Tuesday, January 31, 2012

Marketing Oreos in China

Last week, National Public Radio aired a fascinating story about marketing Oreos in China. The cookie had to be reformulated for Chinese tastes, which Kraft did a few years ago by reducing the sugar content, with globalization expert Sanjay Khosla leading the way. Kraft also had to reduce the size of packages so it could reduce the price.

"Twist, lick, and dunk" may be a traditional U.S. Oreo consumption ritual, but it doesn't come naturally in China, where milk and cookies are an acquired taste. Now Kraft has rethought the shape and size of Oreos, as well, coming up with new versions that appeal to local tastes. Thanks to glocalization, the Oreo is now the best-selling cookie in China.

Wednesday, January 25, 2012

February 5 Means . . .

For football fans, the Super Bowl. For supermarkets, the Super Bowl began on the second day of January, when holiday displays were replaced with "big game" displays of chips, dips, and every other snack food or drink a fan might possibly want. Grocery ads are hyping party platters, and all other related products. Needless to say, this is a big time of year for TV sales, and the electronics retailers are vying for those purchases in a big way.

For non-fans, the New York Times reports that reservations are available in gourmet restaurants, tickets can be had for popular Broadway shows, ski slopes are empty, and other things that are difficult on any other Sunday in February are easier on February 5.

Even for fans, this year's Super Bowl coverage may be TMI. There will be celebrity talk shows broadcasting from Indianapolis, interviews with NFL wives, charity tie-ins, and a seemingly endless round of place-based promotions (in stores, in taxis, at gas stations, etc).

February 5 will be the biggest sales day of the year for pizza restaurants. No wonder the promotions are starting now. Papa John's is offering a special for members of its loyalty program, based on the coin toss.

Oh, and the NY Giants will be playing the New England Patriots on February 5th, by the way. But if you're not a fan, you might tune in anyway to see the new crop of commercials that debut on Super Bowl Sunday.

Saturday, January 21, 2012

"Likes" Per Million in Revenue

Three experts from Booz & Co. recently took a fresh look at Facebook "likes" and company revenue, with an eye toward understanding competitive brand value. They wrote:

Every company can compare its brand value to that of its competitors based on a readily available scale: Facebook "likes," adjusted for company revenue (in millions).

Here's how to apply the likes per million (LPM) calculation for Whole Foods Market and Publix. Numbers are rounded off, and this is only a sample comparison--these aren't direct competitors.

Whole Foods has 777,000 likes, $10 billion in revenue. Its LPM is 777,000/10,000 = 77.7.

Publix has 357,700 likes and $25.3 billion in revenue Its LPM is 357,700/25,300 = 14.1.

The higher the LPM, the better the brand value (or, another way to look at it, is how engaging the brand is compared with competing brands--higher LPM is better). Whole Foods Market's LPM is higher than Publix's LPM, at least on this day. As Booz points out, LPM is a moving target because likes can change from day to day.

Thursday, January 19, 2012

Will Game Apps Muscle Game Consoles Out of the Way?

Angry Birds has been downloaded 600 million times--an incredible number that represents the high penetration of smartphones and a definite shift in the market for games. This raises questions about what the future might hold for the big players in this market.

  • Will mobile games (Angry Birds) and online games take over from the game consoles like Sony Playstations and Nintendo Wiis? 
  • Will handheld game devices (like the Nintendo DS) evolve into tablet-like gadgets? 
  • Or will console controllers evolve into tablet-like gadgets, which is what the forthcoming Nintendo Wii U (see above) seems to look like?
  • Will online games or games in the cloud be the future of consoles? The combo of console and online game playing has been profitable for Microsoft's Xbox, in particular, with the Kinect system.
The stakes are high...and 2012 is likely to be a key year for the industry. Stay tuned!

Wednesday, January 18, 2012

Top 10 Leaders in Retail Customer Service

The National Retail Federation just released its ranking of retail service leaders, based on a survey of 9,300 consumers. The top 10 are a mix of bricks-and-mortar and online/TV retailers:
  1. Amazon.com (up from #2 last year)
  2. L.L. Bean
  3. Zappos (before the revelation of its recent hacking problem)
  4. Overstock.com
  5. QVC
  6. Kohl's
  7. Lands' End
  8. J.C. Penney
  9. Newegg.com
  10. Nordstrom

Saturday, January 14, 2012

Starbucks "Thinks Holistically About Prices"

Today's New York Times has a story about a higher price on Starbucks tall coffees in stores across the Northeast. The price is officially $1.85 in New York City for 12 oz of java. With tax, however, the total price paid is $2.01.

Now that's an unusual price. It forces customers to either carry spare pennies, break another bill, or--as is happening at some NYC Starbucks stores--be grateful to the cashier who offers to put in a penny from the tip jar. Meanwhile, competition in the gourmet coffee market is fierce, and many places now offer great coffee at a great price. It's not on the menu, but seniors can get a cup o'joe at MacDonald's at a significant discount if they know to ask for the "senior coffee."

The psychological effect of pricing is well known. When we see an item priced at $3.99, the theory is that we "process" the price starting with the number on the left, which means we perceive this price as being in the $3 range. Some retailers use odd-number pricing to get us to pay attention; Walmart, for instance, offers 97-cent shipping, a number that is probably intended to call attention to the low shipping fee (under a dollar!).

Back to Starbucks: The company told the New York Times that it “thinks holistically about prices and about the total value it provides its customers.” Questioned specifically about the New York City price being $2.01 including tax, an exec confirmed that this “wasn’t an accident.” The reporter wonders whether the "annoyance factor" of having to carry extra pennies will discourage some NYC customers from being loyal to Starbucks. Let's see.

