Wednesday, August 28, 2013

Multibranding at Starbucks

If and when the ubiquitous coffee culture cools off after its long reign, Starbucks will be ready with a fridge full of other food products under various brands. This multibrand strategy is important because it facilitates revenue growth without the expense of opening new cafes--and it reinforces the company's toehold in non-coffee products.

Evolution Fresh juices, a 2011 acquisition, will give Starbucks its intro to the fresh-juice refrigerated section of supermarkets like Whole Foods. (Facebook: 10,700 likes for Evolution Fresh.) The company is smart to make the most of established grocery relationships in its marketing channel. Plus from a profit perspective, doesn't it make sense to sell your own products in your own outlets? That's why Evolution Fresh is replacing the Naked Juice line of fresh juices that Starbucks currently sells in its stores. And adding new Evolution Fresh snack bars to Starbucks menu boards.

In addition, Starbucks is partnering with Danone on a line of Greek yogurt parfait-style products, to be marketed under the Evolution Fresh brand. The idea is to sell them in Starbucks stores and through the grocery distribution channel. This is another bit of diversification that will help Starbucks offer more things to more people without going too far out on a limb. Again, it makes sense to boost a home-grown brand rather than bring in outside brands.
Starbucks not only has high awareness and positive associations among its customer base, also has a very cost-efficient social media platform for promoting itself and its brands (Facebook: 35.2 million likes; Twitter: 4.8 million followers).

And in the corporate social responsibility area, Starbucks is testing new community stores. These specially-designated stores donate a portion of each transaction to local programs for education, youth, health, etc. The newest community store in Seattle, for instance, expects to donate about $100,000 to the local YWCA. 

Thursday, August 22, 2013

Marketing Ski Season Passes in Summer?

Maybe the weather is hot where you are, but ski enthusiasts are already thinking about the coldest, snowiest days of winter. If you're thinking about boarding or skiing the mountains at Aspen or Vail or other big ski areas, you may have noticed that the price of a season pass is generally going up. Nobody knows how much snow will fall when the temperature falls, but if you wait to buy a pass, you'll pay more than you would if you buy during the dog days of summer.
  • Aspen Skiing Co. is offering a discount until September 13th, when the price rises--and rises again after November 8th.  
  • Sugarbush has special pass pricing until September 12th. Its segmentation includes special pricing for college students, corporate employees, and families with kids.
  • Heavenly Lake Tahoe has special season pass deals until September 2d. Segments being targeted: adult, teen, child, and senior.
  • Sundance Resort is pricing its season passes lower until Halloween. Its segmentation includes targeting college students, "juniors" (6-12 yrs old), "student" (teenagers), corporate skiers, seniors, and night-only skiers.
The good news is that many season passes are good at multiple mountains. Even better news is that some passes include extras like lodging packages. In many cases, buyers enjoy flexibility in choosing when and where to ski, which is especially appreciated by the segment of variety-seekers. The mountains and lodges get money upfront and, just as important, gain a competitive edge when you buy their pass.

Here's how Vail's chief marketing officer explains the season-pass marketing strategy in this week's Time magazine: "After you've bought our pass, are you likely to go skiing elsewhere? No. Passes really drive customer loyalty."

Tuesday, August 20, 2013

Target to Canada: "Hi Neighbour"

Even before Target opened its Canadian stores, it used a friendly, low-key "Hi, Neighbour!" campaign to reach out to shoppers who knew the store by reputation (and sometimes from shopping in its US stores).

Note the spelling of "neighbour," showing how carefully Target is, well, targeting Canada. The retailer's Canada Facebook page has 1.1 million likes and content that is designed specifically for the market. (Target Canada also has a Facebook page in French, with 64,000 likes.) Target Canada has 65,000 Twitter followers (fewer than 2,000 Twitter followers for the version in French.) Posts are friendly and frequent, with an informal tone that reinforces the "neighbourly" feeling.

Target has tremendous buying power, which helps it to price competitively. Its strong brand image is yet another advantage that helps it compete with long-established rival retailers throughout Canada.

