Airbus deletes A380 from product line

Some product decisions have long time frames and extremely costly consequences. Aircraft manufacturers therefore spend considerable time studying the marketing environment to project future trends in travel and demand, before they develop and introduce a new jet.

Airbus spent billions to develop its double-decker A380 jumbo jet, betting that airlines would be ferrying large numbers of passengers from major hub to major hub. It was test-flown in 2007, receiving much publicity for its spacious interior and the amenities that could be added (such as on-board showers and luxurious first-class suites).

Airbus received some big orders from Emirates, among other airlines. In fact, Emirates is by far the largest buyer of A380s. But when Emirates cut the number of A380s in its latest order, and other orders slowed down, Airbus decided to discontinue this product after 2021. In fact, the 2020 coronavirus pandemic that brought international air travel to record-low levels seems to be accelerating the move away from A380s.

Competitor Boeing based its product decisions on a different forecast for the travel environment, believing that passengers would want to travel from point to point rather than hub to hub. It put the emphasis on nimbleness and fuel efficiency, rather than on having a high number of passengers being carried per flight. And that's attracted more buyers than the Airbus A380.

Now Boeing's original 747 jumbo jet is transitioning to a cargo carrier, extending the life cycle of this aging product. In addition, Boeing is still marketing its 777 and 787 jets to airline customers--and looking ahead with forecasts for the future of travel as it plans future product introductions.

The race to market electric cars

Although Tesla is one of the best-known electric car brands on the planet, many automakers have marketing plans that include the introduction of electric cars.

Especially now that Tesla appears to be having difficulty consistently producing its Model 3 mainstream auto in sufficient quantities to meet its objectives, other automakers see real opportunity to gain market share with their own electric vehicles.

For example, Germany's Mercedes recently introduced an all-electric SUV, branded the EQC (for 'crossover'). The interior has many familiar features, including a robust infotainment unit.

Porsche is preparing its Mission E vehicle for 2019 introduction, with the goal of having plug-in electric and hybrid vehicles comprise half of all of its vehicle deliveries by 2025.

Volkswagen is investing heavily to develop and market electric cars in global markets. Chinese carmaker Geely is also gearing up to introduce more electric cars in more markets, including its recently-launched SUV crossover.

As a result, Tesla will face global markets more crowded with electric cars than ever in the past. How will it keep its production and its marketing plan on pace?

This post updates the Marketing in Practice example in Chapter 6 of my Essential Guide to Marketing Planning.

The global reach of Evolve Skateboards

More than 120k Facebook users 'like' Evolve Skateboards, more than 26k Instagram users follow Evolve Skateboards and nearly 16k people subscribe to the company's YouTube channel. Those social media interactions have helped accelerate word of mouth about this fast-growing brand of electric skateboards.

The Australian-based company founded by entrepreneur Jeff Anning and his wife, Fleur Anning, has an international customer base, distribution in multiple countries and many thousands of social media-minded brand fans. Target market: young professionals who see the boards as a convenient and fun way to commute on city streets.

The company was global from its first days in business. Two years ago, when Evolve launched a new product, it attracted A$ 1 million in orders in a single day. One challenge in growing so quickly has been signing with suppliers and manufacturing facilities that meet the firm's quality and performance standards.

Today, Evolve's annual turnover exceeds A$ 15 million as consumers worldwide are introduced to the product category of electric skateboards and come to prefer the Evolve brand. Thanks to social media, Evolve can stay in close contact with its target market in many nations, well beyond the firm's base in Australia.

Beverage marketing evolves

From Innocent's new dairy-free beverages to Pepsi J-Cola for Japanese taste preferences, marketers are expanding their product mixes to expand their customer base and appeal to variety-seeking loyal brand fans.

Another reason for the proliferation of product extensions and brand extensions is consumers' desire for healthy, nutritious beverages. At the same time, beverage marketers are responding to governmental efforts to encourage healthier lifestyles.

In the UK, there is now a levy on high-added-sugar drinks. Beverages that are made of 100% fruit or vegetables will not be subject to this levy. Ireland and South Africa are also taxing high-sugar beverage products. Individual US cities are similarly taxing high-sugar soft drinks, all part of the effort to encourage healthy eating.

In this UK marketing environment, Britvic has experienced strong demand for its no- and low-sugar soft drinks. Barr is also experiencing strong demand for its low-sugar and no-sugar soft drinks. Watch for more product introductions as beverage marketers compete for the attention of consumers during the high-demand summer months.

Unilever shakes up its product portfolio

Unilever recently sold off its spreads and margarine brands to concentrate on other, higher-potential products in its portfolio. The company's CEO explained: 'The announcement today marks a further step in reshaping and sharpening our portfolio for long term growth'.

