Monday, August 29, 2011

Big-Box Retailers Plan for Storms

Walmart was one of the business heroes of the Katrina disaster--providing supplies even when others had their stock depleted or weren't even able to open their doors (see photo below). Walmart has a meteorologist on staff and uses datamining to analyze store-by-store sales so it can plan for storms and other emergency situations.

Not surprisingly, Home Depot and Lowe's, as well as Walmart, were ready for Hurricane Irene, which slammed into the East Coast over the weekend.

"We take storm product, both pre- and post-strike product, we stage those in containers and we have them in our distribution centers, really ready for a driver to pull up and pick up and take them to our stores," a Home Depot official tells National Public Radio.
The big-box retailers coordinate with local emergency centers, check in with FEMA, get their store generators ready, and have emergency supplies on hand for employees.

Home Depot has a "preparing for the storm" page on its Web site. Lowe's has a page with videos and other pages with suggested supplies.

This is where the big-box retailers' contingency planning--preparing for the unexpected, whether hurricane or earthquake or tornado or hail storm--really makes a difference for customers.

Monday, August 22, 2011

Dollar Stores vs Everybody Else

The dollar stores (like Dollar General and Dollar Tree) are increasingly appealing to shoppers across the economic spectrum.

One reason is, of course, price. Many dollar stores carry national brands at $1, a distinct price differential vs even the discounters like Walmart, let alone supermarkets and other retailers.

Another key reason, unrelated to price, is that dollar stores are smaller than their giant counterparts. Shoppers can run in, scoop up a few items, and scoot out again much more quickly if they visit a dollar store instead of one of the giant supercenters or supermarkets. No wonder Dollar General's slogan is "Save time. Save money. Every day!"

It's true that middle-income consumers are feeling strapped and looking to pinch pennies where possible. Dollar stores are a good place to buy household items that aren't visible to peers. Who's going to notice if that detergent comes from Dollar Tree or Safeway? In some cases, dollar stores are located in shopping strips that contain supermarkets or in areas close to the big-box stores, convenient for a quick trip for some household necessity.

For the past decade, researchers and analysts have talked about the problems of retailers being positioned in the middle--neither luxury store nor super-discount store, a middle-of-the-road problem that leaves them vulnerable to competitors at either extreme. And in fact, because dollar stores are clearly positioned as low-price alternatives to other retailers, shoppers know exactly what to expect and have a compelling reason to go there on occasion. Similarly, shoppers choose Nordstrom or other high-end store when they want something special or want status-symbol products.

Once the economy begins to improve--in the coming months or, worst case, a year or more from now--will shoppers who've discovered dollar stores continue to buy there? My opinion: If the dollar stores are conveniently located and stock name-brand goods, middle-class consumers will keep going back for staple items. However, if the price of gas plummets as consumer income rises, the dollar stores will have a big fight on their hands: Walmart, Target, and others will compete mightily for those dollars.

Friday, August 19, 2011

The Tablet Wars--What's Next?

The Hewlett-Packard TouchPad (above), launched to much media fanfare and in many channels to compete with Apple's iPad, has been a monumental disappointment in its first weeks. After a surprisingly slow start, H-P cut the TouchPad's price. But even that move failed to ignite TouchPad sales, and the product has been axed.

In fact, Hewlett-Packard just announced its planned spinoff of the PC/tablet/smartphone division. The intense competition in PCs/tablets has driven prices down and shaved profit margins, making that business less desirable for long-term growth, in H-P's view. H-P will retain its printer business and is looking at software for future growth.

But what happens next in the tablet wars? Apple is, far and away, the undisputed market leader. Dell has tried smaller tablets (the Streak 5) but discontinued this in-between size, neither a smartphone nor a full-fledged tablet. Watch for Dell to upsize its tablets and iPad to intro ever more innovative, powerful, feature-rich iPads. With the rate of adoption so rapid, this product category is sure to be a market-share battleground for the next couple of years.

Wednesday, August 17, 2011

Shared Value: Michael Porter and Mark Kramer

Marketing for profit alone isn't as powerful as marketing with the larger good in mind. Michael Porter and Mark Kramer endorse a concept they call shared value, the idea that a company can and should profit while...

"...advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress."

By applying the concept of shared value, marketers can tackle real-world issues and keep profit in the equation, rather than simply using profits from business operations to "do good."

Danone and Grameen Bank have been partners for several years in a yogurt business that provides jobs making and distributing nutritious, affordable yogurt in Bangladesh. This is a social business, aimed at addressing poverty in a targeted market. In a limited way, it applies shared value.

On a larger scale, General Electric's ecomagination initiative is creating innovative, sustainable products and services that benefit customers in diverse markets. Between now and 2015, GE is investing $10 billion to research "clean" (green) technologies. Since ecomagination was introduced in 2005, GE has reaped revenues of $85 billion from these goods and services. This is shared value, because GE and its stockholders benefit from the profits while customers and communities benefit from green offerings that are environmentally-safe.


