I have seen many television advertisements for Sonic Drive-In over the last couple years and I have never seen any of these restaurants. After a quick look on Sonic’s website, I see a grand total of 8 Sonic Drive-In’s from Bakersfield to San Diego. None of the 8 Sonic Drive-In’s are located in Los Angeles or Ventura County. Why is Sonic Corporation spending big money for television advertising in a market that has zero stores for potential customers to visit?
The most logical explanation I can provide is this television advertising campaign is part of Sonic Corporation’s market penetration strategy, attempting to generate demand and possibly attract some franchisees. Sonic Corporation does have more than 3500 Drive-In’s in 37 of 50 States. A search on whitepages.com for California locations, revealed 52. It does appear that at least 1 Sonic Drive-In will eventually show up in Los Angeles and Ventura County. Assuming my theory is correct, seems like a very expensive market penetration strategy.
How many Sonic Drive-In locations would be needed in Los Angeles and Ventura County to make their advertising campaign more effective is these areas?
Technically I am not qualified to answer the question, but I can provide a logical number.
Take a look at the number of California stores for some of the most common fast food restaurants that advertise on television in Los Angeles and Ventura County.
Jack In The Box = 949
Carl’s Jr. = 929
Taco Bell = 881
McDonald’s = 757
Burger King = 751
Del Taco = 722
Kentucky Fried Chicken = 652
Domino’s Pizza = 581
Pizza Hut = 537
El Pollo Loco = 349
Wienerschnitzel = 256
Papa Johns Pizza = 221
In-N-Out Burger = 167
Popeye’s Chicken = 162
Arby’s = 148
Sonic Drive-In = 52
Determine how many stores for the bottom 5 are located in Los Angeles and Ventura County
Wienerschnitzel = 50
Papa Johns Pizza = 86
In-N-Out Burger = 55
Popeye’s Chicken = 59
Arby’s = 41
Sonic Drive-In = 0
If Sonic had another 50 stores in Southern California and 20-30 of those in Los Angeles and Ventura County, I could see their current advertising campaign in these areas as being more effective.
I highly doubt Sonic Corporations television advertising campaign is national since they are only located in 37 of 50 states. Therefore, Sonic Corporation should be able to save some valuable marketing dollars by concentrating their television advertising into specific areas where their stores are actually located. I think Sonic franchisees who pay advertising fees would also agree.
Wednesday, December 31, 2008
Sunday, December 7, 2008
Texas Best BBQ Sauce, Re-building the Brand
I am sure just about every person who likes to cook has a secret recipe or two and they have dreamed about marketing the recipe and making millions. I personally like to cook and I fall into this category.
I came across an article in CNN Money Small Business that was written November 17, 2008. This is a great article about the marketing mix and insights into what is required to properly plan and launch a product. CNN Money - Texas Best BBQ
Texas Best BBQ Sauce has a past that began in 1975 and through a few sales has recently ended up in the original owner’s hands, a full 360. The brand had a following through the years, but was eventually removed from national supermarket shelves in 2006 by the previous owners.
The new owners (actually the original owners) have a marketing plan to relaunch the brand. The initial “place” plan was to launch Texas Best nationally in supermarkets and specialty stores. The owners were planning on spending several hundred thousand dollars on the relaunch campaign.
The article does not mention how Fortune Small Business became involved, but they recruited three experts to help the owners of Texas Best BBQ Sauce with their relaunch campaign. In my opinion, getting experts involved in your marketing plan is a must for a new business. I am sure the consulting fees will be well worth it in the long run.
One consultant urges the owners to ditch their national launch plans. Instead, recommends focusing on reintroducing the sauce to regional supermarket chains and specialty stores in former stronghold markets such as the South and Northeast. This consultant also offers many other suggestions to help with the “place” and “promotion” of their marketing plan.
The second consultant is assigned to help the owners with their website, maximizing the impact and “promotion” of their product. Again, this consultant points out many mistakes with the website that cost $5,000 to create, then proceeds to offer many improvement suggestions to help with the “promotion”. Other suggestions to help create a buzz would be using Facebook, YouTube, and Blogs.
