Guess Who's Skating Into Town?
Robert Passikoff, Jul 14, 2009 03:02 PM
Tim Hortons Inc., the company founded in 1964 by NHL hall-of-famer Tim Horton, former hockey player for the Toronto Maple Leafs, the New York Rangers and the Buffalo Sabres, just started serving its premium coffee and fresh baked goods for the first time in New York City. It's entering the New York City market with 12 new locations, including 10 in Manhattan.
Tim Hortons has more than 500 locations in the U.S. and sells about 2 billion cups of coffee annually. With 3,000 stores in Canada, it accounts for more than seven of every 10 cups of quick serve coffee sold in Canada, but Manhattan poses a challenge with an already over- caffeinated market. Both Dunkin Donuts and McDonald's have more than 100 locations within five miles of each other, while Starbucks has more than 80.
But it's not all about the real estate. Something else drives customers, more than convenient locations. It's the "something else" that showed up in our metrics three years ago, allowing us to predict the decline of Starbuck's before anyone would believe it. Let's just say here that it's a lot
more centered on customer experience than it is what corner you're standing on. This is how the brands currently rank in the annual Brand Keys Customer Loyalty Engagement
Index:
1. Dunkin' Donuts
2. McDonald's
3. Starbucks
4. Krispy Kreme
Should the new team worry current players? Well, for the six months that ended in February, Dunkin' had posted a 9% growth in system-wide sales and a 4% increase in U.S. same-store sales.
For that same period, Dunkin' Donuts had total sales of $1.55 billion, and offered such new items as caramel iced coffee and an expanded rollout of scones. But McDonald's is expanding the coffee portion of its business in the U.S. and Canada too, and has installed McCafé mini-coffee shops featuring recreational coffee beverages at more than 10,000 U.S. restaurants It will test its in-store McCafé coffee shop concept in Canadian locations later this
year. McDonald's also recently launched a promotion for its Premium Roast coffee in Canada and, this week, McDonald's began a U.S. summer promotion called Mocha Mondays that gives customers a free iced or hot mocha beverage at participating stores.
Meanwhile, Starbucks, once first in our rankings, reported reductions in net revenues, comparable store sales, operating income, operating margin, and net earnings during Q2 2009, and is continuing with plans to close about 800 company-owned stores in the U.S. this year. But it's offering ice cream now, and via Facebook is promoting its ice cream by offering 20,000 pints of it free each day, at a rate of 800 per hour. This offer ends on Sunday.
Krispy Kreme isn't faring a whole lot better. It slipped slightly for the entire system, of which company-owned stores account for 29%, and same-store sales are down 2.4% for combined company-owned and non- company-owned -- and that's after closing what supposedly were its
"bad" stores. At the company's annual meeting, Krispy Kreme says it's planning to test "proprietary" ice cream in stores in cones, cups and shakes. And a doughnut sundae.
Advice for Tim Hortons? Well, hockey great Wayne Gretzky once noted, "Some people skate to the puck. I skate to where the puck is going to be," and the same is true about engendering loyalty. If you have predictive consumer metrics, you always know where consumer values are going to end
up. And winning and keeping customers is a goal to which every brand should aspire.
Dr. Robert Passikoff
Founder & President - Brand Keys, Inc. partner of
Brand Lounge in the Middle East and North Africa
Thursday, July 16, 2009
Thursday, July 2, 2009
Differentiate Or Die
Differentiate or Die
Jack Trout, President & Founder Trout & Partners Ltd.
posted by Hasan Fadlallah, Managing Director Brand Lounge
What has changed in business over recent decades is the amazing proliferation of product choices in just about every category. Its been estimated that there are 1,000,000 SKU’s (Standard Stocking Units) out there in America. An average supermarket has 40,000 SKU’s. Now for the stunner. An average family gets 80 to 85% of their needs from 150 SKU’s. That means there’s a good chance we’ll ignore 39,850 items in that store.
The dictionary defines “tyranny” as absolute power that often is harsh or cruel.
So it is with choice. With the enormous competition, markets today are driven by choice. The customer has so many good alternatives that you pay dearly for your mistakes. Your competitors get your business and you don’t get it back very easily. Companies that don’t understand this will not survive. (Now that’s cruel.)
Just look at some of the names on the headstones in the brand graveyard: American Motors, Burger Chef, Carte Blanc, Eastern Airlines, Gainesburgers, Gimbels, Hathaway Shirts, Horn & Hardart, Mr. Salty Pretzels, Philco, Trump Shuttle, VisiCalc, Woolworth’s.
