As one of the best known and most successful companies in the world Proctor & Gamble certainly know a thing or two about branding. It also seems that they are pretty switched on when it comes to risk.
Over in the States, American Football is huge. One of the most well known players is Pittsburgh Steelers player Troy Polamalu.
Anyone that has watched a game that he has played in will instantly recognise him. He has very distinctive hair.
He is of Samoan descent and has not cut his hair for 7 years. Far from being in bad condition though his hair is in excellent condition and his flowing locks would no doubt make many a woman jealous.
P&G make the famous Head & Shoulders shampoo and when deciding on a suitable person to promote the product settled on Polamalu. If you’re interested you can even play a Polamalinator game here.
No details have been disclosed of how much he’s been paid for the sponsorship deal but it’s no doubt a significant amount.
Successful, healthy, sporty and a sex symbol to a lot of women in America meant that he was the ideal person for promoting Head & Shoulders and the return was no doubt there.
“Risk and Return” is an issue that is involved in all major decisions within business. Whilst the return is there with Polamalu what about the risk?
P&G seem to think that one of the risks is in the loss or damage to his famous hair. They announced earlier this week that they had just insured his hair for $1 million. Apparently if Polamalu loses 66% or more of his hair during the next 7 months then Lloyds of London insurance will pay out $1 million.
So, the branding works well. Risk seems to be covered but what about the legal aspects? Did anyone check the small print to the contract as to whether a haircut is allowed during the next 7 months? I hope so otherwise it could very well be the most expensive haircut in history.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-09-03 05:03:582010-09-03 05:03:58Hair today, gone tomorrow? It’s certainly a risk for Procter & Gamble.
Binge drinking in the UK is a major problem. City centres at the weekend can be full of people that are literally trying to drink as much as possible in as short a period of time. Violence and health issues often ensue.
As well as the disturbances to local residents there are also the costs both health-wise to the drinkers and financially to police forces, hospitals and society at large arising as a result of this binge drinking.
As a potential solution to this problem, the government is currently investigating whether to ban free or cheap drink promotions. One of the ideas being discussed is whether to make it illegal to sell alcohol below cost price. In other words to prevent businesses offering “loss leaders” on drinks so as to encourage higher spending at a later date.
If you’re an accountant, and assuming you’re not reading this in the middle of an actual binge drinking session yourself, this raises an interesting discussion on what exactly is meant by “below cost” and in particular the term “cost”.
The major alcoholic drinks manufacturers produce a range of drinks. Diageo for example produce drinks as varied as Smirnoff vodka, Johnnie Walker whisky and the famous Irish stout Guinness.
Identifying the cost of each particular drink would be challenging exercise. Whilst they no doubt have sophisticated management accounts which allocate overheads and indirect costs in certain ways, there would be a clear debate as to which was the “correct” allocation of these costs.
Apportioning overheads such as head office costs, R&D and marketing to individual products would result in a certain amount of flexibility in terms of identifying the cost figure to use for “below cost” purposes.
One solution to this inherent problem of identifying the cost of individual products has been proposed and that is setting the minimum cost of the drinks as equivalent to the duty and VAT that needs to be paid on the particular drinks.
So, the next time you’re out having a quiet drink with some non finance friends feel free to start a discussion about how much each of your drinks cost to make. You can then explain about the various possible methods of allocating indirect costs. Then again, talking about management accounting cost allocation whilst out with your friends may result in your non finance friends starting a binge drinking session themselves…
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-08-30 10:10:442010-08-30 10:10:44"There's no such thing as a free lunch" but will there be such a thing as a free drink or cheap drink in the future?
Bethany Hare is a remarkable young lady. She’s only 10 years old and wanted to raise money for a local children’s hospice.
She came up with the idea of dressing up as Charlie Chaplin, singing the song “Smile” (the theme from Chaplin’s 1936 film “Modern Times”) and then posting it on a charity website.
