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EC says “not so fast” on internet sales …

April 29, 2010

TakeAway:  Who should have more control over where goods are distributed – manufacturers or retailers? 

Seems like the maker of the good (i.e., the manufacturer) should have the say over where its goods are made available for sale. 

Not so in Europe.  The European Commission is prepared to mandate retailer-favored distribution policies.

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Excerpted from WSJ, “EU to Overhaul Online-Retail Rules,” By Peppi Kiviniemi, April 19, 2010

Heavy lobbying from luxury-goods companies has led the European Commission to water down proposals aimed at expanding online sales of goods in Europe …

The new rules … will protect luxury-goods manufacturers against damage to their image by allowing them to insist in many cases that online sales be restricted to retailers who have “bricks and mortar” stores … This would prevent online-only retailers like Amazon and Ebay from selling the goods directly.

Preventing consumers from buying clothes or cosmetics brands over the Internet from a company that has an “online-only” business model will limit consumer choice and lead to higher prices and less innovative goods, said Director General of the European Consumers Organisation BEUC. But famous names like LVMH and Estée Lauder have argued that an uncontrolled push online could damage their image, and that online entrepreneurs shouldn’t benefit from the brand recognition they have worked hard to build up …

With the Internet now the fastest-growing retail channel in Europe, the overhaul of the competition rules has been long expected by the industry. Previously, luxury-goods makers had full control over who could sell their goods and they were able to prevent most online sales.

Overall, the new EU-wide rules will open up online sales by ensuring that manufacturers cannot discriminate against online shops when setting up their distribution networks, the document shows.

Any qualitative conditions that manufacturers set on who is allowed to sell their products must apply equally to high-street and online sales. This means that shopkeepers who are allowed to sell branded goods on the high street can also set up a store inside eBay or elsewhere on the Web to sell the same products online, provided that their online presence meets the brand requirements for look, feel and pre- and after-sales services …

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Full Article
http://online.wsj.com/article/SB10001424052748704671904575193993537322862.html?mod=WSJ_business_whatsNews

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Posted in Mktg - Distribution | Leave a Comment »

In response to smart phones, LG says ‘keep it simple, stupid.’

April 28, 2010

Takeaway: It’s a classic strategic response: when the competition goes left, you go right.

As Apple, RIM, and Google race to make the smartest phones, LG hopes to connect with customers looking for simplicity and style.

Though smart phone usage has grown exponentially, these devices capture less than 20 percent of all US cell phone users.

LG believes there is tremendous opportunity in focusing on the larger portion of the overall market. LG’s strategy also reduces dollars required for R&D that can instead be redirected to design, branding, and…oh yeah, shareholders.

Will LG prove that less is more? Or, will the market develop to expected more and drop LG’s call?
 
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Excerpt from Advertising Age, “Style Over Smarts: LG and Sprint Pitch Simpler Phones” by Andrew Hampp, April 8, 2010.

Even as Apple promises new features for the iPhone, the industry anticipates the iPhone’s arrival on Verizon and Palm retools its marketing strategy, LG and Sprint are starting a campaign aiming for the vast swath of consumers still choosing among simpler phones largely on the question of style.

The campaign and an accompanying MTV miniseries called “LG Fashion Touch” pair two LG phones being introduced April 19, the Lotus Elite and Rumor Touch, with Victoria Beckham and Eva Longoria Parker, respectively. The Lotus Elite is an edgier, more colorful flip phone that suits Ms. Beckham’s bombshell look, while the Lotus Elite is a more sleek, classic phone that complements Ms. Longoria Parker’s daily style.

The smartphone wars still don’t apply to a large group of women, said a VP of marketing and innovation at LG.

“Although there’s a large percentage of consumers going to smartphones, there’s still another segment who are saying, ‘I want phones that reflect my personal style’ without all the bells and whistles of a smartphone.”

Indeed, only 19.4% of U.S. mobile phone subscribers were using smartphones in the three months ended Feb. 10, compared with 80.6% using simpler devices, according to ComScore.
 
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Full Article:
http://adage.com/madisonandvine/article?article_id=143184

Posted in Mktg - Positioning, Mktg - Product & Innovation | Leave a Comment »

An undercover look at a television show’s impact on a brand

April 27, 2010

Key Takeaway: With viewership that can reach in the tens of millions, popular television shows tend to be the golden child of advertising. Perhaps the only thing better than having a 30-second commercial is having an entire show focus on your product…right?

A study looked at how CBS’ hit show, Undercover Boss, has influenced three establishments. The research shows that while perceptions improved in the short-run, they ultimately drifted back towards the pre-show numbers.

It goes to show that while you can expect television to create buzz around your product, it cannot be the only tactic if trying to change your brand image.

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Excerpted from Brandweek, “‘Undercover’ Boosts Brands?” April 23, 2010

Retail chains with negative reputations expecting big, long-lasting buzz boosts from appearances on CBS’ Undercover Boss better think again.

YouGov’s BrandIndex examined three establishments featured on the hit program to learn if the exposure persuaded consumers that these were places they’d consider working for.

7-ELEVEN
7-Eleven received the lowest reputation score in the Grocery Store sector, so the timing was ideal for the February 21 broadcast.
President and CEO Joseph DePinto’s disguised himself as a trainee on the night shift in a Long Island, N.Y., store, where one employee confides that he’d never recommend working at the chain because it’s a dead end job.

That out-of-the-blue upbeat finale moved the meter only slightly for 7-Eleven — from -23.1 on the night the show aired to a short-term gain of a couple of points. However, in the long run, the chain made it as high as -17.2, and is now tracking at -19.3, a decent amount above its -24.7 score from January 1

WHITE CASTLE
Dave Rife — great-grandson of the hamburger chain’s founder — was surrounded by relatives, expensive cars and a personal trainer when his turn to work undercover arrived on February 28.

After revealing his identity, he told an employee to start a wellness program. He also handed out two $5,000 checks: one to an aspiring cook as a scholarship, and another to a worker for a “leaders of tomorrow” program.
That resonated the most with consumers, who sent White Castle’s reputation score upwards from -11.4 to -5.9 in a matter of three weeks. The brand has since settled in at -9.8, just a few points higher than the January 1 score of -13.4.

HOOTERS
The Atlanta-based restaurant chain has had one of the most undesirable workplace perceptions in the dining sector, so the appearance of president and CEO Coby G. Brooks on Valentine’s Day couldn’t have come at a better time. The chain’s reputation low point of the year came on January 21, with -31.1, around the same time the owners who licensed the brand name for Las Vegas’ Hooters Hotel and Casino announced they had “substantial doubt about our ability to continue as a going concern.”

Hooters’ reputation score got a modest shot in the arm, as it climbed leading up to the February 14 airing, hitting -26.2. It then moved up to -23.7 in late March — the chain’s highest score since November 2009. However, Hooters has slid to -27.7 — and its very existence is shaky now that it has one month to find a buyer to resolve a legal brawl over Coby Brooks’ father’s estate.

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Full Article:
http://www.brandweek.com/bw/content_display/news-and-features/direct/e3icc341acc4f9c061e30d034bbbaf1c758

Posted in Media, Mktg - Brands | Leave a Comment »

ObamaCare and New Coke

April 26, 2010

Punchline: “Admitting a mistake is almost constitutionally impossible for today’s corporate chiefs, and even harder for politicians. Sometimes it’s best to admit your mistakes. Presidents, like CEOs, can pay a steep price for not admitting error.”

Note: My students will know that I’m conflicted on this one.  While I like the message and the implied recommendation, I may be the last living person who thinks that New Coke was a strategic coup — it got Coke plenty of heightened exposure, it strengthened ties with the Classic Coke buyer (when Classic was promptly re-introduced), it got Coke extra shelf facings (New Coke + Classic Coke), and it provided the flavor formula for Diet Coke (<= bet you didn’t know that).

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Excerpted from WSJ:  ObamaCare and New Coke, April 24, 2010

This week marked the 25th anniversary of the introduction of “New Coke.”

New Coke was not just another product launch: It crossed over from product marketing into the social and political sphere.

New Coke was introduced by the company with high hopes: It was a drink that consumers in blind taste tests rated superior not only to Pepsi, but also to Coca-Cola.

Despite consumers’ immediate acceptance of the new beverage and an initial jump in sales, resistance began to form in small protests around the country. Sales began to lag.

The objection was not so much to the new product itself, but to the company’s hubris in removing the traditional Coca-Cola from the shelves to make way for the new.

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There may be some lessons here regarding ObamaCare.

Just as most Americans were happy with the old Coke, 85% of Americans were happy with their own health-care plans at the time that ObamaCare was introduced.

In essence, those plans were taken away from them in the same way the old Coke was taken away.

And, as was the case with New Coke, opposition has continued to grow.

This is personal for the American people.

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Faced with a successful launch but growing and vocal public resistance, the Coca-Cola Company’s leadership did the extraordinary.

Coke reversed paths and returned classic Coca-Cola to supermarket shelves just 77 days after the debut of New Coke.

Coke said: We were wrong, but at least we’re smart enough to listen to you.

People not only rejoiced, they rewarded the company with unprecedented gains in volume and market share.

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Full article:
http://online.wsj.com/article/SB10001424052748703876404575200550394710626.html?mod=djemEditorialPage_h

Posted in Mktg - Brands | 1 Comment »

Beating the promotion cycle

April 23, 2010

TakeAway:  Jos A Bank responded to the downturn the way many companies did – discount, discount, discount.

But Jos A Bank, unlike most companies, appears positioned to carry its short-term success into long-term profitability. 

Thanks to several operating decisions (maintaining control over most of its manufacturing and shipping, and exploiting the downturn real estate market to negotiate low rent leases), Jos A Banks is maintaining profitability while acquiring new consumers. 

Did Jos A Bank figure out how to successfully execute and beat the margin killing promotion cycle?

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Excerpted from Washington Post, “The economic downturn suits menswear retailer Jos. A. Bank just fine,” By Ylan Q. Mui, April 19, 2010

… Jos. A. Bank began making headlines when — just days after the stock market plummeted to a 12-year-low — it offered to refund any suit purchase to customers who lost their jobs.

It rolled out aggressive promotions — such as buy one suit, get two for free — to lure new shoppers. The retailer revamped its Web site, opened new stores and started renting tuxedos. Last week, it announced it would open five pilot outlet stores that could become models for a new line of business.

Such moves have fueled an 11 percent increase in sales … during the last fiscal year and a 21 percent jump in profits … Wall Street valued the company at $1 billion this spring for the first time. Its stock price has more than doubled since last summer …

It seems an unlikely time for a rally. Retailers suffered massive losses as the financial crisis of 2008 froze consumers’ wallets and high unemployment rates stymied prospects for recovery …

Jos. A. Bank responded to the downturn with sharp pricing and inventive promotions … “They have a compelling price-value message with a good-quality product. . . . In this environment, that is what draws the consumer.”

But discounting can become a vicious cycle, and many retailers have struggled to wean shoppers off heavy promotions. Jos. A. Bank experimented with more traditional pricing during Father’s Day last year — typically one of its busiest holidays — and found sales dropped off. When it returned to aggressive promotions, customers came back. It has tested traditional pricing several times since with limited success.

Black said the company will continue discounting as long as necessary. Because it manufactures nearly all of its products, the retailer has greater flexibility to determine prices. The promotions have squeezed profit margins, but the company has made up part of the difference by saving on shipping and materials and negotiating some lower rents …

The retailer’s trademark suits have become increasingly important sales drivers, accounting for nearly 40 percent of sales last year compared to about 30 percent in 2008. Though Black said existing customers are purchasing less, the chain has enticed new shoppers away from competitors. Its customer file has grown 18 percent …

Meanwhile, Jos. A. Bank is testing several new concepts. Early this year, it began offering tuxedo rentals at some stores through a third-party distributor. The company is hoping the service will bring new customers through its doors, who could then be persuaded to purchase other clothing …

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Full Article
http://www.washingtonpost.com/wp-dyn/content/article/2010/04/18/AR2010041802777.html?hpid=artslot

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Gillette’s retaliation may give Shick razor burn

April 21, 2010

Takeaway: For years, the makers of men’s razors have focused on improving their products’ engineering specs, namely by adding blades. Shick has finally broken this cycle of one-upmanship by focusing on the needs of their customers, which center around comfort.

However, in making this potentially breakthrough move, Shick has awakened a giant. P&G’s Gillette will be quick to follow with a relaunched Fusion razor aimed to address the same needs as Shick’s product.

Will Shick’s launch provide the company with a first-mover advantage in comfort positioning? Or, will Gillette’s brand recognition, enormous advertising support, and best-in-class distribution system leave Shick all cut up?

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Excerpt from New York Times, “New Razors Place Focus on Comfort, Not Blade Count” by Andrew Adam Newman, April 18, 2010.

When Gillette introduced the first three-bladed razor in the United States in 1998, it struck some as absurd, and “Saturday Night Live” at the time pitched a 14-blade razor in a parody commercial. But blade escalation continued: Rival Schick introduced the four-bladed Quattro in 2003, and Gillette struck back with the five-bladed Fusion in 2005.

Schick is introducing a new razor, the Hydro, however, and this time it is not raising the blade ante. The new razor is available in both five- and three-blade versions, and advertising focuses less on blades than how a moisturizing gadget reduces irritation.

New television commercials show men getting an unexpected splash from a boxing glove or a soccer ball exploding like a water balloon, drenching the player.

“As you continue to add more blades, there are diminishing returns because more and more blades make a bigger cartridge and that makes it hard to shave in all the nooks and crannies on your face,” said a Schick brand manager. “So instead of more blades, we’re providing a more lubricious, smoother, more comfortable shave.”

The razor replaces the moisturizing strip on the razor’s head with a gel reservoir that exudes aloe and vitamin E.

“It’s by far the biggest launch we’ve ever done, our largest capital commitment for R.& D. and marketing, and by far the best technology we’ve ever come up with,” said a company representative.

Schick, which was bought by Energizer in 2003, is dwarfed in the razor category by Gillette, a Procter & Gamble brand. Gillette has 66 percent and Schick has 25 percent of the nondisposable razor segment. In the $781 million replacement cartridge segment, Gillette commands an 83 percent share, compared with 14 percent for Schick.

“In brand marketing, when you do something and it works, you keep doing it until it stops working, and that’s what it felt like was happening when companies went from one to three to five blades,” said marketing professor at New York University. “They added so many blades that they have unwanted effects, like more irritation. It was absurd, frankly, and it got to be a marketing gimmick.”

While razor makers tend to stress technological advances and performance, which can make razors seem more like racecars, the new Schick campaign focuses more on how it treats skin.

Schick says its internal research found that only 30 percent of men shaved five or more times a week. The company is publicizing a poll it commissioned which found, conveniently enough, that men who shave five or more times a week have sex twice as frequently as the stubbly, and that 82 percent of women prefer cleanly shaven men.

Gillette, meanwhile, will introduce a razor in June that, rather than add another blade, similarly promises to make shaving with five blades less irritating. The Fusion ProGlide, as its name makes clear, will not be an entirely new razor, but rather an extension of Fusion, a brand that Procter & Gamble reports grew faster than any other in its history, earning $1 billion within two years of its introduction.

“If you’re going to address comfort, the place to start is not by adding blades but rather to work on the engineering of the blades themselves,” said Stew Taub, associate director of male premium systems at Gillette.

The ProGlide makes seven comfort-related improvements to the Fusion, including using thinner blades with improved friction-reducing coating. The company also will introduce a preshave facial scrub that causes a warming sensation, as well as a postshave cooling lotion under the ProGlide label.

“Consumers vote with their purchases and have overwhelmingly said Fusion is best, and we’ve chosen to take it up a notch,” said a Gillette spokesman.

Mr. Jones said the innovations in the ProGlide had been in development for years. But some industry analysts think Gillette is rushing a comfort-driven product to market to steal Schick’s thunder.

“It looks like a fairly quick and defensive move on Gillette’s part,” a marketing professor at NYU said. “For me the big news is that Schick, after being almost an afterthought in the category for many years, has staked out some smart territory, and is acting like a real brand marketing company.”

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Full Article:
http://www.nytimes.com/2010/04/19/business/media/19adco.html?ref=media

 

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How low can you go

April 20, 2010

TakeAway:  If it’s possible to lower price, Wal-mart usually leads the way. 

And it has done it, again.  Wal-Mart, seeking to firmly establish itself as a price leader, has cut prices. 

The move serves two purposes – block competition from other discount retailers and retain middle-class consumers, who are now feeling more financially stable and may consider upgrading to Kohl’s or Target.

Of course, Wal-Mart plans to preserve its margins by simply passing the cost of lower prices onto its suppliers.

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Excerpted from WSJ, “Wal-Mart Bets On Reduction In Prices,” By Miguel Bustillo and Timothy Martin, April 9,2010

Wal-Mart is cutting prices on thousands of products in an aggressive campaign to reinforce its reputation as a discount leader, as the company seeks to reverse months of slowing U.S. sales.

The world’s largest retailer was a rare beneficiary of the economic slump, as bargain-hungry Americans … flocked to its supercenters from supermarkets and specialty clothing stores.

But Wal-Mart’s sales from U.S. stores open a year or more have edged lower recently, while other retailers have started to see an uptick in consumers’ discretionary spending. That suggests to some analysts that Wal-Mart is having trouble hanging on to middle-class shoppers.

 

Wal-Mart says that it isn’t so. Its executives attribute the chain’s slowing sales to a general decline in food and electronics prices …

The company says it believes that, despite growing consumer optimism, many Americans will continue to struggle in the months ahead. So, it is cutting prices this week on roughly 10,000 items, mostly food and other staples …

“We felt we needed to increase the intensity and excitement with our customer, especially the feeling that Wal-Mart has great deals.”

