Casual dining chains are seeing an improvement in business, driven in particular by more affluent customers and business/travel entertaining, Darden Restaurants, Inc. executives confirmed during a Dec. 21 analyst conference call for the company's fiscal 2011 second-quarter results. But the executives also cautioned that the pace of economic recovery continues to be uncertain, and provided real-life evidence -- in the form of recent marketing miscalculations for Red Lobster -- that less affluent consumers are still very value-focused. Darden -- also owner of Olive Garden, Longhorn Steakhouse and specialty chains such as The Capital Grille and Bahama Breeze -- reported a strong quarter, with diluted net earnings up 26%, to $0.54, and total sales (including those from new restaurants) up 5.2%, to $1.73 billion. The company affirmed its outlook of net EPS growth of 14% to 17% for the full fiscal year. Darden's results included gains in returns and absolute operating profits for all three of the largest chains, and same-restaurant sales gains of 2% and 6.8%, respectively, at Olive Garden and Longhorn, or 1.4% combined growth. That exceeded the 1% same-store sales growth seen by the restaurant industry as a whole (excluding Darden) for the quarter, according to Knapp-Track industry benchmarking data. However, Red Lobster sales for the full quarter dipped 1.6%, on top of a 1.7% same-store decline for the chain in the first quarter of the current fiscal. While Darden drew praise from analysts for employing short-term, brand-distinctive promotions rather than deep discounting during the period when full-service restaurants were hardest-hit by the economy, its management confirmed that Darden is now looking to return promotional calendars and marketing emphases to being more in line with those typical prior to 2008-09. Pulling back from promotions is proving to be more challenging with Red Lobster than with other chains, however. With Red Lobster, this will take "more time" and "a high level of skill," the executives acknowledged, in part because Red Lobster's customer base is somewhat lower-income than the other chains. Darden has been repositioning the Red Lobster brand to have a more sophisticated image conveying greater value for the money -- including remodeling units with a Bar Harbor motif and shifting from an emphasis on fried fish to more fresh, grilled offerings. Simultaneously, it has been introducing more menu items at the $15 price point that is the "sweet spot" for its customers. The strategy is aimed at countering declining performance created by cost-conscious consumers perceiving its prices as too high. (The average check size was $19.25 to $19.75 last year, according to media reports; Darden executives now report it is between $18 and $19, which is still somewhat higher than the average for casual restaurants.) However, two recent Red Lobster promotions -- a summer Crabfest and the fall's Endless Shrimp deal -- fell short of expectations, partly due to an underestimation of the continuing level of Red Lobster's customers' sensitivity to pricing. Last quarter, the chain's sales decline was attributed in large part to what turned out to be an overly optimistic decision to up the Crabfest's well-received $12.99 test price to $14.99 in rollout. In the latest quarter, the chain's sales decline reflected the full impact of the Endless Shrimp promotion's disappointing results -- which in addition to starting two weeks later than last year's, was reduced in duration by a week (back to pre-recession length), based on the context of the improving overall casual dining scenario, according to Darden. During the Q2 results call, Darden executives also noted that during the Endless Shrimp promotion's first few weeks, the chain was offering the shrimp deal at $15.99 (same price as recent years) in some locations, but $16.99 in others. Furthermore, there was no television advertising support during the first week of this year's promotion, in contrast to heavy TV support during the same juncture in the previous year's promotion. Instead, the chain shifted spending to digital marketing. Darden corrected the pricing issue quickly, moving to a uniform $15.99, and same-store sales, after declining 6.6% in September, were up 1.8% in both October and November. But the initial reliance on digital advertising -- sans TV -- is a media strategy that is not likely to be repeated, the executives said. For the Red Lobster customer base, television advertising clearly continues to be critical, and it seems premature to rely too heavily on digital marketing, they acknowledged. Overall, Darden is learning that its success formula for Red Lobster must combine "crave-able new dishes" and messaging that provides "absolute price certainty" for consumers, along with strong advertising creative, the executives said. This does not necessarily mean offering exceptionally low price points for every promotional item, but making it clear what the price points are -- for instance, spelling out that there are three different combinations/price points available in the chain's current surf and turf promotion, "all under $20." For the Longhorn Steakhouse chain, a media strategy shift of employing national cable television for a month to support a $29.99 dinner for two promotion, rather than the standard spot cable and spot network, succeeded and will continue to be used for select promotions, Darden said. Red Lobster's remodeled units are resulting in sales lifts of 4% to 5%, while Longhorn's (less extensive and less expensive) remodelings are resulting in sales lifts of 3% to 4%, the company reported.
