HP, Intel & Nissan – Corporate Celebrity Endorsements

Hewlett Packard (HP), Intel and Nissan are all using celebrity endorsements.  In fact, most major corporations have used celebrities to promote their products.  Why, then, have I mentioned these three companies?  HP Intel and Nissan are unique in that they have started using celebrity endorsements not to promote a specific product, but to improve corporate branding.  Corporate branding is simply creating a strong identity for the organization behind the products. This adds an extra layer of differentiation in order to gain a competitive advantage.  What I find particularly interesting about HP, Intel and Nissan is that they have taken celebrity endorsements to a new level.

They haven’t just made adverts with celebrities, they have gone as far as to ’employ’ them…

Here are the latest appointments to the boards of HP, Intel and Nissan:

  • Jay-Z has joined HP as ‘CEO of Hip-Hop’
  • Will.i.am has landed at job at Intel as ‘Director of Creative Innovation’
  • Usain Bolt has gone from Olympic gold medalist to a ‘Director of Excitement’ at Nissan

These alleged ‘jobs’ are designed to make consumers associate the characteristics of each celebrity with the corporation.  Hence, Nissan‘s selection of Usain Bolt suggests that they would like to be perceived as an exciting company which produces fast cars.

But I am really skeptical of these marketing campaigns for three reasons:
1. Not Cost-Effective – Instead of paying vast sums of money on a celebrity to pretend to work for a company, there are much better ways to develop a strong corporate brand.  For instance, Proctor and Gamble have sponsored Olympic games and produced powerful advertising to boost their corporate image.

2.  Celebrities Lack the Right Skills – Although they may be able to promote the corporation to their fan-base, they are very unlikely to make good employees.  As such, do not expect Will.i.am to actually deliver creative innovations that improves Intel computer chips.  In fact, based on the below video, asking him to explain why he wants to work for Intel appears to be too much to ask for:

3. Little Impact on Customers – For the most part, celebrity endorsements are effective are generating sales of specific products.  This is because consumers see a direct link between the celebrity and the product.  Therefore, classical conditioning happens faster and consumers are more likely to purchase the product if they like/trust the endorser.  But when you swap the product for a corporation, you effectively make the call-to-action less clear.  For example a consumer sees that Jay-Z is CEO of hip-hop for HP, is this supposed to make the consumer aspire to work for HP or buy their products?  If the former, what products are they supposed to buy?

This is an important issue because a celebrity endorser is unlikely to have relevance for every product a firm sells.  Does Jay-Z’s music talent make owning a HP printer cool?  Does Usain Bolt make Nissan Micras exciting? It may work for laptops and sports cars, but not printers or family cars.   Therefore, it is much more likely that a return on investment could be achieved by using a celebrity endorser at a product-level, rather than a corporate-level.

Ultimately, I do think developing a strong corporate brand is a really important marketing strategy.  But using celebrity endorsements to achieve this is a poor tactical decision.

© Josh Blatchford, author of Manifested Marketing 09/11/2013

Cadbury – Just-Noticeable Difference Marketing

Cadbury is a confectionery brand originating from Birmingham in the United Kingdom.  The firm has been owned by Mondelez International since 2012, after acquiring the brand from Kraft Foods.  Cadbury is most famous for its Dairy Milk Chocolate and its use of purple packaging that has become part of the brand’s identity.  However, did you know that there have been 23 packaging redesigns?  The 23rd wrapper revamp has just been unveiled below:

And for reference, lets take a look at the 22nd (previous) design, introduced in 2008:

Can you spot the difference?

The key changes are:

According to Cadbury‘s Marketing Director, Matthew Williams, the new designs will appear more eye-catching on the shelves and less traditional. The traditional designs had been conflicting with Cadbury‘s competitive positioning as ‘fun’.

While this sounds straight forward, packaging designs are highly risky.  Packaging is the fundamental way consumers identify brands and, for a low involvement product, changing the look can destroy habitual buying behavior if suddenly the product is harder to find.

So how have Cadbury been so successful at redesigns?

