The chief executive officer of SiriusXM wrote an email that was sent out to subscribers earlier this week explaining the recent rate increase and options for customers who want to avoid them. CEO Mel Karmazin says he spends “much of my time focused on satellites, programming and employees, which are all very important, but nothing is more important to me than our subscribers.” The “modest” increase of $1.54 a month -- or as the email broke it down, about 5 cents per day – is on the “Select” package. It will take effect on customers' next renewal date. It amounts to a 12% increase. Analysts called the raise “more than fair” and did not take the company to task the way Netflix was raked over the coals after it introduced a new pricing structure last summer that increased some rates by as much as 60%. Still, the CEO tried to soften the blow, acknowledging that nobody ever likes having to pay more for something. “Because we know this increase comes during challenging economic times, we have provided some options below that you may want to consider, including several ways you could save,” Karmazin writes. Options suggested include switching from paying by invoice to credit card or debit card billing, which saves $2 per billing cycle. Customers can also take advantage of an annual plan discount, which is like paying for 11 months and getting the 12th month for free. Conversely, “Select” customers can upgrade to the “All Access” package, which offers a bundled price for access to the satellite radio channels on computer, smartphone or other mobile device for a bundled price. “As we continue to add exciting new content and find more ways for you to enjoy our programming, we will work hard to control costs and create efficiencies to ensure SiriusXM continues to be the best value for your entertainment dollar,” Karmazin writes.
McDonald's Corp. CEO Jim Skinner, 67, will retire on June 30, and the board has elected Don Thompson, who became president and COO in January 2010, as his successor. Skinner will also retire from McDonald's board, where he serves as vice chairman. During Skinner’s eight years as CEO, McDonald's' compound annual total shareholder return was 21%, and its market capitalization surpassed $100 billion for the first time in its history. Since 2004, McDonald's' stock has tripled, making the global QSR giant the best performer in the Dow Jones Industrial Average since then, according to Bloomberg. Its revenue has grown 42% since 2004 (to $27 billion in 2011). McDonald's now has more than 33,500 locations worldwide, 80% of which are franchised. Skinner is a 41-year veteran of McDonald's, having joined the company as a management trainee in 1971. Thompson, 48, has been with McDonald's for 22 years, starting as an electrical engineer. Prior to becoming COO, he served as president of McDonald's USA from 2006 to 2010. He will assume his CEO duties as of July 1. His successor as COO has not yet been determined. Analysts interviewed by Bloomberg and other media outlets predict a seamless management transition. In contrast to most competitors, McDonald's managed to increase sales and earnings through the worst of the recession. It has realized global comparable sales gains for nearly nine years running, and even U.S. comp-store sales were at least flat to slightly positive in most periods during the height of the economic downturn. U.S. comp sales momentum has been particularly strong in recent months, driven by sales of beverages and core menu items. In February, U.S. comp sales rose 11.1%, versus 2.7% in February 2010. McDonald's credited Skinner's leadership and role as one of the architects of its "Plan to Win" for driving McDonald's revitalization and performance. That strategic framework, in place since 2003, emphasizes "being better, not just bigger." It has been behind McDonald's' modernizing of its restaurants and increased menu variety, including healthier offerings such as salads and, most recently, healthier versions of its kids' Happy Meal. However, while the U.S. restaurant industry is showing continuing signs of recovery as the economy improves, and developing markets continue to offer major growth opportunities, Thompson's challenges in continuing McDonald's growth and performance record include rising input costs and intensifying competition. McDonald's expects its input or ingredients costs to rise this year by as much as 5.5% in the U.S. and 3.5% in Europe. In addition, although its nearest competitors still have significantly smaller revenues, all are pushing aggressively to grab some market share from McDonald's. Starbucks, the nation's second-largest restaurant chain (2011 global net revenues of $11.7 billion), just opened its first Evolution Fresh store, stressing juices and healthy, convenient menu offerings. No. 2 U.S. restaurant chain Subway has made strides against McDonald's, and is heavily marketing its relatively new offerings in the critical breakfast daypart. No. 2 burger chain/no. 4 overall restaurant chain Wendy's is also testing breakfast offerings in some U.S. locations, and scored gains against McDonald's with its introduction of natural-cut fries with sea salt.