She was aiming to raise £5,500 and it all started well with people appreciating the effort she had put in and making donations.
She was then contacted by New York based Bourne Music Publishers, who own the rights to the song. Several discussions between Bethany’s mum and the Publishers later and the end result was that Bethany was told that she must either remove the song or pay a license fee of $2,000 to keep it online for one year plus a further $250 every time she performs it in public.
This is a lot of money for a little girl of 10 years old to pay to a big music publisher especially when she’s trying to raise £5,500 for terminally ill children. Bethany removed the song from her video and in true Chaplin style ran it as a “silent movie”.
A lot of people will question the approach taken by Bourne Music.
Mendelow’s Matrix is a method of analysing stakeholders in a business. According to this model the stakeholders that management should really look after are the “key players” (high interest / high power). Bethany falls within the low interest / low power quadrant of Bourne Music’s matrix and hence the theory goes that they can employ “minimal effort” to this category.
Some would argue that they had a duty to protect the song and obtain all the royalties they could from it but it seemed obvious that Bethany was never going to pay that sort of money.
This story has however got a happy ending. Ben Model from Silent Clowns in New York wrote a piano score especially for Bethany to use and she has now reached her money raising target. Bethany’s performance can be seen here.
I’ll leave it up to you to decide who you think are the good guys and the bad guys in this story. My view is that the title of the song in debate was “Smile” and I’m pretty certain that not a lot of people were smiling when they heard the approach taken by the Publishers.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-08-27 13:09:452010-08-27 13:09:45I take my hat off to Bethany Hare, Charlie Chaplin and Mendelow's Matrix but should I be smiling?
It’s ACCA exam results day today and congratulations to those of you that have passed. All your hard work has paid off and it’s now time to celebrate.
I’ve often wondered whether the results day should be a Friday so you can celebrate on Friday night and Saturday night or whether it’s a good excuse to annoy everyone else in the office on the Monday with your shouts of happiness all day.
If by any chance you’re in Pennsylvania in America and want to have a little drink to celebrate your success then there is now a novel way of doing so.
You can now buy bottles of wine from vending machines. In order to buy the wine customers have to firstly prove they are old enough by swiping their ID and a credit card. They then have to prove they are sober enough to buy the wine by using a breathalyzer.
Wine aficionados may well be aghast at the thought of buying wine from a vending machine but if you’re the type of person that just doesn’t want to stand in a queue and talk to the shop assistant when you’re buying the wine then this could be for you.
Then again, if you’re buying it to celebrate passing your exams I would recommend that you buy it from the shop assistant so that you can tell them and the rest of the people in the queue the reason you’re buying it.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-08-23 01:10:502010-08-23 01:10:50The ACCA exam results are out today. If you've been successful then maybe head to the vending machine.
When it comes to the marketing mix (the 4Ps) there are certain characteristics that are found at the introduction stage.
Witness for example the high prices that are currently being charged for 3D televisions – a Samsung UE55C900 52 inch 3D TV was today for sale at the John Lewis shop in Oxford Street in London for £6,999 plus £139.95 for two pairs of 3D Active Glasses (this in itself provides an interesting example of pricing given that one pair of 3D Active Glasses costs £59.95 – if you need a calculator to spot the significance then maybe a career in finance isn’t for you!).
The lack of 3D content however was always going to be a problem at the initial stages. After all, a top of the range 3D TV isn’t that good if there aren’t a lot of 3D programmes to watch.
Sky TV in the UK though is about to come to the rescue. They announced today that they will be launching a dedicated 3D TV channel on 1 October. Some highlights of the launch weekend include coverage of golf’s Ryder Cup as well as the film Monster vs. Alien.
The good news for Sky subscribers with the latest Sky+ HD set top box is that they won’t need any additional Sky equipment to watch the 3D content. They “only” need one of the latest 3D TVs.
If you’re in the UK you can look forward to a rush of “P – Promotion” for 3D TVs in the autumn. We’ll report back in a years time but expect by then the “P-Price” to have fallen, the “P-Product” to have developed, the “P-Place” for purchasing to have increased and the “P-Promotion” to have…..