As in many other markets, the retail industry in Canada is experiencing consolidation--creating both opportunities and challenges as supermarkets, drug chains, discount stores, and department stores battle for shoppers and market share. New entrants also put pressure on all stores to reexamine profit margins and slice prices. Despite some criticism that retail prices in Canada should be about the same as those in the US, increased competition from stores like Target may eventually help reduce the pricing gap.

Meanwhile, retailers are making deals to improve efficiencies and accelerate growth. This week, the retailer Metro agreed to operate Target Canada's in-store pharmacies in Quebec. Last month, the Loblaw's grocery chain sealed a deal for Shopper's Drug Mart. Earlier, Sobey's bought Safeway Canada. And in July, Hudson's Bay bought the upscale Saks Fifth Avenue department store chain, weighing further expansion in Canada. Will more US retailers say "Hi Neighbour" as they expand northward?

Wednesday, August 14, 2013

Mobile Changes the Web Browser Wars

This map from the current Economist magazine shows that the Google web browser Chrome (green) has captured considerable market share worldwide during the past 12 months.

The days of Netscape (intro in 1994) vs Microsoft's Internet Explorer (intro in 1995) are so far in the past that Netscape is an unfamiliar brand to most Millennials. Opera (1996) was an early IE competitor, but once Mozilla Firefox was launched (2004), Firefox gained share very quickly. And when Chrome came along (2008), the marketing muscle of parent Google gave it a huge headstart in capturing share.

However, the rapid rise of mobile browsing is changing the equation again. Firefox seems to be having difficulty achieving significant momentum in the mobile market. Opera reportedly has 100 million mobile users in China. And Google is increasing integration of its Chrome for mobile with other Google apps/functionality (like Google Docs).

Which browser will be on top next year at this time?

Sunday, August 11, 2013

Pricing the Kind Bar

Today's New York Times has an excellent article about pricing, "Doing the Math on a Snack." It's all about how different retailers price the Kind bar, produced by Kind Healthy Snacks and marketed with a brand image of quality, healthiness, and social responsibility.

Kind relies on a multichannel distribution strategy, selling online (direct to consumer and through online merchants) and in different types of retail outlets, including natural foods grocery chains (Whole Foods, Trader Joe's), drug chains (Duane Reade), mass merchants (Walmart and Target), and newsstands/stores at transportation hubs (subway entrances, airport kiosks).

When the New York Times comparison-priced Kind, it found a range of retail prices from a low of $1 per bar (at a Whole Foods store) to a high of $3.50 per bar (at a newsstand at Kennedy Airport).

Why such variation in pricing for the same product? The retailers didn't explain, but the director of Columbia University's Center for Pricing & Revenue Management told the newspaper that stores are probably setting a price they know they can get consumers to pay, especially if the consumer's options are limited (such as being at the airport).

Try this pricing comparison yourself. I found, today, 12 Kind cranberry-almond bars selling on Walmart's web site for $14.44 (note the unusual price point, a signature of Walmart). The same 12 bars were selling via Amazon from Kind itself for $13.72. What prices can you find?

Oh, and of course Kind is social media savvy: Look for the brand on Facebook (136,000 likes) and Twitter (18,000 followers).

Thursday, August 8, 2013

Small Jets, Big Competition

The August 12th issue of Fortune has a concise analysis of the highly competitive market for small jets. As the magazine's infographic shows, three companies from three continents are competing for airline orders for regional jets (100 seats or so). The two giants of the aircraft industry, Boeing and Airbus, are putting much of their focus on larger jets (think Dreamliner 787 and A350, which are capable of carrying about 250+ passengers).

So Bombardier, Embraer, and Mitsubishi are aggressively marketing regional jets to carriers worldwide. Gaining market share under such competitive pressure requires effective segmentation and targeting, careful pricing, and responsive attention to carriers' needs:
  • Bombardier (Canada) is introducing a jet equipped with up to 125 seats in 2014. "We feel that the segment of 100 to 149 seats is a category that [Boeing and Airbus] are abandoning," says Bombardier's CEO.
  • Embraer (Brazil) is attracting orders but feeling pressure to discount--meaning profit margins are being squeezed. Its new E2 jet (for up to 106 passengers) will be launched in 2018.
  • Mitsubishi (Japan) is developing a regional jet for which it already has 325 orders. The test flights have been delayed a year as carriers work with Mitsubishi on specs.

