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At least it will make it easier for James Bond to park…

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The supercar manufacturer Aston Martin is associated with top end cars such as the Aston Martin DBS (shown left) which retails at £179,000. James Bond is also regularly seen saving the world in one of their cars.

So it’s come as a bit of a surprise to some people that in May of this year they are launching a small city car or “bespoke luxury commuter car” as they refer to it.

The launch version of the new Aston Cygnet (shown below) will cost £39,995 and whilst this is significantly less than the £179,000 for the DBS it is £27,750 more than the Toyota IQ that the model is based on.

So, is this a clever move by Aston Martin to identify a niche segment of the market that will pay extra for the luxury add-ons that are on the car such as a bespoke five-piece luggage set comprising a glovebox bag, removable door pocket bag, holdall, garment bag and a collapsible tote bag?

Or are their other possible reasons?

Some would argue that it’s a nice use of segmentation whereby the brand is being extended to high net worth individuals that need a luxury city runabout that is easier to park than a traditional Aston Martin.

It could also be targeted at the traditional male executive purchasers of new full size Aston Martins who could be encouraged to buy an Aston Cygnet for their wife or girlfriend (or both).

There is also the EU Commission proposal that car manufacturers’ car fleets should average below a certain CO2 emission rate to avoid penalties.

Manufacturers such as Honda and Renault which typically produce smaller more fuel efficient cars can achieve these limits. Aston Martin however with their high performance, and as a result less fuel efficient cars, will not meet the limits.

Is this a sign of things to come?

Will we see the Rolls Royce Mini or the Ferrari Cinquecento on our streets soon…

I’m sorry madam but it’s not in stock. Just press that button though and…

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Luxury fashion house Burberry has just announced a 36% increase in retail sales in the final quarter of last year.

Their shops in Asia Pacific, the Americas and Europe all reported double digit sales growth.

This is pretty impressive given that the economy is still facing turbulent times. So what’s behind the success?

One of the main drivers of this growth is China and in particular the growth in the Chinese luxury market.

Last year, Burberry acquired 50 stores in China from their Chinese franchise partner and seem to have been making the most of having them fully back “within the family”.

One of the key strategic issues facing fashion retailers is “merchandising”. In other words, making sure that the right clothes are in the stores at the right time.

There is always a balance between having money tied up in high inventory levels versus ensuring that shoppers have the item that they want to buy in stock.

Burberry reportedly have had some issues in the past when they were operating with very lean levels of inventory in some of their shops.

This meant that if people went shopping at a Burberry store and saw something they liked but found it wasn’t in stock then the chances were that they wouldn’t come back another day to buy it.

The end result was a lost sale.

The company seems to have better control of their inventory levels now and they have also piloted a new digital store format in Beijing.

If the item isn’t in stock in the shop then the customer can quickly get access to an in-store iPad and purchase the item online for home delivery. A relatively simple but effective way of trying to make sure the customer doesn’t walk out of the shop without making a purchase.

Advertising on the move and all for a good cause.

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There are certain things in this world that really should be readily available no matter where you live.

School education for children for example is one such item.

In some countries however it is a sad fact of life that children often have to walk many kilometres to their nearest school. This can understandably result in there being challenges in ensuring attendance at classes.

The advertising industry can be a very creative place and in Africa the  advertising industry is currently growing at an estimated 20% per annum.

French company Instinct’s Socially Intelligent Marketing programme aims to combine this growing advertising market in Ghana with providing a solution to the school transport problem.

Instinct has launched “TriKademiK”.

In effect this is a mobile advertising platform that combines a billboard with a tricycle that can carry up to 6 children to school. When not in use on the school-run the tricycle can be converted to transport other goods for the local community.

The initial pilot versions of TriKademiK were sponsored by mobile phone company Zain Ghana and drinks company Voltic (part of the SAB Miller group of companies).

Instinct’s aim is to roll out the programme to over 1,000 tricycles which can transport 7,000 children to school on a daily basis.

All in all an impressive and creative use of an advertising platform for a very good cause.

‘Tis the season to be jolly (plus of course to fight with elves…)

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Christmas is fast approaching and for a number of companies this is their busiest time of the year.

It is also a time of opportunity. Or at least that’s what brothers Henry and Victor Mears thought was the case. In terms of legality and ethics though their business plan left a lot to be desired.

Two years after their ill fated Christmas business collapsed within days of opening they are currently in court facing a number of charges.

