Starbucks to Offer Brand Visa Card,” by Julie Jargon, WSJ, March 24, 2016.
Initiatives Starbucks announced at their recent shareholders’ meeting
In their recent shareholders’ meeting, Starbucks announced several marketing initiatives that would be adopted in a bid to enhance the business’ marketing competitiveness and customer attraction as well as retention.
The company announced the adoption of a new loyalty program by the introduction of a “Branded prepaid Visa card”, by the year end, that would enable the customers using it to earn reward points from the company coffee shops. The new card would be used at any retail outlets that accept such and the points earned would eventually be redeemable in the form of free coffee or other merchandise from the shops. Incorporated in the announcement of the new card system was a shift in the reward system from a “star for each transaction” to “two reward points for every dollar unit used by the customer at the Starbucks outlets. (Jargon, 2016)
According to the sentiments of the Chief operating officer who is also the company’s president, the business also intends to adopt more digital payment methods in its operations. This adoption of digital payment methods is intended to serve as a boost for the business’ competitiveness in a bid to accomplish its strategy of growth.
The introduction of Teavana tea brands in Starbucks cafes located in Europe, Asia, Africa and the Middle East by fiscal year end. In the expansive move, the company also announced to introduce new products in the supermarkets and her outlet cafes in the US markets. The new products to be introduced include “ready to drink cold brew coffee”. Also announced at the meeting was the retention of Keurig Green Mountain Inc. as the sole provider of the “Starbucks K-cups”. (Jargon, 2016)
Business or brand-related reasons to support Starbucks’ decision to launch a branded pre-paid Visa card
The use of branded prepaid Visa cards by Starbucks can serve multiple purposes which include Consumer reward schemes and promotions. The cards are an effective tool for creating and anxious and excited client base. They thus form a reliable and efficient solution for the business promotion. Branded cards can also serve as an advertising strategy for the business and thus serve as a tool to push sales upwards. They thus form an effective rebate program that is also affordable for the business since some costs such as those associated with paper the cheque and reward vouchers are eliminated. They are also a reliable tool for creation of brand awareness and loyalty since they possess the business image.
Brand loyalty
Brand loyalty is the tendency or preference of customers of a particular commodity or service (brand) to other competing brands that are usually direct substitutes to the preferred brand. It’s the faithfulness of a customer to a particular brand and usually evidenced by continued or repeat purchases of a specific commodity despite the presence of similar competitor goods in the market.
There exists a direct positive correlation between the reward and brand loyalty programs in the field of marketing. The reward programs form a base upon which brand loyalty is built and nurtured in any business. The reward programs, for instance, are responsible for the creation of a continued/ repetitive buying behavior of any consumer. The reward programs encourage the customers to incline their preferences to the purchase of those brands or from businesses which offer such programs and brand loyalty emerges as a result.
Potential risks or downsides to rewards programs
The belief that the reward program designed at Starbucks will be beneficial to the business is an illusion that at times is left to fate since such programs may be responsible for the loss of the customers who make little purchases. This can be attested by the uproar which emerged when the new program was announced at Starbucks. (Jargon, 2016) On the other hand, it may prove to be too costly for the business if the rewards are based on each dollar spent. This will have the effect of reducing the profit margins of the business. This program is inevitably costly than the previous one where the reward stars were awarded on each transaction.
Two most important insights you gained from this article
Loyalty programs are dependent on reward programs where they are available. In the presence of reward programs, the degree of brand loyalty is solely or greatly dependent on them.
Reward programs can be useful in the attraction and retention of customers to the business products.
Pinterest Pins Its Hopes Overseas,” by Yoree Koh, WSJ, March 24, 2016.
The business of “Pinterest “
Pinterest operates a global business which offers a photo sharing/ image discovery website in the form of a mobile or web application. It operates in the category of social media networking. The main objective is business expansion by the attracting internet users at the global arena. A strong presence across the world will enable the business to become competitive. It seeks to expand its presence overseas and nab the attention and commitment of potential investors. According to Koh (2016), the business’ current target is the US users since it has not yet initiated its debut to serve international users. International clients are however of great importance to Pinterest because they will be responsible for the generation of most of the projected incomes. (Koh, 2016)
How Pinterest makes money
The business currently makes money the continuous display of advertisements to its active users in the available US markets. For instance, the business earned $ 100 million from an approximately 55 million client base in the US. In the future, the business intends to make more money from both the US and international audience. The business, in this case, has projected that at least 50% of the viewers will be in the overseas by the end of June 2016. (Koh, 2016)
Pinterest adaptation to differences in user preferences from one international market to another
In its bid to establish a niche in the international market, the business is keen to understand the preferences of the users in those new markets. For example in the case of french who have resented the presentation of recipes on grounds of Americanization. The business has also sought to understand the market preferences in Europe, Germany, Japan, and Brazil. Since each market has its own unique preferences, only a clear understanding of these different preferences is the best tact for the success of the business. Penetration of the business in the US market has been a great success and the recent expansive move into the international platform is another good business strategy. Market research to understand the new and other potential markets is a great success idea that will contribute to the further success of the business. The business, however, needs to improve on the customization of their services to suit different markets. They ought to establish a product that is fit for global use. This will be less costly and more effective than designing a product for each region/ market.
