Savings and the Consumer in a recession | Advantage Research

August 6, 2010 1 Comment

Contrary to straight and the narrow, lifestyle spending just veered away from expensive brands during the recession and never really dipped. The challenge is we are not getting any growth in the developed economies.

Here’s the latest lifestyle research/ consumer research at Adage:

In a new study, Pew Research Center asked participants about household spending since the recession began in 2007. Via telephone interviews, nearly two thirds of respondents said they had cut back on spending, and only 6% said they had increased spending. In the same survey, 54% said they thought we are still in the recession, and 63% said it will take at least three years before their families recover from the financial effects.

It will be a couple of months before the Bureau of Labor Statistics releases its 2009 data on consumer expenditures, but one of two things will happen: The Pew study will be upheld and there will be some obvious declines in consumer spending, or purchasing trends will continue to increase as they did in 2008 with the recession well in gear. That would show that, while people might want to or think they are cutting spending, in practice they’re actually spending more.

Spending growth peaked in 2005 with 6.9% growth over 2004′s average expenditure of $43,395, according to BLS data. Since then, it has dropped steadily to just 1.7% in 2008. But that was still growth. Broken down by age, only those under 25 and 35- to 44-year-olds dipped, and only by 0.2% and 0.4%, respectively. One of the age groups that really drives the economy, 45- to 54-year-olds, increased its spending a healthy 4.9%.

Luxury Goods sales did dip 20% in 2008 and 2009 and then they were the first to come back. If you try to understand the recession consumer, however, he has more extra time on his hands and seemingly less money that must last a little longer. He just spends whatever he can lay his hands on and in typical subscriptions/ regular items of foods and groceries as he thinks make his family ticket thru the bad times. His car still works fine. Her children don’t suffer. And everyone watches the same channels on Tv. Maybe that’s the lucky ticket that’s got all the global millions rooting for each other at the same time. And I am happy Indian companies are paying more taxes in the US :D if they employ more Indians..

Of course, businesses interested in volume sales like the model Walmart built or as is happening in all consumer categories in Australia right now, the key to the heart of the wallet and not some shavings off the top, is the deep discounts you can offer after the two months premium season for the goods is off. It is true for electronics categories, apparel categories and foods categories including the new Kraft mixes you might want to enjoy. I wonder if we can think this model for currencies also. Buy the dollars at their real value just this week…(My apologies if the weekend stuff got to you, relax, take a deep breath and get to that Mall)

Even for purchases like Insurance or for items that as a group increase Household savings, the same principles apply. New York Life actually increased market share during the recession and it is not MLM. Mid Market companies that invested in MLM have to rethink a simpler model that would intuitively be self sustaining as that model had inherent strengths during a recession.

The important things to keep in mind:

1) Brand investments are important at all times and should not overtly suffer in a recession. A droning level of noticeable brand activity esp as the social world is a really inexpensive and far reaching investment of goodwill
2) Consumers like discount, marketers like discounts and contrary to some opinion even brands like discounts. Look at McDonalds and $1 coffee, $1 breakfast with McCafes
3) Radio and outdoors have been ignored for no fault of the marketer ( okay, point taken)
4) Brand Sense, Tipping Point all say that research must start to try your instinctive hypothesis and not go by the number crunching. Go for the instinct the brand engenders
5) Sell to Moms or any special interest categories that can take charge of the cheerleading for you, Sue.(Glee, Sylvester Sue, defined as a shrew with an agenda, that only grew :( )

Filed under Financial Services, Lifestyle Brands, Marketing Tagged with , ,

All Mothers have them | Washington Post

July 31, 2010 Leave a Comment

We always knew it in our humble Indian ways, but now the Americans have rediscovered it. Part time jobs are not the panacea fo bringing societal good and child development into the home.

Researchers at Columbia University say they are among the first to measure the full effect of maternal employment on child development — not just the potential harm caused by a mother’s absence from the home, but the prospective benefits that come with her job, including higher family income and better child care.

In a 113-page monograph, released this week, the authors conclude “that the overall effect of 1st-year maternal employment on child development is neutral.”

