Mark Kolier’s Blog

Archive for the ‘Marketing stuff’ Category

In the era of stretching a paycheck, generic brands have moved from the fringes to the mainstream. Every day people consider the value of purchasing a ‘non-brand’ when visiting a supermarket, or big box retailer like Costco, Target or Wal-Mart. What people might find surprising (it was to me) is that a generic brand does not necessarily mean the product will be less expensive than the ‘name’ brand.

Wasn’t the whole idea behind generic brands hatched as a way for consumers to pay less while the store could keep a greater share of the profit? An article in Tuesday’s Wall Street Journal http://on.wsj.com/AbOAMK offered some interesting thoughts regarding store brands. It seems at times people actually prefer the store brand to the more established name brand. And they are even willing to pay more for the store brand. What the heck is going on here?

When I shop and consider a store or generic brand versus an established brand I go through the same checklist that I’m sure is the same as many people. If I decide to buy generic or store brand paper towels my expectations are lowered a bit (thinner ply and not as absorbent) but will only buy if the price is considerably lower. Sometimes it is lower, but sometimes the name brand is having a special and the value is better. It rarely (if ever) enters my thinking that I would prefer the ‘private label (fancy name for store or generic) brand.

From the WSJ article:
‘Private-label products still cost an average of 29% less than their nationally branded counterparts. But they are rising faster in price, at a rate of 5.3% last year compared with the industry average of 1.9%, and can sometimes be the most expensive product in a category, according to market-research firm Symphony IRI.
Target’s two-pound jars of Archer Farms roasted almonds, prominently displayed on the end of the nut aisle, recently cost about 16 cents more per pound than Planters’ roasted almonds.’

That Target has been able to create a store brand that costs more than the established brand impressed me a great deal.

The article also noted that Procter & Gamble Chief Executive Bob McDonald said the maker of Pampers and Tide has been balancing its exposure to chains with store brands by expanding distribution in other channels like dollar stores, which don’t sell private labels that compete against P&G products. They are also redoubling efforts to develop new products, particularly at lower prices. “We invest $2 billion a year in research and development, $400 million on consumer knowledge and about 10% of sales on advertising,” Mr. McDonald said in a recent interview. “Store brands don’t have that capability.”

Sounds like someone who is not sure but is hoping he’s right.

Is this a wake-up call for traditional established brands?

Newly hired Ron Johnson, recently of Apple, has taken the reins as new CEO at 99 year old retailer J.C. Penney. It was called Golden Rule Store prior to 1913 having been founded in 1902 by James Cash Penney (I guess his parents had a sense of humor). Mr. Johnson was the brainchild behind Apple Stores and Genius Bars and has taken on a fairly monumental challenge to refurbish a true American institutional brand. Prior to his stint at Apple Mr. Johnson was with Target so he has retail big box experience. An article in Daily Finance offers a good background http://aol.it/ifrUoG.

Mr. Johnson unveiled Penney’s new strategy and logo this week (a square signifying a square deal). One of his first moves is to eliminate the seemingly unending promotions and sales. In fact J.C. Penney had 590 such promotions and sales in 2011. He also will be streamlining pricing to be more consistent, around 40 percent off previous prices, all the time. And as reported in Macnn.com – http://bit.ly/A5gC3X when sales happen, they will be month-long events, and the company will strive to offer “great prices” on items every day. It will also price items in whole numbers, meaning a $20 price instead of $19.99.

I have written (unflatteringly) recently about the trials and tribulations at Sears http://wp.me/pJX7l-y6 and while I’ve not set foot in a J.C. Penney store (at least not that I can recall which says something in and of itself) in a year or so, I feel Mr. Johnson has got the right stuff and is saying and doing the right things to refurbish the J.C. Penney brand.

Having a brand stand for something and have that position understood by consumers is the challenge that Mr. Johnson is taking head on. I like that. He’s also avowed to invest $80 million a month in advertising and promotion. I like that too!

What’s your take on J.C. Penney? Is it a tired brand beyond repair?

With McDonald’s continuing to reign as the undisputed heavyweight champion of the world when it comes to burgers/QSR’s, the contest between Burger King and Wendy’s for second place has suddenly become more interesting. Wendy’s is about to surpass Burger King as the #2 burger chain.

Wendy’s has had its own struggles since the passing of its founder Dave Thomas. Recent improvements in product quality, product presentation (i.e. paper wrapped hamburgers) and in-store offerings have all contributed to recent growth and as marketing professor at Northwestern University’s Kellogg School of Management Tim Calkins notes it’s “a classic marketing story about brands that stumble and then get their footing back. This is about really understanding your brand, and being true to it.” http://bit.ly/Ar3mWW.

But I think it’s just as likely that the change in order is a situation created more by what Burger King is not doing as opposed to what Wendy’s is doing. After all – what is Burger King’s brand and how is BK being ‘true to it’? There has been much discussion on how Burger King’s desire to focus on young men has backfired and hurt its position. The bizarre ‘King’ campaign was just that – bizarre. The ‘Whopper Freakout’ ads were interesting and showed a little promise (at least I thought so) but they were abandoned as well.

