Clever Marketing, From LG

What do you do when your main competitor has pretty much appropriated the word “Galaxy”?

You take out Ads like this one:


Will it translate into sales?

Not sure, but it will at least make potential consumers pause for a second and grab some eyeballs, so it’s probably a good start. Then, comes the real marketing magic…

Marketing To Teens: 1956 Edition

As part of celebrating 125 years of being around, the Wall Street Journal recently highlighted a number of stories it published over the years.

The one that stood out to me, on the business front, was this 1956 piece called “Teenage Customers: Merchants Seek Teens’ Dollars, Influence Now, Brand Loyalty Later” – that highlights the relatively advanced state of marketing, even back then. 

I can’t copy paste an excerpt (no OCR), so two image excerpts will have to do:


and this:


If you subscribe to The WSJ, the compilation of stories is worth taking a look at…


Aereo’s Death Knell

For the uninitiated,

Aereo is a two-year-old company that picks up television signals and sends them to the Internet-connected devices of Aereo subscribers, all without permission from or payment to the broadcasters who provide the programming. The broadcasters, including Walt Disney Co.’s ABC, Comcast Corp.’s NBC, CBS Corp. and 21st Century Fox, argued that Aereo is an illegal operation because it violates the networks’ exclusive rights to transmit their shows to the public.

On June 25, 2014, the broadcasters won.

Keach Hagey writes on The WSJ, that this is most like the death knell for Aereo, and it very well could be. Which is a terrible thing for consumers. While anyone is free to install an antenna on their rooftop or rig up their own version of Aereo at home and do everything that Aereo was giving them, it is likely that they may not want to invest ~ $200 or $300 doing that. Or, they may live in an apartment or house where installing an antenna is difficult if not downright impossible.

So the reason they liked Aereo and were willing to pay Aereo a handful of dollars every month is because Aereo made it very convenient to do what each American resident is allowed to 100% legally. Tap into and if they want, record and view over-the-air programming from anywhere, at anytime. 

In effect then, the Supreme Court outlawing convenience, in the name of copyright law that was written for a different era. And since it’s not the SC’s job to write new laws, Congress must ideally do that and protect the consumer’s rights. But for that to happen, consumers must group together and fund tens of millions of lobbying and get such a law written and passed. 

Good luck to anyone waiting for that day.  


The 10 Companies That Feed The World

Screen shot 2014 07 07 at 10 58 44 am

Oxfam, the charity, has an interesting graphic (above) that shows the 10 most powerful food manufacturers in the world.  

At least in the developed world, where most things people eat are plucked/cleaned or made/assembled, packaged and distributed, they illustrate how 80% – or more – of what the average person eats every day touches one of these 10 companies’ global supply chains.  And it shows you what kind of massive economies of scale are at play in the packaged food industry. 

A secondary takeaway, at least to me, is that because many of these companies compete in the same categories and sub-categories on our grocery store shelves with mostly undifferentiated products, branding and marketing is how they grab market share from each other. Which is of course why these 10 companies are also generally acknowledged to THE gurus of consumer marketing. 

Don’t Cry For Private Equity

Does financial engineering always pay for Private Equity?

Despite the optics, yes.

As Dan Primack writes today:

When a company goes public, its initial success or failure often is gauged by comparing where its IPO priced against its proposed pricing range. So when crafts retailer Michaels Stores came in at the low end of its $17-$19 range last night, the immediate impulse was to view Michaels as a disappointment. In fact, someone said to me: “Bain and Blackstone can’t be too happy about this.”

Bain and Blackstone, of course, are the two private equity firms that originally took Michaels Stores private in the summer of 2006 for approximately $6 billion (existing investor Highfields Capital rolled over a small minority stake).

So here is what “not too happy” means in this particular case: The private equity sponsors committed approximately $1 billion of equity to the deal, the rest of which was leveraged financing. They never contributed additional equity, even though Michaels Stores appeared to be in trouble during the recession. At $17 per share, their aggregate stake is worth around $2.77 billion. Moreover, the sponsors last year pulled out $714 million via a dividend recap. They also received a $30 million termination fee related to the IPO (or $28 million if Highfields is excluded), because most LBO firms insist on being paid for work not done.

So it appears to be around a 3.5x cash-on-cash return right now (albeit mostly on paper). I guess happiness is in the eye of the beholder.

PS: Note that this is just the debut price and has little to do with the post-debut “pop” which makes for great optics but is actually terrible for the company.

