CVS Kicks The Habit and Sticks to Selling Good Heath

February 25, 2015

Health and wellness are good for the mind, body, and soul, but they are also increasingly good for business. For a retailer like CVS, where pharmacy services are at its core, you’d think this sentiment would resound throughout the company; but a couple of years ago, CVS and its Senior VP of Corporate Social Responsibility, Eileen Howard Boone, realized the brand needed to reevaluate one prominent product on its shelves: cigarettes.

With cigarettes raking in nearly $2 billion in sales, and constituting 2% of CVS’s sales (as of 2012), it’s hard to imagine eliminating this revenue stream in a low margin business. However, in October of 2014, the company rebranded its corporate name to CVS Health and became the first major U.S. drugstore to remove tobacco products from its 7,600 stores.  “The decision to stop selling cigarettes was one that came with a financial risk. Eliminating $2 billion in sales is not something that is done every day by a Fortune 12 publicly-traded company,” Ms. Howard Boone told Forbes. While publically committing to reduce near-term revenue is a tough sell for a public company, Howard Boone and CVS Health considered other serious numbers, like the approximately 430,000 deaths that are attributed to cigarette smoking annually.

For CVS Health, the business case was clear.  Providing health care services and promoting health as a core purpose would not be sustainable while selling a product that so directly competes with that aim. To Eileen Howard Boone, it’s all part of innovating and reinventing the business for the benefit of the customers. “Despite this loss in revenue, we were willing to take that risk, to ensure a positive impact on the long-term health of our customers, clients and colleagues and to advance the dialogue on public health,” she explained. It is important to note that while some cities like Boston and San Francisco ban the sale of tobacco products in pharmacies, the decision by CVS Health was completely voluntary. But many interested parties were already advocating for pharmacies to stop cigarette sales, beginning with the American Pharmacists Association in 2010. Dr. Risa Lavizzo-Mourey, CEO of the Robert Wood Johnson Foundation, which focuses on public health, called CVS Health’s decision “a bold, precedent-setting move because it acknowledges that pharmacies have become healthcare settings,” and hopes it will serve as a model for other pharmacies to follow suit.

As Boone explained in a recent interview with Forbes, the company’s CSR strategy, appropriately dubbed “Prescription for a Better World,” is three-pronged: building healthier communities, protecting the planet, and creating economic opportunities. The decision to eliminate tobacco products is just the tip of the iceberg in building healthier communities. CVS has aligned themselves with community partners such as the American Lung Association’s LUNG FORCE a women’s support program to educate and promote awareness.  Like the many companies truly embracing the CSR spirit, CVS Health is ensuring its CSR initiatives go hand in hand with business strategy and key decisions that start at the top. “I’m very fortunate to have the example of our CEO, our board and our senior leadership team.  This year, they made a bold move that really showed me firsthand what it means to be a leader in the area of corporate responsibility.”

See Eileen Howard Boone speak at BRITE ’15 (March 2-3, NYC) and hear more about the the power of purpose and the strategic role of CSR as a business imperative.

BY JENNIE MILLER ’15


Under Armour Shows “I Will,” Becoming Nike’s Chief US Rival

February 18, 2015

On the last day of August 2014, NBA player Kevin Durant tweeted, “Excited and humbled to sign back with the swoosh.” This highly anticipated announcement came after months of courtship from both Under Armour and Nike, with each offering escalating bids for the coveted endorsement of the NBA superstar. Under Armour ultimately lost the bid to Nike – but its aggressive tactics left a big impression.

Under Armour CEO, Kevin Plank, stated, “If you have a deal, there’s no deal too big for us.” Under Armour topped Nike’s original bid of $200M, forcing Nike to increase its offer to $350M. “Do I take pleasure in that they paid $150 million more than they planned on paying? Absolutely.”

Though boastful, these words of confidence are rooted in business reality. In a world where Nike hasn’t faced significant challengers in US market share or endorsement deals, Under Armour is gaining momentum. At the end of 2014, Under Armour overtook Adidas and became No. 2 in US market share in the sportswear category. While Adidas’ sales fell 20-30% in apparel and shoes, Under Armour’s apparel sales grew 17%, and it’s relatively young line of shoes had a 34% bump in sales. Looking through the lens of brand strategy and marketing tactics, it is easy to see why.

