- Published: February 14, 2014
Here in the northeast U.S., we have been inundated with snow and pretty much confined to the indoors. In order to pass the time, we try to keep ourselves entertained by gazing into our crystal ball to see how marketing will change in the future.
While our crystal ball is getting a bit old and is in desperate need of calibration, it still occasionally makes entertaining predictions. For instance, it is predicting that in less than five years, the majority of customers placing fast food restaurant orders will do so before they are near the store. Why? Because mobile devices, such as smartphones, tablet computers, Google Glass or whatever mobile has evolved to in five years, will have matured to the point where customers, especially younger ones, will expect to have this ordering option available.
While orders through mobile apps have been used for some time by smaller restaurants, only a handful of the bigger fast food chains offer this option. But that is soon to change. As reported in this USA Today story, Taco Bell is now testing order placement via mobile app. While this app offers many customer-friendly options, such as menus that update depending on the time of day and maps displaying the closest store, this technology also offers a number of appealing features for Taco Bell, including the ability to suggest (i.e., upsell) customers on additional items and the use of GPS tracking that will alert the restaurant when the customer is getting close to the store.
While our crystal ball has a pretty good track record for being wrong, something tells us this prediction may be right on target.
- Published: February 10, 2014
Well, this story has to rank as one of the more interesting so far in 2014. It seems wireless provider T-Mobile has trademarked a color that they insist competitors cannot use in any promotional way. The color in question is a variant of magenta (i.e. plum) and T-Mobile was able to convince a Texas judge the color is so strongly associated with the company that customers would be confused if competitors also used it.
The decision is the result of a lawsuit brought by T-Mobile against Aio Wireless, a subsidiary of AT&T. The judge sided with T-Mobile, though her arguments seem to do more with how the company has consistently invested in the use of the magenta color in its branding and less to do with whether the use of magenta by competitors may confuse customers.
Assuming the judge is correct, (and we are certainly not lawyers here at KnowThis.com!), the argument for trademark infringement seems to be based not only on possible confusion but also on the investment a company has made in building a brand, including use of certain colors.
To us non-lawyers it would seem this is a strange decision and that this issue is far from being settled.
- Published: February 7, 2014
Maybe it is just pure coincidence, but a sizeable portion of our blog posts so far in 2014 has focused on issues facing the retail industry. For whatever reason, the news media seems to be spending a good deal of time investigating retailing, with their primary emphasis on store-based retailers. As we have noted several times, store-based retailers face significant pressure from competitors that sell exclusively online, such as Amazon, Zappos, and Newegg, to name a few. These Internet companies have attracted millions of customers by providing a highly customized shopping experience, tailored to individual shoppers, along with extremely competitive pricing.
The impact of online retailers has been devastating for many prominent retailers. For instance, back in 2011 we listed a number of famous retail names that have gone away. More recently we see other big chains struggling such JC Penney, Barnes & Noble and Radio Shack.
So what do store-based retailers need to do to survive? Some strategies for survival may be found in this Internet Retailer story. Yes, it may seem surprising that a trade magazine named Internet Retailer would publish a story addressing brick-and-mortar issues; nevertheless the recommendations contained in the story seem reasonable.
The ideas presented for fighting back against online sellers are from executives of leading retail chains and commercial real estate firms, as well as industry insiders representing research firms and consulting services. The advice for fending off online sellers includes improving the overall shopping experience, integrating mobile devices for use by store employees and better analysis of data from customers’ visits to the store.
- Published: February 5, 2014
On the surface, today’s announcement that drugstore giant CVS will soon stop selling tobacco products is certainly a shocker to many. For CVS, this product category represents over $2 billion per year in sales and no doubt generates at least twice that amount from other products customers purchase when they enter the store to buy cigarettes, cigars and chewing tobacco.
But as pointed out in this USA Today story, by abandoning tobacco CVS may be attempting to reposition the company as a little less retailer and a little more health care provider. Of course, CVS and all other drugstores lean toward health care given their emphasis on dispensing prescription drugs. But many of these retailers want to expand well beyond filling prescriptions and see a growing opportunity in providing basic front-line medical care. This can be seen in the rapid expansion of in-store medical clinics now offered by many chain drugstores and other retailers that offer pharmacy services (e.g., Walmart, Target).
From a marketing point of view, CVS needs to present an image of actually caring about patients’ health. Certainly if they offer health care services in one part of the store while selling tobacco products in another, the door is wide open for critics to claim the company is hypocritical and only interested in making money.
So by removing tobacco products, CVS has made a crucial strategic decision that is dependent on the growth of their health care business. However, it remains to be seen whether the general public will bypass medical offices and accept CVS and other retailers as their first stop for general medical care. And whether sales from medical services can exceed what CVS is losing by not selling tobacco is certainly something investors will be watching closely.
- Published: February 3, 2014
As we point out in our Sales Promotion tutorial, one of the most valuable uses of sales promotion is to create demand. This is often accomplished when the promotion involves an incentive for customers to make a purchase. There are various methods for doing this. The most obvious incentive is one that lowers the price for acquiring a product, such as a coupon or special “sale pricing.” Others include an incentive that lowers the out-of-pocket expense by permitting a trade-in of an existing product; contests and sweepstakes, where skill or luck can result in a big payout to the winners; and loyalty programs, where frequent purchasing leads to future savings.
No matter which type of promotion is used to stimulate sales, there is usually some level of risk to the marketer. For instance, if the vast majority of purchasers become conditioned to only purchase a product when a coupon is available then customers are likely never going to buy at full price. This, of course, could dramatically affect marketer’s revenue.
Another example of a potential problem with sales promotions is found in this Washington Post story. As explained, a Texas furniture retailer offered a special promotion that gave customers, who spent more than $6,000, their money back if the Seattle Seahawks won the Super Bowl. The result, the retailer must now give back over $7 million.
While the result of this promotion may seem hard to believe, what is really surprising is that the retailer did not purchase insurance just in case this was the outcome. As the story notes, in 2013 another furniture retailer had a Super Bowl promotion which also benefited the customer, but they had insurance which reduced their loss.