Wal-Mart keeps chin up despite lackluster forecast

Wal-Mart Stores Inc reported expectations of a challenging fall season and a “late Christmas” on Thursday due to current frugal consumer spending habits and the lower appeal of low-quality “throw-away“ items.

While Wal-Mart still enjoys growth potential in various US markets, says company President and CEO Mike Duke, investors should maintain conservative expectations in regards to significant increases in long-term margins, Reuters reports. 

"Customers are buying now when they need product, not anticipating a future need," he said. "I think this is something that will be with us for a long, long time."

Wal-Mart foresees falls in sales for all types of items -- even basics such as infant formula. At the same time, grocery and video game sales are rising, as shoppers opt to stay at home for dinner and entertainment.

"For any of us in the food business, there's more opportunity there," he commented.

The chain felt these effects during Christmas season 2008. Duke, therefore, is positive that holiday sales will be solid.

Wal-Mart’s positive 2008 holiday sales will certainly be reflected this year, said retail analyst Patricia Edwards, who runs Seattle’s Storehouse Partners LLC. Even so, she speculates that because Kmart and Sears offer layaway, some Wal-Mart shoppers will venture their way. 

"For the very, very strapped consumer, people will be drawn to layaway," she said.

Wal-Mart decided to stop offering the service due to skidding use and hiking costs in 2006.

"This year, things are still incredibly tight, but we are not as fear-driven as we were this time last year," Edwards noted.

Also, sales are rising as a result of Wal-Mart’s remodeling efforts at its US stores, Duke said. Still, the biggest expansion potential may be abroad, as the company’s Asda division in Britain continues to show higher shopper traffic, average ticket and overall market share and operations in Japan consistently record monthly same-store sales gains.

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Inside the 'Inside Intel' Campaign (INTC)

"Intel Inside" was the first, and arguably the best, "ingredient" branding to come out of Madison Avenue. And thanks to that campaign everyone knows that Intel chips are inside computers. But the success of that ad push, which made its debut in 1991, created an image of Intel as a staid chipmaker. 

Defined by a logo
"People think of [Intel] as a microprocessor company and that's a shame," said Paul Venables, founder and creative director of Intel's creative agency, Venables Bell & Partners, San Francisco. "Marketing in the past was always tied to the next chip or product and then co-branded with HP or Dell or other partners. ... 'Intel Inside' did a great job of making a brand out of something like chips at a time when ingredient branding was unheard of. But 10 or 20 years later, their whole identity was wrapped up in that little 'Intel Inside' logo."

If "Intel Inside" created the perception of a factory stamping out mini bits of silicon, then what's inside Intel? For starters, the company's inventors, who hold scores of patents for things such as universal serial buses (those connecting ports known as USBs), the DVD and airbag-safety technology and are working on futuristic projects including wireless power, neural sensors and personal robotics.

So the tech titan turned to a new marketing strategy this spring, called "Sponsors of Tomorrow," to change those perceptions, and now a second iteration, which launched Sunday night on the Emmy Awards, is beginning.

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Oprah myTouch 3G $100 off promo ending soon!

As part of a promotion celebrating Oprah Winfrey's 24th year on the air, T-Moblie is taking $100 off the cost of the Google Android-based myTouch 3G. That brings the final cost down to $99.99 with a two-year contract.

The promo ends Sept. 24, so those interested need to act quickly. New customers who want to get their hands on the device can type in a special code--"KICKOFF24"-- when buying online.

The myTouch 3G landed (quite literally) in Justin Herman Plaza on August 6 (see write-up).  While the San Francisco debut was pretty amazing, what took place in Chicago was off the charts.

On September 8, T-Mobile sponsored the kickoff party for Season 24 of "The Oprah Winfrey Show."Check out the video with the Black Eye Peas singing "I Gotta Feeling" with what T-Mobile describes as a surprise flash mob of dancers on Chicago's Michigan Avenue. Of course, Oprah was dancing on stage while waving a myTouch 3G.

T-Mobile is certainly going all out to promote their growing Google Android offerings. Their ad campaign features The View’s Whoopi Goldberg, Los Angeles Lakers coach Phil Jackson and Jesse James of the Discovery Channel’s Motorcycle Mania series.

There is a lot of competition in the smartphone space right now.  It is clear that T-Mobile is committed to the Google Android platform.  Now developers need to get on-board to up the app offerings.

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Baltimore-based Under Armour tries nostalgic approach with new ad campaign

With the launch of college football season this weekend comes a new national television commercial for Under Armour Inc. that relies on feel-good inspiration and nostalgia more than the sports apparel company's past ads.

