Winn-Dixie’s new type of Happy Meal…Customer Marketing on Steroids or Shopper Marketing?

•October 30, 2010 • Leave a Comment

Winn-Dixie has been using an integrated marketing plan to present weekly “Make-A-Meal” specials dangling four free products with the purchase of select brands.

The themed offers are advertised prominently on the chain’s website, featured in circulars and local radio spots, and promoted in stores via table displays, ceiling signs and window posters. The most recent deal, staged Oct. 13-19, offered free SKUs of Dole Foods bananas, Smithfield Foods’ Eckrich sausage and private-label milk and coffee with purchase of three boxes of Kellogg Co. cereal. The promotion delivered $10.71 worth of free product on a purchase of $14.97. (The Kellogg’s cereals were priced high at $4.99 per box.)

The chain switched things up a bit for the week of Oct. 20 by instead offering a “What-A-Deal” incentive: shoppers who paid $23 to get a flu shot at in-store pharmacies received free SKUs of oranges, Simply Orange juice, private-label hand sanitizer and disinfecting wipes, and Kimberly-Clark’s Scotties tissue.

The Make-A-Meal program has been running since late 2009, presenting deals related to seasonal themes such as holiday, summer grilling and football tailgating. 

Winn-Dixie Home Page and Splash Page

While similar themed giveaways have been commonplace at supermarkets since the economic downturn began in 2008 (for one, H-E-B runs weekly “Combo Loco” offers), Winn-Dixie’s offer is decidedly more extreme.


Asda (Walmart) in the UK – A giant supermarket experiments with being small & focus on the city locales

•October 29, 2010 • Leave a Comment

SHIFTING consumer tastes and changing regulations have forced even the clumsiest of retail behemoths to be more fleet-footed. Consider Asda’s purchase of the Netto chain of stores from Dansk, a Danish outfit (cleared last month by the Office of Fair Trading, which polices mergers and acquisitions). To satisfy the trustbusters, Asda will have to sell 47 of the 194 Netto outlets to rivals to ensure that there is sufficient competition in some areas.

The rest will be converted into small Asda stores from early next year. 

The deal marks Asda’s first big expansion into local convenience stores, a format that rivals Tesco and Sainsbury’s have been perfecting for years. For that reason, it was something of a shock when it was announced. Asda’s business model, like that of Wal-Mart, its American parent, is based on scale and low cost, not convenience. The average size of the stores it has acquired is 8,000 square feet; a typical out-of-town Asda might be six times larger. 

But the retail chain had few options in its quest for growth. Tight planning laws and restrictions on the presence that each grocery chain can have in one area make building big stores difficult. The smaller stores will give Asda better access to affluent consumers and small households, in addition to the families with children it mostly caters to now.

Smaller outlets can also be more profitable than big stores, even though renting and supplying them is dearer: faster turnover means more sales can be squeezed from each square foot of floor space. Asda has said it will charge the same prices in all its stores—but there are other ways to make each sale more profitable. Grocers tilt their small-store offerings towards higher-margin products such as chilled foods and favour smaller, more expensive containers of the goods they sell in big stores. Special offers and low-margin goods, such as the cheapest own-label lines, are scarce in convenience stores.

Asda is coming late to the small-store format. Given its reputation for low prices rather than retailing flair, it may struggle to lure in the cash-rich but time-poor consumers who prize convenience. But some analysts think that is the least of Asda’s concerns. “Asda has the right products,” says Jaime Vazquez, a retail analyst at Santander, a Spanish bank. “The challenge for it is the economic model.” Asda and Wal-Mart excel at supplying large quantities of goods to big stores over long distances. The supply of smaller in-town stores is trickier. Asda needs to deliver goods at different temperatures over short distances a lot more frequently than it is used to. “The key to success will be the stuff the consumer doesn’t see,” says Mr Vazquez.  Asda’s experiment has implications for the rest of the Wal-Mart chain, in America and beyond. The small store is a format that suits mega-cities in emerging markets where shops that are close to home are valued. The lessons Asda learns from its 150-odd convenience outlets in Britain will be shared with Wal-Mart stores in other countries. It may take it two years or more before it gets it right. When it begins to open more small stores in Britain, it will be a sign that the retail giant believes it has learned to be nimble.

