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Wednesday, April 29, 2009

Customers in search for a bargain and the large Supermarket Chains Thrive

I was browsing the Internet for some interesting articles and came across a very interesting achievement. Last week, Tesco's annual results were published and it revealed that it had passed the £1bn sales per week milestone. This has made it the company which achieved the all time highest profits to date for a UK retailer.

One might ask how come Tesco managed to achieve this milestone in the current economic climate? Are shoppers actually spending more? The answer is that shoppers are in search for bigger bargains so that they can make their money last longer. There are only two ways how this can be done; either by shopping in smaller quantities or else find better prices and who more than the biggest supermarkets can offer cheaper prices?


Tesco, Asda, Morrison and Sainsbury are amongst the supermarkets which saw the biggest growth in sales during the last quarter...however it was more interesting to note that Tesco was actually the supermarket which had the smallest growth with a 3.3% increase whereas Morrison and Asda managed to register growth figures of 6.9% and 6.7% respectively.

Both Asda and Morrison have actually increased their ad spending in order to further highlight their lowest price proposition. In fact it's not difficult to come across moneysupermarket surveys and other ads that claim that Asda is cheaper than any other supermarket (especially Tesco) in the UK. This strategy is especially important during this period as customers everywhere are feeling the economic strain. Supermarket giants are responding to customer changing needs in lower further their prices....however how is this impacting the supermarket suppliers? Some suppliers are facing difficult times as they want to keep their big supermarkets business, however they are facing the difficult challenge of making ends meet.

Some people and local organisations are opposing the growth of large supermarkets as this is threatening the survival of smaller family-run businesses. Will this result in an ultimate survival challenge? Let's wait and see how the market will continue to evolve and whether the rich will continue to get richer and in this case the small will continue to get smaller (or actually has to close the business).

Tuesday, April 28, 2009

Renault the brand that is set to replace Volkswagen as the People's car

I was reading about the strategy followed by car companies and came across a very interesting strategic brand. It seems that as time goes by, more companies are aiming at improving their market positioning by moving from a hybrid strategy to a more differentiated one. The hybrid strategy, using Bowman's (1996) definition is a strategy that companies follow when they adopt a low to medium price with a medium to high perceived value. On the other hand the differentiated strategy aims at coupling the product offer differentiation with a price increase so as to take a more premium positioning.


Companies which are seen as moving along this strategic journey include brands such as Volkswagen, Fiat (especially with the launch of the new Fiat Cinquecento and the Chroma), Citro├źn and also Skoda. A brand which apparently has decided to keep it's mid market positioning, even though it heavily invests in adverting and brand promotion (by sponsoring sports such as Formula 1) is Renault. Renault's senior vice-president for global marketing, Stephen Norman, said that the brand will continue to focus on delivering ‘better value for drivers'. This strategy should enable Renault to make it through the expected deterioration market conditions for the year 2009.


The aim of Renualt are to improve sales and cash flows while continuing to work hard to achieve unparalleled quality level. In order to achieve the aim of enhancing it's cash flow renault is working on reducing it's inventory levels while at the same time is moving into e-commerce with Renaultshop. The advantage for customers is obvious: using a simplified search engine, customers can search for a vehicle by dealership, geographical area, model or budget. To support the brand improvement strategy and keep continue to transmit it's fresh and innovative image, Renault is launching a web-based TV channel: http://www.renault.tv/. Renault TV, will be an informative and entertaining medium that will be providing information about the brand, its products, and its motor sports to its viewers. It represents an alternative way of communicating to advertising with more comprehensive and various messages.


Will the commitment to it's mid market strategy coupled with innovative ways of communication succeed against the sub-premium move of its competitors? On time will be able to tell us who the winner will be...for now we can sit back and enjoy the innovations...

Monday, April 27, 2009

If you have to pay for breakfast don't worry - The Express will provide you with one for free

Have you ever been to a hotel in the UK which does not provide free breakfast or are you planning to stay in one of these hotels in the next few days? If your answer is yes then you may come across the Express by Holiday Inn 'Breakfast Express' bus. The bus is set to hit the streets of London and Birmingham offering free breakfasts to the public.


What is the aim of this initiaive? Express by Holiday Inn has a twofold aim; it aims at increasing the awareness of starting each day with a healthy breakfast to have the necessary energy to start off a working day and at the same time try to poach patrons from its ‘no free breakfast' rival hotels amongst which are Travelodge and Premier Inn hotels.





The Express by Holiday Inn breakfast bus will be staffed with InterContinental Hotels Group sales representative and these will be handing out about one thousand free breakfasts across the two days. During this campaign the bus is planning to stop at various locations such as close to rival hotels, where it aims to provide the free breakfast to hungry rival patrons, and key business travel agencies such as BSI and Carlson Wagonlit.


