Today, we talked about more and more people go to warehouse club chains, and those channels improve the sales of cK jeans. It seems that warehouse club chains help those brandings a lot to increase their sales.
However, there is an interesting thought from this article. Do warehouse club chains increase the sales of brandings, or brandings bring customers to their stores?
In this article, some customers said that the reason they shops at Costco is because they can buy high-end products in cheaper price. Warehouse club chains love to sell high-end products in cheaper price to attract more customers.
Therefore, my point is that not only warehouse club chains increase the sales of branding products, but those branding products also create profit and bring customers to warehouse club chains. That's why those results about the number of customers shop at warehouse club chains is more than before.
Hence, if those high-end products do not sell their products in warehouse club chains, will people still want to shop at warehouse club chains ? Will customers go back to departments to buy high-end products? I think it is interesting to think about it.
You can read the whole article from the link
http://www.wcpo.com/content/news
Monday, April 30, 2007
Brand Stewardship
I interned at an famous PR firm last summer, and its 360 brand stewardship help clients to manage their brand stewardship. This is a perspective from an agency to help their brand management. It might be useful for those who are interested in brand management at an agency.
The Brand InfluencersIf you have been involved in branding a company, a product, a service or even a public education program during the last decade, you have quickly come to realize Figure 1, below, is a simplistic way of looking at brand communications. Frankly I'm not sure this model was ever in sync with reality, but it was the way branding was viewed up until the late 80s and by some into the mid 90s. It was a simple world back then—or at least we thought it was. A company created a product's brand image, brand attribute and brand promise. Then it communicated the brand—usually through advertising—directly to each of its target audiences.
Figure 1 Mass Communication Transmission Model
Marketers slowly came to realize that "the company" was not the only holder to the "brand key." Marketers who continued to rely on the Transmission Model fell behind. We saw products like Levi lose their foothold on the blue jean market partly because there was more competition in the marketplace, but also because they did not realize other influencers were affecting the buying habits and brand loyalty of their traditional customers. More direct advertising wasn't the answer to Levi's troubles in the 80s and 90s, what Levi's needed was to identify who (in addition to the company itself) was influencing their marketplace and more importantly their products' image.
Smart marketers quickly embraced the Network Marketing model of brand building (Figure 2) in the late 80s. But when they did, they realized that the hard work had only just begun. Once they agreed that there are multiple influencers who affect a brand's position in the marketplace, they realized it was vitally important to identify each influencer and communications build programs to reach them—traditional advertising was only one tool and not always the most effective way to influence a specific target.
Figure 2 Network Marketing Interconnection
Figure 2 is actually a simplistic 2-dimensional model of the interconnection between brand influencers. The model should actually be 3-dimensional and include arrows between and among all the target audiences—they influence each other and in turn influence the perception of the brand. There is no beginning and no end. Welcome to the world of Ogilvy PR's 360° Brand Stewardship®. Ogilvy PR developed 360° Brand Stewardship® to identify all the potential brand influencers and create a process for communicating to each of them, not just through advertising but by the most powerful channel available depending on the characteristics of the specific target. The premise of the Ogilvy PR process is that the brand must actually surround the target audience through every channel and influencer appropriate whether that includes advertising, direct mail, the Internet, public relations, community relations, events and promotions, word of mouth or product placement.
If you are a brand manager, how do you start the process of identifying all the brand influencers, how they communicate and how you can communicate with them? Charting it out on paper is the first step. Listening closely to your customer and their customers is also important. Understanding the competitive, consumer and cultural context of your product is absolutely essential. And remember, just when you think you understand each and every influencer—the marketplace dynamics will likely pull the rug out from under you so don't become complacent.
Smart brand stewards keep an influencer chart on the corner of their desk constantly updating it and making notes in the margins. There is rarely a week that goes by in which they don't hear an insight or uncover a piece of research worth noting.
Your communications partner should be doing the same thing no matter which marketing discipline they call home. At Ogilvy PR, we start from a brand-neutral perspective and then combine the right messages, with the right messenger and the appropriate communications channels to reach brand influencers and ultimately our target audience. Today, successful brands are not constructed, they are nurtured, massaged and painstakingly molded, and refined over time.
The Brand InfluencersIf you have been involved in branding a company, a product, a service or even a public education program during the last decade, you have quickly come to realize Figure 1, below, is a simplistic way of looking at brand communications. Frankly I'm not sure this model was ever in sync with reality, but it was the way branding was viewed up until the late 80s and by some into the mid 90s. It was a simple world back then—or at least we thought it was. A company created a product's brand image, brand attribute and brand promise. Then it communicated the brand—usually through advertising—directly to each of its target audiences.
Figure 1 Mass Communication Transmission Model
Marketers slowly came to realize that "the company" was not the only holder to the "brand key." Marketers who continued to rely on the Transmission Model fell behind. We saw products like Levi lose their foothold on the blue jean market partly because there was more competition in the marketplace, but also because they did not realize other influencers were affecting the buying habits and brand loyalty of their traditional customers. More direct advertising wasn't the answer to Levi's troubles in the 80s and 90s, what Levi's needed was to identify who (in addition to the company itself) was influencing their marketplace and more importantly their products' image.
Smart marketers quickly embraced the Network Marketing model of brand building (Figure 2) in the late 80s. But when they did, they realized that the hard work had only just begun. Once they agreed that there are multiple influencers who affect a brand's position in the marketplace, they realized it was vitally important to identify each influencer and communications build programs to reach them—traditional advertising was only one tool and not always the most effective way to influence a specific target.
Figure 2 Network Marketing Interconnection
Figure 2 is actually a simplistic 2-dimensional model of the interconnection between brand influencers. The model should actually be 3-dimensional and include arrows between and among all the target audiences—they influence each other and in turn influence the perception of the brand. There is no beginning and no end. Welcome to the world of Ogilvy PR's 360° Brand Stewardship®. Ogilvy PR developed 360° Brand Stewardship® to identify all the potential brand influencers and create a process for communicating to each of them, not just through advertising but by the most powerful channel available depending on the characteristics of the specific target. The premise of the Ogilvy PR process is that the brand must actually surround the target audience through every channel and influencer appropriate whether that includes advertising, direct mail, the Internet, public relations, community relations, events and promotions, word of mouth or product placement.
If you are a brand manager, how do you start the process of identifying all the brand influencers, how they communicate and how you can communicate with them? Charting it out on paper is the first step. Listening closely to your customer and their customers is also important. Understanding the competitive, consumer and cultural context of your product is absolutely essential. And remember, just when you think you understand each and every influencer—the marketplace dynamics will likely pull the rug out from under you so don't become complacent.
Smart brand stewards keep an influencer chart on the corner of their desk constantly updating it and making notes in the margins. There is rarely a week that goes by in which they don't hear an insight or uncover a piece of research worth noting.
Your communications partner should be doing the same thing no matter which marketing discipline they call home. At Ogilvy PR, we start from a brand-neutral perspective and then combine the right messages, with the right messenger and the appropriate communications channels to reach brand influencers and ultimately our target audience. Today, successful brands are not constructed, they are nurtured, massaged and painstakingly molded, and refined over time.
Budweiser Faddish Drink Catches Attention...
They've got the Buzz through the media, but will the 2 ounce energy drink malted beverage shot from Budweiser stick or are they riding the health, energy kick wave? You make the call is it a Fad, could it be a trend, or even higher?
Managing a Brand through Tragedy
We were all devastated to learn of the tragedy that took place at Virginia Tech on April 16, 2007. It will be a day when most of us remember what we were doing and who we were with when we heard. As the school and its community move on, they are all in our thoughts and prayers.
As I was watching all the news coverage of the shootings, I thought to myself, when all of this settles down, how does the leadership at Virginia Tech ensure their school and their brand are not defined by this one tragic moment in a long history of prestigious achievements? Throughout the semester we have learned how to create brand meanings, develop them and guide them through the brand life cycle via good stewardship. Can we apply any of these techniques to such a dramatic situation? I think so.