This can be explained by the theory of ‘Just-noticeable difference’.  As the name implies, just-noticeable difference is the degree of change in packaging – or branding – that is only just noticeable to consumers.

An easy way to think of it is as continuous improvement of packaging. As shown below, just-noticeable differences eventually add-up to big changes:

Cadbury Just Noticeable Difference

The result is that the packaging never changes too much, and therefore reduces the risk of re-brands.

However, I am not too keen on Cadbury‘s new wrappers.  I particularly do not like the lower case font, which I think is a slightly too noticeable of a change.  On the other hand, if I was not interested in marketing, would I have noticed the difference if I was an unaware consumer?

Let me know what you think about Cadbury‘s latest packaging design in the comments below.  Is it too noticeable, or has it achieved a just-noticeable difference?

© Josh Blatchford, author of Manifested Marketing 07/11/2013

Interview with Joe Bush from The Chat Shop

Having already interviewed Denys Zhadanov from Readdle, I (Josh) am lucky enough to ‘chat’ (sorry for the terrible, terrible pun) with another young entrepreneur and marketer.  Joe Bush is a founder of The Chat Shop, an agency working to optimize online behavior, offering consulting, implementation and managed services, with a focus on the live chat space. Clients include Mercedes-Benz, Wasteland-Ski and The British Film Institute. If you ever browse a website and have an opportunity to chat with an online assistant, this is what The Chat Shop facilitates.   Here is what we talked about:

Josh:  What are the key benefits to your clients of using The Chat Shop’s services?

Joe:  The first step when we work with a new client is to get to understand their current business and their future plans from both an internal perspective and a customer viewpoint. We utilize a range of tools and methodologies (many of which are proprietary to The Chat Shop) to do this, with the findings being fed into our strategy. As a result of this, each client is different but the benefits they receive tend to fit into one or more of the following categories:

1.      Conversion Optimization
2.      Customer Service
3.      Basket Abandonment
4.      Average Order Value
5.      Lead Generation / Lead Qualification
6.      Customer Experience
7.      Insight

Across our clients, the average increase in conversion/lead generation through chat is 20% – delivering a favorable return on investment. Interestingly, when we first started the business we underestimated the level of insight and understanding generated through chat – this is actively fed back to clients. Analytics and data can tell you what is happening but chat allows you to understand why.

Figure 1 An example of our live chat on a mobile device

Josh: Business-to-business marketing often involves quite traditional, non-digital marketing tactics, while tech start-ups are almost exclusively using internet marketing to promote their businesses.  As The Chat Shop is both offering a business service and is a tech start-up, what do your promotional activities currently look like?

Joe: We’ve used in the past, a wide range of channels to market the business: content marketing, whitepapers, infographics, social media, email, search engine optimization, partnerships, networking events, exhibitions… etc. Gaining a client is a long process, and is often about being there at the right time. I am very keen on meeting prospects face to face, and so exhibitions and events are perfect. This will always be backed up by a strong digital presence.

Josh: Wow!  That’s a huge amount of different promotions you are doing.  There is an old adage in marketing that goes ‘Half of my marketing budget is wasted, but I don’t know which’.  Do you agree with this?

Joe: Definitely!  It is very difficult to identify touch points when you are doing multi-channel marketing.  You can identify the last touch point that sends a client towards us – such as a blog post for example – but never the whole path of touch points.  Sometimes we gain new clients from just good search engine optimization, other times it is a much longer process for them to move from awareness to action.

Chat Shop

Josh: There are some people that believe monitoring consumer activity on websites is violation of privacy and is unethical, what are your views on this?

Joe: We would never ever want to be intrusive.  This is why the structure of our chat software has been designed from the ground-up to fit seamlessly with our client’s websites: it is easily minimized and our chat agents are trained to only initiate conversations at just the right moments.  We are also fully compliant with all the necessary regulations, including the Data Protection Act and ISO 9001.

Josh: Lastly, is there anything else you would like to add?

