Strictly Business

As social issues gain more attention, consumers are responding with their time and wallets. Whether switching to energy-efficient light bulbs to conserve resources, donating funds to help restore communities or spending weekends helping those in need, many people are taking steps to make a positive difference. While contributing to a cause should always be “in style,” today, doing your part can literally be quite fashionable.

Take a look through the racks at Philanthropy, a trendy boutique in downtown Franklin, TN, and you’ll see what I mean. Claiming “style with purpose,” the business offers a variety of merchandise, including graphic tees highlighting social issues and accessories designed to make a bold statement. The best part - a portion of the proceeds goes to support various campaigns, including Aid Sudan, Hands and Feet Project and Against the Grain.

Considering going “green”? You’re certainly not alone. Today you can buy “Eco-Iconic,” what trendwatching.com has termed for "Eco-friendly goods and services sporting bold, iconic markers and design, helping their eco-conscious owners show off their eco-credentials to their peers.” New hybrid models, accessories and even architecture allow consumers to make eco-friendly purchases they can be proud to sport.

So, how can your business help consumers help the world?

Posted by Jocelyn Gutekunst at 05:52 PM | Permalink | Comments (0)

Until fairly recently, the consumer-brand relationship has been heavily one-sided. If feedback channels did exist, they were utilized more so to air complaints than to routinely interact with products/services and other customers who share similar interests. Thanks largely to technology innovations, this is no longer the case. Successful brands are utilizing interactive media to engage consumers and give a louder voice to customer evangelists.

Take Southwest Airlines, for example. In my opinion, they have positioned themselves as “the people’s airline” by inviting customers to vote on preferences and share their stories, while offering them the freedom to “move across the country.” Their blog, Nuts About Southwest, encourages dialogue between the company and the customer, and the customer and the customer, incorporating other social media tools, such as YouTube, flickr, facebook, Linkedin and Twitter (they’ve already expressed they won’t be going the way of American Airlines regarding the baggage fee via Twitter). These utilities not only allow users to share media, they have the capabilities to solicit a response from the consumer, whether it be ratings, comments, tags, etc.

It all begins with a conversation, by listening to what the consumer is saying and evolving your products/services to best deliver on expectations. Because they’re talking, whether or not you’re listening.

Posted by Jocelyn Gutekunst at 01:57 PM | Permalink | Comments (1)

[Authored by MBA Candidate Wesley Payne] As U.S. businesses continue global expansion efforts, even the "experts" continue to learn valuable lessons. With modern technology capable of carrying humans anywhere in the world in a matter of two days and sending communication instantly to any receptive media at any point on the globe, the idea of global expansion seems like the right choice. For some companies, it may be the only path that offers continued growth. The catch continues to be in adequately understanding how to market your product to the culture of the new country.

McDonald's decided in 1981 to expand into Spain (Note: Barcelona unit shown to the left.). This at first seemed like a viable, untapped market of over 8 million people ripe for invasion from the fast food industry. After successfully negotiating with the government, McDonald's went about spreading quickly throughout the European peninsula.

Unfortunately, McDonald's was not ready for two aspects of the Spanish culture. First, was the lack of reason for and desire to rush through one's meal. The Spanish are a very laid back people that adhere to a pace of food consumption most Americans would consider painfully slow. When the McDonald’s people came in offering quick food to take home to eat after work, the Spanish simply saw no need for it.

After recovering from this setback and refocusing their marketing to young Spanish parents and immigrants with kids, they made another mistake by not offering alcoholic beverages. When they started to draw in the young families with the promise of a playground and no hassle meals for children, they noticed the parents would not eat. After some surveying, they found that the parents wanted to drink wine or beer with their meals. Since its inception, no McDonalds had ever served beer at the restaurants in any city or country in the world. This has since changed, and now the corporation serves beer throughout Europe within its stores.

So did the changes make for a successful foray into Spain and later Europe? Yes and No. According to the company website, McDonald's is currently in over 60 countries, with Spain ranked number 11, with over 260 stores. They have also penetrated the rest of Europe with other major countries on the continent presently accounting for half of the top ten. Though McDonald’s did not change the culture and currently provides very few stores when considering Spain’s population of 40 million, they do continue slow and steady growth. It is no doubt in part to their adaptations, but some credit should be given to globalization as a whole. McDonalds may have been ahead of its time when it first tackled the Spanish market. However, as their economy continues to grow and global cultural norms continue to blur, it could be that their timing will work out rather well.