Fully 43% of morning eating/drinking occasions among Americans age two and up consist of beverages-only, according to a “Morning MealScape 2011” study from The NPD Group. Coffee accounts for 30% of all instances of morning beverage consumption (including beverages consumed with food). Tap water and milk are the second and third most-popular morning choices. For the study, NPD surveyed 27,129 U.S. consumers (parents answered on behalf of their children between the ages of two and five), asking them to report on their consumption behavior during the previous day between the time they got up and 11 am. Nearly a quarter (24%) reported consuming a small or “mini” meal; 21% a full/complete meal, and 11% a snack. Just over one in three (38%) reported just one morning eating or drinking occasion on a typical morning, while 41% reported two or more. The average number of morning eating/drinking occasions per person is 1.4. Based on the population, that totals to an estimated 420 million such occasions per day, or 153 billion per year. “By developing versatile products, and positioning products as both a meal and a snack, food companies can meet consumers’ varied morning meal needs and maximize sales volume,” noted Dori Hickey, NPD director, product management and author of the study, which reports on the situational and attitudinal factors that drive morning food/beverage choices.
Kohl’s new spring advertising campaign stars three of America’s best-known Olympians, showcasing Dara Torres, Mia Hamm and Lindsey Vonn as shopping superstars. It’s the first time the retail chain has used athletes in its ad, and the “Shop to Win” campaign follows the three athletes as they experience the store’s fashion assortment, brands and value. Aimed at value-conscious women who are seeking style, the campaign is running on primetime TV, digital and social media, Kohls.com, and radio. In each spot, an athlete sits in talk-show mode, explaining the thrill of competition, and of performing “in the zone.” “I get pretty excited when I score,” confides Hamm, who then explains that she means finding a leopard-print bag on sale. “The adrenaline rush….it’s addictive,” says Vonn. “I’m not talking about skiing. I’m talking about shopping.” The Menomonee Falls, Wis.-based chain say it expects the ads to appeal to deal-seeking women who pride themselves on their ability to track down savings and pounce on deals, and see shopping as something of a blood sport. Additional footage will show each athlete in “haul” mode, showcasing her favorite items and highlighting things she found on sale. Separately, Kohl's also announced a new “American Idol” line, called Authentic Icon, beginning next month. The “AI” line, positioned in the junior's and young men's departments, will be available in Kohl's stores through June, to coincide with the show’s 11th season. Kohl's will be the exclusive retailer and support the brand with marketing such as national advertising, in store graphics, online and digital media, direct mail and public relations. The chain, which had a rough holiday season, recently reported a 2.1% decline in comparable store sales in its fiscal fourth quarter, but says it is continuing to see “considerable brand excitement for its Rock and Republic, Jennifer Lopez and Marc Anthony brands, and expansion of the successful Elle and Simply Vera Vera Wang brands into new categories."
Here is part two of Marketing Daily'sinterview with Ram truck brand’s Marissa Hunter, who heads up marketing communications for Chrysler's Ram Truck brand. She talks about how the brand is reaching potential customers and using social media and event marketing to do it. Part I ran on Wednesday. Q: In terms of the truck market, how are you defining the Ram customer as distinct from other truck brands? A: We look at our target opportunities in a few different ways. There are definitely lifestyle categories that we want to talk to and there are vocational, work and commercial audiences we want to talk to -- and it's fair to say most, if not all, are competing for the attention of those same people. But we have identified other audience groups we think would be interested in hearing what we want to say and we have started talking to them as well. One of them is our heightened focus with the Hispanic audience. We have had testimonial-style custom campaigns, in language, and we also deliver those campaigns in English-language [to Hispanic consumers]. Q: The Ram approach has always had an attitude around things like the Hemi engine, with those "That thing got a Hemi?" ads.A: Quite frankly, our approach is not so in-your-face and aggressive any more, partly because we recognize candidly where we were a couple of years ago. To find our way out of that situation required a lot of self-reflection and refocus internally: how were we going to build these trucks? How were we going to engineer these vehicles? How were we going to take care of our customers? We had to eliminate the problems, eliminate the apprehensions and give them something they can believe in and trust. Then, how to convey that new approach to them through advertising and communications: different textures, different environments, different words. For example, the involvement of [actor] Sam Elliott as the voice of our brand. All of that was important as we reshaped who Ram was going to be. Q: What are you doing "on the ground" to get prospective customers into Ram trucks?A: This year we have worked very hard to develop and implement more robust experiential events and activations because we recognize that once consumers experience the brand, their perception of the brand changes almost immediately. Q: What are some ride-and-drive programs you've been doing?A: At the Chicago Auto Show, we had a Ram test-drive program we built inside the McCormack Center. In a period of 10 or 12 days during public days, we had throughput of over 27,000 test drives there. And we talked to consumers before and after and have product specialists who talk to them during each of the various elements of the course. We plan to execute ride-and-drive experiences at other key auto shows and consumer events this calendar year and beyond. Q: Are you getting your social media agency involved in these events?A: We are. As you know, our social agency is Ignite. So we are inviting them to more events as well. They were at Chicago on the floor of the show sharing information, tweeting and blogging information that was coming out of experiential test tracks after consumers experienced it. What we are trying to do is capture real-time comments and images and push them out to social networks. And in the process we are inviting consumers to share with their friends, to share with their followers. Q: How important is the digital space for the truck market? A: Generally, we need to be very present in the digital space. That's where we need to build our brand, connect with customers and sell trucks. And we know there are digital elements that serve all portions of the [purchase] funnel; you can use digital to support upper, mid and lower. Q: What are you seeing in that space that intrigues you now?A: One thing we are exploring is ways to create modular online ads, where you have specific models of truck paired with specific environments, for example. Then, based on insights about how consumers are engaging with your advertisement you can auto-optimize the ad: an outdoor truck with outdoor messaging in an outdoor content environment or, a commercial truck at a particular work site based on behavior. These "smart ads" are relatively new technology -- an opportunity for you to be ready to satisfy and serve the needs of many customers based on what you observe to be their natural behavior in the digital space. Consumers are very savvy and have the ability to shut you off. They can fast-forward right over you, so it's even more critically important that you deliver a message they would be interested to hear in a place where they will be exposed to it without shutting you out.
