Saturday, January 31, 2009

Chevy Silverado Value Proposition

I really like the new television advertising campaign Chevrolet is doing for their Silverado line of trucks. These three commercials are humorous, short, and straight out value proposition advertisements. Chevy Silverado spokesman Howie Long does a great job in each of the three commercials as he picks out a particular value proposition from one of the three major truck manufacturers (Ford, Dodge, and Toyota) and bashes over their value proposition and presents them as being less than manly. In the end, a voiceover compares the competitions less than manly value proposition with Chevy Silverado’s value proposition.


Chevy Silverado Man Step Commercial
At the lumber yard a man secures a bird house in the back of his Ford F-150 with some tie down straps. When he is done he cautiously gets out of the bed of the truck with the help of the tailgate step and grab bar. He then proceeds to head to the cab of the truck until Howie says, "Hey buddy you left your little man step down." While the man embarrassingly flips down the grab bar, stows the step and closes the tailgate, the voiceover asks "Would you rather have a Ford F-150 with a man step or a Silverado that backs you for a 100,000 miles or 5 years?"


Chevy Silverado Manicure Commercial
While parking along the side of the street a man in a Dodge Ram truck backs up into Howie's Silverado giving the truck a slight bump. When Howie walks up to the driver's side of the truck the owner roles down the window and is very apologetic. Howie tells him, "Don’t worry it happens." Looking in the cab he asks, "Is that a heated steering wheel?" To which the man reluctantly admits. Howie then notices the man also has a manicure. Finding this all very funny he returns to his truck as the voiceover asks, "Would you rather have a Dodge Ram with a heated steering wheel or a Silverado with an EPA estimated 21 highway?"


Chevy Silverado Higher Voice
Howie notices a man in a vest and plaid shirt wiping some dirt off the hood of his truck and asks him if it is new. The man, trying to act manly and rugged responds in a forced deep voice, "Yep, a real trucker’s truck and real trucker’s stuff. You know truckers." When Howie asks, "How is it on gas?" the man’s voice becomes much higher as he responds "19 highway". Surprised Howie asks "V-8?" to which the man answers, "They said V-6." Howie smiles and tells the man, "Have fun being a real trucker." As Howie gets back into his truck the voicover states, "Tundra's V-6 offers an EPA estimated 19 highway Silverado's V-8 offers 21."

Saturday, January 3, 2009

G

What is G?


Have you seen the new G commercial on television over the holidays, if not, here is a sample courtesy of Youtube. G Commercial

Still wondering what G is? G is a major rebranding for Gatorade and according to a company statement, "For Gatorade, G represents the heart, hustle and soul of athleticism and will become a badge of pride for anyone who sweats." In my opinion, the statement is a little over the top, but it’s marketing and what else would you expect.

The commercial is actually pretty good because it offers no connection to Gatorade and it leaves the viewer with a need to know what G is. I think this is a great way to start a rebranding campaign. Undoubtedly we will see some additional commercials in the near future that directly connect G to Gatorade.

Why does Gatorade need rebranding? It’s appears PepsiCo is in the mood for rebranding. Actually PepsiCo’s Gatorade brand in recent years has lost some market share to rivals in the hydration category, most notably Glaceau Vitaminwater. Articles on the Gatorade rebranding subject are available on Adweek and BevNet

In addition to rebranding Gatorade as G, line extensions will also be renamed. Wow, PepsiCo marketing executives are really doing this up big time. On the surface, renaming the line extensions sounds rather risky until you take a look at the new product packaging. At least the marketing executives had enough sense to reference the old line extension name so the consumer won’t be totally lost. I assume the old line extension name will be removed from the product packaging in due time.

Here are some pictures of the new rebranded products. Notice the old line extension name still appears on the product packaging.

Gatorade is now G.
Gatorade Fierce is now Bring It.
Gatorade X-Factor is now Be Tough.
Gatorade AM is now Shine On.
Gatorade Rain is now No Excuses.
It’s pretty safe to say PepsiCo marketing executives are exhibiting some XL huevos by rebranding Pepsi, Gatorade, and a couple other brands at the same time. As for ADEP Winter 09 BUS 375 and the timing of this major PepsiCo rebranding effort, priceless.

New Pepsi Logo – 2008 Version

Prepare yourself for the marketing blitz. After twenty one years, PepsiCo is dumping a perfectly good logo and going with a whole new look. I really don’t see a need for this, but apparently PepsiCo marketing executives feel the move is required to capture more market share, It’s hard to imagine the risk and expense to make such a move.

The picture below shows major shifts in the Pepsi logo over time.
New logo on a can
For such a huge decision, I find no press releases regarding the logo change on PepsiCo’s website, not even on the Pepsi website. I did find a bit of information regarding the logo change on BevNet. Maybe the job is not complete yet and no press is good press. I see a couple Pepsi websites are not complete yet. Pepsi Bottling Group still has product pictures with the old logo as well as the delivery truck. Take a look under the products tab at Pepsi USA and you will only see 5 of 12 Pepsi products displayed with the new logo.
What I find most interesting is the amount of negative comments in blogs on the internet, search “new Pepsi logo”. These are probably mostly people who are resistant to change, but I do like the creativity of one blogger who posted his version of the new Pepsi logo and the inspiration for it.

Only time will tell if this was a great or really bad decision for PepsiCo. Either way, I am sure the marketing blitz will be coming soon and leaving slowly.








Friday, January 2, 2009

COGS Effect on SG&A and R&D

The short video we saw called “The Other Drug War” and some general discussions we had in class, sparked my curiosity on how pharmaceutical companies can afford to use large percentages of annual revenue to fund SG&A (selling, general and administrative) and R&D (research and development). The answer is COGS (cost of goods sold) and fairly easy to see by comparing financial statements from major pharmaceutical companies with other major companies in industries that also have R&D expenses, like software, computers, and microprocessors.

COGS in pharmaceutical and software companies
are 2-3 times less than companies that develop, market, and sell computers and microprocessors. COGS for pharmaceutical and software companies range from 19-33% of there annual revenue and COGS for computer and microprocessor companies range from 48-76% of their annual revenue.

Pharmaceutical and software companies are taking advantage of lower COGS to increase their SG&A and R&D budgets which in turn feeds the machine for continued growth and profitability. Based on this simple analysis, if you want to increase the SG&A and R&D budgets, reduce COGS.

Percentage of Annual Revenue - 2007

Computers and Microprocessors
HP
COGS 76%
SG&A 12%
R&D 4%

IBM
COGS 54%
SG&A 22%
R&D 6%

Apple
COGS 66%
SG&A 12%
R&D 3%

Ericsson
COGS 59%
SG&A 12%
R&D 15%

Intel
COGS 48%
SG&A 14%
R&D 15%

Motorola
COGS 73%
SG&A 14%
R&D 12%

Software
Microsoft
COGS 21%
SG&A 29%
R&D 14%

Oracle
COGS 19%
SG&A 26%
R&D 12%

SAP
COGS 33%
SG&A 26%
R&D 14%

Pharmacutical
Eli Lilly
COGS 19%
SG&A 33%
R&D 23%

Pfizer
COGS 23%
SG&A 32%
R&D 17%

Merck & Co
COGS 25%
SG&A 31%
R&D 20%

GlaxoSmithKline
COGS 22%
SG&A 31%
R&D 15%