Wal-Mart is publicizing its price cuts with a barrage of placards in the aisles of its 3,700 U.S. stores and a media campaign describing how the company’s cost-cutting moves …

Wal-Mart expects to expand its price cuts with help from suppliers. The chain is encouraging them to reduce what they charge Wal-Mart in exchange for having it spotlight their products as part of its price “rollback” …

Retailing experts question how effective the strategy will be in lifting Wal-Mart’s sales, since consumers already regard the chain as a low-price leader.

Though the company may get a modest near-term sales boost, the cuts are more likely to intensify the loyalty of shoppers who came to Wal-Mart during the recession … “This will make customers say, ‘if I go back to Kohl’s and Kroger I may be missing deals at Wal-Mart.’ ”

Despite its sales slowdown, Wal-Mart has continued to post solid profits, in part due to widening margins. Some analysts believe that gives the retailer room to cut prices without sacrificing profit. Getting suppliers to share the costs of the price reductions would also mute the impact on its bottom line …

The price reductions could help Wal-Mart fend off a growing list of no-frills competitors, such as the U.S. branch of Germany’s Aldi discount grocery chain and variety stores such as Dollar General, which are nipping away at Wal-Mart’s less-affluent core customers.

Yet whether Wal-Mart is committed to pushing the envelope on pricing as it did in the days of its late founder or is merely hyping promotions as it pursues a more margin-driven strategy, is the question the industry is asking …

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Full Article
http://online.wsj.com/article/SB20001424052702304198004575172271682347064.html#mod=todays_us_marketplace

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Posted in Mktg - Pricing | Leave a Comment »

Wallet’s are opening … for consumers and advertisers.

April 19, 2010

TakeAway:  Whew.   Consumers are spending again. But this sigh of relief is not heard in the halls of the big CPGs. 

The latest recession provided private-label brands with the momentum needed to overcome consumers’ quality perceptions and induce trial. 

The result: consumers liked or were at least satisfied with the PL products. 

Now that the economy is recovering and consumers have the dough to go back to the brand-name staple goods, companies are hoping that a long-held theory – more advertising will increase market share – will ensure that consumers trade-up for their staple goods.

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Excerpted from WSJ, “Consumer-Goods Makers Pour Out Ads,” By Ellen Byron, April 12, 2010

As wary Americans start to crack open their wallets, household-goods makers like Procter & Gamble, Colgate-Palmolive, Kimberly-Clark and Clorox are cranking up their advertising, hoping to coax consumers farther out of their shells.

Amid signs of an improving economy, recent survey data show consumers are more willing to splurge by eating out or buying new shoes, but the same doesn’t necessarily hold for everyday household goods.

“In consumer staples, you saw consumers trade down” to cheaper products due to the recession, and they were “quite satisfied,” says chief executive of Consumer Edge Research.

To lure them back to premium products—and prices—brand-name manufacturers are churning out “new and improved” goods ranging from more-absorbent diapers, to specialized toothpastes to closer-shaving razors. The strategy relies on advertising to get the word out.

That’s one reason the industry’s ad spending is expected to grow in 2010. So far such spending has been running well ahead of 2009 levels, with year-to-year increases for household products of 15% in January and 11% in February …

P&G, the world’s biggest ad spender, plans a 20% increase in “consumer impressions,” or instances when consumers see its ads … and it will introduce 30% more “significant” innovations in products this year, which its CEO describes as the most in his 30-year career at the company …

The big-name marketers face the challenge of overcoming consumers’s newfound thrift. While U.S. sales of household staples have posted middling gains overall, sales of cheaper private label, or store-branded, goods, have risen more sharply.

In the four weeks ended March 20, overall U.S. sales of household and personal products increased 0.2% from a year earlier, compared with a 5.4% gain in private-label sales …

The new spending will test a long-held theory: that boosting a brand’s share of advertising beyond its market share will raise that market share. Among major household products, market share stayed the same or rose 64% of the time over the past 16 quarters when a company’s advertising reach exceeded its market share by 50% or more …

Some experts say winning over consumers will require not just advertising, but a new approach: emphasizing value.

“For many years, any hint of price was a no-no. It was all about generating emotional connections,” says chief brand strategist at consulting firm Portnoy Group:”Now you’re going to have to work harder to convince me that I’m getting much more value by trading up.. You need to show me that I’m getting more for my money, and it’s not frivolous.”

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http://online.wsj.com/article/SB10001424052702304703104575174042139131092.html#mod=todays_us_marketplace

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Posted in Mktg - Advertising, Mktg - Brands, Mktg - Brands - Private Label | 1 Comment »

Indonesia begs reconsideration as a top emerging market

April 16, 2010

TakeAway:  The unfortunate truth about emerging markets is that companies cannot make market entry decisions based only on traditional variables such as consumer wealth and spending. 

A country’s operating environment (i.e., the political environment) is a key decision making variable and one that often causes companies to turn away from otherwise appealing markets. 

The good news for Indonesia is that companies are forgiving and are willing to reconsider markets that they previously declined to enter. 

Indonesia’s improved political environment and booming consumer spending will likely put the country back on the radar screens of many large companies.

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Excerpted from WSJ, “Brands Bet on Indonesia as Spending Booms,” By Patrick Barta, April 8, 2010

International companies are betting Indonesia will become Asia’s next big consumer market after China and India—in part because of booming jungle outposts like this one.

Here in Samarinda, a coal-mining center on the far eastern edge of Borneo, the population has more than tripled since 2000, and incomes are rising rapidly. Ford has added its first dealership and Honda motorcycle salesmen say they can’t get motorbikes fast enough to keep up with demand.

Variations of that pattern are being repeated across this vast nation … Ford dealers are adding a new showroom nearly every six weeks … CVC Partners agreed to pay more than $770 million for a controlling stake in one of country’s largest retailers, PT Matahari Department Store, which plans to add 150 new outlets …

H.J. Heinz said that Indonesia played a major role in pushing Asia sales, including chili sauces, up 41% last year. It also recently predicted a 23% increase in packaged food spending in Indonesia between 2009 and 2011—a faster rate of growth than India and China, which were expected to grow 20% and 14%, respectively.

With 240 million people, the world’s fourth-largest population behind China, India and the U.S., Indonesia has long promised to be one of the world’s biggest consumer markets. But it has lagged behind other developing nations because of political instability and disappointing growth after the Asian financial crisis of 1997-1998.

That has started to change in the past several years … with a democratically elected government and surging sales of commodities such as coal, natural gas and palm oil to China.

Last year, Indonesia posted the second-highest personal spending growth in Asia, behind China. Private consumption climbed 5.1% compared with 0.4% growth in Asia excluding China …

Unilever’s Indonesian arm, which sells soaps, ice cream and other consumer goods, said in March that 2009 sales shot up 17%—well above previous years and among the fastest rates in the world for Unilever …

Indonesia’s resurgence as a consumer market is the latest evidence that developing Asia, which for years relied primarily on exports for growth, is becoming more self-reliant as it develops a bigger middle class and its own domestic demand.

Indonesia still rates poorly in international indexes measuring corruption and ease of doing business, and many foreign companies remain wary. Income levels are low compared with other emerging markets, with GDP per capita of just $4,000, less than half the level of Brazil—though more than India.

The country also isn’t industrializing as rapidly as China and other emerging markets, which could limit its growth in future years … Even so, “it’s a very strong market” for consumer-spending gains

Powering the rebound, analysts say, is surprising strength in once-ignored second-tier cities, which in some cases are posting growth rates approaching 10% a year, on par with China …

These areas are also benefiting from political reforms after the fall of former dictator Suharto in the late 1990s aimed at decentralizing the country. Such “regional autonomy” reforms, which return more tax revenue to local governments and give them more authority …

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http://online.wsj.com/article/SB20001424052702303591204575169704072987766.html#mod=todays_us_marketplace

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LVHM’s luxury house of brands expands to include hotels

April 15, 2010

TakeAway:   LVMH made an interesting business decision when it decided that opening hotels was the best option to continue its corporate growth. 

Yes, it said that there were no good acquisition targets left in its core business area. 

Yes, it observed that other high-end brands had opened hotels. 

But, the hospitality business is very different from the luxury consumer goods business. 

Although hotels may be a good way for LVMH to expand its presence in the luxury market and provide a new point of sale for its luxury goods, this strategy could require LVMH to devote enormous marketing funds to gain customers in the already-crowded luxury hotel market and could backfire if the hotel experience does not meet customers’ expectations of the LVMH brand.

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Excerpted from WSJ, “LVMH Extends Posh Label To New Luxury Resorts,” By Christina Passariello, April 9, 2010

… LVHM, the world’s largest luxury-goods company, said Thursday it will develop resorts using the name of its Bordeaux winery, Cheval Blanc. 

LVMH tested the concept with a first location that opened in the French ski resort Courchevel in 2006. Two more hotels are scheduled to join the chain by 2012 in Oman and Egypt …

The project is “a natural extension of activities in luxury hospitality with Cheval Blanc,” LVMH said in a statement.

Like many top hotel operators, LVMH is limiting its exposure to the volatile hotel industry. It won’t own the real estate or finance construction, but will instead run the resorts under management contract, a similar model to other high-end chains such as The Ritz-Carlton …

 

The move shows how LVMH is trying to grow without resorting to costly acquisitions. Two years ago, the company pushed the boundaries of its luxury-goods universe to include yachts when it bought Dutch ship builder Royal Van Lent. A few years earlier, LVMH developed a new high-end rum, 10 Cane, instead of buying an existing brand.

LVMH grew throughout the 1990s and until 2001 thanks to expensive acquisitions. But many purchases … haven’t turned into major successes. Now, as the industry leader, there are few targets for LVMH that would have a significant impact on its growth.

LVMH’s hotels will be a showcase for many of its brands. The Cheval Blanc in Courchevel has a Givenchy spa, and visitors can buy its Louis Vuitton and Dior goods in the hotel.

Luxury brands have moved into the hotel business in recent years, looking for new ways to increase their presence …

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http://online.wsj.com/article/SB20001424052702304198004575171680599417158.html#mod=todays_us_marketplace

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Japanese food companies look to spice up sales overseas

April 14, 2010

Takeaway: When you’re bored with the game at home, take your show on the road.

This strategy has worked well for Japanese companies for decades. However, foreign markets typically expect high tech products from Japan.

Recently, Japanese food companies have focused their efforts outward as their domestic consumer market stagnates.

As is expected in Japan, these companies face relatively high labor costs, and limited agricultural resources, so will this strategy bring home the bacon, or be put out to pasture?
 

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Excerpt from New York Times, “Japanese Food Companies Seek Growth Abroad” by Miki Tanikawa, April 2, 2010.

As birth rates and the consumer market shrink at home, food companies in Japan are increasing the pace of their overseas expansions and trying to improve promotion of their brands.

Analysts say that increasing sales abroad is crucial for manufacturers. To do so, the companies are combining, undertaking joint ventures, cutting production costs and creating strategies for new markets.

“The domestic market is shrinking, deflation is cutting into sales and the sense of crisis is looming stronger and stronger,” said a senior economist at Norinchukin Research Institute in Tokyo.

The sector’s strategy has been twofold. First, Japanese companies have been infiltrating the health food and condiment categories overseas with soy-based products like tofu in countries where few domestic companies can compete.

Second, Japanese producers capitalize on cute Asian-themed characters like koalas and pandas and apply technology to make amusingly shaped treats to attract snack-happy consumers.

The Japanese confectioner Ezaki Glico says its Sofyl yogurts and Yakult fermented-milk drinks contain bacteria that aid digestion, now draws 25.7 percent of its 293 billion yen in annual revenue from overseas units, thanks to 38,000 “Yakult women” who sell the products door to door in Asia and Latin America.

The company says it sells 6.5 billion units of Yakult and Sofyl a year outside Japan. “We want our product to be available virtually everywhere, like Coca-Cola, and make a contribution to the health of people around the world,” said the director for the international department.

Ajinomoto, a leading Japanese food company, with about 1.2 trillion yen in annual revenue, has increased its overseas sales ratio to 31.8 percent, from 22.8 percent, in eight years.

In terms of expansion, Japan’s Asian neighbors offer the biggest opportunities. Countries like Thailand already embrace a Japanese food subculture, and in China, growing numbers of upwardly mobile workers are increasingly inclined to purchase prepared foods and snacks.

The international survey firm Euromonitor says that the Lotte Group, a company in Tokyo that sells products in more than 70 countries, is the leading Asian-owned confectioner, with a 10.3 percent market share. The company, maker of Koala’s March — chocolate-filled koala-shaped cookies — ranks fourth in terms of sales among global companies in the Asian sector excluding Japan — ahead of Nestlé but behind Mars, Perfetti Van Melle and Cadbury.

Despite quality concerns raised by the recent recalls by Toyota Motor, a scandal caused by the sale of expired dairy products and eggs at Fujiya confectionery in 2007 and the Snow Brand food-poisoning fiasco in 2000, Japanese food manufacturers express pride in the country’s technological expertise.

In fact, the sales and marketing strengths of Western food companies far outweigh those of the Japanese. Kraft, for example, has gross sales of $50 billion a year, nearly 10 times as much as Lotte, which grossed about $5 billion in sales in its 2008 financial year.

Analysts and management consultants said that the struggle of the Japanese food companies to keep up with their Western rivals in overseas territories sounded familiar: Japanese companies that have higher-quality products are still sometimes hampered by weak marketing and brand strategies.
 

Managing director in Tokyo for the Boston Consulting Group, said: “Japanese firms may say, ‘We have superior products.’ That alone won’t do. You need sales and personnel who understand the trends of the local market, developers who will take the local taste into account and marketers who can explain the product to the locals on their terms.”

“You need the whole package in order to win,” he said.

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Full Article:

http://www.nytimes.com/2010/04/03/business/global/03food.html?pagewanted=2&ref=business

 

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Used to be "enhanced water" … repositioned as "hangover cure" … now you're talking !

April 13, 2010

TakeAway:  Vitaminwater is prepared to put age-old Markstrat advice …you can bend perceptions but, ultimately, if the product does not deliver, the consumer backlash will be extreme … to the test. 

Cleverly listening to its consumers, Vitaminwater is leveraging a common use of the product – a hangover cure – for its latest advertising push.  But the lack of hard proof behind this claim has brought the ads under scrutiny from the FTC and others.  It will be interesting to watch this new usage occasion for Vitaminwater playout.

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Excerpted from WSJ, “Vitaminwater Tries Winking,” By Valerie Bauerlein, April 5, 2010

The new ad campaign for Coca-Cola’s Vitaminwater hints at a use for enhanced waters and sports drinks that is part of conventional wisdom among many college students and young professionals: hangover relief.

The ads debuted during the NCAA March Madness basketball tournament, and are part of Coke’s effort to revitalize the brand … After a decade of fast growth, Vitaminwater’s sales volume slipped 22% last year as price-conscious consumers traded down …

One of the new spots … asserts that Vitaminwater’s purple “Revive” flavor has B vitamins and potassium, and will help rehydrate you after “apparently epic nights.”

Vitaminwater’s head of marketing says that the ad never says the young man has been drinking … “He’s just had a big night … You can take away from that what you wish” …

In these ads, Vitaminwater is tapping into the idea that it’s good to replenish fluids and nutrients, no matter the reason for losing them.

Mass retailers sometimes display enhanced waters or sports drinks beside hand sanitizers and thermometers during cold and flu season. Convenience stores regularly ring up bottles of sports drinks alongside cases of beer.

Alcohol researcher John Brick says there is some science behind the idea that drinks like Vitaminwater improve hangover symptoms …

Some sugars help metabolize alcohol, and ingredients such as potassium and electrolytes help re-establish healthy body function …

The FTC, in at least three cases, has brought complaints against companies touting unproven hangover cures in ads …

A spokeswoman for Gatorade, which dominates the sports-drink niche, says Gatorade doesn’t advertise itself as a cure for ailments, even in a tongue-in-cheek way. “We are focused on athletes and fueling athletic performance only,” …

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Mavericky Brand Building 101

April 12, 2010

Takeaway: Many folks make fun of her, but does Sarah Palin know more about brand building than we MBAs do?

In a matter of months, and against all odds, Palin built herself into a multi-million dollar national brand with droves of loyal followers. How many classically-trained marketing whizzes can boast the same?

Palin may not be able to see Russia from her house, but marketers take note, she is likely to understand many Americans better than we do. This begs the question: What can we learn from Palin?
 
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Excerpt from New York Times, “How Sarah Palin Became a Brand” by David Carr, April 4, 2010.

When Sarah Palin made her debut as the host of “Real American Stories” on Fox News, she described several triumphs of regular people over insurmountable odds, but she missed an obvious one: her own.

After her failed bid for the vice presidency, she was more or less told to head back to Alaska to serve out her term as governor.

Instead, she quit her day job and proceeded to become a one-woman national media empire, with the ratings and lucre to show for it.

With its tales of uplift and pluck, “Real American Stories” trades in the kind of easy sentimentality that provokes eye rolls among those of us who work in media while quickening the pulse and patriotic ardor of almost everyone else. At the beginning of the show, Ms. Palin promised that it would “reaffirm our pioneering spirit and unmatched generosity, here and around the world.”

“It’s not the kind of thing that’s going to excite you guys on the East Coast, but everyone else is dying to hear stories like these,” said one of her representatives.

Beyond her Tea Party theatrics, Palin has tunneled her own route into the public consciousness and gone into the Sarah Palin Across America business. And what a business it is.

