Everyday Rewards… Pulling the Wool over our eyes

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Loyalty is big business, with many consumers willing to hand over their personal details in exchange for a card, hoping it will provide them shopping benefits. A recent market industry study suggests that when choosing between two competing brands, 55% of buyers said they will choose the one with the loyalty program.

With consumers having more and more choices when it comes to where they buy their groceries, are loyalty cards rewarding shoppers with what they want or are they just profiting the big supermarkets? The Woolworths’ Everyday Rewards program has close to nine million members, who receive discounts on specific (orange non-essential ticketed) items in-store. The purchase discounts are accrued only on products that have the orange ticket, these add up to monetary savings in future at the check-out. A recent Monash University study suggests that a typical loyalty card shopper will save about $1.25 per $100 spent. That is $1.25 to spend on items selected by the supermarket… sounds like an everyday reward right?

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A measure of success

Loyalty programs provide retailers with a significant amount of data-metrics and information about the consumers and their purchasing behaviors.

Marketing metrics can be used to help quantify marketing actions and their impact on financial statements, and can be used to evaluate past performance and to help fine tune future strategies. Collected data over time can provide a broader understanding of a customer-type and can formulate strategies based around this – taking marketing from being seen as just a “superstition” into more of a science.

Metrics measurements can be displayed as follows:

MMetrics

And the reward goes to…

Loyalty programs provide organisations with a significant volume of data. From the moment the customer signs up, (where they put in their gender, age, address, personal situation and shopping preferences), this information is recorded. Once the customer starts making transactions using the loyalty card, data starts being collected and a profile is immediately formed, tracking buying habits; when, what and how much of these items you buy. Or as Woolworths puts it collecting data: to “learn of your likely preferences so that we may promote our goods and services to you in a way which may be of most interest to you“. In other words, to try to find new ways to make you spend more, they will offer you targeted deals to try to encourage greater spend. This is targeted marketing at its best; relying on quantifiable collated metrics over time that gets better with age.

Big data is big business and is helping to transform the way companies market. Woolworths spent $20M to acquire a major share in the analytics firm Quantium, to help them manage their data more effectively and to help them build some more financially quantifiable ROI from their marketing – taking it “from data to dividend“. The results of this business move, opened pathways for Woolworths to then be able to cross-examine their loyalty card purchasing habits with claims made in their Woolworths – branded insurance. This helped them to predict risk and allowed them to market better to low-risk customers (or to those who drank more milk and ate more red meat), whilst also helping them to save on advertising.

The benefits of loyalty programs are clear for big business, with them collecting large amounts of quantifiable data and deeper insights over periods of time. But… to the consumer there is a trade-off between the small rewards and maintaining your privacy.

drevil

So shall we all hide under rocks to escape the big data targeted metrics marketing revolution? That is one option, or you can just pay cash…

 

By Damien Mulhall Student ID: 212241227 WordPress User Name: damienmu

 

References

Angus Kidman 2016, Woolworths Everyday Rewards becomes Woolworths Rewards: Everything you need to know, Retrieved 20th April 2016, <http://www.finder.com.au/woolworths-rewards-faq>.

Author Unknown 2013, Big data gets bigger: Supermarkets approaching 10 million FlyBuys or Everyday Rewards cardholders, Retrieved 20th April 2016, <http://www.roymorgan.com/findings/5277-big-data-at-supermarkets-flybuys-vs-everyday-rewards-june-2013-201311032158>.

Daniel Graham 2016, Discounts for data, Retrieved 20th April 2016, <https://www.choice.com.au/shopping/consumer-rights-and-advice/your-rights/articles/loyalty-program-data-collection>.

David Flynn 2016, Woolworths brings back Qantas frequent flyer points for shoppers, Retrieved 20th April 2016, <http://www.ausbt.com.au/woolworths-brings-back-qantas-frequent-flyer-points-for-shoppers>.

Iacobucci, D. 2015. Marketing Management. First Edition. Cengage Learning, Stamford, USA

Jayson DeMers 2014, 10 Online Marketing Metrics You Need To Be Measuring, Retrieved 20th April 2016, <http://www.forbes.com/sites/jaysondemers/2014/08/15/10-online-marketing-metrics-you-need-to-be-measuring/#5c96ba5f355f>.

