KODAK CASE

INTRODUCTION

Kodak, created in 1880 is a multinational corporation and a diversified photographic, imaging, equipment manufacturer and supplies, which include: chemical and health-care products, and information systems.
Widely recognized as a tightly managed company with superior international marketing, this company has been overwhelmed by disruptive innovation on its market and had to deal with the intensive competitiveness. Despite Kodak’s attempts to overcome this situation launching new projects, researches and investment, the company announced its bankruptcy in 2012.
Now Kodak has reborn with a new company name and has learnt how to deal with the mistakes that they committed in the past.
The purpose of this case study is to understand the company’s previous mistakes regarding the market tendency, the competitiveness and customer’s needs in order to find the best solution.

 

I/ BACKGROUND

 

1. Creation:

In 1880, a gentleman called George Eastman, of the Eastman Dry Plate Company, was busy inventing single-shot pieces of paper that were covered in a photographic emulsion. A fellow photographic expert, William Walker, joined Eastman’s company in 1883, and in 1885 they invented a holder for a roll of Eastman’s photo plates.

1. Foundation :

In 1888, Eastman trademarked the word “Kodak”, which was originally just the brand name of Eastman’s cameras, but the brand became so popular that the company name was eventually changed to Eastman Kodak.

1. First Camera:

– Accompanying the new trademark, Eastman released The Kodak Camera(1) in 1888. The camera came pre-loaded with a roll of paper film that could take 100 photos, and you had to send the camera back to Eastman to get it developed and re-loaded with more film.

– By 1897, a folding, pocketable camera had been invented.

– Then, in 1900, Eastman released the Brownie(2), an incredibly cheap, cardboard-box camera that was cheap enough to buy for $1 and operate, that it instantly became a mass market success; the first camera to do so. In essence, the Brownie was so cheap and easy to use that it invented the concept of a snapshot(3).

1. Eastman Death and Kodachrome(4):

– In 1932, because of a long illness Eastman committed suicide after leaving most of his wealth to the University of Rochester. The note he left read “My work is done. Why wait?”
– After Eastman’s death, Kodak continued pioneering consumer products, with color film in 1935 and developed Kodachrome, the first successful mass-market color film. Kodachrome came in just about every format and enabled the creation of color movies and rich color photos in print publications.
Kodachrome was actively produced for 74 years until it finally fell victim to the digital supremacy in 2009.
– Through the years, Kodak had led the way with an abundance of new products and processes that have made photography simpler, more useful and more enjoyable.

1. Film and basic camera:

– By the end of the ’60s, Kodak had the entire photography industry sewn up; it had sales exceeding $4 billion (close to $50 billion after inflation) and 100,000 employees. So the company decided to be faithful to their basic and most profitable products: film and basic cameras. Kodak also produced a camera used by the astronauts of Apollo 11 on the surface of the Moon.

1. Kodak’s diversification:

– By the late 1980s, Fuji Photo Film Co. of Japan had come out of seemingly nowhere to take over huge portions of Kodak’s market share in film. Kodak management began thinking about photography as a fading business – and decided to diversify by buying a big pharmaceutical company. Only a few years later, Kodak abandoned the drug company and, finally, began to invest in digital imaging products. Those were displacing filmed X-rays(5) in medical practice. And it started to push development of its 1976 invention, the digital camera.

1. Permanent innovation :

– In 1976, Eastman Kodak researcher Bryce Bayer created the Bayer color filter array(6). This filter transferred over to digital photography, however, and now almost every digital sensor uses an RGGB Bayer filter to capture images.

–  In 1979 Kodak was the first company to research and create an efficient organic light emitting diodes(7) (OLED), and in 1999, after 20 years of continued research, Kodak teamed up with Sanyo to produce the first OLED display.

1. George Fisher and his action:

-The second man to mark Kodak in a significant way was George Fisher, who took up the position of chief executive in 1993. The main fear was that digital technology would make its conventional film business obsolete. Its growth became slower, and it was burdened with huge debt.

– But by late 1997, when Mr. Fisher’s contract was running out, Kodak was again in a financial mess. The company was suffering from a strengthening dollar and growing softness in overseas markets; there was a manufacturing high-cost, and its growing portfolio of digital products was losing hundreds of millions of dollars annually.
However, Mr. Fisher made numerous mistakes:

– A software business he bought has never made money.

– In November 1997 he unveiled the restructuring plan to save $ 1 billion, in part by cutting 19,900 jobs.

– And they say that Mr. Fisher pumped money into far too many digital products.

1. Digital Camera:

– In late September 2003, the 122-year-old company announced that it was going to concentrate its efforts on digital cameras for consumers, on digital imaging products for medical care and commercial industry. There was irony on the announcement, because Kodak holds patents for inventing the digital camera in 1976. The company just never got around to develop the technology, because they though the money to be made from its traditional business based on old-fashioned photographic film was so much bigger.

1. First strategies and problems:

– Mayor investors met to discuss completely different “strategies to maximize shareholder’s value”:

-One would be to forget about the digital investment, restore the dividend to its high level and continue enjoying the cash

flow out of the fading film business.

-Other Shareholders have raised the idea of splitting Kodak into separate companies, for consumer, medical and commercial products.

– Mr. Carp argued that trying to capitalize on the film business would only accelerate Kodak’s decline as many of the retailers, photo shops, and radiologists Kodak supplies would abandon it for suppliers better able to help manage the transition to digital.
But he waited until the last minute to embrace the digital change: Kodak’s rival Fuji Photo Film Co. started sooner, had better camera technology, and focused more on minilabs, which were expected to dominate the processing market.

1. Carp and his action:

-Mr Carp ran the company for the long ride down. Confident about the company’s growth strategies he insisted that the company was on the right track: the stock bounced up after he revealed his plan: he expected by 2006, revenues from the digital business would account for 60% of Kodak’s revenues, overcoming traditional 40%. However, the revenues did not do that well.

1. Financial strategy:

– Focused on generating cash to support the underlying value of the company, pay down the debt, and enable prudent investments for growth.
– In the process, they bought back 7.4 million shares of Kodak stock. During 2002 there was a worldwide workforce reduction, with the final phase to be completed in 2003.

1. Kodak’s attempt to succeed :

– Digital camera: Early 2004, Kodak announced the cameras sales termination from the advanced photo system(8) (APS introduced in 1996)
– Termination of photo paper: The end of 2005 Kodak quit the production of black and white photo paper.
– By 2008 Kodak reduce 12.000 to 15.000 of the 60.000 jobs at this time.
– Agreement with Sakar: In March 2009, Kodak entered into a license agreement with Sakar International, which will commercialize camera, photo and computer equipment under the Kodak brand.
– In 2009 ceased the world’s production of the Kodak Kodachrome after 74 years and decades of success.
– Changes and notice: Until 2010 Kodak launched during the digitization of photography, several restructuring, sales of business sector and strategic redirection behind. On that process the number of employees fell dramatically and Kodak focused on the professional photo-finish and printer range.
– In December 2011, the Kodak’s stock was under a dollar, and the company got threatened with exclusion from the NYSE and so the loss of subsequent investors. Bankruptcy rumors pointed Kodak back as speculation.