Authored by Wesley Payne, MBA Candidate

Posted by Joe Alexander at 10:45 AM | Permalink | Comments (0)

[Authored by Jeremy Smith, MBA Candidate] As consumers, do we really have a choice when it comes to where and what we purchase? While most businesses have many competitors, there are quite a few that don’t. In many different business sectors, competition seems to be shrinking as large players grow and dominate the field.

A good example is the retail marketplace. Competition is high when it comes clothing retailers or restaurants. If you are looking for a place to buy some new shoes or a dinner for the evening, the choices are abundant. There are many cases where this isn’t true. Retailers like Wal-Mart and Target, Kroger and Publix, Lowes and Home Depot, Barnes and Noble and Books-a-Million, and Best Buy and Circuit City may compete with each other, but not usually with anyone else. There are exceptions to this rule as retail giant Wal-Mart carries just about everything. However, they specialize in nothing. In addition, the competing products are usually of a lower quality.

For example, if I need to buy a kitchen sink on a Sunday afternoon, I basically have two options, Lowes or Home Depot. If I need a popular book to read, Books-a-Million or Barnes and Noble are my two choices. Other small local or online retailers are available, but sometimes the consumer needs something right away or it might want “to touch” the product to feel comfortable with it. These companies have essentially created local oligopolies and compete only with each other. As a result, the big-box stores who used to offer big savings are now only marginally cheaper than their local predecessors.

A bigger question might be what happens next? In many of cases, one player within each pair is starting to outshine the other. In the fourth quarter of 2007, Best Buy, the No. 1 consumer electronics retailer, posted an 18.5 percent jump in sales while Circuit City lost money. Lowes is continuing to gain substantial ground on Home Depot, and Barnes and Noble is the only national book retailer doing well financially. Will the market eventually support only a single competitor in each such space?

Wal-Mart has already gained this position in several small geographic areas and they are using this position to increase profits. In my hometown of Fayetteville, TN, Wal-Mart is the only major retailer. Grocery stores like Food Lion and Bi-Lo have left town. The market is too small for the addition of a store like Target and the prices reflect this lack of competition. Every item in the Fayetteville store is more expensive than the same item in the Murfreesboro Wal-Mart. Are the fates of larger markets the same? In retail, the rule is to grow or fail. However, should one company win, it is the consumer who would suffer.

--Jeremy Smith, MBA Candidate

Posted by Joe Alexander at 08:38 PM | Permalink | Comments (1)

[Authored by MBA Candidate Mitch Walker] Product advertising through media is experiencing many changes. The industry is switching away from direct advertising to more of a product placement approach. Although, this concept is nothing new, more and more companies are utilizing this approach. The next time you watch television or a movie, try and identify certain products that appear or are mentioned over and over. Some of them will become more obvious than others. Unless the viewer is really thinking about it, they may not realize that they are being exposed to certain product placements.

In the movie You’ve Got Mail, AOL, Apple, IBM and Starbucks were products that were frequently displayed. Apple computers were exclusively used and displayed in the movie Mission Impossible 2. Chevrolet made excellent use of the Camaro in the recent Transformers movie.

More and more television shows are being broadcast “commercial-free” and obtaining more and more advertising revenues via product placements. Recent examples of television series that have been broadcast without ad interruptions include Gideon’s Crossing, 24, and Alias. Furthermore, with the advent of digital video recorders, viewers are switching from watching live programming to watching recorded programming and fast forwarding or skipping through commercials. By placing products into the show’s content, viewers have no choice but to be exposed to advertisers’ products. Reality TV has changed the rules of the game by creating brand entertainment. The Apprentice reality TV show has positioned the product as an integral part of the show. In many of the show’s challenges, the company’s own executives introduce the task which involves their own product. Staples, Pontiac, QVC, Sony, Best Buy and Pepsi, to name a few, are companies that have placed their products in tasks on The Apprentice.

Reality TV hit show Survivor has made product placements extremely obvious with reward challenges centered on food products as the reward such as Doritos or Mountain Dew.

Product placement is also evident in books, music videos and video games. Children’s books feature product brands right in the titles. Skittles Riddles Math, The M&M’s Brand Counting Book, and The Hershey’s Kisses Addition Book are just a few examples.

Product placement in video games isn’t anything new. In the 1980’s, Sega placed banners advertising Marlboro in its auto racing games. More recently, Sega has placed ads for Dole Food Company in its Super Monkey Ball video game.

Product placement is accomplished under various arrangements including 1) it merely happens within programming without any intentionality (see example in the picture to left of a Coke displayed from the space shuttle), 2) the placement is arranged and a certain amount of the product is supplied as compensation, or 3) the placement is arranged in return for monetary compensation.

--MBA Candidate Mitch Walker

Posted by Joe Alexander at 08:14 PM | Permalink | Comments (2)