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Monthly Newsletter Presentation

November/December 2011

www.grewallevymarketing.com

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Article Index

Pizza Hut on the Mobile Go (Chapter 4, 8, 9, 12, 17)

Remaking the Drugstore (Chapter 7, 8, 9, 10, 11, 12, 16, 17)

Non-Lemon Lululemon (Chapter 2, 4, 5, 16)

Trading Down for Good (Chapter 1, 2, 5, 8, 13, 14)

Multichannel Retailing and Localizing (Chapter 9, 12, 16, 17)

One Brand with a Local Feel (Chapter 2, 10, 17, 19)

Taking a Tip from Hulu: YouTube’s Latest Moves (Chapter 6, 12, 14, 17, 18, 19)

Chanel Sues 399 Web sites (Chapter 7, 10, 15, 16)

The Dynamic Retail Environment in Korea (Chapter 4, 7, 8, 12, 16)

Feeling before Facts (Chapter 5, 9, 11)

Online CRM Develops Relationship (Chapter 5, 8, 12, 16)

Introducing the Kindle Fire (Chapter 2, 11, 12, 15, 16, 17)

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Video Index

Tesco in Korea (Chapters 4, 7, 12, 17)

Mobile Commerce (Chapters 6, 11, 16, 17)

Facebook iPad App (Chapters 4, 10, 11, 17)

LocalResponse (Chapters 16, 17, 18,19)

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Pizza Hut on the Mobile Go Pizza Hut decided to create a mobile app out of fear that its

competitors might be first to do so. Pizza Hut was concerned that cannibalization of sales would happen

as a result. The Pizza Hut app lets customers order food through a user-friendly

experience, but it also makes sure to identify the closest store locations for delivery or pick-up service.

Market research showed that users of the app included as many people older than 55 years as under 24-year olds.

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What Do You Think?

• What is Pizza Hut’s mobile strategy?

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Remaking the Drugstore Duane Reade is the New York City drugstore with 256 stores. The store did not have a great reputation because the stores were

overcrowded, messy, dingy and the associates did not know anything.

The company is paying closer attention to complaints, including those on popular blogs and slowly transforming the stores through remodels and new products.

The remodeling is focused on dividing the store into three sections: “How I look,” “How I feel” and “What I need.”

This strategy prompted a couple of new slogans: “New York living made easy” or “Your City. Your Drugstore.”

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What Do You Think?

What factors have been important thus far in Duane Reade’s turnaround?

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Non-Lemon Lululemon Lululemon was founded in Vancouver, Canada because there was

no clothing appropriate for yoga. Lululemon sells activewear at a higher price point than other retailers.

Yoga pants, for example, average $98.00 per pair. Gap’s brand, Athleta, competes with Lululemon but offers a more

affordable alternative. Nordstrom’s launched the Zella line of athletic wear to capture some

of Lululemon’s customers. Nike is trying to duplicate Lululemon by developing a yoga culture

that makes consumers feel that they are part of a community.

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What Do You Think?

• Do you think these other retailers can be successful with yoga merchandise?

• Will consumers continue to spend their income on yoga apparel or focus on other categories of apparel?

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Trading Down for Good In the recent recession, consumers chose more lower priced

alternatives, especially for basic purchases such as paper towels or laundry detergent.

Customers are not changing their economical attitudes: Now that they are accustomed to the lower cost options, consumers evidently see no reason to start paying more, when the basic version will get the job done.

Customers also shop according to their paycheck cycles: When paychecks arrive, shoppers feel flush and stock up on products. Near the end of the pay cycle though, reserve funds are low, and shoppers turn to smaller sizes to get by, until their next paycheck arrives

Many retailers are promoting their private-label options, noting their lower price points compared with national brand alternatives

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What Do You Think?

• Why are consumers trading down for good?

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Multichannel Retailing and Localization

Multichannel retailing involves selling merchandise through multiple distribution channels including stores, online, mobile, catalog, and phone.

Retailers are not managing cross-channel marketing as well as they think. Surveys indicate that just 12% of retailers (excluding Walmart) had the in-store ability to access or review a customer’s online order.

Many retailers are not capitalizing on mobile commerce functions including localization. This means that retailers’ mobile sites accessible by their mobile phone do not always provide a store locator function helping the customer determine their closest store.

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What Do You Think?

• What is multichannel marketing?

• Which retailers are most successful at multichannel marketing and why?

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One Brand with a Local Feel

Applebee’s encourages franchisees to stay connected to their local community. Social media has been instrumental in connecting with their local customers.

They are focusing on just Facebook for social media to build credibility and trust before trying to reach customers through multiple social media outlets.

Applebees has 2,000 restaurants and 44 franchisees, executives at Applebee’s were worried that all of the different messages could potentially dilute the brand or differ from Applebee’s corporate driven initiatives.

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What Do You Think?

• What are Applebee’s franchisees doing to communicate with its customers?

