May 2011

You can’t sing like Lady Gaga but if you eat this will you have baby face looks?

Published on: 30 May 2011

Here’s a question to get the marketing part of your brain thinking.

How do you double sales of a product without changing the marketing mix (i.e. without changing the Product, Price, Promotion or Place)?

Well, if the product you are trying to sell is baby food then the answer seems to be courtesy of Lady Gaga.

The average reader of this blog is typically a young (or youngish!) professional and in case you’re not completely up to date with the latest music scene, one of the real stars of the moment is Lady Gaga.

She’s loved for her music and extrovert style and with songs such as Poker Face and Just Dance she is now one of the world’s leading female music artists.

As well as being a music and fashion icon she has reportedly developed a taste for baby food, or the “Goo diet” as it’s now known.

According to upmarket UK grocery website Ocado, since the trendy singer announced that she ate baby food to keep her figure trim, sales of Heinz Mum’s Own Creamed Porridge have increased by 100%, while those for pasta and spaghetti bolognese purees are also up by a healthy 87%.

The “Goo diet” involves having one main meal a day and then combining this with several jars of the baby food throughout the day to stop the hunger pangs.

It’s not just Lady Gaga that is reportedly using this diet. Other stars that have apparently used the diet include Jennifer Aniston, Reese Witherspoon and Cheryl Cole.

So, is the conclusion that an unofficial celebratory endorsement is more important than adjusting the marketing mix? In reality, this unofficial endorsement of baby food is in fact an unplanned element of “promotion”.

I have no strong views about this although I do wonder whether there will soon be a surprise rumour about Lady Gaga starting a training programme to become an accountant…

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What a remarkable change of direction for a car but are the guns safely locked away?

Published on: 27 May 2011

Land Rover and Jaguar cars are classic British cars but their fortunes have really changed over the last couple of years.

This turnaround has arguably been due to “Globalisation”.

Land Rover was established in the UK in 1948 and manufactures the famous 4×4 off-road vehicles including the Range Rover whilst the first Jaguar cars came off the production line back in 1922.

A few years ago Jaguar Land Rover (JLR) was loss making and was asking for UK government support to keep it afloat.

The support from the UK government never came and the JLR business was bought by India’s Tata Motors for £1.5 billion in 2008.

This week the company announced its results for the year to 31 March 2011 and it has made a remarkable journey over the last couple of years.

The latest figures show revenues 51% higher than the previous year at nearly £10 billion with the number of cars sold being up 26% to 243,621.

What has caused this turnaround and why the reference to Globalisation?

Well, the British car company was acquired by an Indian company. This Indian company injected serious amounts of money to fund investments including new car models.

Although the cars are made in the UK, 75% are exported around the world. The last year has seen an acceleration of demand for the luxury JLR models in emerging markets such as China and Russia and these are the main growth areas.

So, a British car company owned by an Indian company selling to Chinese and Russian clients.

Ignoring the fact that a base model Jaguar or Land Rover is already pretty expensive it appears that some of this new demand wants to spend even more on their cars.

If £85,695 for the Range Rover autobiography isn’t enough to spend then there’s also the possibility to have a bespoke Range Rover model made for £140,000.

Amongst other things the extra £54,000 does however buy you a hand crafted gun cabinet in the boot for when you go hunting as well as a drinks cabinet which includes free drinks for the first year of ownership.

With alcohol, guns and a powerful car involved I’m assuming that after spending £140,000 the owner can afford to pay for a sober chauffeur to drive the car.

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Would you really like your daughter with a name like this?

Published on: 25 May 2011

There are some well known companies with world famous names and some of these names have unusual origins.

facebook likeTake the luxury car brand Mercedes for example. Back in the early 1900s financier Emill Jellinek was working with Gottlieb Daimler on the design of racing cars. The name put to their designs was in fact Mr Jellinek’s daughter’s name Mercedes.

Adobe, the global software powerhouse got their name from the river Adobe Creek that ran behind the house of the founder John Warnock.

Have you heard of the company Packard-Hewlett?

Probably not as the name doesn’t exist although it could have been rather different if Bill Hewlett and Dave Packard had a different outcome when they tossed a coin to decide whether the company they founded would be called Hewlett-Packard or Packard-Hewlett.