She was paid a $1.25 million retainer by HarperCollins. Her book, “Going Rogue,” has sold 2.2 million copies, according to its publisher, and she has another tentatively scheduled for this fall.

She now has an actual television career, including appearances as a pundit on Fox News, her gig as the host of “Real American Stories” four times a year, and a coming eight-part series on TLC called “Sarah Palin’s Alaska,” which will cost, according to some media reports, $1 million an episode.

Other people have crossed the border from politics to media to very good effect — George Stephanopoulos, Patrick Buchanan and Chris Matthews, to name a few — but the transition was far more gradual. Ms. Palin turned on a dime and was a ratings sensation from the word go: her first paid appearance, as a commentator on “The O’Reilly Factor” on Jan. 12, was good for an extra million viewers.

Her appeal doesn’t stop at the red states. When Ms. Palin stopped by to chat with Oprah Winfrey — not exactly friendly territory — the show achieved its biggest ratings in two years.

Ms. Palin didn’t go on the show to run for president as much as to become the next Oprah. And it seems to be working. So what are the rest of us missing?

Back in September 2008, when she was unveiled in St. Paul during the Republican convention, a longtime political reporter told me that her appeal would burn off over time. I wondered about that. I’m from Minnesota, which is sometimes considered the southernmost tip of Alaska, and her way of speaking in credulous golly-gee may have been off-putting to some, but there is a kind of authenticity there that no image handler could conjure.

In Ms. Palin’s America, everyone’s got bootstraps; they just need to have the gumption to find them. And her version is full of plain old folks spending a lot of time overcoming a great deal, including a government that she posits usually intends to do them harm.

She’s also imported the political trick of coming from the outside and ruling from the center. When she sets down the ear piece and leaves the studio lights, even the way she says the word “media” in her speeches — “MEE-dee-uh” — makes it sound like something yucky and foul, a swamp to be avoided at all costs. Unless, of course, you are promoting a show, a book or a cause.

Many observers thought her unwillingness to serve out her term would be fatal to her ambitions, but the fact that governance did not suit her — she resigned as governor back in July — has become a kind of credential.

Ms. Palin still gets a session in the media spanking machine every time she does anything, but the disapproval seems to further cement the support of her loyalists. Ms. Palin may or may not be qualified to represent America around the world, but she certainly represents vast swaths of the American public and has a lucrative new career to show for it.

If we don’t see why, then maybe we deserve the “lamestream media” label she likes to give us.
Edit by BHC
 
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Full Article:
http://www.nytimes.com/2010/04/05/business/media/05carr.html?ref=media
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Memo to Playboy: Even a bunny knows when to stop …

April 9, 2010

TakeAway:  Playboy’s loyal collectors have followed the brand for decades and some have even dedicated entire wings of their houses to Playboy paraphernalia.

So, you know something has gone really wrong when these loyalists complain about Playboy’s latest category extensions. 

Though it is better to get consumers to switch within a brand franchise, it appears that Playboy has gone beyond the loyalists perceptions of fit.  Maybe Playboy executives need to step back and reacquaint themselves with the loyalists associations to and beliefs about the brand.   

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Excerpted from WSJ, “As Playboy Bunny Logo Multiplies, Collectors Are Barely Interested in It,” By Russell Adams, April 5, 2010

Over the past nine months, Playboy has turned its bunny loose, slapping its famous logo on a tanning spray, a disposable lighter, a mattress, a couch and a line of drinks designed to boost the libido.

The new Playboy paraphernalia should be welcome news for Ken Ritchie, who has a wing on his house precisely to hold stuff like this.

Ken has spent most of his adult life collecting and selling Playboy merchandise. For about a decade, he was spending $3,000 a month on paraphernalia … But Mr. Ritchie turns up his nose at what Playboy is selling now.

“These are a lot of silly things that have no connection with Playboy,” Mr. Ritchie says. “How many guys do you think are going to go out and buy navel rings because they’ve been licensed by Playboy? It’s not a must-have item.”

Playboy launched more than a magazine when it put Marilyn Monroe on its inaugural issue in 1953. It created a brand that came to represent a rebel ethos … Over the years Playboy Enterprises has capitalized on it by attaching its logo to nightclubs, cuff links and other trinkets.

As advertising has drained from its magazine, Playboy has come to rely more heavily on its licensing efforts. That’s rankled some core fans, highlighting the delicate task facing Playboy and other struggling magazine companies: how to capitalize on their brands without diminishing their value in the eyes of the people who cherish—and in some cases profit from—them most …

Playboy has been licensing its brand on an array of seemingly random products for decades … However Playboy has sought to usher the brand up-market during the last 20 years … canceled licensing contracts with makers of items such as fuzzy dice and air fresheners and instead targeted high-end apparel and accessories for women.

Playboy’s new CEO … is shifting gears, making expansion of licensing a priority. “I think we might have been a bit more conservative about category expansion previously” …

The CEO acknowledges that it is difficult to expand the high-margin licensing business and please hard-core collectors at the same time. The ubiquity that fuels strong sales is precisely what turns off collectors …

Still, the CEO says Playboy takes pains to determine whether new products will sully its media properties or other products. “So far, we can’t point to an example of a product we’ve licensed that we regret,” …

In February, Playboy reached a deal to outsource its licensing business in Asia, where Playboy-branded apparel has become especially popular among young women.

That doesn’t sit well with male collectors … they are reluctant to put on a Playboy shirt given the growing popularity of Playboy apparel among women. “Now it’s almost too feminine to wear something like that,” …

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How ROIDs can help bulk up profits

April 7, 2010

Key Takeaway: There is no doubt that a company’s marketing strategy and techniques must evolve over time. As consumer needs, desires, and beliefs change, it is important that organizations address these new insights.

ROIDs marketing focuses on four areas that can help enhance your analysis of the traditional P’s of marketing: responsibility marketing, organizational leadership, insights about customers, and digital marketing.

Perhaps when Mark McGwire recently admitted he ‘roided during his career he was just trying to tell us about his savvy marketing knowledge?

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Excerpted from Harvard Business Review, “Putting Marketing on ‘ROIDs'” by Dick Patton, March 1, 2010

In conversation after conversation, CEOs, presidents, and CMOs tell me that their companies are looking to marketing to lead the business into the customer-centric future. And in a future that looks vastly different from the past, natural talent no longer suffices. Looking ahead, they say they want to supplement the indispensable four P’s of the traditional marketing mix (product, price, placement and promotion) with some powerful new elements. They describe this potent brew in various ways, but I think its essential ingredients can be summed up in the easily remembered acronym: ROIDs.

  • Responsibility marketing, including social responsibility, green marketing, and sustainability
  • Organizational leadership, requiring marketing to touch as much of the value chain as possible
  • Insights about customers, based on new analytic techniques that replace yesterday’s market research
  • Digital marketing, requiring companies to master an amorphous bundle of fast-changing media 

    All four elements mean bulking up on knowledge, not simply improving marketing technique. In responsibility marketing alone, the required knowledge could range from understanding carbon footprint and endocrine disruptors to microloans and foreign labor practices. Organizational leadership requires knowing how each step in the value chain can add value for customers. Customer insights rely on exacting new disciplines like Web analytics. Digital marketing obviously means understanding an array of digital media, but with social networking it means knowledge of social dynamics, not merely customer behavior.

    Edit by JMZ

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    http://blogs.hbr.org/cs/2010/03/putting_marketing_on_roids.html

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    Ball Park Franks turned Oscar Meyer into just another dog

    April 6, 2010

    Key Takeaway: Sometimes taking advantage of a deep consumer insight is all a brand needs to do in order to be the top dog in a category.

    Ball Park Franks, which focused for years on linking their product to the outdoor grilling experience, realized that mom is the one who does the vast majority of hot dog purchasing in the family.

    By concentrating their marketing efforts on mom’s ability to satisfy their family’s cravings for flavorful, high-quality food, Ball Park was able to appeal to both the purchaser and end-user of its product.

    There is no doubt that Ball Park’s profits plumped when they cooked up this strategy.

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    Excerpted from Brandweek, “How Sara Lee’s Ball Park Brand Became the Top Dog” by Elaine Wong, March 28, 2010

    For years, Ball Park was the No. 2 player in hot dogs. That is, until parent company Sara Lee—maker of Hillshire Farm meats and Jimmy Dean breakfast sandwiches—turned to insights, backed by innovation, to take share from and ultimately usurp the lead spot from Kraft competitor Oscar Mayer…The brand’s ascension was informed by research which showed that moms were the primary buyers of the product, but that teenage boys, too, enjoyed eating it.

    Brandweek: At a recent industry conference, you spoke about how Sara Lee is using insights to drive innovation. Give us an example of how that worked for a major brand.

    Philippe Schaillee:

    For many years, we communicated Ball Park through traditional TV and print, primarily to a male audience. We had this character called Frank, and we’d talk about the grilling occasion and that great experience you’d get from [cooking with] Ball Park hot dogs.

    Looking back, I’d say that was [both] intuition and research-based, but it wasn’t really insights- based.

    As we dove much deeper into an understanding of the consumer and shopper, we learned a few things.

    One was that the brand was overindexing with males. They are looking for the heartiness and real quality of a Ball Park hot dog. But [the brand] was also overindexing more with teenage boys than with adult males.

    Once we learned that, we started to look into the shopper of this [brand] and learned that she was really looking for a hearty solution for her teenage son and husband.

    She [wanted something that wasn’t] just a lower quality snack or that would get them into this mindless eating behavior, but something that was solid, yet still fast and convenient. That [discovery] was a breakthrough.

    BW: And then what?

    PS: We decided we had an opportunity to build this platform around “guy foods.”

    However, the person we had to reach out to and that we had to convince from a purchasing behavior perspective was mom.

    So, from an activation perspective, we shifted our spending radically from what, before, was 80 percent against a male target, to 70 percent [to reach] this female shopper, and the other 30 percent was spent against [targeting] teenage boys.

    Our communication to teenage boys, [meanwhile,] was a radical departure from the past.

    Teenage boys watch TV, but they are absolutely not loyal. That is not where we should be spending our money, [nor do they] really read any magazines or newspapers. Where we have to be to reach that target is in the individual gaming and online action sports [arena]…

    We teamed up with a couple of sports spokespersons to build credibility and really ensure that the Ball Park brand would be [engaged in and participating in] the action sport, versus just advertising at [the event].

    As for business results, after having eternally been the No. 2 brand in the hot dog category, we overtook Oscar Mayer about two years ago, and we’ve been growing our share advantage every year.

    When looking at equity parameters like awareness and household penetration, our loyalty metrics are inching up, and we’ve seen that with teenage boys, especially. We’ve moved from being not on their radar screen to more on their radar screen.

    Edit by JMZ

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    Full Article:
    http://www.brandweek.com/bw/content_display/news-and-features/direct/e3ie9fc421daf51cf828daadc047e8488cc?pn=1

     

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    Film execs attempt to strike gold on the silver screen

    April 5, 2010

    Takeaway: 3-D films have drawn customers back into theaters and now film executives are looking to cash in on their captivity.

    After deploying the greatest ticket price increases in recent memory, will these executives bring home the gold, or crumble to the critics?
     
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    Excerpt from Wall Street Journal, “Higher Prices Make Box-Office Debut” by Lauren A.E. Schuker and Ethan Smith, March 24, 2010

    Major U.S. movie-theater chains, seeking to capitalize on the surge in revenues fueled by such 3-D hits as “Avatar” and “Alice in Wonderland,” are imposing some of the steepest increases in ticket prices in at least a decade.
    The increases, in one case as much as 26%, vary from theater to theater, but many cinemas are raising prices most—or even solely—for 3-D showings, which accounted for the vast majority of last year’s 10% jump in domestic box-office sales. 3-D movies accounted for 11% of domestic ticket sales in 2009, up from just 2% in 2008.

    At an AMC theater in a Boston suburb, 3-D ticket prices are jumping more than 20% to $17.50 from $14.50, while the adult admission price for a conventional film will remain at $10.50. A 3-D Imax movie at New York City’s AMC Loews Kips Bay will cost $19.50, up from $16.50.
     
    Their moves come on the heels of a record-setting year at the domestic box office, with revenue surpassing $10 billion for the first time. Movie attendance in the U.S. and Canada grew 5.5% in 2009, to 1.42 billion, the highest level since 2004. Ticket sales so far this year are up nearly 10% from a year earlier.

    Movie theaters typically had charged $2 to $3 extra for 3-D tickets. But the brisk demand for those premium-priced tickets led many exhibitors to believe that they were underpriced.

    About 83% of the record $2.6 billion in ticket sales for “Avatar” came from 3-D and Imax screens. And Walt Disney Co.’s “Alice in Wonderland” also set records when it hit 3-D screens earlier this month.

    While the price increases could boost theater owners’ already buoyant revenues, some industry watchers think the could also spark a consumer backlash. Studios, theater operators and trade groups have long touted films as a bargain, compared with other forms of entertainment, intensifying their pitch during the recession.

    “The U.S. economy isn’t in the greatest shape, and there is definitely risk here in pushing price too far in a weak economy,” said a media analyst.

    Some movie-studio executives expressed concern that the price increases might be too much too soon. “The risk we run is that we will no longer be the value proposition that we as an industry have prided ourselves on,” said a distribution executive at one major studio, who added that he was worried movies would become “a luxury item.”

    Warner Bros. executive said: “Sure, it’s a risky move, but so far charging a $3 or $4 premium has had no effect on consumers whatsoever, so I’m in favor of this experiment to raise prices even more. There may be additional revenue to earn here.”

    Studios are also in a bind. While many are wary of appearing to gouge consumers beset by a weak economy, they are also facing higher costs as they produce more movies in the technology-heavy 3-D format. Though ticket prices are set by theater operators, the proceeds are split roughly 50-50 with movie studios.

    Five major 3-D films are opening in theaters over the next three months, starting this weekend with DreamWorks Animation’s “How to Train Your Dragon.” That rich selection is one reason theater owners chose to raise 3-D ticket prices now. It may also help set consumers’ expectations for future 3-D films.
     
    “This is a truly unique event for the movie industry,” said one industry analyst. “I can’t remember the last time I saw such a major change in ticket pricing.”
      
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    http://online.wsj.com/article/SB10001424052748703312504575142143922186532.html
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    Posted in Mktg - Pricing | 1 Comment »

    A rose by any other name … Comcast rebrands as Xfinity

    April 2, 2010

    TakeAway:  The Comcast cable guy and his truck are getting a new look.

    With a reputation for poor service and network problems decided a new name might make people forget.

    We’ll see.

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    Excerpted from Philly.com, “Comcast unveils new brand name and logo,” By Bob Fernandez, February 4, 2010

    Comcast  re-branded its TV, Internet, and telephone services as Xfinity  to signal to customers that this isn’t the same old company.

    Comcast will remain as the corporate name, but the company will emphasize Xfinity in advertisements and on 24,000 service trucks and thousands of employee uniforms.

    The new brand name first appeared in Comcast ads, around the time of the Winter Olympics, in Philadelphia and 10 other markets.

    “This is a pretty big moment where we are upgrading every product area … the new name communicates Comcast’s constant product upgrades and innovation.”

    The new brand name … will appear eventually as a logo on the Comcast TV guide and Web sites, and will also appear on customer bills under headings for different services …

    Xfinity seems to position the company to compete with Verizon, which markets its TV and Internet services as FiOS, and AT&T, which uses U-verse …

    This re-branding comes as Comcast has struggled to rebuild its reputation because of poor service and problems with its network that resulted in telephone and Internet outages. Its customer-satisfaction rating is among the lowest in the industry, but it has improved slightly in the last year.

    Comcast spokeswoman said the re-branding was not an attempt to distance the service from the Comcast name. “This is about our product. It is about providing our customers with products that just keep getting better” …

    Comcast tried to keep more customers happy by limiting its cable rate increases to 6.9 million subscribers in late 2009 compared with 16.2 million customers in the fourth quarter of 2008 …

    Comcast has been on a tear by boosting its Internet speeds, offering more TV channels as a result of its digital transition, and is adding features to its new phone service …

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    http://www.philly.com/philly/business/83522972.html

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    Posted in Mktg - Brandmarks & Logos, Mktg - Brands | Leave a Comment »

    Diageo’s martini recipe: not just dirty, down & dirty … blame it on the economy.

    March 31, 2010

    Takeaway: During the era of excess, brand cache was largely derived from sky-high prices as carefree consumers enjoyed opportunities to showcase and indulge in their abundances. However, like most businesses, spirit makers now face a ‘new normal.’

    Diageo has found that its customers demand the same style at substantially lower prices and has concluded that many of its premium products have fallen out of fashion.

    In response to this challenge, the company will launch a new ‘cheap chic’ brand of vodka as a direct attack on competitors such as Constellation Brands, which offers more moderately-priced labels.

    Marketers stayed tuned: Is cheap chic here to stay? Or is it a short-term strategy aimed to ease dormant consumers back into the market in hopes that they will trade up to torpid top-shelf titans?
     
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    Excerpt from Wall Street Journal, “New Label, Made in Sweden, Will Go Up Against Constellation’s ‘Cheap Chic’ Svedka Brand” by David Kesmodel, March 24, 2010.
     
    Diageo plans to unveil a Swedish vodka in the U.S. this summer in a direct assault on Constellation’s Svedka, a fast-growing “cheap chic” brand that has stolen market share from Diageo’s Smirnoff and other vodkas.

    The strategy suggests Diageo may not feel confident that the industry will be able to boost prices much in the next 12 to 18 months or begin seeing consumers move back toward upscale brands.

