Strategy Muse

How they boost income: 07-August-08

JCPenney, the department store chain, which is among the older and better known stores in the U.S., but more associated with mothers than their teenage daughters:
1. It is trying to change perceptions. It introduced Dorm Life, a lineup of products for girls getting into college after school:
2. It is reaching these customers on their terms
3. It hired EVB and spread their message via the web and an interactive, entertaining and humorous online "Dork Dodge" advergame that fashion and price conscious young women would enjoy and share, to lure them to the brand.
4. It placed the Dorm Life brand's interactive page on Facebook rather than build a traditional micro-site.

[Incoming college females is probably a smarter target than males, since guys of that age often look to the thrift store for clothes and to things like plastic crates and cinderblocks for furniture.]

[Click here for full story at Businessweek.com]

New marketing initiative for new customer base = new income stream

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JPMorganChase, Citigroup, Cerberus, Morgan Stanley and other Wall Street firms who cooked up the mortgage mess, the hedge fund blowups, busted buyouts, and credit market gridlock:
1. They want to take over and run troubled corporate pension funds, including those at IBM, Hewlett Packard, Verizon, and Alcoa. (There is $500 billion in "frozen plans" that are closed to new employees and whose benefits are capped)
2. They are lobbying Washington to let them run these funds.
3. They are hoping to sell a broad array of fee-generating products to related corporations by managing those troubled plans

[Click here for full story at Businessweek.com]

Desperation is the seeker of income in forbidden gardens.

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Lenovo Group Ltd., China's biggest personal-computer maker:
1. It gained market share in Europe by building up good sales channels through distributors including Ingram Micro Inc. and Tech Data Corp.
2. It has used IBM's sales networks and third-party distributors to expand international sales.
3. It is introducing lower-priced products aimed at consumers outside its corporate clientele amid slowing economic growth in October (after Acer Inc. began selling such products in June).

[Click here for full story at Bloomberg.com]

Good sales channel = open secret of good income
Avoiding low price product in a so-called low cost production base during an economic downturn = sub-optimal strategy, no?

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Puma AG, Europe's second-largest sporting-goods maker:
1. It boosted marketing spending prior to this year's big sport events, where it has to show presence to increase sales faster in the future
2. It will sponsor the Volvo Ocean Race yachting competition and two teams in the Bundesliga, Germany's top soccer league, in the upcoming season.
3. It will introduce sailing clothes in October
4. It may raise prices for its products in 2009

[Click here for full story at Bloomberg.com]

More marketing pull + more products + higher prices = more income

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GMR Infrastructure Ltd., operator of India's New Delhi and Hyderabad airports:
1. It will spend $10 billion on overseas acquisitions in industries including power and infrastructure.
2. It will buy airfields in Eastern Europe and the Middle East, where accelerating economic growth is driving demand for air travel.
3. It will sell shares in a company that will own the overseas assets within five years

[Click here for full story at Bloomberg.com]

Expanding in growing economies = higher income growth

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Procter & Gamble Co., the world's largest consumer-products company:
1. It raised prices on Cascade dishwashing detergent, Iams pet food and Gillette razors to counter record costs for oil used in plastic packaging and pulp for paper towels and toilet paper.
2. It will raise prices again in September on fabric, hair care, bar soaps and shaving products by as much as 16 percent. The increases will be the steepest in at least 18 months.
3. It will raise prices in China by an average of 3 percent

[Click here for full story at Businessweek.com]

Raising prices for rising costs = income imperative
Better products + deeper customer loyalty = easier to raise prices