The ad, "Under Armour is football ," portrays the brand's role in the many stages of football from Pop Warner leagues - look for the childhood footage of company founder Kevin Plank in uniform - to the college level complete with adoring cheerleaders and 100,000 cheering fans.

"It's a comprehensive look at our brand's role in the sport of football ," said Steve Battista, senior vice president, brand. "We started out with the one T-shirt, and now we're head-to-toe [with] cleats and [uniforms]. "

The 60-second spot will debut Saturday on the ESPN, ESPN2 and ABC networks and air throughout the regular season, which ends in December. High-profile games in the lineup include Plank's alma mater University of Maryland's home opener against James Madison University and University of Southern California vs. Ohio State, both on Sept. 12. It will be shown during the University of Miami vs. Florida State University game this Saturday.

Battista would not say how much the company spent on its media buys for the commercial, the third in a series of football -related ads targeting younger athletes that began this summer. (Under Armour also plans to buy advertising during the College Bowl Week but has not designated which commercials will be used.)

The ad is a montage of Under Armour commercials over the past decade, youth football and college scenes, and shots of professional players like the Ravens' Terrell Suggs. The theme song from NBC's show about high school football, Friday Night Lights, which uses Under Armour apparel, plays throughout.

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Amazon Slaps Its Brand on Some Consumer Electronics

Like many general retailers, Amazon seeks to forge direct ties with manufacturers wherever it can so that it can keep a larger percentage of the profits. Just as shoppers might find Safeway cereal, RadioShack batteries and Wal-Mart diapers, Amazon has sold such “private label” items since 2004, including Pinzon bath towels and sheets, Strathwood patio furniture, and Denali Power Tools.

Today, Amazon is expanding its private-label line with AmazonBasics, a new collection of consumer electronics items.

The items are not all that exciting, at least for now. They include HDMI cables, Ethernet cords, and blank CDs and DVDs.

All will be shipped in Amazon’s recycled cardboard frustration-free packaging, which gives people another opportunity to avoid those hermetically sealed plastic clamshell containers from other vendors.

“We think there’s an opportunity to provide really good quality and additional value in terms of lower prices than some other products we see in the market,” said Paul Ryder, Amazon’s vice president for consumer electronics and wireless.

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Verizon's New Wireless Pricing Is An Insult

Again, 'Open Network' Push Is About Nickel And Diming Users

It's been made fairly clear that as Verizon loses the ability to lock down their phones and network (forcing consumers toward their wireless handset content), the carrier is going to make up for it by squeezing the pipe and imposing some steep per-byte charges. A recently leaked Verizon memo gave insight into the company's new wireless pricing plans for Internet-enabled handsets not quite powerful enough to be considered "smartphones": $9.99 for 25MB (50 cents each additional MB) or $19.99 for 75MB (30 cents each additional MB). 

If you're a smartphone customer, you can still of course pay $60 a month for 5GB worth of data, but the significant majority of customers are going to be using what Verizon's now calling "Enhanced Multimedia Phones," which come tied to this new pricing. The company this week launched the first phone that utilizes this new, not so bargain basement pricing: the 3.1-inch AMOLED touch screen Samsung Rogue:

"The Samsung Rogue will serve as the flagship phone for the company's new data pricing option available to customers beginning today. The new data pricing gives Verizon Wireless customers more freedom to select how much data and the type of data they want to use. . . Customers who want to watch full-length TV shows plus news, sports, weather and live entertainment video clips can also add Verizon Wireless' new V CAST Video on Demand plan..."

Except with such low caps and steep overages, customers interested in freely wandering the web consuming video are going to be punished for their curiosity. That's of course where Verizon comes along to direct customers back to their $10.00 monthly VCAST video service. Previously, users who rarely went online could pay (an equally ridiculous) $1.99 per megabyte, though at least they had the option of choosing to not pay if they didn't use the Internet. Heavier users could sign up for the "unlimited megabytes" offered by Verizon's $15 a month Vcast VPak.

So what's the motivation? More money for an already very profitable company, silly. Verizon Wireless' second quarter results indicated that wireless data revenue comprised 29.3 percent of total Verizon Wireless revenues (net $3.16 billion in the second quarter alone), and jumped 24 percent from one year earlier. Verizon's already impressive wireless profits are about to get more impressive, and while that's great news for investors and Verizon executives, it's not particularly great news for you, or the generally open nature of the Internet.

