Current Issues in Marketing Strategy: August 2009

Wednesday, August 19, 2009

60ml Redbull Shot - Price Skimming Strategy

The 60ml Red Bull Shot is now available at all 7/11 stores Australia wide and even at the exorbitant price of $4.44 each, they have been an enormous success. Some argue that the success of the new product will be short lived, artificially inflated by early adopters trialing but not repurchasing. However, you only need to look at sales in the USA to see that the smaller product has plenty of fans.

It may seem like marketing strategy 101, but early adopters will always trial a new product, particularly one that is priced under $5. Which is why the Red Bull premium pricing strategy is so brilliant. In a market where profit margins are contracting, the 60ml shot is a high turnover, high margin solution.

The energy drink market is extremely competitive, V are about to launch their version of the shot to compete in this new space.The true test of Red Bulls marketing strategy will be seen in how disciplined they are with pricing. We will definitely find out how much currency the Red Bull brand has in the Australian market & whether consumers will pay a $0.50 or $1.00 premium for a Red Bull.

Josh Strawczynski's Opinion:
It is important for Red Bull to concentrate on premium branding and maintain larger margins. The energy market is in its infancy in Australia, it is only a matter of time until a flood of competitors invade the space. Red Bull need to fortify their position, be prepared to give up market share (can't be everything to everyone), but cement themselves as the #1 energy brand for product quality.

Monday, August 17, 2009

60ml Red Bull Shot Product Release

Red Bull have defied Australian market expectation and released the new smaller 60ml Red Bull Shot. This comes as both competitors Mother & Monster increased their can size to an enormous 500ml, cutting margins and cannibalizing the segment. So lets look at Red Bulls marketing strategy, why release the Red Bull Shot?

Branding is key to Red Bull, they spend the equivalent of Lithuania's GDP on advertising each year to cement their very strong brand image. They want to be known for provision of energy, not provider of soft drink. When was the last time you saw a sport star carrying an energy drink that wasn't Red Bull? With this in mind, the shot suits the image, in actual fact, there is as much energy in the shot as there is in an entire 500ml Mother energy drink!

We also have to question the value in following the 'bigger is better' trend. Marketing 101 teaches us that we should differentiate on value, but you need to look at more than just that. For instance, bigger cans means less 2 for 1 sales (Red Bull is famous for their 2 for $5 deal). Bigger cans and low price also means reduced margins for retailers & producers. To top this off, 500ml cans are not female friendly.

Energy drinks sell enormous volume in the convenience category (petrol stations etc.) because nobody plans to become tired and Red Bull provides that pick-me-up that they need. A small shot not only reinforces that brand promise, but provides a convenience not before seen.

Josh Strawczynski's Opinion

The Shot has already been released in the USA and is doing tremendously well particularly, when you consider I counted 27 separate SKU's in one convenience store. The Australian launch will be another triumph, certainly not to the levels of standard Red Bull cans, but it will offer value in the form of a quick energy hit. I give the product & marketing strategy two thumbs up.

Wednesday, August 12, 2009

Pookinuk Dog Food Strategy

How do you compete in a mature industry? A new Australian company Pookinuk.com.au is taking the dog food market on and proving that innovation is king. Harnessing the power and cost advantage of the Interweb, owner Richard Templeton is quickly cementing his place as a leader in the Australian canine market. So lets dissect the marketing strategy and highlight the strengths and opportunities.

A compelling value offer is the fundamental corner-stone of any business. Pookinuk offer Australian customers dog & cat food + accessories, delivered to their door (next day) at under retail price. The value customers are paying for is not the price saving, but the convenience of receiving premium dog food delivered to them. Traditional marketers would call this service value.

Internet advertising is responsible for many new clients trialing the service. Search any of the brands Pookinuk sell (Eukanuba, Royal Canin etc.) and you will see the website appear on Google, Yahoo & MSN. The interweb has been extremely important in growing the reputation of the business, by targeting consumers that are actively engaged in searching for a product / solution. However, any savvy marketer will tell you that Internet advertising is only one component of the marketing mix.

Richard is also particularly good at network marketing. His team sponsors and visits most of the various pet functions like 2009's Bark In The Park. With strongly branded cars in Pookinuk colours, he communciates with pet owners, offering them free samples and engaging people with his brand.

Future Marketing Strategy - Josh Strawczynski's Opinion

The next step for Pookinuk is the big one, a transition from pet food supplier to one stop show for everything pets. You don't need a lot of segmentation to find that 'pet people' spend a lot of time & effort on their pets. In times of recession, pet spending is one market that doesn't slow down.

