The “Lipstick Indicator”

March 31, 2008

DISCUSSION TOPIC: Times are tough, so women are shopping – for lipstick

TOPIC SUMMARY:

In an article on the Australian site The Age they report:

Interest rates might be rising and food and fuel prices soaring, but it is going to take much more than that to wrest a woman away from her favourite lipstick.

Industry experts, including Steve Ogden-Barnes of the Australian Centre for Retail Studies at Monash University, say cosmetics is one category that is “recession-proof”.

“When things get tight, people might put off buying the new plasma or the new sofa, but there is no way a woman is going to leave the house without her make-up on,” he says.

In fact, there is a widely held belief that when times get tough cosmetic sales not only survive but thrive. They call it the “lipstick indicator”.

Originated by Leonard Lauder, chairman of the Estee Lauder Group, in the wake of the 9/11 attacks when lipstick sales in the US doubled, the theory goes that when things get tough women seek comfort in feel-good items. And while they may not be able to afford a $3000 handbag, they will fork out up to $30 for a lipstick.

Discussion questions:  Do you believe in the “lipstick indicator”?  Is it or will it hold true in America as in Australia?

My post:

My own unofficial polling of cosmetic industry professionals indicates that the “lipstick indicator” has largely held up over the years.  However, today’s economic issues have made even cosmetics businesses less than robust. The Aussies have the benefit of their commodities-based economy (somewhat similar to Canada in this regard) to bolster weaker areas and offset price hikes.  The US is suffering worse than most of the overseas economies and this is causing slackening business even in the cosmetics world, although not as severely as in other product categories.  In this way, the “lipstick indicator” continues to hold true.

Mike Osorio, your Dare to be Contagious! TM strategist

http://www.osoriogroup.com/

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Go to the full article at TheAge.com:
http://www.theage.com.au/news/national/times-are-tough-so-women-are-shopping-151-for-lipstick/2008/03/29/1206207499094.html   

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Boomers return to hippie values of their youth

March 28, 2008

DISCUSSION TOPIC:  Study: Boomer Shoppers to Become Pragmatic with Age

TOPIC SUMMARY:

According to a survey of 1,100 Baby Boomers, 86 percent plan to be more practical and pragmatic in their purchases when they reach the age of 70, and much less concerned about trendiness and indulgences.

The study providers, FH Boom and the National Marketing Institute, believe the turn to the pragmatic is highly correlated to the fact that only 41 percent of Boomers state they have a secure, financially sound plan for retirement. After paying their basic living expenses, Boomers anticipated that they will have on average 22 percent of their income left to spend on discretionary purchases.

But the buying pragmatism may also reflect Boomers readapting more hippie-like values held in their younger days.

“The key is to think of boomers at 70 not so much as revolutionaries, but as ‘retrolutionaries,'” says Dr. Carol Orsborn, co-chair of FH Boom. “By this definition, retrolutionaries are the vast majority of Boomer-aged consumers who are aiming to get their monetary expenditures in better alignment with values formed at earlier stages in their lives. Think the 2016 version of Birkenstocks and VW in the 60s and 70s: living affordably, but with style.”

Discussion questions:  Do you also expect Boomer spending tendencies to become more “more practical and pragmatic” as they reach the age of 70 and older? Why or why not? What credence do you give to the theory that Boomer spending habits might be reshaped by a return to hippie attitudes?

My post:

I always find it amusing when studies attempt to categorize and describe the tendencies of the Boomers.  The generation is simply to large and spread over too many years to neatly label and predict.  However, some of the observations are likely to be true:  Boomers will continue to avoid “getting old” and will spend on products and experiences that keep them feeling, if not looking, young.  Also, Boomers will remain connected to current happenings via technology and continued linking with Gens X & Y.  Therefore, they will always adopt those new products, services and experiences that feel “cool” and contribute to the desire to remain forever young.  For example, I regularly share on-line music with my college-age sons both because it is a shared interest, but also because I genuinely like much of the new music.  I expect this will continue well into my 70’s and beyond!

