Group 155 – Under Armour (Blog 2)

Thanks to everyone who’s shared their views on our blog, gives us more topics to think about along with a whole lot of different perspectives. Some points of view mention that the entire targeting strategy implemented was maybe just an accident. Well, even if this was the case, UA has done a fabulous job in expanding their product line and range. From starting off with their “DryFit” performance enhancing gear, today UA has expanded to getting into a variety of sports. Going a step ahead, they now even have a product rage for niche markets like military and tactical, hunting and tough mudder. UA since the very beginning, has followed a very unconventional promotional strategy. Did anyone notice the apparel used by Dwayne Johnson, more popularly known as “The Rock” in all the Fast and Furious movies?

If you have a closer look you would notice that he exclusively wears only UA apparel. Digging further into this, we found that there is no contractual agreement between him and the brand.

Dwayne Johnson made his WWF debut in the year 1996, where he was quick to become the crowd’s favorite. Making his way into movies from 2001, Dwayne has established himself as an action hero with movies like Hercules (2014) and San Andreas (2015) riding on his “sizable” shoulders. Former football player, actor, wrestler, health and fitness freak – That’s an impressive profile to choose to endorse your brand, that too in a very subtle manner. Think of the various, very specific market segments that are influenced seeing that logo on his t-shirt.

Another big step that the brand took was to venture into the world’s most watched league (Barclays premier league) partnering with Tottenham Hotspur (12^th most supported team worldwide). This was UA’s largest individual team deal. With 11 million Tottenham supporters and 4 other premier league teams in London, Under Armour made a hefty presence in the United Kingdom that resonated world over.

Speaking of increasing their target market, we leave you with their “Protect this house” campaign, which more importantly, also targets the women.

Look forward to getting some interesting thoughts!

How One Brand Makes No-Brand Sexy to Consumers

Group 9

In today’s market, companies such as Apple are striving to make their brand sexy by creating genius products that attract cult-like consumers. If this is the western approach to innovation, how does the Japanese approach it differently? Specifically, how does MUJI make no-brand sexy to consumers?

MUJI is one of strongest retail brands in the world. It is a global retail company from Japan which sells a wide variety of apparel, household and consumer goods. There are over 700 retail outlets opened in the US, UK, France, South Korea, China, and Australia and so on.

As we all know, there are so many brands (e.g. Nike, Apple, Coca Cola etc.) succeeded through building up and conveying strong brand images, and ultimately give the company logo of extremely high value. MUJI, however, does not follow this way. MUJI adopts no logo and “no-brand” concept, which creates an authentic beauty of simplicity. The concept of simplicity, is all about bringing a quiet sense of calm into strenuous everyday lives. This is attained by deemphasising branding, spending much less on advertising and marketing, reducing expenses on production and simplifying packaging. Finished goods are directly delivered from factories to consumers, which ensures high quality and reasonable prices. Hence, at the core of their Corporate Social Responsibility, MUJI sets itself apart from other brands by communicating simplicity and sustainability in living through customer experience.

Segmentation & Targeting

In line with MUJI’s no-brand concept, the company is targeting several types of segments. In demographic segment, potential customers are identified at the age of 25-44. In psychographic segment, MUJI targets potential consumers who are sick of identifiable company logos, or people who are in favour of MUJI’s environmental-friendly stance and keen on natural materials, or people who are after design-less products.

Positioning

MUJI positions itself by simplicity and functionality through its minimalist designs. That is summarised in three words: “Simple, Functional and Affordable”.

Simple – the designs of MUJI product are understated, plain and thus able to blend into the environment;

Functional – MUJI products are versatile, adaptable and useful; and

Affordable – they are of good value. Although MUJI constantly positions itself as a mundane and banal, it is a paradox – it is precisely their symbolic production to be part of ordinary life which makes it unique.

After careful execution of STP and consistent offering of products and services, MUJI truly wins the heart of consumers and builts very strong customer loyalty, and its popularity is attributed to word-of-mouth from brand lovers.

Interestingly, even though MUJI adopts the “no-brand” concept, in turn, it successfully becomes an identifiable brand to consumers.

Group 155 : Under Armour – The Journey

Under Armour: The Journey

Working from his grandmother’s basement in Washington DC, 23 year old Kevin Plank changed the way athletes dressed forever. Former football captain from the University of Maryland, Kevin hated having to change his sweat soaked cotton tee over and over again and wanted to do something about it. This small thought led to the invention of fabrics that helped the athletes stay cool even during hot conditions. This was done using moisture-wicking performance fibres in apparels called the Under Armour HeatGear.