And this is only a short list of names that are no longer with us.
In this global killer economy you have to find a way to differentiate yourself or you better have a very low price. To do this, here are the steps you must follow:
Step one. The context.
Arguments are never made in a vacuum. There are always surrounding competitors trying to make arguments of their own. Your message has to make sense in the context of the category. It has to start with what the marketplace has heard and registered from your competition.
The context also includes what’s happening in the market. Is the timing for your idea right?
Nordstrom’s differentiating idea of “better service” played perfectly into the context of a department store world which was reducing its people and service as a way to cut costs.
Lotus launched the first successful network on “groupware software” called Notes just as Corporate America was networking its PC’s. (IBM ended up buying Lotus and Notes for 2.5 billion dollars.)
It’s like riding a wave. If you’re too early or late you’ll go nowhere. Catch it just right and you’ll get a long and profitable ride for your difference.
Step two. The differentiating idea.
To be different is to be not the same. To be unique is to be one of its kind.
So you’re looking for something that separates you from your competitors. The secret to this is understanding that your differentness does not have to be product related.
Consider a horse. Yes, horses are quickly differentiated by their type. There are race horses, jumpers, ranch horses, wild horses and on and on. But, in racehorses you can differentiate them by breeding, by performance, by stable, by trainer and on and on.
A product or service can be differentiated by feature, leadership, preference, heritage, specialty, how it’s made and on and on. ( I wrote a book on this subject if you want more ways to differentiate your brand.)
Step three. The credentials.
To build a logical argument for your difference, you must have the credentials to support your differentiating idea. To make it real and believable.
If you have a product difference, then you should be able to demonstrate that difference. The demonstration, in turn, becomes your credentials. If you have a leak-proof valve, then you should be able to have a direct comparison with valves that can leak.
Claims of difference without proof are really just claims. For example, a “wide-track” Pontiac must be wider than other cars. British Air as the “world’s favorite airline” should fly more people than any other airline. Coca-Cola as the “real thing” has to have invented colas. When it’s “Hertz and not exactly” there should be some unique services that the others don’t offer.
You can’t differentiate with smoke and mirrors. Consumers are skeptical. They’re thinking, “Oh yeah, Mr. Advertiser? Prove it!” You must be able to support your argument.
Step four. Communicate your difference.
Just as you can’t keep your light under a basket, you can’t keep your difference under wraps.
If you build a differentiated product, the world will not automatically beat a path to your door. Better products don’t win. Better perceptions tend to be the winners. Truth will not out unless it has some help along the way.
Every aspect of your communications should reflect your difference. Your advertising. Your brochures. Your website. Your sales presentations.
In marketing, the rich often get richer because they have the resources to drive their ideas into the mind. Their problem is separating the good ideas from the bad ones, and avoiding spending money on too many products and too many programs.
Unfortunately, without the proper resources, even the best differentiating idea won’t get off the ground. Look what happened to AT&T in recent years. They failed to differentiate themselves from Sprint and MCI. The result: A price war which ended in the ignominy of being bought by a Baby Bell.
As I said, Differentiate or Die.
With more than 40 years of experience in advertising and marketing, Jack Trout is the acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands, Big Trouble, A Genie's Wisdom and his latest, Trout on Strategy. He is president of marketing consultancy Trout & Partners and has consulted for such companies as AT&T, IBM, Southwest Airlines, Merck, Procter & Gamble and others. Recognized as one of the world's foremost marketing strategists, Trout is the originator of "Positioning" and other important concepts in marketing strategy.With more than 40 years of experience in advertising and marketing, Jack Trout is the acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands, Big Trouble, A Genie's Wisdom and his latest, Trout on Strategy. He is president of marketing consultancy Trout & Partners and has consulted for such companies as AT&T, IBM, Southwest Airlines, Merck, Procter & Gamble and others. Recognized as one of the world's foremost marketing strategists, Trout is the originator of "Positioning" and other important concepts in marketing strategy.
Jack Trout, President & Founder Trout & Partners Ltd.
posted by Hasan Fadlallah, Managing Director Brand Lounge
What has changed in business over recent decades is the amazing proliferation of product choices in just about every category. Its been estimated that there are 1,000,000 SKU’s (Standard Stocking Units) out there in America. An average supermarket has 40,000 SKU’s. Now for the stunner. An average family gets 80 to 85% of their needs from 150 SKU’s. That means there’s a good chance we’ll ignore 39,850 items in that store.
The dictionary defines “tyranny” as absolute power that often is harsh or cruel.