Plank founded Under Armour to “build the better sports shirt” at a time when wicking materials were still rare in the category. The company continues to launch new products fueled by technological innovation thereby putting pressure on the competition. In the past few years, its portfolio has expanded to address more sportswear needs – launching shoes and a women’s line, for example. It also branded and incorporated its signature innovations (Infrared, Magzip) across its product portfolio. These efforts have created both clear brand differentiation and functional benefits to meet changing consumer expectations.

At the core of Under Armour’s brand lies its credo, a fierce, passionate call-to-action for competing and winning, encapsulated by its two-word tagline – “I will.” It has excelled at connecting its functional benefits to the emotional aspects of sports, and it developed a communications strategy that dripped with attitude and resonated with a well-defined consumer target.  Initially, this fierce image limited its appeal to a hard core male audience, but the company has ambitiously and effectively reached out to a wider base that includes women focused on fitness.

Its latest campaign, “I WILL WHAT I WANT,” has been a viral hit.  The ad features American Ballet Theatre’s Misty Copeland rehearsing while a voiceover reads a rejection letter she received at age 13 stating that she has “the wrong body for ballet.” Supporting the ad is a dedicated community website that allows women to post their fitness goals and share their progress with others.

In 2013, Plank also brought Under Armour into the fitness tracking marketplace — a category created, in part, by market leader Nike — with its purchase of MapMyFitness and its release of the Armour39 smart chest band. This January at CES, he formally launched Record, a fitness app designed to be device agnostic, extending the brand more widely into this arena. Working with HTC, the company plans to develop additional connected products for Record, but nothing formal has been announced. Plank is likely being cautious given Nike’s strategic move away from the Fuelband and additional hardware innovations.

Under Armour still has a way to go to challenge Nike, a brand that has also cultivated an image of power and achievement that resonates with athletes, both professional and amateur. On top of that, Nike demonstrated initial category leadership by developing technology enhancements and a social community of people focused on improving their fitness through Nike+. Some argue that Nike will remain unchallenged for years to come, but it is clear that the sportswear contest has shifted, and Under Armour has emerged as a powerful challenger.

BY NANCY LU ’16 and MATTHEW QUINT


How Ann Mukherjee (PepsiCo) Keeps Whetting Consumers’ Appetites

January 15, 2015
Ann Mukherjee (PepsiCo)

Ann Mukherjee (Pres., PepsiCo Global Snacks)

In the fiercely competitive and fickle beverage and snack business, you need a marketing leader with a deep understanding of the consumer landscape, an eye for innovation and the ability to delight consumers. One might argue that Ann (Anindita) Mukherjee is a “consumer whisperer” of sorts; she gets consumers and seems to be in lockstep with the latest trends in the art and science of marketing.

Mukherjee has built an impressive resume of accomplishments since joining PepsiCo and Frito-Lay in 2005, where she has advanced from VP of marketing to CMO at Frito Lay and is now President of PepsiCo’s Global Snack Group and Global Insights Group. Her leadership helped Frito-Lay reach $14 billion in sales with consistent annual growth rates higher than the global snack category as a whole.

Her most notable and enduring Frito-Lay campaigns include Doritos “Crash the Super Bowl” – the poster child for user-generated advertising –  and “Do Us a Flavor.” The “Do Us a Flavor” Facebook contest, which also leveraged consumers by helping them pitch ideas for new chip flavors, earned a 2014 GMA CPG Innovation and Creativity award. In its 9th year, Frito-Lay’s “Crash the Super Bowl”, the largest online video contest in the world, has upped the ante, with its grand prize winner not only walking away with a cool $1 million, but a year-long gig at Universal Studios. These consumer engagement tactics resonate with consumers, causing them to feel empowered to participate and seek out brands that encourage this behavior. The “Crash” ads “are really not talking about Doritos at all,” says Peter Daboll, CEO of television analytics company Ace Metrix. “They’re more like sitcoms. And viewers respond to them because they’ve got a certain authenticity, aren’t overly produced and didn’t go through five approval committees at the marketer or several remakes by an ad agency”.