Source: The Economist, 10/28/10

Must Read — Interbrand Top 100 Brands Report

•September 18, 2010 • Leave a Comment
Below is a preamble to the report from Jez Frampton, Global Chief Executive, Interbrand

As 2008 rolled into 2009, we saw spending habits begin to change. Now, in 2010, we are seeing the starts and stops of a recovery coupled with profound changes in the relationships between brands and their customers.

We are becoming used to a new normal – one where brands are constantly stress-tested for relevance and value. The same customer might opt to buy an iPad instead of a laptop, purchase private label toothpaste and then match a Zara skirt with Christian Louboutin shoes. They will expect to buy online, return in-store and receive the most up-to-date offers and promotions instantly. With alternatives only a click away, their patience is ever-shortening making them not only more difficult to predict, but more confident every day. Indeed, even what appears to be the most minor instance of customer discontent in one part of a brand experience can quickly lead to a major customer revolt due to consumers’ ability to spread the word about brands quickly and effectively online.

It is clear from our recent conversations with Chief Marketing Officers around the world (available to read at, that brands are making an eff ort to adapt to this real-time brand management approach, using social media channels to forge deeper relationships with consumers. Managing this constant connection demands a radical shift in internal behavior, and it is fair to say that many traditional organizations are still struggling with this change. We can already see that the next big challenge will be to genuinely empower and engage people on the inside. Just as corporate greenwashing is no longer tolerated, the notion of “brandwashing” your way through customer relationships won’t be a lasting tactic. Like the smart marketers that have sensed changing attitudes toward corporate citizenship and have responded by putting it (in its widest sense) at the center of their business strategy, the best marketers are already focused on making meaningful employee engagement a priority for their brand and business strategies.

Despite all this change, however, it is clear that the role of brands in consumers’ lives and the foundations of strong brands remain consistent. Brands, in their ability to create choice, build trust and loyalty and drive a premium price, are as important today as ever before. They play an unwavering role in our lives, even as spending changes, technology advances and preferences evolve. The rules for building and managing great brands may be shifting, but as you’ll learn in the pages in this report, the long-term sustainable advantage gained by building a strong brand remains the same.

A measure of an organization is internal commitment to or belief in its brand. Commitment is the extent to which the brand receives support in terms of time, influence and investment.

This component examines how secure a brand is across a number of dimensions from legal protection and proprietary ingredients to design, scale or geographic spread.

The brand’s values, positioning and proposition must be clearly articulated and shared across the organization, along with a clear view of its target audiences, customer insights and drivers. It is vital that those within the organization know and understand all of these elements, because everything that follows hinges on them.

This component looks at a brand’s ability to adapt to market changes, challenges and opportunities. The brand should have a desire and ability to constantly evolve and renew itself.

This component is about how soundly a brand is based on an internal capability. Authenticity asks if a brand has a defined heritage and a well-grounded value set, as well as if it can deliver against customers’ expectations.

This component estimates how well a brand fits with customer needs, desires and decision criteria across all appropriate demographics and geographies.

Not only must customers recognize the brand, but there must also be an in-depth understanding of its distinctive qualities and characteristics, as well as those of the brand owner.

This measures the degree to which a brand is experienced without fail across all touchpoints and formats.

This measures the degree to which a brand feels omnipresent and how positively consumers, customers and opinion formers discuss it in both traditional and social media.

This is the degree to which customers perceive the brand to have a positioning that is distinct from the competition.