    Diageo’s new Rökk, its first Swedish-made vodka in the U.S., is part of a flurry of new liquor products that the London drinks giant is rolling out in the U.S.

    The new products, many of which are midpriced brands, show how Diageo is trying to appeal to drinkers that are reaching for relatively inexpensive—yet distinctive— brands in the sluggish economy. Many of the moves reflect how times have changed in an industry long focused on introducing upscale brands that tend to carry higher profit margins.

    Vodka is the biggest category in the U.S. spirits industry. Sales of vodka are growing at the second-fastest rate after the much-smaller Irish whiskey segment.

    The industry has engaged in heavy discounting to woo consumers, cutting into revenue for Diageo.

    Svedka, a Swedish import, posted a 34% increase in volume last year, reaching 2.8 million cases, according to Beverage Information Group.

    Rökk will sell for roughly $13 for a 750-milliliter bottle, a similar price to Svedka. Rökk also will compete against such Swedish imports as Absolut, which sells for about $20 and is the No. 2 vodka in the U.S. after Diageo’s Smirnoff.

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    http://online.wsj.com/article/SB10001424052748704211704575139891106275422.html

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    Red Bull’s extreme marketing …soccer in the U.S.?

    March 30, 2010

    TakeAway: When does a marketing playbook need to be adjusted? 

    Red Bull may provide us with an example very soon. 

    The U.S. energy drink category-leader just invested $220M in a struggling MLS team and a massive MLS stadium — an investment in, well, a non-extreme sport that doesn’t exactly match RB’s image.

    Soccer sponsorships have worked in other countries, but in the U.S. professional soccer has yet to generate even a fraction of the following that soccer boasts in the rest of the world. 

    And, it is very unclear how many soccer moms are going to let their young kids embrace this high caffeine drink.

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    Excerpted from WSJ, “Red Bull’s Latest Buzz: New Soccer Stadium,” By Matthew Futterman, March 18, 2010

    There may be easier ways to sell drinks than buying a struggling sports team and building the biggest soccer stadium the country has ever seen atop a former industrial-waste site.

    Yet that’s exactly the playbook Austrian “energy drink” maker Red Bull has been following for the past four years. The strategy will be unleashed this [last] weekend when the $220 million Red Bull Arena opens in Harrison, N.J. …

    The team [New York Red Bulls] and stadium represent the biggest and most visible foreign investment ever made in professional soccer in the U.S.— even as closely held Red Bull had flat revenue and faces challenges from rivals like Monster Energy, distributed by Coke, and Rockstar, distributed by Pepsi.

    “As soon as we decide to take part in a sport, we either do it properly or we don’t do it at all.”

    Still, 15 years into its existence, Major League Soccer boasts just two profitable teams, and a labor dispute with players has jeopardized the current season. The Red Bulls themselves … have been something of a flop …

    The venture is in keeping with the unorthodox marketing moves — including a festival for homemade flying machines and a half-pipe built for Olympic snowboarder Shaun White — Red Bull has become known for since its emergence in Europe in the late 1980s …

    “Edgy marketing is part of this category, and they’re the grand-daddy of energy drinks,” says publisher of Beverage Digest. “They’ve done a great job building their brand both here and in Europe.”

    Red Bull’s brand strength allowed it to outpace the industry last year in the U.S., when the premium-priced energy-drink market was growing at just 0.1% and Red Bull sales were up 1.1% …

    In the U.S., Red Bull has a 33% share of the energy-drink market by dollars, ahead of Coke’s Monster, which has a 27% share and holds second place. But Monster has been gaining with the help of its parent company, as has Pepsi’s Rockstar.

    Red Bull wields its identity as a rebellious category creator, associating itself mostly with activities and athletes that display a mix of courage and daring, such as Shawn White, the snowboarder sometimes known as the “Flying Tomato” for his shoulder-length red hair.

    Other sports stars the company favors include airborne surfers, dirt bikers, skiers, stunt specialists or race-car drivers more obsessed with speed than grounded team-sport athletes.

    It’s rare to see a Red Bull commercial on television — though the brand still gets plenty of play, whether it’s Britney Spears photographed drinking it or Lindsey Vonn sporting its logo on her helmet …

    Within the stadium, the company’s logo —two bulls butting horns in front of a yellow sun—is emblazoned on the lower-deck seats. Where some companies might have plastered billboards throughout the building, Red Bull CEO says the idea is to build his brand through the quality of the experience the arena offers …

    This project was about soccer … And selling caffeinated drinks.

    “Everything that we do is for the value and the image of the brand.”

    Edit by TJS

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    Full Article
    http://online.wsj.com/article/SB10001424052748704059004575127842812699832.html

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    Posted in Mktg - Brands, Mktg - Promotion | Leave a Comment »

    Movie-theater owners reach for the 3-D sky … with prices that is.

    March 29, 2010

    TakeAway:  No business owner wants to/should leave money on the table, but when pricing a new product — especially in a down economy — how soon should you test consumers’ limits?  Movie-theater chain owners think ASAP.  

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    Excerpted from WSJ, “Higher Prices Make Box-Office Debut, By Lauren Schuker and Ethan Smith, March 24, 2010

    Major U.S. movie-theater chains, seeking to capitalize on the surge in revenues fueled by 3-D hits … are imposing some of the steepest increases in ticket prices in at least a decade …

    The increases, in one case as much as 26%, vary from theater to theater, but many cinemas are raising prices most—or even solely—for 3-D showings, which accounted for the vast majority of last year’s 10% jump in domestic box-office sales. 3-D movies accounted for 11% of domestic ticket sales in 2009, up from just 2% in 2008 …

    The price increases come on the heels of a record-setting year at the domestic box office, with revenue surpassing $10 billion for the first time. Movie attendance in the U.S. and Canada grew 5.5% in 2009, to 1.42 billion, the highest level since 2004. Ticket sales so far this year are up nearly 10% from a year earlier.

    Movie theaters typically had charged $2 to $3 extra for 3-D tickets. But the brisk demand for those premium-priced tickets led many exhibitors to believe that they were underpriced …

    While the price increases could boost theater owners’ already buoyant revenues, some industry watchers think the could also spark a consumer backlash. Studios, theater operators and trade groups have long touted films as a bargain, compared with other forms of entertainment …

    A decade ago, the average ticket at a multiplex was $5.39, but prices have edged up between 2.7% to 6.1% a year since then …

    “The U.S. economy isn’t in the greatest shape, and there is definitely risk here in pushing price too far in a weak economy.”

    Some movie-studio executives expressed similar concern that the price increases might be too much too soon. “The risk we run is that we will no longer be the value proposition that we as an industry have prided ourselves on.”

    Some studio executives … expressed support. “The exhibitors are trying to push the needle on ticket prices and see where it ends up … it’s a risky move, but so far charging a $3 or $4 premium has had no effect on consumers whatsoever, so I’m in favor of this experiment to raise prices even more. There may be additional revenue to earn here.”

    Studios are also in a bind. While many are wary of appearing to gouge consumers beset by a weak economy, they are also facing higher costs as they produce more movies in the technology-heavy 3-D format.

    Though ticket prices are set by theater operators, the proceeds are split roughly 50-50 with movie studios …

    Edit by TJS

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    Full Article
    http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=114556

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    Posted in Mktg - Pricing | Leave a Comment »

    Recipes for success … driving consumer sales.

    March 26, 2010

    TakeAway:  Driving product usage is not as simple as it once was for food companies. 

    Consumers now look for pizzazz in food products’ “back of the box” suggestions, yet consumers do not want to have to go to the grocery store to buy new/uncommon ingredients. 

    Consumers do not want to be treated as cooking novices, yet more than 11 ingredients is way too complex. 

    It’s a tricky position for food companies. 

    As a result, the process to pick just the right recipe for the precious 2 inches of real estate on the product label is exhaustive and all inclusive. 

    And, this process has a lot riding on it because if the recipe does not spur use, these products will sit, forgotten in the back of the pantry.

    * * * * *

    Excerpted from WSJ, “For Old Labels, a Little Zest,” By Miriam Gottfried, March 18, 2010

    Recipe developers at Campbell Soup spent months testing and tasting before reaching a decision: “Chicken With Sun-Dried Tomatoes” was safe enough to print on the back of a can of cream-of-mushroom soup.

    Some of the most beloved American dishes started as back-of-the-package recipes, designed in corporate test kitchens to sell more cans of soup, bags of noodles and boxes of cake mix …

    Now America’s increasingly sophisticated palate, influenced by TV cooking shows, celebrity chefs and gourmet ingredients, presents a problem. Many food companies have had trouble increasing revenue …

    Food companies need to figure out how to update their recipes to entice today’s more ambitious cooks to use products that might otherwise sit on the shelf for months. The recipes must make cooks feel like they’re doing more than just adding eggs to a mix, but not use so many ingredients to require a special trip to the store. If they get too trendy, they risk alienating their core consumers …

    Campbell’s began the quest for new label recipes last February …

    The group was unsure about “Chicken With Sun-Dried Tomatoes”—boneless, skinless chicken breasts with a sauce of cream-of-mushroom-soup, basil, shallots, red-wine vinegar and sun-dried tomatoes and served atop egg noodles. Chicken is the most popular search term on CampbellsKitchen.com, but the group was divided on sun-dried tomatoes.

    “Label recipes are weeknight meals,” says Campbell’s Kitchen group manager. “Most involve rice or pasta. The real estate is small, so there are few ingredients and few steps.”

    In May, recipes were sent to consumers to try at home, asking if they liked the taste, found the ingredients affordable, and whether they would make the dishes again.

    Testers liked a fajita recipe but didn’t think cheddar cheese soup was a necessary ingredient. Another recipe for beef short ribs … called for braising liquid made with French-onion soup and beer … “It looked like beer was the new wine, and it might be the right time for this recipe.”  But testers said they had to make a special trip to buy beer. Short ribs were unfamiliar and some consumers thought they were too expensive …

    In the end, “Chicken With Sun-Dried Tomatoes” stood out because the gourmet twist was in the title and there were more ingredients—11 instead of the four to seven used in a typical recipe …

    The recipe will appear on cream-of-mushroom soup cans starting in August. Sales of cream-of-mushroom soup … usually take off in September as cold weather approaches, and the company hopes to see growth in the business from the recipe promotion …

    Edit by TJS

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    Full Article
    http://online.wsj.com/article/SB20001424052748704059004575127752736708066.html#mod=todays_us_personal_journal

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    Posted in Mktg - Packaging, Mktg - Promotion | Leave a Comment »

    Attax hits a home run in the bottom of the ninth

    March 25, 2010

    TakeAway:  Subject to the product life cycle, popular high growth products will eventually decline into obsolescence unless they are regenerated. 

    Baseball cards were following this pattern until Attax breathed fresh life into the age-old favorite. 

    Attax seized a new favorite pastime – fantasy baseball – adapted it for baseball cards, and recaptured the hearts of America’s youth. 

    * * * * *

    Excerpted from WSJ, “Topps Takes Trading-Card Game, Runs With It,” By Gregory Zuckerman, March 23, 2010

    Attax, a sports-card game created by Topps, combines a once-popular kids’ pastime—collecting baseball and other sports cards—with a present-day “fantasy” games twist. Kids can build teams and compete against each other.

    Since their 2007 launch, Attax cards, have sold over 100 million packs and now account for about 25% of revenue and profits for Topps …

    Prior to the launch of Attax, Topps performance had been slipping … as some kids shifted to videogames and other diversions. Many adult collectors also moved on. When the economic downturn hit … there was worry that sales could fall as weekly allowances shriveled.

    But … a 26-year-old Topps employee was tinkering with a revamped sports card, one that aimed to capitalize on the success of fantasy sports games enjoyed by many adults … The Attax game began with soccer in the U.K.; a baseball set is timed for opening day … they were an instant hit …

    Last year, Topps tested its baseball cards in the New York market. By the end of the summer, the cards … had sold out of most stores, sending some parents and children on desperate searches.

    To introduce the game, Topps set up demonstrations at minor-league stadiums and Little League parks in the New York area, a tactic it plans to expand this summer …

    Like traditional baseball cards, the Attax line features glossy player pictures. But rather than list dozens of statistics on the back, the new baseball cards have just three ratings for each player’s ability at pitching and batting.

    In games, one player puts out a pitcher, face up, and another a batter, face down. The first player then decides which of several pitches to throw. If the rating for that pitch bests the batter’s rating for those types of pitches a strikeout results; if not, it’s a home run for the player with the batter card …

    Fads come and go, of course, especially among fickle youth. And some children call the baseball Attax cards too simple, because each at-bat can result in just two outcomes, a home run or an out. That would make the excitement harder to sustain …

    For now, though, interest seems to be building …

    “It’s been a monster,” says store manager of a store called Attack of the Baseball Cards … “It’s given kids a reason to collect cards again.”

    In recent years, the store manager resorted to running seminars to teach kids the basics about baseball cards, such as how to flip and collect them, trying to revive interest. Now he expects to sell as many as 200 packs of the new cards a week, up from 100 last summer …

    Edit by TJS

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    Full Article
    http://online.wsj.com/article/SB10001424052748704534904575132144292424072.html

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    Posted in Mktg - PLC | Leave a Comment »

    Cruise lines find that a rising tide lifts all boats

    March 24, 2010

    Takeaway: Recent passenger counts demonstrate that consumers are setting sail during the economic recovery. Though the cruise industry is rebounding nicely, it has been able to attract passengers through discount programs enabled by lower labor and fuel costs.

    In the coming months, many cruise lines plan to test higher prices. Given the competitiveness of the travel and entertainment category, many marketers may be anxious to learn whether this pricing strategy sinks or swims.
     
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    Excerpt from Wall Street Journal, “Can Cruise Industry Catch Pricing Wave” by Kelly Evans, March 23, 2010.

    If any industry should have been a relic of the boom, cruise lines, with their tricked-out “floating malls” catering to the whims and indulgences of consumers, were a likely contender.

    Yet after a difficult 18 months, the industry is seeing a fairly impressive rebound in demand, a telling sign of the mind-set of U.S. consumers. That is bolstering the top line for operators like Carnival, which analysts expect Tuesday to report that revenue for the three-month period ending in February rose to $3.1 billion, up 8% from a year earlier.

    Now comes the hard part, regaining some pricing power. Carnival announced across-the-board price rises of about 5% that took effect Monday. Norwegian said it will raise fares as much as 7% beginning April 2.

    Whether these increases stick will speak volumes about how willing consumers are to spend in the absence of deep discounts. It also will show if the cruise industry has found clear sailing, after battling its way through the ravages of the recession.

    Carnival, the world’s largest operator with some 82 ships and 10 different brands, is one of several lines that reported record bookings during the winter, historically the busiest time of year for the industry.

    While cruise lines have discounted to lure passengers, sharply lower fuel and labor costs have dulled some of the pain. As those costs begin to rebound, and a strengthening U.S. dollar hurts competitiveness, operators like Carnival will become more dependent on higher prices to prop up margins.

    And even if consumers are looking more resilient, many still are value-driven and so may be turned off by higher fares.

    If that turns out to be the case, Carnival’s stock, which has doubled over the past 16 months, could face rough sailing.

    Edit by BHC
     
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    Full Article:
    http://online.wsj.com/article/SB10001424052748704841304575138161384844590.html?mod=WSJ_hps_MIDDLESecondNews

    Posted in Mktg - Pricing | Leave a Comment »

    From soup to nuts: Campbell’s turns to psychology for consumer insights

    March 23, 2010

    Takeaway: Consumer anxiety commonly runs high when companies discontinue iconic images — last year scores of consumers protested the redesigned Tropicana carton.

    In this high-stakes branding game, Campbell’s has sided with science and will soon abandon its widely-recognized red and white labels for a design the company believes will evoke a deeper emotional response from shoppers.

    To arrive at this decision, the company employed neuromarketing – an emerging discipline that augments traditional market research with analysis of consumers’ biometric responses to new stimuli.

    If successful, Campbell’s approach may provide marketers with powerful new tools for understanding their customers.
     
    * * * * *

    Excerpt from FastCompany, “Campbell’s Soup Neuromarketing Redux: There’s Chunks of Real Science in That Recipe” by Jennifer Williams, February 22, 2010.

    About a week ago, the Campbell’s publicized a bold redesign of its iconic label with the assistance of neuromarketing. Pundits promptly predicted brand suicide, decrying the company for using pseudo-science.

    With help from its parter Interscope Research, Campbell’s spent two years studying microscopic changes in skin moisture, heart rate, and other biometrics to see how consumers react to everything from pictures of bowls of soup to logo design.

    By the end of a two-year study, more than 1,500 subjects were interviewed and tested using multiple methodologies–which ranged from traditional consumer feedback to cutting edge neuromarketing techniques.

    The team used a combination of proprietary micro facial expression analysis obtained by in-store cameras, in-aisle eye tracking and pupilometry, and intercept interviews.

    One brand team member explained that the type of cutting edge technology they employed enhanced traditional methods of market research.

    An Innerscope researcher explains, “Companies that rely exclusively on traditional measures, focused only at the conscious level, are missing a critical component of what drives purchase behavior. The vast majority of brain processing (75 to 95%) is done below conscious awareness. Because emotional responses are unconscious, it is virtually impossible for people to fully identify what caused them through conscious measures such as surveys and focus groups.”

    Many argue that the new label design could just as easily been arrived at by a savvy designer with good instincts. Perhaps. After all, understanding that a steamy bowl of soup is likely to elicit a positive emotional response isn’t much of a leap.