Brands sold to KKR, a private equity firm, include Flora, ProActiv, Becel, Country Crock, I Can't Believe It's Not Butter and and Blueband.

Although the spreads business was profitable for Unilever, with margins of about 20%, the firm wants to concentrate its marketing resources on products that closely fit its vision.

In particular, Unilever has been growing formerly niche brands like Pukka Herbs tea into mainstream brands to accelerate growth. It's also investing in personal care brands that are growing quickly and launching a number of new products for highly targeted customer segments within specific geographic markets.

This updates the Unilever examples in Essential Guide to Marketing Planning 4th edn.

Vinyl record sales set records

Due to nostalgia marketing, aesthetics and technical interest, vinyl record sales are setting records. In 2016, sales of vinyl records exceeded 3 million units. As impressive as this sounds, it's actually paltry compared to overall sales of recorded music.

David Bowie topped the list of vinyl best-sellers and UK music best-selling artists. And not just Bowie's final recording, but other perennial favourites sold well in vinyl and digital formats. 

Why are vinyl sales soaring? 'It’s twofold in that older people are going back to vinyl but I also think the younger generation are discovering it in a way they weren’t before', says the CEO of Regent Street and Gold Bar Records. 

Record Store Day in April is helping introduce vinyl to new fans and give loyal customers new reasons to buy. Established performers and newcomers alike use this April 'holiday' to launch new products with heightened marketing awareness.

Now vinyl sales are strong enough that Sony has decided to get back into that business. How will the addition of this major player affect the fortunes of GZ Vinyl and the few other vinyl manufacturers competing in the industry? Will other big labels reintroduce vinyl as well?

Preventing 'success disaster'

Message on Hatchimals website in December, 2016

A Google product expert--one of the team behind the new artificial-intelligence Google Translate technology--recently spoke about the need to prevent success disaster. That's a situation in which an organisation lacks the practical capabilities to meet high demand for a product.

In other words, suppose something new like the revamped Google Translate is tested and adopted by a large number of users. The result would be a strain on Google's network unless it planned, in advance, for an extended, sustained surge in usage. Meaning new processing equipment and new networking equipment. Which Google did, in fact, install prior to revamping Google Translate this year.

Family Search, the free genealogy website, also understands the potential for success disaster. As more people worldwide become interested in family history and post names and photos on Family Search's databases, the organisation has arranged for flexible cloud computing services to keep operating at peak demand.

Now think about the potential for success disaster at Christmas time. Weeks ago, well before the peak of holiday shopping, Hatchimal toys were already out of stock in many stores. Even though the company shipped additional inventory during December, it recognised that some children were going to be disappointed by not having Hatchimals under the tree in 2016. The message shown at top was a pop-up on the company's home page in mid-December.

Admittedly, predicting the popularity of a new toy (actually, predicting consumer behaviour towards purchasing the new toy) is quite a challenge. But even LEGO, with its long history of sales analysis, wasn't prepared for worldwide demand in 2015. No wonder LEGO 's top executive says: “If you make a decision in product design, you need to mirror it in manufacturing.” That is a major step towards preventing success disaster.

What does a brand stand for?

Quick, what do you think of when you think of Kodak?

Maybe you remember Kodak's yellow and red film packaging...or other photography-related products.

Kodak is changing its brand associations, and today it describes itself this way: 'Kodak is a technology company focused on imaging'. For consumers, Kodak offers digital cameras, movie cameras, printers and more.

Can the Kodak brand be associated with smartphones? Kodak is aiming for that market. Last year, its brand appeared on a smartphone made by Bullitt. The phone didn't sell well. Now the Kodak brand is about to appear on a new smartphone, to be marketed as having a very good built-in camera. The new phone is called the Ektra.

Everyone takes photos with smartphones and tablets these days, right? Some famous photographers use their iPhones and rely on the quality, and Apple is definitely promoting the photography aspect for social media ease and professional use.

In other words, Apple has successfully associated its branded phones and tablets with high-quality photography.

Can Kodak do the same for its Ektra smartphone?

Start-up success requires product expertise, thoughtful targeting

Brighter Foods was recently named Wales Start-up of the Year. Founded in 2014, the company specialises in healthy snack foods. Brighter Foods was also named food and drink start-up of the year and manufacturing start-up of the year for 2016.

It targets consumers who seek out snacks that are healthy and taste good. Among its products are snacks with high fibre, low fat, no dairy and/or no gluten. This is a fast-growing segment of the market and a promising target opportunity for an ambitious business seeking to expand sales.

