This week Best Buy outlets around the country began selling in-box versions of OnStar, General Motors' telematics product that until now, has only been available in GM vehicles. As in GM cars and trucks, the new product, OnStar FMV (For My Vehicle), comes as technology integrated into a rear-view mirror assembly. To support the retail rollout, the company launches a national campaign on Aug. 1 with a theme that OnStar is now in a box, explains Greg Ross, the VP of business extensions for GM, who was in New York on Monday at Best Buy's flagship in Union Square. He tells Marketing Daily that the new effort "explains that all of the features, the technology, the engineering are packaged in a way that lets you easily put it in your car." He adds that Best Buy will be central to the message. "It will show people coming into a Best Buy and picking up OnStar." The effort, on prime time, cable and network, comprises a range of ads, an Internet presence and social media on its Facebook page -- which, per Ross, has 280,000 fans. "We have been using that quite a lot to get the word out about this," he says. "For example, we have a promotion running right now giving away [an OnStar] mirror every day to Facebook fans." Ross adds that Best Buy held a private sale [Sunday night] to Best Buy Reward Zone members in several hundred stores around the country. "The challenge, strategically, is we know a lot about how to do OnStar services, but what we don't know how to do is retail. So a partner like Best Buy helps a lot in things we might not have even thought about, like how to present OnStar at retail, and even what the box itself should look like." Ross says the new ads really aren't so much about what OnStar is, since awareness of the brand is already very high, although the ads do touch on key services surrounding safety and security. "The heroes in it are the box -- but also live-advisor support and service providers, whether it's emergency responders, fire, or police, because we spent a lot of time building strong relationships with those communities," he says. The company has been seeding the market in various ways for several months to get the word out, starting at the Consumer Electronics Show in January, where it was nominated for Best In Show. And then on "Celebrity Apprentice," part of which was actually shot in the Union Square Best Buy, the final challenge had contestants trying to communicate that OnStar is available in a box. "We knew we wanted to get that across, so it couldn't have been more perfect," says Ross, adding that the show brought in a lot of online opt-ins and queries about when the product would be available. "We are sending emails responses today," says Ross. "The great thing for us with these campaigns is that we already have a set of hand raisers. But we also have relationships already with six million [General Motors] customers, and a lot of them don't have exclusively GM cars in their households. Now they don't have to wait until they are in market for a new car to put in their existing vehicles." Ross says the first sale of the OnStar FMV was to an owner of a 2003 Ford Explorer, a reflection of where the opportunity is for OnStar as a stand-alone brand. "There's 230 million cars on the road, and people are keeping their vehicles six, eight, ten years," he says.
McDonald's' announcement of healthier Happy Meals and a commitment to achieving generally more healthy menu offerings in the longer term is meeting with largely favorable reactions from nutrition advocates, including First Lady Michelle Obama. The First Lady, the force behind "Let's Move!" and other initiatives to stem the obesity epidemic, issued this statement in response to the mega-QSR's announcement: "McDonald's is making continued progress today by providing more fruit and reducing the calories in its Happy Meals. I've always said that everyone has a role to play in making America healthier, and these are positive steps toward the goal of solving the problem of childhood obesity. McDonald's has continued to evolve its menu, and I look forward to hearing about the progress of today's commitments, as well as efforts in the years to come." On the Happy Meals front, the chain will begin including apple slices (a quarter cup/half serving) in each meal, a smaller size of French fries (1.1 ounces vs. 2.4 ounces), and a choice of beverage that includes a new, fat-free chocolate milk and 1% white milk (or soda, if requested by a parent). The new meals will start being introduced in September, with a goal of a roll-out to all 14,000-plus McDonald's units by Q1 2012. The chain told the Chicago Tribune that in consumer tests, parents and children rejected the option of completely replacing fries with a fruit or vegetable. McDonald's also reported that while 88% of customers are now aware of the Apple Dippers it introduced as a fries alternative in its Happy Meals in 2004 (and that it hasn't advertised fries-option Happy Meals since), just 11% of kids' meals are currently ordered with apples instead of fries. The caramel dip that was included with Apple Dippers is being phased out, as well. On the broader front, McDonald's committed, by 2020, to reducing added sugars, saturated fat and calories in its menu selections through varied portion sizes, reformulations and innovations. It also committed, by 2015, to reducing sodium by an average of 15% overall across its national menu items. The chain pointed out that it has already reduced sodium in its national chicken menu