    The end result offered many things that savvy design or consumer feedback alone could not have predicted. This fall, consumers can expect their soup shopping to be easier and more emotionally enjoyable than it is with Campbell’s current label. Flavor and style will be easily distinguished, and the familiar red logo will still be there. However, the logo will be smaller and out of the way in the scan and selection process, and the updated images will tap into emotions that consumers already associate with and want to feel about soup.

    Was this a case of a mere marketing fad masquerading as science meant to mesmerize corporate clients more than consumers? Campbell’s synchronizing of careful research done by three agencies–research which triangulated two years of data gathering and statistical analysis–looks a lot like genuine science.

    Edit by BHC
     
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    Full Article:
    http://www.fastcompany.com/article/rebuttal-pseudo-science-in-campbells-soup-not-so-fast

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    Posted in Mktg - Brands, Mktg - Consumer Behavior, Mktg - Packaging | Leave a Comment »

    Increasingly customers ask: what’s in a name?

    March 23, 2010

    Takeaway: In light of recent economic conditions, consumers are arguably more focused on value than ever before. This, combined with the increasing power of national retailers, now limits consumer products and services companies’ ability to deliver differentiated benefits to customers.

    Faced with these new competitive pressures, brand managers must form new strategies for connecting with their customers to reinforce the value of their brand.
     
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    Excerpt from FastCompany, “Logos Get Lost in the Supermarket, Here’s Why” by Jamey Botter, March 11, 2010.
     
    Logorama, the movie comprised entirely of animated logos, recently won the Oscar for best animated short film and is an excellent representation of the technicolor tapestry of branding that our world has become.

    What would the world be like if there were no more brands to differentiate products, inspire us, or give us a good feeling about a company or product we’ve never tried before? I’m one who thinks it would be bad for brands to meld together into a homogenized mess, and I see that starting to happen in places. At the rate things are going, someday soon all brands will look like Walmart’s Great Value label.

    Why is this happening? It’s partly because value is in great demand now, with unemployment still in double digits throughout parts of the country. It’s also because retailers are putting pressure on manufacturers to differentiate their brands inside their stores, so that a brand doesn’t look and act the same in one store chain as it does in another. If brands fold to this pressure, they become diluted and change what they really stand for. This erodes brand equity with consumers and eventually, retailers decide they don’t need certain brands anymore and can easily outsource the product cheaper themselves to increase their margins. So now those manufacturers are out, and jobs are lost. And so is the brand.

    Private label brands grew at twice the rate of national brands over the last decade. Retailers like Walmart, Target and Costco are narrowing consumer selections everyday. Walmart recently took out Glad and Hefty storage bags to give more space to its Great Value brand. Walmart brought Hefty back, only after the company agreed to manufacture its Great Value bags.

    That sort of manipulation will continue to happen unless brand managers, strategists, designers and manufacturers stand up to big-box retailers and reinforce the naturally differentiating attributes of their brands. They must build their brands so the retailer depends on them and the manufacturer, like the good old days.

    Over the last 100 years, brands have played an important role in our society. The danger of private labels taking over the national branding landscape is the loss of meaning and value in the brands we love, prefer and recognize. Not only do our favorite brands help us distinguish product attributes, they inspire and motivate us, and give us a sense of individualism and choice.

    If price is the only thing we as consumers are driven by, then sure, just make all the brands the same, Big Brother. But understand that what starts at retail can mushroom to other industries. Soon, we could all end up buying gas from one brand of gas station. Bank at one brand of bank. Wear clothes from one clothing company because they’re all alike anyway.

    Edit by BHC
     
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    Full Article:
    http://www.fastcompany.com/1579214/when-private-labels-take-over-the-world
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    Posted in Mktg - Brands | Leave a Comment »

    McKinsey: A marketer’s guide to applying behavioral economics

    March 18, 2010

    TakeAway: Marketers have been applying behavioral economics—often unknowingly—for years. A more systematic approach can unlock significant value.

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    Excerpted from McKinsey Online: A marketer’s guide to behavioral economics, Feb. 2010

    Long before behavioral economics had a name, marketers were using it.

    “Three for the price of two” offers and extended-payment layaway plans became widespread because they worked — not because marketers had run scientific studies showing that people prefer a supposedly free incentive to an equivalent price discount or that people often behave irrationally when thinking about future consequences.

    Here are four practical techniques that should be part of every marketer’s tool kit.

    1. Make a product’s cost less painful 
    In marketing practice, many factors influence the way consumers value a dollar and how much pain they feel upon spending it.

    Retailers know that allowing consumers to delay payment can dramatically increase their willingness to buy.

    One reason delayed payments work is perfectly logical: the time value of money makes future payments less costly than immediate ones. But there is a second, less rational basis for this phenomenon. Payments, like all losses, are viscerally unpleasant. Even small delays in payment can soften the immediate sting of parting with your money and remove an important barrier to purchase.

    Consumers use different mental accounts for money they obtain from different sources.

    Commonly observed mental accounts include windfall gains, pocket money, income, and savings. Windfall gains and pocket money are usually the easiest for consumers to spend. Income is less easy to relinquish, and savings the most difficult of all.

    2. Harness the power of a default option
    The evidence is overwhelming that presenting one option as a default increases the chance it will be chosen.

    Defaults — what you get if you don’t actively make a choice — work partly by instilling a perception of ownership before any purchase takes place, because the pleasure we derive from gains is less intense than the pain from equivalent losses. When we’re “given” something by default, it becomes more valued than it would have been otherwise — and we are more loath to part with it.

    An Italian telecom company, for example, increased the acceptance rate of an offer made to customers when they called to cancel their service. Originally, a script informed them that they would receive 100 free calls if they kept their plan. The script was reworded to say, “We have already credited your account with 100 calls—how could you use those?” Many customers did not want to give up free talk time they felt they already owned.

    Defaults work best when decision makers are too indifferent, confused, or conflicted to consider their options.

    That principle is particularly relevant in a world that’s increasingly awash with choices — a default eliminates the need to make a decision.

    3. Don’t overwhelm consumers with choice
    When a default option isn’t possible, marketers must be wary of generating “choice overload,” which makes consumers less likely to purchase.

    Large in-store assortments work against marketers in at least two ways.

    First, these choices make consumers work harder to find their preferred option, a potential barrier to purchase.

    Second, large assortments increase the likelihood that each choice will become imbued with a “negative halo” — a heightened awareness that every option requires you to forgo desirable features available in some other product.

    Reducing the number of options makes people likelier not only to reach a decision but also to feel more satisfied with their choice.

    4. Position your preferred option carefully
    Economists assume that everything has a price: your willingness to pay may be higher than mine, but each of us has a maximum price we’d be willing to pay.

    How marketers position a product, though, can change the equation.

    Marketers sometimes benefit from offering a few clearly inferior options. Even if they don’t sell, they may increase sales of slightly better products the store really wants to move.

    Similarly, many restaurants find that the second-most-expensive bottle of wine is very popular — and so is the second-cheapest.

    Customers who buy the former feel they are getting something special but not going over the top.

    Those who buy the latter feel they are getting a bargain but not being cheap.

    Sony found the same thing with headphones: consumers buy them at a given price if there is a more expensive option — but not if they are the most expensive option on offer.

    Marketers have long been aware that irrationality helps shape consumer behavior. Behavioral economics can make that irrationality more predictable.

    Understanding exactly how small changes to the details of an offer can influence the way people react to it is crucial to unlocking significant value—often at very low cost.

    Full article:
    https://www.mckinseyquarterly.com/Marketing/Strategy/A_marketers_guide_to_behavioral_economics_2536

    Posted in Behavioral Economics, Economics, Mktg - Customer Acquisition | Leave a Comment »

    The curse of Chuck E. Cheese: An epidemic of brawls…

    March 12, 2010

    Punchline: Law-enforcement officials say “alcohol, loud noise, thick crowds and the high emotions of children’s birthday parties make Chuck E. Cheese restaurants more prone to disputes than other family entertainment venues.”

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    Excerpted from BrandChannel: Someone Please Save Chuck E. Cheese’s, March 10, 2010

    Generally, a strong, popular brand can weather a bad mention in the press. Even a second bit of bad press should be no big deal. However, three, four, or five are cause for alarm. And family dining and entertainment establishment Chuck E. Cheese’s should be alarmed.

    The Chuck E. Cheese’s brand name has been turning up in the news with rather disturbing frequency, and each report evokes more of images “jail time” rather than “fun time.” Here is a list of some of the reports from the last few months:

    • “One day, three police incidents at Susquehanna Chuck E. Cheese’s restaurant”
    • “Brawl At Memphis Chuck E. Cheese”
    • “Two Crooks Target Mom At Chuck E. Cheese’s”
    • “Fight breaks out at St. Louis Chuck E. Cheese’s”
    • “Chuck E. Cheese Riot In Tennessee Leaves Several People Facing Charges”
    • “Customers brawl at Toledo Chuck E Cheese”
    • “Brawl breaks out at Chuck E Cheese in Flint Township”
    • “Three Arrested After Greenville Chuck E. Cheese Fight”
    • “Testimony Begins in Chuck E. Cheese Slaying”

    “Fights among guests are an issue for all restaurants, but security experts say they pose a particular problem for Chuck E. Cheese’s… Law-enforcement officials say alcohol, loud noise, thick crowds and the high emotions of children’s birthday parties make the restaurants more prone to disputes than other family entertainment venues.” 

    Chuck E. seems to be dragging his feet to address the situation.

    So far, the only action the brand has taken is to post “rules” in his 530-plus locations:

    • No gang-style apparel.
    • No gang-type conduct or behavior.
    • No weapons, knives, chains, screwdrivers, glass cutters.

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    Ken’s Take: Gee, woulda thought those rules would have been enough to remedy the situation.  What kind of gang member disrespects a “No” sign ? 

    Full article:
    http://www.brandchannel.com/home/post/2010/03/10/Someone-Please-Save-Chuck-E-Cheeses.aspx

    Posted in Mktg - Brands, Mktg - Buzz - Word of Mouth | Leave a Comment »

    “But my product is a commodity” … Stop whining, start repositioning

    March 10, 2010

    How can you reposition your own brand when the entire product category is seen as a commodity? Here are five successful strategies:

    • Identify. Ordinary bananas became better bananas when a small Chiquita label was added to the fruit. Dole did the same for pineapple, and Foxy did the same for lettuce. Of course, you then have to communicate why people should look for these labels.
    • Personify. The Green Giant character became the difference in a family of vegetables in many forms. Frank Perdue became the tough man behind the tender chicken
    • Create a new generic. Tyson wanted to sell miniature chickens, which doesn’t sound very appealing. So it introduced Cornish game hens.
    • Change the name. Sometimes your original name works against you. For example, no one wanted to eat a Chinese gooseberry until the name was changed to kiwi fruit
    • Reposition the category. Sales of pork increased when its producers repositioned it as “the other white meat.”

    Source:  Repositioning: Marketing in an Era of Competition, Change, and Crisis by Jack Trout with Steve Rivkin, 2010

    Posted in Mktg - Positioning | Leave a Comment »

    Innovation: USAA says “Grab your iPhone”

    March 3, 2010

    Using your iPhone to deposit checks in your bank account, to initiate insurance claims from the accident scene, and to go toe-to-toe with car salesmen … now, that’s cool stuff, for sure.

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    Excerpted from Business Week: Customer Service Champs – USAA’s Battle Plan,  February 18, 2010

    The provider of financial services for military families uses remote technology and a keen focus on clients to stay atop our annual customer service rating

    When customers want to deposit checks, they don’t need to use an ATM, a teller at a branch, or even a stamped envelope and deposit slip. Rather, they can take a  picture of the check with their iPhone, use an app to send it to their bank, and within minutes the money shows up in their accounts. Giants like Bank of America are just testing a similar service.

    In almost everything it does, the financial-services outfit puts itself in the spit-shined shoes of its often highly mobile military customers, many of whom face unique financial challenges.

    USAA was the first bank to allow iPhone deposits, it routinely texts balances to soldiers in the field, and it heavily discounts customers’ car insurance while they are deployed overseas.

    “They do all this really creative stuff … There is nobody on this earth who understands their customer better than USAA.”

    No fewer than 87% of respondents to J.D. Power’s syndicated surveys say they will definitely buy from the company again, far higher than the average, which is just 36%. Its client retention rate? A near-perfect 97.8%.

    Reps are armed with software that lets them view a history of the online screens a particular customer has viewed on USAA’s Web site, letting them know what policies or business lines the customer was perusing — and may be ready to buy.

    Another high-tech service USAA rolled out in 2008 lets its far-flung customers — a sizable number of whom are young, tech-savvy, and living paycheck to paycheck — get text messages about their account balances before, say, making a big purchase.

    Later in 2010, USAA is planning mobile peer-to-peer payments, which let customers e-mail or text-message money to friends or family for immediate deposit, no matter where they are at the time.

    USAA was among the first to let customers initiate an insurance claim using their phones from the scene of an accident. And it soon will expand that app so policyholders can attach photos to the claim and complete the entire process via phone. By 2011 customers will even be able to attach voice recordings to their file, immediately retelling exactly what happened.

    Also coming this year: a mobile car-buying service that lets customers standing at a dealership snap an iPhone pic of a vehicle’s VIN number and instantly get back insurance quotes, loan terms, and pre-negotiated rates at approved dealerships. “The idea is you can turn that phone around to the salesman and say ‘this is the price I’m going to pay.’ ”

    Besides helping policyholders, such technology benefits USAA.  “If you can have the member self-serve on certain parts of the claim, or the entire claim … clearly there’s an efficiency gain.” 

    Full article:
    http://www.businessweek.com/magazine/content/10_09/b4168040782858.htm

    Posted in Internet Marketing - eCommerce -, Mktg - Product & Innovation | Leave a Comment »

    Coupons surge as economy sputters …

    February 26, 2010

    No surprise, consumers are more price conscious in the down economy … and companies are responding with a deluge of coupons …

    * * * * *

    Excerpted from BrandChannel: Heinz – Back To Brand Basics, And Coupons,  February 19, 2010

    Consumers are firmly entrenched in a new money-saving mind-set.

    This new behavior includes more meals at home and a dramatic increase in coupon use 

    “Coupons are back on shoppers’ radar; the economic downturn has instilled a drive to be smart and frugal about spending, and coupons definitely have a role in fulfilling it.”

    Americans cashed in 3.3 billion coupons in 2009, a 27 percent jump from 2008 when the financial crisis tipped the US into recession.

    “Brands saw coupons as a key to maintaining brand strength … they stood to lose sales to lower-priced competitors and store brands — so they doubled down, hoping to create brand loyalty once the economic dust settles.”

    Full article:
    http://www.brandchannel.com/home/post/2010/02/19/Heinz-Back-To-Brand-Basics-And-Coupons.aspx

    Posted in Mktg - Promotion | Leave a Comment »

    Sorry, you need more loyalty points (and cash on the card) for the free latte …

    February 23, 2010

    The local shoe store — buy nine pairs; get the 10th pair free. At the pizzeria 10 receipts means a free pie. At The Body Shop eight points earns a tub of  Satsuma Body Butter.

    Shell out $25 for a Starbucks card and get two free lattes (one for signing on, one for your birthday) plus a 10% discount on every drink.

    That was then.  Now Starbucks is dumping the old card in favor of a new one with a tiered system of rewards involving stars. You’ll get one free beverage for every 15 transactions. (Note: number of transactions, not number of drinks. Buy 2 drinks and sorry, it’s one transaction.)

    Starbucks says the new card is free.

    Well, not quite free. Loading cash on the card and using it to pay for drinks is the only way to reap the benefits of the new program. Just think of those stars as the chain’s way of thanking caffeinistas for what amounts to an interest-free loan.

    Companies that make alienating changes in their loyalty and rewards programs “are playing with fire,” says Allen Adamson, managing director of the branding company Landor Associates.

    Consider the trickle-down effect of these shape-shifting programs. A marathoner will complete the 26-mile, 385-yard race only to be told at the tape that the new distance is 27 miles. A couple who’ve been married for a quarter of a century will discover that the new requirement for a silver anniversary — let’s call it super-silver — is 30 years of wedded togetherness.

    Excerpted from WSJ: Buyer Be Wary of Your Loyalty Being Betrayed, Feb. 19, 2010
    http://online.wsj.com/article/SB10001424052748704509704575018963639140970.html?mod=WSJ_Opinion_LEFTTopOpinion

    Posted in Mktg - Loyalty Programs | Leave a Comment »

    Hey, where’s my favorite deodorant ?

    February 18, 2010

    Bottom line: As retailers adjust to tight-fisted shoppers, many stores are shrinking the number of name-brand products on their shelves.

    Don’t be shocked if you can’t find your favorite salad dressing or mouthwash on your next trip to Wal-Mart.

    * * * * *

    CNNMoney.com, Dumped! Brand names fight to stay in stores, Feb. 16, 2010 

    Large retailers — including Wal-Mart, the world’s biggest — are wrestling with having too many types of brand-name products.

    At the same time, shoppers are buying less and looking for bargains.

    So unless a particular brand is a top seller in its category, it’s getting knocked off the shelf — and sometimes getting replaced by a cheaper store brand.

    For example, Wal-Mart recently removed Glad and Hefty-branded storage bags from shelves, replacing them with its own lower-priced Great Value brand.

    Those categories at greatest risk of losing brands are everyday-type purchases such as household products, toiletries and food staples.

    These are also categories in which retailers have aggressively pushed their own house brands.

    Moves such as this are significant given Wal-Mart’s heavyweight status in the retail industry.

    “Any change that Wal-Mart makes with its product assortment has enormous implications for the entire industry.”