The group presentation on crisis management provides some insight on dealing with a situation like this (copied from the team's presentation on crisis management):
1. Respect the role of the media
2. Communicate, communicate, communicate
3. Take responsibility
4. Centralize information
5. Establish a crisis team
6. “Plan for the worst; hope for the best”
7. Communicate with employees
8. Use third parties to speak on your behalf
9. Use research to determine responses
10. Create a website
I think Virginia Tech can (and has been) following these same steps to ensure they are taking care of their community as well as managing the perceptions of those outside the community. For example, they have taken the following steps:
1. Engaged the media to help distribute information as well as to showcase their response to the tragedy.
2. Maintained a steady stream of communication as information became available about the events as well as the University's plans.
3. Created a comprehensive website for those within the Virginia Tech community as well as those just seeking information out of curiosity or concern.
4. Established a crisis team.
5. Provided options for the current students to finish the semester in a way they were most comfortable given the extreme circumstances.
The reality is Virginia Tech is very much like any other business which relies on students attendance to survive and thrive. If students and faculty are not comfortable at the school based on the University's response to such a tragedy, the school will suffer on many levels. Given the dramatic situation, there was, and will continue to be, scrutiny by the media on how the situation is handled and Virginia Tech can use this opportunity to build their brand rather than allowing the situation to detract from it.
As I was watching all the news coverage of the shootings, I thought to myself, when all of this settles down, how does the leadership at Virginia Tech ensure their school and their brand are not defined by this one tragic moment in a long history of prestigious achievements? Throughout the semester we have learned how to create brand meanings, develop them and guide them through the brand life cycle via good stewardship. Can we apply any of these techniques to such a dramatic situation? I think so.
The group presentation on crisis management provides some insight on dealing with a situation like this (copied from the team's presentation on crisis management):
1. Respect the role of the media
2. Communicate, communicate, communicate
3. Take responsibility
4. Centralize information
5. Establish a crisis team
6. “Plan for the worst; hope for the best”
7. Communicate with employees
8. Use third parties to speak on your behalf
9. Use research to determine responses
10. Create a website
I think Virginia Tech can (and has been) following these same steps to ensure they are taking care of their community as well as managing the perceptions of those outside the community. For example, they have taken the following steps:
1. Engaged the media to help distribute information as well as to showcase their response to the tragedy.
2. Maintained a steady stream of communication as information became available about the events as well as the University's plans.
3. Created a comprehensive website for those within the Virginia Tech community as well as those just seeking information out of curiosity or concern.
4. Established a crisis team.
5. Provided options for the current students to finish the semester in a way they were most comfortable given the extreme circumstances.
The reality is Virginia Tech is very much like any other business which relies on students attendance to survive and thrive. If students and faculty are not comfortable at the school based on the University's response to such a tragedy, the school will suffer on many levels. Given the dramatic situation, there was, and will continue to be, scrutiny by the media on how the situation is handled and Virginia Tech can use this opportunity to build their brand rather than allowing the situation to detract from it.
A Reason to Believe: Finding the dramatic difference in retail brand revitalization
http://www.brandchannel.com/papers_review.asp?sp_id=1287
This is an interesting article by a retail brand consultant regarding the steps needed for retailers to succeed in the brand revitalization process, and why many retailers fail at it. Many retailers fail because the changes they implemented were superficial, instead of making fundamental changes to address the fact that the brand has lost its relevance. This is the situation the Gap finds itself in currently, as we discussed in class earlier.
The author points out that brand revitalization is often necessary once a company has reached the point where its perception of its brand differs significantly from the customer's perception. This forces the company to undergo a revitalization. The author also points out the importance of the employees in this process - getting employee buy-in is crucial to the success of the revitalization. Chances are that if the employees feel strongly about the new direction of the company, the changes will take hold and be more than just superficial.
The author finishes with an example of a company (REI) that implemented a successful brand revitalization.
This is an interesting article by a retail brand consultant regarding the steps needed for retailers to succeed in the brand revitalization process, and why many retailers fail at it. Many retailers fail because the changes they implemented were superficial, instead of making fundamental changes to address the fact that the brand has lost its relevance. This is the situation the Gap finds itself in currently, as we discussed in class earlier.
The author points out that brand revitalization is often necessary once a company has reached the point where its perception of its brand differs significantly from the customer's perception. This forces the company to undergo a revitalization. The author also points out the importance of the employees in this process - getting employee buy-in is crucial to the success of the revitalization. Chances are that if the employees feel strongly about the new direction of the company, the changes will take hold and be more than just superficial.
The author finishes with an example of a company (REI) that implemented a successful brand revitalization.
Barbie goes from Vinyl to Virtual
Last Monday our team talked about brand revitalization. Now, Mattel is going to put the Barbie onto the internet: a $60 device that connects girls to a new Website, BarvieGirls.com. Mattel is hoping that Barbie Girls will invigorate the brand and serve as case study in how a 1950s-era business finds its place in the Digital Age.
In my point of view, Barbie is worth revitalizing based on the revitalization requirements scorecard: It is premium position, slightly under-advertised, wildly distributed, and has long-held heritage and distinct point of view. Besides, the aging cause for them is the offer, since kids right now spend lots of time on the internet and thus the traditional Barbie became a little obsolete.
But, how Mattel can turn this into cold, hard cash? The Company will sell snap-on accessories to dress up the Barbie Girls device, much the way people customize cell phones and iPods. But unlike some gaming companies, Mattel won’t charge real money for virtual clothes and accessories; its goal is still to well dolls, not run a Web business.
Reference Article:http://www.businessweek.com/magazine/content/07_19/b4033084.htm?campaign_id=rss_daily
BarbieGirls.com:http://www.barbiegirls.com/
Brand Steward/ Non-profit
Interesting article on the role of branding and brand stewardship in organizations.
http://foundationcenter.org/pnd/npodesign/npodesign_print.jhtml;jsessionid=2RM4NVSCNGFK1TQRSI4CGXD5AAAACI2F?id=44800019
http://foundationcenter.org/pnd/npodesign/npodesign_print.jhtml;jsessionid=2RM4NVSCNGFK1TQRSI4CGXD5AAAACI2F?id=44800019
Friday, April 27, 2007
Absolute Brand Maneuvers
As a follow up on the J&B case, check out this article on Absolute and how it's brand managers are trying to keep it's brand fresh in the minds of consumers. In an attempt to recreate it's double digit growth that resulted from the Absolute campaign in the 80's and 90's, the company's brand managers are asking customers to imagine an "Absolute world".
"On Planet Absolut, for instance, men can get pregnant, the Curse of the Billy Goat is lifted from the hapless Chicago Cubs and the garish billboards in Times Square are replaced by masterpiece paintings. Lying leaders are exposed by their Pinocchio noses, protesters and the police wage street fights with feather pillows, nice Manhattan apartments cost $300 a month and it takes only one exercise lap in a pool for a fatty to become a hottie."
"On Planet Absolut, for instance, men can get pregnant, the Curse of the Billy Goat is lifted from the hapless Chicago Cubs and the garish billboards in Times Square are replaced by masterpiece paintings. Lying leaders are exposed by their Pinocchio noses, protesters and the police wage street fights with feather pillows, nice Manhattan apartments cost $300 a month and it takes only one exercise lap in a pool for a fatty to become a hottie."
Testing what's hot in the cradle of cool
Remember last time we were talking about cool hunting? I just read an article about cool hunting in Tokyo, Japan.
Right now, fashion houses are trying out new products on the teenyboppers of Tokyo. Some Western companies have signed on with local partners who can better read the Japanese market.
"I can see something happen in Tokyo and watch the ripple effect across the Pacific to New York and then watch as it goes back to L.A. ," says Kiester, who travels to the Japanese capital four times a year in search of inspiration.
Ohio-based Abercrombie & Fitch and Sweden's H&M plan to set up shop in Tokyo in 2008, while Spain's Zara is expected to double its store acount to 50 over the new three years in Japan.
However, sometimes, though, all those Tokyo teenagers can be a bit too fashion-forward. Last year LeSportsac launched a range of bags in Japan with a pattern featuring brightly colored button mushrooms, a motif that figures prominently in the kawaii (Japanese for "cute") genre that includes icons such as Hello Kitty. Although the mushroom bags were a hit in Japan, Kiester has been reluctant to introduce them in the U.S. "It's too 1970s. Too psychedelic," she says. "We weren't ready for that at home."