But Mukherjee, who has been playfully dubbed the “Queen of Corn,” has focused on much more than advertising. As she told the New York Times in 2012, “Demographics, the aging population and changing ethnic mix, and bifurcating income are the trends reshaping the way people are eating,” Ms. Mukherjee said. “We’re snacking more often during the day, and we’re looking for snacks that are more satisfying physically and healthier.” To meet these various challenges, Frito-Lay launched new brands like Stacy’s Pita Chips and Sabra for the more health conscious, and expanded the Lays and Cheetos brands into dollar stores and other discount outlets.

In a speech at Snaxpo 2014, Murkherjee noted that, “Mass marketing no longer resonates with today’s consumer and it must be replaced by one-on-one marketing with dedicated focus on pre-shop behavior.” According to Murkherjee, research has shown that 76% of purchase decisions are influenced before consumers even start shopping, primarily in the forms of social media and consumer written reviews. As such, there are significant strides to be made in the realm of word-of-mouth marketing.

So what’s next for the now President of PepsiCo Global Snacks & PepsiCo Global Insights? The need to gain a better understanding of the ways that technology will continue to change the retail experience, and continued expansion into emerging markets. “When people think of Lay’s they think America, but actually we have some of our strongest audiences around the world,” Mukherjee says, “There are no borders anymore, we all know that. The world is global. Everyone knows that. The same is true for the potato chip.” Chew on that!

See Mukherjee speak at BRITE ’15 (March 2-3, NYC) and hear more about her efforts at PepsiCo and how to leverage the art and science of marketing.

BY JENNIE MILLER AND MATTHEW QUINT


Embodying the Craft Ethos: Bigger Doesn’t Mean Better

January 12, 2015
Heady Topper | The Unconventionals

Click for full podcast

At the Brand Center we firmly believe that a strong brand begins with a great product or service and is maintained with a clear purpose. The rapid growth of the craft beer industry is one testament to this. Listen to The Unconventionals’ latest podcast for a fascinating interview with John and Jen Kimmich, the founders of The Alchemist Brewery, a small craft brewery that embodies these sentiments. They are best known for producing Heady Topper, which is viewed as one of the best beers in the world.

The couple was running a small pub when, “People started taking our beer out… pouring pints into bottles, and capping bottles, and trading it,” John recalls, “I can’t believe some dude did that!” Hurricane Irene pummeled the company’s pub in 2011 and forced them to refocus all their efforts on building a production brewery. “We do zero marketing,” John states, “We have no marketing other than the picture on the can and what is in the can.” Despite the demand to expand, the couple isn’t interested in taking on investors, and remains happy and proud of how they help build and support their Vermont community.

The Center on Global Brand Leadership is a proud academic supporter of The Uncoventionals.

BY MATTHEW QUINT


Effectiveness in Mobile Display Advertising

October 22, 2014

mobile-advertisingOne might assume the types of companies that benefit most from mobile display advertising (MDA) are those that sell no-frills, everyday products like cleaning supplies. But new research from Columbia Business School’s Professor Miklos Sarvary has shown that short, promotional messages on mobile devices pack a powerful punch for big ticket items that entail a high level of consideration during the path to purchase—such as cars.

By 2016, global spend on mobile advertising is predicted to reach $36 billion. As marketers increasingly dedicate larger portions of their budgets to MDAs, it’s essential to have an in-depth understanding of when and why these ads are most effective.

In Which Products Are Best Suited to Mobile Advertising?, Prof. Sarvary, along with INSEAD’s Yakov Bart and the University of Pittsburgh’s Andrew Stephen, analyzed mobile display campaign data from a variety of industries spanning 2007-2010 and reaching nearly 40,000 US consumers. They focused on two primary psychological measures: (1) how favorable consumers’ attitudes are toward advertised products and (2) consumers’ intentions to purchase or use advertised products.

They identified product characteristics associated with MDA campaigns that boost consumer attitudes and purchase intent and found that mobile ads are most effective in reminding people of a purchase decision for highly-involved products.

“If you’ve been thinking about buying a car, you already have plenty of information in your mind about it…” Sarvary explains. “The ad’s strength is not adding new data, but reminding you what you already know and making you think about the product again.”

Download the study to learn more about mobile display advertising and its effects on consumer attitudes and intentions.

BY ALLIE ABODEELY


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