With a growing number of stay home men taking on roles that are traditionally associated with women such as cooking, food companies are changing their marketing strategy and product line to appeal to this growing consumer segment. Anne Marie Chaker’s article on the Wall Street Journal “Groceries Becoming a Guy Thing” highlights some of the new merchandises arriving in American supermarkets that are targeted at the male audience, particularly in the way they are packaged and advertised. The rationale behind these shifts is the idea that what a man values in his food isn’t the same as what a woman does.

While it’s true that the two genders have different psychographics, but it is probably a bit too carried away to say that a packaging with a bull’s head on a dark background will draw a flood of dudes to the new yogurt. For instance, is the guy buying the yogurt for himself or his family? If he is packing lunch for his daughter, then he would certainly put his daughter’s preference before his. The bottom line is that while guys are likely to pay more attention to “meatiness” of the products and less on the “healthiness”, the difference isn’t substantial especially if they have keep in mind who they are doing the purchase for. For mass consumer oriented food products, the future is perhaps a unisex marketing approach.

Following up on iPhone 5s/5c’s success after my earlier post back in October, I ran into the not so glorious side of the story. Rosemary Westwood’s business blog on Maclean’s – “China’s Apple Clone” reveals that Apple’s market share in China is 4.8% and dropping, even less than its imitator, Xiaomi, a Chinese smart phone start-up. Two factors contribute to why Apple is performing so poorly in China. This first one has to do with the pricing (which is discussed extensively in Rosemary’s blog). The iPhone costs a hefty $757 when the average monthly income in Beijing is only $870 where as Xiaomi’s most high end handset is sold at $285.

Xiaomi Mi-2 smartphone

However price difference can’t explain why iPhone’s market share in China was as high as 9.1% in 2012. Here is where the second factor comes in – consumer attitude, which in my opinion is even more important than the price. Essentially, Apple’s Chinese customers place more value on prestige than functionality. The sole reason why they were willing to cough up their entire month’s income on the old iPhone 5 was because they enjoyed the attention they got when they flashed out this premium smartphone in public. But when the 5s looked almost exactly the same as the iPhone 5, there is no reason to upgrade. If Apple wants to remain competitive in China, they either have to change the the premium model aesthetically (differentiation strategy) or drastically cut down the functionality and price of its economic model (cost strategy).

United and Delta Air are losing on their home-turf against the trio of state owned Persian Gulf carriers, Emirates, Qatar, and Etihad, reported Susan Carrey in her article on the Wall Street Journal “U.S. Airlines Balk at the Rise of Gulf Rivals”. While the US companies struggled to stay afloat during the the recent recession and soaring fuel prices, the Gulf carriers expanded rapidly. Now, big American airlines are resorting to government lobbying for legislation that would give them “fair” advantages. However in trying to pick a fight with their rivals, they have in fact missed the most important link in the issue: their customers.

The simple truth is, the Gulf airlines are just plain better. While the Americans can’t compete on the exact same footing, they don’t have to. Emirates, Qatar, and Etihad’s competitive advantage lies with luxury. They offer the experience of grandeur and a sense of imperial excess – everything from their regal service to the over-sized A380. Americans should instead focus on what they can do better: trendiness, efficiency, beauty from simplify, and the fun factor – all the values brought by advances in the digital era and promoted by companies like Apple, Google, and even Zappos. These aren’t qualities that the Gulf Airlines would be able to copy authentically. People can get tired of luxury quickly, but it’s harder to get bored of the creative and the new…

Cost reduction isn’t a strategy, but rather a way for companies to take better advantage of their strategies. When a business confuses reducing cost with undercutting its value proposition, it’s making a critical mistake. Ikea, however, gets difference right. In “Ikea’s Path to Selling 150 Million Meatballs” published on the Wall Street Journal, Jens Hensegard illustrates how the company’s low-profile food department has grown to rival full fledge restaurant chains. The key is in making innovation and cost reduction work together.

Despite being a quirky idea at first, Ikea’s rational is very straight-forward: hungry costumers will stay longer in its stores if they have food. In essence, the strategy involves introducing a brand new value proposition to its furniture business. A nuisance PoD like this that enhances customer relationships and purchasing experience is very powerful since the actual furniture sold by different stores varies relatively little .

But a great idea alone isn’t enough. Ikea follows up implementation with cost reduction techniques: selecting a small standard menu to increase inventory velocity, outsourcing production, and developing dishes that offer the most “fullness” for the price. Although Ikea’s food outlet has the potential to become an independent revenue stream, it’s probably more profitable if it remains a cheap complimentary service to help capturing lucrative furniture sales.

Japan looks bullish as Prime Minister Shinzo Abe rolls out reforms to stimulate the country after a decade-long economic stagnation. In an article on The Wall Street Journal “Looking Beyond Yen in Japan” Yumi Otagaki suggest that now is the prime time for foreign investors to look beyond the familiar selection of exporting giants (Toyota, Sony, etc.), and focus instead on small/midsize domestic companies. Though this assessment has some merit, the article risks being too optimistic. First and foremost, it’s yet unknown how effective the reform will really be in the long term. In particular, there are questions about the true drive behind Japan’s recent market recovery. Is it due organic industry growth, or is it the effect of a national hype following Abe’s bold promises?

