Posts

Have a break. Have a fish and chip flavoured chocolate bar…

, , , , , , ,

Nestlé’s Kit Kat is one of the world’s best selling chocolate bars.

It is estimated that over 400 Kit Kat fingers are consumed every second worldwide and every 5 minutes enough Kit Kat fingers are produced to out stack the Eiffel Tower.

Whilst most people associate Kit Kat with its red wrapper alongside the classic wafer and chocolate taste, Nestlé actually segment the market rather nicely in a number of countries. They produce a range of flavours which are only available in certain countries according to local tastes. In simple terms they are dividing the market (segmenting) and then adjusting the marketing mix accordingly.

In Japan for example, Nestlé recently launched 19 new flavours. These flavours reflect the food specialities of certain districts and are only sold in these specific districts.

For example, you can buy a yubari melon flavour Kit Kat in the Hokkaido district, a strawberry cheesecake flavour in the Yokohama district and a cherry flavour one in the Yamagata district.

Different flavours are available in other countries (segments). For example, peanut butter flavour can be bought in Canada.

Now, originating from Scotland where my favourite dish was crispy cod and chips my obvious question to Nestlé is:

“When will a fish and chip flavoured Kit Kat be released in Scotland?”

I feel it’s only a matter of time so if any marketing executives from Nestlé are reading this then over to you…

Mobile phone plus food equals…

Mobile phones have revolutionized the world. It’s not just communication where they have changed things dramatically but if you think about it then a Smartphone is in effect a computer in your pocket.

Today’s Smartphones are more powerful than some of the computers we saw only a few years ago and are capable of doing lots of things.

So, they have lots of benefits but there’s one particular business that is trying to improve their results by encouraging their customers not to use their phones.

Over in America, a Los Angeles restaurant is offering diners a 5% discount on their meals if they don’t use their phones in the restaurant.

Now, in my mind this is a pretty good idea. I’ve been to some restaurants where it felt that I was the only person that was not speaking or texting on the phone (admittedly that was because my phone battery was dead but even so…).

Eva Restaurant in LA will offer a 5% discount if you hand over your phone for safe keeping as you enter the restaurant.

According to KPCC, owner Mark Gold said “For us, it’s really not about people disrupting other guests. Eva is home, and we want to create that environment of home, and we want people to connect again,” he explained. “It’s about two people sitting together and just connecting, without the distraction of a phone, and we’re trying to create an ambience where you come in and really enjoy the experience and the food and the company.”

I think this is a great idea and although I haven’t seen the small print of the terms and conditions of the offer then surely if I could get together 20 mobile phones to check in at the restaurant then 20 x 5% discount = 100% discount = equals free meals?

You get a safe hotel and a great bed. The towels and TV will cost you extra but what about the toilet paper?

, , , , , , , , ,

The Tune Hotel chain has just opened up its first hotel in the UK. The chain already has 7 hotels in Malaysia and 2 in Indonesia and they claim they offer 5 star beds at 1 star prices.

Their policy is to offer the essentials that people look for in a hotel such as safety, cleanliness and comfortable beds whilst at the same time removing a number of “extras” that some customers don’t necessarily want.

With rooms starting at £35 it certainly offers great value for London hotels. It wouldn’t suit everyone’s taste though as some of the things that people take for granted at a hotel are not included in the standard price.

There are a number of optional extras that guests can purchase. A towel for example can be provided for £1.50 per stay whilst the use of a hairdryer will set you back £2. If you want to watch TV you’ll need to pay £3 a day.

If you’re the type of person that likes to take your own towel to a hotel or is relaxed about whether or not you wash then you could end up with a very cheap room.

Whilst this hotel wouldn’t be everyone’s “cup of tea” (incidentally there are no coffee or tea making facilities in the rooms) there will certainly be a market for people that only want a clean and safe hotel room to sleep in and are not bothered about the extras.

In the past we’ve blogged about the BMI Weymouth hospital that was adopting a differentiation approach to business. With Tunes Hotels adopting a hospitality industry equivalent to the low cost airline models of Easy Jet and Ryan Air, this is a great example of either a cost leadership approach or Bowman’s no-frills strategy.

Guests can rest assured though that toilet paper is included in the price and is not an optional extra.

Forget about the football, what about the shoes?

The football World Cup is well under way and as well as being the world’s leading football fiesta it’s also one of the top events for sportswear sponsors to showcase their goods.

As an England supporter I haven’t been overly impressed with England’s attempt to save hotel costs by minimizing their stay in Brazil and Luis Suarez showing his favourite food is Italian wasn’t the most sporting action I’ve witnessed.

329839One area of the event which has been interesting though is the competition between the big sportswear brands.

Perhaps the most eye catching footwear has been Puma’s new evoPOWER Tricks 2014 boots which feature two different colours – pink for the right foot and blue for the left foot.

Ignoring the question as to whether the 2015 version will feature blue for the right foot and pink for the left foot, it certainly has raised awareness of Puma boots during the event.

The Puma company has an interesting history.

In the 1920s in Germany, brothers Adolf and Rudolf Dassler set up a shoe making business but soon fell out with each other and went their separate ways.