Soon after, Under Armour introduced the ColdGear tee that helps athletes stay warm under cold conditions. Competing brands were soon to follow this trend into the “Dry Fit” market.

Safe to say, Under Armour gave birth to what is often termed as “Performance enhancing apparel”. The brand attracted significant attention when it featured in one of the most talked about movies in 1999 – “Any Given Sunday” starring Jamie Foxx and Al Pacino, where the football team wears Under Armour apparel.

Building relationships with major sports like Baseball, Hockey and Running, the brand started to slowly seep into the minds of young athletes. It slowly established itself as a worthy competitor against brands such as Nike and Adidas.

Under Armour’s first ever TV campaign in 2003 – Protect this House, positioned the brand as the voice of the youth and made Under Armour a household name.

As of 2010, within ten years from its launch, Under Armour ended the year with 281 million in revenue. From featuring in movies, to partnering with major sports leagues in the country, the brand pulled all the right chords to target the younger athletes. Today, Under Armour has expanded, catering to head-to-toe needs of athletes for soccer, basketball, hiking and tennis, giving more established brands a run for their money.

Marketing for a Monopoly?

One might argue that Marketing is an expensive indulgence for Government-owned Corporations monopolizing an industry, such as National postal suppliers or Energy wholesalers.  But as technology is evolving, indirect market entrants are challenging the market share enjoyed by the traditional suppliers, and customer focus becomes increasingly critical.

Ergon Energy’s network arm is a Government-owned business, responsible for distribution of electricity to regional Queensland users.  Revenue is generated by selling to energy retailers, who then on-sell to consumers.  Ergon Energy’s costs include network construction and maintenance costs.

Emerging energy storage technologies are a major threat to Ergon Energy’s network business, and Ergon Energy can’t afford to sit back and watch while the market changes.  Ergon Energy must conduct a detailed segmentation to identify and target its most valuable customers, and develop a positioning strategy to ensure they have the right mix to retain these customers in the business. Unless it takes action to restructure its business model around the needs of its customer, Ergon Energy risks becoming an expensive and irrelevant relic of the 20^th century.

Over the last decade, alternative energy generation methods have been introduced into Ergon Energy’s supply plan.  Retail customers can support their energy needs using alternative energy generators, and Ergon Energy now has over 100,000 households with solar PV panels on their roof. Customers are credited for any excess energy produced and fed back into the network, and customers can purchase from Ergon Energy’s network when the PV system is not generating (i.e. at night time).  Customers pay a service fee, even if their net power usage is negative.  As battery systems grow in capacity and reliability and become more affordable, customers may be tempted to disconnect from Ergon Energy’s network altogether.  This reduction in market share will reduce revenue for Ergon Energy, but more importantly, will drive a thickening of their fixed costs, eroding margin from all customers.

The good news is that Ergon Energy’s retail entity already has the segmentation gig down pat.  Ergon Energy Retail contracted marketing specialist Experian to segment their 600k plus customers using their Mosaic model.  A mosaic segments markets on the basis of consumer lifestyle information and combines data from sources such as census, real estate databases, credit records, and research surveys, to offer a general segmentation model tailored to the Australian market.

Picking up the Retail segmentation would be a quick and affordable mechanism for segmenting the network business.  From here the Ergon Energy network business will be able to target the market segments that drive the highest profitability, and also those segments with the highest customer retention risk.

The Distanced Existence segment is big risk for the Ergon Energy network business.  These customers are households from farming and mining communities in remote and regional Queensland.   They have large houses and have above average to high energy consumption.  They are likely to make further capital investments for savings and efficiency, 18% have already installed solar panels.  Distanced Existence is 22% of the Ergon Energy market, making it a critical segment to retain.

The Ergon Energy network business should leverage the existing strengths of their current infrastructure network with the following offerings for the Exclusive Environ segment:

• Produce a battery storage product to use in conjunction with the network, to deter disconnection from the grid.
• Develop a time of usage tariff, rewarding off peak users.
• Promote companion products such as home automation switches to enable consumers to consume electricity at the cheapest times.
• Introduce a Brand campaign to highlight the reliability, value and relevance of a connection to the Ergon Energy grid.

If you were Ergon’s CMO how would you change your marketing mix to focus more on these customers?