Reference:
http://www.businessweek.com/magazine/content/07_19/b4033073.htm?chan=globalbiz_asia+index+page_top+stories
Right now, fashion houses are trying out new products on the teenyboppers of Tokyo. Some Western companies have signed on with local partners who can better read the Japanese market.
"I can see something happen in Tokyo and watch the ripple effect across the Pacific to New York and then watch as it goes back to L.A. ," says Kiester, who travels to the Japanese capital four times a year in search of inspiration.
Ohio-based Abercrombie & Fitch and Sweden's H&M plan to set up shop in Tokyo in 2008, while Spain's Zara is expected to double its store acount to 50 over the new three years in Japan.
However, sometimes, though, all those Tokyo teenagers can be a bit too fashion-forward. Last year LeSportsac launched a range of bags in Japan with a pattern featuring brightly colored button mushrooms, a motif that figures prominently in the kawaii (Japanese for "cute") genre that includes icons such as Hello Kitty. Although the mushroom bags were a hit in Japan, Kiester has been reluctant to introduce them in the U.S. "It's too 1970s. Too psychedelic," she says. "We weren't ready for that at home."
Reference:
http://www.businessweek.com/magazine/content/07_19/b4033073.htm?chan=globalbiz_asia+index+page_top+stories
BenQ to spin off BenQ, change name
BenQ Corporation consists of three main business groups — Computing Products, Digital Media and Mobile Business. Although these business groups encompass a broad range of products, each retains a focus on providing consumer-oriented solutions designed especially for the digital lifestyle. 2004 revenues exceeded US$5.1 billion dollars.
In order to become an international brand, BenQ purchased Siemens in 2005 June. BenQ got the patent skill to produce 2G and 3G from Siemens. Moreover, BenQ could use brand name Siemens as BenQ-Siemens to launch their mobile phone. If the plan could go smoothly, BenQ mobile phone would become the top 4th branding in the worldwide. BenQ would not be only OEM, ODM, or local company anymore.
However, the plan is fail. BenQ got a huge loss from this M&A, over $10billion.
The reasons that BenQ failed from this M&A are cultural understanding and detail plan before M&A. BenQ wanted to be an international brand, so they made a rash decision. BenQ thought they could transfer their successful experience of Asia to Siemens. However, there were so many unpredictable factors, such as culture in Europe and the truth situation of Siemens. The loss of Siemens is much more than what BenQ thoughts before merging.
So the next step they will do is to spin off BenQ, change its name. All of you could read the news to get more information about their new milestone.
Reference: http://www.itworld.com/Man/3920/070425benq/
Milward Brown releases Top 100 Brands report
The report gives an overview of the familiar metrics they use to calculate brand value:
Brand Value = Intangible earnings X Brand contribution X Brand multiple
The trends they highlight include:
The rise of consumers in emerging markets
Converging technologies
Corporate social responsibility
The response of fast-food makers to obesity concerns
Brands of note:
- Google was ranked #1 this year, with a 77% increase in brand value ($66 million)
- BMW 14 with an 8% increase
- Harley is 64th with a 3% increase
From the report...
"The Brandz ranking provides sector and geographic coverage of market facing brands, including brands in Apparel, Beer, Cars, Fast Food, Financial Services, Luxury Goods, Mobile Communications, etc. It covers brands in developed markets currently driving world GDP and emerging markets whose share of world GDP is expected to grow in the future.
The ranking is based on the brand's 'dollar value', calculated by using an economic use approach; the brand value shown in our ranking is based on the present value of the earnings that the brand is expected to generate in the future."
You can find the full report, with breakdowns by industry and other criteria here:
Tuesday, April 24, 2007
Follow-up to J&B Case
While talking about the J&B case last night and the rise of competition though beer and wine, I was reminded of the linked article in BusinessWeek titled "The Great Indian Beer Rush". The article addresses the marketing challenges from the beer industry's perspective and how to break into a primarily whisky drinking country. Will they be as successful in India as they have been in the US?
http://www.businessweek.com/globalbiz/content/apr2007/gb20070412_651937.htm
http://www.businessweek.com/globalbiz/content/apr2007/gb20070412_651937.htm
Thursday, April 19, 2007
Volkswagen Goes Cashmere
Not sure if this is as far of a stretch as Kleenex diapers but there are definitely brand & organizational misalignments in VW's attempt to produce fashion accessories. Volkswagen however believes that cashmere wraps will help them sell their new “Eo” vehicle, which they claim is targeted to female consumers.
Any thoughts on whether this might work?
Full article: http://www.businessweek.com/innovate/content/feb2007/id20070213_212980.htm?chan=search
Brand Crisis- Aftermath of Ford/Firestone
In doing research for our group project on brand crises, I exchanged emails with Jon Harmon, the former Director of Communications for Ford during the 2000-2001 Ford/Firestone tire recall fiasco. He also has a great blog where he talks about the event, and also offers his expert advice about public relations and crisis management:
http://jon8332.typepad.com/force_for_good/2007/02/crisis_communic.html
I'd be interested to hear your thoughts on how you think Ford really handled the crisis, and Jon's blog comments that state their efforts to defend Ford’s reputation and the Explorer brand paid off...
http://jon8332.typepad.com/force_for_good/2007/02/crisis_communic.html
I'd be interested to hear your thoughts on how you think Ford really handled the crisis, and Jon's blog comments that state their efforts to defend Ford’s reputation and the Explorer brand paid off...
As many have already heard, after much finger pointing about who was at fault, Firestone ended the co-branded relationship in May 2001, blaming Ford Explorer vehicles and the weight as the cause of the tire ruptures. Ford in turn declared it would voluntarily replace 13 mil questionable Firestone tires outside those recalled the previous summer. So how did things end up after the dust cleared?
Jon points out a few interesting facts:
-Later, the National Highway Traffic Safety Administration (NHTSA) concluded that the tires were indeed defective and ordered Firestone to recall any tires that Ford hadn't got to yet. Ford later sued Firestone to pay for this massive recall which should have been Firestone's responsibility to pay, and eventually Ford and F/S settled on F/S paying Ford a few hundred million dollars, far less than the tiremaker had cost the auto maker.
-At the same time (Aug 2001) that NHTSA found those tires defective, it found no reason to move forward with an investigation in F/S's claims that the Explorer itself was unsafe, effectively exonerating the Explorer. Explorer sales indeed continued to recover and eventually (Aug 2002) sent an all-time sales record of more than 51,000 for the month and would finish the year with about 450,000 sales, breaking its own records for best-selling SUV ever. This after many "experts" had urged Ford to drop the Explorer brand as fatally wounded.
-Amazingly however, Firestone has still survived all of this and their overall parent company (Bridgestone) stock price is up higher than it was pre-crisis.
-It's not all rosy for Ford either, as in recent years, sales of Explorers and other SUVs have waned because of changing customer tastes and high gas prices. Ford stock has plummeted and never recovered. Firestone tires are no longer sourced on new Ford vehicles.
Jon points out a few interesting facts:
-Later, the National Highway Traffic Safety Administration (NHTSA) concluded that the tires were indeed defective and ordered Firestone to recall any tires that Ford hadn't got to yet. Ford later sued Firestone to pay for this massive recall which should have been Firestone's responsibility to pay, and eventually Ford and F/S settled on F/S paying Ford a few hundred million dollars, far less than the tiremaker had cost the auto maker.
-At the same time (Aug 2001) that NHTSA found those tires defective, it found no reason to move forward with an investigation in F/S's claims that the Explorer itself was unsafe, effectively exonerating the Explorer. Explorer sales indeed continued to recover and eventually (Aug 2002) sent an all-time sales record of more than 51,000 for the month and would finish the year with about 450,000 sales, breaking its own records for best-selling SUV ever. This after many "experts" had urged Ford to drop the Explorer brand as fatally wounded.
-Amazingly however, Firestone has still survived all of this and their overall parent company (Bridgestone) stock price is up higher than it was pre-crisis.
-It's not all rosy for Ford either, as in recent years, sales of Explorers and other SUVs have waned because of changing customer tastes and high gas prices. Ford stock has plummeted and never recovered. Firestone tires are no longer sourced on new Ford vehicles.
Would You Buy a $30,000 Hyundai?
Hyundai is still struggling for its brand image. Although they couol succeed in moving upward, they are still regarded as an “Entry-Level” and, the sales of Sonata are down by 30%.