A stock indicator board in Tokyo (image taken from The Wall Street Journal)

Never the less, my analysis shows that the short term boom will continue, during which small businesses will experience growth as the domestic market revitalizes. But at the same time investors must be extra careful about these small companies’ realistic worth so as not to be caught in a bubble as share prices spike above their true value. Moreover, only newly emerging industries will continue to benefit from sustainable growth after the immediate effect of the new reform wears off. Some hedge funds have smartly chosen to invest in Japan’s medical services given the country’s aging population. I think the organic foods industry might also also a good bet. In a wealthy and increasingly health conscious nation, what will the consumers eat?

Commercials are products too. They provide consumers with brand awareness and the price is one’s time and attention. Consequently, good advertisements must also possess the same ingredients – points of difference, points of parity, and frame of reference that govern the success of the products they promote. Sauderite Katrina’s post “I Don’t Care What It Is, But Please Take My Money,” illustrates one such advertisement:

As Katrina pointed out in her post, Fantastic DeLite succeeded because the campaign voiced the FoR, PoP, and PoD that the brand possesses. Yet if we look even closer, we can see that the campaign itself possesses the these elements too.

Firstly, the commercial can be quickly identified as a snack commercial (frame of reference). In contrast, some exotic ads confuse the viewers because they aren’t perceived as real advertisements. Secondly, it does what other commercials of its kind do – attest that the snack is delicious (point of parity). Thirdly, the advertisement possesses a compelling point of difference – it shows how consumers think about the product through their spontaneous actions instead of testimonials or a celebrity endorsement. A successful marketing campaign not only must consider the FoR, PoP, and PoD of the brand it is promoting but also create ones for itself.

With the latest iPhone 5s & 5c, even some of the most harden fan boys are forced to concede that their beloved brand is really letting innovation slip. However, are they still passionate about Apple? Absolutely yes! And herein lies the beauty. While reading fellow Saudrite Jerome’s post: “Solid New Iphones Fail to Excite,” I started thinking about flip side of the coin.

What if the new iPhones were never intended to “excite”, i.e. to snatch customers away from competitors, or to reach out to new customer segments? My analysis show that Tim Cook’s vision subtly differs from Steve Jobs’. Cook is all about maximizing returns using available resources (his background being operations after all) – in this case, iPhone’s existing enthusiasts. He wasn’t concerned about creating radical new features that would persuade a Galaxy user that iPhone is superior. On the contrary, his aim was to achieve the greatest product satisfaction possible (e.g. by launching a more affordable line) for Apple’s established target market.

The new iPhones’ record breaking 9 million first week sales in September clearly affirms Cook’s perspective. Apple’s success comes from its strong grasp of consumer behavior. The key is not to forcefully compete for new customers, but rather to see the Purchase Funnel through to a full loop.

Increasingly, people are beginning to rationally analyze Facebook’s effectiveness as a marketing tool. However until very recently, businesses would simply scrambled to get behind this booming social networking website, believing that it was truly “the new thing”.

Is Facebook truly new? Let’s compare Facebook and television channels. As much as they are radically different means of advertising, they offer their clients essentially the same value proposition! And both suffer from the same disadvantages. Neither Facebook nor TV users engage in their respective activities with the intention to search for products or services. Thus both Facebook and TV ads must actively compete with more interesting contents. In addition, while Facebook boasts of its ability to target ads at the desired customer segment, the same effect can be achieved on TV by selecting the appropriate channel and air time.

Doubtlessly, Facebook offers top of the line social networking experience. In this frame of reference, Facebook reigns supreme. But if the frame were to be extended to include other competitors, then it lacks a convincing edge. Perhaps it time for Facebook to rework its advertisement delivery. Imagine if instead consumers were invited to look up what brands their friends are all buzzing about!

McDonald’s announced this Thursday that starting early 2014, fruit and salad side dishes will be included into its Value-Meal. This decision foreshadows a series of others that is yet to come.

When analyzing an established company in relation to its environment, the Porter’s 5-Forces is an excellent tool. The quick service restaurant business is unstable since the barrier to entry is low. The profit margin is already at its thinnest, so slashing prices is not an option. to maintain its competitive advantage McDonald’s must seek product improvement and differentiation. Most likely, it  has realized through industry sales reports that its customers (who have absolute buyer power) are slowly moving away from “high calorie foods” in the US. The proposed changes will help differentiate McDonald’s from its main competitors in the race to offer healthier menu options.

However these early promises lack both impact and speed, and McDonald’s should really consider ramping up its commitments swiftly. Promoting healthy products will likely have minimal effect on the sales of its traditional goods which rely primarily on brand loyalty and cultivated tastes. The faster McDonald’s can “own” the image of a healthy yet hearty fast food, the stronger it will be in the future restaurant scene.

In the last quarter, Canada Post reported a $104 million loss in revenue. The chief culprit?  The Crown Corp readily points to the drop in transaction (paper) mails over the past decade. Not so fast! Perhaps the real problem lies in the company’s incompetent accounting and operations management.

Since the Digital Revolution swept through the Canadian households in the last decade, Canadians have rapidly taken up emails as the default means of communication. Canada Post’s management accounting must have foreseen the doom of its traditional business model from the revenue trends. Being based 51% on transaction mail meant low margins but heavy costs – vehicles, retail locations, and mailmen. However, they failed to communicate the urgency of this situation.

Image taken from CBC news

After years of revenue dip, finally Canada Post announced their plan for a makeover. The decision is to shift the main focus toward parcel delivery to capitalize on the growth of e-commerce. At the same time transaction mail services will be downsized.

The lesson here is simple,  if the values offered don’t align closely with the values sought by consumers, then the company model must be changed, and changed fast. Waiting is not a viable solution.