Melanie Pollock & Melisa McIntyre

Quietly successful niche segment

Do you know the brand Hermès ? – Probably not as much as you know some of their competitors.
If you do not, you are probably not the only one. And if you have never purchased any of their products, you are definitely not the only one. Yet you might be surprised to hear that they were ranked by Forbes last year #13 most innovative company, the first fashion company, the first French owned company in the 2014 ranking.

Quietly, steadily successful
Have you ever seen any Hermès advertising ? Chances are, you have not. Yet their share price jumped from less 100 euros before 2011 to more than 350 today.
They rely on word-of-mouth and … sparkling unaffordable prices, the concept of the untouchable perfection fantasy, products most people cannot get, not only because of the prohibitive price-tags, but because Hermès deliberately maintains a legendary shortage of stock of key products like their 1980 Birkin handbag – which I had never heard of and am not interested in whatsoever. A version of the iconic handbag, sold for US$223,000 at a Christie’s auction in May 2015.
Discretion is elegance
Aligned with this discrete advertising strategy, their brand name is also not splashed all over their products like other luxury brands. They have enduring partnerships with other luxury brands which their target customer segment is likely to interact with according to the local market demands. For example they will associate with the Meridien hotel in New Caledonia because it is a destination for Japanese honeymooners. They also keep trademark boutique shopfronts that cannot be mistaken with any other in appearance but also feel: they are small, yes small, in a somewhat Parisian style, intimate, exquisite, always immaculate – and … often devoid of customers. Each store keeps items which are likely to appeal to the local market. They also maintain more affordable products more readily available, like perfumes, to reinforce the inaccessibility of their less visible larger products. You can indeed purchase some of their products online … but not the apparently highly sought after Birkin handbag.
Their financial reports show that their most profitable segment is Asia and particularly Japan relative to population numbers. Yet they fiercely defend the French family’s ownership of the brand and recently prevented an acquisition by LVMH. So unlike one of its other competitors, which has sold its soul over, Hermès is still owned and run by descendants of the original creator thus reinforcing a family story in keeping with the image of traditional yet innovative craftsmanship and ultimate quality they promote.
Ask and you will be granted
They do not push their products onto customers. Instead customers chase their products. And if you are willing to pay, they might even customise their product just for you. In the meantime, you can keep admiring, from a distance, their enduring pride in the quality of work well done.

What ‘drove’ you to have that car?

Cast your mind back to that first car you purchased or were given. Did it invoke feelings of excitement and freedom?  Or were you mortified at the piece of bolts and metal staring at you? For many of us our first car was not the car of our dreams, but that doesn’t necessarily mean there was anything wrong with the car at all, but merely an ill-fated relationship between you and the non-conforming target segment the car was meant to appeal to.

The question is; how do the car companies make the consumer fall in love with one brand, yet make us thumb our noses at others?

Answering this question involves us delving into the mechanics of marketing STP (segmentation, targeting and positioning). Segmentation involves marketers breaking the consumer market into groups with similar needs, effectively targeting those segments with products based on profitability governed by their companies’ strategic fit. This is something the car companies spend $$$ millions on trying to get you to drive their car out of the showroom!

Undoubtedly, the pioneer who opened the floodgates to automotive consumerism was Henry Ford. The Ford Model T which was launched in 1908 was hailed as the ‘universal car’, as it could be used in any situation and appeal to any type of customer who needed transportation. Many can’t argue that Ford’s advances in manufacturing enabled him to position the ‘Ford’ automobile as a mainstream brand with multiple uses which was set an attractive price point.

Over the models production life Ford decreased the unit sale cost i.e. sacrificing profit per unit sold by generating larger company profits through sales volume, opening the brand to new demographic segments and ultimately commanding a whopping 48% US market share by 1914! A feat any current day car company would envy.

In today’s environment, consumers are now faced with an enormous selection of competing automotive brands with their own product ranges (and varying level specifications within a product category), hence developing an effective marketing campaign to align with the segmentation strategy is critical.  Have a look below of current day manufacturers targeting specialised segments with varying success:

THE ‘HITS’:

Unbreakable/Bugger Hilux:  Targeted at the male ute driver who is after a tough car rather than flashy, the “bugger” Hilux campaign effectively demonstrated the message “unbreakable” and to this day, Toyota has continued to use “unbreakable” related themes as a platform to target the male ute segment.