Wal-Mart's "Help Home Feel Closer" ad beat out more than 85 other holiday-themed ads, according to Ace Metrix, which evaluates the creative effectiveness of TV ads. Victoria's Secret, which aired multiple TV ads this holiday season, garnered the highest campaign score, driven largely by high "attention" scores from men. The Wal-Mart spot, featuring Procter & Gamble's Operationfamilyconnect.com promotion, resonated across all demographic groups with its philanthropic message. It scored more than 100 points above the retail ad norm for "likeability" and "attention" and more than 90 points above the average for all ads in the Ace Metrix database of nearly 8,000 national ads. Wal-Mart's ad scored a 623 out of a possible 950 points, says Peter Daboll, CEO of Ace Metrix. It was effective partly because of what it did not do -- focus on sales and events, he adds. Consumers have learned to tune these promotional types of ads out. Messages about what companies are doing for them resonate much better, he says. "Consumers just don't respond to the 'buy it now, you idiot' sales messaging," Daboll tells Marketing Daily. Philanthropic ads for major brands continue to show strong advertising value, he says. "I think the trend of philanthropy will continue," Daboll says. "We have seen some great success of ads from companies such as Starbucks and Wal-Mart, where consumers are looking for more than the typical messages. To earn their business you need to be a good citizen, too." Despite Victoria's Secret's polarizing effect between men and women, the ads were consistently top-scoring, a hallmark of campaign success, Daboll says. Both Wal-Mart and Best Buy, which had the top two ads overall, did not fare as well on the campaign level because of the gap between their high-scoring and lower-scoring ads. Victoria's Secret and Overstock.com, on the other hand, had consistently high-scoring ads. The scores are based on viewer reaction to national TV ads. Respondents are randomly selected and representative of the U.S. TV viewing audience. The results are presented on a scale of 0-950, which represents scoring on creative attributes such as relevance, persuasion, watchability, information and attention. Ace Metrix's criteria, (did it persuade consumers to do something, increase their desire, change their opinion or provide useful information) is much different than "did the consumer like the ad" which is the criteria for the recently released NRF ad list. The NRF reported that Target did well, while their ads did quite poorly in the Ace Metrix rankings vs. both Wal-Mart and Kmart.
American Suzuki's Kizashi sport sedan has gone some ways toward raising both awareness for the automaker, whose name many people still associate with two-wheeled transport, and sales. Next year, the company will put most of its marketing dollars behind the car with a campaign centering on a series of ads showing how the Kizashi fares against the competition. Except in this case, the competitive set is not other mid-sized cars but luxury sports sedans by Audi, Volvo and Mercedes-Benz. The campaign, comprising three 30-second TV spots and two 15-second ads, touts Kizashi for its handling, safety and performance -- with the takeaway that one doesn't need a premium badge and price point to get a premium experience. The ads -- each of which show the Kizashi in side-by side track tests versus either Audi's A4, Mercedes-Benz C-Class or Volvo's S40 -- also have a humorous twist, as they also pit Kizashi against a motorized sofa, a man completely encased in a bubble-wrap suit and a stretch limo. One of the spots has Kizashi beating the Audi A4 -- and the motorized sofa -- in braking, cornering and quietness tests. In another, the car is touted for having more airbags, better road-holding grip, superior braking performance and a higher safety rating than the Volvo S40. In that ad, the guy in the bubble wrap is safe until a few dogs take a liking to popping the bubbles. There will also be a new Web site for the "Kizashi Kicks" campaign -- Kizashikicks.com, set to go live this week. The site will have the ads as well as interactive animation, videos, tools for consumer input, and links to the Suzuki Auto site with dealer locator, build and pricing features. Steve Younan, director of marketing for the Brea, Calif.