Archive for the ‘Mktg – Positioning’ Category

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Airlines Fight For First Class With Food … Umm, umm, good

March 10, 2009

Excerpted from WSJ, “Cooking Up Ways to Improve Steaks on a Plane” By Scott McCartney, Jan 20, 2009

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Competition for first-class passengers is more heated than ever in the global recession, and sometimes it boils down to whether the soup is hot enough. International airlines are beefing up food spending as a differentiating draw for premium customers — even U.S. airline spending on food has increased recently …

U.S. airlines that fly internationally increased their spending on food by 8.5% — the biggest increase in any category besides fuel … The same airlines cut labor expenses and maintenance expenses in the same period and slashed advertising more than 22%.

Many airlines, domestic and international, hire famous chefs to help create in-flight menus and lend cachet to airline food … Profitability for long international flights hinges on selling business-class and first-class tickets for thousands of dollars … Food is a crucial variable.

“Nobody complains about what kind of fuel you buy, but food does get a disproportionate share of comments … Airlines fly the same kind of planes — either a Boeing tube or an Airbus tube. What’s different is the service and the food, and that’s where we try to excel.”

The focus on food may seem a bit bizarre for travelers who usually travel domestically — and in coach. Food service on airlines has soured for many travelers after years of cost-cutting …  Even in first class, meals on many domestic flights are skimpier: Drinks and nuts are the typical offering on shorter trips …

It turns out you can serve a high-quality meal on an airplane, if you know how to overcome the huge obstacles. Because the dry air of a jet cabin dries mouths, taste is diminished in flight. So Singapore and other carriers exaggerate flavors in meals … High-quality airline food is prepared so that it can be reheated hours after its initial cooking …

Today, passengers want flexibility in meal service so they can work, watch fancy entertainment systems and sleep. And just as culinary arts have been raised on the ground, so, too, do passengers expect more from airline food …

Edit by SAC

Full Article:
http://online.wsj.com/article/SB123241509322796411.html

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Who says a cup of latte is 4 bucks? … Starbucks fights back.

February 9, 2009

Ken’s Take: Uh-oh. Premium brands shouldn’t try to shift focus to price … cheapens the brand and plays to the other guy’s advantages. Starbucks is flailing …

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Excerpted from WSJ, “Starbucks Plays Common Joe”, Feb. 9, 2009

Starbucks — built a coffee empire on its premium image — wants to convince customers that its drinks aren’t that expensive.

Soon, it’ll be selling discounted pairings of coffee and breakfast food for $3.95, a type of promotion long used at fast-food chains. It’s the first move in an aggressive campaign to counter the widespread perception that Starbucks is the home of the $4 cup of coffee.

The Seattle-based company is training its baristas to tell customers that the average price of a Starbucks beverage is less than $3, and that 90% of Starbucks drinks cost under $4.

For Starbucks, the effort is also an attempt to fend off McDonald’s … whose advertising includes billboards saying “Four bucks is dumb.”

Few companies embody the consumer spending boom of the 1990s and 2000s like Starbucks … it  transformed  coffee from a commodity drink into what he billed as an affordable luxury … but sales have been in steep decline during the recessionary era of penny-pinching … so, executives began plotting a new strategy to portray the company as offering value.

Research uncovered what executives describe as a disconnect between the company’s actual prices and consumers’ perception of those prices.

“The myth of the $4 latte … is not true” … the average price of a Starbucks latte is $3.25 (before tax).

Pinning down the price of the drinks is more difficult than it may seem. The price tag climbs when customers add flavoring or additional shots of espresso, and sales tax also makes the tab higher. Prices also vary depending on the city.

Indeed, the price gap has narrowed  and some sizes and varieties of Starbucks are cheaper than Dunkin’ Donuts coffee when adjusted for size differences. McDonald’s is still cheaper than Starbucks.

Dunkin’ Donuts says, “We believe we are the faster and more affordable alternative” to Starbucks.

McDonald’s says “everyone’s looking to get more from a dollar … our customers know that’s what they’ll get at McDonald’s.”

Asked whether Starbucks is considering simply reducing drink prices: “Today, no. But never say never.”

Full article:
http://online.wsj.com/article/SB123413848760761577.html?mod=testMod#printMode 

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The Axe Effect: A Whiff of Truth

February 4, 2009

The Team’s Take:  While a somewhat shallow example, this study shows how products are benefit-based. Axe is more than a physical product.  It is a bundle of emotional and psychological benefits that as this study shows includes not only odor protection, but also self-confidence and the perception of attractiveness. 

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Excerpted from AdAge, “Scientists Prove the ‘Axe Effect’ Is Real. Sort of” By Jack Neff, January 07, 2009 * * * * *By now everyone is familiar with ads for Axe deodorant showing women chasing men who use products from the Unilever personal-care brand. And a new study in the U.K. … indicates that there might be a whiff of truth in it. The research found that men who used Lynx deodorant, Axe’s British-brand cousin, were seen as more attractive by females than men who used a “placebo” deodorant with no fragrance … Of course, the findings might not pass everyone’s sniff test, because the women didn’t meet the men face to face, so technically did not smell them … But the research indicates a statistically significant proportion of the women did find Lynx-wearing men more attractive than their non-deodorized peers when they watched 15-second videos the men made describing themselves …

