Posted by: Paul.Christ
on Nov 17, 2009
Godiva Rides in a New Direction (New York Times)
Higher-end products don’t always suffer during a recession. Some do fine as their key target market often remains relatively unaffected by a slowing economy. One example is Godiva. Positioned as a higher-end chocolate brand, Godiva is launching a new promotional campaign that makes no mention of price or the popular “value” proposition that many products now promote. Instead, Godiva positions itself away from the mass market chocolates with an emotional appeal that states that even in bad economy it is sometimes worth splurging on a quality product.
… the campaign seeks to explain why Godiva is still worth buying during tough times, using an emotional appeal to make the case that a brief respite to indulge oneself — “the golden moment,” as it were — is as desirable now as it was when the Dow was at 14,000.
Compared to this promotional strategy, is Godiva’s positioning strategy likely to change again once the worldwide economy becomes healthy again?
Posted by: Paul.Christ
on Nov 13, 2009
Burger King Franchisees Sue Over $1 Promotion (MSNBC)
In a posting earlier this week we noted that not all franchisors listen to their franchisees the way Subway did when they developed their popular $5 Footlong promotion. And here is a perfect example. Burger King’s franchisees are screaming at the franchisor saying they are losing money on BK’s new, highly publicized $1 Double Cheeseburger promotion. They go a step further and claim that BK does not have the right to set maximum prices on products sold in the franchisees’ stores.
Clearly this is intended to be a loss leader pricing promotion and it is a little hard to believe Burger King can’t run such a promotion for the short term. But we’ll have to see as the courts will take up the matter next week.
The National Franchise Association, a group that represents more than 80 percent of Burger King's U.S. franchise owners, said the $1 promotion forces restaurant owners to sell the quarter-pound burger with at least a 10-cent loss.
If the franchisees win on this issue, what would it mean for any future promotions that are directly involve a low price offering?
Posted by: Paul.Christ
on Nov 10, 2009
The Accidental Hero (BusinessWeek)
The Subway $5 Footlong is a wildly successful promotion. With the help of a sizable advertising campaign the promotion is one of the most successful sales promotions currently being offered by any retailer and has generated sales of nearly $4 billion in one year.
But the back-story on how Subway came up with this idea may be even more interesting than the success of the program. As this story discusses, a single franchisee operating two small stores in Florida had the original idea. To Subway’s credit they listen to their franchisees, which not all franchises seem to do, and it has paid off nicely.
Frankel's $5 footlong idea illustrates how a huge company can wake up and eventually seize on a good idea that's not generated at headquarters. Frankel, along with two other local managers in economically ravaged South Florida, ceaselessly championed the idea to Subway's corporate leadership amid widespread skepticism.
How much of the success of this sales promotion is tied to a down economy and what is the likelihood Subway will continue the promotion once the economy begins to recover?