Food Trucks breaking down the barriers of distribution strategies

The ‘Place’ part of the marketing mix is all about having the right products, available in the right place, at the right time. Food Trucks are striking gold with this concept however going about it in unconventional ways.

Food trucks do away with the traditions of brick-and-mortar restaurants opting instead for a kitchen on wheels that is able to set up in their chosen high traffic spot.

In review of the Food Truck’s ‘Place’ mix (Iacobucci 2013) advises the first step in designing a distribution system is to determine distribution intensity. Intensive distribution systems are typically for highly consumed goods and services that organisations want available in as many locations as possible. At the other end of the scale, exclusive distribution systems are often associated with more complex and relatively expensive purchases (Iacobucci 2013). The purchase of fast food would not often be considered a complex or expensive purchase (however have you seen the prices at Nando’s?! I don’t know who they think they are kidding but in terms of fast food I think they missed the mark on a few of the key components) however Bojanic & Reid (2010 p.319) claim “exclusive distribution is common among independent providers in the hospitality industry”.

The distribution channel of food trucks is quite simple as the food truck is both the ‘manufacturer’ as such and the retailer, this is referred to as a Direct Channel (Bojanic & Reid 2010 p. 321). This lack of channel partners mean that food trucks need to employ a Pull strategy to ensure that their consumers seek them out and ‘pull’ their goods as such. This is especially necessary for food trucks as their constant movement from place to place means that their loyal customers need to constantly seek out their current location. Food trucks employ strong social media presences to keep their consumers up-to-date on their whereabouts.

You could assume this simple distribution channel also avoids any conflicts however in the case of a food truck or any restaurant, they are also a consumer of bulk food items they incorporate into their meals and are effectively a channel partner of many larger distribution channels (Bojanic & Reid 2010 p. 327). Therefore, they are still susceptible to power conflicts in the distribution channels and would need to take care to ensure conflicts don’t arise.

Location, Location, Location

This is where food trucks hit gold. We all know nothing stays the same, trends change. The hot spot one week may be somewhere else the next. A company’s target market may move from place to place based on what is happening that weekend, what event is on. The food truck goes where their customers go. So if there is a big festival in Fitzroy they all set up camp there for the day, when there is a new art exhibition opening they can set up in front of the gallery or there is international DJ in town they’ll set up close by at the wee hours of the morning. Recent studies show that 61% of consumers found out about the food trucks by just happening upon them (Column Five Media).

Food trucks also carry to opportunity for franchising, indeed some in the U.S. have already started down that path however Daley (2011) claims it may not be a worthwhile venture. Franchising, while having many positives such as expanding without the capital expenditure (Iacobucci 2013), adds a layer of margins to the price mix. In dealing with low cost items already this could take away one of the competitive edge’s that food trucks have.

 

References:

Bojanic, D.C. & Reid, R.D. 2010 Hospitality Marketing Management, 5^th edn, Wiley, Hoboken, New Jersey

Column Five Media, Infographic: Good Luck, Truck the Realities of Starting a Mobile Restaurant, Intuit, retrieved 16 May, 2016 < http://www.columnfivemedia.com/work-items/infographic-good-luck-truck-the-realities-of-starting-a-mobile-restaurant&gt;

Daley, J 2011 ‘Franchises Hop on the Food Truck Trend’, Entrepreneur, 26 July, retrieved 16 May, 2016 < https://www.entrepreneur.com/article/220017&gt;

Iacobucci, D 2013, MM⁴, Student edition, South Western, Mason.

Image Credit: Column Five Media

Thank-You Mum

“It takes someone strong, to make someone strong”

Proctor & Gamble (P&G) have just launched their Olympic advertising campaign, Strong, 100 days out from the start of the games. This is the third instalment of their Thank-you Mum campaign, with the first commencing at London 2012 following a successful first outing with the Olympics in Vancouver 2010 (Manca, 2015).

P&G’s Thank-you Mum campaign employs an Affective Advertising Strategy aimed at affecting emotions to enhance attitudes and positive associations about the brand (Iacobucci, 2013).

