Friday, December 28, 2012

New Year, New Super Bowl Ads

The calendar hasn't even turned 2013, the NFL playoffs haven't begun, but already Super Bowl advertising is in the air.

Just for the record, Super Bowl XLVII will be played in New Orleans on February 3rd, at the Mercedes-Benz Superdome. Of course, Mercedes-Benz will air ads during the game.
As of yesterday, Ad Age reports that only a handful of ad spots remain to be sold. Many of the 2012 advertisers are returning for 2013. Remember, at nearly $4 million per spot--not to mention the cost of production and talent--big money is at stake. That's why I'm wondering about these advertisers:
  • Gildan is seeking the spotlight for its inhouse Gildan brand of athletic apparel. Gildan thinks big: It sponsored the New Mexico Bowl this month (see left) and also holds a Guinness Book record for the world's largest T-shirt. Can it make a distinctive brand name in an industry dominated by deep-pocketed rivals?
  • SodaStream will promote its make-your-own-soda product, with a 30-sec ad likely to be a retooled version of its controversial UK campaign. Considering that Coca-Cola is going to air multiple commercials, SodaStream may have difficulty breaking through. It also has to convert attention into interest, positive attitudes, and sales.
  • Best Buy will air a 30-sec ad. Last year it featured innovators of the mobile industry, instead of well-known celebrities. Considering the retailer's challenging situation, I hope it will promote a USP (remember that concept? unique selling proposition) that differentiates it from competitors, particularly Amazon. Otherwise, as the Wall Street Journal observes, it may not be able to survive the showrooming effect.

Friday, December 21, 2012

Kindle's Star Turn, Year After Year

The Internet Wayback Machine serves as a window on the World Wide Web of past days, weeks, months. And if you use it to browse Amazon's pages since late 2007, you'll see one product very consistently featured.

Every day since Amazon introduced the Kindle, the product has been on the retailer's home page. Imagine if Macy's had one product or brand in its main display window every day, day after day, updating the display when new models are introduced. This exposure has helped the Kindle shine as the star of Amazon, year after year after year.

For example, look back at Amazon's home page for December 20, 2009, and here's what you'll see at top of the home page:

Yes, the Kindle, 2 years old in 2009 and going strong, was featured prominently just days before Christmas.

Fast-forward to 2010, and on December 21, Amazon is showcasing its Kindle reading apps for multiple devices and platforms. The message: You can read your Kindle books (purchased at Amazon) anywhere, at any time, picking up on the page where you left off.

Today's Amazon home page shows the Kindle product line, from the most basic model to the latest Fire HD, and free two-day shipping.

Wednesday, December 19, 2012

The Wheel of Retailing Turns Again

More than 50 years ago, Professor Malcolm McNair proposed the "wheel of retailing" theory. He sought to explain the way a retail business evolves, starting at the no-frills, low-price end with minimal services--as a way of breaking into the store business--and then progressing ever higher on the wheel to offer expanded goods and services in better store surroundings and with higher price points (and margins).

At the time, discounting was a new retail phenomenon and a threat to established department and specialty stores. What would McNair have made of the incredible rise of online retailing? Would he have included Jeff Bezos, for example, on his list of the greatest merchants in history?

Here are the names that McNair gave Fortune in 1962 as the six greatest merchants:
  • John Wanamaker (whose Philadelphia department store featured fixed pricing--no more haggling!)
  • Frank Woolworth (whose five-and-dime variety stores were once a fixture in so many cities and towns)
  • General Robert Wood (who took Sears from a mainly mail-order business to the heights of bricks-and-mortar retailing)
  • Michael Cullen (who founded King Kullen supermarkets because he saw a real need for affordably-priced foods in a business model of high-volume, low-margin retailing)
  • J.C. Penney (his middle name was Cash and he had a policy of cash-only sales)
  • Eugene Ferkauf (founder of E.J. Korvette, a New York-based discount chain that predated the self-service model of Walmart and other mass merchants)

Whether or not the wheel of retailing applies to today's business environment, it correctly suggests that the retail industry is always changing. In a "back to the future" move, some online-only retailers like Bonobos are opening brick-and-mortar stores. A store chain in Brazil hangs fashions on hangers that display the real-time number of "likes" each item has attracted on the retailer's Facebook pages, bringing social media onto the selling floor in a new way. Piperlime, owned by the Gap, was once online-only but now has a store in New York City's SoHo district (see photo).

What's next for the wheel of retailing?

Thursday, December 13, 2012

Online Privacy: Survey Says . . .

Consumers in Canada may use Facebook, but as this infographic of survey results shows, 69% worry that it poses a threat to privacy. They're not logging off, however.

U.S. parents tell Pew researchers that they're concerned about who's tracking their teenagers' online behavior and why.