1. Bankruptcy :

– The 19th of January 2012, Kodak filed bankruptcy protection in the United States District Court according to Chapter 11 for the Southern District of New York.

– In February 2012, Kodak announced that it would cease making digital cameras, pocket video cameras and digital picture frames and focus on the corporate digital imaging market.

– In August 2012, Kodak announced the intention to sell its photographic film (excluding motion picture film), commercial scanners and kiosk operations as a measure to emerge from bankruptcy.

1. Action and changes:

– In January 2013, the Court approved a financing plan to help the company to emerge from the bankruptcy by mid-2013.
– Kodak sold many of its patents for approximately $525,000,000 to a group of companies (including Apple, Google, Facebook, Amazon, Microsoft, Samsung, Adobe Systems and HTC) under the name Intellectual Ventures and RPX Corporation.
– On September 3rd, 2013, Kodak emerged from bankruptcy having shed its large legacy liabilities and exited several businesses.
Foundation Kodak Alaris:

– Kodak Alaris( established in London) arise from the acquisition of the personalized imaging and document imaging of the Kodak’s bankruptcy for 650 million US-dollar. As a part of this acquisiton 4,700 people from 30 countries should switch to Kodak Alaris. They expected annual sales of 1.3 billion US-dollars.

– Only the photo-paper is directly produced from Kodak Alaris, the photo films are prepared by the former parent company Kodak in the US and only distributed by Kodak Alaris. Kodak Alaris has received a perpetual license to use the brand name Kodak. On the same day left the former parent company Kodak the bankruptcy proceedings and will focus now only on professional printer business.
2014 Kodak        
-The Board of Directors of Eastman Kodak Company has elected Jeffrey J. Clarke as Chief Executive Officer and a member of its Board of Directors.

II/ Case Analysis

 

A/ Kodak’s market

It is essential to compare Kodak’s evolution to its market, so a company can decrease its market share or profits, as long as the market decreases more than it. Even though the company is able to testify an average growth its economy can be in trouble, as the average market growth increase more or faster. Before analyzing Kodak’s market share evolution, it’s important to introduce the market structure.
1° The market’s structure

Let’s remind that at the beginning, before the bankruptcy, Kodak was focused on the consumer film, printing and cinema activity: the « photography » market (un-professional customers).The average growth rate of the US photo market is 2% annual unit since 1970.

But it is appropriate to analyze this market structure deeply, and the several submarkets that it involves such as digital and film cameras.

This graph determines three main points in camera’s market:
– Film cameras (and film itself) peaked in roughly 1998-1999.
– Digital cameras were slowly adopted between 1995 and 1999, but 1999 represented a sharp growth inflection for the technology (this is likely due to the rise of the broadband internet from 1999 and forward).
– Stand-alone digital cameras peaked in 2007 – the year the iPhone was announced.
è Globally, we can conclude that there was a tendency towards digital cameras which replaced traditional films.

2°The consumer tendency:
In order to determinate the market, it is essential to analyze the consumer tendency:

– From the late 90s until 2008 (which is also the year when the phone’s camera became mainstream), the digital camera market in the U.S. grew from 4.5 million units shipped in 2000 to 28.3 million units in 2007.
– Specifically, digital grew and the revenues drop as photo printing went to digital: while the cost production is higher for digital, consumers have shown a clear preference for it.
èTendency to digital

3° The market share

– During the 1980’s, Kodak faced intensification of Japanese competition in photography and a continuing decline in product demand as Fuji, Konica, Polaroid, 3M company  and others challenged Kodak’s dominance on the market: these lower priced brands such as Konica and Fuji were gaining market share faster than Kodak.
– Although Kodak tried to focus on digital image instead of film, printing photos and movies, the advance of its competitors and the arrival of Canon and Nikon, in 2006 on the digital market, have not allowed Kodak to recover its 76% share of the market, in 1986 fell under 70% and in 1995 to end at 8% in 2010.
èKodak loss of market share

B/ Kodak’s financial report

Kodak, which is strongly linked to its buyers’ bargaining power, who have different product options according to the lowest price, had to deal with more than 100 years with potential new entrants in the market and with substitutive product. As the following financial statement reveals: “Kodak was unable to defeat the intense market competition”.
Exhibit 1: Evolution of the Income statement

 

-The gross profit reflects the volume of business generated by the current activity of the company and allows the reader to appreciate the dimension:

àThis exhibit highlights the culminating power of Kodak in 1999 and its unavoidable bankruptcy in 2012.

-Net income reflects the profit and loss of the company:

àKodak financial result
Exhibit 2: Evolution of the balance sheet

-Net current asset is one of the most important indicators from the balance sheet: Current asset – current liabilities, it determines whether the company’s balanced resources are sufficient to finance the investment cycle. When a surplus is generated it is possible to finance a portion of current assets, that is to say, the working capital needs to be generated by the activity. Therefore, the more score, the more the company demonstrates a better financial situation:

àThis reinforces the Kodak’s financial lift and seems to exclude the potential business closure.
It is true that market developments didn’t make the task easy to Kodak, and to advise it in the best objective to recover from its fall, it is essential to find out why it fell to learn from the past:

1. C) Failure theories:

1° Kodak’s location:

The analysis of Rich Karlgaard argues that the failure of Kodak can be related to its Rochester location:  When you study the history of great American companies that stumbled and failed, or only partially recovered, you see how difficult it is to overcome the mindset of your immediate surroundings. Businesses located in places where success is the norm, and innovation is built into the ecology, have a better improvement chances. According to Karlgaard, that was, and is, easier to do in Silicon Valley, where laid-off can more readily find new jobs, than in a small city like Rochester, whose population is now at 210,000 plus. Indeed the impact on a small city and the multiplier effect of lost jobs, axed all at once, could turn into a civic disaster.
2° Disruptive Innovation:

Clayton Christensen in his book “The Innovator’s Dilemma”, which is subtitled “when new technologies cause great firms to fail”, show that once-successful companies went under not because their managers made bad decisions, but because they kept making the same kind of decisions that had kept their customers happy for decades.  In doing so, they overlooked products that other kinds of customers might one day want, thereby missing untapped opportunities that eventually turned into industry-transforming ones. Christensen estimates that Kodak was “a global company that completely dominated its industry and was destroyed by a disruptive technology: digital imagery”.
3° The Marketing Myopia:  Poor market listening

Conventional wisdom suggests that good management involves staying close to your customers. And that is what management at Kodak did. Rather than allocating resources towards the internal development of a risky, digital camera that their mainstream customers had little interest in, the company funded projects that enhanced its position within the lucrative film market. Management at Kodak was constrained by the needs of their established customers. That is fine when making incremental improvements to existing products, but it is fatal when dealing with disruptive technologies:
During 80-90’s years, we entered the digital age. Film and photo prints on specific paper were much rarer: the consumables sales drop is staggering. Kodak then develops its first digital camera, but prefers to stay focused on its core products. The company does not really know how to approach the digital switchover: is it a fad or a real transformation of the market? The group’s leaders think it’s a fad that will not last. They prefer then play the “security card” rather than analyzing their market to understand this “digital revolution” in depth. Kodak does not take the digital revolution, “They had gold in their hands, but do not know how to use it,” declared the former director of Kodak France. Thus begins a long and perilous descent into hell for the Kodak group.
4° Kodak’s failed business strategy:

“When there is a disruptive technology, firms are often unable to capitalize on the invention for fear of cannibalizing existing product sales. Kodak’s primary strategy was to sell high margin film. Known as the razor blade strategy, the company developed inexpensive cameras as a means to an end: their purpose was to facilitate lucrative film sales. In summary, its digital camera innovation was held back because of management’s concerns about the negative impact on film sales. When Sony launched a filmless digital camera in 1981, fear permeated Kodak’s executive suite. Specifically, over the next decade, Kodak invested approximately “$5 billion—or 45% of its R&D budget—in digital imaging,” according to a 2005 Harvard Business School case study. Unfortunately, with disruptive technologies such as digital cameras, the first-mover advantage is too great for late entrants to overcome. By the time Kodak realized that their razor-blade business model was dead, the horses were already out of the barn. The company was unable to catch-up to the competition.” Source obtained from businesstheory.com the article “Lessons learned from Kodak’s fall”.