Tuesday, August 6, 2013

Buy, Buy, Buy: Stores Apply Consumer Behavior

MediaPost has a fun post today titled "What I Learned About Marketing Psychology at the Mall." The author deconstructs three effective techniques for getting shoppers to buy: (1) obedience to authority (Kiehl's salespeople wear white lab coats--associations with "medical authority"); (2) samples lead to reciprocity (no such thing as a free lunch; get a sample, feel obliged to buy); and (3) exclusivity that isn't as exclusive as it appears (limiting the number of shoppers inside a store even when there might be room for more).

Here are a few more examples from the annals of retail marketing:
  • Genuine bargain or boring regular price? JCPenney tried, unsuccessfully, to convince shoppers that its everyday low prices (EDLP) were actually low, not a gimmick. However, researchers find that shoppers crave the "rush" they feel when they bag a bargain. So EDLP doesn't make shoppers feel as good as they do when they buy on sale or with a coupon or discount code.
  • Sensory appeal. Perfumed entryways in department stores and the aroma of bread baking at the supermarket--just two examples of how retailers get shoppers in the mood for a positive experience, maybe encouraging a bit of impulse buying. Don't forget the key to shelf position: Eye-level merchandise practically jumps into the shopping cart; children's products placed on low shelves are just the right height for little ones to see and grab.
  • Time to kill? Browse (and buy). Airline passengers waiting for flights often have lots of time to walk in and out of airport shops. Maybe they spot the perfect gift for someone back home or see clothing they have to have for the trip...Heathrow is cashing in on this tendency with ritzy new shopping areas. The airport's retail director explains: "A lot of women business passengers, who come in and out every week, tell us it's great because while they're here – having to be here early – they can do some shopping, which they never have time to do in town because they're too busy."

Friday, August 2, 2013

Matchmakers in the "Sharing Economy"

The "sharing economy" is one of 2013's biggest trends. Sharing (or peer-to-peer) actually means paying for something--paying for renting a consumer's spare bedroom, as an example. This is a viable business model for everyone involved: The person who rents the bedroom makes money, the renter of the room gets a bargain or at least an adventure, and the matchmaker takes a small piece of the fee for putting the two sides together.

Two high-profile matchmakers in the sharing economy are:
  • Airbnb is an "apartment-sharing" company that specializes in helping consumers rent out a bedroom or house or villa for a night or a week. Airbnb depends on sophisticated cloud computing tools to help customers locate the most appropriate accommodations where and when they want to rent. On the back end, Airbnb provides security and transactional efficiency for both parties. When a consumer's bedroom or home rents, Airbnb takes 3% of the payment.
  • Eatwith is a matchmaker for home cooks who want to attract paying guests for fun dinner parties. The idea is to encourage conversation and new experiences. Founded in Israel last year, Eatwith has expanded through Europe and South America and is only now beginning operations in the United States, with New York City a top priority. 
However, authorities are still grappling with the legal and regulatory nuances of the sharing economy. "In New York City, people who offer meals to the public for money are considered food service establishments and need permits," says a health department official in response to a question about Eatwith. New York City is also pursuing legal cases against some airbnb hosts, with airbnb assisting in the defense of one host who was fined $2,400 for violating the city's short-term rental rules.

Now a nonprofit group named Peers has formed to help members of the sharing economy navigate the regulatory environment and serve as a unified voice for the industry. "The sharing economy is helping us pay the bills, work flexible hours, meet new people or spend more time with our families. We think it’s how the 21st century economy should work, so we’re coming together to grow, mainstream and protect the sharing economy," says Peers on its website. How will the shared economy grow and evolve? And how will established competitors in the corporate world respond to this development in the business environment?