offerings, including Chicken McNuggets (a popular Happy Meal choice) by 10%, on average. McDonald's' announcement of this chain-specific initiative would appear to explain its conspicuous absence as a participant in the recently announced "Kids LiveWell" program, a voluntary restaurant industry initiative in which 19 leading chains have agreed to offer and promote items that meet nutritional criteria based on the 2010 USDA Dietary Guidelines. McDonald's has been a participant in the voluntary Council of Better Business Bureaus' Children's Food and Beverage Advertising (CFBAI) initiative since 2006. As reported in Marketing Daily, CFBAI recently announced stricter, more uniform guidelines for participating companies. McDonald's cited various testimonials in its nutrition changes announcement, including one from a member of the 2010 Dietary Guidelines Advisory Committee. "I applaud the commitments made by McDonald's today," stated Roger Clemens, adjunct professor of pharmacology and pharmaceutical sciences at the University of Southern California. "They have captured the intent of the Guidelines and have taken a reasoned, evidence-based approach that should have a positive impact on the millions of children and adults McDonald's serves every day." Marion Nestle, professor of nutrition, food studies and public health at New York University and a vocal critic of fast foods and packaged foods/beverages with high fat, sodium and sugar content, tells Marketing Daily that she is cautiously optimistic about the McDonald's announcement. "It's a step forward," Nestle says. "They've gone part way, although I wish they'd gone a little further. For instance, why not offer a half-cup of apples instead of a quarter cup? It's definitely positive that they're making the healthier choices [for Happy Meals] the default, rather than putting the onus on parents to order those options. But we'll have to wait and see. Will these meals sell as well? And if not, will they stick with it, or backtrack?" Even the Center for Science in the Public Interest (CSPI), the most all-around active consumer nutrition advocacy group, issued a largely positive response to McDonald's' announcement. "The improvements that McDonald's has announced for its Happy Meals are an important step in the right direction," stated CSPI executive director Michael F. Jacobson. "It's good news that those meals will all have apple slices, smaller servings of fries, and fewer calories. While we wish that Happy Meals would include a bigger serving of fresh fruit or vegetable, including even a small serving -- and without a sugary sauce -- as a standard component is a real advance. "McDonald's clearly has a lot more to do, for both kids and adults," Jacobson continued. "But this move is a sign that the company recognizes that parents don't want burgers, fries and soda to be the default fast-food experience. And surely, McDonald's recognizes that policy makers are becoming increasingly interested in ensuring that healthier foods are marketed to children." Still, AtlanticWire writer John Hudson observed that the pledges for 2020 "seem like a pretty long time away." In conjunction with its nutrition change commitments, McDonald's announced that it is launching a number of supporting initiatives. These include expanding in-restaurant, brand Web site and mobile communications nutritional information, coupled with supporting marketing efforts, according to the company. The brand's first mobile app (see graphic) offers nutritional information for menu items, along with a location guide to the chain's restaurants. McDonald's USA president Jan Fields, with other senior U.S. executives, will launch a national "listening tour" in August, to hear direct input from parents and nutritional experts, according to McDonald's. McDonald's also reports that it is establishing an online parents' forum area, as well as a "Kids' Food and Nutrition Advisory Board," comprised of parents and experts in children's nutrition, education and behavior, to develop "effective nutrition and active lifestyle marketing messages and programming for kids." The company says it will also form an agreement with a third-party organization to "collaborate on a comprehensive measurement process that sets benchmarks and annual progress against commitment goals, which will be reported publicly." As the largest-selling QSR, McDonald's has come under increasing fire in recent times from consumer nutrition -- and particularly children's nutrition -- groups. Last year, two California counties banned offering toys with meals unless the meals met specific nutritional standards, and similar legislation has been proposed in New York. A California state court recently denied McDonald's' motion to have the Happy Meals lawsuit moved to federal court, which is considered more friendly to corporate interests than state courts. McDonald's' iconic mascot, Ronald McDonald, has also come under increasing heat from various children's nutrition advocacy groups, and from some shareholders. But McDonalds's CEO Jim Skinner has been adamant in stating that the mascot is an "ambassador for good" (re the Ronald McDonald House Charities) and a beloved, rather than unhealthy, influence on children. Most recently, at the annual shareholders' meeting in late May, Skinner reported that media ads paid for by a group seeking to retire the Ronald McDonald character had prompted an outpouring of feedback from customers asking that McDonald's "defend their right to choose."