Just Toyoda did for Lexus, Hyudai also should set up sub-brand for Sonata.
Otherwise, they will be regarded as just "Entry-level".
http://www.businessweek.com/autos/content/apr2007/bw20070417_362089.htm?chan=autos_autos+index+page_top+stories
Just Toyoda did for Lexus, Hyudai also should set up sub-brand for Sonata.
Otherwise, they will be regarded as just "Entry-level".
http://www.businessweek.com/autos/content/apr2007/bw20070417_362089.htm?chan=autos_autos+index+page_top+stories
Tuesday, April 17, 2007
Is negative attention a good thing?
Although they probably weren't planning on a less than successful campaign, no one can say they weren't original. VW put magnets on cars that appeared to be dents but were in fact just ads...
I can't imagine that would create a positive association....
http://www.autoblog.com/2007/04/17/step-away-from-the-car-vw-polo-magnetic-dent-promotion/
I can't imagine that would create a positive association....
http://www.autoblog.com/2007/04/17/step-away-from-the-car-vw-polo-magnetic-dent-promotion/
Taking Care of Business: The Countess puts on her thinking cap and ponders marketing strategy and the making of a brand
I came across an interesting article in the May issue of W Magazine. Louise J. Esterhazy writes a column in the last page of the magazine which usually includes a story or commentary on any subject she deems interesting that month. She decided to tackle branding in this issue.
She begins by discussing great brands and how they are getting lost in the mix because today, "the world is all about brands. Everything is branded: hedge funds, TV companies, drug companies, mattress retailes, nails, water, even chefs." She then dives deeper into movie and music starts as brands, and, horror of horrors, socialites who are dying to be branded (a la Paris Hitlon?). She makes a particulary stabbing comment to the socialites, "As these women preen, pose and prance for the paparazzi, they forgot that elite names like Babe Paley, Gloria Guiness and C.Z. Guest haven't faded, because they had true style....It all boils down to the fact that a brand - be it a person or a product - has to do something for us... A brand is really branded when there is quality, uniqueness and style."
I think this is particularly relevant to all of the products or companies who try to create or use a brand to maximize sales, or relate to their customers, or go global when there isn't really a brand at all, just a bad or common product with a fancy name. When there are thousands of products and hundreds of brands for consumers to choose from, throwing another one into the mix in the hope of creating a fortune isn't going to get noticed unless you truly have something to offer.
It was a really interesting article, and unfortunately I don't have a link to include, but I have a copy of the article (it's only one page long) if anyone is interested in reading it.
She begins by discussing great brands and how they are getting lost in the mix because today, "the world is all about brands. Everything is branded: hedge funds, TV companies, drug companies, mattress retailes, nails, water, even chefs." She then dives deeper into movie and music starts as brands, and, horror of horrors, socialites who are dying to be branded (a la Paris Hitlon?). She makes a particulary stabbing comment to the socialites, "As these women preen, pose and prance for the paparazzi, they forgot that elite names like Babe Paley, Gloria Guiness and C.Z. Guest haven't faded, because they had true style....It all boils down to the fact that a brand - be it a person or a product - has to do something for us... A brand is really branded when there is quality, uniqueness and style."
I think this is particularly relevant to all of the products or companies who try to create or use a brand to maximize sales, or relate to their customers, or go global when there isn't really a brand at all, just a bad or common product with a fancy name. When there are thousands of products and hundreds of brands for consumers to choose from, throwing another one into the mix in the hope of creating a fortune isn't going to get noticed unless you truly have something to offer.
It was a really interesting article, and unfortunately I don't have a link to include, but I have a copy of the article (it's only one page long) if anyone is interested in reading it.
Nike's New Downmarket Strategy
So, Nike is planning to launch a new brand called "Tailwind" targeting fashion and value conscious women. The new brand will be sold at Payless Shoes stores. According to chief analyst Marshal Cohen from NPD group "What this does is afford a big-name brand the ability to enter an even bigger market without diluting the core essence of its dominant brand". However, there are a lot of examples of failures of brand over-expansions which ended up cannibalizing the master brand name and did not provide a lot of differentiation. To avoid these potential risks, Nike will be using the Tailwind as a stand alone brand targeting a specific market segment need and a targeted value proposition to this segment.
Nike's New Downmarket Strategy (Business Week)
Hoping to make good on its promise of growth, the company is launching Tailwind, a line of shoes for fashion- and value-conscious women
by Helen Walters
Nike raised an eyebrow or two earlier this month when Chief Executive Officer Mark Parker outlined a bold plan to increase the company's business to $23 billion in revenue by 2011. "We'll get there by creating innovative products and consumer experiences," Parker said at the investor meeting held at Nike's headquarters in Beaverton, Ore., in early February. "When we're innovating, we're leading. And leading is what we do best."
It was a soundbite-worthy—and entirely unspecific—comment. But now, a mere two weeks later, Nike (NKE) has taken a concrete step by launching a new brand aimed squarely at a market segment not previously served by its core lines of athlete-focused footwear and apparel. Parker, it seems, wasn't making idle promises.
Produced by the wholly owned Nike subsidiary, Exeter Brand Group, Tailwind, as the new brand is called, is a fashion-conscious line of footwear, officially launching in three Payless stores in Manhattan and Brooklyn on Tuesday. Initially, the line will be available in 400 stores in select markets, though by December it will be stocked in pretty much all of the retailer's nearly 4,600 stores nationwide.
Bright and Sporty
The launch came with all the hoopla and sports-star endorsements you would expect from Nike. Soccer great Brandi Chastain was involved in Tailwind product development and design, and she, along with teammate Hope Solo and volleyball player Logan Tom, are the front-and-center faces of the brand.
The line aims at what Exeter President and CEO Clare Hamill describes as the "premium value" space. In other words, cheap shoes, in this case for women. For now, there are six styles, ranging in price from $19.99 to $34.99. Constructed from various materials, including mesh, leather, and synthetic suede, the shoes feature cheerfully bright colors and are certainly sporty looking. Each design features a Nike-developed technology called "G Zone," a honeycomb gel that sits in the heel of the shoe, intended to soften the impact of life on the wearer's foot.
"This woman has a very active, busy life and is looking for a product that will perform and look great," Hamill says of the ideal Tailwind consumer. "The designs are on-trend but not trendy. They're expressive and beautiful—but we were also looking to get some performance, too."
New Audience
In fiscal 2006, the six Nike subsidiaries generated $2 billion in revenue. That's a drop in the bucket compared with the $8 billion growth the company projects over five years, but it's an area of the business that Nike is moving aggressively to expand—over the next five years, Parker predicts subsidiaries will contribute around 25% of Nike's revenue growth. He says the company is "bullish" on its subsidiary companies.
"We believe Nike's 'other' business—which is composed of Cole Haan, Nike Bauer Hockey, Hurley International, Nike Golf, Converse, and Exeter Brands—is a major driver of Nike's business," agrees Citigroup research analyst, Kate McShane, who describes the subsidiaries as Nike's fastest growing division and considers them one of its major growth drivers. "We estimate this category will generate around $2.3 billion in revenues, or grow 16.5% during Nike's fiscal year 2007," she says.
Tailwind gives Nike the opportunity to attract an entirely new audience at the lower end of the market, one previously alienated by the high prices and athletic focus of Nike's core brand offerings. "What this does is afford a big-name brand the ability to enter an even bigger market without diluting the core essence of its dominant brand," says NPD Group chief analyst Marshal Cohen. "Nike really has nothing to lose and a lot of volume to gain…. Consumers like the idea that Nike is behind [the new brand]—it seems like a good bargain."
There has been a lot of talk in recent months of the dangers of unchecked brand expansion. Perhaps the poster-brand for over-expansion, Gap (GPS), continues to sit back on its haunches after an already tumultuous year. It stands accused of cannibalizing its own market share with the introduction of labels such as Old Navy and Banana Republic that simply weren't different enough from the mother brand's core offering. Indeed, Gap just announced the closure of its concept, Forth&Towne, after the 18-month retail experiment failed to take off as anticipated.
In this instance, Nike's playing it safe—introducing a line with the cachet of the main brand association (executives are hardly keeping the introduction quiet, while the chosen athletes are already well-associated with Nike) without the risk of putting its own name on the line. "It's all a question of multi-tiering the brand to appeal to several different target audiences, to sell product at different price points," says Cohen. "That's the future."