Market research to conduct- Asia
In a bid to gain a clear understanding of the Asian market, I would initiate a research that would be aimed at understanding whether the cultural differences between Americans and the Asians really have an impact on the adoption and use of Pinterest. Culture would indicate what products and images may be preferred in the Asian markets and any differences that may exist. This research will also seek to understand the cultural perceptions about the service on offer and the cultural preferences for communication. (GIM, 2016) This will all be geared to the understanding of the market tastes and preferences.
The research would also focus on opportunities for future growth in the market as well as the existing and potential client base as well as competitors. I would finally do a thorough evaluation of the economic and political stability in the region so as to assess the business risk. ("BMO PPC Market Analysis - Asia", 2015)
Insights
A successful launch and penetration into a new market require a thorough understanding of the customer preferences and tastes in the new market. This will enable the business act in a manner to meet those tastes and preferences.
For the business to understand the tastes and preferences as well as their trends in any market, it ought to conduct a thorough market research to obtain the relevant information.
Retailers Can’t Shake Their Circular Habit,” by Suzanne Kapner, WSJ, March 12, 2015
Purpose(s) played by advertising inserts, or circulars in the retail industry
Despite the recent developments in other channels of advertisements, circulars still remain important in the advertisement agenda since they reach a reasonable client base estimated to be at least 50 million households annually. According to the research by Wanderful, printed circulars have a higher degree of being read by the target clients compared to other digital media adverts. An estimated 80% of printed newspaper readers are believed to read the circulars compared to at most 1% of the online newspaper readers who bother to read the online circulars. (Kapner, 2016)
Why some retailers hesitant to discontinue their use of circulars
Retailers are hesitant to replace the print circulars with the digital advertising media due to the inability of the latter to achieve an equal influence on the market. This is caused by the lack of sufficient digital advertising. The replacement of circulars with digital advertising has proved to be futile and less productive compared to the circulars. A good example is an experience by Wal-Mart in 2011-2012 when they initiated a complete advertising overhaul and invested in digital advertisements with the same amount of money they had previously used in print media adverts. The result was reduced traffic in its stores and was compelled to revert to circulars. Circulars have therefore proved to be less costly and more effective.
Two alternative strategies that retailers can use if they choose to discontinue circulars
Any business that wishes to discontinue the use of circulars in an advertisement may opt to classify its markets into the new, infrequent, loyal and under-engaged in a bid to eliminate the circulars from all the markets other than the loyal customers. A business may also opt to launch a complete overhaul of the advertisement channels and shift to the digital media. This implies that all the advertisements for the business will be done on the digital platforms.
How advertising circulars work
Circulars being print media channels of conveying information about the presence and prices of various commodities in the market play a very crucial role in marketing. The first role played by the circulars is informing the consumer about the presence of the commodity or service in the market. The circulars also contain pictures of the specific goods or samples of the goods being sold and they thus give the customer the actual picture of the brand. They are designed in a manner to ensure they are captivating and this strategy serves best as a persuasive mechanism to invoke the customers desire to buy the goods.