Here is the link to the full report:

Groupon Launches National Deal With Gap, Selling 10 Groupons A Second

•August 21, 2010 • Leave a Comment

What a difference a day and a deal makes. Yesterday morning, Groupon launched its first nationwide deal, $25 off a $50 purchase at Gap. The promotion, which was available in every city, briefly crashed Groupon’s servers as deal-happy consumers clicked on the 50% discount and pinged their friends.  

Despite the technical difficulties, according to Groupon‘s CEO Andrew Mason, as of 11AM PST (the e-mail blast went out at roughly 6AM in each time zone) Groupon has sold 200,000 Groupons and is currently selling roughly 10 per second. Ten sales per second is an unusually high volume, Mason says, “several multiples above the average.”

Originally Groupon predicted they would sell more than 700,000 Gap Groupons by the end of day. Or, roughly $17.5 million in revenues for the daily deal machine. As it turned out sales tapered off and 400,000 were sold or $11 million in revenues — not too bad.

Although Groupon has dabbled in multi-city deals, this is the first time they have partnered with a national retailer for a full countrywide roll out. Interesting to see how Groupon will integrate this into its mainstream which are local daily deals, but the Gap promo certainly proves that a  national campaign could be compatible with Groupon’s business model. For Groupon, it’s an obvious win situation, the Gap deal enhances the company’s mainstream appeal, its consumer visibility and, as evidenced by the numbers, it also pulls in a lot of cash.

The upside for Gap is a little less clear. Yes, it’s a splashy marketing campaign coupled with the opportunity to push out inventory, but $25 off $50 is a deep cut to margins— especially, when you consider that Groupon typically takes a 50% cut. Thus, from Gap’s perspective, the retailer is effectively dolling out 75% off discounts on sale and non-sale items. That raises a red flag.

Did Gap pair up with Groupon to launch a sexy marketing campaign or did they partner with Groupon because they really need to drum up excitement and sales (whatever the margin?).  

Kroger Delivers Upscale Beauty Line

•August 17, 2010 • Leave a Comment
Retailers continue to build brands that rival established brands in the mind of the consumer and shopper.  Review the following description from the Kroger website.
Kroger is proud to introduce mirra™, our easy to use, exclusive health and beauty care brand for family-focused women seeking effortless beauty. mirra™ combines quality, natural ingredients with the latest science to meet 3 different needs: Daily – routine personal care; Renew – a rejuvenating time out; and Inspire – quick transformations for a night out.

Designed to make hair look and feel its best, mirra™ Daily shampoos and conditioners are professionally formulated to adapt to your hair’s unique needs: Smoothing, Volumizing, and Color Treated. mirra™ products contain sunflower extract, soy protein, amino acids, and chicory root, along with other ingredients, to counteract the harsh effects of hard water and restore a healthy PH balance to your hair – allowing your hair to reach its full potential. Styling products provide moisture, shine, and hold.

mirra™ Daily makeup brushes are made from quality natural hair and synthetic fibers for flawless application of color cosmetics. mirra Renew skincare products feature exfoliating cleanser and assorted creams to hydrate, reduce appearance of wrinkles, accelerate skin renewal, firm and lift with ingredients such as aloe, green tea, pro-vitamin A, and apricot seeds.

In body care, mirra™ Renew offers Bamboo & Honey, Lemongrass & Ginger, Black Tea & Cracked Pepper, and Japanese Yuzu fragrances in foaming bath, body wash, body lotion, and body mist products for customers to layer as they nourish, strengthen, moisturize, and soothe their skin. Exciting mirra™ Inspire products are in creation for a later launch date. mirra™ is perfect for the woman who wants effortless beauty.

Wal-Mart pops onto scene, makes its mark Beverage pricing points to retailer’s influence on rivals, suppliers

•July 5, 2010 • Leave a Comment

Before referencing the article below in the Chicago Tribune, there is an issue that continues to confound me as we try to make some sense of our hyper-competitive CPG marketplace. The article below speaks of “disruption” and points to an example of a Chicagoland Walmart store selling 24 pack cans of Coca-Cola for $5. At first glance a terrific deal… after all, Coca-Cola at about 20 cents per can.

