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:

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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:

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and this:

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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.

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