    Wal-Mart is not the only one doing this,  leading drug store chains, including CVS and Walgreens, grocers such as Kroger, and Wal-Mart’s rival discounter, Target, are also looking to simplify their store shelves.

    In good economic times, product variety is a must for retailers. But in down times, when shoppers aren’t buying much, variety can be a burden.

    “I think the feeling is that as these companies keep extending their [product] lines, it’s only causing confusion for shoppers and not really driving them to buy more products.”

    “If you walk into a Wal-Mart or another large retail chain, there are so many products on shelves that it does make it harder to shop.”

    Besides cutting clutter, industry experts say Wal-Mart and other retailers are looking for more lucrative deals from suppliers on both prices and advertising.

    “Perhaps one consideration in which product to cut is based on which company gives [Wal-Mart] the best deal.”

    “In this recession, consumers have certainly become less discriminating with what they buy. Consumers have rushed to value prices, and they are buying generic brands.”

    Retailers’ own brands have grown their market share by between 2% to 6% … and 77% of consumers who traded down to less expensive private label products are happy with their decision.

    Full article:
    http://money.cnn.com/2010/02/15/news/companies/walmart_dropping_brands/index.htm

    Posted in Mktg - Product Line Mgnt, Retailing | 1 Comment »

    Gillette launches new razor … guess how many blades ?

    February 15, 2010

    Excerpted from AP: Gillette Unveils Razor, and No, It Doesn’t Have 6 Blades, Friday, Feb 12, 2010

    A redesign of Gillette’s Fusion razor, the nation’s best seller, is coming and it doesn’t have any extra blades.

    The blades war started with Gillette’s introduction of a two-blade razor in 1971, Japan’s Kai went to three in 1998, soon followed by Gillette’s three-bladed Mach3, and then Schick launched Wilkinson-Sword’s four-blade Quattro in 2003.

    Not to be outdone, Gillette countered with the five-blade Fusion which has become a $1 billion brand in annual sales and accounts for 45 percent of the men’s razors sold in the U.S. (Below is a revealing internal perspective on Gillette’s 5-blade strategy – it’s well worth reading)

    Now. the company’s focus is on making shaving easier and less irritating to the skin.

    “Shaving is a very complicated and precise operation. Guys don’t say they want more blades. They want more comfort.”

    So there will be no escalation in the decades-long blades race.

    New features range from blades that are 15 percent thinner and meant to tug skin less, to a better grip and new mineral-oil lubrication.

    The ProGlide will cost 10 percent more than the current Fusion, at a suggested price of $10.99 for a handle and a single shaving head.

    Full article:
    http://www.cnbc.com/id/35364266

    * * * * *

    Company Confidential

    We’re Doing Five Blades!                                         

    By James M. Kilts
    CEO and President,
    The Gillette Company

    February 18, 2004

    Would someone tell me how this happened? We were the vanguard of shaving in this country. The Gillette Mach3 was the razor to own. Then the other guy came out with a three-blade razor. Were we scared? Hell, no. Because we hit back with a little thing called the Mach3Turbo. That’s three blades and an aloe strip. For moisture. But you know what happened next? The competition went to four blades. Now we’re standing around selling three blades and a strip. Moisture or no, suddenly we’re the chumps. Well, we’re going to five blades.

    Sure, we could go to four blades next, like the competition. That seems like the logical thing to do. After all, three worked out pretty well, and four is the next number after three. So let’s play it safe. Let’s make a thicker aloe strip and call it the Mach3SuperTurbo. Why innovate when we can follow? Oh, I know why: Because we’re a business, that’s why!

    You think it’s crazy? It is crazy. But I don’t care. From now on, we’re the ones who have the edge in the multi-blade game. Are they the best a man can get? Hell, no. Gillette is the best a man can get.

    What part of this don’t you understand? If two blades is good, and three blades is better, obviously five blades would make us the best razor that ever existed. Comprende? We didn’t claw our way to the top of the razor game by clinging to the two-blade industry standard. We got here by taking chances. Well, five blades is the biggest chance of all.

    I’m telling Engineering to stick two more blades in there. I don’t care how. Make the blades so thin they’re invisible. Put some on the handle. I don’t care if they have to cram the fifth blade in perpendicular to the other four, just do it!

    You’re taking the “safety” part of “safety razor” too literally, grandma. Cut the strings and soar. Let’s hit it. Let’s roll. This is our chance to make razor history. Let’s dream big. All you have to do is say that five blades can happen, and it will happen. Hey, if I’m the only one who’ll take risks, I’m sure as hell happy to hog all the glory when the five-blade razor becomes the shaving tool for the U.S. of “this is how we shave now” .

    People said we couldn’t go to three. It’ll cost a fortune to manufacture, they said. Well, we did it. Now some egghead in a lab is screaming “Five’s crazy?” Well, perhaps he’d be more comfortable in the labs at Norelco, working on electrics.

    Maybe I’m wrong. Maybe we should just ride in Bic’s wake and make pens. Ha! Not on your life! The day I shadow a penny-ante outfit like Bic is the day I leave the razor game for good, and that won’t happen until the day I die!

    The market? Listen, we make the market. All we have to do is put her out there with a little jingle. It’s as easy as, “Hey, shaving with anything less than five blades is like scraping your beard off with a dull hatchet.” Or “You’ll be so smooth, I could snort lines off of your chin.” Try “Your neck is going to be so soft, someone’s gonna walk up and tie a Cub Scout kerchief under it.”

    I know what you’re thinking now: What’ll people say?  When you’re on top, people talk. That’s the price you pay for being on top. Which Gillette is, always has been, and forever shall be, Amen, five blades, sweet Jesus in heaven.

    Stop. I just had a stroke of genius. Are you ready?  Put another aloe strip on that thing, too. That’s right. Five blades, two strips, and make the second one lather. You heard me—the second strip lathers. It’s a whole new way to think about shaving. Don’t question it. Don’t say a word. Just key the music, and call the chorus girls, because we’re on the edge—the razor’s edge—and I feel like dancing.

    Source: The Onion.com

    Posted in Mktg - Product & Innovation | 1 Comment »

    Take an Apple to work ?

    February 11, 2010

    Takeaway: Apple is a favorite at home, and many Mac Heads are now demanding their favorite computers in the workplace.

    So far, Apple has turned a blind eye to the corporate customer. Perhaps this is because team Jobs worries that the buttoned-up behemoths would taint its sexy consumer brand.

    That said, the recent introduction of the iPad reminds us that the consumer may soon become maxed out with Mac gear and the corporate client may become more critical to boosting Apple’s bottom line. Could a clever multiple target strategy help Apple have its cake and eat it too?
    * * * * *

    Excerpt from itbusiness.ca, “The enterprise opportunity Apple doesn’t want you to know about” by Jeff Jedras, February 8, 2010.
     
    There probably isn’t a week that goes by without an enterprise IT manager hearing one of their users lament “why can’t I have one of those cool iMacs instead of this boring, grey PC?” It’s enough to make even the strongest IT manager run for the hills.

    While IT had a list of tried and true answers to bar Apple for many years – cost of support, compatibility with Windows networks, cost of acquisition – those barriers have been coming down, one by one. New management tools make managing mixed networks simple. You can even run Windows on a Mac device, and the increased reliability of an Apple machine can net-out the marginal difference in acquisition cost.

    So, increasingly, there is a stronger and stronger case to be made for bringing Apple into the enterprise market. The question is, is the enterprise a market that the fiercely consumer-focused company even wants to go after?

    On that question, the jury is out. Apple declined several requests to be interviewed for this feature.

    The enterprise is certainly an untapped market for Apple. According to a November, 2009 report from Forrester Research on Enterprise Platform Trends, enterprise Mac OS use was at just four per cent in June 2009, up from one per cent when Forrester first began tracking the statistic in 2006.
    Edit by BHC
    Full Article:
    http://www.itbusiness.ca/it/client/en/home/News.asp?id=56341&cid=6

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    Posted in Mktg - Segmentation | 1 Comment »

    Hold the burger … and just give me with a glass of water, please.

    February 10, 2010

    Excerpted from CNNMoney.com: The burger and beverage recession, February 9, 2010

    People are holding back on buying burgers, soda and beer. So much for fast food, soft drinks and booze being recession-proof.

    Sure, the worst of this downturn may in fact be over, but don’t tell that to Coca-Cola, McDonald’s and Molson Coors.

    • Coke’s fourth-quarter profit that was led by robust sales growth in markets such as India, China and Brazil. But North America revenue fell 4%.
    • McDonald’s said that same-store sales, a key measure of growth at restaurants open at least a year, rose more than 4% in Europe as well as in its Asia/Pacific, Middle East and Africa division.  But,  U.S. same-store sales were down 0.7%. 
    • Molson Coors reported that demand for its beers in international markets in the fourth quarter was frothy, with volume rising 14% thanks to healthy sales in Europe, China and Latin America. Yet, sales fell in the U.S. during the quarter.

    It appears that U.S. consumers are serious about keeping an eye on their budgets … even for relatively inexpensive creature comforts such as a Big Mac or six-packs of Coke Zero or Coors Light.

    “People aren’t as panicked, but they are still hanging on to their wallets pretty tight. The big question hanging out there is whether this recession has been long enough and deep enough to change consumer spending for an extended period of time.”

    Full article:
    http://money.cnn.com/2010/02/09/markets/thebuzz/index.htm

    Posted in Mktg - Consumer Behavior | Leave a Comment »

    Tropicana customers squeeze more out of OJ

    February 9, 2010

    Takeaway: When consumers think of loyalty programs, airlines and credit card companies are usually top-of-mind. However, Pepsi recently launched a points program on its Tropicana brand.

    Perhaps consumer products marketers should reexamine how these programs could reward them. 

    * * * * *

    Excerpt from BrandWeek, “Tropicana Starts Offering ‘Juicy Rewards’” by Elaine Wong, February 1, 2010. 

    Freebies are always appreciated, but even more so in a downturn. That’s why PepsiCo rolled out its Juicy Rewards program for Tropicana last week, a move the company characterizes as the largest marketing investment for its orange juice brand. The program offers incentives through a points-based system for every purchase of qualifying Tropicana juice. Rewards include Adidas shoes, TaylorMade golf balls and a trip to the local zoo, said Tropicana chief marketing officer Andy Horrow. In an interview with Brandweek, Harrow, the former global marketing officer for PepsiCo International, discussed how Tropicana hopes to shake up the OJ category with the new rewards program.

    Brandweek: What are you looking to accomplish with Juicy Rewards?
    Horrow:     The campaign is a really big marketing platform for Tropicana. Juicy Rewards is a first of its kind opportunity to give consumers something more from their orange juice. We’re not only giving people the best opportunity to get the best-tasting and highest-quality orange juice, but 20,000 different ways they can get more value from their orange juice via healthy rewards. It’s an opportunity for us to really engage with our consumer and get them excited about Tropicana.

    BW: Juicy Rewards, at its core, is an incentive-based marketing program. But how penny-pinched are consumers when it comes to buying OJ?
    Horrow:     I don’t know that it’s about getting people to buy more orange juice. It’s about giving people more value for the OJ they are buying. We’re already America’s favorite orange juice. We have been and always will be. It’s about giving consumers more value and that is what they want right now. We did a survey that helped inspire the development of this program, and 98 percent of participants said they wanted more value from the products and services that they buy. They expected more from us, and [programs like Juicy Rewards] are one of the ways that Tropicana will continue to go to market in the future. It’s not just about talking with consumers. It’s about engaging with them and building a relationship with them, which is important for any marketer.

    BW: How much are you spending on this campaign for Tropicana?
    Horrow:     We’re taking a big bet on this. We think it’s the right way for us to go going forward and we’re putting a lot of marketing muscle behind it. We’re being very bold about it and very proud of what this program will stand for. That’s the view going forward. This is the biggest marketing campaign that this brand, I daresay, has ever had—certainly in recent memory—and I don’t like to think of it as a marketing campaign, but as a platform that supports everything we’re doing. It’s a great way for us to get our customers engaged and our retailers excited.

    Edit by BHC 

    * * * * *

    Full Article:

    http://www.brandweek.com/bw/content_display/news-and-features/promotion-incentive/e3i757c960f9ac5b913ba87f344ecbb79ac

    * * * * *

    Posted in Mktg - Loyalty Programs | 1 Comment »

    Mobile loyalty program may destroy the competitive edge of shopper insights

    February 8, 2010

    Key Takeaway: Motorola is attempting to establish the new decade’s version of a customer loyalty program.

    The service will allow the shopper to both receive and use coupons through his or her mobile phone.

    The mobile phone will also act as a shopper ID card, eliminating the need for the shopper to carry around club cards for every retail outlet.

    In addition to easing the shopping process for the consumer, this innovative system may benefit small retail outlets as well. Smaller chains that do not have the financial ability to lay down the infrastructure for their own loyalty programs will now have access to invaluable consumer information, allowing them to employ more effective product, pricing, and promotional strategies.

    Will this upset the big boys, who already have strong shopper insights?

    * * * * *
    Excerpted from Brandweek, “Motorola’s Loyalty Solution Targets Shoppers” by Noreen O’Leary, January 19, 2010

    Recognizing consumers’ need to use mobile phones while shopping, Motorola launched a Mobile Loyalty Solution, which serves as an extension of existing loyalty card programs or as the basis for new digital ones.

    The service, unveiled at the National Retail Federation’s annual convention in New York last week, enables retailers to send offers and incentives to customers’ mobile phones, eliminating the need for membership cards and paper coupons. At the same time, those merchants are using it to build a database of shopper product interests, purchase habits and preferences.

    “With a growing number of smartphone users and the enhanced capability of their operating platforms, an era–where a constant digital connection via a mobile phone enhances the consumer’s shopping experience–has begun,” said Dana Warszona, global lead for the m-commerce portfolio, Enterprise Mobility Solutions. “From enabling consumers to easily search for product information to completing transactions, the mobile phone has become a business-critical tool that retailers must incorporate into their strategy to meet the needs of customers, now and in the future.”

    Edit by JMZ

    * * * * *

    Full Article:
    http://www.brandweek.com/bw/content_display/news-and-features/shopper-marketing/e3id183d5e80b48e57c30e96d6a2b64073a

    Posted in Mktg - Loyalty Programs | Leave a Comment »

    AdAge reveals seven truths behind successful brand management

    February 5, 2010

    Takeaway: Even top MBAs need a little help every now and then.

    AdAge’s one-pager on the seven universal brand management truths may make for effective cubical flare, though some may want to keep it out of sight in a locked drawer to gain a competitive edge over their peers.
     
    * * * * *

    Excerpt from AdvertisingAge, “The 7 Universal Brand Management Truths” by Nitish Gupta, January 5, 2010.
     
    Coke has a market capitalization in excess of $100 billion because the perceived value of its brand is significantly higher than the sum total of all the assets of the company. By staying true to seven core principles, a marketer can weather economic highs and lows while building an iconic brand for target consumers.

    1. Leverage information via hypothesis-led data analysis. This refers to leveraging information and converting it into a forceful rationale to take the right action for the brand. The key to this is understanding the issue at hand by anchoring the hypothesis and then looking at the data or information to prove the hypothesis right or wrong.

    The pain-relief medicine brand Aleve had been struggling with single-digit market share. The team anchored two hypotheses: Consumers were not aware of the brand Aleve, and consumers were aware but didn’t want to try the brand. Through data mining, they found that 35% of heavy pain-relief medicine users had tried Aleve in the past year but had been using other brands as well. Thus the issue was clear that the brand had the awareness and trial but needed to drive loyalty. Then, based on the top attributes that drove preference for the brand (control over pain, and freedom to do things you want), they developed the “Dramatic Difference” campaign, resulting in an almost 10% to 20% increase in sales and shares hitting an all-time high.

    2. Understand the competition and maintain your point of difference. Having a broader category-competitive understanding is important because that sets the context under which consumers will be viewing your brand. It’s critical to maintain the point of difference for your brand and play to its strengths.

    When Coke managed to get sponsorship rights for the 1996 Cricket World Cup in India, Pepsi gauged the competitive threat and stuck to its point of difference (youthful rebellion brand positioning). It launched the “nothing official about it” campaign during the Cricket World Cup, which actually helped Pepsi strengthen its leadership position in India.

    3. Be consistent with your positioning over time and across platforms. For any brand, it’s imperative to create a distinctive and meaningful position in the mind of consumers for the offering. So no matter what brand extension or innovation you are planning for your brand, ensure that it builds on and strengthens that distinctive positioning.

    The Dove brand has extended across categories from skin care to hair care to others like deodorants by positioning itself on the soft/smooth platform and the fact that it contains moisturizing milk. Dove deodorants are positioned as leaving the underarms feeling soft and smooth. The brand has extended itself only in those categories where these soft/smooth and “contains moisturizing milk” equities are relevant, thus staying true to the positioning over time and across platforms, thus strengthening the brand.

    4. Know what your target consumer wants. Evaluating all the marketing choices from the vantage point of the consumer will help you to connect with the consumer and genuinely make a positive difference in his or her life. It’s important to understand both the stated and unstated needs — the insights into your target consumers’ lives.

    Louis Vuitton was launched in the late 1800s by supplying LV-branded suitcases to travelers. Travel then was a luxury afforded to only the wealthiest. Thus the brand became a symbol of status — it helped consumers showcase their differences from others. By leveraging this core human insight, LV was able to extend to shoes, apparel and bags. It has became one of the most extended brands but has suffered almost no diminishing returns. The brand was positioned not just on a functional need (like storage), but instead it tapped into deeper insights to connect with consumers.