 

1. D) Leadership evolution and impact

 

Relevant CEO in Kodak’s history achievements and characteristics:

1. The very first one: Henry A. Strong (1884-1919), was a photography businessman.
2. Father and promoter: George Eastman (1919-1925), was an innovator and entrepreneur who founded and popularized the Eastman Kodak company. He was also a philanthropist contributing in many different ways to help the American community.
3. Best market share, almost monopoly: Walter A. Fallon (1972-1983)
4. Richest time ever in the company: George M. C. Fisher (1993-1999)
5. Path to an imminent bankruptcy: Daniel A. Garp (2000-2005)
6. The dodged bankruptcy finally steps on Kodak: Antonio M. Peréz (2005-2014). Now a days, Special Advisor to the Board of Directors. Mr. Perez was Chief Executive Officer of Kodak from 2003 to 2014. Mr. Perez worked for 25 years with HP, where he held a variety of global leadership positions. After HP, Mr. Perez was President and Chief Executive Officer of Gemplus International. Mr. Perez has been special advisor to the Board since March 2014. He is an optimistic person, passionate and based on innovation.
7. New name, new time, new opportunity: Jeff Clarke (March 2014- Present). His combination of strengths and experience in technology, transformation, finance, operations, and international business is precisely what Kodak set out to find in the next leader of Kodak. Because those personal characteristics can lead the company to success. His past leadership positions have included businesses selling hardware, software and services, and printing – with B2B customers as well as consumers. “We feel extremely confident about Kodak’s prospects with Jeff at the helm,” said James V. Continenza, chairman of the board. “I thank Antonio Perez for his excellent leadership of Kodak through its complex and successful restructuring, and for solidifying our relationships with our valued customers since that time”.
8. E) Kodak situation after bankruptcy

The New Kodak
-Kodak has based his commercial markets in a two-year restructurating. The plan is to keep reducing costs and erase non-core business, such as spin offs like the new Image of Kodak that operates as Kodak Alaris controlled by a new owner.
-Today, Kodak is leaner, financially stronger and ready to grow. The company is prepared to take advantage from the digital transition. Kodak is working in the growing demand for graphic communications around the world, especially in emerging markets; and dynamic growth in the market for printed electronics, sensors, fuel cells and other printed products with functions beyond visual communications.
Imaging Innovation for Business
-Kodak has transformed itself into a technology company focused on imaging for business. Today’s Kodak provides:

-World-class R&D, based on Kodak’s unique strengths in the materials, imaging and deposition sciences.

-Breakthrough products enabling customers to achieve transformational improvements in quality, productivity and sustainability.

-A broad solution set across graphic communications, product goods packaging, functional printing enabling.

-Software and professional services businesses use to redefine information flow and security.

Building on a Technology Heritage
–Kodak’s current portfolio is based on deep technological expertise developed over the years in science materials and digital imaging science.
-Using this expertise, the company that delivered the first film roll is now delivering leading solutions for today’s business customers. These include: Digital Offset Plates that reduce or eliminate the consumption of energy, water and chemistry Flexographic systems that make packaging more vibrant and eye-catching for shoppers. Continuous manufacturing processes to mass-produce touch screen sensors / Printing plates that reduce environmental impact by eliminating use of chemistry and processing.

Kodak Alaris:
-Kodak Alaris consumers products and services: Kiosk, consumer films, single use cameras, Mobile Apps, and Tips and projects Center
-Kodak Alaris business products and services:
-Document Imaging: enable customers to capture and consolidate data from digital and paper sources, understand and extract
valuable insight from the contents, and deliver the right information to the right people at the right time (scanners, services…)
-Event Imaging solutions (expertise, technology).
-Professional photographers & Labs (Professional film & products)
-Retailers and photofinishers (thermal printing, innovative papers…).
–Kodak Alaris with Insight:
Kodak Alaris made a partnership with Insight Health care, which is a company based in providing solutions and services to the old population :
Document Scanners: capture and convert vital patient Health information with speed, efficiency and reliability.
Info Insight: reduce information management costs with exceptional classification and handling it is a flexible and capable artificial intelligence.
Info Activate: obtain and organize information to streamline you healthcare team’s share point information and workflow.

 

Early results        
It is too early to know if Kodak’s new business plan will succeed. The company ended 2013 still in the red zone. Kodak’s overall sales for 2013 came in at $2.35 billion. Revenue for the most recent quarter came in at $607 million, down from $739 million a year earlier. Sales, which fell 12% at the company’s graphics, entertainment, and commercial films business, were not enough to prevent a net loss of $63 million.

On the good side, net loss is $402 million less than a year ago. 2014 is a key year for the company, and investors should monitor both revenue and profitability figures in detail. The company is not forecasting a major turnaround, and it forecasts sales volume for 2014 are in the $2.1 billion-$2.3 billion range.

 

 

 

 

 

 

 

 

 

 

III/ Kodak’s Problem

How Kodak can learn from its mistakes and wrong decisions to make a strong come back to the market?

In other words: How can the company ensure its existence in the current business with the changing industry trends? What should Kodak do to maintain its competitiveness in order to effectively compete with existing and potential competitors?

 

IV/ Kodak’s Option

-Hire expert in managing conglomerate company.
-Create control mechanism to motivate executives to improve their divisions’ performance.
-Introduce nutritional supplement product in order to capture the growing opportunity in healthcare industry.
-Partnership
-Implement cost cutting strategy among all divisions in order to enhance company efficiency.
-Develop training program in order to become more market oriented.

-Close the business.

V/ Criteria

To purchase the best option, Kodak has to consider:

– The market competitiveness and competitors.
– The economical purpose: keep making profits.
– The actual « Photo market », the disruptive technological innovation.
– Involving customer’s needs.
– The image of the company.

 

VI/ Conclusion and Action plan

-Discontinue unprofitable product.
-Change middle to high-level management.
-Launch new and innovative product

-Innovation: focused in imaging innovations and business, the result is an extensive portfolio and differentiated.

-Stewardship:  responsibly managing all company’s assets, including Kodak’s people, facilities and the products and services it sells. Contributing to a culture of sustainability with movements like Kodak Cares, Corporate citizenship, and Global diversity.