An “Outsourced” Airline – Will It Fly?



In a globalized economy, companies source individual parts of their product or service from whichever country or company offers the lowest cost, best quality, etc. This is what manufacturers, retailers, IT companies and others have been doing for the last couple of decades. Consumers get cheap(er) products, supply chains mature and local jobs disappear.

And now, an airline trying to do the same thing, is running into a lot of opposition from the international Air Line Pilots Association. Among other things, it took out a full page in the Washington Post recently (because…a lot of lawmakers and policy types who ultimately they need to influence live in the DC area. I guess.) that I included above.

Their core argument, as Claire Zillman writes in Fortune Magazine, is this:

“At bottom, [Norwegian] seek[s] to establish a new flag of convenience in Ireland to avoid Norway’s labor laws and lower labor costs,” Delta Air Lines (DAL), United Airlines (UAL), and American Airlines (AAL) said in a joint letter to the Transportation Department.

“That’s why we’re calling it Walmarting,” says Edward Wytkind, president of the Transportation Trades Department of the AFL-CIO, which represents airline industry unions. “This could dumb down labor standards to the point where it’s hard to make a living wage in the airline industry.”

It will be interesting to see who wins. My money, in this case, is on the airline pilots association who will likely make the case to regulators and lawmakers that this model raises huge safety concerns and lack of accountability.

But if they don’t win the argument, (as the pilots fear?) will we start to see US airlines, especially the ones like Spirit, adopt the same business model?

Spicy Food And Loyal Customers


So what’s behind everyone and their mother introducing spicy/hot flavors in packaged foods?

Customer Loyalty, says Sarah Nassauer in The WSJ.

“You get endorphins when you eat something really spicy,” which feels adventurous to flavor-seeking eaters, says Krista Lorio, senior manager of consumer insights forGeneral Mills Inc., which owns Cheerios, Betty Crocker and other brands. That experience can “create a lot of loyalty,” she says. The company recently started selling Helper Bold, a version of its boxed line of pasta that comes in Firehouse Chili Macaroni and other flavors.

Who knew…

Coke To Bet More On Sugar Water With Bubbles

Consider two things (paywall):

1. Global soda sales and coke’s soda sales are steadily declining:

The pace of Coke’s global soda volume growth slowed to 1% last year from 3% in 2012 as concerns about health and obesity spread. Last month the World Health Organization suggested that individuals limit consumption of added sugars in food and drinks to 6 teaspoons a day—less than the 9 teaspoons in a 12-ounce can of Coke.

Soda volume in Mexico, Coke’s second-largest market, have fallen an estimated 5% or more since the country introduced a tax on sugary beverages in January.

The new drag on Coke’s U.S. business is diet soda. Diet Coke volume has been down for eight straight years, accelerating the decline in the past three. Diet Coke sales plunged 6.8%, in volume terms last year, according to Beverage Digest.

2. But instead of focusing only on diversifying into non-soda beverages,

…the Atlanta-based company plans to double down on its namesake brand. The company is boosting advertising, introducing new products, and using singer Taylor Swift as a pitchwoman. Chief Executive Muhtar Kent has said that last year, when Coke’s U.S. soda volume dropped 2%, was an anomaly. Soda can return to healthy growth, even in the U.S., especially if it is a brand name like Coke, he said.

“Coca-Cola remains magical. We need to work even harder to enhance the romance of the brand in every corner of the world,” Mr. Kent told investors in February. He regularly refers to flagship Coke as the company’s “oxygen” and “lifeblood.”

For starters, he plans to increase global advertising by $1 billion over the next three years. The company spent $3.3 billion last year. Much of the increase will be devoted to soda, including the Sprite and Fanta brands.

But with even Warren Buffet saying “I’m 100% in accord with Coca-Cola’s business strategy and regard Muhtar Kent as the ideal CEO for Coca-Cola” it’s probably a safe bet that Mr Kent (and Mr Buffett) can see the future of Coke’s bubbly sugar water in a way no one else can.

9.6 Degrees, Cereal And Marketing To Kids

John Brownlee writes in Fast Company about a new study from Cornell’s Food and Brand lab about characters on kids’ cereal boxes:

Cereal boxes aimed at children are specifically designed so that the eyes of the mascots look downward, making direct eye contact with the sugar goblins that they are hoping to seduce.