Closer to home, the team here at ExP are proud of the origins of our name.

Away from the corporate side of things and the naming of your children can be a big responsibility.

There’s pressure to get the naming of your child right and I’ll leave it up to you to decide whether Lior and Vardit Adler from Israel got it right when they recently named their new born daughter.

The proud parents named their daughter “Like” after the Facebook Like button.

Luckily for Like Adler her parents like Facebook and not Twitter.

After all, Like is a better name than Twit.

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What has the end of the world got to do with business strategy?

Published on: 20 May 2011

Mr Harold Camping, an 89 year old evangelist from America predicts that tomorrow Jesus Christ will return to earth and true followers will be swept up, or in his words “raptured”, to heaven.

He predicts that giant earthquakes will sweep across the world to mark the start of the destruction of the earth and with the exception of the 200 million people that will have been raptured to heaven the rest of the world’s population will perish during the earth’s destruction.

Now, with a little bit of luck you’re sat at your desk with a cup of coffee reading this and the world didn’t come to an end on Saturday.

There’s a nice business strategy example in this though and it also involves a number of pet dogs and cats…

Some of the better known business strategy models include:

The Rational Model – the “original” strategic planning model with 3 clear steps of Analysis – Choice – Implementation.

The Emergent Model – made famous by Mintzberg’s analysis of Honda’s entry to the US motor bike market.

Logical Incrementalism – small regular changes to the strategic approach.

And then there is the concept of “Freewheeling Opportunism”. This is the situation where an organisation doesn’t have a formal plan but takes advantage of opportunities as and when they arise.

In a classic freewheeling opportunism move an American entrepreneur has just set up Eternal Earth-bound pets. This business offers a service to those individuals with pets who believe that they will be raptured tomorrow.

Unfortunately the rapture process highlighted by Mr Camping doesn’t allow people to take their pets. Eternal Earth-bound pets has taken quick advantage of this by offering a service to look after the pets after their owner has been raptured.

As at the time of writing, more than 250 clients have paid $135 for their pets to be looked after after the rapture.

Eternal Earth-Bound Pet’s tag line on their website is:

The next best thing to pet salvation in a Post Rapture World

Eternal Earth-bound pets has a no refunds policy if the end of the world doesn’t happen…

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If you make your sales targets you’ll get a what!?

Published on: 18 May 2011

German insurance company Munich Re is the world’s largest re-insurer. It has just been revealed that a few years ago they undertook what can only be described as a fairly unusual (plus arguably immoral and unethical) approach to rewarding some of their top salesmen.

Now whilst most successful salesmen would be happy with a traditional bonus of extra pay the Ergo division of Munich Re reportedly held a party for their successful salesmen at thermal baths in Hungary where the services of a number of prostitutes were made available to the successful salesmen.

There’s a well known 2-factor motivation theory by Frederick Herzberg which refers to two types of factors that are present in an employee’s job.

A Hygiene factor is something which is expected to be present. If it is present, it doesn’t motivate. If it isn’t present however then the absence de-motivates. Basic pay and conditions are classic hygiene factors in a job.

A motivating factor on the other hand is something that is above and beyond what is expected to be present and such a factor should motivate an employee.  An exceptional boss who fully involves and mentors a junior could arguably be a motivating factor.

Munch Re took an extremely unusual view on what constitutes a potential motivating factor.

The salesmen that achieved their targets were provided bonuses in the form of access to prostitutes at a company funded party.

The salesmen were joined by 20 prostitutes at this party.

According to German business newspaper Handelsblatt , some of the prostitutes wore colour coded wristbands with ladies who were wearing certain colour wristbands only being available for the more successful salesmen.

In addition, after each “encounter” the prostitutes providing the service were stamped on their lower arm in order to keep track of how much they had earned during the evening.

It’s not clear from the reports whether any of the weaker performing salesmen that didn’t achieve their targets also ended up with stamps on their lower arms at the end of the party.

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Are they really going to get their money’s worth for $8.5 billion?

Published on: 16 May 2011

What was founded 8 years ago by 2 entrepreneurs and was last week bought by Microsoft for $8.5 billion?