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-28 17:10:452010-07-28 17:10:45It's a rather nice TV and a "bargain" at £6,999 but you'll have to wait until 1 October to get the most out of it.
Reckitt Benckiser, the Anglo – Dutch consumer products group, has agreed to buy the maker of Durex condoms for £2.5bn.
Last week the board of SSL recommended that the shareholders accept the offer from Reckitt which was at an effective 33% premium on the share price.
In addition to Durex condoms SSL also make Scholl shoes but £2.5bn is a lot of money and a 33% premium is pretty good in today’s environment. Should the shareholders therefore grab this opportunity with both hands?
Students of business strategy will be aware that there are both pros and cons of acquisitions. The general view amongst analysts in this situation though appears to be that it represents a good fit for the Reckitt business.
Firstly, Reckitt will strengthen their health and personal care division which is currently their fastest growing area. Health and personal care is considered by many to be a key area for businesses going forward (this is a nice link to PESTEL within the syllabus).
Secondly, SSL has a larger presence in a number of emerging markets. In particular SSL are in a strong position in China, a country where Reckitt are relatively weak compared to their competitors.
Cost savings from synergies of course can never be ignored. If the deal goes ahead there could be reported savings of £100m a year in terms of removing duplicate jobs, combining distribution channels, etc.
Marketing synergies are also important. Reckitt for example produce the headache tablet Nurofen.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-26 13:23:542010-07-26 13:23:54How much do condoms cost to buy? Well, I guess anywhere from £1 to £2.5bn…
There was an interesting court case in Germany this week. Not only for people that follow employment law but also for people that have to wear certain outfits to work.
German Policeman Martin Schauder was awarded an extra 7 days of holiday a year after arguing that the time he spent changing into his uniform each day was part of his job. He therefore claimed that this time was part of his work time.
He stated that it took him 15 minutes every day to get his police outfit on and 15 minutes to take it off. These extra 30 minutes a working day amount to an extra 45 working hours every year.
The court in Germany agreed with the policeman and told his employers to either pay him the overtime or to give him holiday.
The police force have unsurprisingly said that they are going to appeal against the decision.
Now, if this case is upheld then it raises some interesting opportunities for me. As an accountant who meets clients then I am expected to be dressed smartly. My personal choice of clothes for the office however would be shorts and a t-shirt so the fact that I have to wear a tie surely means that the time it takes me to do my tie up is overtime.
This varies from a sleepy 1 hour plus on a Monday to a speedy sub 1 minute on a Friday. Adding this all up will amount to a significant sum of overtime money and this is before I take into account the time taken to tie up my shoelaces instead of slip on my preferred choice of footwear of flip flops.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-16 13:52:312010-07-16 13:52:31If you wear a business outfit to work then surely getting dressed in the morning is overtime?
So my plan for tomorrow night is to have a relaxing evening and settle down with a nice box of chocolates, a glass of Pinot Grigio wine and start reading the 50th anniversary edition of the book “To Kill a Mockingbird” which has just been released.
The only problem is that I don’t have chocolates, wine or the book…
Not to worry though as I can order these over the internet for delivery tomorrow. Two websites I’ve ordered from before are those of the supermarket Tesco and the online bookstore Amazon. Tesco have sold books as part of their offerings for a while now so I might as well order all of them from their website.
Hold your horses though as Amazon today announced that as well as books, DVDs and suchlike they would now be selling a range of grocery items online. Over 22,000 grocery items in fact.
Items ranging from a packet of cinnamon sugar for 29p through to a Highland Fayre Royal Banquet for £1,203.97 are now available for home delivery on www.amazon.co.uk.
Is this a smart move by Amazon or simply an online bookstore trying to get some extra revenue? After all, shouldn’t they stick to what they do best and sell books?