"It's important that Tailwind stands alone as a brand," says Exeter's Hamill. "This is a new premise and a new position in the marketplace. Clearly, we wanted it to be a different space and a different opportunity." And with the success of introductions such as the Starbury One, a $14.98 pair of sneakers developed by New York Knicks point guard, Stephon Marbury, that's made and sold by the discount clothing chain, Steve & Barry's, Nike is showing it's not going to treat lightly any threat to its dominance within the footwear market (see BusinessWeek.com, 01/22/07, "Changing the Game on Nike").
Spreading the Word
"The athletic industry currently faces many changing dynamics across its value chain," adds Citigroup's McShane. "As a result of consolidation, fewer manufacturers are selling product to fewer retailers. Competition has intensified, and a lot of the control footwear manufacturers once had is now in the hands of the retailers. We rate Nike as Buy (1M) because of its flexibility to operate in this changing environment."
The products may be less expensive, but the value market is certainly lucrative—estimated to generate revenues of around $384 billion in annual sales industry-wide. "We saw a need to go in and create a premium experience in this value space," says Hamill. "There are other players and people, but we very specifically saw a need to bring a premium experience through innovation, messaging, and athletes. So we went for it."
And even though it's a new segment, the might of Nike's marketing machine will be brought to bear on the line's introduction. A standalone, e-commerce enabled Tailwind Web site with rich media content features the three stars expounding on the philosophy of the brand. An extensive print campaign will run in April issues of various magazines. And the new offering will have a prominent presence at Payless stores. Hamill refused to disclose details of the marketing budget, saying simply that it will be "more than adequate." Executives hope that will be the case with Tailwind's sales, too.
So, Nike is planning to launch a new brand called "Tailwind" targeting fashion and value conscious women. The new brand will be sold at Payless Shoes stores. According to chief analyst Marshal Cohen from NPD group "What this does is afford a big-name brand the ability to enter an even bigger market without diluting the core essence of its dominant brand". However, there are a lot of examples of failures of brand over-expansions which ended up cannibalizing the master brand name and did not provide a lot of differentiation. To avoid these potential risks, Nike will be using the Tailwind as a stand alone brand targeting a specific market segment need and a targeted value proposition to this segment.
Nike's New Downmarket Strategy (Business Week)
Hoping to make good on its promise of growth, the company is launching Tailwind, a line of shoes for fashion- and value-conscious women
by Helen Walters
Nike raised an eyebrow or two earlier this month when Chief Executive Officer Mark Parker outlined a bold plan to increase the company's business to $23 billion in revenue by 2011. "We'll get there by creating innovative products and consumer experiences," Parker said at the investor meeting held at Nike's headquarters in Beaverton, Ore., in early February. "When we're innovating, we're leading. And leading is what we do best."
It was a soundbite-worthy—and entirely unspecific—comment. But now, a mere two weeks later, Nike (NKE) has taken a concrete step by launching a new brand aimed squarely at a market segment not previously served by its core lines of athlete-focused footwear and apparel. Parker, it seems, wasn't making idle promises.
Produced by the wholly owned Nike subsidiary, Exeter Brand Group, Tailwind, as the new brand is called, is a fashion-conscious line of footwear, officially launching in three Payless stores in Manhattan and Brooklyn on Tuesday. Initially, the line will be available in 400 stores in select markets, though by December it will be stocked in pretty much all of the retailer's nearly 4,600 stores nationwide.
Bright and Sporty
The launch came with all the hoopla and sports-star endorsements you would expect from Nike. Soccer great Brandi Chastain was involved in Tailwind product development and design, and she, along with teammate Hope Solo and volleyball player Logan Tom, are the front-and-center faces of the brand.
The line aims at what Exeter President and CEO Clare Hamill describes as the "premium value" space. In other words, cheap shoes, in this case for women. For now, there are six styles, ranging in price from $19.99 to $34.99. Constructed from various materials, including mesh, leather, and synthetic suede, the shoes feature cheerfully bright colors and are certainly sporty looking. Each design features a Nike-developed technology called "G Zone," a honeycomb gel that sits in the heel of the shoe, intended to soften the impact of life on the wearer's foot.
"This woman has a very active, busy life and is looking for a product that will perform and look great," Hamill says of the ideal Tailwind consumer. "The designs are on-trend but not trendy. They're expressive and beautiful—but we were also looking to get some performance, too."
New Audience
In fiscal 2006, the six Nike subsidiaries generated $2 billion in revenue. That's a drop in the bucket compared with the $8 billion growth the company projects over five years, but it's an area of the business that Nike is moving aggressively to expand—over the next five years, Parker predicts subsidiaries will contribute around 25% of Nike's revenue growth. He says the company is "bullish" on its subsidiary companies.
"We believe Nike's 'other' business—which is composed of Cole Haan, Nike Bauer Hockey, Hurley International, Nike Golf, Converse, and Exeter Brands—is a major driver of Nike's business," agrees Citigroup research analyst, Kate McShane, who describes the subsidiaries as Nike's fastest growing division and considers them one of its major growth drivers. "We estimate this category will generate around $2.3 billion in revenues, or grow 16.5% during Nike's fiscal year 2007," she says.
Tailwind gives Nike the opportunity to attract an entirely new audience at the lower end of the market, one previously alienated by the high prices and athletic focus of Nike's core brand offerings. "What this does is afford a big-name brand the ability to enter an even bigger market without diluting the core essence of its dominant brand," says NPD Group chief analyst Marshal Cohen. "Nike really has nothing to lose and a lot of volume to gain…. Consumers like the idea that Nike is behind [the new brand]—it seems like a good bargain."
There has been a lot of talk in recent months of the dangers of unchecked brand expansion. Perhaps the poster-brand for over-expansion, Gap (GPS), continues to sit back on its haunches after an already tumultuous year. It stands accused of cannibalizing its own market share with the introduction of labels such as Old Navy and Banana Republic that simply weren't different enough from the mother brand's core offering. Indeed, Gap just announced the closure of its concept, Forth&Towne, after the 18-month retail experiment failed to take off as anticipated.
In this instance, Nike's playing it safe—introducing a line with the cachet of the main brand association (executives are hardly keeping the introduction quiet, while the chosen athletes are already well-associated with Nike) without the risk of putting its own name on the line. "It's all a question of multi-tiering the brand to appeal to several different target audiences, to sell product at different price points," says Cohen. "That's the future."
"It's important that Tailwind stands alone as a brand," says Exeter's Hamill. "This is a new premise and a new position in the marketplace. Clearly, we wanted it to be a different space and a different opportunity." And with the success of introductions such as the Starbury One, a $14.98 pair of sneakers developed by New York Knicks point guard, Stephon Marbury, that's made and sold by the discount clothing chain, Steve & Barry's, Nike is showing it's not going to treat lightly any threat to its dominance within the footwear market (see BusinessWeek.com, 01/22/07, "Changing the Game on Nike").
Spreading the Word
"The athletic industry currently faces many changing dynamics across its value chain," adds Citigroup's McShane. "As a result of consolidation, fewer manufacturers are selling product to fewer retailers. Competition has intensified, and a lot of the control footwear manufacturers once had is now in the hands of the retailers. We rate Nike as Buy (1M) because of its flexibility to operate in this changing environment."
The products may be less expensive, but the value market is certainly lucrative—estimated to generate revenues of around $384 billion in annual sales industry-wide. "We saw a need to go in and create a premium experience in this value space," says Hamill. "There are other players and people, but we very specifically saw a need to bring a premium experience through innovation, messaging, and athletes. So we went for it."
And even though it's a new segment, the might of Nike's marketing machine will be brought to bear on the line's introduction. A standalone, e-commerce enabled Tailwind Web site with rich media content features the three stars expounding on the philosophy of the brand. An extensive print campaign will run in April issues of various magazines. And the new offering will have a prominent presence at Payless stores. Hamill refused to disclose details of the marketing budget, saying simply that it will be "more than adequate." Executives hope that will be the case with Tailwind's sales, too.
Monday, April 16, 2007
Starbucks and the Beatles
Paul McCartney recently inked a record deal with Starbucks-owned "Hear Music."