Monday, August 15, 2011

How to Make BFFs (Brand Fans Forever)

What marketer wouldn't want loyalty, in the form of Brand Fans Forever?
Ford "Warriors in Pink" promo

To make BFFs, your brand must be:
  1. Liked. Not cute, not cuddly, but likable. Apple is liked. It has a "good guy" image. Southwest Airlines is liked. Walmart wants to be liked and is working hard on this element...part of brand management 101.
  2. Respected. Nobody wants to be BFF with a sleazy outfit. Your brand must act responsibly, treat stakeholders with courtesy, and deliver on its promises. Ford is respected because it's steadily going green, living within its financial means, and working hard to deliver vehicles that drivers want and need.
  3. Trustworthy. Brands that do the right thing will earn the trust of their customers, suppliers, and distributors. If you can't trust a brand, you might buy it occasionally, but you won't be its BFF. Facebook is at a key juncture now, with some loyal users angry at its privacy missteps. If users come to believe that FB can't be trusted with their personal data and messages, Google+ may be the big social media winner.
  4. Relevant. Even the most loyal BFF may need a change to remain relevant and valued as needs/markets/technologies change. Your brand should be flexible enough to change with the times yet deliver value without losing its likability, respectability, or trustworthiness. Maybe you need a new package or flavor or line extension, whatever value update will keep your brand relevant to its existing BFFs and attract new BFFs. Frito-Lay does this by adding new flavors, making snacks healthier, and changing packaging to look current.
What else should marketers do to make BFFs?

Friday, August 12, 2011

P&G Boosts Ad Spending as It Innovates

Procter and Gamble, marketer of such famous brands as Crest, Tide, Olay, and Scope, is bulldozing its way through economic doldrums by increasing its worldwide advertising spending to a record $9.3 billion this fiscal year.

To put that into perspective, the annual GDP of the Bahamas is just shy of $9 billion. In other words, P and G spends more on advertising its cosmetics and household products than the entire value of goods and services produced in the Bahamas in a year.

P and G's CEO, Bob McDonald, tells Ad Age: "Consumers are continuing to buy our products, particularly when we have innovation in market, and we have a very strong innovation program right now."

The company web site highlights some product introductions from the past year, most of which are extensions rather than "new to the world" products. One way P and G fosters innovation is through separate spaces where teams can gather and work away from the mainstream. In addition, it operates a portal where it invites inventors to submit new product ideas for consideration in a partnership approach to innovation.

P and G's CEO also observes that, despite the difficult economic climate, “We’ve not seen dramatic changes in consumer behavior over the last few months that’d be markedly different from what we’ve seen before.” Essentially, he's saying that the company has been tracking long-term consumer behavior and hasn't seen major deviations that are unfamiliar or unable to be addressed via marketing.

Wednesday, August 10, 2011

60 Seconds Is an Eternity to Texters

The old-style, hard-sell 60-second TV commercial just doesn't have the same effect on young audiences. Unlike generations born before MTV, the Millennials often prefer new ways of accessing traditional media...and are heavy users of social media and SMS texting to stay in touch.

One-minute ads, infomercials, and magazine advertorials are so old media. These days, smart-phone and tablet computer devotees have the option of dispensing with words and simply scanning QR codes to get info on the fly.

To today's audience accustomed to the limits of 140 or 160 characters, in other words, 60 seconds can seem an eternity. No wonder marketers are telling a story or crafting a work of art in 60 seconds, to retain the attention of Millennials about as long as a fast-moving movie trailer. 

Levi Strauss is using a 60-second "film" (yes, it's an ad) to showcase its "Go Forth" legacy theme (see below). Coca-Cola and other well-known brands also emphasize entertainment to hold the audience for a minute before they click to another station or tune out the commercial entirely as they run their thumbs over the phone's keypad.

So do 60-second TV commercials have a future? Stay tuned.

Monday, August 8, 2011

Marketing Movie Tavern

Have you heard of Movie Tavern? The concept of a "cinema eatery" is surprisingly simple but intuitively appealing: Offer a first-run or classic movie with the option of food--dinner, desserts, or snacks, plus beverages.

The original Movie Tavern featured a lobby ordering area, with food and drink delivered to customers in their seats. The "premier" version allows customers to order (from a larger menu) from their seats.

Here's a Movie Tavern general manager talking about the concept:

Movie Tavern also offers special weekend "Breakfast and a Flick" showings, including a kiddie menu, for family movie fun. And at least twice a week, Movie Tavern shows a classic movie as "Retro Cinema."

Today, there are 15 Movie Tavern locations around the US, from Pennsylvania to Colorado. The most recent to open, in Collegeville, Pennsylvania, anchors the second phase of a shopping center anchored by destination stores such as Wegmans, Dick's Sporting Goods, Best Buy, and Staples.