In addition to contract manufacturing, Brighter Foods developed and now markets its own Wild Trail brand of snack bars, which are gluten- and dairy-free.

Wild Trails is being marketed via a microsite and is also available at Tesco, a channel partner that can help build brand awareness quickly. What product innovations will Brighter Foods introduce in 2017 to maintain its growth momentum?

Pop-up shops boost brands, test products, target customers

Pop-up shops are increasingly popular. Some pop-ups test interest in certain merchandise or new products. Others are opened for short-term promotion of brands amongst targeted customers.

Pop-ups don't always sell merchandise...sometimes they're focused on bringing the brand experience to life for a limited period in a targeted location.
Not only are pop-ups temporary, they can also be located or relocated to specific areas where target customers live, work, shop or enjoy leisure activities like sports and concerts.

Here are a few recent examples of UK pop-ups:

• Kanye West opened pop-ups in London and elsewhere to promote his current album.
• Morrissey opened a pop-up in the Salford Lads Club when he appeared at Manchester Arena.
• A dance teacher opened the Ballet Box in Westmorland to dance apparel.
• Insert Coin opened a London popup to promote its new line of Pokémon apparel.

McDonald's newest marketing ideas

NEW IN MARKETING AT MCDONALD'S

McDonald's is going hyper-local to satisfy food tastes in certain regions--and to reassure customers of the purity of its ingredients. It's also adjusting its marketing strategy to better differentiate itself and attract new customers, while maintaining the loyalty of current customers who are tempted by the many fast-casual alternatives.

On the McDonald's Japan site, you can see a photo of the newest sandwich, a 'burger with an egg on top' that features cheese from the region of Hokkaido plus a strip of bacon and a dab of secret sauce. Not only does this product introduction fit with changing consumer tastes--such as a preference for eating locally-produced foods--it also fits with a seasonal moon-viewing festival in the autumn, when round-shaped foods are in favour.

Another new marketing idea for McDonald's is table service. After experiments in France, Australia and other nations, McDonald's is testing in-restaurant service in Manchester. The UK market is a bright spot in the McDonald's global empire, because sales continue to increase in the UK even as they've plateaued in the US, where competition is extremely intense and other casual-dining chains are growing quickly.

McDonald's knows that many of its customers are mobile-savvy, so it's preparing its mobile ordering and payment strategy for more convenience and speed in China, among other markets.

Among UK New Product Winners: Ella's Kitchen

The Grocer presents new product awards every year, for the best food and for non-food products introduced during the previous year. Entries for 2015 are now open. Categories include coffee and chocolate drinks, dairy drinks, fish products, frozen desserts, laundry products, infants' products, soups, and teas and infusions, among others.

Who were the winners in 2014? Both large and small marketers entered and won. Cadbury was a winner in the chocolate confectionery category; Persil won in the laundry category.

Among the smaller companies to win in 2014 was Ella's Kitchen (winner in the infants' category). Named after a real baby named Ella, the company markets a range of organic baby food.

Paul Lindley is the founder of Ella's Kitchen and also Ella's father. He had an idea for marketing nutritious, all-organic baby food products to delight 'tiny taste buds' and tempt even finicky babies to eat. He also knew he needed colourful packaging to 'sell from the shelf'. Once Sainsbury's began to stock his products, the company gained national distribution.

Lindley had worked for Nickelodeon before becoming an entrepreneur, and this connection enabled him to arrange for free TV promotion in exchange for some of the firm's profits. As a result, Ella's Kitchen gained brand recognition and established itself nationally.

When Ella's Kitchen undertook global expansion, however, Lindley experienced considerably more competitive pressure in the US market. He sold Ella's Kitchen to Hain Celestial, known for its all-natural food products, and remained as the division head, using the parent's marketing muscle to boost Ella's Kitchen.

Today, nearly a decade after its founding, Ella's Kitchen is active on social media to educate and inform parents about nutrition and, of course, explain how its products are good for baby. On YouTube, for instance, the company posts videos about feeding babies, weaning babies and other topics of interest to families with infants. It offers Q&A with experts on its Facebook page and its Twitter page.

How well will new Coca-Cola Life sell?

After test marketing a new lower-calorie version of its cola in South America, Coca-Cola is readying a rollout in Great Britain and beyond this year.

The new product, Coca-Cola Life, features a green can or green label with the characteristic Coca-Cola brand logo script.

Coca-Cola Life is also being marketed as 'natural' because it is partly sweetened by plant-based stevia, reducing the sugar content.