The third consultant is the bean counter and offers up an assessment of “price” and how little profit will be made in the end. This consultant also brings up the need for realistic business plans and goals which could help to land possible future expansion investors.
The owners of Texas Best BBQ have already revised their marketing and business plans to coincide with many of the consultant recommendations. CNN Money Small Business plans on visiting Texas Best BBQ again in the near future to see how they are doing, could be an interesting follow up story.
I came across an article in CNN Money Small Business that was written November 17, 2008. This is a great article about the marketing mix and insights into what is required to properly plan and launch a product. CNN Money - Texas Best BBQ
Texas Best BBQ Sauce has a past that began in 1975 and through a few sales has recently ended up in the original owner’s hands, a full 360. The brand had a following through the years, but was eventually removed from national supermarket shelves in 2006 by the previous owners.The new owners (actually the original owners) have a marketing plan to relaunch the brand. The initial “place” plan was to launch Texas Best nationally in supermarkets and specialty stores. The owners were planning on spending several hundred thousand dollars on the relaunch campaign.
The article does not mention how Fortune Small Business became involved, but they recruited three experts to help the owners of Texas Best BBQ Sauce with their relaunch campaign. In my opinion, getting experts involved in your marketing plan is a must for a new business. I am sure the consulting fees will be well worth it in the long run.
One consultant urges the owners to ditch their national launch plans. Instead, recommends focusing on reintroducing the sauce to regional supermarket chains and specialty stores in former stronghold markets such as the South and Northeast. This consultant also offers many other suggestions to help with the “place” and “promotion” of their marketing plan.
The second consultant is assigned to help the owners with their website, maximizing the impact and “promotion” of their product. Again, this consultant points out many mistakes with the website that cost $5,000 to create, then proceeds to offer many improvement suggestions to help with the “promotion”. Other suggestions to help create a buzz would be using Facebook, YouTube, and Blogs.
The third consultant is the bean counter and offers up an assessment of “price” and how little profit will be made in the end. This consultant also brings up the need for realistic business plans and goals which could help to land possible future expansion investors.
The owners of Texas Best BBQ have already revised their marketing and business plans to coincide with many of the consultant recommendations. CNN Money Small Business plans on visiting Texas Best BBQ again in the near future to see how they are doing, could be an interesting follow up story.
Sunday, November 30, 2008
Convenience Value = Big Profit for Frito-Lay
I recently visited the local Costco to stock up on some Thanksgiving Day supplies and two of my purchases were a 28 oz bag of Frito-Lay Ruffles and a 30oz bag of Frito-Lay Doritos. I have purchased these products from Costco before, but I never noticed the retail price printed on these bags, $7.59 for Ruffles and $7.69 for Doritos.
I imagine these huge bags of chips are made specifically for Costco and I don’t really understand a need for a printed retail price on the bag, particularly when Costco charges $4.99 for these chips, everyday. I think it is interesting that Costco charges a price that is approximately 35% lower than the retail price printed on the bag.
I am certain Frito-Lay is not loosing money on each bag of chips they sell to Costco and I have to assume Frito-Lay is making some sort of profit. Since Frito-Lay is making a profit on 28oz and 30oz bags of chips they sell to Costco, what kind of profit are they making on the smaller bags of chips they sell to other stores, particularly convenience stores?
It’s safe to say that you can expect to pay full retail price for any bag of Frito-Lay chips you purchase at a convenience store. If you compare the price per ounce of Costco purchased and convenience store purchased chips, the minimum profit over Costco numbers are huge. These numbers range from a 67% increase for an 18oz bag of Doritos to 196% increase for a 1.875oz bag of Ruffles.