Jemima Whyte, 2015, Which supermarket loyalty points get you a better deal: Coles or Woolworths?, Retrieved 20th April 2016, <http://www.afr.com/business/retail/which-supermarket-loyalty-points-get-you-a-better-deal-coles-or-woolworths-20151028-gkl7k4>.

Kevin Cain 2012, Measuring Marketing Effectiveness: 6 Metrics You Need to Track, Retrieved 20th April 2016, <http://contentmarketinginstitute.com/2012/10/measuring-marketing-effectiveness-metrics/>.

Monash Business School, ACRS Review of Woolworths ‘Woolworths Rewards’ program, Retrieved 20th April 2016, <http://business.monash.edu/__data/assets/pdf_file/0003/356556/ACRS-Review-of-Woolworths-Rewards-program.pdf>.

Myriam Robin 2013, Why loyalty cards are Woolworths’ secret weapon in supermarket wars, Retrieved 20th April 2016, <http://www.smartcompany.com.au/people-human-resources/managing/39563-why-loyalty-cards-are-woolworths-secret-weapon-in-supermarket-wars-2/>.

Natasha Wallace, Sarah Whyte 2013, Supermarket spies: big retail has you in its sights, Retrieved 20th April 2016, <http://www.smh.com.au/digital-life/consumer-security/supermarket-spies-big-retail-has-you-in-its-sights-20130914-2trko.html>.

Professor David J. Reibstein 2013, The Importance of Marketing Metrics, Retrieved 20th April 2016, <http://www.insead.edu/executive-education/interviews/marketing-sales/the-importance-of-marketing-metrics>.

Rachel Browne 2015, The price of loyalty: are rewards schemes worth it?, Retrieved 20th April 2016, <http://www.smh.com.au/business/retail/the-price-of-loyalty-are-rewards-schemes-worth-it-20151029-gklqxh.html>.

Sharp, B 2013, ‘Marketing: theory, evidence, practice’, Oxford University Press, Melbourne, Australia

James Brand – A license to sell

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The name is Bond, James Bond. And he has a license to kill. That is, as long as he has downed his shaken not stirred Smirnoff martini before using his remarkable Omega watch to fend off terrorists in his Brioni suit, before speeding off in his Aston Martin. Saving the world every other day, surrounded by a number of the world’s most expensive brands and taking on many an attractive conquest is just another day for the swaggering British agent. A swagger, it seems that advertisers can’t stop throwing money at.

Product placement is playing an increasingly significant role in big Hollywood films. So much so that in the most recent James Bond film, Spectre, there were 17 major brands on screen. A few select brands take centre stage in Bond films, with the Aston Martin being the car of choice and the Omega watch, being  something which helps him outsmart villains .

 

The time has come Mr Bond

Measuring the impact these brands have on the viewer is serious business. Jean Claude Monachon, Omega Vice President and Head of Product Development said that everybody wants to be Bond “he’s sexy, he has the strength, he’s running fast, he’s special, all the ladies love him”. This, he believes, sits well with the Omega brand. In fact Omega invests as much as 25-30% of its marketing budget on brand ambassadors, focusing most heavily on Bond films as they have seen a “very direct impact on sales” when the films have been in the cinemas.

According to the Omega site: “OMEGA and 007 are appreciated for their fashion flair, adventurous spirit and reliability – they complement each other perfectly.” And with watches flying off the shelves with the release of every new Bond film, and at $9,000 a piece, it looks like Omega have found their man of influence.

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Bonding with James
With so many well-known and expensive brands believing in the Bond franchise and throwing millions of dollars in advertising to be featured in the films, they are putting a lot of trust in the films ability to tap into a very loyal fan base to help them sell their products. Along with the movie product placement spots, the current Bond, Daniel Craig, also serves as a brand ambassador for a number of these brands, appearing in print and other ads, which helps build each brand’s association with Bond and build their exposure at the same time. On top of this, Daniel brings a similar “air” through his off-screen persona, so when people see him, they may recall the brands associated with Bond.

