Dollar Menu Marketing Strategies

The marketing battle of the dollar menus continues into 2013 as price-conscious consumers keep a lid on their fast-food spending. Although dollar menus don't do much for the bottom line, they do keep customers coming back (instead of switching to rivals).

Here's the latest on dollar menu marketing strategies:

• McDonald's trimmed its dollar menu early in 2012...but sales lagged during the fall, so to increase traffic, it put the marketing focus back on the dollar menu ("good taste doesn't cost a lot"). McD's also included new low-price sandwiches and pushed "extra value" meals. The strategy worked: Revenue was up in November. Profits? No word yet. But remember that soft drinks, coffee, and other beverages are typically higher-margin than burgers. So a buyer who chooses a 99-cent burger and adds a cola to the order is helping to balance the profit picture for McDonald's and giving the fast-food chain a higher share of wallet at the same time.
• Wendy's is emphasizing its "Right Size, Right Price" menu, a dollar menu with an added tier of under-$2 items. This expands lower-price choices for customers and allows franchisees to promote higher-profit items, not to mention helping Wendy's compete more effectively with McD's.
• Sonic has "everyday deals"--a few budget-priced items in budget sizes. But the strategy is actually to move in the opposite direction, beefing up the premium sandwich menu. And Sonic offers happy-hour deals on discounted soft drinks, an interesting twist in light of the higher profits on drinks.

Mobile Marketing: Small Screen, Big Potential

eMarketer projects ever-higher mobile ad spending

Small screen, big potential: What's ahead for mobile marketing in 2013?

• Rich media customized for small screens. Mobile marketers are learning how to make video and other elements look good and function effectively on smart phone screens, within apps and on mobile web sites. Watch for more experiments and incremental improvements.
• Relevance in content and presentation. Intrusive interruptions aren't customer-friendly. Consumers won't pay attention long enough to respond unless mobile marketing is meaningful, presented in a relevant context, timed properly, and geared to their needs and interests. Coca-Cola has had success with text messages, for example, related to its Olympics campaign worldwide. At the same time, it's important that customers be able to opt out of text message marketing.
• More compelling business rationale for mobile marketing. Decision-makers are looking to make every dollar count. Just because mobile is relatively new and attracting attention doesn't mean it's right for every marketer. Accidental clicks don't count. This is the year when pilot programs and big data will make the case (or not) for mobile marketing, brand by brand and company by company.
• Clearer rules for mobile marketing. The FCC had to step into the controversy over companies (and their digital agencies) sending a confirmatory text when a consumer opts out of receiving marketing text messages. (Companies are now allowed to send consumers one final ad-free message "confirming" that they've opted out, within 5 minutes of receiving the opt-out notice.) The rise in mobile marketing inevitably means more squabbling over details and more guidelines for marketers to follow.
• Competition for customer attention. Expect more noise, more clutter, more competition for attention. Mobiles are in every hand or pocket, and customer power is stronger than ever before, so target wisely and post-evaluate every program or test.

What Happens When Social Media Sites Change the Rules?

Ryan Block, co-founder of the gdgt site and formerly editor in chief of tech blog network Engadget, brings up an important point about social media content posted by users. What happens to users' data and content when a site changes its user agreement and/or privacy rules, jumps the shark, or gets acquired?

In his New Year's Eve post, titled "Why I'm Quitting Instagram," Block tells about joining the pioneer social media site Friendster in its early months and then moving on. Friendster was purchased in 2009 by a Malaysian company and has been repositioned as a social gaming and dating site targeting users in Asia. Months ago, Block began getting promo e-mails from Friendster's current owner. That's when he realized that his info had been transferred without his knowledge or permission, and is now out of his control.

In the context of Instagram's recent announcements and reversals about changing its user agreement, Block has decided to give up that account, as well as his Facebook account (remember, Facebook now owns Instagram). Given the need for social media sites to build profits--usually via advertising--Block's concerns are understandable. Not to mention that privacy policies can be confusing . . .  and even a highly public fuss may not roll back changes that prove unpopular with users.

However, as Andrew Couts points out in his post, "Why I'm NOT Quitting Instagram," the social media sites have already won. Advertising sales form the basis of their business models, and consumers mostly don't care about what happens to their content, now or in the future. Rules may change, ownership may change, but once we're connected to friends, family, and colleagues, we're unlikely to quit.

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.

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.

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?

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.

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.

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.

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.