Jonathan Mildenhall, the strategy director at Coca-Cola's London-based agency Mother, was tapped to become vice president of global marketing, with responsibility for exploiting the "Coke Side of Life" campaign around the world. Mildenhall's appointment was reported early yesterday in the British advertising press. He will relocate to Atlanta. Meanwhile, Coca-Cola reported a year-to-date revenue jump Thursday, propelled partly by a 10% increase in worldwide marketing spending, company officials said. "We believe we're getting traction out of the spend," said Chairman-CEO Neville Isdell on a conference call with analysts. Isdell has made increasing ad dollars a priority in his tenure. Isdell reportedly has boosted Coke's marketing investment by $400 million a year, meaning it will come close to $3 billion this year. So far, however, the global revenue increase has trailed the rate of increase in marketing dollars. Net operating revenues for the first nine months of 2006 jumped 3% to $18.16 billion. In the most recent third quarter, net operating revenues increased 7% to $6.45 billion. Still, Isdell added, "effective marketing programs ... are increasingly connecting with our consumers." Particularly helpful this year, he noted, were marketing initiatives tied to the World Cup this summer outside the U.S., highlighted by soccer hotbeds Europe and Latin America. Isdell said World Cup programs were rolled out in more than 100 markets. However, one troubled business segment Coke cited Thursday was in ready-to-drink tea and coffee beverages, which he deemed unsatisfactory. "There's clearly more that we can do," he said. "Coke's real problem is a long-term decline in carbonated soft drinks and more effective ads will only take it so far," said Gerry Khermouch, editor of Beverage Business Insights, West Nyack, N.Y. "The change does nothing to juice innovation, which still consists largely of tepid line extensions and me-too new brands (like Gold Peak tea). The real hot seat at Coke is Mary Minnick's innovation post, and it remains to be seen whether she will be able to bring some agility to the new-product machine." The company is testing barista-style coffee drinks in Toronto, and in November will launch Enviga, a sparkling green tea beverage that actually burns calories, in a joint venture with Nestle.
Hershey, the nation's largest candymaker, took another bite of the premium chocolate market with its acquisition of Dagoba Organic Chocolate, an Ashland, Ore.-based maker of natural and organic chocolate. Dagoba produces natural and organic chocolate bars, hot chocolate and chocolate-covered coffee beans sold in natural and gourmet food stores. Terms of the deal were not disclosed. The $20 million organic chocolate category grew 57.2% last year, compared to a decline of 0.1% for conventional chocolates, according to Nutrition Business Journal. Although organic line extensions of existing brands are faltering, marketers who acquired organic brands are finding more success. The organic segment in total saw a sales growth of 16.2% to $14 billion last year, NBJ reports. Hershey's other chocolate products include Hershey's Reese's, Kit Kat and Almond Joy. In a conference call with analysts yesterday, Hershey also lowered its sales and earnings growth projections for the year. Third-quarter sales rose 3.3% to $1.41 billion from almost $1.37 billion a year ago, an increase Chairman and CEO Richard Lenny attributed to strong Halloween shipments and sales of dark chocolate products. The company said it plans to spend more on marketing and merchandising in the fourth quarter to revive sales and margins because retailer orders of new products were disappointing, as they still have too much stock on hand of Hershey's limited editions candies. "After five years of outsized performance, Hershey has finally hit a wall this year relative to expectations, but still delivering growth any company in the industry would be happy to achieve," reported Credit Suisse. An A.G. Edwards analyst warned that the extra marketing spending could hurt 2007 earnings if retail sales remain sluggish.
Speaking to reporters at yesterday's meeting of the International Motor Press Association in New York, Jill Lajdziak, general manager of GM's Saturn brand, told of a trip she took to Washington, D.C. to meet a guy who runs a popular Web site for aficionados, called Saturnfans.com. She wound up at his kitchen table doing a live chat about Saturn. Lajdziak did it because back in 2001, when Saturn merged with GM, owners were concerned that the brand would lose its legendary reputation for customer service. The merger, she pointed out, was meant to produce economies of scale, and not just in terms of product development. "It was in all areas: I used to have my own separate market research team--we did our own research. Now I go right to Paul Ballew [GM executive director, market and industry analysis]. I have one of the best in the business doing research." Lajdziak said Saturn ("Like always, like never before") has a multi-pronged marketing strategy. It wants to lure buyers of Toyota, Honda and other imports by expanding its portfolio from just two vehicles to seven by the end of next year, while reassuring its current owners that the brand isn't toying with its brand equity in customer service. "Our goal for the company is to bring in people who would not have otherwise considered a GM product," she said, claiming that about 62% of Saturn buyers would not consider any other GM model. "We are [also] focused on making sure our 3 million owners we have today come along with us." The company will have launched four new products by the end of the year--including the Aura mid-sized sedan, the Sky roadster, Vue Greenline hybrid SUV, and a crossover, Outlook, which replaces the short-lived Relay. She also noted that Saturn's European sibling Opel will be the basis for future vehicles, such as a Saturn version of the European Opel Corsa compact. The importance of Saturn's current owners is reflected in the brand's loyalty numbers. According to Lajdziak, loyalty has begun an upswing after a decade-long decline. In the early '90s, 52% of Saturn customers bought a new Saturn when they were back in the market for a vehicle. In 2002, customer retention was down to 27.3%. "Now we are seeing 46% and 47% retention rates." Saturn's September sales were up 4.4% over the previous year. Lajdziak said Saturn will be GM's "green" brand, something she insists is inherent in its identity already. In addition to the Vue Green Line hybrid, the company will offer a hybrid version of Aura next year, and another hybrid in 2008. To promote the Vue Green Line, for instance, the company is running greenhouse events in three Washington, D.C. locations next week with Dwell magazine. The events include seedling giveaways, lectures on sustainability, cooking demonstrations, and the like. Saturn also represented G.M at New York's NexTrend confab last month, touting hybrid and hydrogen fuel cell technology.