Jane Bednall, spokesperson for Express by Holiday Inn, further highlighted the importance that this campaign has in terms of increasing the awareness of good breakfast and the benefit it makes by providing its patrons with one. In fact, Ms. Bednall says that starting the day without a breakfast could lead to a sluggish feeling that reduces the daily proiductivity. This productivity, according to an internal research by Holiday Inn, is said to be costing the UK £22 billion...so one can say that it surely pays to provide a good breakfast to your employees.

Sunday, April 26, 2009

Pernod Ricard brand Malibu in a facelift to gather sales momentum

The Rum brand Malibu owned by Pernod Ricard is to launch a new integrated marketing campaign that will end an 18 month absence from TV advertising. The company has set a side a £14 million budget for the next two years for it's new TV advertising campaign. The campaign is targeted towards 18 - 24 year old women who account for about 40% of all sales volume of Malibu.

The campaign is supported by a limited edition bottle that will feature a new summery design developed by Pernod's in house team and that will also feature cocktail receipts that involve the use of Malibu Rum. The new bottle design is also support by a brand new site (http://www.malibu-rum.com/) that feature the strap line "Get Your Island On" and has the same fresh design as the bottle label. The website includes other features such as cocktail receipts, TV advertising and downloads.





A feature which I believe is missing from Malibu's strategy is the actual social networking...summer is renowned for the parties and friends meeting for social events...it could be a good idea for Malibu promote itself as your party partner for the summer season and hence Twitter, Facebook (and other social networking sites such as Bebo and Myspace) and own blog would be a good idea. Could this proposed strategy enhance the chances of success of this campaign or is social networking not ideal for such products?

Saturday, April 25, 2009

Bayer in Breakthough Advertising

There are some issues, especially those that are sources of a moral debate, that always cause upheaval when advertised. A high percentage of such adverts relate to sexual health. UK's Watchdog has take a step forward in this regard as it tries to facilitate sexual health related advertising so as to increase sexual education with the aim of decreasing the rate of teenage pregnancy. However such moves, as always find a lot of opposition.


Bayer has now gone a step further...while before people were complaining because a proposal was being passed that would allow contraceptive advertising to be aired before the 9pm watershed, Bayer last Thursday started a TV campaign advertising the morning after pill - Levonelle. This goes a step further as there exist a further moral debate now...it is not just about advertising contraceptives, but about whether to consider this drug a contraceptive or an early abortion (given that it doesn't prevent the exchange of body fluids to tries to correct what has already taken place).





The Prolife Alliance see this as an abortion pill however other organisations such as Marie Stopes International see this as a good step forward toward better sexual health education that might drive down the rate of teenage pregnancy. The issue now rests on where do we place the limit...should we allow any form of advertising for the sake of reducing problems such as teenage pregnancy or should there still be a limit....for example should we allow abortion clinics to advertise their services or should we auto impose certain limits...

This question is surely a difficult one to answer as it is sure to spark a very hot debate...however what is sure is that Bayer succeeded in one thing...they managed to spark the much needed discussion that will get the name of their drug of newspapers and online fora.

Thursday, April 23, 2009

ITV and YouTube miss an opportunity to capitalise on a new artist - Susan Boyle

I was surfing on YouTube in the evening after a busy day at work and came across a video from Britain Got Talent. I used to watch this program when I was abroad and I immediately got a nostalgia feeling and said let's watch it. It was about a middle aged woman named Susan Boyle who wanted to sing her favourite song (http://www.youtube.com/watch?v=9lp0IWv8QZY&feature=related). Honestly when I saw it I said it was one of those participants that would come there just to try however this was before I heard her singing...her voice was simply fantastic...it left everyone astonished. Everyone was simply wondering how such a talent could remain hidden for so long! I felt proud for this Scottish talent and decided to do a small search.

I noticed that all videos that showed Susan Boyle's performance has extremely high viewerships...I believed that in total these videos had been viewed more then 100 million times!! I wondered how come YouTube and ITV did not capitalise on this opportunity and attach small advert to these videos? The answer came from an article from Brand Republic (http://www.brandrepublic.com/Discipline/Digital/News/900557/ITV-YouTube-miss-Susan-Boyle-ad-revenue/)...ITV and YouTube could not agree on advertising terms and lost a golden opportunity to negotiate on pre-roll ads for these videos. With the huge number of people that this advert attracted, YouTube and ITV could have made a good return, a breath of fresh air during this period of economic uncertainty.

Susan Boyle became an idol for the common men in the street, a symbol of hope for those chasing apparently unrealistic dreams...These companies should look back at the opportunity they lost and learn to achieve a win win win win situation. Both companies, the artist and the advertisers all gain a share from the popularity and achieve their individual goals making such deal a fruitful deal for everyone.

