Tesco, the U.K.’s largest grocery chain, is using weather-forecasting software to predicted temperature changes that influence customer needs and demand.

Tesco said the system has already predicted temperature drops during July that led to a big increase in demand for soup and hot puddings.

The computer program includes detailed regional weather reports for the whole of the UK going back five years and, crucially, what each Tesco store sold as a result of that weather.

A rise of 10C, for example, led to a 300% uplift in sales of barbecue meat and a 50% increase in sales of lettuce.

(Via The Times and Cool News)

233,906 to be precise.  Burger King offered Facebook users a free Whopper in exchange for “de-friending” 10 friends. 82,771 people took up the offer within a week before Facebook shut down the application citing privacy concerns.

Just one of the thought-provoking nuggets from Jeremy Abelson’s interview with Alex Bogusky.

They are the agency that developed the recent Microsoft campaign and Bogusky’s explanation of their approach is  interesting:

When we started working on this we swung everyone in the agency over to PC’s, and really all of the senior people on the account are working on PCs, and we thought it was really important because we do a thing called method advertising, which is if you don’t use it, you don’t know how to talk about it. And I think in the past Microsoft’s creative had a lot of swirly magical kind of stuff going on, and it might have been because their agencies weren’t working on PCs. So once you start working on it and you understand you can do a better job on it, and I think we’ve done a really good job on it and, you know, one of the key factors is that we use them. I had never worked on a computer other than an Apple, and I thought, “Oh my god! Will I be able to do this?”

Watch the interview or read the entire transcript here.

Meanwhile, on the subject of creativity being a commodity, here’s a topical article on “Dumb Dads in Advertising”.

An interesting new campaign from Microsoft attempts to reposition Macs. The approach is quite interesting – someone is given a fixed sum of money to buy a laptop that they need. They look at Macs but find that PCs are better value for money. All this while damning Macs with praise. “I guess I’m not cool enough to be a Mac person”, “This is so sexy! But Macs to me are about aesthetics more than computing power”.

Time will tell if this approach pays off for Microsoft and HP, whose laptops seem to be the ones that are getting bought in these ads. But it’s certainly an interesting approach and timely given the recession.

This is quite simply amazing. It created buzz, activated the brand and ultimately sold the product.

Click here to see the story of the campaign.

Sheer marketing genius.  Read the entire “recession washing” report here.

According to The Economist,

(Hyundai) is now gaining market share more quickly than any other carmaker in America.  It has managed to increase its car sales in America—they rose by 14% in January compared with a year earlier.

One of the holy cows of global marketing in the 20th century  is the concept of market evolution. The idea is that markets develop along broadly similar lines along a spectrum where the habits and behaviours of consumers in the  poorer, developing countries in Latin America, Africa and Asia will eventually become more like those in the West.  At a very broad level, this theory has held true for most of the 20th century. As wealth accumulated in the West and innovation concentrated in Europe and the US, it was common and sensible practice to roll out these innovations to developing countries.  A typical chart might look something like this:

This has now changed in two ways.

1. A Leap in Evolution. Consumer habits in some developing countries, particularly in urban Asia, are now more advanced than in the West, in several mass market categories.  (This excludes Japan, which cannot be considered a developing economy.)  The repertoire of products and services used, per capita consumption, category penetration and trial rates of new products in several categories are considerably ahead of  Europe and the US.  This is driving innovation in some categories at a rate far higher than that in the West.  Consumer habits and preferences are also evolving in ways that are very different from those in the West. The recent failure of Apple’s iPhone launch in India illustrates this:

Analyst estimates that total official iPhone sales here have yet to touch 20,000 handsets. (iSuppli) estimates iPhones cost less than $175 to build, (but) both Apple and Airtel stuck to the approximately $700 price for the phone in India, vs. $199 with a two-year AT&T contract in the U.S.  In India, then, three iPhones equal one Nano, the $2,000 car that Tata Motors  launched in India just two weeks ago.  For Airtel and Vodafone, subsidizing the phone has not been an option (because) the vast majority of Indian users have prepaid accounts…
According to Sanjay Gupta, the chief marketing officer of Airtel’s mobile business, Indians just use their phones differently. Indian customers like to forward text messages; Nearly 70% of them do that at least once a day, says Gupta. Until recently, the iPhone didn’t allow users to do that. “It’s a big functionality issue,” says Gupta. (via BusinessWeek)

2. Home-grown Innovation. The cost and infrastructure constraints of doing business in large, developing countries are fostering a reverse wave of innovation that originate there and in some cases are then rolled out to or copied by the West.  Not all these innovations are relevant in the West (in some cases they are kept out due to legal or market structure barriers) but they are certainly relevant and easier to bring to market in other developing countries. This is changing the pattern of both sources of innovation and evolution of markets.