So it is with choice. With the enormous competition, markets today are driven by choice. The customer has so many good alternatives that you pay dearly for your mistakes. Your competitors get your business and you don’t get it back very easily. Companies that don’t understand this will not survive. (Now that’s cruel.)
Just look at some of the names on the headstones in the brand graveyard: American Motors, Burger Chef, Carte Blanc, Eastern Airlines, Gainesburgers, Gimbels, Hathaway Shirts, Horn & Hardart, Mr. Salty Pretzels, Philco, Trump Shuttle, VisiCalc, Woolworth’s.
And this is only a short list of names that are no longer with us.
In this global killer economy you have to find a way to differentiate yourself or you better have a very low price. To do this, here are the steps you must follow:
Step one. The context.
Arguments are never made in a vacuum. There are always surrounding competitors trying to make arguments of their own. Your message has to make sense in the context of the category. It has to start with what the marketplace has heard and registered from your competition.
The context also includes what’s happening in the market. Is the timing for your idea right?
Nordstrom’s differentiating idea of “better service” played perfectly into the context of a department store world which was reducing its people and service as a way to cut costs.
Lotus launched the first successful network on “groupware software” called Notes just as Corporate America was networking its PC’s. (IBM ended up buying Lotus and Notes for 2.5 billion dollars.)
It’s like riding a wave. If you’re too early or late you’ll go nowhere. Catch it just right and you’ll get a long and profitable ride for your difference.
Step two. The differentiating idea.
To be different is to be not the same. To be unique is to be one of its kind.
So you’re looking for something that separates you from your competitors. The secret to this is understanding that your differentness does not have to be product related.
Consider a horse. Yes, horses are quickly differentiated by their type. There are race horses, jumpers, ranch horses, wild horses and on and on. But, in racehorses you can differentiate them by breeding, by performance, by stable, by trainer and on and on.
A product or service can be differentiated by feature, leadership, preference, heritage, specialty, how it’s made and on and on. ( I wrote a book on this subject if you want more ways to differentiate your brand.)
Step three. The credentials.
To build a logical argument for your difference, you must have the credentials to support your differentiating idea. To make it real and believable.
If you have a product difference, then you should be able to demonstrate that difference. The demonstration, in turn, becomes your credentials. If you have a leak-proof valve, then you should be able to have a direct comparison with valves that can leak.
Claims of difference without proof are really just claims. For example, a “wide-track” Pontiac must be wider than other cars. British Air as the “world’s favorite airline” should fly more people than any other airline. Coca-Cola as the “real thing” has to have invented colas. When it’s “Hertz and not exactly” there should be some unique services that the others don’t offer.
You can’t differentiate with smoke and mirrors. Consumers are skeptical. They’re thinking, “Oh yeah, Mr. Advertiser? Prove it!” You must be able to support your argument.
Step four. Communicate your difference.
Just as you can’t keep your light under a basket, you can’t keep your difference under wraps.
If you build a differentiated product, the world will not automatically beat a path to your door. Better products don’t win. Better perceptions tend to be the winners. Truth will not out unless it has some help along the way.
Every aspect of your communications should reflect your difference. Your advertising. Your brochures. Your website. Your sales presentations.
In marketing, the rich often get richer because they have the resources to drive their ideas into the mind. Their problem is separating the good ideas from the bad ones, and avoiding spending money on too many products and too many programs.
Unfortunately, without the proper resources, even the best differentiating idea won’t get off the ground. Look what happened to AT&T in recent years. They failed to differentiate themselves from Sprint and MCI. The result: A price war which ended in the ignominy of being bought by a Baby Bell.
As I said, Differentiate or Die.
With more than 40 years of experience in advertising and marketing, Jack Trout is the acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands, Big Trouble, A Genie's Wisdom and his latest, Trout on Strategy. He is president of marketing consultancy Trout & Partners and has consulted for such companies as AT&T, IBM, Southwest Airlines, Merck, Procter & Gamble and others. Recognized as one of the world's foremost marketing strategists, Trout is the originator of "Positioning" and other important concepts in marketing strategy.With more than 40 years of experience in advertising and marketing, Jack Trout is the acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands, Big Trouble, A Genie's Wisdom and his latest, Trout on Strategy. He is president of marketing consultancy Trout & Partners and has consulted for such companies as AT&T, IBM, Southwest Airlines, Merck, Procter & Gamble and others. Recognized as one of the world's foremost marketing strategists, Trout is the originator of "Positioning" and other important concepts in marketing strategy.
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