Mike Osorio, your Dare to be Contagious! TM strategist

http://www.osoriogroup.com/

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GO TO THE FULL DISCUSSION AT RETAILWIRE.COM:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12853  

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The Amazing Shrinking Product

March 26, 2008

DISCUSSION TOPIC:  Brands Shrink to Avoid Price Hikes

TOPIC SUMMARY:

Companies faced with higher cost for raw materials often find that a decision needs to be made. Continue production as-is and lose money if the price for the item isn’t increased; keep on manufacturing but raise the price or alter the product itself to reduce the cost of making it.

For many manufacturers, reformulations have been the chosen path to meeting consumer demand while protecting profitability. Of course, when changes are noticed, as in the case of a smaller candy bar or fewer rolls in a pack of paper towels, there is bound to be grumbling. This is especially true at a time when consumers are watching prices rise at a much faster rate than their take-home pay.

Discussion questions:  Do you think most consumers are understanding in the current environment when it comes to manufacturers downsizing and/or raising prices on established brand products? Is there a right or wrong way to go about handling the announcement of a product being reformulated in a smaller size? What role is there for a retailer to play in the current scenario where products are being altered to avoid hefty increases in prices to consumers?

My post:

The process of reducing size or changing ingredients to reduce manufacturing costs is called “incremental degradation.”  This can be a slippery slope.  The effects of tiny reductions in size or quality are not immediately apparent to consumers and certainly fatten the bottom line.  Managers begin to rely on incremental degradations to maintain margins and assume the consumer will continue to not notice.  Eventually, though, these incremental degradations add up and the consumer stops buying either because they notice the difference or because they just don’t like the product like they once did.  When this happens, it is too late to reverse course because the relationship with the customer is damaged.  Particularly if yours is a product known for quality, incremental degradation is a dangerous path.  You either believe in quality or you don’t.  Make a choice.

It is a much better strategy to implement incremental augmentation:  subtly adding value to your products which will tend to increase customer loyalty and keep your customers loyal even when prices eventually need to rise.

Mike Osorio, your Dare to be Contagious! TM strategist

http://www.osoriogroup.com/

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GO TO THE FULL DISCUSSION AT RETAILWIRE.COM:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12853  

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Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!


Disney buys retail stores back from Children’s Place

March 24, 2008

DISCUSSION TOPIC:  Disney Gets Back into Retail

TOPIC SUMMARY:

Walt Disney Co. said last week it wants to return to running its Disney stores in North America. Re-owning the stores “can be an important extension of the ‘Disney’ brand” and would serve as a launching pad for the company’s growing number of creative franchises, according to Disney.

On the other side of the bargaining table, The Children’s Place, which licensed the Disney Store chain for the U.S. and Canada in November 2004, appears to have no problem handing it back. Disney Stores recorded a $107.3 million operating loss in 2007.

Since the sale, Disney has grown dissatisfied with the sluggish pace of store remodeling under Children’s Place. But Disney itself had long struggled with its North American stores in the past.

As with Warner Bros., critics said Disney had opened too many mall stores and failed to change them often enough to preserve novelty.

But Disney asserted last week that it can run its North American stores profitably as a smaller operation just as it does in Europe, where it owns 120 Disney Stores. That “right size” is from 200-225 stores. Children’s Place runs 335 Disney Stores and intends to close the stores Disney doesn’t want prior to selling back the franchise.

Discussion questions:  Do you think it’s a good idea for Walt Disney to take back its North American retail business? What do you think of their plans to reduce the size of the chain and exploit its newer franchise properties? What steps should be taken to bring Disney Stores back to profitability?