Joe: Don’t forget to consider what happens to your visitors when they arrive on your site. A huge amount of resource goes into driving traffic to your site, with on-site behavior almost left to chance. As frustrating as it may sound… a website is rarely performing it’s 100% best. Preferences and customer behavior changes over time and will also differ from person to person. Never underestimate the value in knowing the “why” behind the “what”.

If you have any questions, don’t hesitate to get in touch either through the comments or:

@chatshopjoe

uk.linkedin.com/in/joebush/

© Josh Blatchford, author of Manifested Marketing 06/11/2013

5 Reasons why Apple Rocks at Marketing

Steve Wozniak recently spoke at the AppsWorld 2013 conference.  What was of particular interest to marketers was Wozniak’s claim that “marketing is the most important thing” when launching a new product.  Furthermore, he believes that a major reason for Apple’s success was becoming market-led.  These are important concepts for business leaders to understand: developing a market-led culture is very often cited as being linked to financial success.  However, having a market orientation – or culture – is a very vague concept.  Let’s take a look at what the 5 key requirements of developing a market orientation – or in other words: five reasons why Apple is great at marketing.


1)  Customer orientation –
Steve Jobs and Wozniak had an incredible knack in understanding consumers better than they understood themselves.  This meant that Apple was able to revolutionize the technology industry with new products, such as the personal computer: the idea that a computer would be for the home and not work was absurd at the time Apple was founded…  Jobs famously said “customers don’t know what they want until we’ve shown them”.

2)  Competitor orientation – Apple has always stayed on-the ball in terms of keeping ahead of its competitors.  A huge benefit of this has been the ability for Apple to position itself as the only luxury brand in the technology industry.  It goes without saying that the ability to charge a premium price is key to driving sales revenues.

3)  Interfunctional Coordination – although Jobs was partly-infamous for having an autocratic leadership style, he was equally famous for his abilities as a visionary.  This meant that Jobs was able to both inspire project teams to work towards the same goal – and force them to if necessary!  But regardless of the how, this approach lead to high levels of coordination.

4)  Long-Term Focus – it took decades before Apple products became successful beyond the world of geek niches and into mainstream consumer markets.  Despite this, the brand was never re-positioned or never targeted a different market.  Instead, Apple kept true to its strategy of targeting early adopters and consequently the brand grew massively through word of mouth recommendations.  This enabled Apple to cross ‘The Chasm’ from niche to mass market.

5)  Organizational Culture – combine all of these facets together and instill a belief that marketing is every employees’ responsibility, then you foster a marketing culture.  I think that this is the most important reason for Apple’s long-term success.  While Apple may have had some criticism from Wozniak at the conference, the firm is still delivering strong shareholder value.  The death of Jobs doesn’t not appear to have damaged the culture he created, rather his legendary status could well have enforced it.

Let me know in the comments if you think the death of Jobs has had any negative impact on Apple.

© Josh Blatchford, author of Manifested Marketing, 28/10/2013

Disclaimer: to avoid sounding like an Apple fan-boy, I’d like to point out I don’t use any Apple products.  Although, I do have an iPod in a cupboard somewhere at home 🙂

Diet Coke vs Coca-Cola Zero – Brand Positioning

A friend recently asked me what the difference is between Diet Coke and Coca-Cola Zero.  I don’t think he realized it, but this is a very good question from a marketing perspective.

Coca-Cola’s Diet Coke and Coca-Cola Zero both claim to be calorie and sugar free – why then would a firm want to produce almost identical products?

The answer, I believes, in the way that the drink’s have been positioned and differentiated as brands.

‘Positioning’ is how consumers view your product in the market place.  It is often valuable to map out positioning, relative to competitors and your other products in a perceptual map, such as below.

 

 

 

 

 

 

 

 

 

 

 

It is clear from above that Diet Coke and Coca-Cola Zero are viewed as very similar products.  Yet despite the similar positioning, differentiating the two drinks enables Coca-Cola to avoid cannibalizing sales and, in fact, make a profit.