The Cog (Honda Accord):  This campaign was targeted at the segment who drive Honda Accords (and their competitor’s equivalents) by aiming to alter the perception that their engineering is regarded as inferior to the elite European marques brands.  Upon release, this advertisement went viral and is well-known for the precision of the advertisement’s production.

THE ‘MISSES’:

Dame Edna promotes Toyota Avalon:  Toyota used a fictional cross dressing character for targeting large car segment drivers claiming that Avalon was a superior class car to their competitors.  In 2003 the large car market peaked at 203,524 sales, making it the biggest segment, accounting for 22 per cent of the overall market. Holden owned 43 per cent of that segment while Toyota’s Avalon could manage just 3 per cent.

General Motors using white alpha male to portray successful people drive a Cadillac (GM had filed for US. Chapter 11 a few years prior):  This GM Cadillac advertisement was targeted at the primary male driver in the household by projecting the image that successful hardworking Americans drive a Cadillac.  The advertisement offended numerous demographics and had minimal impact through relatively weak sales.  Consequently, Cadillac recently moved its ad business to a new ad agency.

So the next time you step into your ‘pride and joy’, think about this. Are you the consumer that fits the car’s intended segment perfectly, or have you out foxed the marketing prowess and carved out your own segment in the market?

We welcome your comments…..

MPK732 Group 30 – TOOI & EBASILE

Sources:

https://people.hofstra.edu/geotrans/eng/ch2en/conc2en/fordcostproduction1908192.html
http://www.sciencedirect.com.ezproxyb.deakin.edu.au/science/article/pii/S0142694X09000167
http://www.wiley.com/legacy/products/subject/business/forbes/ford.htm
http://smh.com.au/drive/toyota-always-aimed-to-be-number-one-and-soon-the-car-maker-will-be-the-only-one-20131213-2zd0d.html
http://www.urbachletter.com/Archive/Marketing_0307_HondaCog.htm

Target North – The AFL Agenda

Group 13 Simon Stout & David Erjavec

The AFL push to become the dominant national Football code has been the primary focus for the league since the expansion into Sydney in the mid 1980’s, when the besieged South Melbourne Swans were relocated to the Harbour City as a means of reinvigorating the then Victorian Football League. Further expansion included logical moves into Aussie Rules dominated Eastern states complimented with the initially foray into Queensland with the Brisbane Bears, which occurred in 1987.

 

The Bears struggled, to put it mildly, (being located in a Rugby League dominated market) and when the weakest of the remaining Victorian clubs the Fitzroy Lions was on the edge of extinction, the now AFL grabbed the opportunity to reinvigorate their Brisbane identity with the remnants of the team from Fitzroy, and in 1996 the Brisbane Lions were born.

In the 2000’s the two primary AFL northern clubs witnessed the ultimate success.The Brisbane Lions took an amazing three in a row (2001 to 2003) Premierships and Sydney Swans in 2005 taking one also. This solidified the AFL brand in the sporting landscape of the Northern capital cities.

 

After over 15 years of consolidation, the AFL’s desire for a greater presence in the high population growth areas of northern Australia’s continued to be an identified target market and with negotiations forthcoming for the Broadcast rights the AFL was keen to act. In 2009 an offer for relocation to the Gold Coast was made to another struggling Victorian based Club in North Melbourne, given the success of the Brisbane Lions, this was seen as the best opportunity to take a recognised brand into the new territory.

When North Melbourne rejected the reported $100m offer, the AFL was not going to let their push into the new territory wane, particularly with another burgeoning market in Western Sydney in mind.

The birth of two new expansion teams was brought to fruition, the Gold Coast Suns (2011) and Greater Western Sydney Giants(2012) were include as part of the now 18 club national competition, timely with the inking of a $1.2 billion broadcast deal that began in 2012.

To assist the clubs in building brand awareness and connection amongst their target markets, the AFL facilitated 2 major recruiting coups from their most obvious competitors within these particular markets. They built rapport with potential supporters through the addition of Rugby League icons to the new AFL clubs. The news that Karmichael Hunt to the Gold Coast Suns and Israel Folau to Greater Western Sydney Giants resonated throughout all sporting news outlets as the new recruits cut their teeth in their new codes.

With multimillion dollar contracts in place the Clubs built their newly formed brands around their prized additions.

Fast forward to 2015 and both Folau and Hunt have seen out their contracts and exited the game, both signing high priced Rugby Union contracts. Additionally, Hunt has left a trail of destruction with criminal proceedings related to illicit drug use and tarnished the Club and its young list with an alleged endemic drug culture.