The M-Pesa service offers Kenyans the ability to send and receive money using SMS messages. M-PESA is a new Safaricom service allowing you to transfer money using a mobile phone. Kenya is the first country in the world to use this service, which is offered in partnership between Safaricom and Vodafone. M-PESA is available to all members of the public, even if you do not have a bank account or a bankcard. (Via PSFK). This idea is now being copied in other markets like India and South-east Asia.

(In designing the Tata Nano car, which costs only $2000 ),  there were three possible ways they could have gone: work down from a car design, work up from a scooter or start with a clean sheet of paper.  By going for the third option, Tata has created a new template for developing ultra-low-cost cars…  The team even asked whether there was a need for doors and whether plastic instead of steel could be used for the bodywork. Tata has filed for three dozen patents for the Nano, mostly for innovations that are out of sight. (Via The Economist)

…from Bangladesh, one of the poorest nations on the planet.  France’s Groupe Danone built local microplants that produced one one-hundredth of the yogurt of a standard Danone facility, in part due to the lack of refrigerated storage. The microplants produced yogurt almost as cheaply as the larger ones and have now been rolled out to Indonesia. Lessons from operating in Bangladesh have also helped Danone launch Ecopack, a low-cost yogurt line, in France. (Via Fast Company)

Clearly it’s time to throw away those old market evolution charts! The constraints imposed by low incomes and poor infrastructure are leading to product and service design innovations in developing countries. These together with cultural differences are driving consumer habits and preferences in new and diverse ways – not necessarily along the same path as consumers in Europe or the US.

Bruce Tait writes about how “Marketing Science” (ie supposedly rock solid quantitative research) is undermining brands by fostering me-too strategies. The article refers to a number of studies showing a decline in brand differentiation, which forces brands to compete on price and promotions.

Thanks to Tallie Fishburne at Brand Camp

I’ve been in frustrating meetings where quantitative research has been rolled out to kill original and strongly differentiated propositions and to prop up ideas which common sense would tell us are exactly the same thing our competitors are doing. Tait explains why in his article:

If brands are to succeed they need to be based on differentiated, unfamiliar brand strategies. Unfortunately, these are the exact same ideas that people initially dislike. That’s why quantitative testing of alternative positioning ideas will likely systematically kill the more original ideas, and people will prefer the ones that are closest to what they already know.

The real gem in Tait’s article is his insight into why the  supposedly brilliant people in those meetings ignore common sense and logic while making their decisions:

Brand building is dangerous to your career if you don’t cover yourself with research
The market place is a complex and ever-changing environment. Things can go wrong. But if you do all the right testing beforehand and if you get a good test score, who could really blame you? Everyone involved in a failure can point at the test scores and ask, ‘Who could’ve known?’

Tait ends with a call to arms, for “a crusade to free marketers and brands from the tyranny of marketing science.” Count me in.

Note: Read the full text of Tait’s article here.

Grant McCracken writes about 4 ways in which consumer behaviour may change in the downturn as spending power (or perceived spending power) goes down. I’ve summarized his ideas below:

1. Elastic Consumers: spending less during the crisis but reverting to old habits once things get better

2. The Exception: spend less on most product categories but keep spending at the current level on one (or more).

3.  Trading-up: Spend less on some categories to spend more on others. (Which ones and why is an interesting and important question to answer!)

4.  Sticky Savers: reducing spending during the crisis and staying that way forever.

Read the original article here.

I did a little research to look for actual examples of these types of behaviour. Here are two of the more famous (but most probably apocryphal) ones:

The Lipstick Index (Via The Economist)

a term coined by Leonard Lauder, the chairman of Estée Lauder, a cosmetics firm, in the 2001 recession. In the autumn of that year, lipstick sales in America increased by 11%. Believers in the theory trace the phenomenon back to the Depression, when cosmetic sales increased by 25%, despite the convulsing economy.

If this theory were true, then lipstick could be an “Exception” or a “Trading-Up” category for many people. However, The Economist writes that while lipstick sales do increase during economically difficult times, they also increase during times of relative prosperity so there is no clear correlation. Click here to see a great chart showing the data.

The Mama Noodle Index (via Wikipedia)

In 2005, the Mama Noodles Index was launched to reflect the sales of Mama noodles, the biggest manufacturer in Thailand. The index was steady since the recovery from the East Asian financial crisis, but sales jumped by around 15% in the first seven months in 2005 on a year-to-year basis, which was regarded as a sign of recession. People could not afford more expensive foods, hence the increase in the purchase of instant noodles, as instant noodles is seen as an inferior good.

I haven’t been able to find data to prove or disprove this theory but the notion of instant noodles being an inferior good may not be the only explanation as this article by Christopher Solomon describes:

It is comfort food in the ultimate sense of the word: the comfort that you can eat, and feel as if you’ve eaten, for mere pennies. One does not hanker for instant ramen. One doesn’t dive into the cupboard in search of ramen and emerge with, say, tomato soup. It is almost always the other way around.Yet this meal of last resort is all the more satisfying, because the alternative — hunger — is unthinkable.