Adolf (Adi) Dassler kept the original company but renamed it Adidas (named after his first name and part of his surname) whilst Rudolf left and set up Puma.

Whilst Adidas and Puma were set up by brothers, the other big player at the finals, Nike has an altogether different background.

Nike, was established in 1962 by Phil Knight, who incidentally was an accounting major, and is one of the best companies in the world in terms of getting its marketing just right.

They have a long history of having a certain flair for marketing. After the 1972 Olympic marathon trials for example they proudly announced that 4 of the top 7 finishers had worn Nike shoes. They neatly ignored the fact that the top 3 were wearing Adidas shoes!

Students of strategy papers will be aware of Michael Porter’s generic strategies whereby organisations compete either by way of cost leadership or differentiation (see our ExPress notes for a refresher if you’re unsure about these terms).

It can be argued however that Nike take the best of both of these approaches.

They focus on the differentiation side of things by investing heavily in R&D, design and marketing. As a result they can charge a premium for being “different”.

On the cost leadership side of things then Nike use external manufacturers rather than internal production. This means that they can source their manufacturing via approved suppliers which they will select for each product on the basis of the best price offered by these suppliers. It enables them to shop around for the best price whilst still guaranteeing the quality.

All in all a very smart business model but I’m sure that fans of the World Cup are more interested in the goals that are scored with the football boots rather than the business models behind them.

An easy mistake to make?

You may laugh but would you really be able to spot the difference between a fully grown 180 kg gorilla and a middle aged man dressed in a gorilla suit?

gorillaNow, whilst most of you are probably thinking to yourself that yes, you would be able to tell the difference, unfortunately for an employee of Loro Parque Zoo on the Spanish Island of Tenerife, the Zoo vet didn’t spot the difference.

Any business should ensure that procedures are in place to minimise danger to members of the public. In the case of zoos this includes having practice drills to ensure that if an animal escapes the staff know what to do and have practiced it beforehand.

The zoo started a practice drill where a 35 year old zoo employee was dressed as a gorilla. He then “escaped” from an area of the zoo and the alarms were raised. Unfortunately for the “man dressed in a gorilla costume” the zoo had told all the people involved in the emergency drill that it was a practice except the zoo vet who as soon as he heard the alarm sounds grabbed his tranquiliser gun and proceeded to shoot the zoo employee with a tranquiliser which had been designed to knock out a 180 kg gorilla.

The zoo employee was rushed to hospital where he was treated and fortunately made a full recovery.

Somehow I doubt whether he will volunteer to dress as a gorilla at the next practice.

Listen – your pets can make their own purchase decisions…

Who makes the purchase decisions in your household? Is it you, your husband or wife, or perhaps your dog?

Nestle, one of the world’s largest producers of pet food recently undertook an interesting marketing approach by producing adverts aimed directly at the pet as opposed to the owner.

TV commercials screened on Austrian television used high frequency tones which could be heard by dogs but not humans.

According to Anna Rabanus, Brand Manager of Beneful for Nestle Purina PetCare Germany, they “wanted to create a TV commercial that our four-legged friends can enjoy and listen to, but also allow the owner and dog to experience it together.”

Now, whilst it’s not clear whether that many dogs had read the TV listings to know that the adverts were going to be on or in fact whether the dogs themselves were already engrossed in the latest episode of Animal Cops Houston on another channel and missed the adverts, it certainly was a novel approach to advertising by Nestle.

This wasn’t the first innovative pet food advertising that Nestle had undertaken though.

Last year, Nestle Purina launched an award winning “Stop sniffing” campaign that enabled dogs to sniff the scent of Beneful dog food from special posters on advertising boards in German towns and cities whilst out for a walk with their owners.

Although not related to Nestle, a few years ago there was another advertising campaign which utilised the sniffing habits of dogs.

Small posters scented with… (let’s just say a smell produced by dogs that other dogs find attractive) were put on lampposts at ground level.

Whilst the dogs stopped to sniff these posters there was a bigger poster at human eye level advertising the Animal Planet TV channel which was aimed at the dog owner that was stood there waiting for their dog to finish sniffing.

Luckily for the advertising production team the smell that was put on the small poster to attract the dog was artificially created in a laboratory.

Is it a character from Star Wars? Is it a new form of transport in the latest James Bond movie? No, it’s…

… a great example of the marketing mix.

For students of strategy papers within the various exams the concept of the marketing mix and the 4Ps should be well known.

Philips, the global electronics giant with its headquarters in the Netherlands has just released a new clothes iron that well and truly adjusts the “Product” part of the 4Ps so that it is aimed directly at men.

They saw a gap in the market whereby they felt that men wanted a robust, “heavy duty tool like” iron. As a result they have just launched a more masculine looking iron by the code name of the GC4490.

As well as being stealth fighter black in colour, the GC4490 also has the same style of heavy duty protective case that expensive power tools come in. The product is clearly directed at men but what about the remaining three Ps of the 4Ps?

Well, in terms of the “P – Promotion” side of things, some of the promotional pictures make it look like a bit like a Star Wars fighter plane which will no doubt make ironing more exciting!