Burger King seems to have forgotten its own USP (unique selling proposition) and POD (point of differentiation). Of the three, only Burger King broils its burgers. When’s the last time you heard anything about that? Of course BK’s problems are substantially more complicated than not having a USP or POD. Just walk into a Burger King restaurant and you will realize what I mean instantly. To me the few restaurants I’ve been in lately are dark, somewhat less than spotlessly clean and bereft of a variety of healthy choices as opposed to McDonald’s and Wendy’s.

As the Ad-Age article concluded ‘Indeed, Wendy’s has benefited from the woes at Burger King, much like Diet Coke benefited from Pepsi’s issues to become the No. 2 soda brand.

Burger King has struggled with management and ownership changes, and analysts have said the chain faltered by focusing too much of its marketing on young men, a demographic hit hard by the recession. Wendy’s seized the moment, made the right changes and zipped into the No. 2 spot.

However, Burger King is determined to rebound. Last year it hired Global CMO Flavia Faugeres (Wendy’s has been sans CMO since June), brought on McGarry-Bowen , and, “to appeal to a broader audience, traded in its King character in favor of food as the star of its advertising. A new brand campaign is also expected this year.’

McGarryBowen is a top notch shop but I think Burger King has quality perception problem that supersedes its identity problem. It won’t be an easy fix but Wendy’s has shown that good comeback stories still exist in the ultra-competitive QSR burger category.

Let me start by acknowledging that we have a client who has signed up some prominent school districts around the United States who have agreed to allow outlets like in-school video screens with ads and scoreboard sponsorships (among others) to be displayed at their schools. More than 500,000 students already have been reached via these outlets and the number is growing rapidly.

There’s no mystery as to why a school district would sign up to participate in programs like these. With increased pressure on school budgets showing no sign of abating, new sources of revenue to fund a wide range of educational programs are essential.

Last week my local paper printed an article in which one town had agreed to allow the sponsorship of an outdoor scoreboard. That practice has been going on for quite some time. The superintendent of schools in a neighborhood town chimed in by noting that his board would not allow any advertising in the schools at all. When people think about advertising in public schools traditionalists gasp in mock horror thinking that before long the school will look like the outfield fence at a minor league baseball park. While that is unlikely to happen it does offer reason for debate and perhaps even concern. The idea of having advertising supported in-school TV monitors that would broadcast information on behalf of the school and district horrifies those same traditionalists to an even greater degree. I believe that the ends more than justify the means.

Many (most?) students in public schools today have mobile phones with an increasing number having smartphones. While school districts attempt to limit the usage of those devices while the students are in school, at the least students use the phones between classes, on breaks and during lunch hours. Since the phones often have full web access, there are shows broadcast with ads, ad supported websites and all kinds of ad supported content. How is having a monitor broadcasting information (and yes some ads) any different? It’s not as if the school is going to broadcast the latest episode of iCarly, Twilight or Jersey Shore.

Public school education in the U.S. is facing a host of challenges – underpaid teachers (and there are overpaid tenured ones in droves), increasing special education needs and requirements as well as decreasing local tax revenues. Finding new sources of revenue to help close the gaps and support good school programs has never been more important.

What do you think? Should there be ad supported content platforms within public schools?

As the holiday season scorecards begin to be revealed, Sears, showing its ‘softer side’ as sales were down 5.2% over the eight week holiday period, led by CEO Ed Lampert http://on.wsj.com/ttKCBi reported that it expected to close 100 to 120 underperforming stores. Already before Noon on Tuesday December 27th the stock price has sunk 20% (it finished 27% below the previous day’s close) and is down 45% over the past 12 months.

There was a Sears in the Long Island town in which I grew up. Even back then (1960’s and 1970’s) the impression I had of the store was that the stuff they had was a bit dated and that Sears was pretty good at appliances. In my opinion not much has changed and I have been in a Sears within the last year – although I cannot recall why.

With more than 2,200 stores (including Kmart and Sears full-line stores) Sears still has a substantial footprint in the United States. Yet I wonder if more often than not people end up at Sears instead of really wanting to go there. Aside from its aforementioned Kenmore home appliance offerings, what about Sears would attract a shopper? The clothes (do they still sell Haggar?)? The styles? The once proudly displayed Craftsman tools? Or maybe you will recall the union of the Sears brand with that of Lands End or Martha Stewart and KMart? It is an understatement to note that things did not turn out the way it was they were supposed to.

It’s a far cry from the now somewhat distant past where Sears was known for quality and service. While I suppose there are Sears stores that have better service than others that’s not what the brand says to me – nor does it scream quality either.

Sears was the largest retailer in the U.S. until the early 1980’s. Today the combined Sears has 2,201 full-line and 1,354 specialty retail stores in the United States operating through Kmart and Sears and 483 full-line and specialty retail stores in Canada operating through Sears Canada Inc. (Sears Canada), a 92%-owned subsidiary. So Sears ‘gets around’. During the fiscal year ended January 29, 2010 (fiscal 2010), it operated three segments: Kmart, Sears Domestic and Sears Canada. As of January 29, 2011, Holdings operated a total of 1,307 Kmart stores across 49 states, Guam, Puerto Rico, and the United States Virgin Islands.

As I browsed through comments http://on.wsj.com/ucpEXX from people who had shopped at Sears the conversation varied from blaming Ed Lampert to poor service and odd pricing but there were a few positive comments regarding selection, service and quality. The thing that stood out to me was the inconsistency of delivering the Sears brand promise – whatever that is. I could not figure it out – can you?