Luta is more than an athletic apparel company. It is the offshoot of a program that a UK-based former boxer launched in the favelas (slums) of Rio de Janeiro to get kids off the streets and out of gangs. Although half the money goes to that program, called Luta Pela Paz ("Fight for Peace" in Portuguese), Luta is by no means a not-for-profit operation. Luke Dowdney, the ex-fighter who founded and runs "Fight for Peace" and the Luta clothing brand, said at the recent Association of National Advertisers/World Federation of Advertisers Global Marketing Conference that Luta articulates his conviction that "people are increasingly aware that what you buy has an effect on someone else around the world. Before, it was ‘as long as what you buy isn't detrimental,’ that was enough. Now consumers are saying they want what they are buying to make a positive impact. It's one thing to say you are doing something, but you have to do it." Dowdney talked about what led him to create boxing and mixed martial arts programs in the favela in Rio, where machine gun fire is as frequent as rain, and it is common enough to catch sight of 14 year olds toting assault weapons. "Nine out of ten gun deaths are outside of war zones," said Dowdney. Where he grew up in the UK might not have been as bad as the hills of Rio, but, as is the case with a lot of kids from hard-scrabble backgrounds, he went into the squared circle to find an outlet and meaning. "Boxing was something I came to in my teens," he said. "I went into boxing and everything changed. And I realized it was also a way for me to have a language I could teach." The academy uses a five-pillar program -- boxing and martial arts, formal education, social action, home visits and access to jobs -- to help the over 1,000 young people (many of them girls) get mentoring services, learn how to get an education, and jobs. Dowdney said he got help in erecting the Fight for Peace academy from the Brazil branches of KPG, and Deloitte. It opened in 2005 in Complexo da Maré, a clump of over a dozen favelas close to and walled off from Rio's airport and the road that takes oblivious world travelers to and from the more picturesque quarters of the city and the waterfront. Dowdney later opened a sister academy in London, and has chapters in 136 communities around the world in places like Uganda, the Congo, Lebanon, Costa Rica, and Europe. "We have had 7,000 young people go through a program that started with 10 kids. And we have two national boxing champions in Rio," he said. One of the academy's graduates, Roberto Custódio, is slated to represent Brazil in the 2012 Olympics in London. That latter point is critical, he said, because the fact that the academy has created a pair of boxing champions gives it credibility. "And if we aren't authentic to kids on the street, they wouldn't come in. If we don't have champs, they won't come." Several brands have gotten involved. British Airways promotes the organization with a two-minute film passengers see on flights. Credit Suisse, Comic Relief, Petrobras and several foundations also provide funding. But it isn't enough, and Dowdney launched the apparel line to close the gap and create a homegrown revenue stream to help Fight for Peace expand further. "And we have to raise $3 million just to keep [academy doors] open." The temptation, he said, was to sell the cause to a global brand for instant cash and total loss of autonomy. "It made more sense for us to do it ourselves, because real strength is based on a real story and comes from a real place." That's how the Luta (Luta is "fight," or "struggle," in Portuguese) brand was born. Dowdney explained that the brand is not a charity, or glorified donation swag masquerading as a product, but authentic gear designed as a for-profit brand to compete with the likes of Grant, Everlast or Body Armour. The effort to keep the favela roots is evinced by the font, which was done by a Brazilian graffiti artist, and the product portfolio shots, which were taken in the favelas and feature Fight for Peace pugilists and grapplers wearing the Luta apparel. "Being aspirational is much more effective," he said. "The brand values are performance; that it is inspired by the favela and should be proud of that; and it has a genuine social mission," said Dowdney who added that the product has two ranges: professional training gear and street wear. The product development process involved in-depth interviews with professional fighters on what they needed in gear (freedom of movement, durability and temperature control) and a partnership with London University to create the product line. The brand started as professional boxing gear -- gloves etc. -- then expanded to athletic training gear, because of the obvious limitations on basing a business on gear solely for fighters. "There are only so many in the world, so we needed to go beyond." Then last year Luta launched a street wear line and a training website, and a social media program focused on Luta as an aspirational brand. Celebrity endorsers have also lined up to appear in the products: the famed Gracie brothers from Brazil, the current, reigning, and apparently heavyweight boxers the Klitschko brothers. After having launched a retail center in London the brand is now looking at other places including the United Arab Emirates and Spain, said Dowdney. On the corporate side, Dowdney says Unilever, global agency ?WhatIf! and global management consultancy Kurt Salmon have helped support the program. "People will align with a brand if it means something. Authenticity means changing business practices."
