Discount train travel builds customer base

Italo (nick-named the 'Ferrari train') was founded in 2012 as a high-speed, low-fare direct competitor to Trenitalia, Italy's state-controlled railway system. The combination of low fares and speedy, comfortable travel has attracted millions of loyal passengers and given Italo a profit margin of more than 30%.

Some of these customers used to ride Trenitalia's trains and some used to fly Ryanair and Easyjet between Rome and Milan. Now Italo is adding more trains and extending its coverage to new destinations as its discount pricing structure has helped it grow to the second-largest train system in Italy.

Four price levels allow passengers to choose the value they're willing to pay for. Italo even has a frequent-rider loyalty reward scheme and a cobranded American Express credit card that offers upgrades and other benefits.

Watch for discount train travel to become more of a competitive challenge for railway systems and no-frills airlines in other European nations, as well.

Which brands are tops in the UK for 2018?

According to the Centre for Brand Analysis, the #1 brand in the UK this year is not British.

In 2017, and for the previous three years, the top brand was British Airways. Not this year.

The survey asked UK consumers about brands' reliability, distinction and quality. The brands they cited were, mostly, long-established multinationals with strong customer loyalty.

Consumers said that the top 10 superbrands in 2018 are:

10. BMW (cars)
 9. Heinz (food)
 8. Boots (retail)
 7. Marks & Spencer (retail)
 6. Disney (entertainment)
 5. Coca-Cola (beverages)
 4. Andrex (toilet tissue)
 3. Apple (electronics)
 2. Gillette (personal grooming)
 1. Lego (toys)

The future of fixed pricing in UK food stores

Have UK food retailers experimented with surge pricing? That's a form of dynamic pricing in which customers pay more at peak times or pay less during off-peak times.

The idea is to effectively manage supply and demand, avoiding queues during busy periods and spreading demand during the day.

Well, surge pricing is not exactly what's happening, at least not yet. Thanks to electronic price tags on shelves, however, food stores have the technical ability to vary prices during the day.

For example, Marks & Spencer last year tested discounting sandwiches in the morning to encourage early buying and alleviate crowds at lunchtime.

Surge pricing could be in the works for petrol, again as a way to manage supply and demand on busy days.

Still, fixed pricing is not going to disappear from food retailers, at least not for a long time. Customers will vote with their wallets if they don't like what a retailer is doing. And no store wants to lose loyal customers over a pence or a pound.

What's in a brand?

Brands generally include a name and (in many cases) a symbol/logo. Branding identifies and communicates what the branded product stands for so customers can recognise it. Ultimately, marketers want consumers to understand the brand's identity and its meaning, respond to it and have an ongoing relationship with it via brand loyalty and repeat purchasing (see Chapter 8 of my Essential Guide to Marketing Planning).

If you've ever walked past a Marks & Spencer store, you know that the brand shown above the door is distinctive. The website shortens the name to M&S, but the typeface is the same as on the name above the door. Over the years, M&S has changed the look of its brand name, but the brand still stands for values like quality, choice and innovation.

Now some brands are trademarking words that they've used over and over in adverts. Specsavers, the well-known eyewear retailer, was able to trademark the word 'should've' which it uses in its adverts, as in the catchphrase 'should've gone to Specsavers'. This legal protection ensures that no one else will be able to use that particular wording for marketing purposes. Essentially, 'should've' becomes part of the brand associations for Specsavers.

Changing a brand symbol or logo is a big deal. BT is reportedly making changes to the look of its brand. Instagram changed its look earlier in 2016, with mixed reactions. Once people become accustomed to a brand or logo, and are loyal to that brand, not all will have a positive reaction to changes.

Speedier self-service at McDonald's

McDonald's UK wants to speed up ordering by having customers touch a screen just inside the entrance to its UK outlets. Tap to order meals or a coffee, insert a payment card and retain the receipt so you can collect your order by number. Those cashiers who previously staffed the till are now working behind the scenes or delivering meals to the table. Also being tested: delivery to home or office.

Amidst intense competition for the 'fast casual dining' customer, McDonalds needs to differentiate itself and refine its positioning. Self-serve ordering is one way to appeal to customers who habitually tap screens (smartphone or tablet) to order all kinds of products. The screen also updates the look of the outlets, adding a modern touch to a brand that has been in business for decades. The Aberdeen McDonald's, soon to open, is being promoted as 'high tech' because of its proliferation of screens and its table service.

Liverpool, interestingly, has a high concentration of McDonald's units, much higher than the national UK average.

Despite the high-tech updates, McDonald's UK continues its low-tech frequent-buyer reward scheme to encourage loyalty amongst coffee buyers. Every coffee cup comes with this peel-off loyalty card, good for a free coffee after the purchase of 6. This is an easy way to keep coffee lovers loyal without a lot of technology to slow down transactions.

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.

Superior service reinforces customer loyalty at Ritz-Carlton

The world-famous Ritz-Carlton hotels are known for personalised service. The general manager of the Ritz-Carlton in Toronto screens prospective employees with the goal of hiring and training those who are enthusiastic about providing superior customer service. He says the key question his employees must ask themselves is: 'How can I make things more hassle-free for the guest?' Read more about the Ritz-Carlton's Gold Standards here.

The hotel company created the acronym MR BIV to focus employees on avoiding and correcting service slipups:

Mistakes
Rework
Breakdowns
Inefficiencies
Variation in work processes


According to a J.D. Power survey, hotel guest satisfaction in North America is at an all-time high--which means hotels must work even harder to stand out.