Ruffles
28oz at Costco = 4.99 = .18 per oz
14oz at conv store = 4.99 = .36 per oz = 100% minimum profit increase
10.5oz at conv store = 3.99 = .38 per oz = 113% minimum profit increase
2.75oz at conv store = 1.29 = .47 per oz = 177% minimum profit increase
1.875oz at conv store = .99 = .53 per oz = 196% minimum profit increase
Doritos
30oz at Costco = 4.99 = .17 per oz
18oz at conv store = 4.99 = .28 per oz = 67% minimum profit increase
12.5oz at conv store = 3.99 = .32 per oz = 92% minimum profit increase
7oz at conv store = 2.29 = .33 per oz = 97% minimum profit increase
3.625oz at conv store = 1.29 = .36 per oz = 114% minimum profit increase
2.125oz at conv store = .99 = .47 per oz = 181% minimum profit increase
It is fairly obvious to see that Frito-Lay is making very large profits from convenience store sales, smaller the package, greater the profit.
I imagine these huge bags of chips are made specifically for Costco and I don’t really understand a need for a printed retail price on the bag, particularly when Costco charges $4.99 for these chips, everyday. I think it is interesting that Costco charges a price that is approximately 35% lower than the retail price printed on the bag.
I am certain Frito-Lay is not loosing money on each bag of chips they sell to Costco and I have to assume Frito-Lay is making some sort of profit. Since Frito-Lay is making a profit on 28oz and 30oz bags of chips they sell to Costco, what kind of profit are they making on the smaller bags of chips they sell to other stores, particularly convenience stores?
It’s safe to say that you can expect to pay full retail price for any bag of Frito-Lay chips you purchase at a convenience store. If you compare the price per ounce of Costco purchased and convenience store purchased chips, the minimum profit over Costco numbers are huge. These numbers range from a 67% increase for an 18oz bag of Doritos to 196% increase for a 1.875oz bag of Ruffles.
Ruffles
28oz at Costco = 4.99 = .18 per oz
14oz at conv store = 4.99 = .36 per oz = 100% minimum profit increase
10.5oz at conv store = 3.99 = .38 per oz = 113% minimum profit increase
2.75oz at conv store = 1.29 = .47 per oz = 177% minimum profit increase
1.875oz at conv store = .99 = .53 per oz = 196% minimum profit increase
Doritos
30oz at Costco = 4.99 = .17 per oz
18oz at conv store = 4.99 = .28 per oz = 67% minimum profit increase
12.5oz at conv store = 3.99 = .32 per oz = 92% minimum profit increase
7oz at conv store = 2.29 = .33 per oz = 97% minimum profit increase
3.625oz at conv store = 1.29 = .36 per oz = 114% minimum profit increase
2.125oz at conv store = .99 = .47 per oz = 181% minimum profit increase
It is fairly obvious to see that Frito-Lay is making very large profits from convenience store sales, smaller the package, greater the profit.
Sunday, November 23, 2008
Chevy Volt Electronic Vehicle
This blog entry originates from a 2008 Los Angeles Auto Show link I found on the LA Times homepage, 2008 Los Angeles Auto Show.
As I clicked on the link, I wondered what type of interesting articles I would find on near future fuel efficient vehicles. I spotted a link to some information on electronic vehicles and was pleased to read that many automobile manufacturers have already made a commitment to producing electric vehicles again. Consumers can expect to see these vehicles on the road and in dealerships by 2010, L.A. Auto Show - Carmakers charge ahead with electrics
I have to wonder if the electronic vehicle commitment will remain the same for all these manufacturers. More than likely these commitments were made when oil and gas prices started to dramatically increase a couple years ago and are back to reasonable levels now. The advanced development and marketing teams for all vehicle manufacturers must be pulling their hair out. My opinion is they should stay the course and push the development and marketing of these vehicles, we all know oil and gas prices will increase again.
One of the vehicles mentioned in the article is the “hotly anticipated” Chevrolet Volt and it’s $40,000 price tag. My immediate thought when reading $40,000 for an electric car, GM is not real serious about this market and they are going to get squashed by the competition again. The eventual winner in the electric vehicle market is going to be a manufacturer who incorporates great quality, affordability to the masses, basic needs options only, and customization options like Mimi Cooper and Scion.
