On the Post-9/11 Plague

Blitz Magazine, November 2001

On September 9th, it was time to start another book. I randomly plucked one from a shelf and began to read. The book was The Plague, by Albert Camus. By September 12th, I realized that the choice was an eerie coincidence.

plagueThe Plague, published in 1947, is the story of a city visited by the bubonic plague, and of the psychological and functional changes forced upon the city’s people. However, the plague is only a symbol. What Camus was really writing about was the German occupation of France.

We are now the plague-stricken, with our affliction being terrorism and everything that created it. The parallels between the novel and what we are now experiencing, and what we will experience, are too numerous to cite—you’ll have to read the book. But in it, Camus touches on the media and writes about how, when journalists become bored with reporting the death tolls, and on the frustratingly-slow recovery process, they turn their society’s disaster into morbid entertainment. Their news becomes limited to the information supplied by the Prefect. In the time of crisis, they lose all credibility.

In the aftermath of the September 11th attack on New York, I’ve been sickened by the media/Hollywood treatment of it. The image of the plane crashing into the World Trade Center just had to be shown again. And again. And again. And again. The major news organizations used it as a logo. There were/are the Creative Writing 101 titles: ‘America Under Attack’, ‘Helping America Heal’, ‘America’s New War’. The White House joined in, with Dubya’s speechwriter making him say things like ‘Dead or Alive!’ then helped with the branding of it all with the incredibly ridiculous ‘Operation Infinite Justice’. Dateline is still busy wringing every last melodramatic ounce from the disaster. Advertisers are running promotions around it: ‘Buy an RV and we’ll give $100 to the New York relief effort!’, and ‘Buy a 2002 SUV and help keep America moving!’

Other truly nauseating examples were the special editions of the magazines. Those from Time and Newsweek were little more than collections of photographs taken on and around that horrible day. As what? Keepsakes for scrapbooks and photo albums, to be pasted in along with the baby pictures? On September 16th, Fox scheduled Independence Day for its Sunday night movie. On the already moronic Entertainment Tonight, the story from the odious Mary Hart was how ‘The Stars’ managed to get home from the Toronto Film Festival. Then she interviewed a producer, who unwittingly summed up all that’s wrong with Hollywood when he said: “This kind of thing is entertainment as long as it’s fantasy. Once it happens, it ceases to be entertainment.”

plague1In The Plague, the citizens struggle to live their lives normally, in denial, helplessly going through the motions, obedient to every edict from the Prefect. Dissenters are quashed.

The novel’s main characters are heroes; doctors and volunteers, who spend their days lancing the buboes on the bodies of the stricken, in hopes that release and disposal of the noxious fluid will help bring an end to the pernicious plague.

There is only one character who self-destructs—the profiteer. This man makes a lot of money by appealing to the base instincts that arise in people during times of crisis; once the plague has run its course, he loses his mind, his friends and his freedom.

Camus was writing about World War II, and we know that this type of situation, and its effects on any society, has been the same for centuries. But the nature of media has changed; its scope and capabilities have changed. One would hope that, with all this sophistication, the behaviour of those who work in all forms of media would change for the better. I’m not seeing it.

 

 

 

 

 

 

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For the Love of Lager: Loyalty to an Old Law & Savvy Marketing Make Okanagan Spring Brewery #1

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For natives of Germany, a country where open land and big sky are at a premium, western Canada is the Land of Opportunity. In the early ‘80s, pub owner Jakob Tobler, and real estate developer Buko von Krosigk immigrated to Canada and settled in BC’s Okanagan Valley, specifically Vernon.

Their goal was to address one glaring problem with their new home: the beer was no good. The offerings of Canada’s major breweries fell short of the quality to which they were accustomed. Meanwhile, Jakob’s son Stefan had earned a degree in beer-making at a German university, and that made him one of only two certified brew-masters in western Canada. It was logical to establish a brewery and sell true German beer—but just within the valley, they thought. The partners bought a 10,000 square-foot fruit-packing house, invested in the finest equipment available, put the neighbourhood name together with that of a brewery that had operated in Vernon in the 1800s (the Vernon Spring Brewery), and Okanagan Spring Brewery was born.

There are three types of breweries. A ‘microbrewery’ produces less than 15,000 hectolitres per year (a hectolitre is 1000 litres). Okanagan Spring Brewery (OSB) is an example of a ‘regional brewery’. Then there are the mainstream, or commercial, breweries such as Labatt and Molson.

Almost all microbreweries and regional breweries are ‘craft’ breweries. Craft-brewed beer is made in accordance with the Bavarian Purity Law of 1516. This law, which is still followed by all German breweries and is the core of OSB’s operations, states that there can only be four natural ingredients in beer: hops, malted barley, yeast and purified water. (A non-craft brewery may add adjuncts or preservatives; things like rice, cornmeal, corn syrup and chemicals.)

OSB brings barley from the Canadian prairies and has it malted in the Okanagan. Hops are imported from Germany (the hop is a plant and there are two types: aromatic and bitter). The X Factor is the yeast, which is prepared to OSB’s secret recipe by an outside supplier. The already high-quality Okanagan water is purified, and that’s it.

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There are two processes which craft breweries do not use. In ‘high-gravity brewing’, water is added back to a sort of beer concentrate. It’s more efficient, and more profitable, but it makes beer taste diluted (as in American beer). The other process is pasteurization, which is when beer is heated or boiled to kill germs. Pasteurization extends shelf life, but it makes for common ‘Wonder Bread’ beer. In craft brewing, everything is ‘sterile-brewed’, so pasteurization isn’t necessary, although the shelf life of craft beer is reduced to about three months. After that, the beer is still drinkable, but may have the ‘skunky’ smell that German imports often acquire by the time they reach us.

