Friday, February 23, 2007

HSBC Advertising on Airline Terminals

I flew into La Guardia International Airport this past weekened and noticed HSBC has ads placed on airline terminals. I found this very interesting. It definitely caught my eye. Then again, I'm always trying to find new unique ways companies advertise. I could only imagine what made HSBC put ads there. So I decided to do some research. Apparently, HSBC signed a five-year deal in April 2006 to brand the interior and exterior of the 108 jetbridges at John F. Kennedy International Airport in the first major airport branding agreement in North America. It started negotiations to brand itself at La Guardia as well. HSBC recognized the importance of reaching out to consumers in one of the world's largest financial markets, New York City.

HSBC said the following when releasing news about signing the deal back in April. "True to being 'the world"s local bank,' we're excited that New Yorkers and visitors will be exposed to HSBC as they pass through JFK," said Martin Glynn, president and chief executive officer of HSBC Bank USA, N.A., HSBC's U.S. banking unit. "HSBC's strong metropolitan New York presence complements its global footprint and makes New York's airports natural places to continue building our brand with domestic and international travelers alike." With this agreement, HSBC is continuing its U.S. brand-building efforts, which coincide with its ongoing U.S. expansion.

HSBC obviously understands who its target market is and knows advertising at prominent airport locations in North America is a great way to reach them.

Tuesday, February 20, 2007

GM/Chrysler and Sirius/XM: Market Leaders Merge

GM is in talks to buy Chrysler according to Automotive News and Sirius is merging with XM Radio. However, this has many people wondering why? Neither GM/Chrysler and Sirius/XM Radio are in position to become bigger through mergers. In fact, Sheldon Liber at www.bloggingstocks says, "Why would General Motors (NYSE: GM) consider buying DaimlerChrysler AG's (NYSE:DCX) Chrysler unit? Is GM lacking scale? Has anyone accused it of not being big enough or broad enough? Hasn't it already acquired many brands over the years and still run up against superior Japanese and German manufacturers? Will acquiring Chrysler help rebuild its own brand? Does GM need Chrysler? The obvious answer is no, it does not. What GM needs is better car design, improved and more uniform quality control, sharper focus, better vision, more efficiency, streamlined management structure and less overhead burden. How does Chrysler solve any of these problems? It doesn't!" In addition, Liber feels Sirius and XM Radio have their own problems and that combining forces won't help.

Overall, both GM and XM Radio stock prices rose slightly due to the recent news about acquisitions and mergers. Also, both have seen a considerable rise in buzz.

Sunday, February 18, 2007

J.C. Penney Launches New Brand Positioning

J.C. Penney switched to a new ad agency, Saatchi & Saatchi, to come up with its new tagline "Every Day Matters." This is a change from its previous campaign "It's All Inside."

The new brand positioning also supports J.C. Penney's 2007-2011 Long Range Plan, which will be unveiled at the company's analyst meeting in April. Following the Academy Awards, ads will air over the next few weeks, reaching 89% of women ages 18-54 more than 12 times.

"Our customers want the moments in their lives to be more exciting and more meaningful," said Myron E. (Mike) Ullman, III, chairman and CEO. "To address this, our mission will be to make J. C. Penney a source of encouragement and inspiration, offering style and quality at a smart price."

J.C. Penney's stock price has risen over the past two years. It will be interesting to see if changing agencies and campaigns will have a positive impact on J.C. Penney's short term and long term success.


Saturday, February 17, 2007

Marketing Through Social Networking Sites

Social Networking sites have been showing up over the past few years and marketers have noticed and are taking advantage of this opportunity. Today, almost half (45 percent) of web users are active on social networking sites according to the Nielsen/Net Ratings. Almost 54 million people are on MySpace alone.