-Engagement: looking beyond company’s direct sphere of influence, reaching out to a variety of stakeholders and participating in the larger arena to explore long term opportunities for Kodak and the world community.

-Move to another business segment such as movie and entertainment
-Focus on high potential products (Kiosks and mini-lab; online services such as photo printing and sharing): Kodak could have become a social media powerhouse if it had successfully convinced consumers to use its online service to store, share and edit their pictures. Instead, Kodak focused too much on devices, and lost the online battle to social networks like Facebook.

-Emphasize on niche market: medical market and professional.

-Transform executive and management teams: slowly eliminate poorly performed executives and who don’t fit with company’s divisions acquired; replace with people who have expertise and industry knowledge.
-Decentralized decision making authority to each division: conduct preliminary analysis to get the most efficient flow of information between divisions; shift decision making task from centralized manager to each division manager then evaluate its effectiveness in responding to the competitive threats and changing trends.

 Sources and links:

http://businesstheory.com/

http://www.kodak.com/ek/US/en/Home.htm

 

 S S, C G, M P

Case Study: McDonald’s

Who has never heard McDonald’s? This company is well-known for fast food and the first company that established the standardization of fast customer services, manual as well as multi-store network, all of which impacted on the business field, especially, fast food industry. It is amazing contribution that recently the reference rate of exchange, which is called “Big Mac Index”, has been started to use to see the economy all over the world. McDonald’s Corp (MCD.N) Chief Executive Officer Don Thompson said the company that now serves some 70 million customers a day worldwide has at various times during its history faced questions about whether it is still relevant to consumers, who are now craving more fresh and unprocessed food. These days, however, the sales of McDonald’s are decreasing gradually. On 21^st, October in 2014, McDonald’s Corp. (MCD), the world’s largest restaurant chain, has announced that the third-quarter net profit fell 30 percent, which is $1.7 billion, as U.S. sales slumped for the fourth straight quarter. And also 30 percent of net profit which is $1 billion comparing with that of last year fell in this third-quarter.

What has led them to suffer from the management? There are some internal issues. One of them is the increase of competition. In addition to existing fast food rivals like Burger King and Starbucks, there are new rivals which is called fast casual food like Chipotle. The customer rotation of Chipotle is faster than McDonald due to the lower number of options. Chipotle, known for using pricier antibiotic-free meats and organic produce, are taking a bite out of McDonald’s market share. A several days ago, Chipotle reported an eye-popping 19.8 percent gain in third-quarter, same-restaurant sales. Other fast food companies launched new products. Burger King Worldwide Inc. (BKW) recently started selling a 10-pack of chicken nuggets for $1.49, while Wendy’s Co. is touting pulled-pork sandwiches. These components cause McDonald’s not only to get, but also to keep fewer customers. On the other hand, McDonald’s needs to respond to the rise in price of ingredients and labor costs. They have had no choice but to raise the price of hamburgers because they don’t have any good solution so far. Finally, the sales in existing branches decreased 3.3%.  Labor costs seem to be the more difficult issue to solve. On 4^th November, workers for fast food demonstrated to make the company pay more than $15 per an hour for them 150 places in America. McDonald’s is the biggest target because it has most branches in America.

These are also external issues, one of which is the use of rotten chicken imported from China to Japan. Also, Japanese branches sell new products with more expensive prices than that the company decided in advance. These facts let customers embrace disbelief of security and trust, which has resulted in decreasing the sales which accounts for 25% in Japan. The most net profit in Asia is generated in Australia and Japan, so this problem gave the company serious damage. The sales in August is one-quarter than same month last year. Totally, McDonald’s Asian sales fell about 10%. In Russia, McDonald has gotten difficulty in selling their food due to the political issue in Ukraine. Four branches have been closed as the response to the American economic sanctions to Russia. In addition, recent economic crisis in Europe caused McDonald’s Europe sales to fall 1.4%.

Chief Executive Officer Don Thompson said in a statement.

“The internal factors and external headwinds have proven more formidable than expected and will continue into the fourth quarter,” Thompson said in the statement. “These significant challenges call for equally significant changes in the way we do business.”

To win more diners, McDonald’s said today it’s trying a new global strategy that includes investing in store remodeling and technology as well as mobile ordering and payments. Sales were hurt in China and Japan after a probe into meat supplier OSI Group LLC caused food shortages. The affected markets make up about 10 percent of consolidated revenue, McDonald’s said in August. The supplier issue reduced profit in the quarter by 15 cents a share. The company also is facing pressure in Russia, where hundreds of its stores are being inspected by consumer-safety regulators. Russian courts have temporarily closed nine restaurants, McDonald’s said in a statement on its Russian corporate website. Closings there and in Ukraine reduced profit by 1 cent a share.

In conclusion, it is true that there are some tough issues including politics, but McDonald’s still has great chance to overcome current conditions. It is time to radically reconsider the company itself if they really want to get back into the competitiveness. Otherwise, it is just going to go bankrupt and many people are going to lose jobs, which makes the society disorder. That’s why they should approach those issues not only for McDonald’s.

 

http://www.bloomberg.com/news/2014-10-21/mcdonald-s-profit-drops-30-as-u-s-sales-slump.html

http://www.usatoday.com/story/money/business/2014/10/21/mcdonalds-fast-food-restaurants-earnings/17652697/

http://www.chicagotribune.com/business/breaking/chi-mcdonalds-earnings-20141021-story.html

http://www.ibtimes.com/mcdonalds-reports-30-drop-third-quarter-profit-after-chinese-meat-scandal-1708829

McDonald’s Third-Quarter Profits Drop 30%

http://beforeitsnews.com/financial-markets/2014/10/mcdonalds-reports-30-q3-profit-drop-on-weak-u-s-china-markets-2782336.html

 

Venture Capital. Yes or no?

Venture capital

Starting up a company requires money to get it off the ground. There are several ways to get the funding you need: personal savings, family and friends, a bank loan, venture capital, business angels, crowd funding, etc.. Whereas the first three funding methods have limitations unless you are already a wealthy individual, venture capital offers large quantities of money to help private, young and fast-growing companies with their start-up expenses. In broad, venture capital differs from traditional financing sources in that venture capital typically:

• Focuses on young, high-growth companies,
• Invests equity capital rather than debt,
• Provides a long-term equity investment in turn for a share in your business,
• Takes higher risks in exchange for potential higher returns,
• Has a longer investment horizon than traditional financing,
• Actively monitors portfolio companies via board participation, strategic marketing, governance, and capital structure.

Venture capitalists are not the same as banks. Banks lend money to numerous entrepreneurs, whereas VCs only have a limited amount of capital to invest across a set of companies. The range of their capital typically available is around $500,000 to more than $30 million. Furthermore, VCs are effective at adding value and are dedicated to helping your company grow. They provide feedback and are willing to keep investing in your company when you’re doing well.

Another advantage of working together with VCs is that the more closely the ideas of the investor align with your ideas (when you want the same outcomes), the less you are going to have the problem of ending up in situations where you don’t want the same outcome. But it’s not always easy to convince a VC to invest in your company. VCs are very picky when it comes to allocating their capital, but in return you get their full commitment.