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Beyond Online Ads: P&G Sets $4 Billion E-Commerce Goal

Aims to Grow Online Sales Eightfold -- Equal to Drugstore Channel

E-commerce has never reached even 1% of Procter & Gamble Co.'s sales, but now the company is looking to increase that share more than fivefold as it seeks to capitalize on its growing investment in digital media.

P&G -- and new CEO Bob McDonald -- is counting on e-commerce, including sales through such outlets as Amazon and Walmart.com as well as through its own websites, to become as much as a $4 billion or bigger business for the $79 billion company. That's more than eight times the $500 million a year P&G gets today from e-commerce.

Tellingly, P&G included both digital media and e-commerce in the job responsibilities of Lucas Watson when it appointed him global team leader of its digital business last year. Traditionally, the company has kept its retail sales and brand marketing functions mostly divided. But giving him responsibility for both has a strategic purpose, as the interconnection is both obvious and growing.

"Some categories see as much as 30% to 50% of their business in e-commerce," Mr. Watson said. "Our forecasts don't suggest consumer products will ever work like that. But it's not out of the realm of possibility e-commerce will be more than 1% of our sales. Getting north of 10% would be an aggressive goal, but somewhere in between that would be, we think, within the realm of possibility."

That would put e-commerce on par with such channels as dollar stores and drugstores, he said.

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China Set To Boost Apple's Global iPhone Sales, But Competition Likely to be Strong

After months of speculations, Apple iPhone 3G S is about to make its “official” entry in the Chinese market, following China Unicom's announcement of a three-year deal with Apple to sell the watershed device in China in 4Q. Through this deal, and while Apple is set to face several issues in the coming months, the giant tech company is set to make a big splash in the Chinese market, which has become the largest handset market in the world, with 670 million+ wireless subscribers, according to the Ministry of Information Industry. 

Bottom line: If all goes well, the Chinese smartphone market could be an instant home run for Apple, which has kept an eye on the Chinese market since the launch of its first iPhone in 2007. With 22 million iPhones sold worldwide, the Chinese market, which is now moving full speed toward the 3G revolution, could boost Apple's iPhone sales globally, and provide upsides to Apple's future estimates, especially as other Chinese carriers adopt the iPhone in the coming years. However, China Mobile, Nokia, Samsung, LG, Motorola, RIM, HTC, Dell, among others, are set to become fierce competitors for Apple in the Chinese market. At the end of the day, the iPhone 3G S could stimulate innovation in the Chinese smartphone market, and set the bar higher in terms of mobile user experience in China.

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New Nestle candy said to be healthy

Nestle recently introduced a stack that stresses health and nutritious value, it said.

The snack — Nestle Smarties — is packaged and imported directly from Germany. Its sugar coating is made of natural ingredients and doesn't contain any artificial coloring.

Beneath its sugar coating is milk chocolate. “One would be overwhelmed with the aromatic rich chocolate the moment he or she bites into its crispy sugar coating. Its splendid taste guarantees that one would pop one after another non-stop,” Nestle says.

On top of that, Nestle says the candy's hexagonal package would grab children's attention right away.

“Its unique packaging seal design not only retains its wonderful taste, but also saves the kids from worrying that it'll melt and smudge their clothes even if they place the unfinished snack in their school bags, or pockets. The three dimensional packaging could also be used as the raw material for art works, and allow kids' imagination and creativity to run wild,” Nestle says.

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IBM: Forget Office, Join the Symphony Family

IBM last week announced upgrades to and a roadmap for its 15-month-old Lotus Symphony suite of productivity tools, emphasizing it indeed offers an alternative to Microsoft Office.

The move comes after Microsoft recently said that a court order to remove Office from store shelves next month could leave consumers and businesses "stranded without an alternative set of software."

Microsoft is battling a patent infringement case brought by Toronto-based i4i over XML file formats. The 2007 case resulted in a $290 million judgment against Microsoft and an injunction that bars it from selling Word 2003 and Word 2007 after Oct. 10 unless the offending technology is removed.

"What we are trying to do with Symphony is establish that there is an option in the market and companies don't have to spend the money they spend for productivity suites," says Ed Brill, director of product management for Lotus Software.

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2011 Bentley Mulsanne U.S. Dealer Tour Kicks Off in September

Bentley on Wednesday told Inside Line that it is already taking deposits for the 2011 Mulsanne in the U.S. market and will roll out its new flagship on a dealer tour here that runs from early September through November. But it has ruled out putting the Mulsanne on Facebook.