Twitter & other communication portals now facilitate business's like Pookinuk communicating with their clients and positioning themselves as pet experts. The value offer now changes as owners feel more comfortable asking Pookinuk for advise on wormers, vets, flea control, food recommendations and more, this of course transitions into more sales, more dedicated customers and a very strong business model.

Monday, August 10, 2009

HP Business Printer Marketing Strategy

I was recently contacted by Hewlett Packard to review their latest marketing roll out to support their new product the HP Officejet Pro 8500 printer. They sent me their online ad and a printer to trial. Interestingly, the printer was excellent, but their marketing strategy not so. To highlight this, I will compare it to the famous Kodak AIO, one of the best viral campaigns around.

If you want to see the cartoon they were planning on running, click here. I can only assume that it has been scrapped, as last time I checked YouTube it had been removed. If you can be bothered watching it through, you will see that they are trying to attract the small/home office market. But the length and speed of it indicates that they just don't understand the Internet.

The printer itself is fantastic! It's wireless, scans, faxes & prints perfect pictures, it even has data insert points so you can plug your SD card directly into it. Yet with all these brilliant features, not one of them got a mention. Clearly they are proud of the fact is uses 50% of ink of its competitors, but even this didn't get a guernsey.

Contrast this viral ad from Kodak. It is very long, but hugely engaging and leaves the audience with clear brand values that they take away with them.

Josh Strawczynski's Opinion:
The Internet, particularly display advertising is about capturing the consumers imagination and imparting simple brand messages. The best advertising has a hook, be it viral, display or search, you need to understand your audience.

In my opinion a much better online strategy would have as simple PPC & Display ads encouraging people to find our more about this wonderful new office printer (possibly offer a prize) and then focus on a sharp landing page with actual user feedback. Integrating other social media like Twitter would have really given it an edge. Engage the potential customer and interact with them, that is Internet marketing in 2009.

Saturday, August 8, 2009

Bidmadness Use Social Media To Attract Users

BidMadness is an Australian concept that facilitates people both gambling and purchasing a bargain online. I could spend pages explaining it, but simply, it is the highest unique bid for a product within a given price range. For those who use it, it is fantastic, but how does a savvy marketer expand the client base on a shoestring budget?

It is a common problem, needing to advertise a product nobody is actively looking for. Unlike the iPod which was herald by a multi-million dollar advertising campaign, BidMadness operate on a very small advertising budget. So what sort of affordable marketing strategy can cut through this and engage the customer?

Social media marketing is getting a lot of press lately, mainly due to the fact that anyone can apply it. The marketing concept is actually age old, leverage influential people to encourage others to try your product. The difference nowadays is that we can do it digitally, quicker & more effective than ever before. Facebook, My Space & Twitter are tools in this as they are agents of connectivity, allowing for the spread of information with a single click (one to many).

In the case of BidMadness, it was as simple as good old fashion bribery. For every registered member, if you post a favorable comment about the company on a social media portal, you receive free $$$. So in effect, they are forming conversations between people and advertising the product for free.

Josh Strawczynski's Opinion:

There are far too many companies jumping on the social media marketing bandwagon because it is in vogue. In my last article, I wrote about planning your website, social media is no different, you must have a plan. Don't just set up a Facebook account and expect people to buy more. Communicate with those around you and build your networks by leveraging those influential people around you, then engage them and use the portal to keep them up to date and feeling like the special customer they are.

Thursday, August 6, 2009

SME's, Website Design & Internet Advertising

Go to any business course anywhere and they will tell you that every business needs a plan to map it for success. For this reason, I am constantly astounded by how many companies set up websites without a plan and more so when they come to me looking for advertising to 'fix their strategy'. The fact question is (as with advertising for a bricks and mortar store), what will people do when they get here?

SME's are notorious for demanding black hat Search Engine Optimization (SEO) and then getting perturbed when their traffic goes up and their sales continue to flag. I can't tell you how many angry phone calls I have taken, let along business I have knocked back because clients want a 'Selley's no more gaps' quick fix solution. As with plastering over a crack in the wall, if the foundation is not solid, the crack will soon worsen.

To fully understand, you must realize that despite SEO having 'optimization' in the name, it doesn't mean that an advertising agency will make people purchase, it means that it will make it Google friendly. So speak to a designer, if you need a recommendation, e-mail me josh.straw84@gmail.com and I will be happy to help you out.

How do you know when a website has been setup well? Well there are 101 articles to help you, but the best and most obvious answer is to ask your friends and colleges to give you a candid review of the total purchase process, from finding the site, to sourcing the product and finally the purchase screens. Plan, test, launch..... it is almost to easy to be called marketing strategy.

Current Issues in Marketing Strategy