Tom Rattray's Marketing Blog

It seems like every credit card these days is co-branded with some other company. Now you may ask what is co-branding? Co-branding is a marketing strategy involving a partnership between two companies so that each company can achieve greater brand recognition, reach larger markets, and increase consumer spending. Mastercard.com reports that holders of co-branded cards (ie WestJet MasterCard), outspend holders of regular MasterCards by approximately $4900 per year. Co-branded MasterCards make up 55% of the total MasterCard sales per year.

Why would people be willing to spend so much more per year just because their credit card has some companies logo on it? It isn’t just the fact that the credit card has a nice logo on the front, MasterCard believes that cardholders spend more because they are getting something in return. Co-branded credit cards are known for having higher then normal spending rewards or little perks associated with the card, the only problem that most people forget is generally these cards have higher annual fees then regular MasterCards. When using the Starbucks Duetto Visa you can use it anywhere VISA is accepted, but if you use it at a Starbucks you earn all the perks that you would receive if you had paid with a registered Starbucks gift card; a free drink on your birthday, free refills on drip coffee, free soy milk upgrades, and free flavour shots just to name a few.

Another example of co-branded credits cards are not for businesses, but Unions, Association, and Non-Profit Organization. For example if you are a member of COPA(Canadian Owners and Pilots Association) you are eligible to apply for their co-branded MasterCard. Every time you use this credit card BMO will make a donation to COPA. Another benefit of the card is being a COPA you receive travel and hotel benefits all across Canada, so instead of carrying your membership card around you can simply flash your COPA MasterCard and it acts as identification.

Co-branding credit cards is very effective increasing sales for both the credit card company and the company that it is co-branding with. But it isn’t just credit cards, there are many other ways that two companies can co-brand and they are all very effective.

I have been reading through a few blogs, for example Shu Woon Leong’s blog post You & Starbucks. It’s bigger then coffee, and a common theme that I am seeing is the release of the new Starbucks “Tribute” products and drinks. So the other day I was sitting at home watching TV and I saw a rather interesting Starbucks commercial that I thought I needed to share.

Now, there is a lot going on in this commercial, but the one thing that stands out to me is the supply chain that is shown. Now it may not be Starbucks’ exact supply chain but it is a good summary. A little mistake in the commercial is it made me believe that Starbucks has a pull supply chain*, because Sue orderers her coffee and then the whole chain from the farmer to the barista makes the coffee for her, but I know that is done to add effect to the commercial. Apart from that is it very good commercial and well representative of the side of the coffee industry that few people see.

*A pull supply chain is when a product isn’t produced until it is ordered, this would be difficult for Starbucks because the coffee beans take months to grow.

The supply chain that I derived from this video is, Sue orders then:

Farmer—>Transportation Company—>Freight Forwarder—>Starbucks Warehouse—>Retailer—>Customer

One thing that I noticed in this video is that rather then fly the coffee beans, they are sent by ship. As I said before I am not sure if this is how Starbucks’ beans are actually transported or not, but it is in fact a very good idea. Once the coffee beans are cooked they become relatively imperishable, so Starbucks, or whoever is in possession of the beans at the time, could save money by sending the beans via ships rather then planes.

Even if you don’t look at the technical side of this commercial it is still just a really cool commercial.

What do you think it would be like if Starbucks really had a pull supply chain?

This morning after I finished up playing hockey, a few of the guys in the locker-room were talking about how the Vancouver Police Department(VPD) is now using twitter. So I went home and found an article in The Province that talks all about it. The VPD have an officer on staff who is responsible for continuously updating the @VancouverPD twitter account. So I decided to follow VPD, and soon realized that many other major police departments also are on twitter (Victoria, Toronto). At first I was kind of thinking that this was a bit of a stupid idea, but once I saw a few of the VPD tweets I soon learned that they are actually pretty informative. Alerts on recent crimes that have taken place around the city, areas of high traffic that you should avoid, and even one of their tweets was a response to a fellow Sauder student’s tweet about an event he had witnessed yesterday. I was very impressed by VPD’s twitter account and was beginning to think that twitter was a very efficient means of distributing information for “emergency services”….

While viewing the VPD tweets, a tweet popped up from an airline that provides air ambulance services to the province of Alberta. I was shocked by what it said “Currently responding to a double fatality car accident north of Edmonton”. I don’t see any need for that tweet! I think that people should watch what they say, they could have just said “Responding to a car accident north of Edmonton”. Do we really need to know the saddening details?

I still believe that twitter is a very effective means of communication for “emergency services”, but I think that they should leave some of the “not so pleasant details” out of their tweets.