Venture capital can be the right funding method for young, fast-growing companies inasmuch as they provide a financial cushion. This long-term or “patient capital” gives companies the time to mature into profitable organizations. It’s an active form of financing that helps companies grow and achieve a greater return on investment.

Evidence to support this hypothesis can be found in the following three US-based start-up companies: YikYak, Uber and Airbnb

The online app YikYak was launched in November 2013 with funding of the company Atlanta Ventures. Six months after the application was released, it became the 20^th most downloaded social media app in the United States. As of April 22, 2014, YikYak announced they had raised $1.5 million in funding from various companies. This funding was intended to enhance the app, and to increase the amount of users both in the United States and overseas. On June 30, 2014, YikYak had raised over $10 million from previous investors.

Uber is a ride-sharing service based in San Francisco. The company received venture funding in late 2010 from a group of investors in Silicon Valley. In early 2011, Uber raised more than $11.5 million in Series A funding led by Benchmark Capital. In late 2011, Uber raised an additional $32 million in funding from several investors bringing their total funding amount to $49.5 million. As of September 16, 2014, the service was available in 45 countries and more than 100 cities worldwide, and was valued at more than $15 billion.

Airbnb is an online community marketplace for people to list, discover, and book accommodation around the world. It was launched in 2008 and had six rounds of funding from eighteen investors. Airbnb collected 794,8 million dollars from funding and are know worth over ten billion dollars. They have now over 500,000 listings in 33,000 cities and 192 countries.

As proved by the three real-world examples, venture capital can be used by other young, fast-growing companies to mature into profitable organizations. It offers a stable funding base when you’re performing well, this in turn encourages start-ups to keep exceeding expectations. Companies are able to expand continuously due to the fact that VC provides a longer investment horizon compared to other funding methods. Additionally, VC can help young companies grow and expand really fast, giving the owners the opportunity to sell their profitable business at a high price, because companies that are growing at a fast rate are worth more than companies that are growing at a slower pace.

Sources:

National Venture Capital Association

money.howstuffworks.com

huffingtonpost.com

sba.gov

crunchbase.com

YikYak.com

Uber.com

Airbnb.com

By Anna, Manou and Priscilla

Skyter

To those in search of a fun, cool and exciting life, Skyter brand provides the perfect combination of transportation and amusement using brand new technology that breaks limitations and ensures users a safe and exciting form of transportation.

Skyter is a brand selling alternative transportation devices. Namely, the most popular product in the brand’s portfolio is the Jet Board. The Jet Board looks like a combination of a surfboard and a skateboard. However, where skateboards have wheels, the Jet Board floats, and where the surf board can only be used in water, the Jet Board can be used on land as well. The board is able to float one meter above the ground, using ventilators to generate strong flows of air that lift the board into the air. To maximize safety for the user, the Jet Board features a leaning bar and pressure sensitive fans on the bottom make sure that every side of the board is evenly balanced. Maximum speed is 30 kilometers per hour. The unique floating feature enables users to ride the board anywhere, and it is also what makes Skyter very different from any other amusement/transportation brand.

The logo emphasizes the idea of flying – as easy as standing on a cloud – and the colors represent the element of fun and amusement the brand is supposed to give users when they purchase a Jet Board. The letters forming the word “Skyter” are slightly rough, which is supposed to symbolize the action element of the products sold by the brand. Furthermore, the name “Skyter” is a fusion of the words “sky” and “skater”, which points to what the brand makes: skateboards that are used above ground. In other words, it hints the floating feature.

Of course you can enjoy like exisiting boards, but these functions enable you to use Skyter as a tool of transportation. Our target audience is mainly young people. Our brands category is amusement.

The logo emphasizes the idea of flying which seeks to awaken customers’ imagination and tempt them to buy the product. Also, this lets them imagine an enjoyable life.

Our target audience is mainly young and adventurous people who look for alternative solutions and are willing to spend money.

The brand is different from other transportation and entertainment devices, allowing the users to get around fast and in a convenient, easy and fun way. Also, unlike normal skateboards, the fact that it is floating and pressure regulated on the sides makes it much safer to ride the Jet Board with minimum risks.

By choosing Skyter, users are provided with high-safety casual transportation that easily takes them around traffic jams the way a skateboard or a scooter might. Skyter’ technology is brand new and has never been seen before, which enables skaters  to get around even faster than before.

They can enjoy more in their life and if they combine with other transportation, they are able to go to your destination faster by avoiding traffic jam.

Our product appeals to young people, who are still not too worried about all the risks the world　has,　and　who　are interested in making every day an adventure.

Therefore,　naturally,　this is the segment whose attention we’re trying to catch. Because it is a brand offering products no one else has ever sold before, competition is limited, but the safety priority is there to maximize market penetration so that if competition should show up, Skyter would still be among the more popular brands to consider. In other words, it is a plan for customer retention before it is needed, so that when/if competition enters the market, we have made sure that we’re hard to compete with.

Skyter is an experiential brand, because customers expand their knowledge of our brand by experiencing what it is like, and whether they like it or not will depend on how they feel when they try the products in its portfolio. We will promote this by using TV commercials and YouTube, by cooperating with some sports brands: Nike, Adidas and so on. Also, we can demonstrate it and let potential customers try it in amusement parks to show them how Skyter works better than existing skateboards.

Coca-Cola’s Social Media

COCA-COLA is a brand established around the world and it is the third largest global brand. Also almost the whole population of the world knows how a can of Coca-Cola looks. So it is easy to recognize this brand only with the red labeled can. The cause of this is the work of at marketing and year after year of hard investment on marketing.

Coca-cola partnership with Brazil

Coca-Cola invests its money on marketing in many ways. But one with better ROI is partnership. Like the American company did last summer with the World Soccer Cup in Brazil.

The target of the well-known company is a huge range of population, without boundaries of age, race, country or sex. But actually the range that buys more coke is the Latin American population at the age between 15 and 25 years old. Although those numbers Coca-Cola is investing in new products and niches to grow its revenues year per year. And the social media marketing is a tool to multiply marketing results.  Lately Coca-Cola used social media tool to increase the result of “share a coke” marketing procedure. This is the second year that the soda company uses this slogan and marketing strategy.

EXAMPLES OF MARKETING STRATEGIES:

1.- FIRST DAY OF COLLEGE HELPS PEOPLE, GIVE A GOD WAY OF LOOKING TO THE BRAND COCACOLA LINK: https://www.youtube.com/watch?v=t9cmoT_wb0A

2.- SHARE A COKE, CAN OF COCA COLA WITH PERSONAL NAMES AND NICKNAMES.

Coca-cola social media strategy

3.- COCA COLA LIFE, LESS CALORIES MADE OF NATURAL PRODUCTS.

Coca-Cola new product: Coca-Cola Life

“Coca-Cola Life is our newest innovation that provides consumers with an option with less sugar and fewer calories and that is sweetened from natural sources. It has been really well received in Argentina and Chile, and we think that consumers in GB will love it too.” Coca-Cola Company

GROWING NICHE:

Coca-Cola is not shying away from soda market, indeed is investing double and a addition to 1 billion in advertising through 2016. Even though Americans are drinking less these days, Coca-Cola’s big bet might not be a bad idea.