In light of the branding frameworks we learned in class, I wonder if this development sets a precedent for the Starbucks brand. How far will the Starbucks identity be stretched before it ceases to have the "Starbucks flavor?"
I also wonder if Starbucks will be able to weave a consistent thread amongst its various efforts. After all, coffee and the Beatles generate extremely different meaning maps.
http://www.cnn.com/2007/SHOWBIZ/Music/03/21/starbucks.mccartney.ap/index.html
SEATTLE, Washington (AP) -- Paul McCartney was introduced Wednesday as the first artist signed to Starbucks Corp.'s new record label.
The former Beatle made an appearance via a video feed from London at the company's annual meeting.
The world's largest specialty coffee retailer announced earlier this month that it was partnering with Concord Music Group to launch the Los Angeles-based Hear Music label.
The McCartney announcement is another big step for Seattle-based Starbucks' attempts to spin part of its consumer appeal into the entertainment business. The coffeehouse chain already has produced and sold some albums, markets books, and helped develop a feature-length movie.
Hear Music has been used as a brand on other releases developed for sale in Starbucks stores. The coffee giant also has a branded page on Apple Inc.'s iTunes digital music store, and a handful of hybrid music-and-coffee stores that allow customers to burn tracks to CDs.
Concord, which controls several other labels, helped Starbucks sell the Grammy-winning "Genius Loves Company," an album of Ray Charles duets.
In light of the branding frameworks we learned in class, I wonder if this development sets a precedent for the Starbucks brand. How far will the Starbucks identity be stretched before it ceases to have the "Starbucks flavor?"
I also wonder if Starbucks will be able to weave a consistent thread amongst its various efforts. After all, coffee and the Beatles generate extremely different meaning maps.
http://www.cnn.com/2007/SHOWBIZ/Music/03/21/starbucks.mccartney.ap/index.html
SEATTLE, Washington (AP) -- Paul McCartney was introduced Wednesday as the first artist signed to Starbucks Corp.'s new record label.
The former Beatle made an appearance via a video feed from London at the company's annual meeting.
The world's largest specialty coffee retailer announced earlier this month that it was partnering with Concord Music Group to launch the Los Angeles-based Hear Music label.
The McCartney announcement is another big step for Seattle-based Starbucks' attempts to spin part of its consumer appeal into the entertainment business. The coffeehouse chain already has produced and sold some albums, markets books, and helped develop a feature-length movie.
Hear Music has been used as a brand on other releases developed for sale in Starbucks stores. The coffee giant also has a branded page on Apple Inc.'s iTunes digital music store, and a handful of hybrid music-and-coffee stores that allow customers to burn tracks to CDs.
Concord, which controls several other labels, helped Starbucks sell the Grammy-winning "Genius Loves Company," an album of Ray Charles duets.
Sunday, April 15, 2007
Is Jordan's Monster Deal a good deal?
As the Official Furniture Store of the Boston Red Sox, Jordan's Furniture is currently running a marketing campaign "Jordan's Monster Deal"- if Red Sox win the 2007 Major League Baseball World Series, every sofa, sectional, dining table, bed, mattress purchased from Jordan's store between March 7 and April 16 will be FREE.
This campaign seems very attractive to consumers, especially Red Sox funs. When I went to Jordan's store in Framingham this weekend, I did see some people in Red Sox jackets wandering there. However, I am not sure if this is a good way to build brand equity. I do not doubt that this campaign can generate buzz. A lot of people will talk about it, even though many of them are not Red Sox funs. The WOM will bring more traffic to Jordan's store locations, significantly improving Jordan's brand awareness and opportunities to sell. But when we think about the emotional feeling of Red Sox funs, this campaign seems more risky than rewarding.
If Red Sox lose (just if), funs will be very upset, and losing the chance to get rebate for their furniture purchase could make them even more upset. Many of them may blame the team's loss on Jordan's. Bad WOM spreads even faster than good ones.
If Red Sox win (most of us hope so), it seems a win-win. Both Jordan's and funs will be happy with the result. But when customers receive the rebate check form Jordan's, whom will they be grateful to, Jordan's or Red Sox? I think most people will give their thanks to the latter. So what can Jordan's get from this? Hopefully, the funs will buy furniture from Jordan's again in the future.
This campaign seems very attractive to consumers, especially Red Sox funs. When I went to Jordan's store in Framingham this weekend, I did see some people in Red Sox jackets wandering there. However, I am not sure if this is a good way to build brand equity. I do not doubt that this campaign can generate buzz. A lot of people will talk about it, even though many of them are not Red Sox funs. The WOM will bring more traffic to Jordan's store locations, significantly improving Jordan's brand awareness and opportunities to sell. But when we think about the emotional feeling of Red Sox funs, this campaign seems more risky than rewarding.
If Red Sox lose (just if), funs will be very upset, and losing the chance to get rebate for their furniture purchase could make them even more upset. Many of them may blame the team's loss on Jordan's. Bad WOM spreads even faster than good ones.
If Red Sox win (most of us hope so), it seems a win-win. Both Jordan's and funs will be happy with the result. But when customers receive the rebate check form Jordan's, whom will they be grateful to, Jordan's or Red Sox? I think most people will give their thanks to the latter. So what can Jordan's get from this? Hopefully, the funs will buy furniture from Jordan's again in the future.
Saturday, April 14, 2007
Zen and the Art of Selling Minimalism
Recently I read the article in BusinessWeek that the Japanese retail - Muji - is going to head to US in this fall. This article reminds me of the Ikea & Starbucks case we discussed before.
(Muji has lots of fans in Asia and Europe and is one of my favorite brands. They are selling furniture, stationery, clothes and housewares, all of them are simple, functional but original and possess post-industrial design factors. )
This retailer will be taking on heavyweight when coming to US: Ikea and Crate & Barrel in furniture, Gap in apparel, and Target in housewares. Their first 5,000-sq-ft store will be opened in middle town Manhattan and intend to target at 20~30 young consumers.
I think it will be another case of customer experience. Muji must be very careful designing the first "touch point" in US: The decoration & atmosphere, the story, point of differences- all of them must woo Americans as well as stick with their core value- simple, functional, less-is-more aesthetic. These all affect Muji's chance to win the territory in US.
Let's see how they manage this Asian Zen style brand and unique customer experience in the Western world.
Article link:http://www.businessweek.com/globalbiz/content/mar2007/gb20070329_161669.htm?chan=search
Japanese official website: http://www.muji.net/
English version (I think they will have a new site after opening the store in NY): www.muji.net/eng/
Daphne
Friday, April 13, 2007
Branding drives condo sales
Came accross an interesting article about branding trend in real estate development. It's somewhat related to our old SCPT case, when real estate development company realized a value of developing a strong brand for all of its rental properties. Now, this article says that it became popular to associate new condo developments with some known brand names, let it be a famous fashion or jewelry designer, a symphony hall or a hotel chain. As long as it has a known luxury appeal, it helps sell the condos during bad and good times in real estate market life cycle.
Another good point the article makes is that because the branding became so popular, soon the real estate market may become over-saturated with brands and it would be hard to differentiate and draw a value out of branding. What they would do next is the open question.
Here's a link to the article http://money.cnn.com/2007/01/26/real_estate/condos_get_branded/index.htm
And here's a link to the example of branded luxury condos - beautiful pictures inside
http://money.cnn.com/galleries/2007/real_estate/0701/gallery.branding_drives_condo_sales/index.html
Another good point the article makes is that because the branding became so popular, soon the real estate market may become over-saturated with brands and it would be hard to differentiate and draw a value out of branding. What they would do next is the open question.
Here's a link to the article http://money.cnn.com/2007/01/26/real_estate/condos_get_branded/index.htm
And here's a link to the example of branded luxury condos - beautiful pictures inside
http://money.cnn.com/galleries/2007/real_estate/0701/gallery.branding_drives_condo_sales/index.html
Wednesday, April 11, 2007
Starbucks and the Schultz Email
The Schultz email to C-level employees at Starbucks sparked a great deal of interest among Starbucks watchers, and since Starbucks is one of the most interesting (and successful) marketers of recent memory, it piqued the interest of marketers as well. John Moore (a former Starbucks marketer) had a series of postings in his blog, Brand Autopsy , that related to the email. It culminated in a Change This! Manifesto made up of his and reader input.