Friday, January 13, 2012

Pink: Not For Girls Only

Pink is the color of Breast Cancer Awareness month . . . and the traditional color of products targeted at girls, newborns through teens. My earlier post about Legos Friends shows that even plastic blocks are aiming at the girl market with pink (and other colors beloved by little girls).

Fujitsu Japan has just announced a line of pink cell phones for--you guessed it!--girls. The phones and accessories are cute in the extreme.
However, as blogger Philip Berne writes on SlashDot, pink isn't necessarily for girls. His young son is mad for pink, and he himself has a pink iPod mini that he likes a lot. By day, Berne works for Samsung; by night, he blogs about tech topics.

Berne's complaint is that many people find pink appealing, but stereotyped marketing types think it's for girls only. Berne has a solution, and I agree it's worth a try:

"The answer is to start making and marketing more pink devices aimed at men. Or, more generally, make pink devices that everyone will like. Treat pink like the appealing color that it is, and not some super-inflated symbol of gender and sexuality."

Thursday, January 5, 2012

Going Down: Pricing Trends for 2012

Dealnews has an interesting piece titled "12 Things That Will Be Less Expensive in 2012," which suggests that prices are going down on the following products. I'm also adding my two cents to this list:

  1. Apple iPad 2. Of course, given the inevitability that iPad 3 is on the way. And this will also affect pricing of other digital gadgets that retailers want to clear before the iPad 3 is introduced, notes Time.
  2. Wine. In particular, bottles priced over $30 are likely to be marked down, because economically-challenged consumers have barely bought at this price range. Visits to local wine stores bear this out.
  3. Laptops. Out with desktop PCs, in with replacement laptops, at new low, low prices.
  4. Android tablets. Kindle Fire, $199--Android tablets have to come down to compete. Without question.
  5. Solid state drives. Demand is growing for solid state drives as prices drop. The cycle will feed on itself, says Dealnews, and I agree.
  6. Car rentals. I'm skeptical, but if rental firms have lots of inventory sitting idle, they'll have to budge on price to get people to their lots. Last time I priced a rental, however, prices were still way above 2010.
  7. E-book readers. Ordinary Kindles are getting cheaper and better, not to mention the Kindle Fire's huge popularity. To play in this marketplace, competitors will have to reduce prices. Buzz over e-books is growing, and the higher-priced readers will be shut out if they don't find a way to compete quickly.
  8. Apple MacBook Air refurbished models. Enough said, especially with a new MacBook on the way in 2012.
  9. GPS units. Those individual units with "lifetime" maps are going, going, gone as smartphones and other connected gadgets give us up-to-the-minute map info. Definitely.
  10. Media streamers. Think Roku and similar standalone boxes, which are competing with ever-cheaper DVD players (and TVs) capable of streaming without a separate gadget. Again, this makes sense.
  11. 3D TVs. Not a lot of demand yet, especially at the currently high price points, and stock is starting to pile up. Watch for super deals at Superbowl time!
  12. Homes. Dealnews says downward pricing pressure will continue into 2012, but I'm seeing prices start to plateau. My view is that areas with a glut of empty homes (much of Florida, much of Cleveland) will see lower prices, while areas with less of a glut will see slowly rising prices through the year.

Monday, January 2, 2012

Legos for Girls

Lego has just introduced its Lego Friends for girls, following a lengthy period of marketing research and testing. BusinessWeek has an indepth article about the company's new product development process here.

As anybody who knows 8-year-old boys knows, Lego is the go-to toy for birthdays and all other occasions. Its block sets featuring licensed brands such as Harry Potter and Star Wars are immensely popular with boys and with the people who buy for their sons, nephews, and grandsons. Not to mention AFOLs--Adult Fans of Lego, a large and lucrative segment of hobbyists who enjoy the challenge of building intricate creations from Lego blocks.

Now, with a $40 million campaign backing the intro of Lego Friends, will the product line become a favorite of girls worldwide?

Maybe, but I have my doubts. The "Friends" are mini-doll figures, not minifigures, with much more detailed faces and outfits than the minifigures in "boy" sets...in other words, they're small dolls. The "Friends" habitats seem to be the usual stuff of girl toys (beauty shop, house) with the usual girl accessories (cute dogs, cosmetics). And there's a lot of lavender and aqua, not to mention pink, leading me to believe that these are aimed at younger girls in particular.

By comparison with the boy sets featuring Star Wars, Ninjago, etc., the "Friends" sets seem, well, very safe, very tame, and nowhere near as compelling. The Star Wars and Harry Potter sets have aspirational aspects to them: Boys have to be able to follow directions to assemble the pieces, and the storylines are complex and multidimensional. The appeal is also multigenerational, because so many parents were Star Wars fans when they were young.

However, "Friends" have no outside associations or backstory that would be recognized by girls or their parents, an important difference. Also, they seem to have a "little girl" quality that limits the appeal, IMHO. Tweens and preteens want to be like teens, and that means more sophisticated toy themes. "Friends" are cute, not sophisticated.

Lego has been criticized recently for reinforcing gender stereotypes with this new "Friends" product line. A recent Time opinion piece says:
There are no men in Heartlake City, except for the father of Olivia, one of the five core “friends” who are not minifigs at all but redesigned mini-dolls that come with the following accessories: a purse, a hair brush, a hair drier, four lipsticks and two barrettes; a spatula, an electric mixer and two cupcakes; and for when they’re not primping or baking, a puppy dog and a pink book with butterflies on it. Is this message — with its emphasis on physical appearance and limited career choices — really any different from that of Disney’s princesses?
Good question. The market will deliver its answer very soon.