A mother’s love is a universal emotion (Machleit – cited by Coolidge, 2014), relatable for everyone. While previous campaigns have showcased the sacrifice and effort mothers have put in to support their kids sporting endeavours, the current campaign focuses on them being rocks for their kids, not just in sport but beyond in everyday life showcasing later how this transfers to the athlete’s ability to perform under pressure at the highest level of sport (Nudd 2016).

In making the media decisions regarding this campaign P&G would have considered the standard questions of ‘When to Schedule?’, ‘Which Media?’ and ‘How Much to Spend?’ and they seem to have hit the nail on the head with all their answers.

To run a campaign targeted at women that has a sport focus such as this, the Olympics is a natural choice. Olympics have the highest viewership of females than any sporting event and make up 50% of the total viewers over the games (Elliott, 2008). And while they released it exactly 100 days out from the games, it conveniently coincided with Mother’s Day for another little pull on the heart strings.

Integrated Marketing Communications (IMC) is the guiding principle companies follow when communicating with their target markets, it attempts to create a cohesive message across the various elements of the promotional mix (Boone & Kurtz – cited in Mangold & Faulds 2009). With the rise of social media, consumers have changed how they access information and consume sport, therefore companies needed to evolve and spread their advertising messages across multiple platforms of media utilising more than ever IMC. Since entering the social media arena P&G have “carefully crafted their communications with the marketplace to consistently reflect their organisational values” (Mangold & Faulds 2009). This campaign continues their consistent while appearing across multiple channels including TV, YouTube & Facebook.

Mangold & Faulds claim that social media has two interrelated promotional roles in the marketplace, firstly it opens communication between the company and the consumer and secondly it facilities conversations between consumers (2009). The latter is what has worked in P&G’s favour with the ‘Thank-you, Mum’ campaign capitalising on the concept of things “going viral”. Within two weeks of posting online the ad has had over 13 million views on YouTube, to go along with another 1.5 million views and 30,000 shares on Facebook.

The other strong elements of this campaign worth discussing is their Public Relations (PR) & partnership with the International Olympic Committee (IOC). Publicity is effectively a ‘free’ communication tool, however the negative is the message can’t be controlled. With the launch of this campaign a number of publications and online media’s picked up on the story and sung it’s praises (click here and here for examples).

P&G’s sponsorship of the Olympic Games is the final important element of this campaign. Corporate sponsorship of sport is increasing in attraction in certain countries due to the importance the culture places on competition, entertainment and accomplishment (McCook – cited by Mason, 2005). Sport raises irrational passions for sporting teams, competitions and athletes (Hoye et al 2006 p.4) and sponsors aim to link the positive emotions around sporting events with their brand in what is referred to as the ‘halo effect’ (Mason 2005).

There is no doubt this is an emotional campaign that would bring tears to the eyes whether run in a sport context or not, however the added emotions of sport and excitement around the Olympics makes this a gold medal winning campaign.

 

References:

Elliott, S 2008 ‘Olympics Draw High Percentage of Women Viewers, and Ads Intended for Them’, New York Times, 18 August, retrieved 9 May 2016
< http://www.nytimes.com/2008/08/19/sports/olympics/19adco.html?_r=0&gt;

Coolidge, A 2014, ‘P&G aims for moms’ heart with latest ‘Thank You’ ad’, USA Today, 8 January, retrieved 9 May 2016 < http://www.usatoday.com/story/money/business/2014/01/08/pg-olympics-thank-you-ad/4380229/&gt;

Hoye, R, Smith, A, Westerbeek, H, Stewart, B & Nicholson, M 2006, Sport Management Principles and Applications, Elsevier Ltd, Burlington.

Iacobucci, D 2013, MM⁴, Student edition, South Western, Mason.