Wyndham Hotel Group is launching a global marketing campaign for its Tryp brand as well as the debut of the brand's revamped consumer Web site. The revamped site, www.tryphotels.com, is available in five languages: English, Spanish, German, Portuguese and Brazilian Portuguese. Featuring the slogan "This is my Tryp," the campaign will be seen online and in print and is already embedded in the brand's Web site, hotel collateral and signage. It is Tryp by Wyndham's first new global marketing campaign since Wyndham Hotel Group acquired the brand last year from Meliá Hotels International of Spain. The brand will introduce its first location in North America in the fall, the 173-room Tryp New York City Times Square South. The brand also expects to open hotels in Panama City, Panama, and Bogotá, Colombia, later this year. By reintroducing the new Web site in several languages, the brand hopes to better accommodate travelers in key feeder markets and connect with its customers in their own language. The Web site will be updated frequently to feature promotions and offers aimed at those who shop online for urban hotels in key cities globally. Visitors to the site also can share hotel information and offers via social sites, including Facebook and Twitter. The site's "Our Cities" section provides them with a variety of travel tips, information on city hotspots. The new "This is My Tryp" campaign, created by the brand's marketing agency, Miami-based Navigant, is part of a broad, multifaceted effort to market it as a global cosmopolitan brand that resonates with travelers around the world. The campaign reflects extensive consumer research, which considered current consumer trends, including what travelers expect from mid-priced hotels. Based on the research findings, the marketing copy reflects verbiage used by its Gen X and Y target audiences as well as imagery that captures the notion of traveling throughout the world's best-known cities. Test results indicated that after seeing the new marketing campaign, two-thirds of participants in the United States agree that Tryp by Wyndham hotels are located in "cool" cities and that Tryp by Wyndham is the kind of hotel brand they'd like to stay with during their travels.