This can be looked at in terms of the Elaboration likelihood model (ELM) of persuasion. This model is a dual process theory, which suggests that there are two ways in which advertising can influence a recipient: through a central and peripheral route. The basic idea is that when someone is presented with information, some level of “elaboration” occurs. For example: in a Bond movie the viewer can be influenced centrally or more consciously, where they listen carefully and are more motivated or more easily persuaded by what they are experiencing. If they believe the source is reliable and convincing, they will more than likely be more receptive to a change in attitude towards the product. Whereas, a more peripheral recipient is more likely to be influenced by surface characteristics, like seeing Daniel Craig in a fashion magazine wearing a flashy watch – someone who is less engaged or unaware of the brand.

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Do you expect me to talk? No, Mr Bond…

Much like remembering the ending to a movie quote the sleeper effect is a theory, which suggests that as time passes, a message a user may have received, but may have forgotten left hidden in the back of their memory, can resurface and increase in persuasiveness under the right circumstances. For example: if a suave actor who plays Bond turns up to an event in a fancy watch, a part of a recipient’s brain may cue a memory (a discounting cue) where they realise they know the brand of watch and then begin to associate it to the character Bond.

Despite mixed reviews, the most recent James Bond film, Spectre, managed to become the second highest grossing Bond film in the franchise pulling just under $900 million USD. And, with many brands fighting for advertising space across multiple channels, it is clear that being part of this franchise is highly desirable.

When a loyal fan walks into a James Bond film, they are expecting an action packed blockbuster, with a classy and witty lead who gets what he wants every time. And in most cases, the films deliver… with a side of product placement hoping to influence the fan on future product purchasers. But don’t worry, if you are not a fan, or don’t see the film, you are sure to experience one of many other advertisements associated with Bond… whether you are expecting it or not…

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By Damien Mulhall Student ID: 212241227 WordPress User Name: damienmu
References

 Author Unknown, ‘Omega’ https://www.omegawatches.com/planet-omega/cinema/james-bond/ [Accessed 26 April, 2016]

Author Unknown, 2016, ‘Elaboration likelihood model’ https://en.wikipedia.org/wiki/Elaboration_likelihood_model, [Accessed 25 April, 2016]

Author Unknown,’ Sleeper Effect’ http://changingminds.org/explanations/theories/sleeper_effect.htm [Accessed April 26, 2016]

Author Unknown, ‘Box office history for James Bond movies’ http://www.the-numbers.com/movies/franchise/James-Bond [Accessed April 26, 2016]

Deacon, M, 2015, ‘The name’s Brand… James Brand’ http://www.pressreader.com/uk/the-daily-telegraph/20151024/282097750560351/TextView [Accessed 25 April, 2016]

McCarthy, L ‘James Bond, keeping time with Omega watches’ http://wwd.com/menswear-news/lifestyle/james-bond-omega-watches-007-spectre-10273044/ [Accessed 25 April, 2016]

Velasco, V, 2015, ‘Where time is everywhere, weatches are serving a new purpose’ http://www.businessmirror.com.ph/where-time-is-everywhere-watches-are-serving-a-new-purpose/ [Accessed 25 April, 2016]

Wicks, A, 2008, ‘Giving timepieces a celebrity face’ http://wwd.com/media-news/giving-timepieces-a-celebrity-face-458987/ [Accessed April 26, 2016]

Yocco, V, 2014, ‘Persuasion: Applying the Elaboration Likelihood Model to design’ http://alistapart.com/article/persuasion-applying-the-elaboration-likelihood-model-to-design  [Accessed 25 April, 2016]

I want to be like Mike

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In 2003, Michael Jordan (MJ) retired from basketball. Today the Jordan brand generates roughly $3B USD per year for Nike alone, with MJ pocketing a cool $100M USD from the deal. He also makes millions through his other business ventures and sponsorship deals. MJ is worth an estimated $1.1B USD, and is set to make $30M USD more than any other athlete in the world in 2016.

 

Just do it

MJ is considered by a large majority as the greatest basketball player of all time (G.O.A.T). When he played, he brought a new and exciting vigour to the game and set the benchmark not just on the court, but also through player sponsorship deals – he became the tipping point for the globalization of sports marketing.