My curiosity was peaked and I needed to take a look at this new “hotly anticipated” Chevrolet Volt, regardless of it’s $40,000 price tag. I took my search to Google and picked one of the first few hits, CNN Money - Chevy Volt.
Toyota Prius Production
As I clicked on the link, I wondered what type of interesting articles I would find on near future fuel efficient vehicles. I spotted a link to some information on electronic vehicles and was pleased to read that many automobile manufacturers have already made a commitment to producing electric vehicles again. Consumers can expect to see these vehicles on the road and in dealerships by 2010, L.A. Auto Show - Carmakers charge ahead with electrics
I have to wonder if the electronic vehicle commitment will remain the same for all these manufacturers. More than likely these commitments were made when oil and gas prices started to dramatically increase a couple years ago and are back to reasonable levels now. The advanced development and marketing teams for all vehicle manufacturers must be pulling their hair out. My opinion is they should stay the course and push the development and marketing of these vehicles, we all know oil and gas prices will increase again.
One of the vehicles mentioned in the article is the “hotly anticipated” Chevrolet Volt and it’s $40,000 price tag. My immediate thought when reading $40,000 for an electric car, GM is not real serious about this market and they are going to get squashed by the competition again. The eventual winner in the electric vehicle market is going to be a manufacturer who incorporates great quality, affordability to the masses, basic needs options only, and customization options like Mimi Cooper and Scion.
My curiosity was peaked and I needed to take a look at this new “hotly anticipated” Chevrolet Volt, regardless of it’s $40,000 price tag. I took my search to Google and picked one of the first few hits, CNN Money - Chevy Volt.
The Volt concept vehicle made it’s first appearance at the 2007 Detroit Auto Show and the buzz began, the concept was gorgeous, it resembled a Chrysler 300M on steroids. Who could not love the way this vehicle looked, however it was a concept, a toy model. The GM advance development and marketing teams accomplished what they wanted to accomplish, create a buzz, a big buzz.
Chevy Volt Concept
GM just unveiled their production version of the Volt last September and many of the early fans of this vehicle have abandoned their praise and are asking to be taken off the waiting list. The buzz has been killed and how could this happen?
Chevy Volt Production
The initial buzz was created by the marketing and industrial design teams in their realistic looking fantasy vehicle with no regard to engineering, design, and manufacturing. I am sure this sort of concept vs. actual phenomenon occurs all the time in the automobile industry, but I think there should be some resemblance between concept and actual.
I have to wonder if this Volt concept was actually a concept for some high performance gas guzzling luxury car in the 300M class of vehicles, I suppose it’s possible. GM could have decided to scrap the concept when oil and gas prices were on the rise, but the model was already made. The GM marketing team could have been trying to quickly react to a changing market, hey look at what we are doing and it’s called Volt and it's an electric vehicle.
What ever the true story is, GM missed the mark big time. They went from a Chrysler 300M on steroids resemblance to Toyota Prius resemblance. They could have created a concept that was a little more realistic and manufacturable while maintaining and elegant and futuristic look. Now they have lost some of their early fan club and turned them into a bash club. I am sticking to my earlier thought on this vehicle, GM is not real serious about this market and they are going to get squashed by the competition again.
For the record, I am not a GM basher. I currently own a GM truck and have owned three other GM vehicles in my life.
I have to wonder if this Volt concept was actually a concept for some high performance gas guzzling luxury car in the 300M class of vehicles, I suppose it’s possible. GM could have decided to scrap the concept when oil and gas prices were on the rise, but the model was already made. The GM marketing team could have been trying to quickly react to a changing market, hey look at what we are doing and it’s called Volt and it's an electric vehicle.
What ever the true story is, GM missed the mark big time. They went from a Chrysler 300M on steroids resemblance to Toyota Prius resemblance. They could have created a concept that was a little more realistic and manufacturable while maintaining and elegant and futuristic look. Now they have lost some of their early fan club and turned them into a bash club. I am sticking to my earlier thought on this vehicle, GM is not real serious about this market and they are going to get squashed by the competition again.
For the record, I am not a GM basher. I currently own a GM truck and have owned three other GM vehicles in my life.
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