Hits & Misses
(Business 2.0) – [HIT] A star is bought. After spending billions on the Olympics without seeing the expected jump in tourism revenue, Greece came up with a better investment: the annual Eurovision Song Contest. State-owned broadcaster ERT boosted interest in contestant Elena Paparizou by shelling out $850,000 to produce a music video, air promotions, and send the singer on a tour to 13 small nations such as Bulgaria and Serbia. The strategy played well, since the fans of each country, no matter its size, carry an equal weight in the American Idol-style voting. Paparizou's 38-point victory gave Greece the right to host the next contest, which should draw 200 million viewers and about $100 million in tourism spending.
[MISS] Money for nothing. In most of the world, switching cell-phone carriers is a simple matter: Just pop a new SIM card into your phone and you've got a new account. But if it's easy for customers to switch, it's also easy for providers to poach customers--and in the Philippines, a little too easy. The archipelago's two largest carriers, Smart and Globe, spent the last few years in an arms race in which they nudged people to switch with enticements like calling credits and coupons for local restaurants. Consumers caught on fast, switching back and forth to rack up the freebies. As a result, the carriers incurred an extra $34 million a year in expenses, and Smart recently admitted that some of the resulting subscribers were "transient."
[HIT] You hosers like cheap brew, eh? Despite its strong love for beer, Canada has long suffered from high prices for suds: A 12-pack of longneck Bud costs about 33 percent more up north, thanks largely to Canada's high sales tax. In the face of flagging demand, Labatt's closed a plant in Toronto earlier this year, but Brick Brewing of Waterloo, Ontario, came up with a better way to quench Canada's thirst: The small brewer dropped ad campaigns for its more expensive brands and pushed "buck-a-beer" 24-packs. At 82 U.S. cents a bottle, the packs flew off the shelves. Brick's first-quarter revenue grew 75 percent to $7 million, while profits grew fivefold.
[HIT] If only "krispy kremu" meant "makes you smarter." Kit Kat bars are a hit the world over, but Nestlé never had much luck pushing them in Japan--until it figured out how to crack the teen market. In Japan, the product's name is pronounced "kitto katsu," which roughly translates to "I hope you win." Fueling a rumor that Kit Kats bring success at crucial school exams, Nestlé rolled out packages combining the candy with other good-luck charms. Now 90 percent of Japanese schoolkids say they've heard the rumor, and Kit Kat sales soared 28 percent last year.
[MISS] Voq unpopuli. When Palm's Treo 600 hit the market in 2003, it reversed the fortunes of the beleaguered handheld maker. But there was a lesser-known beneficiary too: British Columbia's Sierra Wireless, which brought in about $40 million last year supplying the phone's wireless modem. That wasn't enough, however, for Sierra CEO David Sutcliffe, who decided that Sierra would be better off making its own smartphones. Yet despite spending almost $15 million to develop the Voq, a $399 Windows-based model with an awkward flip-out keypad, Sierra found few carriers willing to sell the unit. By the time it halted production in June, the company had rung up less than $2 million in sales. Palm, meanwhile, dropped Sierra as its supplier for the next-generation Treo 650.
[MISS] Where the rubber fails to meet the road. When Formula One Group revised its tire-safety rules for the 2005 season, the world's most popular car racing circuit was trying to prevent blowouts, not create one. Yet that's what resulted when Formula One again tried to get America's Nascar-loving fans to embrace a U.S. Grand Prix. While the event did draw 120,000 spectators, an impasse over the Michelin tires used on most of the vehicles led to only six cars actually hitting the track. Attendees booed, walked out, demanded refunds, and filed lawsuits; Indianapolis Motor Speedway executive Joie Chitwood said the racetrack might end its relationship with Formula One as a result.