During his playing career, the popularity of MJ brought forward a flurry of sponsorship deals including: clothing, movies, cereals, sports drinks, fashion magazines and appearances in music videos. Everyone wanted to be like Mike and every company wanted a piece of him.

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In fact, the MJ brand was so successful in the 1980s-1990s that one year after signing MJ to their ‘Be like Mike’ campaign; Gatorade increased their revenue from $681M to over $1B. (Turner, 2007, p. 197; originally from Andrews and McDonald, 2001, p. 20). This was a clear example that the MJ brand was a force to be reckoned with, a marketing tool which could be measured and executed effectively.

With Nike, it started from humble beginnings, where MJ was fined $5000 per game for wearing the first Air Jordan shoes as they were too colourful. Nike gladly paid the fine each game, taking the opportunity to advertise they they gave each player who wore them a competitive advantage. Now Nike ‘s MJ brand is a global phenomenon with three out of every four basketball shoes in the USA being the Nike MJ brand. In fact, Nike is backing the MJ brand so much that they have set targets to double the brand’s annual revenue to $4.5B by 2020.

 

Air-volution

The power of the MJ brand is still growing, with MJ being ranked in a recent survey by CelebrityDBI as the most marketable person in the USA.

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The brand has been very successful in extending its product line with Nike, a product people trust and will pay a premium for. In fact, according to a recent Nielson report, approximately six in ten respondents (59%) of consumers prefer to buy new products from familiar brands. So it is not surprising that the MJ brand has been able to build on its success year on year, it now even sponsors players across a number of sports who wear different variations (tailored to the sport) of the shoe. This is helping it to diversify the brands market reach and example of how it has continued to evolve along with changing consumer behaviour and trends.

The story of the MJ brand is an example of how the brand image of a sports star has managed to transcend the game of basketball and sport, age, gender and global boarders to remain successful long after his career has finished.

MJ paved the way for many in basketball and in sports branding. He changed the perception of how a sports star can be perceived, as branding platforms for corporations and cultural icons.

MJ has been responsible for changing the business of sports and his brand has remained relevant through agility; moving with market demands and through broadening demographics.

People can debate MJ’s status as the G.O.A.T on the court, but there is no argument on who is the greatest sporting brand of all time.

 

By Damien Mulhall Student ID: 212241227 WordPress User Name: damienmu

 

References

Author Unknown, 2015, ‘Understanding the Power of the Brand Name’ www.nielsen.com [Accessed 20 April 2016]

Author Unknown, 2015, ‘Michael Jordan, the Legend, the Brand’ www.galleycreativegroup.com [Accessed 20 April 2016]

Badenhausen, J, 2016, ‘ How Jordan will make more money than any other athlete this year’ , www.forbes.com [Accessed 20 April 2016]

Badenhausen, K, 2016, ‘Michael Jordan, David Beckham Lead the Highest-Paid Retired Athletes 2016’, www.forbes.com [Accessed 20 April 2016]

Badenhausen, K, 2016, ‘How Michael Jordan will make more money than any other athlete in the world this year’, www.forbes.com [Accessed 20 April 2016]

Badenhausen, K, 2015, ‘How new Billionaire Michael Jordan Earned 100 Million in 2014’ www.forbes.com [Accessed 20 April 2016]

Cortsen, K, 2013 ‘The Jordan Impact’, www.kennethcortsen.com [Accessed 20 April 2016]

Davidson, K, 2014 ‘Michael Jordan, fuelled by Nike’s Jordan Brand sales, enters billionaires club’ www.oregonlive.com [Accessed 20 April 2016]

Gbadamosi, F, 2015 ‘The Economics of Nike’s Air Jordan Brand’, www.Themarketmogul.com [Accessed 20 April 2016]

Smith, K, 2016 ‘Brand Equity Modernization: Why Social Media is your Best Asset’, www.brandwatch.com [Accessed 20 April 2016]

Turner, G, 2007, ‘The economy of celebrity’, in Redmond, S. and Holmes, S. (Eds), Stardom and Celebrity: A Reader, Sage Publications Inc, Thousand Oaks, CA, pp. 193-205.