The background to the case is that they established a Lapland-style theme park in the New Forest region of the UK.

Their business plan indicated that they would make in excess of £1 million. With thoughts no doubt of the success of other theme parks around the world such as Disneyland and Lego Land they got hard to work on the Lapland-style park.

Promotional materials for the park advertised Christmas festivities including a bustling Christmas market, real log cabins and a variety of real “Christmas animals”.

All in all it promised to be a true Christmas spectacle for the parents and their excited children that planned to visit the park.

The promotional materials were so successful that nearly 10,000 advance bookings were made online.

Unfortunately for the crowds that turned up the reality of the park left a lot to be desired.

The ice rink didn’t have any ice in it. Instead of ice skaters gliding over the ice there was a muddy puddle. The real Christmas animals were pet husky dogs that were in such a bad condition that they were reported to the RSPCA (Britain’s animal welfare charity).

The other “real animal” on show was a plastic toy polar bear which had been placed a distance away in amongst the trees.

All in all it was a spectacular failure.

Businesses fail for a variety of reasons but this one never really got off the ground.

There’s a big difference between having a couple of pet dogs, a puddle and a plastic Polar bear compared with a Christmas extravaganza Lapland theme park.

The park was only open for 6 days before closing. The company behind it was subsequently liquidated with creditors owed £850,000.

Some people may feel that the only real highlight of the 6 days that the park was open was the far from traditional Christmas scene where some of the parents started fighting with a number of Father Christmas’s elves.

The end result is that the brothers have been charged with 8 counts of misleading customers. The brothers deny all charges against them.

The ExP authors will be taking a break from this blog for the festive season but we all hope that you have a fantastic holiday break and we’ll be back blogging in January!

You’ve got to jump around like you just don’t care…

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Microsoft and Salesforce don’t exactly love each other.

Founded in 1999 by former Oracle executives, Salesforce is a very successful cloud based CRM (Customer Relationship Management) company.

There’s no love lost between them and Microsoft though and earlier this year Microsoft sued Salesforce claiming it had infringed a number of patents.

This week Salesforce held their annual conference in San Francisco with an estimated 20,000 people attending.

Microsoft couldn’t resist the temptation to undertake a bit of guerrilla marketing at the event (guerrilla or ambush marketing is where companies that are not officially at an event try to get their message across in an “unofficial way”).

Microsoft hired a number of people to drive outside the conference venue in specially adapted Segway vehicles.

The Segway’s had a prominent advert on the front encouraging people to sign up for Microsoft’s own CRM product, Microsoft Dynamics.

The text on the advert on the front of the Segway’s read “I didn’t get Forced! I got a cloud-based CRM solution that works the way I do.”

So how did Salesforce react?

In what can only be a classic way to react to guerrilla marketing, Marc Benioff, the CEO of Salesforce nicely turned the tables on Microsoft.

Salesforce tracked down “Bernard”, the actor whose face was on the Microsoft adverts on the front of the Segways. During Mr Benioff’s key note speech at the conference Bernard was invited onto the stage and asked if he would “come back” to Salesforce.

To great cheers from the audience he said that he would be very happy to return.

Mr Benioff seemed rather relaxed about the attempt by Microsoft to hijack the conference with their guerrilla marketing tactics. The video below captures the moment when he was on stage at last week’s conference with Will.I.am of the Black Eyed Peas.

He didn’t look exactly worried during his dancing and he certainly didn’t look as worried as his personal physician probably looked.

The sound of the tills ringing was music to their ears even though there was no music in the shop…

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Christmas shopping for me is normally a last minute rush before the shops close on 24 December.

This year though I was determined to be organised and last weekend headed off to hit the shops in London’s West End.

It was a pleasant surprise to find that arguably the two most famous shopping streets in London (Oxford Street and Regent Street) were car free as they had been shut to traffic to encourage early Christmas shopping.

Although the streets were closed to traffic the number of shoppers made up for it. It also seemed as though every other shopper walking along Oxford Street was carrying a Primark shopping bag.

For those of you that haven’t heard of Primark, they are a very successful budget clothing brand with 145 shops in the UK together with an additional 62 shops in 6 other countries.

They compete via a classic cost leadership strategy whereby they keep their costs low by way of a variety of business techniques including for example:

•    Purchasing  stock in huge quantities so as to benefit from economies of scale;

•    Only stocking items in popular sizes so as to avoid “using up” valuable shop space with items that don’t sell so well;

•    Minimising advertising spend (why pay models and magazines when they can let their prices do the advertising for them?);

•    Not playing any music in its stores (why pay licence or royalty fees to artists?).