If it can get its marketing right, Coke expects forthcoming low-calorie products sold in smaller sizes and using new sweeteners will appeal to people who’ve been avoiding soda. The company is already selling a stevia-sweetened Coca-Cola Life, launched last year in Chile and Argentina. That might be enough to bring recent soda abstainers back to the vending machine.

Soda Market Sales Forecast

RESULTS OF MEDIA MARKETING:

A Coca-Cola Co. study finds online buzz has no measurable impact on short-term sales, but online display ads work about as well as TV, said a company executive in a presentation at the Advertising Research Foundation’s think 2013 conference in New York today.

It’s a stunning admission for a company whose flagship brand has 82 million fans, more than any other brand on Facebook. But Eric Schmidt, senior manager-marketing strategy and insights at Coca-Cola, is not giving up on buzz problem.

Now Mr. Schmidt said Coke is looking to refine how it measures buzz. In example, by getting a better idea of how many people buzz actually reaches rather than, just counting the raw publicly available comments from sources such as Facebook, Twitter, blogs and YouTube.

Coca-cola social media effect

One problem Coca-Cola has is determining whether buzz is actually positive or negative in the first place. “When we say it’s positive, the machine about 21% of the time says it’s negative,” he said. Machines have the most trouble judging sentiment in longer posts such as those in blogs or Facebook and do much better on Twitter, he said.

But the good point is what Coca-Cola as a brand learns from their strategy:

• Build central campaigns
• Crowd-source, involve consumers
• Interact directly with costumers
• Embrace new mediums
• Measure success

Is there evidence this strategy is working or will work in the future? Provide examples.

Coca-Cola has 2.4 million followers worldwide at Twitter. In the last month, @cocacola has Tweeted 1,994 times. It means more than 60 Tweets per day and created over 1 billion potential impressions the last 30 days.

Examples provided (campaign “share your coke”): The results across every medium show the campaign to be wildly successful. Those who saw the TV adverts are seven per cent more likely to consider buying Coke than the general population. Consumers who saw the campaign on Twitter are eight per cent more likely to recommend Coke to a friend. Those exposed to the campaign on Facebook are 18 per cent more likely to have a good impression of the brand than other Facebook users.

Through our online focus groups we found that the main reason Share a Coke worked so well is because it reached out to consumers as individuals, but at the same time didn’t exclude anyone. Some participants expressed disappointment at not finding their names on Coke bottles, but they could still get excited about the campaign by finding the names of their friends and family.

Coca-cola revenue per year

But comparing 2013 Ad result with 2014 now it is not working anymore. Coca-Cola’s definition of “Share a Coke” strategy:

“The concept of the ‘Share a Coke’ scheme is to bring friends and family together during social event over the summer. Have people been sharing the news about the personalized Coke’s comeback? Their Recommend score in 2013 started at 2.1 and ended up with an average score of 7.9 until the end of the scheme. However, we see a different pattern this year. Its score dropped from 3.6 on 15 June to -5.0 on 19 July, averaging at -0.9. Similarly, Diet Coke averaged at 7.9 in 2013’s campaign but figures dropped to -0.9 since 14 June”.

How can we apply their strategy to a small business or a blog like The Hyde Street Journal? Provide examples.

We could apply Coca-Cola strategy to a small business or our blog doing work at social medias as Facebook, Twitter, Instagram and Pinterest. We will advise to our followers every time we have new posts in our blog. Or ask for their interests and do a basic newsletter one time per week or month.

Besides this, the best idea in one-to-one marketing is to be close to the costumer, like Coca-Cola does in Twitter. This tactic is employed both as a customer-service method, and to show some love for fans that show love to the brand:

Coca-Cola’s onte to one in Twitter

RESOURCE:

Brand index: http://www.brandindex.com/article/has-share-coke-gone-flat

Coca-Cola: http://www.coca-colacompany.com/stories/online-social-media-principles

Bloomberg business: http://www.businessweek.com/articles/2014-04-10/four-reasons-why-coca-cola-will-stick-to-sweet-sodas

 SSB

SOURCE COPIED FROM THE WEBPAGE

COCA-COLA COMPANY COMMITMENTS

The Company makes certain commitments concerning how we interact with the public and each other, and these commitments apply to interactions that occur on social media platforms as well.  We expect the same commitments from all Company representatives, including Company associates and associates of our agencies, vendors and suppliers:

Coca-Cola will be transparent in every social media engagement.

Coca-Cola will protect our consumers’ privacy in compliance with applicable Privacy Policies, IT Security Policies, and laws, rules, and regulations.

Coca-Cola will respect copyrights, trademarks, rights of publicity, and other third-party rights.

Coca-Cola will be responsible in our use of technology and will not knowingly align our Company with any organizations or Web sites that use excessive tracking software, adware, malware or spyware.

Coca-Cola will reasonably monitor our behavior in the social media space, establish appropriate protocols for establishing our social media presence, and keep appropriate records of our participation as dictated by law and/or industry best practices.

COMPANY AND AGENCY ASSOCIATES’ SOCIAL MEDIA ACTIVITIES

The Company respects the rights of its associates and its authorized agencies’ associates to use blogs and other social media tools not only as a form of self-expression, but also as a means to further the Company’s business. It is important our associates and our agencies are aware of the implications of engaging in social media and online conversations that reference the Company, its brands, or its business, and that they recognize when the Company might be held responsible for their behavior.  Our expectations for personal and professional/official use of social media are set forth separately below.

PERSONAL USE OF SOCIAL MEDIA:  OUR EXPECTATIONS

Whether you are an authorized Company spokesperson or not, when you’re talking about our Company, our brands, or our business on your personal social networks, keep in mind that:

Our Company’s Information Protection Policy, Insider Trading Policy, and other policies still apply.

You are responsible for your actions. We encourage you to get online and have fun, but use sound judgment and common sense.

You are an important ambassador for our Company’s brands, and you’re encouraged to promote them as long as you make sure you disclose that you are affiliated with the Company.  How you disclose can depend on the platform, but the disclosure should be clear and in proximity to the message itself.

When you see posts or commentary on topics that require subject matter expertise, such as ingredients, obesity, the Company’s environmental impacts, or the Company’s financial performance, avoid the temptation to respond to these directly unless you respond with approved messaging the Company has prepared for those topics.  When in doubt, contact your local Public Affairs and Communications director.

Be conscientious when mixing your business and personal lives; be sure to know your work group’s policies regarding personal use of social media at work or on Company devices.

Social Media Analysis: Volkswagen

Volkswagen AG is the biggest German company with a worldwide sales revenue of about $250bn and a vehicle production of more then 9.25 million per year.

 The Facebook-Page of Volkswagen (general) has gotten about 1.5 million likes and a very structured design with  a lot of information. They post only one time a day to be sure that there followers don’t feel spammed. The Posts are about VW-events, new cars or its just a beautiful or a cool picture. They promote especially the cars for young customers like the UP!, Golf, Scirocco or Polo because this is still the main group using Facebook. They also use the possibility of links to their homepage or other social media accounts and hashtags. Volkswagen has many other Facebook-Pages for special products or special countries for example the VW USA page has nearly 3 million likes. The Posts from every page are different depending on the kind of customers that like it who like it. In the USA , rallies are much more popular than in Germany so there are much more Posts about this topic.