Little did Swedish entrepreneur Niklas Zennstrom and his Danish colleague Janus Friis realise that the Skype product they introduced back in 2003 would be worth a mighty $8.5 billion 8 years later.

Skype, whose name comes from the abbreviation of the initial project name of “Sky peer-to-peer” has turned into the most successful online voice and video phone service.

It has over 650m users with the vast majority of users only use the free call facilities.

Even allowing for its success in terms of the numbers that use it, it’s still a pretty hefty amount that Microsoft paid for it.

If you look at the history of the company you’ll see that Zennstrom and Friis founded it in 2003, it was then purchased by eBay for $3.1 billion in 2005 in the anticipation that it would be integrated into their online auction site to help people negotiate over their purchases.

This wasn’t a huge success and eBay cut their losses when they sold it 4 years later to a group of investors with the company valued at $2.75 billion.

The investors that bought it from eBay though have done pretty well.

With Skype being valued at $2.75 billion in 2009 here we are 2 years later with Microsoft buying it for $8.5 billion – a pretty healthy return of approximately 300% over a couple of years.

If you look at the figures behind Skype then some people will argue that Microsoft have paid over the odds for Skype.

In summary, the latest reported annual figures for Skype are:

Sales: $860 million

Profit (eh, actually it’s a loss): ($7 million)

Amount Microsoft paid for it: $8.5 billion (or $ 8,500 million)

So, Microsoft paid $8,500 million for a company whose most recent reported annual results showed a loss of $7 million.

These figures clearly show that Microsoft are hoping to create a lot of value from the acquisition of Skype and possible integrations discussed include using Skype within Microsoft Outlook and their computer game XBox.

This is a big amount of money to recover though and only time will tell whether the largest acquisition in Microsoft’s history will turn out to be a good call or not.

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Should you be scared of the property next door to you?

Published on: 13 May 2011

It’s Friday the 13th today and for a lot of people this is considered to be an unlucky day.

“Friggatriskaidekaphobia” is the medical term for the fear of Friday the 13th and although it looks like the type of word that you’d get if your cat walked across your computer keyboard it affects a number of people and in extreme cases these individuals will refuse to leave their home on Friday the 13th.

Another tricky to pronounce word is “triskaidekaphobia”.

This is a fear of the number 13 and could have interesting implications for the valuation of property.

A report released today highlights that if you’re thinking of buying a property in the UK then you may well be able to pick up a bargain if the property address has a number 13 in it.

According to a survey by property website Zoopla, the current average value of a house in the UK with the number 13 in it is £205,085.

This is nearly £4,000 less than the average value of £209,009 for properties with the neighbouring numbers 11, 12, 14 or 15 in their address.

They also found that more a quarter of UK streets don’t have a number 13 address as some local authorities have banned the use of number 13 in new housing developments.

So, whilst people who currently own properties with 13 in the address may feel a bit cheated, if you don’t suffer from triskaidekaphobia and are looking for a potential bargain then the £4,000 saving could be quite attractive.

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How much would you pay for an Olympic medal?

Published on: 11 May 2011

It’s the Olympics next year and as well as being one of the world’s greatest sporting events it is also one of the world’s greatest marketing opportunities for organisations.

The 2012 Olympics offers 3 tiers of sponsorship level with companies such as British Airways, BMW and Adidas reportedly paying around £40 million to be tier 1 sponsors.

Tier 2 sponsors pay from £20 million and tier 3 sponsors £10 million.

Rio Tinto, the Anglo – Australian mining company though has struck an unusual deal to become a tier 3 London 2012 sponsor.

Rather than pay completely in cash for the honour of becoming a sponsor they have just announced that they will also supply the metals to make the Olympic medals that will be presented at the games.

The metals will come from their Bingham Canyon mine in the US and from the Oyu Tolgoi mine in Mongolia.

In total there will be 4,700 medals awarded at the Olympics.

This is a significant number and although the design of the medals hasn’t been finalised yet they will certainly need a serious amount of precious metals.

It shouldn’t come as a great surprise to most of you that the coveted gold medals contain gold (!). The price of gold has surged in recent months and is now approximately 65% higher than it was in 2008 during the last Olympics in Beijing.