If you build it, they will come… hopefully…

 

If you live in Melbourne and don’t spend your life with your head submerged in sand, you may have seen one of the recent multi-billion dollar shopping centre upgrades. Despite weak retail conditions billions of dollars are being thrown at the future of bricks and mortar retail.

Chadstone

So what’s with all the expansions? Are we on the verge of a boom in retail? Should I invest all my money into Westfield-type stocks, fly to the Bahamas and wait for my investment to pay off?

Fry

It may be worth putting down your pineapple daiquiri for a minute to ask the question of whether a weakening retail sector and the overall muted business confidence could lead to a vast oversupply of retail space… or future shopping ghost towns?

While some of these upgraded centres are pulling in profits each year increasing their turnover by 5 per cent or more, the market is still sluggish.

 

What are they thinking?

A consumer sentiment survey was recently conducted (and reported in the media) globally with over 22,000 participants. The survey took a snapshot of buyer behaviours, recent shifts and the implications of these. The findings of the survey, showed that in a number of markets consumers remained fearful of losing their jobs (more than 50%) and highlighted money as being a constant worry (with ¼ living from pay check to pay check) in them making purchase decisions.

ConsumerSentiment

The survey also highlighted the recent trend in the “frugal” or “coupon-savvy” shopper, with a large proportion of consumers (44%) now choosing to shop around for the best deals. However, the “savvy” shopper seems more than happy to splurge (at sales or in limited proportions) on a high end product; on brands they can trust…

Rich kids

The results also showed that there was a shift amongst consumers towards using multiple channels when shopping. This trend can be seen with the 35% growth in eWAY, an online payment system used by over 23,000 Australian merchants.

The survey concluded that there are behavioural shifts amongst consumers worldwide – purchasers now seem savvier and smarter with how they spend their money. They are also becoming more aware of the benefits of online shopping.

 

So…. no daiquiri?

As highlighted in the recent survey, consumers are becoming savvier and more decisive with how they make decisions; with access to global online stores and access to year round sales in most bricks and mortar stores brands must give consumers solid reasons to buy their products. The benefits need to match the price.

Drink

Billions of dollars are being spent upgrading shopping centres creating an experience for the shopper, a place where companies “dazzle” and influence even the smartest shopper into purchasing their wares.

Modern shopping centres have in store cafes, music, lights and colours all trying to seduce you into loosing yourself in the moment… to whip out that plastic and start swiping it like a mad person. These centres also have movie theatres, hip cafes, free Wi-Fi internet and lounges for partners who might rather be elsewhere (see above).

The modern shopping centre is selling itself as an experience, with every effort made to “tingle” every one of your senses as you walk into each store.

Winning the “evolving” consumer over in this day and age is a challenge for consumer companies, but with these challenges, comes opportunities for new companies to flourish, those who move quickly and are more responsive to consumers’ evolving needs.

So head to the bar at your local Lux movie cinema, conveniently located in one of many Westfield cinemas and order that drink… take out your phone, connect to the free Wi-Fi and perhaps even throw that money at some WFD shares… they are up today… but I would watch them closely, they may fluctuate in the near future…

By Damien Mulhall Student ID: 212241227 WordPress User Name: damienmu

 

References

Harley, R, 2016, ‘Customers spent 1 billion as big shopping malls meet expectations’, Financial Review, http://www.afr.com/real-estate, [accessed 30 March 2016]

Magni M, Martinez A and Motiwala R, 2016, ‘Saving, scrimping, and… splurging? New insights into consumer behavior’, Mckinsey&Company, http://www.mckinsey.com

Sadauskas, A, 2015, ‘Why shopping centres are getting bigger despite weak retailing conditions’, http://www.smartcompany.com.au, [accessed 29 March 2016]

Author Unknown, 2015, ‘Monthly Business survey – November 2015’, NAB, http://www.business.nab.com.au [accessed 26 March 2016]

Author Unknown, 2015, ‘Irrational consumers behavior – new normal: business strategies are mostly out of sync with consumers buying habits’, [accessed 30 March 2016]