Insights
Magazine Heiress Gives Up on Print Ads, by Jeffrey A. Tractenberg, WSJ, April 4, 2016,
Why Maria Rodale has chosen to eliminate print advertising from Prevention Magazine
According to the article, the decision to eliminate print advertising from the magazine was compelled by the declining print media audience that seemed to make the adverts ineffective. The healthcare sector seems to have been highly impacted by the digital era and thus rendered the print media redundant. In a bid to reorganize the business, the Prevention magazine seeks to make up for the print advert generated revenues by adopting the subscription and newsstand prices. The revenues generated from the print adverts have declined from 2014 to 2015 despite them being 8.3% more in 2015. They are therefore not cost effective for the business. (Trachtenberg, 2016)
Keys to financial success for a magazine that relies principally on advertising revenue
The key to financial success for a magazine that is reliant on advertising revenue is a large client/ reader base coupled with numerous advertisers. The presence of many advertisers implies that there will be many adverts and each attracts revenue. The wide reader base implies that the magazine is purchased by many people and thus the sales volumes will be high. (Trachtenberg, 2016)
Keys to financial success for a magazine that does not include advertisements
Since there are no advertisements on them, such magazines achieve financial success through minimizing the operating costs and charging the readers reasonably high prices for the service rendered. (Cost minimization and high prices) (Trachtenberg, 2016)
Additional marketing research
In regard to the decision made by Rodale’s to drop the print adverts and increase their magazine prices should be informed by several market types of research if the business is to achieve success. The first research is the elasticity of demand for the magazine in the market. In the event of an inelastic market demand, it would be lethal for the business to increase the prices since this could prove to be lethal and the company can lose its sales revenues almost wholly. If the market demand is elastic the business can comfortably increase the price and rest assured of sales revenue. The business also ought to gain an understanding of the existing and potential competitors and substitute goods. These pose the threat of taking up the market if the customers disapprove the price increase. Customers’ tastes and preferences also remain paramount to any marketing decision. The magazine business should also get a deeper understanding of what their customers need. If they need the adverts on the magazine, scrapping them would be detrimental to the business.
Insights
The profitability and success of any business are subject to the relationship between the costs incurred and revenues generated by the business. High operating costs eat into the profits of the business while reduced costs give the business an opportunity to maximize profits.
The adoption of a new marketing strategy or the launch of a new product in the market should be informed by a clear knowledge of the market. This will help the business to make the right decision and avoid losing its clients as a result of the new strategy or approach.
AOL’s Chief Envisions A Digital-Ad Empire Emerging at Verizon,” by Mike Shields and Ryan Knutson, WSJ, March 31, 2016
Why Verizon purchased AOL
Verizon purchased AOL as a strategy to gain market competitiveness and become a potential threat to other giant service providers such as Google and face book. The company sought to make use of the data services to achieve a global coverage that would imply a large client base. According to Tim Armstrong, data is the basic foundation for success in the modern economy and bond between these two enterprises would achieve the desired global business success. The underlying plan by Verizon to purchase a section of Yahoo Inc. is a backup strategy for the establishment of the “global business empire”. (Knutson, 2016) The company plans to utilize the acquired Yahoo Inc. services for its digital advertisements.
Data are the oil of the mobile economy
Data forms the spine of the modern mobile and digital economic transactions. Nearly all business transactions across the globe are currently initiated online while several are completed on the same platform. The web has converted the global economy to an online affair and very few businesses with a global presence are not dependent on data. It provides the economy with a fast, reliable and effective mode of communication and exchange of information across the world. It minimizes the costs of phone calls or physical movements of economic actors from one region to another and thus becomes the oil of the economy.
Data provides reliable bases for objective comparisons in the businesses and overall economic performance. These comparisons are useful in the establishment of business trends and the eventual business and economic planning.
What it will take for AOL to become one of the juggernauts of digital advertising
In order to become a giant in the digital advertising business, AOL ought to make real its plans to expand its client base to 2 billion by the year 2020 and double her revenues to $ 20 billion. The acquisition of yahoo Inc. will also assist the AOL business to increase its competitiveness and global reach. This is because Yahoo has a relatively large client base and will contribute to the relative expansion of the business agenda.
The potential financial returns to Twitter for its decision to purchase rights to stream NFL games
Historically more than 85% of revenues earned by twitter are generated from the carefully designed non-interruptive advertisements on its site. Since the amounts paid by advertisers to twitter are dependent on the traffic on the content being advertised and the advertisers tend to compete against each other to advertise on specific spaces, the company will be assured of more adverts during the football sessions. (Gadkari, 2013) The authorization for Twitter to air ten NFL games on Thursday nights definitely give the business an opportunity to air more adverts to more football fans which will be a guarantee for the increased revenues. According to the twitter chief financial officer, the business will capitalize on the huge audience using their facility to watch the games. “..we have millions of users looking at tweets about the game.” These viewers will interact with the advertisements aired during the game and thus add to the revenue. (Greenberg, 2016)
Insights
Data is critical to the success of any digital business in the current economic era. It is on data that all business connections and communications are founded. In the digital business, data strength determines which business succeeds in which markets.
Acquisitions and mergers are usually a competitive strategy that enables businesses to reach where they could not reach on their own financial or technological muscle.
Podcasts Surge, but Big Advertisers Sit Out,” by Steve Perlberg, WSJ, February 19, 2016
A podcast can be defined as a digital file, usually audio, that is provided on the internet and users can download and store on various storage devices. The file is usually availed in multiple sequential series. The recent technological developments and the adoption of the digital modes of communication, podcasts have become the most common access point to real time modern entertainment. The customer, usually called podcatcher, is usually the internet users who use specific computer applications to download the content from the service provider’s web feed.