Ultimately I think the question still remains: when a unique, interesting company seeks massive growth they run the risk of becoming a slave to the street (if they are publicly owned) or at least their own ambition (if they are not). Is it possible to remain unique and interesting when attempting growth on the scale that Starbucks has? Do streamlining of operations and pursuit of growth opportunities stand directly at odds with the uniqueness that made the growth possible in the first place? How many huge companies make products, goods or services, that are truly interesting and different?
Certainly there are alot of factors that play into that tension, but Starbucks' experience is a cautionary tale for companies that build a business on a carefully crafted product or experience: grow, and change, at your own peril. Perhaps Starbucks is ahead of the curve and can right the ship before financial results catch up with the deterioration of the Starbucks experience, but maybe recent financial results are a sign of things to come.
Ultimately I think the question still remains: when a unique, interesting company seeks massive growth they run the risk of becoming a slave to the street (if they are publicly owned) or at least their own ambition (if they are not). Is it possible to remain unique and interesting when attempting growth on the scale that Starbucks has? Do streamlining of operations and pursuit of growth opportunities stand directly at odds with the uniqueness that made the growth possible in the first place? How many huge companies make products, goods or services, that are truly interesting and different?
Certainly there are alot of factors that play into that tension, but Starbucks' experience is a cautionary tale for companies that build a business on a carefully crafted product or experience: grow, and change, at your own peril. Perhaps Starbucks is ahead of the curve and can right the ship before financial results catch up with the deterioration of the Starbucks experience, but maybe recent financial results are a sign of things to come.
Tuesday, April 10, 2007
Consumer Reports finds McDonald’s coffee better than Starbucks
Related to last night’s Starbucks discussion, Consumer Reports rated McDonald’s coffee better than those of higher end chains. The business model is different but McDonald’s has to be considered a major threat and is chipping away at Starbucks coffee market share. Starbucks stock has also declined over the past 12 months. Coffee is its core competency and Starbucks may have diluted its brand. Interesting to see what Schultz’s internal memo will spark.
A couple links to articles about consumer reaction and coffee survey results:
http://abcnews.go.com/GMA/Business/story?id=2927462&page=1
http://www.msnbc.msn.com/id/16951509/
A couple links to articles about consumer reaction and coffee survey results:
http://abcnews.go.com/GMA/Business/story?id=2927462&page=1
http://www.msnbc.msn.com/id/16951509/
Harley-Davidson
In response to the comment about Harley employing skateboarding Team Emerica for some of their events, I agree that it might appear to be a forced fit.
An acquaintence of mine was recently asked by Harley to develop a video blog of his experiences in Dayonta Beach. He's younger than the traditional "Posse Rider" and he is somewhat high visibility because he's in a well-known punk band (the Bouncing Souls). Additionally, he has previously blogged extensively about his cross-country travels on his Harley.
In light of his organic passion about the bike and the influence that he exerts over younger consumers ("pre-dreamers"), this might be a better fit than Team Emerica.
His video blog is here.
An acquaintence of mine was recently asked by Harley to develop a video blog of his experiences in Dayonta Beach. He's younger than the traditional "Posse Rider" and he is somewhat high visibility because he's in a well-known punk band (the Bouncing Souls). Additionally, he has previously blogged extensively about his cross-country travels on his Harley.
In light of his organic passion about the bike and the influence that he exerts over younger consumers ("pre-dreamers"), this might be a better fit than Team Emerica.
His video blog is here.
Monday, April 9, 2007
Angels and Devils Case Reflections
Having been part of the Best Buy Angels and Devils case debate last Monday, I have some follow-up thoughts on Customer Relationship Management (CRM), specifically in the evolution of this marketing concept through the research of Dr. V. Kumar and his colleagues.
Dr. Kumar is the ING Chair Professor of Marketing, as well as the Executive Director of the ING Center for Financial Services, at the University of Connecticut’s School of Business. He is considered a pioneer in customer loyalty and customer lifetime value (CLV) research. (www.drvkumar.com) In the October 2000 issue of the Journal of Marketing, V. Kumar and Werner Reinartz conducted studies that contradicted such commonly held marketing beliefs as long-term customers are more profitable, a customer’s profits increase over time, it costs less to service long-term customers, and long-term customers are less price-sensitive. Therefore, marketing managers cannot assume that long-term customers are always more profitable than short-term customers. The authors also discussed the concept of “barnacles” and “butterflies”, which was then expanded upon in their article “The Mismanagement of Customer Loyalty” published in Harvard Business Review in July 2002. This article also noted “loyal” customers do not always generate positive word of mouth, which was a topic that came up a lot during the discussion last week. Kumar and Reinartz wrote, “To identify the true apostles, companies need to judge customers by more than just their actions” (page 4); however, CRM systems are based on just that, past actions. In the summer of 2004, the Journal of Interactive Marketing published an article by V. Kumar, Girish Ramani and Timothy Bohling entitled “Customer Lifetime Value Approaches and Best Practice Applications.” The article outlines formulas to calculate the average CLV of a group, as well as an individual. The authors considered CLV superior to the traditional Recency, Frequency, and Monetary Value (RFM) model because it “anticipates and models future customer behavior” (page 65). Then in October 2004, Kumar published “A Customer Lifetime Value Framework for Customer Selection and Resource Allocation Strategy” in the Journal of Marketing with Rajkumar Venkatesan which presented a CLV formula that takes into account the time between purchases. The authors tested the formula against three other metrics and found CLV to be a better predictor of customer profitability. However, this study did not explain the potential impact of various marketing mix strategies on CLV. In January of 2005, the Journal of Marketing contained “Balancing Acquisition and Retention Resources to Maximize Customer Profitability” by Werner Reinartz, Jacquelyn Thomas, and V. Kumar in which the authors provide a framework to help the marketer determine how to best allocate marketing resources. Using a statistical model, they found underspending on retention of current customers has a greater negative impact on profits than underspending on acquisition of new customers. In their studies, approximately 75-80% of the marketing budget spent on retention and 20-25% of the marketing budget spent on acquisition was found to be optimal.
A recurring theme of the class discussion on Monday was all the factors that statistical models cannot account for – word of mouth (negative or positive), potential earning changes that will impact future profitability, etc. Without a method to easily collect such information, what is a marketer to do? As my team argued last Monday, we believe it is better to use the information available than not to use information, but we must remember the numbers do not convey the entire story. As Professor Fournier mentioned in class, it is up to us as future marketers to figure out how to fuse art, science, and technology, since marketing involves all three: CRM systems are the technology and V. Kumar’s research is part of the science, but art is open to interpretation.
Dr. Kumar is the ING Chair Professor of Marketing, as well as the Executive Director of the ING Center for Financial Services, at the University of Connecticut’s School of Business. He is considered a pioneer in customer loyalty and customer lifetime value (CLV) research. (www.drvkumar.com) In the October 2000 issue of the Journal of Marketing, V. Kumar and Werner Reinartz conducted studies that contradicted such commonly held marketing beliefs as long-term customers are more profitable, a customer’s profits increase over time, it costs less to service long-term customers, and long-term customers are less price-sensitive. Therefore, marketing managers cannot assume that long-term customers are always more profitable than short-term customers. The authors also discussed the concept of “barnacles” and “butterflies”, which was then expanded upon in their article “The Mismanagement of Customer Loyalty” published in Harvard Business Review in July 2002. This article also noted “loyal” customers do not always generate positive word of mouth, which was a topic that came up a lot during the discussion last week. Kumar and Reinartz wrote, “To identify the true apostles, companies need to judge customers by more than just their actions” (page 4); however, CRM systems are based on just that, past actions. In the summer of 2004, the Journal of Interactive Marketing published an article by V. Kumar, Girish Ramani and Timothy Bohling entitled “Customer Lifetime Value Approaches and Best Practice Applications.” The article outlines formulas to calculate the average CLV of a group, as well as an individual. The authors considered CLV superior to the traditional Recency, Frequency, and Monetary Value (RFM) model because it “anticipates and models future customer behavior” (page 65). Then in October 2004, Kumar published “A Customer Lifetime Value Framework for Customer Selection and Resource Allocation Strategy” in the Journal of Marketing with Rajkumar Venkatesan which presented a CLV formula that takes into account the time between purchases. The authors tested the formula against three other metrics and found CLV to be a better predictor of customer profitability. However, this study did not explain the potential impact of various marketing mix strategies on CLV. In January of 2005, the Journal of Marketing contained “Balancing Acquisition and Retention Resources to Maximize Customer Profitability” by Werner Reinartz, Jacquelyn Thomas, and V. Kumar in which the authors provide a framework to help the marketer determine how to best allocate marketing resources. Using a statistical model, they found underspending on retention of current customers has a greater negative impact on profits than underspending on acquisition of new customers. In their studies, approximately 75-80% of the marketing budget spent on retention and 20-25% of the marketing budget spent on acquisition was found to be optimal.
