Hits & Misses
Company bets that paid off and those that bombed.
(Business 2.0 Magazine) -- [HIT] Sound strategy. If you're pitching a movie about apparitions that only kids can see, what better way than to run ads with sounds that only kids can hear? Hence Sony's (Charts) TV spots for The Messengers, which included an inaudible-to-adults 17-KHz tone along with a voice-over that said, "If children can hear this, imagine what they're seeing." The tones were similar to those developed by a British security firm to help stores repel loitering teens, which were then co-opted, in classic teen-guerrilla fashion, as surreptitious classroom ringtones. They seem to have been no less effective at the box office, helping The Messengers top the charts on its debut weekend en route to a seven-week gross of $35 million.
[MISS] An inconvenient deal? Since Quiksilver (Charts) aspires to be "the dominant outdoor lifestyle company," the surf-gear maker's 2005 push into winter sports seemed to make sense. And after it bought Rossignol for $320 million, the logic was affirmed by Wall Street, which sent its stock up 14 percent last year. But whether the result of climate change or bad timing, Quiksilver's cruise down the mountain has turned into a boots-over-helmet tumble. With the warmest winter on record leading to paltry snowfall across much of the globe, Quiksilver's profit fell 87 percent for the first quarter of '07. Several analysts downgraded the stock, while those at JPMorgan -- in a report titled "Skiing on Grass Is Not Fun" -- slashed earnings estimates for Quiksilver by a third.
[HIT] Ode to the common man. It may seem obvious, but it's advice marketers too often forget: Don't alienate your core customers. It clearly slipped the mind of SABMiller, whose precious "Girl in the Moon" campaign for its High Life brand led to a 7.5 percent sales plunge in key Midwest markets for most of 2006. But with help from ad agency Crispin Porter & Bogusky, Miller pulled out of its nosedive. After it rolled out spots featuring a boisterous delivery guy who charges into gourmet grocers and bistros to repo their High Life, sales in heartland markets like Chicago bounced back 5.6 percent. Now the question is whether the turnaround will last. Though Miller is happy with the High Life ads and plans to roll them out nationwide, CPB and Miller parted ways in March over differences in the strategy for the brewer's Miller Lite brand.
[HIT] Would you like that in a people bag? While most dog food tests pet owners' gag reflexes, Nestlé Purina's Beneful line looks like something out of Bon Appétit -- and has dished up results tasty enough to make company execs salivate. Sales of the brand's dry versions, with ingredients like pearled barley and sweet potatoes formed into colorful nuggets, averaged double-digit growth for the past five years and hit $170 million in 2006. Heartened by this success, last spring Purina unveiled Beneful Prepared Meals, wet food in resealable tubs that look at home in any Sub-Zero. The line did $20 million in sales last year even as the overall market fell 6 percent.
[MISS] Don't bogart that insulin. Given the average human's disdain for injections, it's no surprise that Pfizer (Charts, Fortune 500) has high hopes for Exubera, the world's first inhaled insulin product. The company projects eventual annual sales of $2 billion -- but a limited rollout to specialists has thus far drawn mixed reactions at best. "There is no advantage to Exubera, and there may be a safety risk," said Dr. John Buse, a president-elect of the American Diabetes Association, to an AP reporter in March. "I see it as my job to talk people out of it." U.S. insurers, meanwhile, have limited their coverage of the pricier new option, and national health systems in Germany and England have refused to cover it at all. Not that patients are clamoring for it: The delivery system for the vaporized doses was recently dissed by a prominent diabetic blogger as a "medicinal bong." The upshot? Analysts at Citigroup and Merrill Lynch have slashed their estimates for annual sales by 2010 to just $265 million and $500 million, respectively.To send a letter to the editor about this story, click here.
From the May 1, 2007 issue