The Twitter-Page is similar but contains more small tweets because there is another way to use this social media also there are a lot of different accounts like on Facebook the same for Youtube,  Google+ and Instagram. On Youtube there are mainly presentations of new cars or for example a campaign to promote the e-cars.

The target audience of their social media strategy is clear. They accommodate there appearance to the users of the social media sites so its different from the customer base of the company. The most people using social media are young and the most people who buy new cars are old so this kind of advertisement doesn’t really reach the main customer base of the company but there are so many customers only in the niches the pages that it makes sense to create an own page for every niche.

Every company should create accounts on social media sites. It’s not a lot of work and a very good way to keep possible costumers in the mind of possible customers. It’s a cheap way to inform the people and for example on Facebook it’s very easy for small companies to get new customers because also the friends of persons who are interested in your page or company will see a link to your site so it’s sharing on his own for free.

http://www.statista.com/topics/1574/volkswagen/

https://twitter.com/VW

https://www.youtube.com/user/myvolkswagen

https://plus.google.com/+vw/posts

http://instagram.com/vw

https://www.facebook.com/VW

https://www.facebook.com/VolkswagenDE

https://www.facebook.com/Volkswagen

The marketing strategy of Babolat

Babolat

Babolat, is the first racket sports company and one of the most famous brands in the world. But their customer base is, of course, those who play racket sports. Also, it is mainly supported by serious players and students. The main company is located in Lyon, France and they use several social media methods to advertise their products. For instance, they use Facebook and Twitter by showing the players who contract with Babolat achieve amazing results and plays in order to advertise new products. These days, Li Na, a professional tennis player, declared retirement so they made a special logo, “LoveLi”, wishing her luck on her next adventure. This attitude of respect makes customers feel good. This leads them to buy the products in the future great.

Youtube is usually used to promote new products, to show us ads and to demonstrate how well the new product works or how differently they work in comparison to existing ones. Almost all people who watch these posts or videos are players, so it is effective to encourage customers to buy their goods. Moreover, the better results that a professional player records, the more opportunities there are for not only existing customers but also potential customers to see their products. Youtube allows those who use products of other brands to change their mind and buy Babolat’s products. This could cause the company to make more profit.

As previously stated, the customer base, as well as the target audience, of Babolat’s social media strategies is those who play racket sports. Babolat’s social media strategies can pull in potential customers easily. In this case, the target audience is people who use other brands. Seeing the videos of the player in action is more effective than picture imaging ( such as only pictures of rackets) to convince the customers to purchase the suggested item. This is how Babolat gets potential customers. It is the oldest and biggest brand in the world and main strategy of introducing products in a limited, controlled way in their home area, then patiently expand to other locations, seems to be working well. There is the evidence that they established the position as the best brand in ten years even though their products were not sold in America ten years ago. They have made a big success by following the strategy which is working and will work in the future.

We can apply this strategy to make small business or the blog like The Hyde Street Journal bigger than now. So they should reconsider about our home area and devote to making profit or making it bigger. Not every business grows up rapidly so they need patient in working on to expand it. It is important that they know what to do and if the strategy fits their attitude or policy, because, no matter how good strategies are, they do not work unless companies understand about that.

R.T

The social media strategy of KLM

KLM Royal Dutch Airlines was founded October 7, 1919 and has been the flag carrier airline of the Netherlands ever since then. It has flights to 136 destinations worldwide and has 32,505 employees, including around 100 who work at the social media department.[1]

KLM uses different social media platforms: Facebook (6,7m likes), Twitter (1,2m followers), their blog, YouTube, LinkedIn, Pinterest, Instagram and Google+. The first three mentioned are the most used platforms.[2]

The business has a big target audience. Basically everyone who wants or needs to travel is part of this group. You can find that in their social media strategy. For example, they have a broad approach in the use of language. The general language used by the company on social media is English, although you can reach their Twitter account in 10 different languages.[3] This is the main difference between the customer base and the target audience; the customer base consists of mainly people from The Netherlands, with Dutch as their mother tongue, but their social media strategy is mainly in English.

KLM choose to employ a different strategy for every different social media platform. Their Twitter account mostly used for direct contact with customers with questions or concerns. They even promise to answer the questions within 120 minutes, 24 hours a day.[4] Twitter is also used to share links to their blog posts. Another way to directly answer their customers’ questions is Facebook. Besides that, Facebook is also used to share pictures made by customers, share post from their blog and sharing funny/interesting stories related to their company. They decided to link a weblog to KLM, which is quite remarkable, because not many companies use a blog in their social media strategy. The weblog consists of posts about their current campaigns, behind the scenes post and posts written by customers. Most of the time these customers are specifically selected, for example celebrities or other famous travelers.

KLM is known for its successful social media strategy, but what makes it so popular? The first thing is their accent on interaction. As mentioned before, as a customer, you can always reach the company and get a response within a few hours. The next method, which follows the line of interaction, is the use of language in the communication with customers. A good example of this is a question asked by a customer on Facebook, which got a remarkable reaction by one of KLM’s employees. Unfortunately this was in Dutch, so I’ll explain the situation. This customer wanted to book a flight from Amsterdam to San Francisco with spending a few days in New York City in between. So he asked the KLM web care about the best way to book this. However, he wrote this message in a typical Dutch slang used by teenagers. The KLM employee responded in the same kind of language, which isn’t very common among companies, who normally use a more official language. The power of this is that this reaction got so many likes on Facebook that it was shared really fast among the Dutch population. It even became breaking news. In this way, KLM reached a lot of people, without putting much energy in it.

It’s currently a hard time for airlines, so KLM experienced some losses[5], regardless of their exceptional use of social media. This means that their social media strategy will be more and more important in the future.

What we can learn from the social media strategy is the approachability of the company. Customers can choose which social media platform they want to use and they are promised to get an answer in a reasonable amount of time. The kind of language used makes the approachability even more fitted, the KLM employees adapt their language use to their customers (in different languages as well as in different slangs). The last thing we can learn, is to be outstanding, so news about the company will be spread by the customers themselves or even by other companies, for example because they think an update or reaction by the company is funny/interesting or at least worth sharing.

[1] https://www.skyteam.com/nl/About-us/Our-members/KLM/
[2] http://www.klm.com/travel/gb_en/about/news_press/KLM_on_social_media/index.htm
[3] https://twitter.com/KLM/with_replies
[4] https://twitter.com/klm
[5] http://buyingbusinesstravel.com/news/3022890-air-france-%E2%80%93-klm-halves-losses-over-first-half-2014

Louis Vuitton Social Media

Analyze their use of social media and how do the Louis Vuitton use Facebook or Twitter … etc?

The social media is that it’s social media needs to be fully integrated within the overall brand strategy. And it cannot be seen as just a trend anymore, nor as a new way to do marketing.

According to the research,they enabled users who are fans of Louis Vuitton to be a part of this exclusive crowd as they live streamed the event on their Facebook page. They succeeded in engaging with their community by living the Louis Vuitton dream.

They first got people excited by releasing a small amount of information about the event through their Facebook fan page:.