The report is based on data from the most comprehensive child-care study to date, the National Institute of Child Health and Human Development Study of Early Child Care. It followed more than 1,000 children from 10 geographic areas through first grade, tracking their development and family characteristics.

Infants raised by mothers with full-time jobs scored somewhat lower on cognitive tests, deficits that persisted into first grade. But that negative effect was offset by several positives. Working mothers had higher income. They were more likely to seek high-quality child care. And they displayed greater “maternal sensitivity,” or responsiveness toward their children, than stay-at-home mothers. Those positives canceled out the negatives.

The study may bring hope to working mothers, who have labored under a collective societal guilt since the 2002 publication of landmark research showing that early maternal employment hampered child development. The same research team behind that report produced this one.

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Don’t be stupid be crazy| Advantage zyaada

July 20, 2010 3 Comments

Is repositioning Virgin viable?

Richard Branson’s brat brands were never leaders in Low cost flying, credit cards or prepaid mobiles among other sectors it joined after launching itself as the imp icon of the new age, an Avatar to save the world from staid, mundane things like brands and winning ways that ranged from a youth stunt propelled Richard Branson in each launch to quick launches and purchases in disparate geographies in Europe, Asia and around the world.

While Virgin as a brand has become fairly consistent, with more meaningful characterisations of the same brand ethos in Delhi, Dambula and lastly even football fans in Detroit, it is now causing heartburn to its new owner in the US, Sprint. Sprint has already got a great thing going with a football inundated target audience, mobile NFL updates and more flip handsets than anyone else. It now also owns its own prepaid brand Boost with a distinctive campaign promotion and a simple enough takeaway. Apparently the Virgin portfolio may be destined for better ways with a rebinding that lets Sprint sell Boost as the prepaid card and gets back Virgin so that it can be made the mobile data option for the veritably largest data paying audience to tackle the iPhone revolution.

With an iPhone and an iPad, Apple has made up to $100 per month compulsory household data subscription spend, likely for more than 5 million households by the end of 2010. That means others not with iPhone friendly providers, like America’s largest Sprint.
The new Virgin Data unlimited campaign is apparently run by the old Virgin launch team from 2003. and the spend is less than $10 million

Adage

To build its prepaid business, Sprint acquired Virgin Mobile to join its existing prepaid player, Boost. To differentiate the two properties, Virgin Mobile is going after data-obsessed mobile users.

“We saw a real opportunity to go after data, text and social networking that nobody was exploiting,” Mr. Stohrer said. “We had to shed the classic pay-as-you-go from the Virgin brand.”

Virgin Mobile is positioning itself as a prepaid service with a focus on flat-rate unlimited data, rather than minutes. Mother’s work, “Don’t Be Stupid, Be Crazy,” targeting 18- to 24-year-olds, launched late last week.

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Hoping to do business in Asia ex-India ex-China | Advantage zyaada

July 12, 2010 Leave a Comment

A succinct view and even a make-do definition of branding and marketing esp. in’Retail Lifestyle’ segments..From a fellow Power 150 blogger, in Kuala Lumpur

Aspirational heritage to go with aspirational clothes to go with aspirational gadgets to go with aspirational toilet paper … and yet nine times out of ten, the only justification the company has to explain their ‘aspirational’ label is they charge a .X. of money for the product.

Yep … like ‘luxury’, the marketing community have completely .X. and simplified the meaning of the word ‘aspirational’ to try and make themselves feel better about what they do while making the masses feel worse.

I have nothing against aspirational products … just like I understand there is [sometimes] a commercial benefit to communicating a lifestyle image that your audience finds attractive and desirable … but more often that not, there is no depth of exploration of this view, it’s executed as a simple “this costs a lot of money and so you will obviously want it” tone and manner and that just annoys the .X. out of me.

..

The best bit was that our work didn’t just make these people – viewed as some of the lowest valued individuals on the economic scale – feel great about themselves, but it made people who were much, much, much more fortunate than them actually aspire to be more like these truck drivers.