Diet Coke has long been aimed at a Women, with the ‘Diet Coke Break’ advertisements forming a fundamental part of this.

 

Unfortunately for Coca-Cola, it is no longer women that are worried about calories and sugar.  The recognition of the importance of healthy eating means that men now also want a healthier alternative to regular Coca-Cola.  Hence, the firm needed to introduce a new ‘Diet Coke’ with branding and an integrated marketing communications plan to differentiate the product to appeal to men.  This prevents consumers defecting to Pepsi Max or Diet Pepsi.

In contrast to Diet Coke, Coca-Cola Zero is far more masculine, with darker packaging and Lynx-esque (or Axe-esque for US readers) advertising.

 

© Josh Blatchford, author of Manifested Marketing, 22/10/2013

Microsoft’s Bing – Marketing Communications

Microsoft is a U.S. computer software firm, founded in 1975 by the legendary Bill Gates.  One of Microsoft’s products is Bing, an internet search engine that was launched back in 2009. Initialy, the vast majority of consumers – particularly the less tech-savvy – felt no need to switch from Google.  However, Bing’s market share has now grown to a respectable 17.9%, while Google has remained at a dominant 67%.  Microsoft’s next marketing strategy is to steal disloyal Google users in an attempt to gain further ground on Google’s share.  Part of this strategy is a campaign called ‘Bing It On’.

As part of Microsoft’s market challenger strategy, the aim of the campaign is to convert Google (the market leader) users to Bing users.  Google consumers are encouraged – through social media marketing and online public relations – to visit http://www.bingiton.com.  On the website visitors are asked to make five searches and vote each time for which results they prefer.  Importantly, these results are unbranded, which should mean that visitors are unbiased in their voting.  At the end of the experiment, their results are shown, identifying the users favorite search engine.

There are, unfortunately, a number of flaws with this test: previously visited links are purple, slight forms of branding are visible – such as Bing maps – and lastly users are likely to search for their interests and therefore roughly know how Google displays those results.  As a result of this, the implementation of this communications tactic is less than ideal.

Having said that, in terms of marketing strategy this is a very clever idea.  Just to reiterate: it is the implementation that has reduced the likely effectiveness of this tactic in changing consumer behavior.  In true, Manifested Marketing style, lets take a look at a strategic model that shows why this is a good communications campaign in theory.

 

There are four types of buying behavior:

Complex Buying Behavior this occurs when the consumer perceives there to be lots of differences between brands along with a highly involved information search.  Hence, the buyer searches extensively for information on the available brands before making a purchase.  An example of this would be shopping for a car.

Dissonance Reducing Buying Behavior in this case there is not perceived to be any meaningful difference in brands by the consumer, yet still undergo a high involvement information search.  This is because the consumer fears making a purchase they will later regret and similarity between brands makes it hard to find a suitable product.  An example of this would be purchasing a carpet.

Variety-Seeking Behavior – this behavior is present when there are differences between brands, yet the purchase is not risky enough to warrant an extensive information search.  Consumers are likely to demonstrate this when buying confectionery.

Habitual Buying Behaviorlastly, when consumers see very little difference in available brands, there is minimal risk and no information search, they are likely to buy the product out of habit.  This is the type of Google user Microsoft’s Chief Envisioning Officer, Dave Coplin, is aiming to ‘steal’ from Google.

By engaging consumers, and making them think about the search engine they are using, Microsoft intends for consumers to realize that there are differences between Bing and Google.  Consequently, anyone with little brand loyalty to Google is likely to switch from habitual buying behavior to variety-seeking buying behavior.  This would result in Bing gaining a larger market share from ex-habitual buyers now using Bing on some occasions.

I believe this is a much more realistic prediction of consumer behavior than hoping Google users will ‘kick the habit’ and jump straight to using Bing exclusively.  As search engine choice is a low involvement decision, social judgement theory states consumers should have a wider latitude of acceptance – this means they will believe a greater variety of opinions.  Despite this, media attention of the campaign – particularly from the Freakonomics Blog – have harmed its reputation.  Thus consumers are now skeptical about believing Bing’s claims on user preference, which damages the credibility of the Bing It On website. The overall effectiveness of the campaign is thus undermined.