In a study of over 65 cereals and 86 mascots across 10 different grocery stores in New York and Connecticut, Cornell’s Food and Brand Lab studied the characters on the front of cereal boxes. What they found is that all characters and people on cereal boxes –whether Lucky the Leprechaun, or Michael Jordan on a box of Wheaties–are designed to make eye contact with the intended consumer. In fact, they have almost exactly the same focal point: they are staring out from the box at a spot about four feet away, which is the average distance from the shelf of a customer walking down a supermarket aisle.

The result? When a character looks straight into your eyes, brand trust is 16% higher and brand connectivity, 28% higher.

Not sure whether to file this under the “interesting” category or the “disturbing” one. Perhaps both.

Adventures In Marketing A Delicious Yet Unfamiliar Product

What do you do when you have a delicious (and nutritious) product, but it sounds unfamiliar and off-putting to most when they hear about it?

You roam the country and indulge in reckless sampling (a theme that I cover a few days ago when talking about Kind Bars’ ballooning “sampling” budget).

Today, we consider the case of Sabra’s hummus – something that many Americans have been running into a lot over the last year or two.

Consider this:

Lucille Jennings is sitting in a mall in a suburb of Salt Lake City, about to have her first taste of hummus. The great-grandmother peels back the seal on a small cup of Sabra and peers at the beige mass inside. “You know what that reminds me of?” she says. “Chicken mesh. My mom and dad were farmers, and they ordered baby chicks through the mail. They fed them this kind of stuff.”


According to Sabra, more than 70% of people who try it at a truck purchase some within 60 days. In the past five years, Sabra’s presence in households has gone up 118%. America is ready.

So, how did they respond?

 …in both product and marketing, Sabra has recalibrated to meet Americans where (and how) they already eat. Chief among its efforts: It has six colorful trucks roaming the country to hawk hummus, stopping in cities like Phoenix and Milwaukee for four to six weeks at a time. Staffers hand out tiny packs of the product at supermarkets and churches and Little League games, hoping to lure newbies.

Catch the rest of the story here.

Wisdom From Clorox’s CEO

Recently, I ran into an interview with the CEO of the company that’s best known for Bleach.

Two things that stood out (to be honest, the entire interview/article made for a nice read) I thought should be mandatory reading for CEOs and managers everywhere:

On the heart side, the lesson is that it’s all about your people. If you’re going to engage the best and the brightest and retain them, they’d better think that you care more about them than you care about yourself. They’re not about making you look good.  You’re about making them successful. If you really believe that and act on that, it gains you credibility and trust. You can run an organization based on fear for a short time. But trust is a much more powerful, long-term and sustainable way to drive an organization.

 The other thing I’ve learned is that you’ve got to assume the best intent of people, and that they’re really trying to do a good job. I’ve seen organizations that are based more on fear than trust because senior management really thinks people are trying to get one over on them, that they’re just punching a clock. People really are trying to do a good job, and they want to be proud of where they work. Understanding that helped make me a bit more patient.

What Makes For A Good Manager?

Gallup, in its research, found that just one out of ten people possess all of the 5 traits that make for a good manager:

  1. They motivate every single employee to take action and engage them with a compelling mission and vision.
  2. They have the assertiveness to drive outcomes and the ability to overcome adversity and resistance.
  3. They create a culture of clear accountability.
  4. They build relationships that create trust, open dialogue, and full transparency.
  5. They make decisions that are based on productivity, not politics.

But since most promotions are based on individual performance (or worse, seniority), no wonder there are so many bad managers all around…

Corollary: Ever run into an accomplished “individual contributor” that’s chosen to remain that way, spurning promotions to management? I think they deserve respect.

Retail Manipulation

As I’ve wrote here in the past, though we think that we are mostly rational beings that carefully weigh any number of things before acting one way or the other, in reality, we are extremely susceptible to all kinds of external stimuli. 

Retailers, among others, know this of course, and employ every tool there is in their psychological arsenal to lighten our wallets. So how bad is it?

Consider this excerpt from an article that appeared in The Economist all the way back in 2008:

In the Sainsbury’s in Hatch Warren, Basingstoke, south-west of London, it takes a while for the mind to get into a shopping mode. This is why the area immediately inside the entrance of a supermarket is known as the “decompression zone”. People need to slow down and take stock of the surroundings, even if they are regulars. In sales terms this area is a bit of a loss, so it tends to be used more for promotion. Even the multi-packs of beer piled up here are designed more to hint at bargains within than to be lugged round the aisles. Wal-Mart, the world’s biggest retailer, famously employs “greeters” at the entrance to its stores. Whether or not they boost sales, a friendly welcome is said to cut shoplifting. It is harder to steal from nice people.