    5. Manage budgets with a “scarcity” mentality. Working with a scarcity mentality will help you maximize returns for every dollar spent by answering the question, “Is this the best way to spend dollars on marketing my brand, or is this money better spent elsewhere to generate greater returns?”

    Starbucks, instead of spending money on TV advertising, clusters an area with its stores, increasing total revenue and market share. This was contrary to what established retailing houses did, which was to avoid placing stores near each other so as not to cannibalize sales at existing outlets. For Starbucks, doing so resulted in reduced supply costs and made management of the stores cheaper, which more than made up for sales lost to cannibalization. Thus, funding for expansion from internal cash flow was a judicious use of money. Until recently, Starbucks spent just 1% of its revenues on marketing and advertising (compared to more than 10% for companies of the same size).

    6. Get the right pricing that offers value in the eyes of consumers. Pricing determines the value that your consumers get for your offering: Perceived consumer value equals perceived brand benefit/price. Thus it’s critical to decide the pricing strategy for your brand so that there is a net positive value for your consumers.

    Gillette’s pricing strategy for its flagship men’s razors and blades brand focuses on regularly upgrading them, and hence pricing up on their newest offerings. The innovations are consumer significant, so that they are ready to pay a premium to upgrade to the latest offering. Right from their twin blade to triple-blade Mach3 to Mach3 Turbo (with vibrating motor) to Gillette Fusion (with an additional trimming blade), their upgrades have been significant, and as a result they’ve been able to charge a more than 10% premium with them.

    7. Motivate the team via thought leadership. Building a successful brand requires dedicated support, not just from the leader but from the whole multifunctional team — sales, research, R&D, finance. To do the same, the brand leader needs to have a clear vision for the brand and enlist the team toward the same.

    When it launched, Cosmopolitan had been positioned on a broad “for the family” platform. However by the mid-1950s it was suffering from declining readership. In the 1960s Helen Gurley Brown took charge. She sharply defined the target audience (progressive, career-oriented and open-minded women) and then rallied the team to deliver a product that would appeal to the target. They came up with innovations like a glossy format, inspirational articles and writings, and talking frankly and honestly about various issues and needs of women. The first print run of about 350,000 was sold out by the end of publication day, and the Cosmopolitan of today was born.
    Edit by BHC
     
    * * * * *

    Full Article:
    http://adage.com/cmostrategy/article?article_id=141298

    * * * * *

    Posted in Mktg - Brand Management | Leave a Comment »

    Price hikes cause an avalanche in the U.S. beer market

    February 4, 2010

    TakeAway:  Despite significant volume declines and loud protest and cries for help from retailers, the biggest U.S. beer brewers continue to increase prices. 

    It could be that the big brewers are trying to capitalize on the fact that consumers seem willing to pay higher prices for beer (evidence:  craft beers, typically the more expensive beers, posted great numbers).  However, the value proposition of craft beers is very different from that of mass market beers, and consumers are willing and able to pay a premium for the added benefits that craft beers offer. 

    What benefits have mass market brewers added to their value proposition to close this gap and warrant price increases?

    * * * * *

    Excerpted from WSJ, “Slump Has Beer Makers Over a Barrel,” By David Kesmodel. January 21, 2010

    U.S. beer sales volumes fell 2.2% last year, the highest rate since the 1950s, with demand worsening late in the year … The decline, the industry’s first since 2003, raises demands for industry leaders Anheuser-Busch InBev and MillerCoors to come up with better advertising and to rethink recent price increases …

    But they must tread carefully, balancing price moves against a need to drive profits in the wake of the mergers that created the two.

    The two giants increased prices by about 5% last year, fresh off InBev’s acquisition of Anheuser-Busch and the move by SABMiller and Molson Coors Brewing to combine U.S. operations. Those increases, along with a weak job market and lackluster advertising, contributed to the sales drop …

    Some retailers are pushing back against the industry’s price increases and calling for a new approach to marketing. “We need cost decreases or we think there will be declines in domestic beer purchases in total,” said a 7-Eleven spokeswoman. 7-Eleven unsuccessfully has sought lower prices from Anheuser and MillerCoors …

    Anheuser and MillerCoors, which control nearly 80% of U.S. beer sales, posted strong profit gains in the first nine months of 2009, buoyed by higher prices and cost cuts that followed the 2008 mergers.

    But longer-term, they’ll need to restore sales-volume growth because cost cuts and price hikes will be harder to come by …

    “When you raise prices that much, there are going to be consequences,” said an analyst with Deutsche Bank. He said brewers failed to come up with a blockbuster new product akin to Anheuser’s 2008 success with Bud Light Lime.

    While the U.S. economy showed signs of improvement in the second half of 2009, beer volumes cooled further. SABMiller said Tuesday that unit sales from distributors to retailers fell 3.6% in the fourth quarter, the weakest result since MillerCoors was formed. SABMiller cited a “challenging industry and economic environment.”

    Anheuser, the No. 1 player in the U.S. by sales, and MillerCoors, No. 2, have signaled price increases this year in the range of 2% to 3%, said editor of industry newsletter Beer Marketer’s Insights.  Deutsche Bank analyst’s say they expects large retailers to insist that brewers offer more promotions to spur demand, resulting in pricing not “much better than flat.”

    Anheuser posted a 2.1% decline in shipments last year, its biggest drop since 1976 … MillerCoors … had a 1.9% drop. Large suppliers specializing in imported beers fared worse, with Crown Imports showing a 5% drop. The small-batch “craft” beer industry continued to represent an industry bright spot, with the biggest among the craft brewers, Boston Beer, showing a 1.7% increase.

    Edit by TJS

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    Full Article
    http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=114556

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    Posted in Mktg - Pricing | Leave a Comment »

    Losing your marketing budget is a losing strategy

    February 3, 2010

    Key Takeaway: Even in an economic downturn, marketing should be thought of as a necessary business component.

    While many companies find it simple to slash marketing budgets during recessions, others use it as an opportunity to increase awareness, improve positioning, or steal share.

    Marketers understand the business from all angles, making their input invaluable during a crisis.

    GE focuses on a framework of “optimize today, build tomorrow” in which marketing serves a crucial role in the overall strategy and has contributed to the company’s continued success.

    * * * * *
    Excerpted from BusinessWeek, “A Marketer Is a Terrible Thing To Waste” by Beth Comstock, September 21, 2009

    As a result of the economic downturn, marketing budgets are being slashed and the stewards of many of the world’s largest and most prestigious brands have been forced into hibernation mode—waiting for the economy to turn around and the dollars to return to their function area.

    But at GE, where I work, we’re trying to increase the volume on marketing, even in the face of these tough times.

    In fact, once marketing was recognized and embraced as a potential growth driver at GE, we marketers were only too happy to hang our hats on good fortune—confident we could deliver for the company 8% or 10% growth year over year, more than double our historic rate.

    Marketing budgets and resources can be an easy target because they tend to be more flexible—they’re not tied to fixed costs or capital expenditures. Some may even see marketing budgets as a good-times luxury. The reality, though, is that marketing serves as a hedge against economic crises. Good marketing minimizes negative impact and even slingshots the best ideas, innovations, and products forward.

    In the current economic environment, those of us in marketing at GE have found that this framework—optimize today, build tomorrow—is incredibly useful to focus our efforts and to remind our colleagues of the vital role marketing plays in good times and bad. For most of GE’s businesses, our ambidextrous strategy unfolds as follows: 60% to 70% of our marketing efforts support today’s initiatives, with the remaining focus on building tomorrow’s initiatives. We think that’s a realistic alignment of energy and resources.

    There are three core strategies we have adopted to help us Optimize Today:

    • Understand the needs of customers like never before,

    • Gain share, and

    • Reexamine value and how to measure success.

    A wide body of research indicates that companies that spend more time understanding their customers in a downturn are better positioned to do business with them when the economy recovers. On one level, it’s counterintuitive. You know your customers aren’t buying, so why bother? The reality is that there is no better time than now—no matter the environment—to listen for clues, discern insights, and refine value. Customers remember the partners who picked up the phone and called when times were tough and they were not in a position to buy.

    In tough economic times, some companies will hunker down until the crisis passes. But winning organizations will take advantage of the opportunity presented to them, capture more share, and achieve lasting success.

    We’ve increased our promotions spending at GE, using the current climate as an opportunity to remind customers and investors that we’re an innovative technology company with staying power—and we’ll be here when the recession is over, emerging stronger and smarter from the experience, just like we always have.

    At GE, we’ve been particularly focused on understanding customer profitability. Do we understand the true cost of serving our customers? Which ones represent the highest value? Marketing can give you a laser focus on which customers are worth investing in—and which are destroying value for your company.

    If your marketing radar is tuned to leading indicators and trends, maybe you were able to see signs of the downturn early enough to be prepared. It’s this ability to see the world in panoramic view that makes marketing so vital to an enterprise’s long-term viability. No other function focuses on and can integrate these key elements:

    • Intelligence: What’s going on in the market, and how is the crisis affecting it?

    • Customer insights: What do my customers need, and how do I serve them best?

    • Value proposition: How do I articulate the value of my product or service and create differentiation?

    • Commercial activation: How do I deliver via channel, marketing communications, training, etc.?

    Ultimately, marketing is the key to sustainability and vitality—in good markets or economic crises.

    Edit by JMZ 

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    Full Article:
    http://www.businessweek.com/innovate/content/sep2009/id20090921_471157.htm

    Posted in Mktg - ROI | Leave a Comment »

    Lessons from Toyota’s quality snafu

    January 29, 2010

    Ken’s Take:

    (1) Kudos to Toyota for stepping up with a J&J Tylenol-like response in the market … especially since the analogous Audi problem turned out to be bogus.  It’ll hurt Toyota  in the short-run, but pay dividends in the long-run

    (2) Press reports have a tinge of “good for them, good for US” … seem to overlook that most of the vehicles are made in the U.S.  Hmmm

    (3) GM will regret its direct attack during during Toyota’s sales cessation period.  I’m as competitive as the next guy (ok, more competitive), but what goes around comes around … Just watch and remember.

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    Consumer Reports, the bible of the car-buying public, now rates Ford’s quality higher than Toyota’s.

    Excerpted from WSJ:Toyota: Too Big, Too Fast, Jan. 28, 2010

    Three or four years ago senior Honda executives demanded to know from their underlings how arch-rival Toyota could expand its production and sales so quickly and still keep its quality intact.

    Now they’re getting the answer: Toyota’s once-vaunted quality actually was eroding.

    In fact, Consumer Reports, the bible of the car-buying public, now rates Ford’s quality higher than Toyota’s.

    General Motors held the title of “world’s largest car company” for decades before things began to go wrong there. Toyota grabbed the top spot last year, and things started going awry in just a matter of months.

    This week the company suspended the sale of eight different models, including the popular Corolla, Camry and Avalon, for potential safety problems. Next week Toyota will halt production at the five North American factories that make those vehicles.

    The company also expanded a recall that already was the largest in automotive history. Some 4.8 million Toyota cars and trucks might suffer from sticking accelerator pedals or faulty floor mats that seem to grab the accelerator and can cause the car to accelerate out of control. Several deaths have been attributed to the problem.

    How could this possibly happen to the car company that was the undisputed leader in quality, the company that all the others from Germany and America and even Japan wanted to emulate? The answer is almost too simple.

    Toyota is suffering from trying to get too big, too fast. It went on a headlong expansion spree around the world.

    In doing this Toyota abandoned one of the pillars of its conservative culture: never building a new product in a new factory with a new workforce.

    Any new Toyota factory, anywhere in the world, would first build a vehicle that Toyota was making at one of its existing plants. That approach minimized quality-control variables.

    But in 2006 Toyota started building its first full-size pickup truck at a new factory with a new workforce in San Antonio, Texas. That truck, the Tundra, was recalled both for the gas-pedal issue and for another problem, potential corrosion of the vehicle’s frame.

    In 2005 Toyota recalled 2.38 million vehicles in the U.S., which was slightly more than the number of cars and trucks the company sold in America that year. 

    * * * * *

    Another question is how quickly Toyota can resolve the unintended acceleration issue. It’s a problem with a curious history.

    In the mid-1980s Audi was accused of having a similar problem, and its U.S. sales almost evaporated. But the issue, fed by media hysteria, turned out to be bogus.

    Toyota’s acceleration problem appears to be the real thing. The company has pinpointed specific likely causes—linkages in the gas-pedal mechanism and the size of the floor mats.

    In an era when cars have more microchips than many desktop computers, these things are amazingly low tech.

    Reports yesterday said Toyota was zeroing in on a repair: inserting a “spacer” in the pedal mechanism that would increase the tension in a spring and help prevent sticking.

    * * * * *

    The company remains the leader in gas-electric hybrid technology. Toyota is reversing its overexpansion and reducing excess capacity by closing a plant in California, and postponing plans to build another plant in Tupelo, Miss.

    Because it is Japan’s biggest auto maker by far, Toyota tends to be insular. One pressing need is for Toyota to develop a new generation of talented and trusted local leadership in the many countries where it operates. It’s impossible for a small inner circle in Japan to run a global company effectively in the long run. 

    * * * * *

    The immediate question is what Toyota’s dramatic moves will do to its reputation.

    Consumers might (and should) give the company credit for taking unprecedented and costly action in the interest of protecting their safety. But many Toyota owners are worried, and brand-loyalty ratings have begun to drop.

    In last year’s J.D. Power Customer Retention Survey, Toyota lost the top spot to Honda for the first time since the poll began six years ago. Toyota and Lexus still hold the second and third positions in the survey, but the trend has to be discomfiting.

    General Motors, meanwhile, has begun offering special discounts to Toyota owners who trade in their cars, a marketing move that might backfire the next time GM has a big recall.

    http://online.wsj.com/article/SB10001424052748704878904575031082583154198.html?mod=WSJ_newsreel_opinion

    Posted in Mktg - PR - Public Relatios, Mktg - Product Recalls | Leave a Comment »

    While Pepsi pushes health, Wall Street is still on a sugar high

    January 29, 2010

    Key Takeaway: PepsiCo, a company whose only ties to health come through the athletes in its advertisements, is trying to make a push for a more balanced portfolio.

    Throughout this period, the company has seen a sharp decline in sales for many of its hero brands. PepsiCo is still staying true to its healthy vision, as the R&D budget has increased by nearly 40% over a three year period.

    As delicious as Pepsi Apple Slices may sound to some, Wall Street does not seem to be as favorable to the strategy as it holds PepsiCo’s stock price well below the soft drink giant, Coca-Cola 

    * * * * *
    Excerpted from BusinessWeek, “Pepsi Brings In the Health Police” by Nanette Byrnes, January 14, 2010

    Over the past two years, Pepsi has hired a dozen physicians and PhDs, many of whom built their reputations at the Mayo Clinic, WHO, and like-minded institutions. Some researched diabetes and heart disease, the sort of ailments that can result in part from eating too much of what Pepsi sells.

    Last year, technological improvements to an all-natural zero-calorie sweetener derived from a plant called stevia allowed Pepsi to devise several fast-growing brands, including Trop50, a variation on its Tropicana orange juice that has half the calories of the breakfast standby. Introduced in March, Trop50 has become a $100 million brand.

    Chief Executive Nooyi says she has no choice but to move in healthier directions. For more than 15 years, consumers have gradually defected from the carbonated soft drinks that once comprised 90% of Pepsi’s beverage business. Many switched to bottled water. Meanwhile, the cloud of criticism shadowing Pepsi’s largest business, oil- and salt-laden Frito Lay snacks, grew steadily.

    Coming off a tough 2009, during which once high-flying brands such as Gatorade slipped, Pepsi hasn’t convinced Wall Street that Nooyi’s plans will pay off. The company trades at a significant discount to its rival, Coca-Cola . While securities analysts say that healthier foods look like a good long-term market, for now, the slowdown in the company’s far larger traditional snack-and-soda portfolio cannot be ignored. “The consumer can move to baked chips, or pretzels, or Sun Chips, but they’re not yet giving up their chips for an apple or carrot stick,” says Bill Pecoriello, CEO of Consumer Edge Research, an independent stock-research firm in Stamford, Conn.

    Pepsi built its empire on the manufacture and distribution of instantly recognizable products. It could get a bag of Lay’s or a can of Mountain Dew to customers practically anywhere in the world. So far, healthier options have produced only modest hits, including TrueNorth nut snacks and SoBe Lifewater.

    Edit by JMZ

     

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    Full Article:
    http://www.businessweek.com/magazine/content/10_04/b4164050511214.htm?chan=innovation_branding_top+stories

    Posted in Mktg - Product & Innovation, Mktg - Product Line Mgnt | Leave a Comment »

    Apple’s tablet to be the savior for lagging industries

    January 28, 2010

    Key Takeaway: Apple is back to its incredibly innovative ways as it prepares for the launch of the iPad in 2010.

    This device will allow consumers to have a more interactive experience with print media, give people the ability to host two-way video discussions anywhere and anytime, and may finally jumpstart telecommuting.

    Talk about benefit-overload; this product’s unique attributes show that there are ways to revive and improve stagnant, or even declining, categories.

    * * * * *

    Excerpted from BusinessWeek, “Five Ways Apple’s Tablet May Change the World” by Ben Kunz, December 30, 2009

    Speculation about Apple’s one-device-to-rule-them-all iPad reached fever pitch this month when Yair Reiner, an analyst at Oppenheimer (OPY), dug through Steve Jobs’ production pipeline and found evidence that the tablet was being readied for an April 2010 launch.

    …the iPad will change the world in at least five ways.

