Groupon and online marketing.

Group CEO Andrew Mason has gone on record to dispel the myths about online advertising daily Groupon. Mason explains that the perception of the man on the street about how Groupon’s business model operates, and the reality to the online marketer are poles apart. He accepts that there has been a tiny minority of high profile problems, but you get this with any pioneering business, and Groupon is dealing in the unchartered waters of online marketing and mega-mailing lists.

Groupon customers are more than 90% satisfied, and most keep coming back time and time again. His team are working for many small businesses from all around the world, in fact Groupon deals in more than 46 countries every day. Groupon now has shareholders of course after its IPO in 2011. Investors have bought into a complex model of online marketing which Mason regards a difficult to imitate. He advocates that Groupon is a relationship marketing company and that it has a huge mailing list which was a large upfront investment but now offers a competitive low cost communications route to consumers.

Groupon has a huge mailing list! It has 150 million subscribers and 250,000 advertisers (or merchants), and considers itself to be in a strong position in terms of the on-going, daily customer relationship. It is difficult to imitate but one wonders how long before the e-mail space has migrated to the social space? Will mailing lists be enough to compete with very precise consumer profiling and relationship marketing?

Facebook gets ready to go public.

Shortly Facebook will begin the process of becoming a public company in the USA and it is rumoured that the company will generate $10 billion from its Initial Purchase Offering (IPO). To put this in to perspective, that makes it more valuable than companies such as Apple. Remember that Google generated $1.9 billion when it floated in 2004.

Facebook’s revenue stream comes through advertising and last year the company made a $355 million net profit from income of $1.2 million. At $10 billion that will make the IPO one of the 5 largest of all time. Rumours do have the company valued at $100 billion but to put that into some kind of perspective, that’s the value of McDonalds the hamburger restaurant. Morgan Stanley is likely to handle the administration of the floatation worth millions of dollars to the business. Facebook is could go public in April 2012 since it has to publish its annual accounts at this time anyway.

The world economy is fairly unpredictable at the moment, and Facebook is doing as well as it possibly can at this point in time. Other technology IPOs occurring around the same date include LinkedIn and Groupon, both of whom compete for online advertising using different but similar models as Facebook for income generation. One thing is for sure, Facebook’s early investors will become the new mega-rich of Silicone Valley in the same way that Google’s original venture capitalists and entrepreneurs did not so long ago.

Starbucks launches new products and opens new stores (place).

The Seattle-based coffee giant Starbucks has announced a 10% increase in profits for the last quarter. It’s all down to changes to its marketing mix. It has launched new products and opened news stores (place).

Starbucks- and Tazo-branded K-Cup packs accounted for New Product Development (NPD). The business also moved to a direct distribution model for its coffee and tea. In fact Starbucks distributed 100 million Starbucks- and Tazo-branded K-Cup packs in its first 3 months. Over recent weeks the company has launched Starbucks Blonde Roast which is targeted at US coffee drinkers who prefer a much milder choice of coffee. This will give the business access to new segments of the market. Starbucks acquired Evolution Fresh, a super-premium juice company. This will allow the business to migrate into wellbeing and health segments, and will also give a new dimension to the cafe industry.

Starbucks has opened new stores in new places. 241 new stores have been opened over the last 3 months. The company now has more than 500 stores in China and Latin America. In December 2011 Starbucks entered the new markets of Morocco and Curacao. In the United Kingdom new stores will open at motorway service stations.

Net profit was $382 million. However the company expects costs to increase by $230 million due to the fact that the commodity price of coffee is expected to increase. Despite these pressures on cost, Starbucks continues to be the most well-known coffee brand in the world, and it continues to grow. The company is a specialist in extending current market opportunities as well as finding new ones. New products at new locations seem to be the current keys to success.

Nintendo’s new Wii U. Will it save the company?