My post:

When Disney sold their retail stores to Children’s Place in 2004, they were trying to unload its stores as part of a larger effort to dispose of noncore assets such as sports teams. The once-profitable retail chain hit a high of 700 stores in 2000. Since then, Disney had been trimming the number of stores, while losing money on the operation.  Children’s Place saw the acquisition as strengthening their leadership in the newborn to age 10 category, while Disney believed Children’s Place’s commitment to quality, the Disney brand, and entertainment retailing would maximize the Disney Store opportunity.  They were trying to sell the European stores as well, although that never occurred.

Fast forward almost four years and the times have changed.  Children’s Place was never able to find the profitability key for the franchise and product design & innovation was lacking.  They did not close enough poor performing units and actually increased the number of stores.

Disney recognizes now that owning a smaller number of well-run stores in good locations can be reasonably profitable and serve as a wholly-controlled brand-building platform.  The keys though are “well-run stores” and “good locations”.  If this can be accomplished through hiring a number of excellent retailers and taking advantage of the current economic situation to renegotiate leases in the best locations and close the unwanted stores, this move could be quite positive.

Mike Osorio, your Dare to be Contagious! TM strategist

http://www.osoriogroup.com/

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GO TO THE FULL DISCUSSION AT RETAILWIRE.COM:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12841  

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Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!


Social Network Ignorance

March 18, 2008

DISCUSSION TOPIC:  Marketers Don’t Get Social Networks

TOPIC SUMMARY:

Social networks are all about relationship building. Yet marketers are continuing to use mainstream advertising ploys – including hammering home messages – in targeting the medium rather than just having conversations.

“Frequency of message is not the idea here,” Rick Murray, president of Edelman digital, told Advertising Age. “Frequency of contact is.”

Charlene Li, VP and principal analyst at Forrester Research, agreed that marketers haven’t seemed to figure out that this is a channel where consumers actually want to be spoken to.

“[Consumers] are asking questions on these sites that go unanswered,” she said. “You can’t ask for a better environment. And what do marketers do? They say nothing and put up another ad.”

Discussion questions:  What’s the difference between mainstream marketing techniques and efforts targeting MySpace and other social networking sites? How should mainstream advertising be tweaked to work on social networking sites?

My post:

Few retailers or brands have taken the time to research how to best use the social networks for marketing efforts.  Therefore, most efforts have been to slam their regular mainstream marketing onto these sites – a huge mistake.  Retailers and brands would do well to research the many quality “how-to” sites for social networking entrepreneurs. These sites provide excellent lessons on how to write compelling content for blogs, social networks, etc.  Key points:

  • Remember: These are conversations not ads. Talk, engage, but don’t sell.
  • Who will do the postings on blogs, MySpace, etc.? They must speak with an authentic voice, aligned with the company’s voice.
  • Can you commit to regular updates? If not, don’t start.
  • Have you prepared for the inevitable complaints and bad comments about your brand/product?
  • Give stuff away. The way you gain trust with your audience and get them to buy your product eventually is to prove that your stuff is worthwhile. This method is used to great advantage in information marketing and should be utilized in product marketing.
  • Test, test, test, and test some more. This medium is continuously evolving and the best are always looking to tweak their approach.

Mike Osorio, your Dare to be Contagious! TM strategist

http://www.osoriogroup.com/

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GO TO THE FULL DISCUSSION AT RETAILWIRE.COM:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12828  

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Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!


IKEA irritates the Danes

March 18, 2008

DISCUSSION TOPIC:  Translating Retail Success Across National Borders

TOPIC SUMMARY:

There is yet another potential impact of importing and exporting that retailers are now starting to consider. Boasting 273 stores attracting some 583 million customers each year, IKEA, for example, needs to be aware of what people think and feel.

Both The Independent and The Daily Telegraph in the UK reported that Danish customers of the Swedish shop are less than happy with what’s being offered for sale or at least with what the products are called.