As well as focusing on cost leadership they are masters at “fast fashion”. In other words, they manage the supply chain to get the fashionable styles into the shops as quickly as possible so that they match the very latest designs that are seen on the catwalks and in the fashion magazines.

Gone are the days of fashion having 4 distinct seasons as far as Primark is concerned.

With so many people carrying Primark bags last week then my suspicion was that they were doing very well with their sales.

Press reports yesterday did indeed indicate that Primark did very well at the weekend.

It was reported that they had their most successful one day single shop performance in their 41 year history on Saturday.

The tills at their Oxford Street branch rang up to the tune of £820,000 in the one day.

Whichever way you look at it that’s a pretty good figure for one day’s worth of sales at a single shop.

Their cost leadership approach to strategy seems to be working. As well as their success on Saturday, their reported profits for the 53 weeks to 18 September 2010 showed profits increasing by 35% to £341 million on sales up 18% to £2,730 million.

Is it a phone or a computer and what on earth does that button do exactly!?

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A few years ago things were fairly simple when it came to deciding what was a computer and what was a phone.

A computer tended to fill a room and a phone was attached by a wire to the wall.

Then along came mobile phones and laptop computers.

It was still possible to tell the difference though. You held the phone to your ear to make calls and you used your fingers to type on the computer keyboard.

In April of this year the Apple iPad was released. This was a tablet PC and although if you were clever you could make internet based phone calls it wasn’t possible to make calls via a mobile network.

Samsung have just released their 7-inch Android-powered tablet here in the UK. This is slightly different to the iPad in that it is designed to make calls and is now available on all the major mobile networks.

So, is it a phone or a computer?

In fact do we care anyway?

Well, if you’re a lucky person that has been provided with a Samsung galaxy tab by your employer then yes, you probably will care whether it’s a phone or a computer.

For UK tax purposes, a phone provided by an employer is a tax free benefit (i.e. you will not be charged income tax on it). A computer on the other hand is a taxable benefit and generally the value on which tax will be applied will be equal to 20% of the cost of the computer.

So, in summary, if you were provided with a Samsung Galaxy Tab phone by your employer it’s tax free.

If however you’re provided with a Samsung Galaxy Tab computer by your employer you will be taxed on it.

Unfortunately for any individuals in such a position this guidance by the UK tax authorities indicates that it is likely to be taxed on the employee.

As well as a tax discussion, the Samsung Galaxy Tab also provides an interesting example of some of the challenges companies can face when launching products in different countries.

The photo to the left shows the Galaxy Tab when it was first launched in the European country of Romania.

There is a button marked “Porn” clearly visible on the screenshot.

This isn’t what you may think though and doesn’t provide a short cut to adult related content.

It is in fact an abbreviation that Samsung initially used for the “home button”. “Porn” was used as an abbreviation of the word “Pornire” which means “start” in the Romanian language.

Samsung quickly changed the abbreviation following its launch.

Was it a good bet or not? 10 years and £1.4 billion later and the answer seems to be…

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Although people have been gambling for a long time, the profile of the betting industry has changed dramatically over recent years.

The bookmakers that were seen on many a high street seem to be gradually disappearing.

People are still gambling though but the delivery method of the industry is switching to internet based gambling rather than placing bets at a physical bookmakers.

Ten years ago former professional gambler Andrew Black and former JP Morgan trader Edward Wray started up a betting business that addressed matters in a new novel way.

For years the typical approach to gambling had been where a bookmaker set the odds and it was up to the individual gambler whether or not he or she accepted these odds and placed the bet.

Betfair pioneered the concept of person to person betting whereby individuals bet against each other rather than the bookmaker. Betfair provide the platform for the betting and take a commission on each transaction.

A gambler will say that they want to bet on a certain event happening (or not happening) and if another gambler wants to accept the bet then the transaction goes ahead. Betfair provide the mechanism for this to happen.

This is known as a betting exchange and is a great example of where first mover advantage really counts.

In order for the business model to work there has to be a critical mass of gamblers that are willing to offer and accept bets. Without this critical mass the business simply would not work.

Another example of where first mover advantage has been critical to business success is in online auctions. After all, who are the main competitors to eBay?

Back to Betfair though and it certainly is a good business model. Risk for example, is nicely reduced as the company is not standing to lose on the bet but instead takes a nice commission on each transaction.

