most purchase decisions at the shelf, in-store advertising allows marketers to reach them just before the “first moment of truth”, when they pick up the product. Second, in-store advertising can increase the effectiveness of the rest of a marketing campaign, “activating” promotions and sponsorships by making them click in consumers’ minds …

Today, marketers can run ads on in-store video networks spanning thousands of screens in retail stores … these ads reach more consumers than the major broadcast networks [and] can increasingly be targeted to a specific aisle in the store …

The money to fuel in-store advertising’s dramatic growth will come from several sources … The growth in in-store advertising does not rep­resent a zero-sum game; it often signifies an expan­sion in the overall pie … True, some of this spend­ing has come at the ex­pense of traditional television budgets or out-of-home budgets for non-digital ads, such as static billboards, but a significant share is incremental …

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For the promise of in-store advertising to be realized, several challenges need to be addressed.

• Targeting Today, the same ad is typically broadcast to every aisle across a chain. But some retailers are experimenting with in-store video advertising that achieves a level of personalization and focus unmatched by broadcast and cable TV, because messages can be customized by store aisle, time of day, and neighborhood to better target specific shopping occasions …

• Quality of engagement … To counter the perception that the higher production values of home television make brands look better than retail store displays ever could, in-store video ad networks will need to develop research that demonstrates the ad recall and influence of their campaigns. They will need to show that the ads have an impact on consumers; that they are complementary to ads running on traditional broadcast and cable TV; and that they can represent an essential part of an integrated campaign …

• Accountability … Until recently, there were no standard metrics for audience delivery that could serve as the currency to negotiate ad sales contracts or to optimize the performance of campaigns … Although existing research efforts are helpful in demonstrating the value of in-store media, they don’t provide the systematic, standard sets of metrics that are available for more established media …

• Brand integration. Finally, there is significant potential for CPG manufacturers to integrate their brands more effectively into the store. Video ads, for example, may refer consumers to other products, in the same way that Amazon.com currently suggests complementary titles to its book buyers. Marketers can also weave product placements into programming to provide indirect celebrity endorsement.

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Some factors inhibiting the potential of in-store advertising are already being addressed … But this is not enough to engender an in-store revolution. The entire marketing and media ecosystem needs to tackle three key priorities.

First, marketers and their partners must create a programming model tailored to the retail environment … Marketers need to improve the way they frame their message … a better solution lies in creating programming that is developed specifically for retail stores …

Second, marketers and their partners need to better use in-store marketing efforts to upgrade promotions and analytics …

Third, integrating in-store media with the broader marketing mix will require some organizational change. Marketing organizations need to break down the traditional walls between divisions and work more directly with a diverse set of agency and media partners … It also needs to be easier for marketers to buy ad inventory by region, rather than by store or by chain … Players across the ecosystem will also need to find a common way to track and demonstrate results …

As companies address these challenges, in-store advertising will become a more valued and widespread component of marketing campaigns. Indeed, the global market for in-store video advertising is poised to take off. Leaders who take the initiative and invest in the right combination of assets and capabilities stand to reap significant rewards …

Edit by SAC

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Full Article:
http://www.strategy-business.com/resiliencereport/resilience/rr00066?tid=230&pg=all

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Posted in Mktg - Promotion, Mktg - Shopping Behavior, Retailing | Leave a Comment »

Want a premium brand? Go global.

February 13, 2009

Excerpted from BusinessWeek, “Brands: Moving Overseas to Move Upmarket” by Jack Ewing, September 18, 2008

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You could call them David Hasselhoff brands. The onetime star of the TV series Knight Rider resuscitated his showbiz career in the late 1980s with a hit single in Germany, becoming a symbol of unlikely overseas reinvention. Long before Hasselhoff, smart marketers knew that brands could acquire new personalities when they crossed borders.

The brand pros call it “country of origin effect.” For decades products have made a step up in status when they traveled. Heineken, a mainstream brew in the Netherlands, became a premium beer after the Dutch company began exporting it to the U.S. in the 1950s. To Germans, Mercedes is not only a maker of upscale autos but also delivery vans and heavy trucks. But Americans perceive Mercedes as a pure luxury brand—one reason why strategists at parent company Daimler are thinking hard about whether to export the mid-market A-Class and B-Class models to the U.S. They fret the fuel-efficient compact models could dilute the Mercedes image.

Products have to move upscale when they travel in order to justify the higher costs of exporting. But thanks to the Internet and cheap air travel, word gets around if a company overdoes the upgrade. Gap, known for cheap chic in the U.S., failed as a premium brand in Germany. AmBev’s Stella Artois, a distinctly working class brew in Britain, has struggled to achieve the same premium image in the U.S. as Heineken. “If the differences in positioning are too big, you risk destroying the brand,” says Andreas Bauer, a partner at Roland Berger Strategy Consultants who specializes in consumer goods.

The master of overseas reinvention may be Yum! Brands.  The company owns Pizza Hut, KFC, Taco Bell, and several other venerable brands, all of which are surging overseas. KFC is closing stores in the U.S. but has been building them in China at the rate of almost one a day—148 through June, for a total of more than 2,700.

In China and other overseas markets, Pizza Hut is fashionable and booming.  When Cui Tao, a 24-year-old resident, was looking for that special place to take his girlfriend on Valentine’s Day, the choice was obvious: Pizza Hut. They had to wait an hour for a table, and the meal cost more than a quarter of his monthly income, but it was worth it.

Part of the secret, company execs say, is to offer a mix of standards with local favorites. So KFC in China sells not only its trademark fried chicken but also breakfast rice porridge. Pizza Hut in India offers a tandoori topping. “The fast-food and casual dining markets in the U.S. are crowded,” says Graham Allan, president of Yum! international operations. But in places like Brazil or even France, he says, “we still have massive room to grow.” 

Edit by NRV
Full article:
http://www.businessweek.com/magazine/content/08_39/b4101060110428.htm 

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