They also created  an event on Facebook that is similar to an invitation you would receive to go to the actual event.

And spreading the word on their Twitter account:

The resuit:

Enabling all the fans of Louis Vuitton to see the London Maison Opening, live from the Red Carpet on Facebook.

A Facebook app dedicated to this special event was created on Facebook. This very clever app was live streaming. It offered you the possibility to update your status with news about the event, comment on the video – and thus interact with worldwide users doing the same as you which reinforces the feeling of belonging to a community. The camera icon – as you can see on the image above – allowed you to take pictures from the live show. These pictures were then sent to a new Facebook album created on your profile. What is extremely clever is that this album would – as something new – directly appear on your news feed, exposing your Facebook friends to this incredible, high-quality content.

Social media is not an impossible challenge. With limited costs – regarding the digital part – it achieved amazing results. The one rule to respect is to use social media as a tool to reach a defined aim which is part of the brand’s marketing strategy.

Luxury brands have to understand that people who are Facebook users are not only millennials. Everyone is on Facebook; especially affluent people who are the target audience. Luxury brands need to adapt and build a new kind of relationship with their customers who want to be more engaged with their favorite brand. Social media is a way to create a more one – to – one relationship with your audience as social media is built on people. Louis Vuitton did very well because they understood that social media should not be used as an end in itself, but as a new and extremely powerful communication tool where your community does all the work.

Source: http://luxurysocialmedia.wordpress.com/2010/05/26/louis-vuitton-or-how-to-master-the-art-of-social-media/

What’s their customer base and what is the target audience of their social media strategy? Is it the same or different?

Customer base

• most of the users are mature (25+), female, working population with stable financial background.
• There is an increasing number of young LV users, who are fashionable trend-followers
• LV users are usually less price-concerned
• LV products are frequently used by the rich and famous, celebrities, models all over the world.

Target audience

• Both men and women
• Age: Ranging from young adults to seniors 22-65 yrs old
• Income: Around 5,500 or above per month

Is it the same or different?

According to my research, they are the same because the age, people or income we found it is similar.

source: http://www.slideshare.net/kannupriya23/louis-vuitton-3594546

Louis vuitton ppt from deepti bhardwaj

Is there evidence this strategy is working or will work in the future? 

Vuitton’s growth has slowed in recent months because luxury-hungry consumers in emerging markets like China are becoming rapidly more sophisticated; in essence, they want subtle leather bags instead of the logo-covered canvas pieces that are Vuitton’s bread and butter, in addition to being the brand’s most visible symbol.

Much of Vuitton’s recent success has been predicated on entry-level luxury consumers’ lust for the brand’s flashy canvas pieces. That group will be the one affected the most by Vuitton’s price-increase strategy because they’re the most price-sensitive segment of Vuitton’s consumer base; in losing some of what the brand seems to consider riff-raff, execs are hoping to gain new customers at the top end of the market. After all, Hermes increases its prices constantly (or at least it feels that way) and is growing at record rates, perhaps because the type of customer the brand attracts doesn’t care about an extra $500 on top of a $5,000 purchase. If Vuitton can’t buy Hermes, it seems hell-bent on trying to become its twin.

The second segment of Vuitton’s reported growth strategy – emphasizing its subtler, more expensive leather bags and accessories over its famous canvas – indicates that it’d like to at least attempt to become a similar brand, at least in the eyes of the purchasing public.

Source: http://www.purseblog.com/news/louis-vuitton-raises-prices-in-hopes-of-attracting-more-high-end-customers/

How can we apply their strategy to a small business or a blog like the The Hyde Street Journal? 

In an age of unbridled competition, branding is often what sets businesses apart.

Consider an example: both Louis Vuitton and GAP sell clothes. Yet, Louis Vuitton is able to charge thousands of dollars for a suit, while GAP’s suits will rarely set you back by more than a couple hundred dollars.

This is because the Louis Vuitton brand is perceived as a luxury brand, and thus, can command luxury brand prices. GAP, on the other hand, has consciously positioned itself as a brand for the middle-class urban consumer, hence the lower prices.

Building a brand is often very different from building a business. It involves identifying and communicating the qualities that make your business special. It is largely a marketing enterprise, though to be successful, it must reflect qualities your business truly values.

Creating a successful brand positioning strategy requires a number of steps, such as:

Identify Values: Identify your brand’s primary values. Try to distill these values into a concise ‘mission statement’. Amazon’s mission statement, for instance, is to create ‘Earth’s most customer-centric company’.

Identify Competitors: Who are your primary competitors? What values do they espouse? How do they differentiate themselves? Answering these questions will help you understand competition and thus, create your own brand identity.

Differentiate: Identify what makes your brand different from competitors. Maybe you have a larger portfolio of products, maybe you use better ingredients/construction material, or maybe you have better customer service. This is a crucial step as it will dictate much of your brand marketing.

Communicate: The last step is communicating your brand’s values and what makes it different to consumers. This can be done through advertising, PR campaigns, media, etc.

Source: https://www.udemy.com/blog/positioning-strategy/

INDIA AND ITS ECONOMY

1. Fastest growing industry in India
One of the fastest growing industries in India is the petrochemical industry. It grew at a rate of 11% in 2010-2011 and is expected to keep on growing at a rate of 11-13% over the next five years. The petrochemical industry basically produces chemicals such as Ethylene, Propylene, Benze and Xylene. Those chemicals will either be used as ingredients for medical drugs or as raw materials to produce Nylon, synthetic fibres, Polyester, etc., so basically other chemicals. The high rate of this industry can be explained by the average consumption of plastic per person. While the average consumption is at about 7 kg in India it is almost at 46 kilos in China and 65 kilos in Europe.
Another industry which is growing enormously is the “Telecom” industry. India has already 850 million phone subscribers, 15% of which have smartphones. This will not only lead to an enormous rise of this special industry but also to a significant rise in employment.

2. Fastest declining industry in India
One of the fastest declining industries in India is the handicraft industry. Between 1995 and 2010 the number of handloom weavers and ancillary workers decreased by 2.2 million. Good quality handmade goods are becoming more and more rare in times of mass production and automation. Moreover, people usually tend to buy the cheapest products, but handmade products aren’t cheap at all anymore. Economies of scale have led to lower prices. New materials have been developed that are not necessarily cheaper but more durable and easier to handle. The phenomenon of the ruination of the Indian handicraft industry even has a name. It is well known as the “Deindustrialization”.

3. India in about 35 years (Future outlook)
“Citigroup” expects India to be the World’s biggest economy before reaching 2050, they said in a 2011 interview. Between the year 2010 and 2050 they expect India’s per person GDP to grow at a rate of 6,4% (Between 2010 and 2020 at a rate of 7,2%, between 2020 and 2030 at a rate of about 7,7%, and over the last five years at a rate of about 5,2%). Thus, they predict India will overtake China and the US by 2050, becoming the largest economy in the world. But not only will India become the largest economy, it is also expected to become the most populous country by 2030. Furthermore, temperature will rise by 3,2 degrees by 2050. The climate change will have most visible impact on the sea level and change in underwaterresources. It is expected to lead to serious consequences for the fishing industry, tourism, as well as agriculture and forestry.