Despite the shoddy implementation, I think that this campaign is a step in the right direction for what Microsoft’s marketing strategy needs to be in order to grow Bing’s user base.  Specifically, I think they should use their second user advantage to watch Google closely and then introduce futher  Bing features over time to differentiate themselves.  I believe this is far more likely to be successful than Microsoft’s past strategy of duplicating Google’s services.

If you have taken the Bing It On challenge, let me know your results and search engine preference in the comments below!

© Josh Blatchford, author of Manifested Marketing, 12/10/2013

Starbucks – Related Diversification

Starbucks is a global coffee chain, originating from the U.S. . The business has been pursuing a long-term strategy of diversifying its core offering beyond beverages; this is designed to help differentiate the brand, which is very important considering coffee is almost a commodity.  The latest development is that Starbucks now plans to increase its focus on food. In the U.S. Starbucks is now serving La Boulange pastries – a bakery that the firm acquired for $100 million – and Evolution Harvest granola bars – again acquired for a tasty $30 million. Across the sea in the U.K Starbucks has launched a new food range, with the ‘Duffin’ doughnut/muffin hybrid serving as the flagship product.

This post will look at the benefits and drawbacks to Starbucks of expanding into the food market.

Diversification is just one of four growth strategies of the Ansoff Matrix (below), which shows the four ways a firm can increase sales:

1. Market penetration – is growing sales of existing products in existing markets.  For instance, Starbucks have started writing names of customers on coffee cups.  The intention of this is to increase sales as a result of greater customer satisfaction.

2. Product Development – intends to increase sales by launching new products into an existing market.  An example of this would be Starbucks introducing a new premium coffee made with rare and exclusive beans.

3. Market Development – is growing sales by launching existing products into new markets.  Starbucks are a great example of this by having coffee shops all over the world.

4. Diversification – is launching new products into a new market, potentially increasing sales by a significant amount.  However, this is the most risky strategy.  Starbuck’s latest plans to launch a new food range is a diversification strategy because the firm is using a new product to tap into a new market for meals.

Until now, their food range has only been intended to compliment their beverages and not a significant source of revenue or consumers’ meals.  As this form of diversification is very similar to their current product range and market, it is considered ‘related diversification’.

 
Despite the risk, why do Starbucks want to diversify into food?

Grow Sales!  As mentioned earlier, diversification has the potential to rapidly grow sales.  Particularly for Starbucks, the new food range can become a major source of revenue.  Sales of food items have been flat for the past three years, however the coffee chain is aiming to increase sales by 30%.  Food items also help increase the spend per customer in store, which is important for coffee outlets that are limited by the amount of customers that can be seated.  Therefore this is a more efficient strategy than increasing the amount of consumers visiting Starbucks.

Spread uneven demand.  Currently peak sales for Starbucks occur in mornings and afternoons for coffee breaks; an emphasis on food encourages consumers to visit their outlets at meal times.  Consequently, it will be easier for Starbucks to manage their capacity and not have to use inconvenient shift patterns.

Gain a competitive advantage.  It goes without saying that the coffee shop market is extremely competitive.  And there are no signs of competition becoming less severe: McDonalds have now decided to enter the coffee market to diversify their offering.  To an extent, expanding into the food sector is almost a retaliation from Starbucks, aiming to steal hungry coffee consumers.

Diversification is the last available strategy to grow sales for Starbucks.  The coffee shop market is far too saturated for market penetration strategies to grow sales significantly – the benefits of market penetration are often short term anyway.  Starbucks have an incredibly vast range of drinks, which means that there is very limited opportunity to develop further products.  Lastly, the chain has over 20,000 outlets in 63 countries, again, limiting the possibility to grow sales through market development.