 

The young talent that has been stacked at the two expansion clubs have both shown signs of great brilliance, but as is the case with young players, their physical and mental capacity to maintain this level over the course of a season is not quite there. Combine this with the ongoing issues surrounding the AFL’s equalisation model which is built around ensuring that weaker clubs are subsidised to remain competitive with the stronger ones and the question remains….Can the AFL sustain four teams in NRL dominated markets with the current 18 team structure?

http://www.couriermail.com.au/sport/afl/time-the-afl-stopped-treating-northern-clubs-like-outposts-writes-andrew-hamilton/story-fn842gep-1227199983756 http://www.theroar.com.au/2015/05/08/an-unwanted-storm-looms-for-the-afl-as-the-reality-of-expansion-bites/

A gamble or a sure bet?

By Raymond Hamilton and Sue-Anne Nicol

Are you male; single; 18-30 years old; employed full-time; educated; internet savvy and living in a metropolitan area? Well, in the words of Uncle Sam …

You are, a new odds on favourite, in the line of sight of  more than 2,650 online gambling businesses including Tom Waterhouse.com; TAB; Sportsbet; Bet 365; and William Hill.

But fear not…this is not a one horse race and you are not alone. Around 70% of Australians participated in some form of gambling last year (Australian Productivity Commission, 2010).

So with such a large audience, does the move to personalised online platforms negate a more traditional market segmentation based on demographics, geography or psychographics?  Or will a stock standard, mass marketing approach, where all customers are treated equally suffice in order to sate your ever-increasing hedonistic, risk taking gambling addiction?

Whilst most marketers are curious about the relative size of identified segments, it is perhaps not the size of the segment that matters so much, as to how profitable the segment is likely to be (Iacobucci, 2014, p37).  In 2012-13 the Sports betting turnover in NSW during 2012-13 was $1.079 billion (Australian Gambling Statistics, 2014).

When it comes to positioning, especially on the two dominant dimensions of quality (punting advice) and price (odds) the sports betting scene is further complicated by the growth of websites that compare odds across brands. Websites, such as ‘ways2bet.com.au’, ‘oddschecker.com’ and ‘top100bookmakers.com’, increasingly allow online customers to compare the odds offered by businesses, discouraging brand loyalty at the swipe of a smart screen (Deloitte Touche Tohmatsu, 2011).

To counter this, brand positioning statements are increasingly used to attract more, albeit short-term, punters and communicate why their brand is better than their competitors. Is there really a significant difference?

• Sportsbet – The most sophisticated online betting platform in its class.
• Tom Waterhouse.com – Four generations of betting means we know what punters want.
• Bet365 – The worlds biggest online sports betting agency.
• Tab.com.au – Australia’s No.1 racing and sports betting site. Government approved and secure.
• William Hill – The leading online betting site that provides everything a punter wants.

Strong brands drive value.  Do we talk about on-line sports betting generally or do we refer to Tom Waterhouse, TAB and Sportsbet?  Take the latter example, Sportsbet, for eaxampe.  Tripp established this business for $250K in 2006 and sold it only six years later for $338M (The Australian, 15 Jan 2011).

Saturday 3^rd October

Imagine this…. it’s quarter time in the AFL grand final. Hypothetically GWS are playing Sydney Swans (…a non-sports betting girl can dream, right?). There are only five minutes to grab your beer and a bite to eat. Meanwhile, the television continues (at a ridiculously high volume) to spruik the opportunities afforded by sports betting and nothing else. Market saturation at its best, so take your pick…

Same horse, different rider?

Remember – common segmentation (young; educated male;  high disposable income; no mortgage; educated; and tech savvy); common targeting (the ads are appealing to current and future sports betters in the break between the first and second quarter) yet moderately different positioning (are you after better odds? cash-out facilities? within-game betting options?). Same, same but different.

So which appeals to you?

Tom Waterhouse who has positioned himself as the leader in gambling advice backed by four generations of book makers (note the subtle use of nostalgic black and white references and direct voice over)?

Sportsbet with a jocular sense of social belonging AND male bonding?

TAB delivering mateship AND female admiration (remember…sex sells)?

Bet365 championed by Samuel L. Jackson as a credible spokesperson in a ‘high tech’ advertisement appealing to the technologically savvy?

Or William Hill and the lure of $100 million for a measly $5 investment?

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Dear Students,

Please ensure while posting that you select the relevant category/week/topic.

Kind regards,

MPK732 Team