-based American Suzuki, tells Marketing Daily that the media plan is focused on the automaker's key markets versus a national network buy. "Our first market for the campaign is the Southern region; then we will roll into the Northeast and upper Midwest and then the Pacific Northwest through the end of March." He points out that the effort targets upscale vehicles because the automaker is targeting consumers who aspire to own a luxury performance sedan, not a mid-market car. The spots will air initially on programs like NBA Christmas Day, Academy Awards, the Grammys, NFL regular-season games, Tournament of Roses Parade, AFC Championship game, NCAA Tournament, "Survivor," "30 Rock" and "The Mentalist." Then in January -- when the ads roll into major East and Midwest markets like New York, Providence, Roanoke, and Chicago -- the spots will air on shows like the Academy Awards and its Red Carpet Special, the NFC Championship, NCAA Tournament, "Dancing with the Stars," "American Idol," "House," and "Desperate Housewives." "Kizashi was designed to appeal to buyers who want to own entry luxury vehicles in the future," says Younan. "It was designed to deliver quality and handling at a price within reach of all buyers more or less. That's the story we want to tell. And the campaign also has that breakthrough factor that makes it memorable -- that helps us break through the TV clutter." Rob Siltanen, creative director of Siltanen & Partners Advertising, tells Marketing Daily that those "breakthrough" humorous elements in the ads are intended to poke fun at the competitive test-drive theme. "There have been a lot of competitive ads out there so we wanted to do it in our own fashion. This car has very serious technology going for it, but we wanted also to add a wink and a smile, as part of the whole Kizashi Kicks theme." Siltanen says the bubble wrap guy in the Volvo comparison ad was a last-minute change, as Suzuki had planned to make the third spot a comparison with Acura's TSX. "Steve said 'we have all these claims against Volvo, so why not do one focused on safety and replace Acura with Volvo?' That was a couple of days before shooting, so we worked over the weekend and came up with bubble-wrap thing." Younan says the car is not just the halo for the brand, but the breadwinner, as it resides in the highest-volume segment of the car market. "We are running these TV spots at same time we will be running full-line ads that include Grand Vitara and SX4, our other key vehicles. Those ads will phase out." "Kizashi is the centerpiece of the brand, not just a halo," adds Siltanen. "So with limited ad dollars, we needed to focus in on that car." Seventy-five percent of Kizashi buyers have not bought Suzuki before, according to Younan, who adds that the median age of Kizashi buyers is mid-40's and that they are about 60% male.
While people often take their time finishing up their Christmas shopping, it looks like there are better excuses this year. In addition to continued worries about their own finances (after all, it's no accident that Merriam-Webster just made "austerity" the No. 1 word of the year, and that "pragmatic" came in second), many are convinced that the longer they wait, the lower the prices will go. PriceGrabber, owned by Experian, surveyed consumers, and as late as Dec. 7 found that 43% were planning to shop right up until the whistle this year, with 41% of those saying it is because they are sure they can get better prices in the Dec. 21-24 framework. In a poll by Eversave, a couponing site, 91% of shoppers say they are finding this year's last-minute sales to be better than -- or at least as good as -- last year's. Nielsen Co. reports that 46% of Americans are shopping this week, with 20% of those doing so in order to take advantage of last-minute deals. About 40% use the evergreen excuse that they are just too busy. And about 18% say they do it because they enjoy shopping that last week of Christmas. While the winners this year seem to be department stores, with 74% of the Nielsen sample shopping there, nearly half will also be at supercenters/mass merchandiser stores. (Walmart polled its Walmart Moms group and found that 77% still have gifts to buy.) The good news is that cash registers are really ringing: The International Council of Shopping Centers says that in the last week, ending in "Super Saturday" (the nickname retailers give the last Saturday before the holiday), sales rose 1.7%, and on a year-over-year basis, jumped 4.2%. That's good news, since retailers had worried that consumers' earlier-than-usual shopping would slow last-minute spending. Last week, the National Retail Federation upped its holiday forecast to an overall gain of 3.3%.