IKEA’s products tend to have names rather than numbers, a situation that has recently caused complaints from customers in Denmark, historically a rival of IKEA’s Swedish-based empire. According to The Independent, complaints have been made about some of the names chosen. Apparently those with Danish derivation are used for some of the retailer’s less salubrious, or lowly, products such as doormats, rug linings and toilet seats, for example.

Discussion questions:  Is the IKEA Danish experience unusual in the arena of global marketing? Where do retailers go to acquire the cultural education required to open without incident in new international markets? Is there are retail company or brand that you think best epitomizes how to go about expanding globally?

My post:

International expansion of brands and retailers always creates the potential for cultural missteps.  IKEA did not purposely named their products with names that would offend Danes.  Using names for their products vs. numbers requires them to either use different names in different countries, or choose to not care if one country has an issue with a name that is fine everywhere else.  

When a retailer or brand expands into a different country (or even a different state) it is incumbent upon them to do some due diligence in the new location, particularly regarding marketing and branding methods.  It would not have been a significant issue to rename a few of the IKEA products for the Danish market if indeed some of the names are offensive.

Examples of brands and retailers who have expanded globally effectively include McDonalds and DFS Galleria.  McDonalds offers key products like the Big Mac worldwide, but then adds menu items that relate to the local populace.  DFS Galleria, the Hong Kong-based purveyor of luxury brands in gallerias and airport duty-free locations throughout the Asia Pacific region, pays close attention to how each nationality communicates and shops.  In-store signage, associate language skills, and marketing efforts all support this.

Mike Osorio, your Dare to be Contagious! TM strategist

http://www.osoriogroup.com/

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GO TO THE FULL DISCUSSION AT RETAILWIRE.COM:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12829  

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Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!


5 “easy” steps to a winning corporate culture

March 12, 2008

DISCUSSION TOPIC:  Five Steps to Build a Winning Corporate Culture

TOPIC SUMMARY:

In a recent article in Convenience Store Decisions magazine (http://www.csdecisions.com/article/3218/five-steps-to-build-a-winning-corporate-culture.html), Gary Bradt discusses his views on creating a winning company culture:

Some leadership teams attempt to create culture by acting as wordsmiths, spending untold hours carefully crafting vision, mission and values statements. That’s unfortunate, because in the end culture is not created by words plastered on the wall or carried around on laminated cards, but rather culture is defined by actions on the ground.

A winning company culture is simple and emphasizes three areas: serving the customer, growing the business, and developing employees. A losing culture is confusing and complex, places customer needs behind those of the company, and emphasizes personal gain over team achievement.

The author goes on to describe a “simple” 5 step process for creating a winning culture.

Discussion questions: Do you agree with the premise that creating a winning culture is simple? Do you think most company leaders are able to define what their organization is all about without outside help?

My post:

This is an incredibly critical topic and I am not surprised by the outpouring of opinions.  Culture building is never easy, although the process the author describes is certainly straight-forward.  The visioning process is necessary, in that it forces leaders to pause long enough to articulate the company story and their own stories; a process which uncovers core values that eventually turn into vision/mission statements and the rest.  Until the leaders go through this process, many stumble through their interactions with each other and subordinates never realizing the impact their actions have on the culture.

The visioning process must involve all leadership levels and as many key front line employees as possible so everyone feels a part of the process.  Understanding the story of the company, the values represented by that story, and how each employee’s actions impact the story are all critical elements.  Once complete, the success of the process long term depends on how leaders’ behaviors do or do not link to the vision/mission, and how people who violate the values are handled.

Finally, the visioning process is never truly finished, as our retail world is ever-changing and companies must constantly evaluate how their story fits in with the changing individual customer and employee stories.

It’s a hard process, but energizing and exciting!

Mike Osorio, your Dare to be Contagious! TM strategist

http://www.osoriogroup.com/

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GO TO THE FULL DISCUSSION AT RETAILWIRE.COM:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12815  

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Thank you for visiting my blog!  Please subscribe using the RSS button and comment on my postings.  Comments are the life-blood of any blog and I appreciate yours!