Manca, K 2015, ‘P&G’s Olympic Campaign, 2010-2020’, Ation, 24 February, retrieved 9 May 2016 < http://ation.digitalmediauconn.org/pgs-olympic-campaign-2010-2020/&gt;

Mangold, W.G & Faulds, DJ 2009 ‘Social media: The new hybrid element of the promotion mix’, Business Horizons, vol. 53, no. 4, retrieved 9 May 2016 <http://www.sciencedirect.com/science/article/pii/S0007681309000329&gt;

Mason, K 2005 ‘How Corporate Sport Sponsorship Impacts Consumer Behaviour’, The Journal of American Academy of Business, vol. 7, no. 1 retrieved 9 May 2016 < http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.391.9812&rep=rep1&type=pdf&gt;

Nudd, T 2016, ‘P&G Raises the Stakes in Its Latest, Darkly Brilliant ‘Thank You, Mom’ Masterpiece’, Ad Week, 27 April, retrieved 9 May 2016 < http://www.adweek.com/adfreak/pg-raises-stakes-its-latest-darkly-brilliant-thank-you-mom-masterpiece-171098&gt;

She-conomy 2009, Marketing to Women Quick Facts, She-conomy, retrieved 9 May 2016 < http://she-conomy.com/facts-on-women&gt;

Student ID: 215390509

WordPress Username: naenarcis

Are Loyalty Cards really about Loyalty anymore?

Australians loves a good loyalty program. According to recent studies by Directivity & Citrus (2013), 88% of Australian Consumers over 16 years of age are members of a loyalty program. They feel they get something for nothing, they are going to spend the money anyway so why don’t they build up loyalty points and get rewarded at the end.

But what do the companies get out of it?

Most would assume they are seeking brand loyalty, hence the name. However only 46% of consumers say they feel more loyal to the company/brand when they are a member of their loyalty program (Directivity & Citrus, 2013). Brands of course want to encourage their consumers to keep coming back to them, but according to The Economist (2011) loyalty cards are about so much more than Loyalty.

Rupert Duchesne, the chief executive of Aimia, a Canadian firm which runs Britain’s Nectar card scheme claims that the real value out of loyalty programs is the data (The Economist, 2011). Data about who you are, how old you are, your gender, where you live, and then also data about what you buy.

Most stores these days will have electronic Point-of-Sale technology that records purchases at the check-out and provides scanner data. Scanner data is what items are bought, how much you bought, which brands, how much you spent ect. However loyalty programs allow stores to tie this data to a specific person and effectively a market segment. This data together is a powerful marketing research tool.

Market research is crucial in the decision making process for any brand or company. Smart marketers constantly gather, analyse and compare market research data (Associate Professor David Bednall, MPK732 Marketing Management, Deakin University, lecture 11 April, 2016).

The market research data from loyalty programs can be used to target segments with specific discounts and marketing campaigns or ultimately decide what products to stock on your shelves. UK Grocery Store, Tesco, uses their loyalty program’s data to inform all parts of the Tesco business with the aim of improving it’s performance (Davis, 2013).

Many marketers say that we are only just scratching the surface with this type of big data and it is being utilised but at a rudimentary level (Graham, 2016). Former Global Head of Consumer Markets at Tesco’s data analysis firm, Peter Alexander, says

“Contact with customers was the cream on top for Tesco. It was the data underneath that did most of the work. This was the secret inside the Tesco loyalty scheme and most retailers still do not understand this.”

Australian grocer, Woolworths, is a prime example of this launching a new loyalty program late last year. The new program, completely changed the way consumers would earn points and also took away the redemptions its consumers claimed was the biggest reward, Qantas Frequent Flyer points.  While this is a prime example of the larger topic of market research gone wrong, if they had examined their previous loyalty program data closely could they have avoided this? Would it have shown that larger portions of consumers mainly redeem frequent flyers? Would it show that consumers are spending the minimum $30 everytime to ensure they collect their points? Nevertheless, the people have spoken and Woolworths heard. Back in with the frequent flyer points, now the only thing to worry about is where to go.