To quickly recap, Starbucks’ plans to diversify is one of the Ansoff Matrix growth strategies. The alternative strategies to grow sales are market penetration, market development and product development.  The benefits to Starbucks are to grow sales, spread uneven demand and gain a competitive advantage.  This strategy is also suitable for Starbucks because they have exhausted the ability to grow sales through the other means.

 

© Josh Blatchford, author of Manifested Marketing, 07/10/2013

Cadbury – Classical Conditioning

Cadbury is a confectionery brand originating from Birmingham in the United Kingdom.  The firm has been owned by Mondelez International since 2012, after acquiring the brand from Kraft Foods.  Cadbury is most famous for its Dairy Milk Chocolate and its use of purple wrappers that have become synonymous with the firm.  The particular shade of purple Cadbury use is known as Pantone 2865c and is very much part of the brand’s identity; the color has been used since 1905.  However, this could now be subject to change.  Cadbury has lost a legal battle with Nestle, regarding the trademark of the color.  A trademark is a unique design, expression or sign that identifies a product.  Unfortunately for Cadbury, the UK Court of Appeal has ruled that the color purple is not distinctive enough to qualify as a trademark.  Consequently, the color Pantone 2865c can now be used by other confectionery manufacturers.

But why is this such a big problem for Cadbury?

This post will look at how a color becomes associated with a brand and the potential damage the court’s decision can cause Cadbury.

The process of brand identity association can be best explained by Pavlov’s Classical Conditioning theory:

When consumers see the color purple, their main thoughts are of luxury, high quality and royalty: all of these are positive associations with the color.  Before the association with purple, back in the late 19th Century, Cadbury would have been just recognized by consumers as a confectionery manufacturer when presented with their products or advertisements.

In the early 20th Century, Cadbury decided that they wanted their brand to be associated with the same qualities as the color purple.  The brand embarked on a long – albeit highly rewarding – process of pairing the Cadbury brand with purple.  This involves an integrated marketing communications strategy and coordination of the marketing mix to use the color purple as much as possible and in consistent formats over a long period of time – over one hundred years!

As you can see, when it comes to Cadbury the one color any consumer would immediately associate with the brand is purple.  This has been reinforced – or ‘paired’ – over many years to entrench the color into the brand’s identity.  The result of this is that consumers’ responses to Cadbury and purple become merged.  Thus, when exposed to a Cadbury’s chocolate bar or marketing they see and think of purple and then of luxury chocolate; or when consumers are presented with purple, there is a good chance that Cadbury may come to their mind and subsequently luxury chocolate.

If you really want to drill-down into the fine details of how this ‘pairing’ process works (which I do!), then we need the help of something called Balance Theory:

1. Balanced state without pairing

The first triangle shows the consumer’s state of mind before classical conditioning has taken place.  The consumer associates purple and luxury (etc.) to be associated with one another; this is because of societal norms and culture.  However, Cadbury is not considered to be linked with the color purple and thus not luxury either.

2Unbalanced state during pairing process

This second triangle is the consumer’s state of mind during Cadbury’s branding campaign.  At this point in time, the consumer has been exposed to plenty of marketing stimuli containing the color purple.  Hence, the consumer now believes there is a connection with Cadbury and purple – yet still no link with Cadbury and Luxury.  But this is an unbalanced state, which a consumer cannot remain in for a long period of time.  Namely, it is illogical to believe luxury and purple are synonymous, and that Cadbury and purple are associated together, but not Cadbury and luxury.

3. Balanced state after successful pairing

The consumer was exposed to further marketing stimuli to build a stronger bond between Cadbury and purple so that their state of mind becomes so confused they undergo an attitude change.  Therefore, they reconcile the previous ‘unbalance’ by associating Cadbury and luxury together; now all three constructs are related, which is a logical response.

So why is the trademark loss of the purple Pantone 2865c so disastrous?  There are two main reasons:

1. Improved authenticity of copy-cat products – as pictured above, if generic alternatives to Cadbury can now use the exact shade of purple it increases the chances of consumers mistaking the two, therefore Cadbury lose sales.
2. Damage to reputation – if cheaper products start using Pantone 2865c on a mass-scale, this purple may lose its association with luxury.  Instead, it could – in the consumer’s state of mind – become paired with poor quality.  In this case, all of Cadbury’s marketing will back fire on them!