Immediately to the left in Sainsbury’s is another familiar sight: a “chill zone” for browsing magazines, books and DVDs, tempting impromptu purchases and slowing customers down. But those on a serious mission will keep walking ahead—and the first thing they come to is the fresh fruit and vegetables section.

For shoppers, this makes no sense. Fruit and vegetables can be easily damaged, so they should be bought at the end, not the beginning, of a shopping trip. But psychology is at work here: selecting good wholesome fresh food is an uplifting way to start shopping, and it makes people feel less guilty about reaching for the stodgy stuff later on.

And that’s just the beginning.

The rest of the piece goes into more detail about the many other ways in which shoppers are…influenced (sounds better than “manipulated”, no?), as they walk through the other aisles.

Sampling – The Real World’s Freemium Model

In the software world, the “Freemium” model exists to get users to try out a new service, hopefully like it, get hooked to it and then ultimately start to pay for it because their continued usage triggers some kind of threshold.

So what’s Freemium’s offline counterpart? In some sense, “Sampling”.

That’s what purveyors of new products – shampoo, candy, toothpaste, cereal, etc. – do when they want to introduce something to the public, are not sure if the public will actually like it and pay for it, but want to test the waters beyond focus groups and such. (But it differs from the “Freemium” model in that sampling is a once or twice kind of thing, unlike a Freemium service which could well go on forever. Consider a Dropbox user today that’s might always stay under the 2GB threshold…)

How importance is it, to the rise of new brands and products?

Consider the now-ubiquitous Kind bars. Caroline Fairchild, writing about their rapid spread across the US had this to say:

in 2008, private equity firm VMG Partners invested in the company, although it will not disclose the amount.

Kind bars were sold in just 20,000 locations when VMG got involved. The investors immediately put their capital to work to get the product into more people’s hands with free samples. (CEO) Lubetzky’s sampling budget was $800 in 2008, and he was reluctant to increase it, but by 2009 that budget ballooned to $800,000. Today, Kind spends upwards of $10 million in efforts to get people to try Kind bars. The company has a full-time field marketing team in 25 U.S. markets that organizes sampling in stores, sponsoring sporting events, taking free samples into corporate offices and putting them in gift bags at company events.

The full article touches on other aspects of Kind’s rapid growth – and for anyone (interested) in the CPG space, should make for an interesting read. 

Back To The Blog

It’s good to be back again following a major change…Hope to once again blog here on a semi-regular basis.

GAAP vs Exec Compensation

GAAP is increasingly not good enough for exec compensation.

That’s the argument behind an article in The WSJ today, which chronicles the rise of non-standard metrics in determining exec compensation.

Consider, for example, Goodwill:

Some observers said goodwill write-downs shouldn’t be stripped out. Goodwill is the intangible asset a company carries to account for the excess of what it paid for an acquisition over the net value of the acquiree’s hard assets. Many observers regard goodwill write-downs as acknowledgment that the company overpaid, and so they shouldn’t be excluded from a measure used to evaluate management’s performance.

Medical-device maker Boston Scientific Corp. had goodwill write-downs in five of the last six years, but granted incentive pay to its CEO each year. The company had a $4.1 billion 2012 loss under standard accounting measures, but after excluding a $4.4 billion goodwill write-down and other charges, it had a $933 million profit used to set short-term incentive pay.

I might be naive here, but given the global competition and bidding wars for talent, isn’t this to be expected though?

More, at

- Posted from WP Mobile; expect formatting inconsistencies –

Value vs Pricing: Explaining WhatsApp’s Seemingly Insane Valuation

Depending on who you ask, talk to or read, Facebook’s $19B acquisition of WhatsApp provoked three principal emotions since the deal was announced last week – disbelief, fear and envy. Sometimes all three at the same time.

Considering that 235 of the S&P 500 companies, including venerable names such as Southwest Airlines and The Gap have market caps to the south of that magical number, at the heart of the matter lies the question – where did $19B come from?