So how well has it done over the last 10 years?

The answer to this can be found last Friday when 15% of the company was floated on the London stock market and the company was valued at £1.4bn.

Betfair’s advisors were some of the biggest names in the business and included Goldman Sachs, Morgan Stanley and Barclays Capital to name a few.

Amongst other things their job was to identify the price range of the proposed offer. Initial indications were that it would be between £11 to £14. The final initial public offering (IPO) price was set at £13.

With some of the top investment bankers involved and Betfair being in the gambling industry (which is not necessarily renowned for being generous to gamblers) it was something of a surprise to some people to see the share price rise by nearly 20% in the first day of initial trading after the IPO. After all, this could imply that the IPO was undervalued if there was such an initial jump in price.

I wonder what odds you would have got from Betfair that the IPO share price would rise by 20% on the first day of trading?

According to Apple there’s an App for…something that I shouldn’t say…

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Apple is an extremely successful company. Earlier this week they released their latest set of results.

For the first time their quarterly sales exceeded $20 billion. In my opinion though the really impressive thing about the published figures was their cash balance.

They have total cash and marketable securities (stocks and shares, etc that can be readily converted to cash) amounting to a staggering $51 billion.

To put this amount of money in perspective, if they took their cash and put it in an empty company and then listed this “cash only company” on the London Stock Exchange, it would not only make it into the FTSE 100 but the “Apple cash company” would in fact be the 18th largest company quoted on the London Stock Exchange!

The blog entry here provides some thoughts on what else Apple could do with their cash if they decided to go on a shopping trip.

One of the growth areas of Apple can be found within their Apps business. Apps are “applications” (in effect software to use on their devices). 3 billion apps were downloaded in the first 18 months after their launch.

Apple has a very slick and professional marketing strategy.

Apple’s iPhone adverts such as the one below famously state “There’s an app for that” and finish with “There’s an app for just about anything”.

As well as having a very creative approach to their advertising Apple has also taken a very commercial and sensible approach to matters.

Last week the phrase “There’s an app for that” was officially classified as a trademark of Apple.

This means they will be able to prevent competitors benefiting from the phrase.

It will probably result in adverts such as the one below by US network carrier Verizon being prohibited. Verizon parodied it’s competitor  A&T (a carrier for the iPhone in the US) with this “There’s a map for that” advert.

Should you do a u-turn if you see a GAP in the market and it’s out of the blue?

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According to dictionary.com the definition of a U-turn is

1. a U -shaped turn made by a vehicle so as to head in the opposite direction from its original course.

2. a reversal of policy, tactics, or the like, resembling such a maneuver.

For anyone that’s looking for a current example of a branding u-turn then I’d recommend looking at what has happened since the US clothing and accessories retailer GAP introduced their new logo last week.

GAP Inc, which was founded in 1969 in San Francisco, is home to a number of brands including Old Navy and Banana Republic. Their most famous brand though is that of GAP itself.

GAP has approximately 3,100 stores around the world and last year had revenue of nearly $15 billion.

They are a great brand and their “blue box logo” (shown above on the GAP shopping bag) is one of the best known logos in the fashion world.

They decided however to change the logo and introduced the new logo shown below. Now, what do you think of the new logo? Which one do you prefer – the original one or the new one?

Personally I think that the new one looks as though it would be more suited to a high tech or consultancy company. The original one seems to better match their concept of clothing being laid back and traditional.

Following the launch of the new logo last week there was uproar on social media sites such as Twitter and Facebook with people demanding that the old logo be brought back.

The upshot is that on Monday GAP released a press release where they announced that the new logo would be withdrawn and the previous one reinstated.

In the words of the President of GAP Brand North America there was “an outpouring of comments from customers and the online community in support of the iconic blue box logo.”

A decision was therefore made not to use the new logo but to revert back to the previous one.

Was this a company listening to its customers and giving them what they wanted or was it a company that didn’t speak to their customers enough before making the change? There will be arguments both ways.

We shouldn’t forget the cost of this u-turn.

There would have course have been the fee GAP paid to their branding agency (probably ex-branding agency now). A quick straw poll in the office felt that the fee paid for this particular design should have been in the region of £10.

There would also have been the costs of redesigned packaging and signage with the new (now old) logo on it plus of course all the management time.

They say that “there’s no such thing as bad publicity”. I’m not sure GAP’s Branding agency would agree with this.