Nintendo has announced weaker than expected quarterly results. The usual list of worldwide problems including slow growth and weaker consumer demand in the Eurozone, have blighted the company. The Yen is strong and rose around 5% against the US Dollar in 2011.

Nintendo’s products are beginning to suffer from competition. The Wii and the DS were at the cutting edge a few years ago but now the battle map has changed. US demand for its products fell by more than 20% in the run up to Christmas 2011, in fact US demand for video games in general fell by 8% in 2011. This is a problem for Nintendo since more than 80% of its business is generated from international markets.

Competition has come from non-traditional platforms such as mobile phones and tablets. This is where the consumer now plays handheld games. Android and iPhone are now more popular alternatives in the video gaming space. Generally owned by adults, mobile phones are now more and more popular with younger game players and the pricing and marketing of the Android has put such products with the reach of more consumers.

Perhaps the Wii U will ease the pain for Nintendo. The launch of the Wii U controller will make it much more interactive. It has a central, handheld touch screen and will show different media to supplement and enhance the experience on your TV. It has a High Definition (HD) platform. Reports indicated that it will be launched somewhere between June 2012 and September 2012, although the price to you the consumer is yet to be announced. Let’s hope that this new product turns Nintendo’s fortunes.

Apple is certainly a winner at a time of global uncertainty.

At first glance it might look like the World is in a global recession. Today Japan has posted an annual trade deficit of no less than 2.49 trillion Yen ($32bn), its first in more than 30 years. The International Monetary Fund (IMF) explains that the World is deeply in to the danger zone and it has lowered its forecast for global growth from 4% to 3.25% for 2012. This is largely down to its concerns over the Eurozone. On the ground companies such as United Kingdom retailer W.H. Smith are reporting that profits are lower than anticipated, down 5%. However it is certainly not all doom and gloom.

Apple has reported very healthy quarterly profits, in fact record profits of $13.06bn. Those that paid homage to the undoubtedly unique contribution of Steve Jobs to the business, but also recognised that he was supported by some very special colleagues – well done you! Apple sold 37 million iPhones (double last quarter) and it has its ace in the hole since the new iPad3 is due for launch in March 2012.

Other winners today include Nokia (yes – Nokia!) which has sold its 1.5 billionth phone with the S40 system, and German software manufacturer SAP which is reporting triple profits for the quarter of 1.2bn Euros ($1.6bn). It’s definitely not all doom and gloom.

Are brands good citizens? London 2012.

You can almost smell the Olympic torch as it passes by in readiness for the start of the largest sporting even in the World, the Olympics in London, United Kingdom. The countdown is on not only for the athletes and the following media circus, but also for companies and brands that invested in sponsorship deals. Community and the environment seem to be top of the agenda when it comes to messages. Here are a couple of high profile examples.

McDonald’s has been a key sponsor of the Olympics since Montreal in 1976. The company has decided to extend its sponsorship deal until 2020 which would include Sochi (Russia) in 2014, Brazil 2016, Pyeongchange (South Korea) 2018, and 2020 (wherever that might be). The sponsorship fits well with McDonald’s community role, for example the company supported the volunteer programme for the London 2012 Olympics.

Coca-Cola has anchored its Olympic campaign upon the bedrock of a sustainable games. The company will place 260 new recycle bins around the City of London, and aims to recycle 11,000 tonnes of waste every day, before, during and after the games. Coca-Cola has a number of other initiatives including the Student Champions 2012 and the Olympic Torch Relay.

Other sponsors include:

Worldwide Olympic Partners: Coca-cola, Acer, Atos, Dow, GE, McDonalds, Omega, Panasonic, P&G, Samsung and Visa. London 2012 Official Olympic Partners: Adidas, BMW, BP, British Airways, BT, EDF, Lloyds TSB. London 2012 Official Olympic Supporters: Adecco, ArcelorMittal, Cadbury, Cisco, Deloitte, Thomas Cook, UDS.

There will be much more to say about London 2012 and sponsorship strategies over the next few months, so watch this space.