Here to help us understand this acquisition from a Value vs Pricing perspective (one that makes a lot of sense to me) is Prof Aswath Damodaran, a Professor of Finance at NYU (his blog is eminently worth following; AFAIK, many that are interested in Corporate Finance and Valuations do), who starts off his excellent post by saying:

The first is that there are two different processes at work in markets. There is the pricing process, where the price of an asset (stock, bond or real estate) is set by demand and supply, with all the factors (rational, irrational or just behavioral) that go with this process. The other is the value process where we attempt to attach a value to an asset based upon its fundamentals: cash flows, growth and risk. For shorthand, I will call those who play the pricing game “traders” and those who play the value game “investors”, with no moral judgments attached to either. The second is that while there is absolutely nothing wrong or shameful about being either an investor  (No, you are not a stodgy, boring, stuck-in-the-mud old fogey!!) or a trader (No, you are not a shallow, short term speculator!!), it can be dangerous to think that you can control or even explain how the other side works. When you are wearing your investor cape, you can be mystified by what traders do and react to, and if you are in your trader mode, you are just as likely to be bamboozled by the thought processes of investors.

Cash flows, ROE, growth, users and valuation based on comparables (of sorts) all follow before he draws some conclusions:

  1.  If you are an investor, stop trying to explain price movements on social media companies, using traditional metrics – revenues, operating margins and risk. You will only drive yourself into a frenzy. More important, don’t assume that your rational analysis will determine where the price is going next and act on it and trade on that assumption. In other words, don’t sell short, expecting market vindication for your valuation skills. It won’t come in the short term, may not come in the long term and you may be bankrupt before you are right.
  2. If you are a trader, play the pricing game and stop deluding yourself into believing that this is about fundamentals. Rather than tell me stories about future earnings at Facebook/Twitter/Linkedin, make your buy/sell recommendation based on the number of users and their intensity, since that it what investors are pricing in right now.
  3. If you are a company and you want to play the pricing game, I think that the key is to find that “pricing variable” that matters and try to deliver the best results you can on that variable.

Go read the full post. And when you do that, don’t forget to read its near-poetic and semi-philosophical final paragraph. 

Your Taste In Music = Targeted Political Ads

Add your political inclination to the list of things that can be gleaned from your online footprints. 

As Elizabeth Dwoskin wrote (paywall) in The WSJ a few days ago, Pandora plans to use your playlists to serve up some very targeted political advertising:

The company matches election results with subscribers’ musical preferences by ZIP Code. Then, it labels individual users based on their musical tastes and whether those artists are more frequently listened to in Democratic or Republican areas. Users don’t divulge their political affiliations when they sign up for Pandora. (Take a quiz to see what your playlist says about you.)

Pandora’s effort to pinpoint voter preferences highlights how digital media companies are finding new ways to tap information that users share freely to target advertising. These go beyond the traditional tracking of Web-browsing habits. Pandora, locked in a battle for advertising revenue with Internet radio services such as Spotify, sees political advertising as a way to boost revenue.

“Targeting users is basically the currency in data right now,” says Jack Krawczyk, Pandora’s director of product management. He says companies like Pandora and Facebook, which know users’ names, and can track their media consumption or stated preferences across computers, tablets and phones, have an advantage over companies relying on Web browsing cookies.

While some might yet again bemoan the growing loss of anonymity and privacy on the Web, I suspect that many of today’s young music listeners (and perhaps some older ones too) will simply see this as the price of “free” music – and wait for the next track on their playlist to start. 

100 to 1: How Satya Nadella Became Microsoft’s CEO

The search for CEOs at large global companies – something that is often done under the harsh glare of the media spotlight – has always fascinated me.

How does one downselect candidates? How do some candidates graciously take themselves out of the running? What does the board do when the search seems to go on and on?

For Microsoft-specific answers to these and more, head over to The WSJ for a very interesting look at how Satya Nadella came its 3rd CEO ever –

PS: Of course, good luck to Mr Nadella as he reorients one of the most iconic companies of our times.

Businesses and The Disappearing Middle Class

Politicians and economists have been noting the growing income inequality in the US over the last couple of years.

Now, businesses are noticing too, says Nelson Schwartz on The NYT, given the consumption-driven nature of our economy:

In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found.

Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari (of Washington University in St Louis) and Mr. Cynamon (of the Federal Reserve in St. Louis). Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.

More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income, according to the study, which was sponsored by the Institute for New Economic Thinking, a research group in New York.

