BOSTON ( MainStreet) -- Little things can mean a lot. The business world is filled with "why didn't I think of that" examples of straightforward product and service additions that have pumped sales and pleased patrons.
Two of McDonald's' ( MCD) best-selling items -- the Egg McMuffin and Big Mac -- were the brainchild of single franchisees looking to spice up their menu. Perhaps the single greatest thing ever to happen to Subway is the modest price promotion a Miami franchise launched that became the omnipresent "$5 footlong" phenomenon. The notion of selling breakfast was hardly a radical idea when McDonald's looked to extend their sales day in the 1970s, but it was a novel one that has paid off. Today, breakfast sales account for roughly 25% of all revenue for the chain and its competitors -- including, recently, Subway and Taco Bell ( YUM) -- are stepping up their morning efforts. About 60% of restaurant traffic growth over the past five years has come from breakfast sales, according to analysts at NPD Group, a leading market research company. Improving coffee offerings has also been a small improvement that has paid off big for McDonald's. Its so-called McCafe locations average about 15% more in revenue because of those selections. When Starbucks ( SBUX) pulled the word "coffee" from its signs, some wondered what it was up to and whether it signaled a move toward an expanded menu. Among the simple changes driving increased revenues: juice. Last year it bought juice maker Evolution Fresh in a $30 million deal intended to make itself more attractive to non-coffee drinkers.
|Simple ideas can be a boost to the bottom line. How about if Dunkin' Donuts had soy milk for vegetarians and the lactose intolerant?|
Opportunity: "Manly" skin care products
A Men's Grooming Consumer Report released this month by the analysts at NPD found that more than 90% of men over the age of 18 are using some sort of grooming product today, including but not limited to facial and body skin care, shaving, hair care and fragrance. Of that segment, only a quarter is using facial skin care products such as cleansers and moisturizers, lip and eye products and anti-aging treatments. That low usage persists despite the marketplace having grown 11% in dollar sales last year compared with 2010. The proposition is for a Gillette, Unilever ( UL) or Procter & Gamble ( PG) to push new or existing products at this demographic. "There is a huge opportunity," says Karen Grant, vice president and senior global industry analyst for NPD. "The challenge is getting them involved and engaged. There is a feeling that facial skin care products are not needed unless you have a specific skin problem, such as acne." A company's successful marketing campaign would lead men to "unlearn the idea that the body skin care product they use such as bar soap and body lotion works just as well for facial skin," Grant says, explaining that "need-based opportunities seem to be most pronounced with black and Hispanic men, as well as younger men ages 18 to 34." The challenge for marketers is to build awareness of the benefits that products offer and show that these products can be "seamlessly incorporated into his grooming routine," she adds.
Opportunity: Yo, soy!
In many cities, coffee drinkers pledge allegiance to one of two camps -- you are either on Team Starbucks or Team Dunkin' Donuts ( DNKN). The coffee wars may have heated up a bit when Dunkin' Donuts launched a successful IPO last year and has since battled its rival by beefing up a menu of specialty sandwiches. There's one battle, however, it has been losing -- getting on the good side of vegans. Unlike Starbucks, where it is a standard offering, very few Dunkin' Donuts locations offer soy milk as an alternative to the bovine variety. For the past couple of years, vegan activist groups including Compassion Over Killing and Mercy for Animals have held organized events such as "Ask for Soy Milk Day at Dunkin' Donuts." Thus far, their efforts have been largely ignored, even though a smattering of locations in New York, Maryland and Washington, D.C., have added the option to their menu. It is not just vegans Dunkin' Donuts could appease by offering soy milk. A growing number of lactose-intolerant Americans would also be better served and, perhaps, defect from Starbucks. And while we are at it, has anyone at Dunkin' Donuts ever heard of this thing called "tea"?
Opportunity: Fruit a la carte
The nation's supermarkets, such as Safeway ( SWY) and Kroeger ( KR), might want to do themselves a favor, take a cue from upscale grocer Trader Joe's and start pricing fruit by the piece, not the pound. That's the suggestion of Mary Nanfelt, a supermarket analyst for IBIS World. "Consumers are naturally attracted to lower prices, so they're expected to buy more fruit when they see a sign that says 19 cents per banana instead of 69 cents a pound," she says. "Also, by pricing produce by the item, shopping is more convenient because the consumer no longer has to weigh the product and figure out how much they're truly spending. Americans are increasingly becoming busier and convenience is a huge factor in any routine activity."
