Today’s profit warning from Chipotle has obviously surprised the market. At time of writing, shares have dropped 20%. Either this decline is a typical over-reaction by Wall Street or alternatively the exceedingly high share price to date was the overreaction. The warning is just one more reflection of how weak the economy is, but it is also a back handed compliment to the 800lb gorilla in the fast food sector – McDonald’s.
While Chipotle and Darden ( a really well run company) announce profit warnings, the Golden Arches continues to go from strength to strength announcing good August results with US sales alone up by 4.5%.
Only a few years ago, McDonald’s was a basket case with few predicting a bright future. Deceased CEOs Jim Cantalupo and Charlie Bell energized the business and put it back on the right track – a track that it has never since looked like falling off. I am so impressed the Oakbrook based chain that when keynote speaking about branding, innovation and business growth, I suggest audience members should have their next informal business meeting at a newly refurbished McDonald’s. Why? Well, if you haven’t been to a McDonald’s outlet in recent years, you’re in for a surprise. The ambience and store decoration is inviting – even comfortable where McCafe is in situ, the coffee is drinkable (but don’t tell me it is comparable to Starbucks) and items like the Chicken Snack-Wrap are quite simply good.
Sometime, somewhere, McDonald’s almost lost it. Today the brand is relevant, the products are relevant and in a climate where money is tight, the pricing is relevant.
Chipotle’s price point - at almost $10, is substantially higher than McDonald’s. But if the very recent darling of Wall Street is suffering, it is not inconceivable that the burger giant will hit a rough patch as well, but it sure deserves kudos for what it has achieved to date
Friday, September 12, 2008
Wednesday, September 03, 2008
Is Sarah Palin a VIP product?
When I speak on Innovation one of the concepts I reference is VIP products. A VIP product is the Holy Grail of Innovation in that it is a product that generates incremental Volume, Image and Profit. In the commercial environment VIP products include Apple iPod, Toyota Prius (here the ‘P’ might stand for Perception rather than Profit) and Gillette Fusion which is the fastest ever entrant into the P&G billion dollar club.
Moving away from the commercial environment to the political arena, the question arises - “Is Sarah Palin a VIP product for the GOP?” She has had a pretty shaky start but no fatal wounds have been incurred yet, so let’s see if she might be that VIP product that will help the Republicans hold the White House.
V – Volume of votes – incremental or not?
The lady definitely has energized the Rush Limbaugh market which is a critical sector for the Republicans. Current reaction would suggest that more of this group will now vote the GOP ticket. They were never going to vote Obama, but prior to Palin, not all of this group might have bothered to vote. The likelihood that Hilary supporters will vote for Palin is slight given their diametrically opposed ideology on most issues. Assuming there are no unknown issues, the 44 year old Governor of Alaska will engender Incremental Volume amongst a certain segment of the voting public. She may also though energize the liberal wing of the Democratic Party and ensure there is Incremental Volume on this side.
I – Image.
Will this selection generate Incremental Image for the Republican ticket? Hmm! It has heightened awareness for sure, but whether it has improved the Image of McCain and GOP is really questionable. If the apparently competent Palin had a few more years experience, her selection would have been a definite home run for McCain across a broad spectrum of voters. Now the jury is out big time and questioning the decision and decision making of John McCain. If Sarah Palin is as powerful a candidate as she is being painted (Republicans are praying that she is rather than genuinely believe it) and can withstand the tremendous pressure of the next two months, she will generate Incremental Image for the ticket and thus generate Incremental Volume of votes for McCain. The only thing her speech tonight will tell us is whether she is a good orator of someone else’s words, because you can be sure the very best scriptwriters are working on her script. However a good performance will probably create enhanced Image for her and the ticket.
P – Perception (rather than Profit)
Once the hysteria about her running for VP as mother of a recent Down’s Syndrome child and soon a daughter who is pregnant dies down, she may well benefit from all fuss. I think there will be a sneaking admiration for her (if she maintains her poise) as the campaign continues and this is quite likely to build the longer she holds up. While “Perception is Reality,” the challenge for the GOP will be to ensure that the ‘Reality’ of Palin they are presenting is genuine. If after a few more days, the mainstream media accepts there is substance to her ‘Maverick’ and ‘Reformer’ tag, the public Perception of her will grow.
Using another marketing analogy, is this lady akin to the Motorola RAZR which burned very bright for a short period before flaming out or is she the Blackberry?
Time will tell, but it sure is interesting.
Moving away from the commercial environment to the political arena, the question arises - “Is Sarah Palin a VIP product for the GOP?” She has had a pretty shaky start but no fatal wounds have been incurred yet, so let’s see if she might be that VIP product that will help the Republicans hold the White House.
V – Volume of votes – incremental or not?
The lady definitely has energized the Rush Limbaugh market which is a critical sector for the Republicans. Current reaction would suggest that more of this group will now vote the GOP ticket. They were never going to vote Obama, but prior to Palin, not all of this group might have bothered to vote. The likelihood that Hilary supporters will vote for Palin is slight given their diametrically opposed ideology on most issues. Assuming there are no unknown issues, the 44 year old Governor of Alaska will engender Incremental Volume amongst a certain segment of the voting public. She may also though energize the liberal wing of the Democratic Party and ensure there is Incremental Volume on this side.
I – Image.
Will this selection generate Incremental Image for the Republican ticket? Hmm! It has heightened awareness for sure, but whether it has improved the Image of McCain and GOP is really questionable. If the apparently competent Palin had a few more years experience, her selection would have been a definite home run for McCain across a broad spectrum of voters. Now the jury is out big time and questioning the decision and decision making of John McCain. If Sarah Palin is as powerful a candidate as she is being painted (Republicans are praying that she is rather than genuinely believe it) and can withstand the tremendous pressure of the next two months, she will generate Incremental Image for the ticket and thus generate Incremental Volume of votes for McCain. The only thing her speech tonight will tell us is whether she is a good orator of someone else’s words, because you can be sure the very best scriptwriters are working on her script. However a good performance will probably create enhanced Image for her and the ticket.
P – Perception (rather than Profit)
Once the hysteria about her running for VP as mother of a recent Down’s Syndrome child and soon a daughter who is pregnant dies down, she may well benefit from all fuss. I think there will be a sneaking admiration for her (if she maintains her poise) as the campaign continues and this is quite likely to build the longer she holds up. While “Perception is Reality,” the challenge for the GOP will be to ensure that the ‘Reality’ of Palin they are presenting is genuine. If after a few more days, the mainstream media accepts there is substance to her ‘Maverick’ and ‘Reformer’ tag, the public Perception of her will grow.
Using another marketing analogy, is this lady akin to the Motorola RAZR which burned very bright for a short period before flaming out or is she the Blackberry?
Time will tell, but it sure is interesting.
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