Even as bookstore fans are lamenting the liquidation of Borders, marketing experts are dissecting what went wrong in the very slow death of the Ann Arbor, Mich.-based retailer. Marketing Daily asked Robert Passikoff, founder and president of Brand Keys, which measures customer loyalty, for his take. Q: So what do you think ultimately caused this chain, which was once a bright light in the book world, to fail? A: It's been said that a good book tells the truth about its hero, and a bad book tells the truth about its author. But the liquidation of this 40-year-old chain ultimately tells the truth about the brand and how it was managed. It's been more than half a decade since Borders declared an actual profit, and has lost a billion-plus dollars since. That's occasional shopping, not the kind of customer loyalty that drives profitability. Q: Why? A: For one thing, Borders was egregiously bad at identifying consumer product and lifestyle trends, introducing candles and stationery, CDs and DVDs at a time when consumers were moving in other directions. Q: You mention you've been analyzing the email Borders sent their customers to explain the liquidation, and inviting them to shop at close-out locations. Are there more clues there? A: Yes. Take this part: "We had worked very hard toward a different outcome. The fact is that Borders has been facing headwinds for quite some time, including a rapidly changing book industry, the e-Reader revolution, and a turbulent economy." This is like Krispy Kreme blaming the Atkins diet on its brand-positioning blunders. It's true that the book industry has changed, and the economy has been wonky -- but volumes of competitors, from Barnes & Noble to Wal-Mart, have managed to take away market share and customers from Borders in that same economic environment. Borders was late to the Web and late bringing e-tailing into their marketing mix. In fact, despite their "very hard work," Borders actually contracted out their e-commerce business to Amazon.com -- it drove customers to an actual competitor. Q: Many people are seeing this as a loss to communities, where Borders was sometimes the only bookstore.A: They weren't adding much to communities, at least not recently. If you're a retailer, loyal and engaged customers are six times more likely to visit your locations. Consumers are looking to be delighted, and only real brands that can engage customers can do that. Loyal customers follow "The Rule of Six": they're six times more likely to rebuff competitive offers, and six times more likely to invest in your company. In 2008 Border's stock was 35¢ a share. Last year it was still under a dollar. Amazon's shares were being traded at $215. Q: So it won't be missed? A: No. The email also said: "My sincerest hope is that we remain in the hearts of readers for years to come." But this brand is bankrupt in funds and bankrupt in meaning. How many consumer hearts today beat wildly for the likes of Caldor, Spiegel, Bennigan's or WashingtonMutual?
When people say they're buying consumer electronics "for the kids," they may just be telling the truth. According to new research from the NPD Group, it seems many consumer electronics purchases were completed with the express purpose of letting the kids use them. According to the company, 78% of portable video game systems purchased and 56% of portable digital media players were given to kids. At the same time, the research company found there are almost as many kids using computers (73%) as are using televisions (74%). Three-fifths of kids (60%) are using a portable or console gaming system. A child's presence is also driving adoption of newer technologies. Among households with a child between the ages of 4 and 14, e-readers and media tablets were acquired at 8% and 5% rates, respectively, over the past year. Of course, with the increase in consumer electronic options, something has to give. According to NPD, the number of days in which children use cell phones, personal digital media players and portable video game systems has declined. That, however, may be short-term as new devices still have a novelty factor to them, says Anita Frazier, industry analyst at the NPD Group. "Kids who have access to a media tablet may temporarily put down their portable video game system but not necessarily move away from the gaming system altogether," Frazier said in a statement. In the meantime, in households with kids ages 4-14, consumer electronic pricing is still the most important driver when it comes to deciding where to purchase an item. Because of the easy ability to compare products and prices, many families are making their CE purchases for children over the Internet rather than in brick-and-mortar retailers. "Obviously, consumer electronics devices carry a hefty price tag as compared to something like a toy item," said Frazier. "Online shopping gives purchasers an easy way to seek out the best prices and offers."