Not obviously interms of economic circumstances, but interms of their honour, values and beliefs. Infact when the head of the oil company saw it – a man who has more money than Sorrell – he allegedly said,

“I hope I’m like that man”.

How amazing is that eh?

A billionaire Texan saw the values of a poor Phillipino truck driver as something he wished he had. We didn’t focus on what they had on the outside, we talked about what they had on the inside and those were way more aspirational than a new BMW 5 series, a sailboat or a .X. gold Rolex.

Which leads back to my point.

The mannequin in the picture above is – to my eyes – hideous …

This is not because it’s Eurasian … but because it’s a really badly designed Eurasian mannequin.

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Mining Brand Capabilities in a recession? | Advantage Brands

June 21, 2010 Leave a Comment

Significantly, during 2009 Measured media spending at Leading National Advertisers in the US and the Domestic Industry overall was down 10%. It could have been higher in terms of the cuts as most advertisers would have asked agencies to hold and at least part of the blame, even after restructuring, lies in the leading national advertisers plying their trade across myriad offices and brands, each brand manager trying to guard hs turf and avoiding significant decisions. Diktats from HO finally mean much less even at a GE organisation and unless objectives are v ery clear deeper cuts are unlikely.

Also as the world goes digital, the budgetary cuts next time will be tougher especially if social forms like facebook and twitter are able to   de-google-ise the generation and deliver higher yield where like in emerging markets today, prices may continue moving north along with increases in spending on the media on the web. That promise is however a significant distance further down as we continue to delievr customization and freemium benefits to a growing generation of unemployed entrepereneurs unable to measure, support or evince interest in rebuilding the large corporations.

However, closer home there are lessons in the sustained brand support during 2009 not in China alone but right in Uncle Sam’s backyard/warehouse/main street.

Among the Top 100 advertisers, one in four spent more, betting on opportunity in the Great Recession. While there is no easy way to prove cause and effect, the sales gains at spending boosters should help reinforce the idea that advertising delivers.

If 25% decided their advertising yielded higher benefits during the dull season. the prime cuts ofcourse landed with such advertisers, Walmart pipping Macy’s in spending and sscoring a net 1.1% increase in sales in a brutal market beating the national sales graph by 3.2% s it went south in that same dull season. Even as a proportion of global sales, Walmart spent 0.59% on advertising against 0.52% in 2008 and that is a substantial investment in 2009.

The other interesting story from the crisis we featured here has been Bank of america, which plastered itself on FOX History as part of programming on American History, living a great showcase presence as it came out bleeding and needed to shore up loyalty

Good briefs.

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Agency, Marketing, Consumer – More of the same | Advantage Brands

June 7, 2010 1 Comment

First, a byte from Adage on the ‘wired’ [not mispelt] creative-approver nexus.  We all go thru the pangs of the creative getting us exactly and wondering if we need a second ‘discontinuous’ check for the go to market..or if we could do it in-house..what the research says is that the creative likes the same assertive punches or digs such as the brand manager and 4 out of 5 consumers might actually think differently

WORD NERDS: Xyte’s model relies on factors including learning styles and reliance on thinking vs. feeling to classify people into 16 groups.
When Xyte, a unit of online-sampling firm StartSampling, last year branched into the new area of research, it started having prospects in the marketing, agency, media and market-research community take the test. The company found people throughout the marketing industry tend to fall into the “word” category — people who prefer to work with words and have a longer-term focus.

That’s no surprise, given the nature of the work, said StartSampling CEO Larry Burns, a veteran of Information Resources Inc. (now SymphonyIRI), who himself falls into that quadrant. But word people account for only 18.5% of the population, and the ads that appeal to them often don’t work so well with the other 81.5% of people.

Testing TV spots

As part of its “Xyting Insights” service, which applies the behavioral segmentation to members of Knowledge Networks’ consumer panel, StartSampling also has been testing TV commercials. And it found ads also tend to do disproportionately well with word people.

..

Xyte’s “hand” category — people who prefer working with their hands and have a shorter-term focus in their work — make up 30% of the population, a bigger portion than word folks.