Especially in this digital age, when customers can research hotels and share experiences in an instant, the president of Ritz-Carlton has this to say about the secret to superior customer service:

'Customers today have an expectation of seamless service, in part because of the online experience and other technological factors. It’s important that we provide them with this seamless service– all of the element of the luxury hotel experience must integrate and flow together, from the planning process when they make the reservation, to when they depart the hotel'.

To encourage repeat visits and keep loyal hotel guests informed about new locations and services, the Ritz-Carlton publishes a full-colour online magazine filled with travel possibilities and tips. The corporate FB page has more than 550,000 likes and its Twitter account has attracted nearly 150,000 followers. The hotel is especially active on Pinterest, where its pins are spread across 123 boards with titles such as 'Discover the world' and 'I do.'

Competitive changes in the UK chocolate market

The UK market for chocolates is increasingly split between mass-market brands such as Cadbury Dairy Milk and upmarket brands such as Hotel Chocolat.

In fact, Hotel Chocolat's founder says: 'It's an emotionally charged food product that people are buying for the taste and the way it makes them feel'. With a decade of experience in marketing the emotional and taste benefits of luxury chocolates, Hotel Chocolat has established a distinctive brand image and built considerable brand equity.

On the mass-market side, Cadbury Dairy Milk (owned by Mondelez) continues to top the list of leading UK chocolate brands, with year-over-year growth. Mars and Nestle both have chocolate-bar brands in the top 10--and private-brand chocolates are also among the top sellers.

However, the competitive situation is about to change. Thorntons has been struggling for some time, caught between the upmarket brands and the mass-market brands. Now Ferrero has acquired it, which may lead to a new marketing strategy, not to mention a new positioning for the products and the retail shops. This will cause all the aspirational brands to work harder to connect with customers and reinforce loyalty.

So the hypothethical marketing plan for Lost Legends Luxury Chocolatier (which is included in my Essential Guide to Marketing Planning textbook) must be updated to reflect these important market changes.

Food for thought: pricing at two London cafes

Two London cafes have interesting (and different) approaches to pricing. Whether either or both will attract loyal, long-term customers is the biggest question--but the novel pricing is attracting attention now.

Caffix uses the strapline 'eat fresh, pay less' for its value proposition. 'Give people a great quality product and do it at a lower price', says the founder. The cafe's pricing strategy is simple: every menu item is priced at £1. Salads, sandwiches coffee, juices, everything is sold at the same fixed, low price. The portions are, of course, small -- but that allows customers to enjoy the variety and try new things. Follow Caffix's latest on its website,  Twitter page, Facebook or Instagram.

Ziferblat has a different approach: food is free. Instead, customers pay for the time they spend at the cafe, at a rate of 3p per minute. This pricing strategy originated at the founder's first Ziferblat cafe in Moscow, and now the company is spreading it around the world, to London and Manchester and beyond. The cafe's logo subtly promotes its pricing strategy through the use of the clockface. Follow Ziferblat's latest on its Facebook page or on Twitter.

Keeping up with key performance indicators (KPIs)

Key performance indicators (KPIs) are specific financial and non-financial measures that a company, governmental agency or NGO uses to determine whether its marketing strategy is moving the organisation in the direction of its short- and long-term goals.

Different industries rely on different KPIs to assess marketing performance. Banks--including Metro Bank, based in London--want to increase the number of account-holders, increase the number of services utilised by each customer, increase deposits and retain customers for years. Performance is measured by KPIs that indicate progress towards those goals.

Metro Bank, a 'challenger bank' competing with long-established banks on the high street, differentiates its neighborhood 'stores' on the basis of responsive, in-person service while offering online and mobile banking for customers who want tech options. Measuring the results of Metro's marketing strategy requires KPIs that link back to the goals, such as growth in customer deposits. Another KPI is profitability--so far, a goal that Metro Bank is moving towards but has yet to achieve.

What about KPIs for retailers? Online grocery retailer Ocado seeks to increase customer spend, among other goals, which translate into KPIs such as growth in average order size. As the above table from Ocado's recent results indicates, other KPIs include average number of orders per week, average deliveries per van per week and on-time delivery performance. Product wastage is not just a financial measure--it affects Ocado's sustainability performance, as well.

How Grill'd markets healthy burgers

'Finally, a burger you can eat without having a hangover first'. That's how Grill'd introduces itself to website visitors in Australia. The site and its Facebook page have a slightly cheeky, cheerful attitude, but the burger is the star. Grill'd demonstrates that its burgers are NOT the usual, and no mistake.

Grill'd became a reality when founder Simon Crowe got tired of complaining about the usual burger. Without a food background, he set out to reinvent the product and create a fun, healthy and hearty eating experience for restaurant customers.

A strong, differentiated brand is Crowe's key to sustained growth and customer loyalty. 'We want to be a lifestyle brand that talks very much to our constituents who are 20-something urbanites, loving music, being very social and always getting together with friends,' he explains. 'We know that in part, our brand is two parts: it’s a rebel with a cause, it needs to have a lifestyle element to it, but on a rational basis'.

Crowe pays close attention to all the details that add to the experience. 'If we get our music volume right, the product quality right, and if we get the ambient features relating to lighting and/or temperature right, then what we’ve created is a brand that actually engages with our local community', he says. 

Through a combination of company-owned restaurants and franchising, Grill'd has already grown to more than 50 locations, with additional restaurants soon to be announced. Where is Grill'd headed next? When Ernst & Young named Crowe its 2013 Entrepreneur of the Year, he mentioned the possibility of opening restaurants in Asia and the US.