Top Social Networking Sites with Alexa Ranking 6 15 34 58 69 116 134 1,450

Nikos Drakos, a research director at Gartner, believes leveraging social networks to connect with customers is not only appropriate but also critical for companies to consider. In fact he says, "When I and others say "understand social networks,' it doesn't necessarily mean, 'go talk to MySpace.'" Leveraging social networks depends on what the goal is. Viral marketing and brand promotion, for example may be done through established sites.

Here is a list of companies currently leveraging the power of social networking sites.

Burger King
Jack in the Box
The Learning Channel

Source: Customer Relationship Management

Wednesday, February 14, 2007

Miller Lite Goes With Digitas

Miller Brewing Co. named Digitas as its primary advertising agency. Digitas in taking over the Miller account at a time when alcohol makers are becoming more aggressive and creative in their marketing efforts. Miller hopes using a digital advertising campaign will help it compete with Anheuser-Busch. Both beer companies recently began leveraging online channels such as YouTube to market their products.

But why is Miller changing its partner now? Jackie Woodward, Miller VP-media and marketing services, said in a statement. "We are stepping up our efforts, and Digitas is the right partner to help us develop breakthrough programs that engage consumers and help further differentiate our brands." Miller spent $4.5 million online during 2005, according to TNS Media Intelligence, and $2.6 million during the first nine months of 2006. A Miller spokesman said the brewer has been increasing its digital spending and expects to continue doing so.

The graph below shows discussion patterns for Miller Lite, Budweiser, and Corona in the Blogosphere. Overall, Miller Lite receives the lowest amount of buzz while Corona has the most consistent buzz pattern. Interesting, consumers' discussion about Budweiser is relatively similar to Miller Lite, except around the Super Bowl. Consumer discussion about Budweiser increased dramatically as people began talking about its Super Bowl ads.

A key measurement of ROI for Miller Lite will be to determine whether or not its partnership with Digitas will lead on increased online buzz and ultimately sales.

Source: Adage.

Sunday, February 04, 2007

Determining A Marketing Budget

Finding the amount to spend on marketing is not an easy task. Several ways exist to help companies determine the amount to spend on marketing. These include the percentage-of-sales approach, the competitive-parity approach, the use of all available funds, and the objective-task approach. There are pros and cons to each approach.

The most widely used approach is the percentage-of-sales approach. This approach suggests using information about past sales and occasionally future sales to budget for marketing. A downside to this method deals with marketing when sales are down. The percent of funds allocated for marketing will be lower when sales are lower. Therefore, this may not be in the best interest of a business that needs to advertise consistently even when sales are lower.

The competitive-parity approach requires an organization to attempt to maintain a balance between its communication expenditures and those of its competitors. However, it may not be wise for all companies to incorporate. A smaller company cannot spend as much on advertising as a larger competitor. An example of this is apparent in the auto industry. A company like Hyundai cannot match the marketing expenditures of a Toyota or General Motors. Another method is to use all available funds for marketing. This strategy is commonly implemented when introducing a new offering for which maximum exposure is desired.

A final approach is the objective-task approach. This approach requires an organization to budget communication as a function of the objectives set for a communication program and the costs of the tasks to be performed to accomplish the objectives. The approach requires three steps: (1) define the communication objectives, (2) identify the tasks needed to attain the objectives, and (3) estimate the costs associated with the performance of these tasks.

The objective-task approach is the best method, but the most difficult to apply in practice. In fact, I am currently helping a company which sells baby products reach a more defined target audience. They currently use the percentage-of-sales approach. However, I determined their current marketing strategy had little impact on sales. Therefore, I suggested they switch to a more objective-task approach. We are currently reviewing objectives. Some of these include lower marketing costs and reaching out to their core customer. I plan to do this by moving them from traditional advertisements (i.e. television commercials which don't reach their target market entirely) to focusing on search engine marketing and promotions to encourage referrals.

Overall, I feel moving to an objective-task approach will help this company meet its sales goals, lower marketing costs, and reach its target market more easily.

Source: STRATEGIC MARKETING PROBLEMS, CASES AND COMMENTS by Roger A. Kerin and Robert A. Peterson.