The ticket price is about the same as for any first-run film, with--of course!--food and beverages at an extra cost. Movie Tavern is active on Facebook and Twitter, two good ways to leverage word of mouth among target audiences.

Friday, August 5, 2011

Multinationals Like Marketing in Brazil

Thanks to an emerging middle class and a long period of economic expansion, many marketers have their eyes on Brazil as a growth market.

Kirin, a major Japanese brewing company, has just bought a majority stake in Brazil's second-largest brewery. Given the current state of the Japanese economy, Brazil represents a good opportunity for higher sales revenue. Buying into a successful, established brewing firm lets Kirin learn about the market and buying behavior without the cost and risk of building facilities and starting from scratch.

Automakers see considerable opportunity in Brazil and are putting money into the market day by day. China's Chery and JAC companies, Japan's Nissan, and South Korea's Hyundai are only a few of the automakers that are building factories in Brazil, the world's fourth-largest car market (and moving up quickly). 

The leading foreign car brands in Brazil these days are Fiat, VW, GM, and Ford. Tomorrow, however, the Asian automakers are likely to challenge this line-up and move higher in the standings.

Brazil's economic climate is positive for imports but some local firms aren't doing quite as well as foreign counterparts. Inflation is on the rise and after a big run-up in consumer credit, the level of household debt could hold back consumer spending. Another issue for marketers to consider is the cost of doing business in Brazil. Long term, however, marketers are happy about the prospects of serving Brazilian customers.

Thursday, August 4, 2011

21st Century Vending Machines

In a recent interview, Mandeep Arora, the CEO of Cantaloupe Systems, explains his inspiration for starting a company that helps vending machine operators remotely monitor sales.

He was a teenager, riding along with a vending machine owner who was making his rounds to refill machines in various locations. At the first stop, Arora asked how long the slots had been empty, and the owner said he had no way of knowing. At the next stop, no slots were empty, and Arora asked, "Why are we here?" He knew that operators should have the ability to check machines before going to refill them. A decade or so later, he founded Cantaloupe Systems, which enables operators to use networked systems to check on item sales and plan refill routes accordingly.

21st century vending machines are turning up to solve B2B distribution problems, as well. For example, Facebook's IT wizards have installed a workplace vending machine to dispense small tech peripherals (keyboards, cords, etc.). Employees swipe their ID tags to pay for the items, and the proper department gets billed. No more time-consuming purchase orders, lost productivity, etc. Maybe it's unconventional, but it works!

Speaking of unconventional, a new machine in Minneapolis dispenses bicycle repair parts. Named the Bike Fixtation, the machine distributes tools, lights, and--of course--snacks.

In addition, in-store self-service kiosks are a growing trend adding to scrambled merchandising. Walmart is installing Ticketmaster kiosks in a number of stores, for example. This isn't a new development--free-standing kiosks selling diverse products were around before the dot-com boom/bust. These days, JCPenney and others are using kiosks to expand information about items that can be ordered in-store or online. What next for kiosks/vending machines?

Tuesday, August 2, 2011

Will McDonald's Kid Nutrition Promo Change the Game?

Remember when Walmart's green strategy gave a massive boost to the green movement because of its influence and buying muscle? McDonald's may have the power to do the same with the issue of children's healthy eating.

Along with changes to its Happy Meals--such as downsizing the fries and including apple slices--McDonald's is using its Smurfs movie tie-in to encourage kids to "smurf the earth" by actually eating the apple slices.

To sweeten the deal, each Happy Meal (complete with Smurf toy) contains a digital code for buyers to enter on a special McD's/Smurf site. For each code entered, McD's and its partner, Keep America Beautiful, will plant a tree.

If enough families get involved, and if McDonald's continues the nutrition promo, the Smurfs may turn out to be the marketing heroes that nutrition advocates have hoped would encourage healthier eating. So far--after one weekend--the movie is appealing to families and, if box-office trends continue, its popularity is only going to help McD's do its job.

Monday, August 1, 2011

"Grilled Cheese Makes People Happy"

Jonathan Kaplan--a serial entrepreneur who started, among other things, the firm that gave us the Flip camcorder--has a new venture: Melt, a chain of grilled cheese restaurants. He told NPR just the other day:
"Grilled cheese is one of these food items that people talk about with emotional connection," he says. "[The] reaction was pretty much the same: People love grilled cheese."
The first five Melt restaurants will open in the San Francisco area this month. Of course, given Kaplan's Flip background, his restaurants will have tech flair. Customers can place orders remotely via a mobile app. Once each customer is within range of the restaurant, the Melt will complete their orders (using a special machine that cooks the sandwich in one minute). In a hurry? Pay for your order via cell phone, to avoid lines at the checkout.

But can Kaplan parlay a deep-seated love of grilled cheese into a profitable nationwide restaurant chain? Despite the emotional connection consumers have with grilled cheese, the entrepreneur will have to tap into wallets as well as hearts. Plus Kaplan has competition: Melt Bar and Grilled, for one.