Here’s where I begin to get disoriented and confused. In the CPG brand and retailer circles I hang out in, there is constant talk about building brand or retailer equity, yet examine the ads for any of the major chains in a given week and you can observe a variety of deep price cuts, BOGOs, or other rebate schemes that tout “like paying” as the answer.

Take a look for instance at the competition to Walmart’s $5 price point this week — Namely, Jewel with their feature of selling 4 – 12 pack cans of Coke products at 4 for $8 (with your Jewel Card of course) — We are impressed, because now we have discovered a deal that has us buying Coke products for less than 17 cents. But that wasn’t enough for the retailer / cpg… see the ad below. In addition to the outstanding price on the “Pop”, we were also presented with a $3 package of Johnsonville Sausage for free with our purchase of the 4 – 12 packs.

Now if we do the math, we have reduced the cost of the Coke products from $8 to $5 — We’re now at 10.4 cents per can of our favorite soda.

Here’s where I get stuck. It is pretty well documented that a pack size that is not on sale sees sales shrink to nearly zero. For instance you can be rest assured that sales of 2-liter bottles or 6 packs all but vanish during this promotion, except for the very few that are loyal to a specific pack size.

What’s confounding here seems to be a “race for the bottom” — Both retailers and suppliers going out of their way to train us to wait for the next deal or deep discount.

For both retailer and manufacturer, this amounts to brand equity suicide. Since we are making more fill-in shopping trips, the value conscious shopper is more than willing to parse out their list to where they get the best value.

If you happen to be Target Stores as the ad shows below, your 3 – 12 packs for $11 is an embarrassment.

Yes, I’m dazed and confused — While I understand the need to drive traffic and volume, can someone please explain to me how this benefits our retail environment over the long haul. Or is this a case of simply reverting to a world of “make it up with volume” environment that we have been lamenting for 50 years or more?

From the Chicago Tribune – 6/27/10

Walk into the lone Chicago Wal-Mart to stock up on pop in the summer heat and there, rising like a palm tree in an oasis, is a stack of Coke cases at a special price: 24 cans for $5.

A brand-name beverage like Coca-Cola for about 20 cents a can is more than a great deal. It’s a sign of Wal-Mart’s purchasing might, a warning shot to competitors and less than good news for the beverage industry.

Experts call that kind of intimidating power “disruption,” and it will come to the Chicago area in a bigger way now that Wal-Mart plans to open a second store in the city, on its way to what it hopes will be dozens more urban locations.

Squeezed by higher bottling costs and a decade of stagnant pricing, beverage companies had only recently managed to persuade consumers to pay more for soda, according to industry analysts. Now, in one swoop, Wal-Mart has gotten attention for itself while taking a bite out of soda sales at other chains.

The promotion, which began shortly before Memorial Day, is pushing other retailers to roll back prices to pre-1990s levels to compete. And it has stirred new fears about Wal-Mart’s ability to wield its massive buying power to work against the interests of the industries that supply their stores.

“They just have so many stores that they can really push back, they can really squeeze, not just soft drink companies but other food firms, to force them to take the hit and take their margins down,” said Philip Gorham, an equity analyst with Chicago-based Morningstar who covers the beverage sector.

Wal-Mart’s power is indisputable. It is the largest retailer in the world, which gives it the ability to negotiate with manufacturers to get lower prices that other stores, particularly smaller independent ones, may struggle to match.

Price cuts on such products as soda are part of an aggressive initiative Wal-Mart announced in October 2008 and began to roll out in spring 2009. In May of this year, deep discounts on products like pop, ketchup and other items raised Wal-Mart’s pricing lead versus other competitors fivefold compared with the previous month. Analysts say the promotions are expected to appear around every holiday through the second half of this year.

