Month: March 2011

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.