Men also graded their self-confidence before and after the 48-hour [Axe] trial. Those in the unfragranced group showed a slight and gradual decrease in their self esteem, according to Unilever, while those in the fragranced group had a slight boost in their confidence. The confidence gap apparently was what made the difference for the women … “We wanted to know if this confidence would actually translate into anything that’s really brand relevant … And we saw that link, which was a really nice bonus we got out of the study … Deodorant is supposed to make you feel good about yourself and give you confidence in the mating game, which is what Axe says.” One caveat: The Axe effect could evaporate when men open their mouths. Women rated the fragranced men as more attractive when the sound on the videos was off, but had no statistically significant preference when the sound was on. That clearly indicates body language played a decisive role in making the fragranced men more attractive …  “One way you could look at it is that the Axe Effect works as long as you’re very quiet … We shouldn’t tell the guys not to speak. … Inevitably, what you say will also contribute to your overall attractiveness.”

Edit by SAC

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Full Article:
http://adage.com/article?article_id=133621

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No Downturn for Designer Denim

January 19, 2009

Excerpted from BusinessWeek, “Selling $300 Jeans in a Down Economy”, by Stacy Perman, November 18, 2008

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Denim is an $11 billion industry in the U.S. and has been growing at around a 5% to 7% clip in recent years. Premium labels such as Rock & Republic now account for a 7% chunk of the total market. “Consumers will pay $300 for the right pair of jeans. They see it as an investment.”

Moreover, “certain denim brands have made it their focus to be a game-changer. They make you feel really great and you will pay twice as much for those. What they are able to do is get the consumer of many different age segments and deliver on the implied promise that these jeans will make your life better, you will feel better.”

Even in an economic downturn, Cohen calls denim “recession-resistant.” “People are going to make significant changes,” he says. “They don’t have a lot of money in their pockets. They may not buy three pairs, but they will buy one pair and it has to be about who has the right message.”

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At the time of Rock & Republic’s debut in 2002, premium jeans (those with price tags that start at $75) were on the rise, and the company acknowledges that their timing was spot on. 

The rest of their success came down to branding and marketing. Following a strategy to create a niche label within a tight space of niche labels, the line was unveiled at fashion shows primed to grab attention. Models careen down the runway drinking beer, flipping the bird at photographers, and lifting their skirts.

At the same time, Rock & Republic worked to heighten interest among consumers and retailers by creating scarcity. When Barneys wanted an exclusive deal to sell his line, they turned the luxury department store down. In the beginning they also turned away Bloomingdale’s. “The ability to say no made our brand.  We had a twofold strategy about where we placed the brand and leverag[ed] its exclusivity.”

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If any luxury brand has a shot at staying aloft during this downturn it very well might just be Rock & Republic. “We know very well from our data that strong brands hold up better than weak ones … strong ones have a distinctive position and a real perceived differentiation in the market. Rock & Republic seems to fit that bill even in a fairly competitive market.”

Moreover, one should not underestimate the cachet that Rock & Republic jeans continues to confer on its wearers. “Yacht manufacturers are suffering,” he says. “But let’s face it, someone that is willing to shell out $200 to $300 on jeans is not going to run out to the Gap for their next pair. There is tremendous badge value in this sort of luxury and if Rock & Republic has it, that is what people will buy.”

Edit  by DAF

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Full article:
http://www.businessweek.com/smallbiz/content/nov2008/sb20081118_392896.htm?chan=top+news_top+news+index+-+temp_small+business

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Selling power, speed, and sex … (to utilitarians)

January 13, 2009

Excerpted from Marketing Daily, “Mintel To Mad Ave: Can The Sexy Car Ads” by Karl Greenberg, December 4, 2008

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Most consumers don’t see their cars as a chariot of the gods, a freedom machine, a wheeled camel for Lawrence of Arabia, an automatic chick/hunk magnet, or portable fountain of youth. Instead, they view their vehicles simply as functional and safe for getting around…

Mintel says its survey of car owners suggests that what most people actually feel behind the wheel, regardless of the name on the sheet metal is: responsible and practical, not sexy or powerful…Mintel asked consumers: “How do you feel when you are driving?” Three of the top four feelings chosen by respondents had to do with utility and security, per the firm, with 46% saying they felt “responsible”; 40% saying “safe”; and 37% saying they felt “practical.”

The more amorphous sentiments started further down, with 39% saying “happy” was the thing they felt behind the wheel…near the bottom of the list landed “powerful,” “fast,” and “sexy.” The bottom of the list was “rich”…60% believe the main purpose of a vehicle is to get from point A to point B…

“We found that for most people, driving a car or truck does not make them feel sexy, fast or powerful…The problem is that the auto industry is built on selling power, speed and sex. Those images are dynamic, but they don’t necessarily resonate with the majority of utilitarian, safety-focused drivers.”

Mintel also found that the top information sources that people use when researching new vehicles are word-of-mouth, car dealer brochures, consumer buying guides and the Internet.

Edit by SAC

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If car ads are meant to convey the “behind the wheel feeling,” they are missing the mark according to Mintel’s new study.  Most ads feature fast, sexy cars gliding around winding roads rather than practical, responsible drivers running daily errands safely.  However it is not clear from this study whether the “feeling behind the wheel” is motivating purchase.  While a driver may seek to feel safe and responsible behind the wheel ,the same driver may want the exterior of the car to scream fast, sexy and powerful.

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Full Article:
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=96019

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