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Taking a Tip from Hulu: YouTube’s Latest Moves

YouTube’s most popular content remains amateur videos of extreme sport accidents, cats, or child singers, but it is changing its strategy.

It is producing original, high-quality content and free online channels. With Tony Hawk, perhaps the best known skateboarder in the world,

YouTube will produce original video clips for the site, extending its range beyond the bunch of kids showing off their tricks in the school parking lot.

Although YouTube will be investing a lot of money in this content, it plans to recoup its spending by vastly increasing its advertising revenue to be closer to Hulu.

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What Do You Think?

• Why does Hulu have higher advertising rates? • What are some of the opportunities and

challenges to YouTube’s entry into content markets?

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Chanel Sues 399 Web sites

High-end fashion labels have been battling with counterfeiters for years to reduce the amount of knock-off merchandise sold through grey and black markets.

Chanel filed a cyber piracy and trademark infringement lawsuit accusing 399 websites of selling counterfeit items under the Chanel name. Chanel believes that these websites operate in China, the Bahamas, and other overseas areas where trademark infringement is not strictly enforced.

Historically, high-end brands have focused their battle tactics to minimizing the sales of street corner knock-offs. Chanel’s lawsuit seeks to seize or permanently disable websites from selling any counterfeit merchandise bearing the Chanel name.

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What Do You Think?

• Why did Chanel file a lawsuit against 399 websites?

• What is the difference between counterfeit, gray-market, and black-market merchandise?

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The Dynamic Retail Environment in Korea

New Retail concepts in Korea:E-Mart Traders is a new warehouse store with private-label brands. The original E-Mart provides bulk packaged items at comparably low prices, without membership fees.Molly’s Pet Shop offers a high-end pet store and kennel, as well as a café so people can dine, with their pets along for the meal. Molly’s combines pet grooming and training with social interactions to ensure a fun, playful retail experienceMatrix, an electronics shop with a strong gaming focus, targets technologically savvy shoppers. In general, Koreans exhibit good familiarity and comfort with advanced technology, making this concept a good fit.

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What Do You Think?

• What traits of South Korea encourage these new trends and retail innovations?

• What are the U.S. equivalents to the concepts described in Korea?

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Feelings before Facts Shopping used to be a simpler process: one type of toothpaste, one brand

of jeans, Cheerios, and one or two beer options. Today, there are 300 breakfast cereals on the market—and 11 types of Cheerios alone.

Shoppers often make decisions based on random impressions, inaccurate heuristics, or out-of-date recommendations, rather than by determining which particular product features are superior in a certain offering.

Even when features of a product are communicated, they may not be providing the best information to ensure a successful purchase choice. For truly complex decisions, it is virtually impossible for human minds to weigh all the options fully. Ultimately, it comes down to how the buyer feels about the product for sale.

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What Do You Think?

• What did the comparison of the feeling focus group with the detail focus group prove?

• What do these findings suggest about ethical marketing?

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Online CRM Develops Relationships

Customers know when they have a problem, and they know they need a solution, even if they are not sure what that solution is.

They are not necessarily looking for a specific product when they begin. As Theodore Leavitt’s famous marketing rule points out, customers are attracted to visit the hardware store because they want to make a quarter-inch hole, regardless of which tool will enable them to do so. They don’t want the drill; they want the hole.

Such online relationships do not happen overnight. According to the founder of both Travelocity and kayak, they require attraction, which exists because a customer is trying to fill a need.

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What Do You Think?

• What are the steps to developing a relationship online?

• How does relationship building differ online versus offline?

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Introducing the Kindle Fire

Amazon, a company known for its excellent adaptation, though not for its ability to lead the market with cutting-edge products, now has issued its response and perhaps the best challenge to the iPad yet, in the form of the Kindle Fire. The Fire offers a 7-inch display, or half the size of the iPad, at half the price ($199). It uses the Android operating system, which enables users to access Amazon’s vast content library. The Kindle Fire does not offer an embedded camera or microphone, nor does it provide 3G cellular connections, so it only works on Wi-Fi. However, running on Amazon’s EC2 cloud computing engine, which represents Amazon’s version of the Android app store, the Fire gives users access to more than 10,000 games.

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What Do You Think?

• Would you buy a Kindle Fire?

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Video – Tesco in Korea

Would you shop at a virtual store? Why?

What other types of retailers would also be successful with virtual stores?

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Video – Mobile Commerce

What are the benefits of Google Wallet?

Do you make mobile purchases each month? What types of purchases are they?

*Don’t forget Facebook credits and iTunes!

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Video – Facebook iPad App

Why is the Facebook iPad app so beneficial for users? for Facebook? For Apple?

Is it necessary to have a Facebook iPad App?

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Video – LocalResponse

Would you like to receive a targeted promotion each day based on where you are checking in on Foursquare and what you are tweeting?

Why is LocalResponse leveraging Twitter so well?