“They like touching things, tangible things, practical jokes and wisecracks,” Mr. Burns said, and they often don’t like ads that appeal to word people. “If you’re communicating with them from an emotional advertising standpoint, it’s not going to work terribly well,” he said. “They like products [backed by] facts.”

To take a rain check however, those ‘wild’ consumer driven Doritos and GM ads have got themselves a big thumbs down too..apparently all the green brainstorming produces is nasty vitriol that does not do the brand much good.

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Translating Brand Value to Financial Performance | Advantage Brands

May 9, 2010 1 Comment

Account             Social Media and New Markets

If you are following the unfolding of the pain in Spain on the news ticker, (the showing is currently in Greece), you will have noticed already. Scroll through your favorite personal finance web site or ask your advisor, today’s alternatives for well performing stocks are one of your top 10 super brands: McDonalds, Coke and Proctor & Gamble. Similarly JNJ ( Johnson & Johnson) continues to command a market based valuation of $170 bn on a measured brand spend of $2.60 bn, very similar to Coke’s $2.67 bn. These three brands interestingly also have significant sports spend for brand sustenance across Football, Soccer and the Olympics and depend significantly on Television, outdoors and limited print advertising.

Of these, both Coke (KO) and P&G (PG) have a Market Capitalization of $120 bn and $170 bn respectively. Coke has other international stocks that share its brand value in COKE and the erstwhile CCE. McDonalds single stock ticker MCD accounts for its market value of $74 bn as of Friday.

McDonalds for example continues to innovate on its menu, grow same store sales consistently with new additions in premium coffees, angus burgers and even new ranch sauces with red curry eggplant if things work out for its Director – Culinary innovation (Bloomberg Business Week, Sept 2009) Its brand is also sustained  by aspects of naive “word of mouth” apart from marketing spend, product management and innovation. almost all these brands invest in “wellness and good health” important to every family, even Coke(Fruit Juices, Water and Teas) . Quarterly Sales of $5.6bn with only 61% Cost of Goods sold obviously add financial value, as do $33bn in fixed assets including appreciating real estate all across the world. However, none of that explains completely its pull as a desired financial stock without its foremost calling as the brand that represents America. Apart from reporting more than $5.5 billion Sales in each quarter of 2009, McDonalds also spent $2billion for brand spend according to Adage, as much as European star “Mars” or half that of the fashion accessory / women’s personal brand L’Oreal and ahead of Citibank, ING and Bank of America by a $1 billion each in just measured-media spending.

Coca Cola spent $2.67bn and P&G a huge $9.73 billion on its brand(s). If Adage is to be believed, these brands also spent a significant amount from the same in new Emerging Markets, important Financial growth destinations. For each of these brands Marketing is the most significant spend item in the SGA expenses on the Income statement. McDonalds brand carries it to new markets effectively competing with YUM KFC and Subway brands that report at most 20-25% of the sales at a McDonalds. As a stock, Carl’s Jr owner CKE has been doing very well recently, concurrent to its launches in Asia an emerging markets giving it a brand growth opportunity even with a smaller brand value of $2-3 bn.

Coca-Cola Co. allocates just 16.5% of its $2.67 billion measured-media spending to the U.S. market but spends nearly three times as much in Europe. Three-quarters of Coca-Cola’s sales come from outside the U.S.

Procter & Gamble Co., the world’s biggest advertiser since overtaking Unilever in 2002, devotes 65% of its $9.73 billion measured-media spending to international markets, slightly ahead of the 61% of P&G revenue that comes from outside the U.S. P&G is the biggest advertiser in all regions except Latin America and Africa, where Unilever reigns.

The biggest marketers are investing ad dollars wherever they can find revenue or potential for growth in a tough global economy—and increasingly, that’s China. And some 39 of the Global 100 had measured-media spending in China last year. Five of them already invest more than 10% of their budgets there—Yum Brands, Pernod Ricard, Avon Products, Colgate-Palmolive Co. and P&G. For fast-food seller Yum Brands, China represents 20% of the company’s worldwide measured spending of $1.41 billion. The parent of KFC and Pizza Hut generated 31% of 2008 revenue from its China division, where sales surged 36%.