In summary, purple has become associated with Cadbury as a result of consistent and integrated marketing communications.  The ability of generic or cheaper brands to use this exact shade of purple makes it harder to identify Cadbury’s products and potentially damages the Cadbury brand.

© Josh Blatchford, author of Manifested Marketing, 05/10/2013

Nestle – BCG Matrix and Brand Divestment

Nestle is a multinational food and beverage producer, based in Switzerland.  The firm currently has the 69th highest revenue in the world, generating $98,484m worth of sales in 2012.  Nestle sell over 8,000 brands, ranging from bottled water to pet food, of which 29 brands have sales of approximately $1 billion.  However, Nestle’s CEO, Paul Baulk, recently announced plans to divest (sell-off) under-performing brands due to poor sales.  It is highly likely that the marketers at Nestle have used the Boston Consulting Group Matrix (BCG Matrix) to identify which brands to sell off.  This post will look at what Nestle’s BCG Matrix is likely to look like and critique how useful the matrix is.

Based on recent news sources and Nestle’s 2012 Annual Report (PDF), here is Nestle’s current BCG Matrix for a slection of their brands:

Question Marks – these strategic business units (SBUs) have a low market share of a high growth market.  Magi 2-minute Noodles currently require lots of investment in order to capitalize on the growing culinary segment, which may not offer the highest return on investment in Nestle’s brand portfolio.

Stars – SBUs with a high share of a high growth market.  Nestle’s wide range of mineral water has benefited from the combination of healthier lifestyle trends and emerging markets.  These products require large amounts of investments in order to differentiate the bottled water brands from competitors in mature markets and grow brand awareness in emerging markets.

Dogs – SBUs in this category have a low market share in a low growth market. Sales of Jenny Craig and Lean Cuisine, weight loss management brands, have failed to expand outside of the USA – these two brands are tipped to be divested in the future.  Sports performance and nutrition brand, PowerBar, is confirmed to be divested.  This is most likely because of poor sales in a saturated market. SBUs in this classification may generate enough profit to be self-sufficient, be are considered to never be major sources of revenue.

Cash Cows – perhaps the most important SBU, Cash Cows have a high share of a low growth market.  They require very little investment to generate revenue, which allows funds generated from such SBUs to be reinvested into Stars or Question Marks.

Although Nestle appear to have taken the recommendations from the BCG Matrix, there is no such thing as a fool-proof strategic tool.  As such, Nestle should be aware of the following drawbacks of using this analysis:

Multi-industry comparisons  – Nestle have 8,000 brands across a whole range of industries.  This can make it difficult to compare different SBUs in the same matrix.  For instance, sales of gluten-free food may be growing more quickly than water but it would not be wise to allocate more budget to the former at the expense of the latter as the market for mineral water is obviously much more lucrative.

Market growth may be directly influenced by the firm – Nestle is the world-leader of milkshake products, with a huge market share.  Consequently, an increase in investment in Nestle’s milkshakes would be very likely to lead to a growth of the overall milkshake market.  This would give the impression that Nesquik is actually a Star SBU, which is not accurate.  The exact opposite of this is true: perhaps the reason why the growth of weight-loss management market has slowed is because major firms like Nestle have stopped investing in their products. The result of this is that consumer demand may be there, but not visible in sales revenue because it is highly influenced by the amount of marketing consumers are exposed to.

No consideration of future trends – a major weakness of the BCG matrix is that is focused purely on the present and not on the future.  Hence, divesting PowerBar would be a very bad decision if the sports nutrition market undergoes a resurgence.

Time consuming – given the above weaknesses, is the BCG matrix worth Nestle’s marketers time?  This is a very important question Nestle should have asked themselves before analyzing 8,000 brands!

In summary, the principles of investing different amounts of money into different SBUs is a good practice;  however, the BCG Matrix should not be wholly relied upon.