So today I went to Walmart with my mom. Moms buying, time to stock up! So one of our first stops was the drink isle. My mom grabs a 12 pack of Coca Cola because they are on sale! Then she realizes oh wait 24 packs, which are right next to the 12 packs are also on sale. So she figures “go big or go home” and grabs the 24 pack. Then she realizes that it is $3.99 a 12 pack, so $8.98 for 24 cans, or the 24 pack was “on sale” for $9.99. It was $1 cheaper to buy 2-12 packs rather then 1-24 pack!  What is with that? Do you pay a premium for the connivence of only carrying one case? Normally you pay less, the higher volume you buy!

I have seen other examples like this in the past, such as a few months ago when I saw a 2 pack tooth brushes for $4.50 when the same tooth brushes were priced at $2 each. Is this a mistake or are some companies trying to pull a fast one on us? I think in some cases that you come across (see picture below) are just mistakes by the employee who put out the prices on the shelves, but in the case of the Coca Cola there were big promotional displays with the two prices clearly marked.

These mistakes are pretty funny but they could be costly to the stores that they occur in. Many large corporations, like Walmart, have programs in place where customers receive the products at a reduced rate and in extreme cases for free if they are “marked” inappropriately. Over repeated cases this could add up and cost the business large sums of money.

Earlier today I read a blog post by Pumasell, World Famous Brand – Breitling Watches Canada. The post talks about how exclusive, and high-end  Breitling watches are. Breitling watches are designed with features that make them appealing to pilots and pilot wannabes all over the globe. Myself, still trying to figure out if I am a pilot or just a wannabe, was not sold on these watches. I have a Citizen watch, quite a bit cheaper, but still pricey ($700-800), the only reason that I have this watch is because I got it for a graduation gift from my parents. Other then a few top secret trademark features, and the metals they are made of, there is few differences between these high end watches and a knock off version you would buy from a mall vendor. I saw these inflated prices ($2000-5000 for some Breitling watches) as more brand equity, then true performance of the watch.

Then I remembered a watch that a co-worker had told me about. So after some research I found the watch! The Breitling Emergency, a plain looking Titanium watch. But it isn’t about what this watch looks like or the name on it, the watch has a built in ELT(Emergency Locator Transmitter).

In a plane crash, the plane will have an ELT inside of it, but what if for some reason you have to start walking away from the plane and you can’t take the plane’s ELT with you? Simple you have one built into your watch! This made me reconsider some of the products that I viewed as over priced, strictly because they are a brand name, maybe there are hidden functions to many products. I would be willing to pay a premium if it meant getting rescued in the event of an emergency!

Many people say that a healthy breakfast is the most important meal of the day, the only problem is in today’s busy lifestyle many people don’t have time for breakfast. So, many people choose the next best thing, a greasy breakfast sandwich. Breakfast sandwiches are the 2nd most popular breakfast item in Canada, next to coffee.

This rather large market has been long dominated by McDonalds and their McMuffin line up. Two recent additions to this competition, Starbucks and more recently Tim Hortons, have greatly cut into McDonalds dominant market share.

With this added pressure McDonalds knew they had to do something, and came up with a new idea. The last addition to the Mcdonalds breakfast menu came in 2003, with the introduction of the McGriddle. In 2011 McDonalds decided to modify their breakfast line up, adding the option of substituting the English muffin “bun” on their McMuffins with a newer biscuit style “bun”.

To promote their new product McDonalds launched a TV commercial (see below) and other web and paper based ads. Another very effective method of promoting the new biscuits utilized by McDonalds, was on February 9 & 10 when select stores gave away free samples of the new product. We have seen McDonalds use this method before in late 2010 when they gave away free coffee.

The sampling method may cost McDonalds a lot up front but it is very beneficial in the long run. For example when McDonalds coffee was offered for free I would go there almost everyday, once the promotion was over I realized that I actually enjoy their coffee and now regularly purchase it. But some customers may not be instantly hooked so I would expect McDonalds to offer discount coupons as their next promotional step in the coming weeks.

Vancouver’s Harbour Air Seaplanes (HA) prides itself on being the World’s Largest all Seaplane Airlines, and more importantly the first Airline in North America to achieve Carbon Neutral status in both corporate and flight operations.

Flying has always been known as a quick and convenient method of transportation, but has been boycotted by many due to it’s harmful effects on the environment. To counter these effects, HA charges passengers a small fee (around $2 per flight), which is used purchase “Carbon Credits” from Offsetters. Offsetters, is a Canadian company who “offsets” its clients carbon emissions by implementing programs that reduce atmospheric C02.