P&G, China’s biggest advertiser at about $1.1 billion, accounts for more than one in four dollars—27%—of the Global 100′s China measured-media spending. Overall, China represents 3.4% of total ad spending for the Global 100, slightly below ZenithOptimedia’s estimate that China accounted for 4.1% of 2008 worldwide ad spending.

There had been earlier attempts at harnessing this brand value directly in the balance sheet but their proxy from revalued real estate or goodwill from sold and bought brands is well near a disservice to the value these brands represent. Apart from that, the Financial Statements reflect only book value of assets and the Market valuation that is closer to its value in the Financial markets always attempt to make up the gap in undue leverage and lend a hand to the eventual bubbles that characterize one off black swan events or even recessions. These Consumer staples brands however remain great “defensive” plays even as peers like Starbucks, continue to attempt financial market transactions and financing expansions leveraging the same brand value. Financial valuations and Sales also do not correspond one  to one in each case with JNJ creating $15.6 bn in Sales each quarter with COGS of 40% including 10% R&D spend, and SGA with a higher participation of Sales staff related expenditure to $4.5bn agst a Quarterly marketing spend allocation of roughly $750 mn

Notably, brand spends in Europe, that are sizable in the above 3 brands ( $1.2 bn for Coke) have not translated in any significant gains whereas their existing brand values have created and fueled unprecedented growth in Asia and emerging markets creating a disproportionate yield in Sales growth outside China, Europe and USA.

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Some interesting April developments from around the web | Advantage Brands

April 19, 2010 1 Comment

You guessed it. Fatigue. Advantage zyaada has penned a dozen articles today on the Finance and Economy subjects with a lot of Goldman Sachs and some other Banks popping up. (and the volcanic Ash) do check out the depth and field of vision at ADVANTAGES.US

Also Twitter Chirp kind of boxed forward movement with a lot of developer stuff going around including new developer agreements for using Twitter marks and user data.

Facebook is going the other way on F8, a lot of developer stuff about bringing back the toolbar swing for lulling users and adding a like button to every site you care about. Next you know we would be going Giga Om discussing proprietary standards, integrating internet in LED Televisions and all that gizmodo stuff about a tablet for the competitor.

Coming back to marketing and social media, I am also wary of posting more about Social media usage..most of the stuff is unscientific and definitely counterproductive to using th great examples that cannot arise daily.

There has also been a lot of discussion about Twitter’s 100 million users and Facebook’s 400 million active users. I don’t wabnt to discuss it for my brand. What I know is irrespective my social media effectiveness thru Twitter is in 1000s of clicks/other digital actions of Web 1.0. Facebook’s business effectiveness for my brand is zilch. It is some sort of a hygeine factor now to be on visually appealing Facebook pages. It is much more personal for the user and he does not like to be disturbed, though he can be targeted much more incisively right now on Facebook. Maybe for selling Tag Heuer watches and Bugatti Sports Cars or Armani and Kim Kardarshian fashion accessories..

In the meantime, the web’s other social acquisition account aggregator and advisor Mint has extended its offering to almost all American banks as according to the site an average American uses 11 different banking institutions and unless he can get them all in one place…

The other social revolution on the town square Foursquare recently celebrated Foursquare Day with near million members

Of course last but not the least it’s fashionable in Twitter universe also to hate “Promoted Tweets” and to call/not call them advertising based on whether you are User or Twitter

I would recommend however, that all the developments be not taken in isolation but as a whole picture serious thought be given to being brand leaders in shifting the marketing budget emphasis from print and TV to social media and not “online advertising”

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The Kraft Cadbury purchase for India/China | Advantage Brands

March 4, 2010 2 Comments

Well, that’s what we called it in India, but overall the global Cadbury’s portfolio has a lot in it for Kraft..