In Europe, consumers in the Netherlands say they're very aware of cookies and tracking, but not very concerned about online privacy issues.

Watch for more on this issue in 2013 and beyond.

Wednesday, December 12, 2012

Brands with Purpose and Authenticity

Purpose. Authenticity. Brands either have 'em or they don't. And that makes all the difference in today's global marketplace, where consumers have more power and more choices than at any time in the past.

According to a recent Edelman study, purpose will tip the balance in favor of a particular brand when the quality and price of that category's brands are perceived as being equal. In fact, a majority of consumers expect businesses to do something for society, not merely ring up sales and profits. Employees who work for companies that market brands with a purpose--brands with authenticity--are more likely to go the extra mile.

Case in point: Unilever, which has won praise and publicity for its international initiatives promoting sustainability, social responsibility, and transparency. Its Lifebuoy brand posts this vision on its website:

As the world’s No. 1 germ protection soap, our vision is to bring health and hygiene to a billion people.

In line with this vision, Lifebuoy provides handwashing education to fight disease in India, Kenya, and other areas.

Unilever also owns Ben & Jerry's, an ice-cream brand built on the purpose and authenticity of its cofounders. When ice-cream lovers choose Ben & Jerry's, their purchases enable the brand to continue buying from local dairy producers and to support ongoing social responsibility activities.

Despite being under the Unilever umbrella since 2001, Ben & Jerry's has now become a certified B Corporation, showing its dedication to purpose while advancing Unilever's sustainability agenda.

Sunday, December 9, 2012

When Fans "Like" a Brand on Facebook

From local businesses to multinational corporations, just about every marketer on the planet wants to boost the number of "likes" on its Facebook page. A like is rewarded by exclusive coupons (Domino's Pizza) or early announcements of new products (Graeter's ice cream) or a sneak peek at brand news (H&M). In other words, brand fans perceive they get something of value in exchange for clicking like.

But what, exactly, is a Facebook like worth to a brand? Booz & Co.'s new video, above, features Nick Hodson explaining how and why brands can use the "likes per million" metric for a social media perspective on brand value.

The LPM formula is:
Number of Facebook likes
Millions in $ Revenue

Instead of looking only at the actual number of likes--which can run into double-digit millions for brands like Coca-Cola--the LPM metric uses the context of revenue to evaluate the value of a like. This metric also allows competitive comparisons over time.

Another way to view likes is in the context of stock price. Arthur J. O'Connor conducted research while at Pace University to understand the relationship between likes and company share price. By tracking the number of likes and changes in share price, O'Connor found that "99.95 percent of the change could be explained by the change in fan counts," as he told NPR. Of course, likes don't cause the change in stock value...but they do indicate sentiment toward the company and its brands.

Wednesday, December 5, 2012

Tesco's Tough Time with Fresh & Easy

Fresh & Easy has turned out to be costly and difficult for its parent Tesco, the UK's largest supermarket retailer.

Tesco's researchers observed US shoppers at close quarters and studied market dynamics for two years before the first Fresh & Easy stores opened in Arizona, California, and Nevada in 2007.

Based on what they learned, Tesco's original strategy was to exploit a gap in the market between small-format convenience stores and large-scale supermarkets and superstores.

Fresh & Easy was to be a neighborhood market featuring easy-in, easy-out shopping for fresh fruits, vegetables, and prepared foods, with everyday low pricing (EDLP). In other words, the merchandise would be fresh and the shopping would be easy (and easy on the wallet).

The long-term plan was to have 1,000 stores stretching the coast from California to Washington state. Never mind that those states already have plenty of supermarkets and superstores selling produce and related foods, including powerhouses like Trader Joe's, Costco, Walmart, and Whole Foods. Tesco believed its fresh concept and core competency in food retailing would bring something new and different to the US market. Tesco even invested in a gigantic distribution center to serve the huge network of stores in the works.

However, Tesco soon found that competition was much fiercer than expected. Even worse, the global financial crisis pushed the economy into a tailspin and the Western states where its first Fresh & Easy stores were located suffered particularly severe and prolonged downturns. Shoppers became accustomed to bargain-hunting for promotional pricing, not Fresh & Easy's EDLP pricing strategy.

Meanwhile, Fresh & Easy lacked the high profile and positive brand associations it needed to attract and retain shoppers. Even though a belated advertising campaign, new color scheme, new merchandise categories for US shoppers' preferences, and promotional pricing helped slow the losses, these moves couldn't boost sales and customer counts to break-even levels quickly enough.

After years of multimillion dollar losses and no break-even date in sight for Fresh & Easy, Tesco today announced it was conducting a strategic review of the US grocery chain. Whether Fresh & Easy is sold or shuttered, the experience has been painful and profit-sapping for Tesco.