Despite the economy and trends to the contrary in other industries, leading U.S. food and beverage makers have ample cash -- and their growth strategies call for using that to make acquisitions over the next few years, according to a new survey of senior food/beverage executives from KPMG LLP, the U.S. audit, tax and advisory services firm. Nearly two-thirds (62%) of the 100 executives interviewed in June reported that their companies have significant cash on hand for acquisitions and expansion into new markets, and fully 67% said they expect to be involved in a merger or acquisition as a buyer or seller within the next two years. Thirty-nine percent said their cash will be deployed this year, and another 39% said this will happen in 2012. In addition, 58% said their companies will increase capital spending over the next year (with half projecting increases of 6% or more) for acquisitions, new products and services, facility expansion and information technology. The executives indicated that "they will drive revenue, while dealing with pricing pressures, by focusing on retaining and adding new customers," reported Patrick Dolan, KPMG's national line of business leader. One-quarter of respondents were from companies that had annual revenues of more than $10 billion in their most recent fiscal years, one-third from companies with revenues of $1 billion to $10 billion; and 42% from companies with revenues of $100 million to $1 billion. However, the executives also acknowledged significant challenges and hurdles to growth. More than half (54%) cited pricing pressures (54%) as their most significant growth barriers within the next year, and 40% cited volatile commodity/input prices. Labor costs and lack of customer demand were cited by 25% and 20%, respectively. While looking to further reduce costs and improve working capital through supply-chain and other operational improvements, the companies' primary focus for the next year is organic growth. And nearly three-quarters (72%) said that customer data analytics -- which enable understanding and adapting to changing consumer behavior, as well as better interfacing with consumers -- are central to achieving growth objectives and realizing competitive advantages. The executives' outlook for the overall economy is decidedly mixed. While 54% expect the economy to improve next year, 37% expect little change. As for a full recovery or turnaround, 30% expect that to happen by the end of 2012, 35% by the end of 2013, and 32% by the end of 2014. Most (61%) expect their revenue to be moderately higher a year from now, and just 7% expect significant revenue gains. Still, the moderately optimistic outlook will add some jobs. Nearly half (46%) said they plan to add personnel next year, although 38% expect an increase of less than 6%. More than one quarter (27%) expect headcounts to return to pre-recession levels by the end of this year, but nearly as many (23%) don't expect that to happen until the end of 2014 or later, while 14% expect it to happen by the end of 2012, and 13% by the end of 2013. The least positive news: 19% expect that headcounts will never return to pre-recession levels.
Unless one is really focused on the luxury car -- and the driving experience -- all of that leather, muscle, nicer buttons, six ventilating fans under one's butt, the high-end speakers, the admiring glances and the nameplate that screams "I'm Hamptons bound" doesn't provide much over the long haul. In other words, you may really love what that new luxury car does for you at the test-drive and in the days after you've purchased the new premium car -- but after a few weeks of ownership, the experience of driving pretty much becomes the visceral version of gazing at a traffic jam from an overpass: it's kind of all the same, whether econobox or Maserati. That insight, or a more prosaic version of it, is the takeaway from a new study published in the current issue of the Journal of Consumer Psychology by Norbert Schwarz of the University of Michigan and Jing Xu of Peking University. The study asked why it is difficult for people to learn from their own consumption experiences. Specifically, why is it that drivers of luxury cars believe that their car is a major source of joy, although their experience is usually what they would have in an economy car. "Almost everyone assumes that driving a luxury car is more enjoyable than driving an economy car, but the reality is more complicated," said Schwarz, professor of marketing at Michigan's Ross School of Business, in a release on the study. "When drivers focus on their car while driving, a luxury car is indeed more fun than an economy car. But most of the time, the driver's mind is preoccupied with the mundane issues of daily life and the car makes little difference." The researchers report that they gauged U-M students on the intensity of their experience of 10 positive or negative emotions while driving a BMW, a Honda Accord or a Ford Escort. What the students expected was that the intensity of their positive feelings would increase with the value of the car. And indeed, their experience pretty much matched their expectation. The researchers then asked other survey respondents who were not students what kind of car they drive and then how they usually feel while driving it. Like the students, the greater the value of the vehicle, the more positive emotions. But for both of these groups, the questions were preceded by identification with the vehicle. What if the vehicle is taken out of the equation? To test that, the scientists asked a new group to recall their most recent commute to work or the last time they drove their cars for at least 20 minutes, regardless of the nature of the trip. They were then asked how they felt while driving during those specific trips. This time, the value of the car made absolutely no difference in drivers' reports of how they felt. That's because it was not until the end of the survey that they were asked what kind of car they drive (versus at the outset in the initial two groups.) Said Schwarz, who is also a psychology professor and research professor at U-M's Institute for Social Research: "During the test drive of a new car, our attention is focused on the car, and the more luxurious it is, the better we feel while driving it. This experience is real, visceral and compelling." But, he says, people forget that after a few weeks of ownership, "it no longer captures all of our attention and other things will be on our minds while driving. As soon as that happens, we would feel just as well driving a cheaper alternative."