Wednesday, April 22, 2009

Advertising - Much needed by companies but sometimes frustrating for Customers

I was reading the Financial Times and came across one of a series of articles that reports on the dire state of the print media advertising market in the US as it has been heavily hit by the economic crises. The article (http://www.ft.com/cms/s/0/daa86abe-2e77-11de-b7d3-00144feabdc0.html)reports the further drop in New York's Times aadvertising revenue (it fell 27% leading to a first quarter loss of $74.5m). This drop is not as accentuated in the digital media industry as it is in the print media.

Facebook is one of the companies which is seeking to increase or at least limit the damage of the economic crisis. With the deployment of the last makeover of its social networking site it is aiming to make advertising more targeted so that companies can benefit from better return of investment. However this apparently is leaving its toll on Facebook and other social networking sites who have followed the same trend. A study done by Interactive Advertising Bureau shows that such a strategy is turning off users of these sites (31% of social networking users are fed up with constant requests by brands). This could be a blow to these sites as they are trying to take the opportunity to consolidate their revenue base with the potential to expand further (especially with future economic recovery).



However the same survey highlights the fact that users would be happy to join groups if offered exclusive content or something relevant. This could be the an Ace for another company - Twitter - and could also explain it huge growth. Users can choose to follow mini blogs which they have an interest in and hence pick up the information the want. However Twitter still has to find a business model that will allow it to produce some form of revenue stream that could ensure its long-term survival. Hence the battle still remains for such companies as they need to satisfy their users while at the same time ensure their long term survival.

Tuesday, April 21, 2009

Innocent Drinks Sell Minority Stake to Coca-Cola Co

The three founders of Innocent Drinks, the famous smoothie manufacturer, have finally decided to take Coca-Cola's offer and sell to them a minority stake ranging between 10% and 20% for a sum of around £30 million. According to Innocent's press release, this money will be used to fuel it's European expansion. http://www.innocentdrinks.co.uk/press/pressreleases/view.cfm?token=378b791944ef45c986aca6530f72d5f8&presssectionid=7&id=8

This move has produced a lot of concerns from loyal Innocent consumers who fear that this move will harm Innocent's promise of only making natural products using fresh ingredients and move towards a more corporate culture thus losing some of the values which have characterised company over the past ten years. Some of the concerns expressed by consumers can be seem here:-



So to sum it all up Innocent is now facing a very challenging moment. After having become one of the most successful start ups and one of the lastest companies that sold a stake to a corporate giant, Innocent's owners have to prove it's customer base and general public that they can still attain to the values which made them what they are. Only the future will be able to tell us whether Innocent's move to sell a stake to Coca-Cola was the right move to help the company grow stronger in the European market.

Monday, April 20, 2009

Dominos Pizza discover the Power of Social Networking

I was reading an article on the Daily Mail about the Domino's employees who shot videos of one of them doing all sort of disgusting stuff with pizza ingredients (http://www.dailymail.co.uk/news/worldnews/article-1169881/Dominos-Pizza-workers-filmed-revolting-video-abusing-takeaway-food-charged-police.html). Just after reading the article I decided I should do a standard Google search and was amazed to see that most of the top ten results related to articles reporting the story. The actual homepage of Domino's now stood surrounded by such articles.

Following this I decided to search for the video myself and noted that all videos that were reporting the incident had high viewership rates, with the official video reporting more than a million views. One of the employees involved has also been reported to have claimed the rights from the video, forcing YouTube to put down the link. The tremendous success of this video (unfortunately for Domino's) has caught Domino's by surprise forcing them to take immediate action to try to control the damage inflicted to the brand. Apart from the normal procedure of firing those involved the company sought to replicate as fast as possible...and what better way then using the same channel that helped to create all this hype.

Domino's posted it's own YouTube video (see below) featuring it's US president Patrick Doyle clearly irritated by the action of the two employees (or ex-employees) and the effect that their action could have left on the trust of Domino's customers and the possible repercussions on the brand and it's franchisor. However till today the video although registering over 500,000 views is still behind the 1 million mark that the original video hit. The company has now embarked on the journey of Social Networking and has also created a Twitter account to keep in touch with the general public...



However why should successful companies use a reactive approach (only react after a PR blunder) to adopt new forms of marketing which have already been used successfully by other brands? Could a proactive approach have made it easier of Domino's (in this case) to react more swiftly to this unexpected event and limit the impact of the brand? As Churchill Winston said, All men make mistakes, but only wise men learn from their mistakes...hopefully Domino's Pizza will now learn to be more proactive and other companies would be better off learning from the mistakes of others.