About Me

John Fahy is the Professor of Marketing in the University of Limerick and Adjunct Professor of Marketing at the University of Adelaide. He is an award winning author and speaker on marketing issues around the world.

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Thursday
Feb042016

There May Be Life In Those Old Products Yet!

So Xtra-vision finally succumbed to the harsh realities of life in the DVD rental business with the closure of its operations in Ireland last week and the loss of 580 jobs. But perhaps the most interesting aspect of this event was that it took so long to come to pass. Video/DVD rental has been on life support for over two decades now and twenty years is a long time in any business.

 

 

Xtra-vision was a company with a chequered history. Founded by an ex-courier, Richard Murphy, the fledgling company opened its first store in 1980. Murphy had a flair for doing things differently and with a team of attractive young ladies in short skirts getting the publicity, he quickly grew the business which went public in 1989 and saw its share price quickly double. At the peak of its powers, the company had 317 stores in Ireland, the UK and the US. But when it became apparent that the shelf life of a video was much less than the estimated 30 months, sentiment toward Xtra-vision quickly changed and its stock fell like a stone. The company changed hands several times throughout the next two decades, even surviving examinership in 2011 before finally succumbing to the inevitable last week.

 

In spite of its roller coaster ride and the obvious challenges to its business model, Xtra-vision was still generating a very respectable sales volume of €85m in 2012, half of it coming from movie rental and sales and half from games and music. It even managed to outlive a much more efficiently run (and one-time owner) global video rental company – Blockbuster which collapsed in 2010. Its survival was no doubt helped by the slow pace of making the prospect of video on demand over the Internet a reality – it was 2007 before Netflix began to offer this service. So even in declining industries, returns can be healthy and persist for many years. But when the inevitable death comes it is usually swift. Xtra-vision sales fell to €38.5m last year and there was no coming back from that.

 

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Thursday
Jan282016

Coca-Cola's One Brand Strategy

These are certainly interesting times for the soft drinks giant Coca-Cola. While ever granular levels of segmentation and customisation are all the rage in many industries, here’s one company that is heading in the opposite direction. Earlier this month, Coca-Cola announced that it was taking its ‘One Brand’ strategy worldwide with its first global campaign in ten years. Essentially what ‘One Brand’ means is that its four product variants, Coca-Cola, Coca-Cola Zero, Diet Coke and Coca-Cola Life will come under the Coca-Cola master brand rather than being marketed as separate products. Its ten global TV ads that are planned for this year will feature all four variants so gone are the days of separate Diet Coke or Coca-Cola Zero adverts. The social and experiential themes that have traditionally characterised its advertising will continue with situations such as a first kiss, a first date and ice-skating with friends being featured.

 

 

The One Brand strategy is a response to flat sales in the sector caused by concerns relating to the over consumption of sugar. Promoting a zero sugar brand like Coca-Cola Zero addresses this issue but causes problems regarding what the master brand stands for. This way a consistent message is delivered and consumers looking for zero sugar options can choose those variants. The approach was road tested in the UK in 2015 with reasonably promising results. Sales increases were reported for both Coke Zero and Diet Coke. However, the overall picture for the category looks a lot less promising. Concerns over obesity and sugar consumption appear to be driving the sector towards decline. In the three months to the end of September 2015, Coca-Cola’s revenues in Europe were down 7% or $1.3bn. The legendary company may be about to enter a new phase of managing a dying brand!

 

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