How they boost income: 29-Apr-08
Sourav Mitra -
Tuesday, April 29, 2008 11:25 PM
Metro AG, Germany's largest retailer:
1. It added electronics and food outlets in Poland, Hungary and Russia, where economic growth is stronger than Germany's and now gets three-fifths of sales outside Germany.
2. Its Real chain is refurbishing stores to stem losses.
3. Its Real chain started a marketing campaign including its first TV advertising in three years costing 40 million euros this year.
4. Its Real chain reduced prices for some products to attract customers who usually shop at cheaper competitors such as discounters Aldi and Lidl.
5. It will expand this year into Ukraine, where the economy swelled by 7.4 percent in 2007's fourth quarter.
6. It will expand its Media Markt and Saturn electronics chains by opening more stores in Turkey and Russia and the first in Luxembourg.
[Click here for full story at Bloomberg.com]
More outlets where economic growth is stronger = more income
Refurbished stores = customer attraction = more income
Reduced price = customer attraction = more income
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Cable TV companies:
1. They are focusing on original programming because original shows attract new viewers and airing Hollywood movies is becoming less of a draw because viewers can rent films from their cable provider.
2. MGM, Lionsgate Entertainment, and Paramount are also getting into the pay TV business and their new channel will debut in September, 2009.
3. Lifetime channel, a Walt Disney and Hearst joint venture, agreed to pay the Project Runway's producers an estimated $150 million for the rights to air the show for five years increasing the per-episode cost to roughly $1 million, from $600,000.
4. They are swelling marketing budgets. Expensive Hollywood-style premieres have become de rigueur.
[Click here for full story at Businessweek.com]
If you can create or procure what will sell you are an income genius. But you will still need to push it with marketing money to catch the eyes of your clientele.
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Procter & Gamble Co., the world's largest consumer products company:
1. It will add health and beauty products to boost P&G's 10 percent share of that $350 billion market. It will buy Frederic Fekkai & Co. from Catterton Partners to expand into more profitable, faster-growing beauty lines. It was the fifth such purchase in two years.
2. It is stepping up marketing, cutting prices and increasing shelf space for products including Olay skin-care in developing economies such as India to take market share from Unilever
3. It is raising prices to counter higher costs for the oil, resins, phosphates and corn it uses to make everything from plastic bottles to Iams pet food.
4. It lowered the cost of Folgers ground coffee as bean prices fell during the quarter.
[Click here for full story at Bloomberg.com]
Adding profitable product lines = higher quality income that perhaps is not susceptible to economic downturns as they usually cater to wealthy customers unruffled by rising prices and falling values.
More aggressive marketing (cutting prices, increasing shelf space and other marketing spend) = more income
Raising prices = raising quality and sustainability of income to counter rising prices
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Avon Products Inc., the world's largest door-to-door cosmetics seller:
1. It has boosted advertising.
2. It has added recruits to its sales force.
[Click here for full story at Bloomberg.com]
Productive spending = more income
Unproductive spending = more expenditure
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Coca-Cola Co., the world's largest soft-drink maker:
1. It will make traditional Russian beverage kvas, because its market is the fastest-growing among non-alcohol beverages in Russia.
2. It will rent facilities at two breweries in central Russia.
[Click here for full story at Bloomberg.com]
Do in Russia as the Russians do, and you will find income.