The effects of this phenomenon are now rippling through one sector after another in the American economy, from retailers and restaurants to hotels, casinos and even appliance makers.

For example, luxury gambling properties like Wynn and the Venetian in Las Vegas are booming, drawing in more high rollers than regional casinos in Atlantic City, upstate New York and Connecticut, which attract a less affluent clientele who are not betting as much, said Steven Kent, an analyst at Goldman Sachs.

Among hotels, revenue per room in the high-end category, which includes brands like the Four Seasons and St. Regis, grew 7.5 percent in 2013, compared with a 4.1 percent gain for midscale properties like Best Western, according to Smith Travel Research.

While spending among the most affluent consumers has managed to propel the economy forward, the sharpening divide is worrying, Mr. Fazzari said.

“It’s going to be hard to maintain strong economic growth with such a large proportion of the population falling behind,” he said. “We might be able to muddle along — but can we really recover?”

Businesses adapting to changing consumer spend is one thing, and good for their investors and employees. But…many of today’s large successful American companies built on a vibrant middle class (that emerged following WWII) and the promise of upward mobility. So if that category starts to shrink, what does that mean for the US, businesses and middle-class jobs that these businesses would have created, in the next 2-3 decades?

Yahoo – Very Much A Work In Progress

No one thought turning around Yahoo was going to be easy. But, many thought (and some dissented) that Marissa Mayer was the one to do it (if it could be done). 

Based on its recent Q4 earnings report though, it looks like this is very much a work in progress – and any major reversal of direction might take a lot more time to accomplish. As Vindu Goel writes on The NYT, advertising revenue trends – the major source of revenue for Yahoo and its ilk – continue to disappoint:

Under the turnaround plan devised by Yahoo’s chief executive, Marissa Mayer, the company gained traffic and mobile users in 2013 and introduced a bevy of products, like a slick digital food magazine and a mobile weather app.

Yet despite Ms. Mayer’s labors, Yahoo is still falling further and further behind in the race for Internet advertising. The company said on Tuesday that revenue and operating profits declined in the fourth quarter of 2013 and would continue dropping in the first quarter of this year.

Analysts project that Yahoo’s biggest competitors, Facebook and Google, will post big gains — especially in the hot area of mobile advertising, where Yahoo is making so little money that it does not even break out the numbers.

The one bright spot? “Earnings in equity Interests” = stakes in Alibaba and Yahoo Japan, which contributed $222m of the $348m (which also includes a $49m gain from sale of patents) in net income. 


Good for those using Yahoo’s stock as a way to gain exposure to Alibaba I guess. At least until the latter’s IPO that’s expected later this year. 

Is there a news/media bubble?

Yes, suggests a WSJ article, blaming an ever increasing number of new media/news sites and programmatic Ad buying – both of which are serving to seriously dent rates for these Ads.

Good for advertisers of course…but what are these media properties to do?

Conferences are one solution. Licensing and newsletters, two others. Not sure that will suffice though…More, at

Chinese Consumerism, Brands and Marketing

The Economist, in its latest edition, goes into some detail on the (continuing and accelerating) rise of Chinese consumerism, what that means to brands (mostly foreign ones) and how marketing to the Chinese is changing. 

While the full piece is well worth reading, here’s an excerpt that highlights both the promise and peril for multi-national brands: 

Sanford C. Bernstein, a research firm, calls the Chinese “increasingly aspirational and conspicuous consumers” who routinely trade up to fancier labels even on staples. Newly middle-class types in cities in the interior are keen to try out new products, especially the ones they have seen on foreign television shows. Jeff Walters of the Boston Consulting Group (BCG) points out that even country bumpkins are consuming global media, thanks to the wild popularity of local online-video services. Chinese consumers, he says, were watching the latest season of “Downton Abbey” on Youku, a video-sharing website, well before it was released in America.

This passion for fashion is, in theory, good news for multinational marketers. Unlike, say, Japan, where consumers heavily favour local brands, Chinese consumers hold foreign brands in high esteem. Torsten Stocker of AT Kearney, a consultancy, observes that foreign brands are doing well in sectors they introduced to China (chewing gum, chocolate); those that have “heritage” appeal (premium cars, luxury goods) and those where local brands are not trusted, such as powdered baby milk. The world’s fast-food and consumer-goods giants—Procter & Gamble, Pepsi, General Mills and so on—are also big in China, but they are increasingly dogged by local rivals. A recent study by Bain, another consultancy, found that although foreign brands still lead in some areas (biscuits, fabric-softener, bottled water), local brands are surging in others (toothpaste, cosmetics, juice).