Well, if you think about it, what do they do well? (what are their “core competencies” in strategy exam talk?)
I’d argue that they are pretty good at getting stock into their warehouses (using Porter’s value Chain: inbound logistics), processing orders (operations), delivering goods to customers (outbound logistics), running a website (sales and marketing) and dealing swiftly with any returns (after sales service).
Whether the item of stock being processed is the classic book by Harper Lee or a whole lamb for £119.99 then does it really make any difference?
Only time will tell whether this venture will be successful. Amazon has a trusted brand and is a world leader in processing orders over the internet so maybe they will be successful. The established supermarkets already have a successful internet presence though so it will be interesting to see how this develops.
Anyway, after writing this I’ve now made my decision and I’ll buy the chocolates, wine and books from the Sainsbury Express store next to the office and have the relaxing evening tonight.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-07 18:42:352010-07-07 18:42:35I'd like the classic novel "To Kill a Mockingbird" and a whole lamb delivered tomorrow please.
The Times newspaper in the UK is one of the oldest in the world. It was first published in 1785 and for 219 years until 2004 it followed the traditional route of quality journalism delivered via a “broadsheet” newspaper.
In 2004 certain traditionalists were shocked when the newspaper moved to the smaller compact size favoured by the tabloid papers. This move proved to be successful though and the new size appealed to both the younger generation and commuters who no longer had to try to read their paper without upsetting the person next to them.
This was a good example of a successful adjusting of the product component of the marketing mix.
The Times has had one of the better newspaper websites and last week they completed their transition so that their website no longer has any free content. Instead, readers now have to pay £1 to read the online version of the newspaper. The “product” costs the same whether it is a paper version or an electronic version.
From mid June users were asked to register free to read articles but from last week when you clicked through you were greeted with the following:
Reports suggest that since the requirement to register was brought in last month the viewing figures of the website have almost halved.
The requirement to pay for viewing will no doubt cause viewing figures to drop even further.
The paper’s owner, Rupert Murdoch’s News Corp, will be expecting viewing numbers to fall but importantly for them they believe that charging for content will enable them to continue at the forefront of quality journalism.
There are also reports that the Sun and the News of the World, two other UK titles in the News Corp portfolio, will also disappear behind a website paywall. These papers are more “down-market” than the Times so it will be interesting to see how this will work.
The traditional newspaper street vendor’s call of “Read all about it, read all about it” may soon become “Read all about it either in this newspaper or the online version for the same price”. But then again will there be any paper newspapers being sold in a few years or will it all be electronic?
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-05 10:47:012010-07-05 10:47:01It's 225 years old and has just given birth to a beautiful newly born one pound baby.
Steven Perkins, a 34 year old commodity broker, attended a company golfing weekend, had a bit too much to drink over the weekend and then took the Monday off of work.
This in itself didn’t justify being fined £72,000 earlier this week by the Financial Services Authority (FSA) and being identified as “an extreme risk to the market when drunk”.
It was what he did on the Monday evening that caused all the excitement.
After the golfing weekend, Mr. Perkins felt the need to carry on drinking and started drinking again on the Monday lunchtime. Late that night in a drunken stupor he bought 7 million barrels of oil using $520 million dollars belonging to his then employers PVM Oil Futures.
Because the purchases took place in the middle of the night other traders around the world thought that there was something major happening in the oil market and as a result the price of oil shot up by $1.50 a barrel in less than 30 minutes. Through the alcoholic haze Mr. Perkins gradually increased his bidding price each time to push the price up until at one stage he was responsible for nearly 70% of the global market volume.
He tried to gradually sell down his position in the morning but no doubt with a very dry mouth eventually admitted everything to his employer.
His drunken night time purchases resulted in PVM losing £6million, him being fined £72,000 and banned from the industry for five years. Plus of course, an almighty hangover.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-07-02 12:30:022010-07-02 12:30:02You know you've had too much to drink when your eyesight goes blurry, you slur your words and you spend half a billion dollars...
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