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Staples Strives For Innovation

Staples has a contest called InventionQuest. Winners of the annual contest receive $25,000 and up to an 8% royalty. The annual contest is in its third year and continues to attact investors from across the country. People submit ideas for improving office products. The contest is part of a broad effort by Staples make a stable of exclusive products to differentiate its own-brand line from those of competitors.

Staple's also got a boost after providing to pay for judges on an episode of the Donald Trump show, "The Apprentice." Contestant's on the show developed a useful desk organizer. The winning product went on Staple's shelves the next day and quickly sold out.

Staples brand products, which carry a higher profit margin than other goods, accounted for 18% of Staple's $16.08 billion in revenue last year. Cheif executive Ron Sargent says he expects that to rise to 20% this year. Mr. Sargent says his ambition is to make the chain's own products "the top national office products brand."

Bulkeley, William M. "Got a Better Letter Opener?" Wall Street Journal. Page B1. Thursday, July 14, 2006.

Bold Moves Way Forward

Ford South America has become the company's biggest success stories. It accounted for nearly $1 of every $5 Ford earned in last year. "What we can learn from South America is a willingness to start with a clean sheet of paper," Chairman and Chief Executive Bill Ford said.

First, Ford overhauled its manufacturing facilities by closing inefficient plants. It took a risk by opening a new, low-cost factory. Second, Ford began making cars that were aligned with consumer tastes. Ford polled young people at nightclubs and churches in low-income communities. Its market-research pointed toward designing a small SUV to compete with Nissan Pathfinders and Toyota RAV4s. In 2003, Ford introduced the Ecosport. It is so popular that it has captured 80% of the SUV market in Brazil. The Ecosport is designed to fit customers in emerging markets. It is smaller and designed to cope with bad road conditions.

Michael Robinet, a vice president at CSM Worldwide, a Michigan-based auto-industry research firm said "Bland or non-aggressive design is not a recipe for long-term growth and stability of any company." Ford is closing 14 North American plants and cutting up to 34,000 jobs during the next six years. It is doing this in an attempt to reinvent itself. Industry insiders say Ford must show the same boldness in North America if it really wants to move way forward.

Samor, Geraldo. “In Brazil, Ford Has Discovered ‘Way Forward’.” Wall Street Journal. Page B1. Monday, July 10, 2006.

Nestle Sales Down 18%

Nestle has been unsuccessful trying to increase sales for its candy bar, KitKat. Nestle has been trying to launch different flavors for the popular candy bar. Nestle has been trying to improve sales by introducing line extensions for its current popular product offerings. Meanwhile, it has been trying to avoid introducing new products. "Line extensions are a lot less risky, while new brands tend to be fewer and far between now," says Tom Vierhile, analyst with Datamonitor. Nestle's rival Kraft Foods Inc. turned Oreo cookies into Oreo ice-cream cones, an Oreo pie crust, miniature Oreos, and "spring themed" Oreos with purple filling. Additionally, retailers such as Wal-Mart Stores Inc. provide shelf space to brands receiving the most sales. Unfortunately, new products sales not very strong in most cases.

Nestle dropped the tagline "Have a break, have a Kit Kat" for "Make the most of your break." It hopes sales will improve.

Ball, Deborah. "Flavor Experiment for KitKat Leaves Nestle With a Bad Taste." Wall Street Journal. Page A1. Thursday, Julay 6, 2006.

Old Navy Going Upscale

Old Navy is repositioning to attract customers who are willing to spend more. Sales have been down for Old Navy. In fact, they have been declining since November 2004. Sheryl Clark, Old Navy’s executive vice president of merchandising, says Old Navy had become "overly focused on value." However, there was little product and brand differentiation from other low cost retailers. Therefore, Old Navy is going to begin selling higher quality clothes at higher prices. Old Navy plans to use Abercrombie & Fitch as an internal gauge to compare its progress.

Merrick, Amy. "Can Silk and Leather Tempt Shoppers Back to Old Navy?" Wall Street Journal. Page B1. Friday, June 30, 2006.