Build-a-Bear Workshop is heading back to the Stone Age for Christmas. The company, which will have 300 stores in operation worldwide by the end of the year, is experimenting with Build-A-Dino. Based on the success of its first Build-A-Dino, which opened in T. Rex Cafe in Kansas City last summer, the company plans to open its second Build-A-Dino, a temporary holiday location in St. Louis, close to its headquarters, said Maxine Clark, founder and chief executive bear. "The new store is about 850 square feet of selling space and like our ballpark and zoo stores, will be unique to the brand while also highly identifiable as a Build-A-Bear Workshop brand extension," said Clark. Separately, national TV ads for Build-A-Bear started this week, and the company is also partnering with Warner Bros. for a "Happy Feet" movie tie-in, offering customers the chance to make their own Mumbles, the film's starring penguin. The company just announced that revenue for it fiscal 2006 third quarter increased 20.8% to $101.5 million, compared to $84 million in the prior year's third quarter, in part due to a U.K. acquisition. In the U.S., same-store sales fell 5.8%.
Even before most kids have settled on a Halloween costume, Wal-Mart has fired the first shot in the Christmas toy wars, cutting prices on more than 100 holiday toys. And the cuts will be tough for consumers to ignore. Wal-Mart, which also matches the advertised toy prices of competitors, lowered the price on Hot Wheels Radar Gun from Mattel down to $20 from $30; Amazing Amanda dolls are $69, down from $99; the Barbie Ride On is $199, from $229; Dora the Explorer Talking Kitchen is $65, from $90; and the Cadillac Escalade Ride On now costs $249, from $280. Of course, the cheapest toys aren't always the hottest toys, and none of the toys mentioned in Wal-Mart's release are from the Toys R Us hot toy list, released late last month. That "Fabulous 15" list includes such items as Blue Man Group Percussion Tubes, ESPN Fast Action Football, Kid-Tough Digital Camera and T.M.X. Elmo from Fisher-Price, and Wii from Nintendo. Calls to Toys R Us and KB Toys were not immediately returned. But marketers who are worried about whether price cuts too early might sour fourth-quarter results can head to Kohl's. That retailer, in an exclusive with Mattel, is selling boy's (in black and white) and girl's (in pink and white) Magic 8 Ball branded shoes. Each comes with a digital wristband, which can answer any and all questions--as long as "Ask again later" is an acceptable response. While Wal-Mart's first cuts may not have been the deepest, they won't be the last either. "Throughout the Christmas shopping season we will offer the best prices and merchandise that provides solutions for time-starved customers," the company said in making the announcement. "There's more to come."
Avon and Jane cosmetics will be the next beauty makers to jump on the mineral makeup bandwagon, a new category started by the rapidly growing niche manufacturer Bare Escentuals. The San Francisco-based Bare Escentuals has recently seen larger manufacturers offering copycat versions of its key product, BareMinerals, a powder-form foundation made without talc and preservatives, but with crushed minerals. Avon's new mineral-based foundation, called Smooth Mineral Makeup, is also touted as being made from "100% pure minerals" and free of fillers, but will retail for $10 for the SPF 15 foundation and makeup brush. Bare Escentuals, by contrast, sells an introductory kit of two foundation colors, Mineral Veil (which seems similar to a translucent powder), a blush-like product, and three makeup brushes for $60. Bear Stearns analyst Justin Hott said in a research report that for Avon "it's a positive sign of improved focus on the consumer and fast innovation." Jane's launch, due to hit store shelves in January, will at entry be a more comprehensive line than Avon's and other similar entries from Physicians Formula, L'Oreal, and Johnson & Johnson's Neutrogena brand. Jane's brand, called Jane Be Pure, will initially consist of 11 mineral foundation and "powder" items. Other items, such as mineral eyeshadows and blushes, are expected out in April, and all products will retail for under $7. Bare Escentuals, meanwhile, has gone from sales of $65 million in 2002 to $259 million last year, spurring on competitors by selling its products on QVC, in 30 stand-alone stores, and in Sephora.