The leap-year day launch of Facebook Timeline for brands may yet prove ironic. While the rest of the industry hailed the announcement as a great leap forward, I can’t help but wonder if Zuckerberg & Co. are asking brands to make a leap of faith -- does Facebook actually have marketers’ best interests at heart? One thing is for certain: it is time for all brands to rethink their Facebook strategy. Like it or not, every brand must become a visual storytellerPithy posts may have carried the day on the old Facebook, but Timeline puts a particular premium on images and videos. Not only is there an enlarged photo “cover” on the landing page, but photo albums are featured more prominently. Brands can also “star” images, allowing them to expand across an entire page. And while all of these changes should increase engagement, brands without an arsenal of images will need to assemble one mighty quick. Fan acquisition costs are likely to go upOne of the beauties of the old Facebook was that any brand could build up a following at little to no out-of-pocket expense. Add some compelling content, throw up a “fan gate,” and you could watch those Likes rise like the national debt. With Timeline, Facebook seems to favor paying advertisers at every turn. Sure -- “fan gates” are back as of late last week after Facebook fixed a technical problem, but you can only drive traffic directly to these pages if you pay to do so or link to them via a post. Otherwise, the default landing page is your Timeline home page and the fan gate will be on one of your secondary "tabs." Fan engagement costs will probably increasePrior to Timeline, brand communications were filtered through Facebook’s mysterious algorithm to an unknown subset of fans. Well, that mystery is no more. Facebook announced that marketers will be able to reach only 16% of their fan base for free. If you want to reach more fans, you’ll need to pay to do so via the “reach generator,” which enriches Facebook but not necessarily the brands that support it. A number of brands have already seen their engagement rates drop substantially after making the switch to Timeline. If you don’t have a history, you’ve got two weeks to make one upFor illustrious brands like the New York Times and Coca-Cola with long and well-chronicled histories, Timeline is a dream come true. These brands can now publish “milestones” as far back as they want, adding a rich texture to their Facebook presence. For new and younger brands, Timeline will take a lot more creativity. Perhaps these folks will hearken back not just to the inception of the business idea, but to the conception of the founders themselves! Forget the monthly editorial calendar - pin your best bet weeklyWith the cover photo now taking up so much prime-time real estate, much of a brand’s content will now fall below the typical screen viewing area. To help address this, brands will now be able to “pin” one particular post to the mid-left side for an entire week. Deciding what to pin will become a weekly ritual -- but one that perhaps belabors a minor issue, since so few people actually return to a fan page after their first visit. Engage - or else everyone will know you’re notFacebook is so serious about pushing brands to become engaging storytellers that they will now make it easier for everyone to see how you’re doing. A quick click on the Likes box just below the cover photo reveals not just the number of Likes and “people talking about this” but also the most popular week, most popular city and most popular age group. A nifty little graph tracks new Likes and “people talking about this,” accenting the probable correlation between engaging content and fan growth. The good news: managing complaints just got a lot easierMost brands will welcome the fact that Timeline includes an optional Message tab that allows consumers to contact them directly and privately rather than just post a complaint publicly. In theory, this will help weed out the whiners who broadcast their complaints from those genuinely seeking immediate assistance. Taking unpleasant conversations “offline” is a customer service department dream come true -- and should hasten the integration of social and service-related activities. Bottom line: it’s time to develop a Plan BTime will tell whether the new Timeline actually improves a brand’s ability to engage with its fans via Facebook. What we do know is that the cost of engagement with all your fans just went up, and that Facebook will not hesitate to impose its will upon your efforts. So while few brands can afford to be without a Facebook presence, given how much time consumers spend there, this is as good a time as any to start thinking about how you can engage YOUR fans in other less dictatorial arenas.