    • Magazine and newspaper publishing will bounce back as consumers rediscover paid subscriptions…Expect to see publishers launch visually stunning versions of their magazines with swooping typography, video insets, CNN iReporter-style news uploads, social media overlays—whatever it takes to make you think you’re seeing a magazine or newspaper like never before, so much so you’ll even want to pay for it.

    • Television and radio ratings will continue to fall. Unlike print, TV and radio won’t fit easily into the Apple tablet’s format. Sure, U.S. consumers still watch 5 hours and 9 minutes of live television a day, but the problem is ratings don’t hold when commercials actually air…Rather than being a device to watch television, the Apple tablet is more likely to be an interactive distraction when real TV ads come on your basement set.

    • Augmented-reality views of the world will increase. If you missed this trend, it’s simple: Augmented reality puts computer graphics on top of live video feeds, similar to the yellow line you see on the field in NFL games.

    • Two-way video on tablets will push communication costs even lower…Add a tablet with built-in Webcam, and suddenly video calls are as easy as holding up a mirror.

    • Telecommuting may finally take off…when Apple tablets make portable video truly accessible, plane ticets and poor coffee in cars may become things of the past.

    Edit by JMZ

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    Full Article:
    http://www.businessweek.com/technology/content/dec2009/tc20091229_795528.htm

    Posted in Mktg - Product & Innovation | Leave a Comment »

    Slow and steady wins the pricing game

    January 26, 2010

    Key Takeaway: We all know that a pricing increase, when performed properly, has the potential to exponentially increase profits.

    As the economy begins to pick up, it will be important for companies to extract greater value out of their current portfolio, which may be heavily discounted.

    The most effective price-increasing strategy may be “Steadily Decreasing Discounting” (SDD), which was found to increase both sales and profitability for the companies using this method. Unlike typical strategies, SDD involves slowly raising prices from the sale price back to the initial level rather than all at once.

    This will continually create incentive for a consumer to purchase the product right now, and won’t leave the consumer with a sense of regret if she missed the lowest price.

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    Excerpted from NACS Online, “Study: Retailers Can Increase Profits by Changing Pricing Strategy” by The University of Miami School of Business Administration, January 7, 2010

    The University of Miami School of Business Administration released results of a study this week that shows retailers can substantially increase sales and profits if they increase the price of a sale item to its original cost in gradual steps rather than in one swift move.

    Over a 30-week field study, the school reported a 200 percent increase in sales and a 55 percent increase in profits by using this strategy, which it calls “Steadily Decreasing Discounting” or “SDD.”

    “SDD starts like Hi-Lo pricing in that you have a big sale, but the main difference comes after the initial sale when you progressively increase the price back to its regular level versus in one shot,” explained Michael Tsiros, an associate professor and chair of the Marketing Department at the University of Miami School of Business and the study’s lead author. “By doing so, SDD avoids a key problem of the Hi-Lo strategy – the big dive in sales at the end of the promotion that results from people stocking up on the item during the promotion or because they perceive the price to be too high because it was recently much lower.”

    “SDD could be particularly effective in the current economic downturn,” Tsiros said. “Many retailers have been offering discounts of 60 percent or even 80 percent, and stores can’t offer those prices forever. But if they bring prices back up in increments, consumers will have time to adjust.”

     

    Edit by JMZ

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    Full Article:
    http://www.nacsonline.com/NACS/News/Daily/Pages/ND0107107.aspx

    Posted in Mktg - Pricing | Leave a Comment »

    Loss leader pricing – why do it?

    January 25, 2010

    TakeAway:  Though it’s facing a lot of resistance from its franchisees, Burger is mandating a profit killing price for the double cheeseburger. 

    Why in the world would a global franchisor want to force it’s franchisees to lose money.  The answer is, of course the franchisor doesn’t want the franchisee to lose money.  The franchisor wants to use the item as bait to bring in customers and increase the sales of other, and most likely, higher margin products. 

    If Burger King franchisees do not get this logic or have proof that this logic is false, then Burger King may have bigger problems to worry about.

    * * * * *

    Excerpted from WSJ, “Burger King Franchisees Can’t Have It Their Way,” By Richard Gibson, January 21, 2010

    The price of a double cheeseburger is generating a lot of heat among Burger King franchisees.

    In an ongoing dispute that could affect how the nation’s hundreds of franchise organizations set prices, the burger chain is insisting that its two beef-patty sandwich be sold for no more than $1—in line with other items on its “Value Menu.”

    But the company’s franchisees claim that at that price, they lose money.

    Although the loss on each sandwich may only be a few cents, a typical restaurant might sell several hundred of the burgers each week.

    Most franchisees are following orders for now, but the National Franchisee Association for Burger King, which represents restaurant operators across the U.S., filed a lawsuit last fall in U.S. District Court in Florida, asserting that the company’s franchise agreements don’t allow it to dictate prices.

    Burger King … says it sees the value promotion as key to competing effectively in the current consumer environment …

    A court ruling that’s favorable to Burger King could embolden other franchisers to mandate prices. Many franchisees have long regarded their power to set prices as testament to their independence.

    Burger King’s arch rival, McDonald’s, faced a similar issue, when its franchisees rebelled against a $1 double cheeseburger. The matter was defused when the fast-food giant removed one of the sandwich’s two slices of cheese and renamed it the McDouble, cutting the cost of ingredients …

    Burger King’s franchisees say they usually get the chance to sign off on price changes, and that they’ve twice rejected a $1 double cheeseburger. Burger King confirms that it previously didn’t dictate prices on individual items, though it did require a $1 maximum price on Value Menu items.

    The company won a separate case in 2008 requiring franchisees to offer the Value Menu, which is core to its efforts to attract price-conscious consumers.

    A company might choose to set prices if it thinks the stores are charging so much that its royalties—and its reputation—are being diminished. But most companies don’t like to rile their franchisees …

    Some franchises … say they recommend prices, especially in connection with national marketing campaigns.  For example, Papa John’s is offering a special Super Bowl pizza for $11.99, though it notes in advertisements that the price is valid only at “participating” restaurants.

    “Most franchisees follow our recommended national offers,” says Burger King’s SVP … since customers might argue with the store’s workers if they’re charged more.”

    Edit by TJS

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    Full Article
    http://online.wsj.com/article/SB20001424052748704320104575014941842011972.html#mod=todays_us_section_b

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    Posted in Mktg - Promotion | Leave a Comment »

    Holding on for dear life, Nokia attempts to re-enter the handset market

    January 21, 2010

    TakeAway: Like 66% of companies out there, Nokia suffered from the first mover disadvantage.  Then throw some complacency on top of that and you will have the current day Nokia – losing market share by the minute and watching its stock price tumble. 

    Now Nokia it is trying to crawl back.  Blaming customer focus, carrier demands, etc. for its dwindling success, Nokia is hoping that a suite of killer apps and new distribution channels will renew its position as a credible competitor in the handset market.

    * * * * *

    Excerpted from NYTimes, “Can Nokia Recapture Its Glory Days?” By Nelson D. Schwartz, December 13, 2009

    If there’s anywhere left in the world where it’s still impolite to flash a BlackBerry or an iPhone, it’s Nokia’s annual analyst meeting.

    But earlier this month, as executives talked up the company’s plans for 2010, the optimistic message from the stage was belied by the behavior of the audience. In the back of the room, one money manager after another distractedly toyed with a competing device … one analyst announced to the room, “I don’t think anyone in this room is expecting an improvement in earnings next year” …

    Although Nokia still commands 37% of the world’s handset market, it’s facing bruising competition in the lucrative high end of the industry, where the iPhone and BlackBerry have grabbed the cool factor in smartphones that can surf the Web and handle e-mail …

    Nokia’s problems are especially acute in North America, where its hold on smartphones equals 3.9%, compared with 51% for Blackberry and 29.5% for iPhone … 

    “We made wrong decisions in the American market,” says Nokia’s EVP for devices. For example, Nokia was slow to make the change to so-called clamshell phones, sticking with “monoblock” models even as consumers abandoned them.

    And while Nokia first offered touch-screen technology in 2004 — three years before the debut of the iPhone — Apple’s models quickly made Nokia’s competing products look stodgy. Most of Nokia’s touch-screen phones can’t quickly transform their screen with the jab of a finger, which is among the factors that make the iPhone seem so much more slick.

    Until recently … the company didn’t want to produce phones specifically tailored for American consumer tastes, and it resisted demands from the major carriers to come up with phones based around their brands and individual specifications …

    Nokia has also been hobbled by its traditional weakness in phones employing C.D.M.A., the wireless technology offered by Sprint and Verizon Wireless that’s used by about 50% of American consumers … Nokia focuses instead on G.S.M. phones for AT&T and T-Mobile. However, AT&T’s exclusive deal with Apple has hurt Nokia in the high-end smartphone market …

    Nokia is finally responding — its lithe, BlackBerry-like E72 appeared in the United States on Tuesday — but it is facing looming threats in other segments.

    Google is offering Android, a rival to Nokia’s own operating system, which has been picked up by competitors like HTC, Motorola and Dell, while Asian manufacturers are turning up the heat with low-priced handsets in emerging economies where Nokia has long enjoyed outsize market share … 

    “The market believes this is a management team that can’t and won’t execute,” …

    Despite the pessimism outside, Mr. Kallasvuo insists spirits are still high inside the company …

    Indeed, for all the new competition in smartphones, Nokia remains the dominant player in conventional handsets, selling roughly 15 phones a second worldwide …

    And while market share might be minuscule in North America, the company commands a whopping 62.3% of the market in the Middle East and Africa, as well as 48.5% in Eastern Europe and 41.8% in Asia …

    What’s more, Nokia has been written off before.  Citing past crises in 1998 (the advent of smaller phones), 2001 (the bursting of the tech bubble) and 2004 (the sudden popularity of flip phones) … “we’ve always had points where technology hit a plateau and had to be reconfigured.”

    So why didn’t Nokia move more quickly to counter Apple and Research in Motion in smartphones? “We didn’t execute; we were aiming at too geeky a community,” he says. “Apple is made for the common man. It’s more for Joe Six-Pack than techno-geeks. But we understand Joe Six-Pack too” …

    Nokia executives say new offerings like the N900, which is as much a mobile computer as it is a phone, or the N97 Mini, which combines touch-screen technology with a qwerty keyboard, will win back buzz from Apple and BlackBerry while appealing to the company’s 1.1 billion customers …

    Another crucial development in 2010 will be a bigger push for North American market share, as Nokia works more closely with carriers and brings out more smartphones … Nokia executives are promising a smartphone for next year that will update the company’s aging Symbian operating system, combining the touch-screen coolness of the iPhone with a BlackBerry-like e-mail solution …

    And though Nokia’s flagship outlets in the United States may be folding, the Finnish giant is still trying to compete directly with Apple online, opening Ovi in May to compete with Apple’s hugely successful Apps Store …

    Edit by TJS

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    Full Article
    http://www.nytimes.com/2009/12/13/business/13nokia.html?_r=1&scp=2&sq=nokia&st=cse

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    Posted in Mktg - Product & Innovation | Leave a Comment »

    PLC regeneration – board games are back and better than before

    January 20, 2010

    TakeAway:  Board game manufacturers are taking advantage of technology to not only breathe new life into the board game market, but also to enjoy enormous price increases.

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    Excerpted from WSJ, “New Twists to the Games People Play,” By Ann Zimmerman and Joseph Pereira, December 9, 2009

    Mattel and other makers of traditional games these days are increasingly turning to technology to attract a new generation of players. Hasbro has updated the classic Clue with a Secrets and Spies edition … Monopoly became the No. 1 paid application in the iPhone app store … One of the hottest games this holiday season owes its life to medical science.  Part high-tech Ouija board, part Mousetrap, Mattel’s Mindflex purports to allow you to move objects with your mind through the technology in an EEG … 

    Toys “R” Us, which chose the Mindflex as a hot Christmas toy, is also selling a similar product, Star Wars The Force Trainer, by toy maker Uncle Milton Industries , which claims that players can levitate a ball inside a clear plastic 10-inch tower with their minds. It sells for $100.

    “It is the first time you actually can use the force,” says VP merchandising at Toys “R” Us, adding that the toy is selling well despite its steep price tag.

    With titles like these, toy manufacturers are experiencing something of a game renaissance. While sales of toys in the first nine months of the year were down 2%, board-games sales rose 8%, ahead of almost every category …

    It’s unclear if high-tech board games will have staying power, but they’ve definitely created a certain buzz. Despite its $80 price tag, Mindflex is almost sold out. Panicked parents have been writing pleading messages on Twitter and other social-media sites, followed by triumphant posts when they secure a game … The mother of a 9-year-old girl says she didn’t mind paying $110, or a 38% premium, for the game online …

    The recession has given a big boost to board games in general—even low-tech ones—as families forgo vacations and costly outings in favor of spending more time at home. Hasbro, the largest board-game seller with 53% share of the market, has capitalized on the hunkering-down effect, partnering with food companies and retailers in 120 countries to sell products as part of a “Family Game Night” promotion in the past year.

    To entice new sales of traditional games, Hasbro has tried to spice them up with modern features …

    The board-game business is also getting a boost from some parents who resent the growing popularity of electronic games …

    At $10 to $35 a pop for most traditional games, board games are cheaper alternatives to vacations, ski-trips or even visits to the movies …

    “To tell you the truth,” says Mrs. Murphy, a real estate agent, “we had forgotten how much fun games like Clue and Scrabble and Uno can be—not to mention how much money we saved.”

    Edit by TJS

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    Full Article
    http://online.wsj.com/article/SB20001424052748703558004574583922534512310.html#mod=todays_us_personal_journal

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    Posted in Mktg - PLC | Leave a Comment »

    Adidas plans to extend its product line from the ground up

    January 19, 2010

    Takeaway: Adidas, a company well-known for shoe production, is going to enter Europe’s growing outdoor apparel market.

    Market attractiveness certainly exists in this category, as outdoor gear has been outperforming other sporting goods categories.

    The bigger question, however, relates to Adidas’ competitiveness in this market.

    With a huge player in North Face and niche competitors, such as Patagonia, does Adidas stand a chance?

    Most likely this will come down to Adidas’ brand equity in the eye of the consumer. Does Adidas stand for all outdoor activity? Or is it stuck, like a double-knotted tie, to the shoe industry?

    * * * * *

    Excerpted from BusinessWeek, “Adidas Leaps from Hot Sneakers to Warm Jackets” by Holger Elfes, December 9, 2009

    Adidas has long been one of the world’s premier brands in fashion sport shoes. Now the German sporting-goods company plans to begin selling high-end mountaineering jackets next year, muscling in on North Face’s turf as outdoor gear grows faster than traditional sporting goods.

    Sales of outdoor gear will rise about 0.7% in Europe this year, outperforming the declining sporting-goods market, according to industry body European Outdoor Group.

    In Europe, Adidas increased its spending on marketing this year by running TV commercials with Alexander and Thomas Huber, brothers who are known for extreme Alpine climbing. The sporting-goods maker also started sponsoring Reinhold Messner, who made the first solo ascent of Mount Everest without bottled oxygen.

    Adidas Chief Executive Herbert Hainer has said his company would build its outdoor-sports division using its own brand name and without resorting to acquisitions.

    “Adidas is doing a seriously good job as the company tries to take advantage of the increasing interest for outdoor gear,” says Mark Held, secretary general of European Outdoor Group. He expects the industry’s growth to continue into next year. “Even in hard times, people continue buying outdoor gear to escape for a while from the seriousness of life.”

    Edit by JMZ

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    Full Article:
    http://www.businessweek.com/innovate/content/dec2009/id2009129_588770.htm?campaign_id=innovation_related

    Posted in Mktg - Product Line Mgnt | Leave a Comment »

    Viral marketing at a whole new level

    January 18, 2010

    TakeAway:  The beauty of online ads is that companies can let consumers do most of the work. 

    Once a consumer finds an interesting ad, he or she will do the company’s dirty work of spreading that puppy around to hundreds to thousands of their friends. 

    Now, companies are upping the game by offering videos. This could be the best viral marketing has ever seen.

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    Excerpted from NYTimes, “Online Ads Are Booming, if They’re Attached to a Video,” By Brian Stelter, November 11, 2009

    News Web sites are starting to look a lot less like newspapers and a lot more like television.  CNN.com and ESPN.com are featuring video much more prominently on their home pages, often prompting visitors to press play before they begin to read … news Web sites are not the only Web sites jumping on this trend …

    A major reason is commercial. At a time when other categories of advertising dollars are shrinking, video ads are booming. News sites are adding more video inventory to keep pace with the demands of advertisers, and benefiting from the higher cost-per-thousands, or C.P.M.’s, that ads on those videos command …

    Video is now the fastest-growing segment of the Internet advertising market … and video ads will be the “main channel” for major advertisers seeking to increase their online spending in the next 5 years …

    Some companies think of online video as an extension of TV, and others think of it as an enhancement — one that allows for interactive messages and instant feedback from viewers.

    Companies acknowledge that the medium is still in many ways immature. Sites continue to disagree about the legitimacy of “autoplay,” a setting that starts videos automatically when a Web page loads, increasing the number of streams without necessarily knowing that the Web user is watching.  And, ads next to “serious” news dispatches normally cannot draw the same C.P.M.’s as lighter fare …

    “The Web is fulfilling this promise of being a medium where you can enjoy video as much as you can see it on TV,” … “The difference online is, if you want to do something with it — share it, stick it on a blog, post it on a Facebook page, or mark it and save it — you can do all that. And that was never possible before.”

    Edit by TJS

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    Full Article
    http://www.nytimes.com/2009/11/11/business/media/11adco.html?_r=1&ref=media

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    Posted in Internet - Soc Networking, Mktg - Advertising | Leave a Comment »

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