A recurring theme of the class discussion on Monday was all the factors that statistical models cannot account for – word of mouth (negative or positive), potential earning changes that will impact future profitability, etc. Without a method to easily collect such information, what is a marketer to do? As my team argued last Monday, we believe it is better to use the information available than not to use information, but we must remember the numbers do not convey the entire story. As Professor Fournier mentioned in class, it is up to us as future marketers to figure out how to fuse art, science, and technology, since marketing involves all three: CRM systems are the technology and V. Kumar’s research is part of the science, but art is open to interpretation.
Wednesday, April 4, 2007
Harley looking to boost its stock
Interesting to note that bad subprime loans are affecting Harley and causing stock prices to tumble. This is a premium brand for those that can afford it. I’m wondering if Harley over stretched and hurt its brand by financing bikes to riders who are not as hard-core? Harley says it’s focusing its brand in China, India, and Japan. Would be interesting to see if and how HOG posse rides are handled there and if a cult following will develop.
Company Focus4/4/2007 12:01 AM ET
How Harley stock could roar back
Harley-Davidson shares have taken a bumpy road downward, partly due to subprime loans. But investors who buy now could soon find themselves in Hog heaven.
By Michael Brush
It turns out that loans made to iffy borrowers aren't just taking down housing stocks.
Since late February, troubles with dodgy loans have contributed to a painful slide of Harley-Davidson shares, taking the stock down more than 15%.
Here's the problem: The iconic American motorcycle company has a financing arm that helps fans buy their pricey Hogs. Enthusiasts often pay $25,000 or more for custom bikes.
Harley-Davidson (HOG, news, msgs) finances about half the motorcycles it sells. Now, many of those customers are having a hard time keeping up with payments -- and the company is getting less for the Hogs it repossesses because used bike prices have been weakening.
The problems may only get worse. As lending standards tighten because of concerns about low-end borrowers, sales growth could suffer. Somewhere between 10% and 15% of bikes sold last year were rolled out of the showrooms by subprime borrowers. Already, the company has taken 2007 earnings growth guidance down to 4%-6% -- a hefty cut from the prior range of 11% to 17%.
This one-two punch has Harley-Davidson investors racing to get out of the stock. Since late February, they've driven it down to $59 from above $70.
The road to Hog heaven
At some point, though, enough will be enough, and I think we are almost there. To be sure, traders could push Harley-Davidson stock down even more on worries that the company may announce bad news with its April 19 first-quarter earnings report.
But since it's impossible to call an exact bottom in any stock dip, I'd buy part of a long-term position in the stock now with limit orders set under $59, and look for possible pullbacks from those levels to continue building a stake. Then I'd sit back and watch the stock return to the $75 high it touched last November, for a 30% gain from the current price.
Here's what's going to put Harley-Davidson on the road to a comeback.
* Harley-Davidson has enviable brand strength that will help it power through the current mess. After all, how many companies can boast of a cult brand so powerful that customers tattoo their logos on their bodies? Besides holding on to a loyal fan base, this brand power should help it in its strategy to woo more buyers among women, African-Americans and Latinos.
* With U.S. growth cooling, Harley-Davidson can focus more attention on international growth. In Europe, sales increased 29% last quarter and around 18% in the two quarters before that. Harley-Davidson is also taking Hogs to China and India. It's already the market leader for large motorcycles in Japan.
* This company has enviable cash flow, and it's not stingy with it. It's no secret that Harley-Davidson will keep boosting earnings per share with big share buybacks. It should keep increasing dividends, as well.
Read more here:
http://articles.moneycentral.msn.com/Investing/CompanyFocus/HowHarleyStockCouldRoarBack.aspx?page=1
Company Focus4/4/2007 12:01 AM ET
How Harley stock could roar back
Harley-Davidson shares have taken a bumpy road downward, partly due to subprime loans. But investors who buy now could soon find themselves in Hog heaven.
By Michael Brush
It turns out that loans made to iffy borrowers aren't just taking down housing stocks.
Since late February, troubles with dodgy loans have contributed to a painful slide of Harley-Davidson shares, taking the stock down more than 15%.
Here's the problem: The iconic American motorcycle company has a financing arm that helps fans buy their pricey Hogs. Enthusiasts often pay $25,000 or more for custom bikes.
Harley-Davidson (HOG, news, msgs) finances about half the motorcycles it sells. Now, many of those customers are having a hard time keeping up with payments -- and the company is getting less for the Hogs it repossesses because used bike prices have been weakening.
The problems may only get worse. As lending standards tighten because of concerns about low-end borrowers, sales growth could suffer. Somewhere between 10% and 15% of bikes sold last year were rolled out of the showrooms by subprime borrowers. Already, the company has taken 2007 earnings growth guidance down to 4%-6% -- a hefty cut from the prior range of 11% to 17%.
This one-two punch has Harley-Davidson investors racing to get out of the stock. Since late February, they've driven it down to $59 from above $70.
The road to Hog heaven
At some point, though, enough will be enough, and I think we are almost there. To be sure, traders could push Harley-Davidson stock down even more on worries that the company may announce bad news with its April 19 first-quarter earnings report.
But since it's impossible to call an exact bottom in any stock dip, I'd buy part of a long-term position in the stock now with limit orders set under $59, and look for possible pullbacks from those levels to continue building a stake. Then I'd sit back and watch the stock return to the $75 high it touched last November, for a 30% gain from the current price.
Here's what's going to put Harley-Davidson on the road to a comeback.
* Harley-Davidson has enviable brand strength that will help it power through the current mess. After all, how many companies can boast of a cult brand so powerful that customers tattoo their logos on their bodies? Besides holding on to a loyal fan base, this brand power should help it in its strategy to woo more buyers among women, African-Americans and Latinos.
* With U.S. growth cooling, Harley-Davidson can focus more attention on international growth. In Europe, sales increased 29% last quarter and around 18% in the two quarters before that. Harley-Davidson is also taking Hogs to China and India. It's already the market leader for large motorcycles in Japan.
* This company has enviable cash flow, and it's not stingy with it. It's no secret that Harley-Davidson will keep boosting earnings per share with big share buybacks. It should keep increasing dividends, as well.
Read more here:
http://articles.moneycentral.msn.com/Investing/CompanyFocus/HowHarleyStockCouldRoarBack.aspx?page=1
Monday, April 2, 2007
New Bar Codes Can Talk With Your Cellphone
"It sounds like something straight out of a futuristic film: House hunters, driving past a for-sale sign, stop and point their cellphone at the sign. With a click, their cellphone screen displays the asking price, the number of bedrooms and baths and lots of other details about the house..."
An excerpt from a recent NYTimes.com article highlighting some technology already in use in parts of the world. The idea is that your cell phone can be used to decode giant bar codes on billboards, sides of buildings, products, etc. The phone then uses the decoded information to retrieve and transmit the advertising/information/service/etc. to your cell phone.
Follow these instructions.
Don't read the next word: cowbell.
Everyone read the word cowbell. Just by glancing in the vicinity we automatically read the words, we have been trained to do so. You can not look at just a letter in a word and not read the word.
Point? Well, in terms of advertising, even though billboards, for example, can be obnoxious and seemingly irrelevant to you, if they are in your line of sight, chances are you will read the content. With this technology, the user is more involved, but once I know that a the bar code on a billboard on the way to work does not interest me, i will probably not access it via my cellphone every time i drive by. Although you may check out every bar code sign once to know what it is about, companies have to find good incentives/services/use for you to continue accessing ads through such a functionality or they can weave in advertising as a secondary feature of the primary service.
Rock!
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