American Express is back with the NBA after a five-year absence, but this time the financial services company has a big footprint and a focus on offering its cardmembers privileges around NBA games and events. The company has signed a multiyear partnership that makes it firm Official Card of the NBA, USA Basketball, the Women's National Basketball Association (WNBA), and the NBA Development League (NBA D-League). American Express last had a sponsorship involvement with the NBA from 1995 to 2005. As the Official Credit Card Partner of the NBA, American Express will give cardmembers entree to regular-season and playoff games, the NBA All-Star, the NBA Draft, and "NBA Games - London 2011," the league's first-ever regular-season games in Europe. Cardmembers will also get into events associated with the WNBA and NBA D-League events. American Express will also launch a similar raft of loyalty programs as an Official Partner of USA Basketball. Cardmembers will have access to exhibition games leading up to the summer 2012 Olympics. Perks include game tickets, access to USA Basketball receptions and chances to meet members of the USA Basketball team and coaching staff. Says Courtney Kelso, VP, global sponsorships marketing, American Express: "When we develop partnerships we want to create an opportunity for our cardmembers to have a deeper level of engagement and enhanced access to the things that they love. "This idea is true across all of our various entertainment partnerships including music, fashion and other sports like tennis and golf. Our partnership with the NBA means that cardmembers now have a new perspective of the game through exclusive ticket offers, meet and greet experiences with players and legends, and more. Emilio Collins, NBA's SVP of global marketing partnerships, says American Express will also expand the roster of individual NBA teams it sponsors and therefore, the breadth of opportunities around team games and events for Amex cardmembers. The company currently sponsors the Boston Celtics, Los Angeles Lakers, New York Knicks, and Washington Wizards. The league says cardmembers will get loyalty perks such as tickets, access to NBA-themed hospitality events, behind-the-scenes access and opportunities to meet NBA legends and players. The NBA, on Amex's behalf, has also developed a customized entertainment series around All-Star Weekend of which American Express will be presenting partner. The NBA All-Star Entertainment Series will comprise performances in Los Angeles over the course of the weekend of the NBA All-Star 2011 game there, and around the events that are part of it. "We customized it together with them," says Collins. "It's no secret that American Express is heavily involved in music and entertainment, so we thought -- given how high a profile this is -- that it was a natural fit to partner with them on this sort of program." The American Express deal with the NBA includes media real estate on NBA channels. But while Collins says the league and company are considering how to execute on that via co-branded content, both he and Kelso add that the media buy is not a central element of the partnership. "The program at this point is really focused on getting cardmembers access to tickets, experiences and behind-the-scenes content," says Kelso. Collins adds that the size of the deal makes Amex a top-tier sponsor. "They really are taking ownership positions across all of our properties. Only a handful of brands are activating to that extent."
Marketers looking to reach the growing Hispanic community in the United States may want to emphasize their mobile programs. According to new information from Scarborough Research, cell phone usage among the Hispanic population is increasing at a faster rate than it is among the general population. According to the research, Hispanic cell phone usage increased 25% since 2005, compared with 18% for all adults in the U.S. With nearly exact usage rates among adults (84% of total adults use cell phones, compared with 82% of Hispanic adults), the research suggests not only that the usage rates are increasing among Hispanics, but that they may have reached a saturation point among the general population. "[Hispanics] are the opportunity market," Alisa Joseph, vice president of advertiser and marketing services for Scarborough Research, tells Marketing Daily. "This is really the ideal niche way to reach the Hispanic market." Smartphone adoption is also increasing among the Hispanic population. Currently, 19% of Hispanic adults live in a household that owns at least one smartphone, compared with 5% in 2005. That growth rate is on par with the general population; 23% of the general population owns smartphones, compared with 9% in 2007, according to Scarborough. Hispanics are also more likely to use their devices for other purposes than simply talking on the phone. They text at greater rates than the general market (64% vs. 56%), download music at greater rates (22% vs. 15%), play games more often (19% vs. 15%) and access social networks more often (12% vs. 10%). "The rise of smartphones and apps is redefining mobile marketing," Joseph says. "As this industry continues its rapid evolution, the importance of Hispanics as mobile marketing targets will only continue to expand." Scarborough's research hews closely to that conducted by Hispanic marketing agency San Jose Group, which found that Hispanics spend more hours per week on social networks than the general population (2.4 vs. 1.7), blogging (1 vs. 0.7) and more time accessing the Internet through their mobile phones (1.1 vs. 0.4). "Retailers have the opportunity to intertwine disciplines to effectively engage these consumers and transform them into brand ambassadors," said agency president George L. San Jose, in a statement. "It is essential for them to incorporate interactive content that can naturally be implemented and executed in their day-to-day social life."