The “P – Price” is Euro 79.99 which is towards the top end of prices for irons. Some would argue that this must be justified on the basis of the “fighter plane technology” that was possibly included in the technical specs of the GC4490?

As regards, the “P – Place” then should we expect to see the GC4490 being sold at your local builders merchants?

Leaving aside the sexual politics debate, you have to admire the great use of the 4Ps by Philips to exploit a gap in the clothes iron market.

So what made me think of the marketing mix in the shower this morning?

, , ,

I’m lucky enough to be teaching in Asia at the moment. The students are great and I’m convinced they will pass their exams (if any of them are reading this then good luck in the exam!)

shower-headI’m staying at a lovely hotel and this morning in the shower I was reminded of marketing and the 4 Ps. The shower gel that is provided by the hotel is a well known international brand and I’ve bought it myself before.

What was different about it though when comparing the product (one of the 4 Ps) as purchased by the hotel and the product when purchased by me as an individual? The aroma and texture was exactly the same whereas the packaging was different. The key difference being how the packaging was designed in terms of the ease with which the gel could be poured.

Whether it was me but the version I personally bought appeared to dispense the gel a lot quicker than the hotel version. The hotel version took a lot more effort to get the gel out.

It’s maybe my imagination but if the design of the packaging that is on the public product is in fact different then it would encourage me to use it up quickly and buy a replacement. The packaging on the version that the hotel was using however would “discourage” guests from using a lot of gel and hence save the hotel the cost of replacing the gel as quickly as with the “standard public packaging”.

I’m not sure whether this was a deliberate policy of the shower gel manufacturer but if it wasn’t then maybe they should be considering it…

Is now a good time to eat more chocolate?

It’s Easter weekend and in many countries around the world people celebrate by giving each other chocolate Easter eggs.

There could be some worrying news though for people who enjoy eating these chocolate eggs as well as anyone who enjoys eating chocolate in general.

chocolate-pricesThe price of chocolate is rocketing and in the last year alone cocoa prices have risen by 20% and it seems that the price rises will continue.

So, what is causing the increase in chocolate price?

The answer is that it is a simple case of supply and demand.

In December, the International Cocoa Organisation said there could be a 150,000 tonne deficit in the amount of cocoa beans produced in 2014.

There is a significant lead time in cultivating cocoa crops so the supply of cocoa will remain relatively static. In addition, the supply problems are being compounded by prospects of an El Nino weather pattern which can result in crop damaging dry winds in some of the leading cocoa growing countries in West Africa such as Ghana and the Ivory Coast.

Demand on the other hand is surging.

According to Euromonitor the value of chocolate consumption in major emerging markets such as Asia and Latin America will grow at more than double the rate of the world average in the next 5 years.

It’s estimated that consumers in the Asia Pacific region will eat 1.096 million tonnes of chocolate by 2018. This represents a 27% increase from 2013 and compares to a 5% increase in Western Europe (the biggest current buyer of chocolate) over the same period.

So in conclusion, there are supply problems, rocketing demand and higher chocolate prices seem inevitable.

What better excuse therefore is needed to buy that extra chocolate bar now before prices rise?

It looks like Saturday could be a record day…

When I was younger I can remember queuing with friends to get the latest album by my favourite group. At the risk of showing my age though it’s been a long, long time since I last did that.

It’s not because I don’t like music anymore but rather that it’s now so much easier to buy music online.

PrintThings have changed quite dramatically for the music industry when it comes to their distribution methods.

In my youth it was pretty simple. Record companies would distribute the albums via the record shops.

Fast forward several years and over the last decade music has been increasingly distributed online via platforms such as iTunes and Amazon. There’s also the not insignificant impact of illegal downloads of music.

Even if you still want to buy the more traditional CD versions of the albums rather than the digital version, then supermarkets such as Tesco sell the leading CDs at very cheap prices.

The high street music shops have struggled to stay alive. Several high street music shops such as Virgin Megastores, Our Price and Zavvi have all gone out of business.

Students of strategy though would not really be surprised by this as according to Michael Porter’s generic strategies there are two main ways of competing. Namely, cost leadership or differentiation.

In simple terms, cost leadership is where a company can produce something at a lower cost than its rivals whilst differentiation is where an organisation can charge a premium for its product as it’s “different”.

A high street chain of music shops is going to have a significantly higher cost base compared to companies that sell music over the internet. Property costs are going to be significant and will make it impossible for high street record chains to ever win the cost leadership battle.

Whilst it’s not looking good for the big chains of record shops what about the smaller independent record shops? Clearly they could never compete via cost leadership so what about differentiation?

On Saturday the seventh annual UK Independent Record Store Day will be held.

More than 240 stores have signed up to this year’s Record Store Day and tomorrow’s event is aimed at reinvigorating interest in the independent music stores.

At last year’s event people were queuing to get into the shops. Not to buy the cheap music but to savour the atmosphere, talk to people who were interested in similar types of music and to buy some of the more unusual music.

Hopefully this differentiation approach will work as in my opinion it will be a sad day if all the independent music shops disappear and we can only buy the music online or at a supermarket when buying our weekly shop.