"We prefer more one-on-one marketing," said Bentley's U.S. spokesman David Reuter in a telephone interview withInside Line on Wednesday. We had asked if the Mulsanne would be Bentley's first product to have its own Facebook page.

The Mulsanne tour begins at Bentley's California dealerships and then will hit Texas, Miami, Chicago, Detroit and New York through November. The tour will not include test-drives of the car, which was officially launched last weekend at the Pebble Beach Concours d'Elegance. The Mulsanne will go on sale here in summer 2010, just behind the car's spring launch in Europe.

"Traffic flow on our Web site and calls to the hotline have been overwhelming," said Reuter, who added that he was unable to quantify the response at the moment since the car is only a few days past its debut.

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Volkswagen's Model Marketing

Unlike many of its rivals, Volkswagen Group has defied the global recession to post a 6.7% year-on-year increase in deliveries over July, its third consecutive month of growth. Its rise from a single-marque company to a multi-brand concern that appeals to most segments of society, is not unique, but its ability to consistently create the best marketing, despite the economic climate, is.

VW's latest results confirm it as the main contender to topple Toyota at the top of the global automotive industry - a target it has set itself to achieve by 2018.

When the VW group acquires Porsche next year, its 10-brand stable will include Audi, Bentley, Lamborghini, Volkswagen Commercial Vehicles and Skoda.

Industry experts claim VW's success is based on a strategy introduced in the early-90s of creating a portfolio of strong brands backed by high-quality advertising. 'Over the past 20 years, VW's leaders have worked to fill every segment and niche in the market, almost duplicating the great days of General Motors in the mid-20th century,' says Garel Rhys, emeritus professor at Cardiff Business School.

He adds that VW has the financial muscle to persist with its acquisitions, unlike US manufacturers such as Ford, which jettisoned Jaguar and Land Rover after getting into financial difficulties.

In addition, unlike other mass-market car marques such as Renault and Peugeot, the core VW brand has continued to thrive in Europe, and is alone in holding a market share of at least 10%.

'We have had a history of good advertising, built over 30 to 40 years,' says head of Volkswagen UK marketing, Rod McLeod. 'VW has the right values for a recession - certainty, solidity and quality - and good relationships with its marketing communications agencies.'

Stephen Woodford, chief executive at incumbent agency DDB London, agrees the marque's advertising is right for the times: 'VW's marketing embodies the qualities of the cars themselves - it's always well thought-through, understated and intelligent. When times are tough, people look for the best value and most consumers are smart enough to know that means achieving the right balance of quality and price.'

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Disney's Superhero Bid for Elusive Young Males

Walt Disney’s willingness to pay $4 billion to bring action heroes like the Hulk and X-Men into its pristine Magic Kingdom is a great example of the do-what-you-have to-to-do mindset in the new media market. After years of failing to attract young males to its creative cause, Disney is just buying them.

Disney’s surprise acquisition of Marvel Entertainment — a missed opportunity for rivals Viacom and Warner Bros. — assures its appeal beyond children and families across its film, TV, video game, theme park and merchandising ecosystem. Young male consumers are an elusive, but lucrative demographic is any media segment, as Disney knows from the success of its own ESPNfranchise.

Male Internet users, representing the cream of the crop economically, spend most of their time using the Internet, watching TV and playing videogames, according to eMarketer — all areas where Disney wants to bolster its reach of that demographic. The coveted group of males age 18 to 34 has been completely out of Disney’s reach, preferring to watch online video in places such as Wired.Digital, World Series of Poker and Major League Gaming, according to Nielsen Media. Seventy-five percent of males age 12 to 17  regularly play console video games, which will increasingly move to multiplayer games online, according to Nielsen Media.

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JetBlue inks sponsorship deal with UT athletics

Value airline JetBlue Airways has signed a deal to become the official airline sponsor of University of Texas athletics through the 2010 season.

Jet Blue currently operates six non-stop flights out of ABIA.

"Austin is a vital bridge and an important destination as we continue to grow," said Marty St. George, senior vice president of marketing for JetBlue. "Equally as important is supporting the teams and organizations that matter most to the community, and we look no further than the Texas Longhorns, with one of the largest and most passionate fan bases in all of college sports"

As the official airline sponsor of UT sports, JetBlue's partnership includes joint marketing promotions and advertising through 2010, with options through 2012. Featured elements are print and online advertising, e-mail marketing and videoboard features, contests, giveaways and special game-specific discounts off JetBlue airfare for Texas fans. The airline also receives field and courtside visibility during football, baseball, men’s and women’s basketball and volleyball games.

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