References:

Davis, G 2013, ‘Analysis: Loyalty Cards – How retailers are using their data’, Retail Week, 12 July 2013, retrieved 18 April, 2016 http://www.retail-week.com/sectors/grocery/analysis-loyalty-cards-how-retailers-are-using-the-data/5050868.fullarticle

Directivity & Citrus 2013, For Love or For Money? 2013 Consumer Study into Australian Loyalty Programs retrieved 17 April, 2016 http://www.ami.org.au/iMIS15/librarymanager/Resources/Marketing%20Update/2013%20Loyalty%20Program%20Research%20FINAL.pdf

The Economist 2011 Spies in your wallet, The Economist, retrieved 17 April, 2016 http://www.economist.com/node/21536604

Graham, D 2016, ‘Discounts for Data’, Choice, 11 January 2016, retrieved 17 April, 2016 https://www.choice.com.au/shopping/consumer-rights-and-advice/your-rights/articles/loyalty-program-data-collection

Student ID: 215390509

Username: naenarcis

What the Fox?

For years now Foxtel has had a monopoly on the Australian Subscription TV market. They had the ability to charge whatever they liked and provide content how they liked, and consumers had pretty much no other options.

Then come along streaming services such as Netflix and everyone thought it was the end of Foxtel.

With multiple new and cheaper providers coming into the market the assumption would be that Foxtel’s consumer numbers would head south. However Foxtel has managed to survive and some would even say thrive in a now ultra competitive environment.

In September 2014 Foxtel announced an almost 50% cut (news.com.au, 14 September 2014) to their entry level package prices amid the impending arrival of Netflix in Australia. This boosted Foxtel’s customers from 2.6 to 2.8 million by March 2015 (Redrup 2015).

Netflix arrived the next month and Foxtel have managed to keep their consumer numbers quite steady, with the streaming services only growing the market for subscription TV instead of diluting it, according to Roy Morgan Research (2015).

How have they done this?

Foxtel’s goal is simple. They want every Australian to be able to find something on TV they want to watch everytime they switch on. We know however from Iacobucci (2013, p.43) that a company can’t be all things to all people. So we segment the market, target those who have the needs that match our abilities to deliver and then position our product accordingly. And this is exactly what Foxtel have done.

If we were to segment the Subscription TV market, the most logical way to do this would be based on what they watch and therefore why they pay for TV. There would be the TV Show (Game of Thrones) addicts, who want to watch the latest episode of their favourite show as soon as it is aired. Then there would be families who may want a larger selection of children’s channels to keep the kids entertained.

But the outstanding segment would be the Sports Lovers. Sport is part of Australia’s culture. From the casual watchers who love to watch their team out on the G on a Sunday afternoon. To the absolute fanatics who want to watch every game of the AFL season every weekend, or wake up at 2am to watch the Premier League match between Manchester City and Manchester United. This is the segment that Foxtel can meet this needs of, and this is the segment they are targeting.

On first clicking to Foxtel’s website the whole banner of the front page is filled with an advertisement for three new sports channels.

Foxtel also launched the start of the 2016 winter sports season with a new marketing campaign “We’re a FoxSporting Nation”.

No other subscription TV provider in Australia has access to Live Sport. And foxtel has now made this available not just on the tv but have adapted with the changing market and have this available on Foxtel Go to stream across multiple devices. Sure you can stream other sports, there is AFL Pass or NRL Live but they are separate subsciptions to pay for and manage. And well Foxtel, it has it all in one place, and who doesn’t love convenience.

Foxtel’s long standing in the Australian market has given them a massive head start of other subscription TV providers. And despite the rise of new technoloiges and the changes in the way people consume their TV they have managed to stay comeptitive based purely on targeting a segment of the market other providers can’t service.

 

Iacobucci, D 2013 Marketing Management, South-Western Learning, Ohio, USA

Redrup, Y 2015 ’30 percent of Foxtel subscribers are considering ditching the service for streaming’ Financial Review, 25 May 2015, retrieved 6 April, 2016 <http://www.afr.com/technology/30-per-cent-of-foxtel-subscribers-are-considering-ditching-service-for-streaming-20150524-gh8ee9&gt;

Roy Morgan Research 2015, Netflix reaches 1.89 millian Australian. Foxtel loses share (but not size) as Netflix expands pay and subscription TV market, Roy Morgan Research  <http://www.roymorgan.com/findings/6389-netflix-expands-market-foxtel-steady-australia-pay-tv-svod-july-2015-201508102349&gt;

Student ID: 215390509

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