This addition to the Coca-Cola product portfolio comes at a time when soft-drink marketers and snack marketers face challenges due to serious societal issues such as obesity. Already, nearly half of the cola beverages sold by Coca-Cola in the UK have no calories.

Some critics are unhappy with Coca-Cola Life's calorie count and super-sweet taste. Coca-Cola responds that it is investing in programmes to encourage consumers to be more active through such activities as biking.

Consumers will have the final say: If enough buy Coca-Cola Life, and keep buying it, the new product will remain in the portfolio. If not, the new product will vanish.

Core values of the Warburtons brand

Family-owned Warburtons has been named to two 'top grocery brands' lists in recent weeks, due to its positive brand associations and rapid growth.

• Kantar Worldpanel put Warburtons at the top of the list because it is chosen so frequently by so many UK households--and because of its product innovations.
• The Grocer put Warburtons #2 in its most recent brand listing (just behind Coca-Cola), in part because of the huge sales expansion it has experienced.

The company's turnover has doubled in the last ten years and continues to grow because of new product lines and product variations. It's aiming to capture market share via an expanding range of gluten-free products, for example.

Warburtons wants its brand to be associated with five core values: family, ambition, responsibility, quality and care. These values form the foundation for its marketing, including new product development and support for nonprofit causes. The family's name is on the business, and Warburtons works hard to maintain its brand leadership by applying the five core values every day.

350 million Creme Eggs in Cadbury's Easter Basket

Cadbury (now owned by Mondelez) is 190 years old, and still creating new products for Easter and every other occasion. During the period before Easter, Cadbury produces 350 million Creme Eggs at its Bournville factory, ready for Easter baskets and chocolate lovers. The Bournville plant is to be modernised soon, to increase efficiency and competitiveness. The plant also developed and now manufactures the Marvellous Creations chocolate bar, which accounted for £50 million of sales during 2013.

Egg 'n' Spoon is another recent choco egg creation. The package includes purple spoons to scoop out the mousse filling from each egg. Research and development for this product at Bournville was supported by testing and analysis at Reading University.

New products are vitally important to the growth of Cadbury and its parent company: "In 2012, sales of products developed in the previous three years accounted for 12% of Mondelez Europe's revenue and 13% for the company worldwide," according to an executive. Variations of popular Cadbury products are contributing to growth by appealing to new customers and also encouraging loyal brand fans to try different Cadbury items.

Cadbury is, of course, highly social, with more than 500,000 Facebook likes and 198,000 Twitter followers.

Sweet marketing for KitKat in Japan

Inside the Seibu department store at the Ikebukuro train station in Tokyo is a new chocolate boutique featuring one of Japan's favourite brands: Nestle's KitKat. The brand name has become associated with good luck because it sounds like the phrase 'I hope you will win'. Students in Japan buy KitKats with the thought that it will help them do well on exams.

Not surprisingly, KitKat uses marketing to build on this good luck perception. The new boutique sells some exclusive KitKat flavours created by chocolatier Takagi for Nestle, including Sublime Bitter, Special Sakura Green Tea and Special Chilli. The boutique is already selling out its limited-edition products daily, but revenues aren't the only reason for this retail venture: It's actually a high-profile brand-builder. Simply type "KitKat Chocolatory" or "KitKat Japan" into a search engine and you'll see the boutique's worldwide media coverage.

From 2007, Nestle has developed KitKat variations only for Japan. In fact, depending on where in Japanese consumers buy KitKats, they will find flavours not available in other areas (like Purple Potato). Most KitKat packaging features English (the brand and the brand owner) as well as Japanese, adding a 'global' angle that enhances the product's sweet marketing appeal.

Marketing a 2015 product intro in 2014

Microsoft faces a tricky marketing challenge: How to market the expected 2015 launch of a new operating system (possibly Windows 9) without damaging 2014 sales of products with Windows 8.

From April, the company will withdraw support for Windows XP, once a highly popular operating system and still running on many legacy computer systems. That will push some Windows users to make decisions about upgrading or replacing. And Windows computers are still in great demand, despite the wide availability of competing Mac, Android and Chrome systems.

Yet Windows 8 sales have reportedly lagged. Critics want to see standardised gestures that will operate on different platforms (tablet or computer). They also want apps that launch directly from the start screen.

An entirely new operating system--with or without the Windows brand--could reset customer expectations and jumpstart sales. So Microsoft apparently will make a big announcement about the next generation operating system in April.

Does announcing a new product many months in advance build anticipation and excitement? Will existing Windows customers be willing to wait until 2015 for the new system? Will customers hesitate to buy a new Windows 8 product now because they know a new system will be released next year? Or will the lengthy prelaunch wait cause some customers to switch to competing products?