Smartphone leader eats Blackberry pie.

The World’s marketing news pundits are digesting media releases from the big tech brands this Monday morning as the big players disclose their quarterly results. Some are doing better than others. Surprisingly Google made a 27% increase ($10.6bn) in profits but this news did not please investors who expected more from the tech giant. Android, Gmail and Google+ are all doing better than expected, but a negative influence appears to be that average Pay-Per-Click prices were down 8%. Microsoft posted results of $6.62bn which shows steady profit generation. Intel reported profits of $3.36bn with important new growth in China, Russia, and Brazil.

The loser in today’s business news seems to be Research In Motion (RIM) and Blackberry (RIM makes Blackberry). Co-Chief Executives Mike Lazaridis and Jim Balsillie have stepped down, to be temporarily replaced by Chief Operating Officer Thorsten Heins.

Remember it wasn’t that long ago that Blackberry was the leader in the executive and youth segments of the smartphone market. Apple and Google were late arrivals to these segments and have largely eroded Blackberry’s early dominance. Investors might argue that the company’s management did not take advantage of their early dominance and hence the need for changes at the top of Blackberry.

What is SOPA? Wikipedia switched off!

Wikipedia and Reddit join SOPA blackout protest.

SOPA stands for the Stop Online Piracy Act which aims to limit the freedom of websites in the United States. Of course the Internet is truly global and websites tend to be controlled by their local laws. However there is a growing movement within the corporate world for greater control of websites and their content. It’s about stopping online piracy.

Wikipedia and Reddit are among a number of high profile websites that will be switched off tomorrow (Wednesday 18th January 2012). Of course the legitimate targets of the bill, which was introduced into the House of Representatives in October 2011, were websites that pirate content such as movies and music. The copyright holders want to put a stop to illegal downloading. What could happen if SOPA becomes law?

  • Websites could be shut down.
  • Search engines will block rogue sites.
  • Internet companies could be held liable for their users’ content e.g. Facebook, Twitter.

The biggest problem is identifying who owns what, and which law applies in different countries. Is this the end of an empowered, free Internet?

What is the future for the cruise industry after the Costa Concordia disaster?

Marketing and the cruise industry.

The global media is in agreement that the Costa Concordia sinking is the unfolding news story of its day. The websites and TV networks are covering every angle – from what caused the disaster to the stories of individual passengers and employees. These topics are vitally important. However soon the wider impact of the disaster upon Costa Cruises, its competitors and the global cruise industry will begin to unfold. Let’s look at some cruise industry facts prior to the Costa Concordia disaster:

  • The global cruise industry was estimated at 16 million passengers for 2011. Growth targets were at 6.6% for 2011.
  • The Royal Caribbean Oasis is the World’s largest cruise ship which will take up to 6000 passengers
  • 2011 saw around a dozen new cruise ships launched.
  • The global cruise industry achieved sales of US$29.5 billion in 2009.
  • Cruising is safe. Accidents are extremely rare.

The public relations machine has already kicked in with Costa Cruise issuing media releases at frequent intervals, and the chairman and chief executive, Pier Luigi Foschi, has spoken directly to the cameras. The immediate priority is finding the missing passengers, and making sure that the reason for the accident is brought to light. There might be some marketing problems for the cruise industry to take into account in the near future:

Whilst the demand for cruises has been increasing, capacity has also increased. Carnival Cruises alone will have 24 cruise ships by the end of 2012. There will be many promotions to entice potential passengers.

There will be some keen price-based competition if the capacity of the industry is not used.

The product itself might have to change to open cruising to new segments.

Cruises might need to be marketed in new ways, via different channels to an extending range of destinations.

It will take time, but one thing is for sure, customers are going to be wary of cruise safety over the next few years. They will be swapping to other forms of leisure and vacation activities. Since cruising has an excellent safety record, this can only be good for consumers and bad for cruise companies and their shareholders. Time will tell.