Opportunity: Home delivery
For decades, Burger King has struggled to differentiate itself against McDonald's. Executives and franchise owners must cringe every time they see McDonald's launch a menu item. More often than not, its new fare proves a huge success (although it should be noted that the failures it has had are epic -- McSpaghetti and a "Hawaiian" burger among them). By contrast, Burger King seems to perpetually throwing the menu equivalent of a Hail Mary pass. Its Steakhouse XT failed to steal the thunder of McDonald's Angus offering and its introduction of $8.99 Fire Grilled Ribs didn't drag anyone away from the local barbecue joint. Burger King's new owner, Brazilian private equity firm 3G Capital, has a mighty challenge on its hands as it tries to cut costs and improve sales. It's probably a good idea to stick to a chainwide remodeling plan under way, especially as McDonald's is doing the same on a more limited basis. We also love the Whopper Bar concept that has been launched in Miami and Las Vegas -- upscale Burger Kings with a 20-item "toppings theater" of everything from bacon to guacamole, and the availability of beer. Expanding the footprint of these specialized locations would be an expensive proposition, however. So our suggestion is that Burger king double down on an offering it has just started to consider -- delivery service. Already under way as a trial, Burger King should take a cue from Domino's ( DPZ) and independent restaurants and go national with the concept. This service could be a hit for office workers, college students and busy moms. Best of all, it fills a void left by McDonald's, which delivers only on a limited basis to Manhattan office buildings, even though delivery in other countries accounts for as much as 30% of those local sales.
McDonald's has certainly had a golden touch in the fast food industry here and abroad. Its success in other countries has often been helped by flexibility in adapting its menu to suit the tastes of the populace. It could bring that international approach here to its home base in the U.S. Specifically, the McDonald's menu could stand to add tacos, or even burritos, to appeal to the nation's growing Hispanic population. True enough that other fast food restaurants have dabbled in tacos, notably Jack in the Box ( JACK) and, less successfully, Burger King. But these have been the standard Taco Bell-inspired globs of meat paste. McDonald's could do them one better and strive for higher quality and at least a degree of greater authenticity. In other words, McDonald's could make a move on Chipotle ( CMG). Chipotle has been a true success story with its burritos and rice bowls. But its uniformity in menu could be a disadvantage compared with the broader menu McDonald's could offer families looking to find a one-stop solution to multiple cravings. According to 2010 Census estimates, there are approximately 50 million Hispanics living in the U.S., a 42% increase from the 2000 Census. That equates to one in every six U.S. residents and an approximate buying power of $1 trillion annually. And yet, fast food offerings geared toward this growing demographic are limited to the caricatures of Mexican cuisine found at Taco Bell and Del Taco, or specialized chains such as the eight-state El Pollo Loco and seven-state Pizza Patron. Given that Latinos are now the mainstream, it stands to reason America's most mainstream restaurant chain should be catering more to them.
Opportunity: Better price tags
There has been a lot of buzz about changes in the offing by JC Penney's ( JCP) new CEO, Ron Johnson, the former Apple executive credited with the phenomenal success of its retail stores. The retail chain has a new logo, stole Martha Stewart away from Macy's ( M), hired Ellen DeGeneres as a spokeswoman and is embarking on a redesign to give stores a more "town square" feel. Johnson is also revising the way the stores price merchandise, doing away with the haphazard way items were put on sale and moving closer to a Wal-Mart ( WMT)-inspired "everyday low prices" strategy. One of the small moves that may prove to be a big hit: a redo of the price tags that dangle from items. The aesthetics of a price tag may seem like the tiniest of concerns for a CEO, but consider this: The JC Penney modus operandi has always been to keep sticking red sale stickers on top of the tags, then sticking new stickers on top of them and so on and so on. The result is a sloppy tag that has two drawbacks: First and foremost, it signals that JC Penney is more low-rent than upscale. No shopper expects this to be Nordstrom, but they also don't want it to exude the aura of a Family Dollar ( FDO) store. Secondly, on a psychological level, it gives shoppers an impression that markdowns come fast and furious. Why buy today, when something is bound to be even cheaper tomorrow? It is a cat and mouse game the retailer can't win. So, yes, that tiniest of details -- the price tag -- can make a big difference.