“Wal-Mart is so huge that any action they take tends to have a big consequence. So if they do a rollback on a core product, they drive huge volume, so much that they disrupt the supply chain of producers,” said David Garfield, who is based in Chicago and leads the Consumer Products practice of AlixPartners.

Soda is the single-most consumed beverage in the U.S., and a $70 billion-plus market. For many retailers, it is also considered an important driver for pushing traffic into their stores. But for the megachains like Costco and Wal-Mart, soda is less important, which gives them more negotiating clout.

“There’s been a power shift over the past 10 years where the power has shifted from packaged-goods firms to these huge grocery store chains,” said Gorham at Morningstar.

A dispute over pricing in 2009 led Costco to stop selling a number of Coca-Cola brands in its stores. And while the two sides eventually made up, it represented the first time a retailer was bold enough to go up against a powerful brand like Coca-Cola.

Wal-Mart can afford to be bold, and its impact is readily seen. Median sales decrease 40 percent at similar high-volume stores when a Wal-Mart enters the market, 17 percent at supermarkets and about 6 percent at drugstores, according to a study published in June 2009 by researchers at multiple universities and led by the Tuck School of Business at Dartmouth College in Hanover, N.H.

Stores that fail to prepare by adopting a new strategy to survive tend to feel the greatest impact. Similar high-volume stores, like Target, fare the worst when a Wal-Mart moves into an area because they are forced to compete by reducing regular prices, the study found.

“We’re fiercely competitive on price and routinely shop our competitors, including Wal-Mart, to ensure we’re providing our guests with the best possible value,” said Jennifer Mooney, a spokeswoman for Target.

Mooney also said the chain has a promise to match any print-advertised price on an identical product featured by a local competitor, including Wal-Mart.

Drugstores like Deerfield-based Walgreens are the least impacted, according to the study, and are generally able to stay afloat by increasing their assortment size.

“Overall we compete very well with Wal-Mart,” said Jim Cohn, a spokesman for Walgreens. “We cater to a wide customer base, and often the need or occasion for a Walgreens shopping trip is different from many of our competitors.”

Supermarkets, the study found, can survive by doing their best to differentiate themselves from Wal-Mart, rather than attempting to compete.

Karen May, a spokeswoman for Jewel-Osco, said the company has responded to Wal-Mart’s deep discounts by offering a variety of promotions “every day” and by promoting low-cost private-label brands. She said Jewel-Osco has not seen a change in pop sales since Wal-Mart’s promotions began.

A Dominick’s spokeswoman said “customers have other fluids they continue to look for,” including water, sports beverages and energy drinks.

But a recent analysis by J.P. Morgan found that Wal-Mart’s rollbacks on pop have already upset grocery stores and have the potential to disrupt the beverage industry.

Following Wal-Mart’s soda promotions in anticipation of Memorial Day weekend, national soda sales shifted dramatically to Wal-Mart and away from other grocers, the equity research firm found. Memorial Day weekend is traditionally seen as a lift for beverage sales, but sales volume dropped 9 percent during the four weeks ended June 12, according to data from the Nielsen Co.

More of that disruption may come to Chicago.

Today, just one Wal-Mart stands within Chicago’s city limits. But following a six-year battle to open more stores in Chicago, the behemoth saw progress last week when the City Council voted unanimously to let Wal-Mart build a second store on the South Side.

The chain says it hopes to open dozens of stores in the city through a community partnership agreement that would mean millions of dollars for Chicago charities and a guaranteed higher-than-minimum wage for Wal-Mart employees in Chicago.

Wal-Mart’s impact goes beyond retailers, but the exact impact on manufacturers isn’t clear because few will discuss private negotiations. Some brands have said that Wal-Mart pays for big promotions itself, essentially taking a loss on some sales to bring in more traffic. There are indications that manufacturers also are making concessions to keep Wal-Mart from bullying them off the shelves.

A Wal-Mart spokeswoman said the company does not comment on pricing strategy, industry speculation or sales on a particular product. She said lower soda prices are part of the company’s commitment to “helping families save money so they can live better.”