Brand-hopping, though, is rife. Having grown up with radical economic change, Chinese shoppers are “very fickle, and hard to pin down to a strong brand loyalty”, says Mintel, a market-research firm. Yuval Atsmon of McKinsey reckons that brand-switching—between Pepsi and Coke, Colgate and Crest, KFC and McDonald’s—is common, “much more so than in most markets”. Swarovski, the crystal-maker, has discovered that over three-quarters of Chinese customers are eager to try new brands, a far higher figure than elsewhere. A recent study by Bain found that the top five brands in ten categories lost 30-60% of their customers between 2011 and 2012.

Anti-Trust vs Cable Industry Consolidation

Anti-trust regulators in the US typically do a pretty good job (IMO) when it comes to preventing “excessive” industry consolidation and concentration of power – things that would otherwise inhibit “healthy” competition and hurt consumers.

So what then to make of Charter or Comcast’s chances of buying Time Warner Cable?

But David Gelles, at the NYT’s DealBook thinks there are two good reasons why either company might be allowed to proceed with the acquisition:

Antitrust regulators are understandably skeptical about allowing big companies to get bigger. However, there are reasons why Charter, or even Comcast, might be able to prevail in its pursuit of Time Warner Cable.

Cable operators make two arguments in favor of consolidation. The first is that broadcast and cable networks are demanding ever higher fees for their programming. Cable operators are being forced to pay up, and the consumer is getting hit with higher cable bills. A bigger company would potentially have more bargaining power, and cable operators argue that they will be have more leverage with the programmers, allowing them to keep costs down and save consumers money.

Perhaps. But a more compelling argument made by the cable operators is that while there are a few big companies that dominate the market, they have very little overlap when it comes to customers. In most markets, consumers don’t have a choice between Comcast, Time Warner Cable or Charter, or even two of those three. In fact, most big markets have only one of these available, which might compete against other telecommunications firms, like Verizon and AT&T, and the satellite operators DirecTV and Dish Network.

#2 is fine, but as a consumer, it will be really nice if we actually see the beneficial effects of argument #1 post-acquisition. 

Marriott And The Millennials

Large global companies that sell to consumers directly are in the process of making sure that they continue to be relevant to tomorrow’s buyers – the millennials, who will shape their profits and growth for the next two decades. And you can see this not just in terms of marketing and Ads but also products and platforms across diverse industries – cars, electronics, food and so on and so forth.

Marriott, which operates more than 660,000 rooms across 16 brands globally, is no different.

So what is it trying to do? Brooks Barnes writes in a highly readable NYT piece that

To win over younger business travelers — and, even more important, to keep them in the Marriott fold when they travel for leisure, particularly overseas — the energetic Mr. Sorenson (Arne Sorenson, the first non-family CEO at Marriott International – Ed.) is relying on a range of strategies.

Core hotels are getting gussied up. In September, the Chicago Marriott O’Hareunveiled $40 million worth of improvements, including a better bar, historically a Marriott weakness. (Some analysts trace that to the company’s Mormon roots.) The Detroit Marriott at the Renaissance Center begins a similar $30 million upgrade in February. The company has been trying to improve what it calls the “guest-room beauty experience” at Marriott-brand hotels — stocking bathrooms, for instance, with a Thai skin care line.

A new ad push, “Travel Brilliantly,” estimated to cost roughly $90 million over three years, reflects Mr. Sorenson’s focus on younger consumers. TV and web ads, taped at international resorts like the Bangkok Marriott Hotel Sukhumvit, intone: “This is not a hotel. It’s an idea that travel should be brilliant. The promise of spaces as expansive as your imagination.” Marriott also offers Xplor, a free smartphone app combining reservations with games; players win loyalty club points by completing challenges at virtual hotels.

“We want people to be saying, ‘Hey, do you see what Marriott just did?’ ” Mr. Sorenson said.

And it is starting new brands and not explicitly associating them with the Marriott name in some parts of the world. In others, it is trying to explicitly link the Ritz Carlton name to its Marriott owners, etc.

A terrific read, that piece.

Animated Social Media Icons Powered by Acurax Wordpress Development Company
Check Our FeedVisit Us On TwitterVisit Us On FacebookVisit Us On Google PlusVisit Us On Linkedin