In India however, Kraft just has a sales rep office in Gurgaon selling Tang, Oreo and Toblerone in online marketplaces and hyper-/shopping malls. India continues to source Kraft cheese and even Toblerone from the Middle East and at a $1 price for Oreos and Toblerone, it is restricted to urban lifestyle markets ( Check out this rediff story, nice detail)

China is however a different story as Kraft already has a double digit market share in th country (however, Cadbury’s share in India is more than 50% and that of the top competitor in China also in the higher 20s or some 30s %age. Kraft is a happy buyer at $300 million and with Unilever candidate and expat Sanjay Khosla leading the International effort for Kraft ( $11bn in 2007) it may have been a different story. Apart from putting the new combined structure on the ground which could take some years, Kraft could use the ready Cadbury / ven Nestle & Unilever distribution ( there are no exclusive partnerships or zones in confectionary) Also, fora Kraft a significant challenge would be ITC Foods that has been tapping into the premium foods annd lifestyle markets with limited but growing success. Unilever on the other hand has been slow in the market, Nestle restricted to powdered milk markets and Amul and Britannia eclipsing any Cadbury sized competition in Cheeses..this just a quick post as we wait for more clarity..Cadbury’s portfolio could definitely get a rejig, but its positioning and marketing budgets would be impossible to search and replace..in any casual restructuring.

Kraft os one of the few who is tackling disparate urban clusters in China with a 20% boost in ad spending in 2009. Also going for it are the ever expanding dairy products and cookies markets that could take the merged behemoth beyond just confectionary where it is already a World no. 1 Any market where a 15% or less share globally is enough for leading industry needs to be rewritten and a Global Foods and Dairy giant that could change Buffet’s world view could well be somethhing for Irene and Sanjay to attempt.

Also, maybe an Idle mind’s natter but Kraft is not into Sports like Cadbury, An Indian Market’s demographics may be key in saving Cadbury’s Olympic sponsorships, but other markets in Asia may not work the same way, nor the home market in Europe

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Get an Ad hangover | Advantage zyaada

March 1, 2010 1 Comment

In the age of live blogging, perhaps it was just as well that this NyTimes Correspondent ( and I almost wrote that as NBC correpondent) watched 1400 ads during the month long Olympics to deliver the verdict on advertising for NBC’s Olympics show.

From McDonalds in a desert oasis under the hot sun to six GE commercials, the snow inspired some long winded campaigns, with seven to nine NBC breaks in each hour of television.

For instance, there were eight breaks from 8 to 9 p.m. (Eastern time) on Feb. 12; nine breaks from 9 to 10 p.m. on Feb. 15; and seven breaks from noon to 1 p.m. on Feb. 21. Even as the Games ended, NBC could not stop cramming in commercials. In the final 50 minutes between 11:35 p.m. Sunday and 12:25 a.m. Monday, there were seven breaks.

Is it any wonder viewers were so appreciative when commercials were rationed or eliminated, as during ice dancing or the Canada-United States hockey game?

Meanwhile Team USA got a family home again. In Beijing, the then cash rich BofA had stepped in for a grand sponsorship for Team USA, in Vancouver the same was taken by P&G to further its 2009 Thanks Mom Campaign the link shows you the P&G grand tour de force social media support for the Thanks Mom lovers to spread the message. P&G stamps Thanks Mom for its Gold brands Secrets Beauty products, Pringles, Crest and Oral-B Dental Care. They somehow miss their Tide and Bounty shouts from the Thanks Mom gold badges, but push them in the commercials anyway.

Of course You Tube is a hot destination for everything that Corporates want to share in video right now, with Asian Games Candidate IPL T20 also getting a page on there. Some of the campaigns were indeed follow ups from Superbowl:

SNICKERS A hilarious sequel to a hit spot from the Super Bowl, which featured Betty White and Abe Vigoda, showed how hunger could turn dudes on a road trip into cranky divas — as personified by Aretha Franklin and Liza Minnelli. Gold. Agency: BBDO New York.

SUBWAY Several breezy commercials promised that “any, any, any” footlong sandwich costs $5 at Subway. But the deal seemed less generous when an announcer narrowed it to “any regular footlong” and these words appeared on screen: “Excludes premium subs.” Tin. Agency: MMB.

I have included Subway here for the Taco Bell ads for $5 in-stadium Bento box push campaign

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