The convenience associated with the internet technology is responsible for the increased popularity of the podcasts in recent days. Users have a preference for new series of entertainment in a timely manner and since the podcast is usually a click away from the user, many people prefer it. Downloading a podcast from a mobile phone or a personal computer is easier and timesaving than going to look for the album in a music store. (Perlberg, 2016)
Challenges podcasts face that limit advertising revenues
Various challenges deter the success of podcasts in generating advertising revenues for the providers. The nature of podcasts, for example, makes it relatively hard o estimate or know the actual number of online users tuning into a specific podcast at a particular time. The setup costs for advertisements in these podcasts are also too high and this makes it a challenging affair for the advertisers to conclude whether their adverts are rewarding or not. The complexity of the podcast business is also a sufficient challenge to the success of the investment. The fact that an individual downloaded a podcast cannot be a sufficient proof that they watched or listened to it. This makes the reliability on podcasts very unpredictable.
Out of these challenges, the problem of determining the traffic tuning into a podcast can be easily alleviated by initiating the creation of user accounts that will hold data for each user at any specific time. In this way, it will be easy to know the number with much precision.
However, the cost challenge remains a hard nut to crack since there exist no opportunities to cut the costs. The process of buying and selling podcasts also remains a complex undertaking which requires an individual to obtain a thorough understanding of the entire process. The challenge in resolving these challenges is the risk of compromising the quality of the services provided. (Perlberg, 2016)
What makes podcasts an attractive medium?
The online presentation and ease of access makes podcasts attractive to the users. Podcasts are easily accessed online as long as the user has a strong internet connection and the desire to access the podcast. Unlike the print media, podcasts provide a non bulk form of communication and entertainment since they are not contained on such medium as compact discs.
Technology is the driving force for the success of podcasts and unlike other online media; podcasts create an intimacy with the viewers and keeps them attentive all over the episode. The development of an effective ad within a podcast compared to television or video is empowered by the opportunity to add new adverts into old shows. Thus podcasts are free of the rigidity that comes with television and video adverts.
Insights
The article presents podcasts as a superior and a more reliable channel of advertisements compared to television and video shows. This is due to the flexibility of the model to accommodate new ads within old shows and the viewer loyalty which facilitates a wide coverage of the ads.
Podcasts are costly compared to other video means of advertisements. They are therefore supposed to be carefully evaluated so as to achieve maximum effectiveness at reasonable costs.
References
Jargon, J. (2016). Starbucks to Expand Customer Rewards Program Beyond Its Coffee Shops.
WSJ. Retrieved 25 May 2016, from http://www.wsj.com/articles/starbucks-to-expand-customer-rewards-program-beyond-its-coffee-shops-1458754277
Koh, Y. (2016). Pinterest Works to Pin Down Path to Wider International Audience. WSJ.
Retrieved 25 May 2016, from http://www.wsj.com/articles/pinterest-works-to-pin-down-path-to-wider-international-audience-1458725401
Kapner, S. (2016). Retailers Can’t Shake the Circular Habit. WSJ. Retrieved 25 May 2016, from
http://www.wsj.com/articles/retailers-cant-shake-the-circular-habit-1426113760#
Knutson, M. (2016). AOL’s Tim Armstrong Aims to Build Digital-Ad Empire at Verizon. WSJ.
Retrieved 26 May 2016, from http://www.wsj.com/articles/aols-tim-armstrong-aims-to-build-digital-ad-empire-at-verizon-1459330200
Perlberg, S. (2016). Podcasts Face Advertising Hurdles. WSJ. Retrieved 26 May 2016, from
http://www.wsj.com/articles/podcasts-face-advertising-hurdles-1455745492
Gadkari, P. (2013). How does Twitter make money? - BBC News. BBC News. Retrieved 26 May
2016, from http://www.bbc.com/news/business-24397472
Greenberg, J. (2016). Twitter Thinks Streaming the NFL Is a Big Deal for Twitter. WIRED.
Retrieved 26 May 2016, from http://www.wired.com/2016/04/twitter-thinks-streaming-nfl-big-deal-twitter/
MARKET RESEARCH IN ASIA. (2016) (1st ed.). Heidelberg.
BMO PPC Market Analysis - Asia. (2015). Bmiresearch.com. Retrieved 26 May 2016, from
http://www.bmiresearch.com/ppc/google/market/asia?gclid=Cj0KEQjwvZq6BRC9kfq2zKfQ_94BEiQAOeUVCwQiR7MGrQdHfNrAR9ZUr5Nlre2BTwcKUK8o_LGIVAsaAuhB8P8HAQ