HA started this program with hopes of reducing their large carbon foot print, but Carbon Neutrality, has turned out to be a very good marketing strategy aimed at the “Green” consumer. This strategy helps to relieve customer’s environmental concerns, and brings in customers that wouldn’t have previously considered this means of transportation. When HA first started this program in 2007, it provided them with a significant competitive advantage, the only problem was it was fairly easily replicated by their competition.

Now a days, different means of offsetting carbon emissions are used by many of the major airlines. I believe that this is an excellent marketing strategy and just the right thing to do, HA has excepted its weakness (carbon emissions) and gone out and done something about it. In a time where it seems like there is a lot of talk and little action about fighting climate change, I believe that Harbour Air should be praised for leading the way in reducing carbon emissions.

Click the icon to learn more! Then simply add this icon to your post, email them your post URL and Make It Green will plant a tree in honour of your blog in Plumas National Forest.

As Evan Flater pointed out in his post Creating Value for sponsors-Global Marketing through Cycling-Pt. 1 cycling offers some of the best ‘bang for you buck’ as far as marketing goes. As a company you could choose to pour your marketing budget into 30 second TV ads, or you could receive a season of exposure from being one of the main sponsors of a Professional Cycling Team. Riders are like moving billboards, and if a rider manages to break away from the peloton, this could mean a few hours of TV time for you company.

One of the major misconceptions surrounding cycling is that it is a European sport, and is not big in North America. In recent years the Cycling craze has begun to build in Canada and the US, thanks to a select group of riders who have preformed at high levels in the recent years, one of these riders being Lance Armstrong. I am sure that most of you, even if you don’t know much about him, have heard of Lance and his record 7 consecutive Tour de France wins. Lance and these other riders have opened the door for more and more North American teams and sponsors. A recently formed Canadian based team with many Canadian sponsors, Team Spidertech is beginning to make waves on the professional cycling circuit and already have set goals of qualifying for the Tour de France in 2013.

Cycling is already big in North America, but will continue to grow as North American teams and rider continue to put up results in big races. I believe that this is an excellent opportunity for companies, because cycling teams are very valuable and provide many benefits to their sponsors.

If you watch North American Professional Hockey such as the NHL or AHL, you will see a wide variety of advertisements around the rink (both underneath the ice and on the side boards). These ads display many different companies and are arranged in a way where they are not cluttered.

Over the christmas holidays, I started to watch the Spengler Cup, a hockey tournament played in Europe, featuring teams made up of “lower caliber players” compared to tournaments like the World Championships and the Olympics. I noticed that similar marketing methods are used, but unlike in North American Hockey, the players were skating around like billboards. It seemed like no matter where I looked there were ads. The thing that shocked me most was that the majority of the ads were only for a few different companies! I believe that all of these ads are over-kill. I know that many people watch hockey and other sports so it is a good means of advertising, but there such a thing as too many ads.

In North America we use professional athletes to endorse and promote companies through off-ice campaigns rather then slapping ads all over them. While they play the only real on-ice promotion that players do is displaying the small manufacturer’s logos on the gear they are wearing. In the Spengler Cup I noticed that many of the manufacturer’s logos were covered up by these, mainly, “non hockey related ads”. I think that all the advertising during the Spengler Cup takes away from the game itself, and it makes the players look ridiculous.

Entering its 40^th year of service, Seattle based, Starbucks Coffee Corp. has decided that it is time for change. After having the same logo featured on their cups since 1992, with the exception of promotional cups, Starbucks has finally revamped it’s logo. Starbucks’ fourth logo of all time features the same old Mermaid, minus the words “Starbucks Coffee” that previously wrapped around the logo. Some Starbucks regulars believe this new cup looks cheap, some even say it looks like the cup you would receive a $2 latte in, not a $5 Starbucks Latte. Another Starbucks faithful said that he might stop drinking Starbucks all together because he dislikes the new logo so much. People believe that the removal of “Starbucks Coffee” from the cup is an ignorant move by Starbucks. I personally really like the modern look of the new logo, and yes it may be ignorant to have removed “Starbucks Coffee” from the cup, but honestly the majority of people know a Starbucks cup when they see one.

This new design has outraged many consumers, and for a company like Starbucks with a very loyal customer base, there is a little homework that Starbucks should have chosen to do before making these changes. They could have preformed surveys, or even logo design contests, to ensure that customers will like the new logo. Starbucks has to remember that they have developed an image that they need to live up to, and if customers are put off by this new design they will most likely go purchase their coffee, cheaper, elsewhere. But, in the end these are just cups, and when it comes down to it, it isn’t the cup, it is what is inside the cup that matters.