Representatives for Dr Pepper Snapple Group and PepsiCo Group did not reply to requests for comment. Coca-Cola said the company does not comment on customer relationships.

Analysts say when customers see cheap pop in bulk quantities, the tendency is to stock up, which means a lull in sales following a promotion.

“The risk of such rollbacks are several,” J.P. Morgan wrote in its analysis. “For one, a rollback creates a powerful lift and thus demand for a product, necessitating a production spike and disruption to the supply chain. Inventories can be thrown off kilter. And ultralow pricing poses a threat to brand equity.”

Pradeep Chintagunta, a marketing professor at the University of Chicago Booth School of Business, said retailers are less likely to react to low pricing when a single Wal-Mart moves to an area. But the threat of dozens of Wal-Marts could mean significant changes for Chicago, particularly among chains that rarely localize their promotions on a store-by-store basis.

Kusum Ailawadi, professor of marketing at the Tuck School of Business, said chain retailers usually promote according to “zones,” although they could benefit from a more nuanced strategy.

“Let’s say you now define this as a Wal-Mart zone. Retailers I’ve spoken with have said, ‘We essentially cut our prices down almost across-the-board but especially in the departments where we have more overlap with Wal-Mart,'” she said.

Kotex Challenges Conventions and Discussion of Fem Hy Products With UbK Launch

•May 30, 2010 • Leave a Comment

UbK pops off the shelf in what has been a boring category

Attempting to re-write the notions of a young woman’s onset of her menstrual cycle, in March, Kotex encouraged women to “break the cycle” and transform the conversation surrounding woman’s health.

Kotex is nearly 100 years old and introduces this trendy new line, U by Kotex. It is promoted through a series of ads aimed to make fun of all the old stereotypes of menstruation we have seen in ads for the last 50 years.

This hip new product line serves as the brand’s first step in redefining the tone and positioning of the brand by means of encouraging women to change the conversation surrounding feminine care from one of shame and embarrassment to one of open, honest dialogue.

Supported by NewsAmerica shelf talker program

This sets the stage for the Kotex brand to be positioned very differently in the future according to company brand spokespersons. In the future it will be all about truth, transparency and progressive feminine hygeine — as they promote their new tagline to the target audience of 14 to 20 year olds… “Break the Cycle”.

This new U by Kotex line, which includes tampons, pads and liners, has a distinctive and edgy attitude that shows in the stunning jump off the shelf packaging in a category that has shown virtually no imagination for decades. The product launch is supported by a continuum of marketing elements that span the entire path to purchase. They include product placement on the Tyra Banks show; a cause-related campaign entitled “Declaration of real talk”,  supporting Girls for a Change; a community-driven Web site; targeted print, TV and online advertising; direct-to-consumer online communications; extensive consumer sampling and retail in-store support.

A community designed to "Break the Cycle"

The TV and YouTube spots take on a whimsical, yet direct approach to selling feminine care products. I could describe the young, attractive ethnically ambiguous spokesperson who knows you’ll love her, or others like her, but I can’t do it justice so view her for yourself on YouTube.

Samples and coupons available

Along with these self effacing spots, after all Kotex ran the standard fare for years, the new campaign launch includes a community-driven Web site. Visitors to the U by Kotex Web site can sign a “Declaration of Real Talk” (which encourages women to take ownership of their womanhood) and also obtain samples and coupons for these hip new products.

“U by Kotex empowers women and young girls to challenge euphemisms that hide the truth,” stated Aida Flick, Kotex brand director. “As the brand that created the feminine care category more than 90 years ago, it is only appropriate that the Kotex brand is once again taking the lead in empowering women to change the conversation around the importance of women’s health.” The campaign has already made headlines as several networks censored the use of the word “vagina,” as well as other expressions. Will this smart, witty and somewhat controversial campaign break the cycle and transform the discussion? Some would say it already has.

Kmart Ad - May 30

Google search advertising