Opportunity: Sell suds to women
Efforts to market beer to women typically fall into two camps: the patronizing and the non-existent. We've all seen the steady stream of guy-focused beer commercials over the years. Most treat women as bystanders, arm candy, sex objects or shrews. And that's if they even manage to emerge from the deep focus of a background shot. Is it really too much to ask if we suggest that once in a while they air a woman-centric commercial? Maybe a group of young, professional women kicking back cold ones at a pub in defiance of the stereotype that it's all about Cosmopolitans and wine? Molson Coors ( TAP) recently launched a brand in the U.K. and Ireland called Animee that is marketed directly toward women and comes in three varieties: "clear filtered, crisp rose and zesty lemon." Setting its sights on U.S. beer drinkers is Chick Beer, which comes in a pink six-pack holder and pledges that it will donate "5% of its profits to charities that empower women." Its Web site tackles the question of whether it is "sexist," although it does so with a twist on the word:
"We probably are, in that we are clearly not designed for men. Sorry guys, but you have hundreds of choices that are made for you. What we think is sexist is that the beer industry has totally ignored the female beer drinking market, which drinks 25% of all the beer consumed in the United States -- over 700 million cases every year! Yet the beer industry has always focused on creating and marketing beer to men. Just take a look at the packaging and ad campaigns of the brands out there. Seriously, who are we to tell you what you should drink -- especially when there is already a community of snarky bloggers trying to do exactly that? At Chick, we believe that women are fully capable of choosing what they want to drink."So why should Budweiswer ( BUD) take heed of these efforts? From 2005 to 2010, Budweiser had a 30% decline in sales. In fact, nearly half of the best-selling U.S. beer brands have seen double-digit sales drops (in part caused by the spike in popularity of craft beers). From a marketing standpoint, women are an untapped and potentially profitable demographic. A Gallup poll asked men and women their preferred drink. For men, 54% said beer, 17% said wine and 22% said liquor. Among women, 48% said wine, 21% said liquor and 27% said beer. A look by age, however, reveals an opportunity to sell more suds to younger women. Among women ages 18-39, the gap between wine and beer was narrower, 39% compared with 35%. It is women over 50 who skew the stats, preferring wine to beer 58% to 18%.
Opportunity: Bring back the picnics
Remember the Saturn, that affordable, plastic-bodied car popular in the 1990s? The brand went away in 2009 after General Motors ( GM) failed to close a deal with Penske Automotive Group ( PAG) to acquire the unit. We don't expect that GM will bring back the Saturn -- or the once popular Pontiac brand, for that matter -- anytime soon. A re-launch would also certainly go far beyond our criteria of "simple." But they could take a page from a brilliant marketing strategy that helped the Saturn cultivate a fiercely dedicated following: It promoted ownership as being part of a "club," with a variety of special events that included periodic cookouts and picnics, notably at the Tennessee plant where the car was made. Would similar get-togethers and social events organized to thank owners and celebrate certain models be successful? Perhaps not, given the fast-paced, time-strapped lives many lead. But if this strategy once worked brilliantly in cultivating the cult of Saturn, it might be a relatively inexpensive way to cultivate all-important customer loyalty.
Opportunity: Go for the girls
Microsoft's ( MSFT) Xbox has been the champion among video game consoles, and its motion-detecting Kinect add-on has only boosted that status. The Kinect has proven a hit with families, expanding the Xbox market into a broader realm of consumers. To keep building on that success, Microsoft this week announced a new "Xbox 360 Special Edition 4GB Kinect Family Bundle," an all-white console (Wii-like, one might say) and peripherals packaged with the family-friendly games Kinect Sports and Kinect Adventures. Our modest suggestion is that Microsoft go a step further and target the increasing number of girls using the console. How about a pink console branded in partnership with Sanrio and its iconic Hello Kitty? If that sounds a bit sexist, at the very least Microsoft and its game-producing partners need to come up with some new and better games geared for girls -- from elementary age to tween. They might want to take a page from the Wii playbook and the popularity of games such as Animal Crossing. The popularity of Kinect has certainly brought with it a wider range of games suited for all ages and a family-friendly alternative to the vulgarity of Duke Nukem and sex scenes of Mass Effect. Now would be a great time for the console to do the same.
Opportunity: Take it down a notch
For Best Buy ( BBY), we'd suggest some addition by subtraction. We fully understand the benefit of up-selling, of having employees guide shoppers to add-ons, Geek Squad services and higher-price items. But the hovering one faces while shopping at Best Buy makes the experience almost unbearable at times. Go in to grab a quick DVD and you'll have to run a gantlet of "may I help you," blue shirts and pitches for satellite TV or Blu-ray. Just take things down a notch, we'd suggest. We understand the plight of bricks-and-mortar retailers in an online age, but irritating customers may be enough to drive away all but the "showrooming" shoppers looking for some hands-on time with an item they plan to buy online. -- Written by Joe Mont in Boston. >To contact the writer of this article, click here: Joe Mont. >To follow the writer on Twitter, go to http://twitter.com/josephmont. >To submit a news tip, email: email@example.com.
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