Interestingly though, it’s silver which is the main metal used in the Olympic medals as it is also used in the gold and bronze medals. Whilst gold tends to get all the headlines in terms of the movement in price, silver has also been a sterling performer this year with it recently reaching a 31 year high price of nearly $42 an ounce.

So, compared to previous games the cost of the medals is going to be significantly higher due to the increase in price of the precious metals.

The price of the ribbon to which the medal is attached is thought to have stayed fairly constant.

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Would you have made this mistake?

Published on: 09 May 2011

When did you last send an email?

I guess it was a few minutes or hours ago. Maybe at a stretch it was a couple of days ago.

What about when you last sent a letter?

My guess is that it may have been weeks or even months ago and therein lies one of the challenges faced by Post Offices around the world. Namely, more and more people are relying on emails, texts and phone calls to communicate as opposed to letters.

I must admit that if I decided to suddenly send a letter then it would be a bit of a hassle for me to go and buy a stamp. That in itself would put me off posting a letter.

I don’t want to sound lazy about this but after getting used to the convenience of emailing from my mobile device the thought of heading to a post office to buy a stamp and then posting the letter seems rather slow.

The Danish Post Office though has just launched a novel system to make it easier for people to send letters.

Instead of having to buy a stamp to put on the letter, people can send a text message from their phone to the post office and get back a unique code which they write on the envelope in the place of a stamp.

The cost of this is 8 DKK (£0.92p) and the charge for the code will be added to a mobile user’s phone bill.

This is a nice idea and it removes the hassle of having to go somewhere to buy a stamp.

Meanwhile on the other side of the Atlantic, there was a bit confusion with the designers at the United States Postal Service.

They recently launched a new design of postage stamps which had an image of the world famous Statue of Liberty.

The design was finalised and 3 billion copies of the stamp were printed.

All was well with the stamp until one eagle eyed stamp collector noticed that the image of the Statue of Liberty was not that of the famous statue in New York harbour but instead was a picture of the fibreglass and foam half sized replica which can be found outside the New York – New York hotel and casino in Las Vegas and can be seen in the photo above.

The stamps show a close up of the face and crown of the statue and the US Postal Service has said that they will leave the stamps in circulation.

Meanwhile, the owners of New York – New York in Las Vegas are no doubt extremely pleased to be the first Las Vegas casino to be featured on a US postal stamp.

In fact, they are probably so pleased that they have texted all of their friends.

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You would have to be a really sick person to agree with this…

Published on: 06 May 2011

According to pwc, the British do it twice as often as the Americans and Japanese.

Within the UK, if you happen to be a civil servant or state employee then the chances are that you will be doing it 20% more often than the average UK worker.

After polling over 2,000 firms and public sector employees around the world, pwc found that UK workers have an average of 10 days unscheduled absence from their jobs each year.

This is approximately twice the level that is found in the US (5.5 days) and Asia-Pacific (4.5 days), but roughly the same as Western Europe (9.7 days).

They estimated that the total sick days taken across the UK cost the economy in the region of £32 billion a year.

Richard Phelps, HR consulting partner at PwC, says that “absenteeism is a malaise for British business.

With sickness accounting for the lion’s share of absence, the question for employers is what can be done to improve health, morale and motivation. The line between ‘sickie’ and ‘sickness’ can be blurred, with disenchantment at work sometimes exacerbating medical conditions or preventing a speedy return”.

Whilst genuine sickness should be looked upon sympathetically there are no doubt a certain number of people who maybe take a day off due to “sickness” when in fact they aren’t really too ill to go to work but instead just fancy an extra day’s holiday or two.

Now, as a lot of you are members or students of professional bodies I’m sure you’re too ethical to throw a “sickie” and will only be out of the office on sick leave if it is a genuine illness.

Less scrupulous friends of yours though may have noticed that there are various sites on the internet that provide advice on how to take a “sickie” from the office.

One bit of advice is that when phoning up your boss to tell him or her that you are ill you should “make the phone call to your boss whilst lying on your back as you automatically sound groggy”.

This also means that you don’t even have to get out of bed to make the call…

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