© Josh Blatchford, author of Manifested Marketing, 4th October 2013

Rockstar Games – Grand Theft Auto 5 Guerrilla Marketing

You do not need to be interested in video games to be aware of Grand Theft Auto 5’s (GTA 5) popularity.  Developed by Rockstar Games, GTA 5 is an open-world, crime-based video game – players are allowed to explore a huge city causing illegal mayhem.  The game has been a phenomenal success, generating a revenue of $1 Billion in just three days.  To put that into context, the global music industry generates $1.4 billion a month!  This is partly because Rockstar allocated GTA 5 a huge marketing budget – large enough to rival Hollywood films – which allowed some very creative marketing to take place.  This post will focus on GTA 5’s  viral guerrilla marketing, being a prime example of creative marketing.

Viral marketing is a broad concept, but it is essentially utilizing online social networks to share marketing content.

Guerrilla marketing is the use of unconventional advertising, which often does not appear to be marketing, to spread ideas.

Put these two together and you have online marketing done in a highly innovative way, that is not obviously an advertisement.

Let’s see what this looks like using GTA 5 as an example:


1.  Lifeinvader


Rockstar created its own social network, Lifeinvader, that was set in the world of GTA 5.  An obvious parody of Facebook, GTA fans can create their own account and access it both in the real world and video game world.  The social network’s ads are just that: they advertise all the exciting activities that can be done in GTA 5.  There is, of course, Rockstar’s famous controversial humour to engage users and encourage sharing.  Speaking of sharing, the only social media sharing buttons you will see on the official website are to share content on Lifeinvader.


2. iFruit

The other company to be parodied was Apple when Rockstar released their iFruit app.  The app allows players to customize in-game vehicles and train pets from their phone.  The effectiveness of this is all about using the app to blur the lines between the real world and the world of GTA 5 to generate word-of-mouth marketing around the internet.


3.   Epsilon Program

The last target of the GTA 5 marketing campaign was Scientology, which is parodied in the game as ‘The Epsilon Program’.  Rockstar created both a Twitter feed and a website to once again bring the video game experience into the real world and generate publicity through the controversial humor.

The main advantage of viral guerrilla marketing is that it is highly cost effective to reach a large number of people.  This is because, unlike conventional techniques, the cost of reaching a few people and thousands remains mostly the same.

However, that is not to say this is something every business should be doing.  The chances of a campaign ‘going viral’ are miniscule and the returns are unpredictable.  It only makes sense to take Rockstar’s approach if the target market is suitable.  With the case of Grand Theft Auto 5, the market is generally tech-savvy and active on the internet, vastly improving the success of a viral campaign.

Despite this, Rockstar still used traditional advertising techniques – such as trailers, billboards and press coverage – for the core of their campaign.  This highlights the importance of never relying on guerrilla marketing and appreciating that your entire target market often can’t be reached through one marketing method.

It is probably the integration of both viral guerrilla marketing and conventional marketing that has been highly effective.  This can be explained by the Elaboration Likelihood Model (ELM), depicted in the diagram above.

If the target market is able and motivated to process information, in this case, it means they are active on the internet and willing to engage with Rockstar online.  Therefore they are exposed to the viral marketing, enjoy browsing the parody websites and using the iPhone app.  Such a market is likely to be the gamers in their teenage years or twenties.  According to the model, the most effective way to market to them is through the central route. This requires a promotional message that is convincing and requires the target market to think more – hence the use and success of viral guerrilla marketing.

But what about the older gamer or the Mum/Mom and wife looking for a gift ?  They are all potential customers of GTA 5.  As they are unlikely to be motivated to engage with GTA 5’s online content – nor even aware of it – this market is best targeted through the peripheral route.  Successfully using the peripheral route method depends on exciting and attractive advertising.  Therefore, the billboards and TV trailers embedded in this post are mainly targeted at this demographic.

Simply, combing marketing that uses both the central route and peripheral route means you almost can’t go wrong!

© Josh Blatchford, Author of Manifested Marketing, 03/10/2013

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