It should be noted, however, that it is a misconception that a small brewery produces a higher-quality product. The opposite is true. A regional or mainstream brewery has employees devoted to quality control. And if a batch falls short of its standards, it’s thrown out. A microbrewery can’t afford to toss imperfect inventory.

While there are many beer brands, beer (‘baere’ is German for ‘barley’) is broken down into two categories: lager and ale. The beer-drinking population is split in half—half prefers lager, half ale. The English are the ale masters; Germans are best known for lager. So Buko and Jakob started with lager. On December 31, 1985, the first pint of Okanagan Spring Premium Lager was poured.

While Jakob and Stefan managed operations, Buko started traveling through the Okanagan Valley, selling draft beer to pubs and restaurants. Sales took off and, after a little lobbying, he was able to get the lager onto liquor store shelves. Then Expo ’86 came up and the BC government extended sales licenses to smaller provincial beverage manufacturers. Demand surged. Buko moved to Vancouver and started selling on the Lower Mainland and Vancouver Island. Today, Okanagan Spring Brewery is BC’s #1 craft brewery.

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“There are a couple of reasons why Buko did so well,” says Steve Pelkey, OSB’s Director of Marketing. “He promised, and delivered, consistently fantastic products, and he service customers better than the major breweries did. The key to this was having his own distribution network. The beer has always been brewed in the Okanagan, shipped to Vancouver and delivered to customers—all by OSB employees. That allows them to provide great service, including next-day delivery, rush delivery, Saturday delivery—OSB drivers even rotate kegs. Large breweries won’t do any of that.”

And how do you convince a publican to make room for your beer? “We sell premium beer,” continues Pelkey. “So licensees can charge more for it. Also, you say to the owner ‘You have all the mainstream brands. Why not give your patrons a chance to try something different?’”

Pelkey notes that, by the time Buko started selling his lager, astute pub owners already were already seeing the need for an alternative. “In the last 15 years, there has been a dramatic shift in consumer buying behaviour. As people get older, they drink less, but they drink better. Then there’s the fact that British Columbians—Vancouverites in particular, are the most knowledgeable, educated and discerning alcohol consumers in North America. The market was there. Look at Victoria—30% of beer sold there is craft beer.”

Once customers had tried OSB lager, they asked for porter. Stefan responded by creating Okanagan Spring Old English Porter, which quickly earned a loyal following. Also in response to demand, in 1988, Stefan created Extra Special Pale Ale. Now it’s winning gold medals at international beer competitions and is the most successful craft-brewed brand in BC.

Breweries are secretive—they don’t discuss sales or profits. We know that British Columbians buy 25 million cases of beer annually, and that that translates to $425 million. The government takes 60% of that in taxes. A 12-pack of an OSB product is $17.45. Pelkey estimates that the industry average profit on a 12-pack is $1.70. He will also say that, in 1986, OSB sold 3,700 hectolitres, or 20,000 cases. In 1990, it was 25,000 hectolitres and, in 1995, 75,000.

In its first years, Jakob and Buko put all OSB profits back into the company. In 1988, the brewery was revamped to increase production. A few sales people were hired. The brewery was expanded to 50,000 square feet. The focus remained on the three brands, while production increased and the company grew (it now has 150 employees, including a sales force of five retail reps and 11 licensee reps).

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The trade continued to ask for products. In 1995, to meet demand for an easy-to-drink dark ale, OSB released Cottage Nut Brown Ale. In 1997, in response to the success of the ‘honey’ category, which is lighter and more thirst-quenching, Honey Blonde Ale was launched. (There’s a direct correlation between colour, bitterness, weight and low sales, with lighter beers garnering higher sales.) In 1999, after market research showed that there was room for a different style of lager, there came Traditional Pilsner, modeled after the classic Czech Pilsen recipe. There has been just one failure—Autumn Red Ale.

Not surprisingly, after years of increased success, a suitor came calling in the form of Ontario’s Sleeman Brewing & Malting Company. Although you’ll find no mention of it on either company’s website, Sleeman now owns OSB. Buko has retired; Jakob’s two sons still work at the brewery. With that change came a marketing person—Pelkey was hired in 1997. The first thing he did was conduct an agency review and appoint Grey Advertising (Vancouver) as OSB’s Agency of Record. Ipsos-Reid handles market research; point-of-sale and packaging is managed by dossiercreative.

Last year, OSB’s packaging was up-graded, to the tune of $1.5 million, but it’s still notable for its conservative look. Just as the product names are plain and direct, there is a distinctly elegant tone to the packaging. You won’t find any zany graphics or wild colours—its labels are metallic, but that’s it for flash.

(OSB was, however, the first beverage company to use the stamped MettleTab. Now, when anyone opens an OSB can, they are reminded of the Bavarian Purity Law of 1516, and the purity of OSB beers.)

“Our customers are age 25-44,” explains Pelkey. “We’re not going after the teen crowd. So our branding is more refined and traditional.”

The same is true for all OSB point-of-sale materials, which is just as well, given Liquor Control Board restrictions. There are three sales channels for a BC brewery: trade (pubs, bars, restaurants), consumer-direct through LRS (Liquor Retailer Sales; the pub-attached cold beer and wine stores), and the LDB (the government’s Liquor Distribution Branch). A brewery cannot conduct any marketing programs in the LRS trade channel unless the programs have been approved in the LDB channel. At the moment, in-store draws, contests or promotions are verboten. Danglers and shelf-talkers have to fit within strict size restrictions, and the largest allowed size was just reduced to 18” x 24”. OSB reps conduct hundreds of trade promotions every year—mostly instant gratification things like getting to keep your mug. All other promotions have to be in-case.

With in-case promotions, you open your case of beer and find a card offering a chance to win ski passes, a fishing trip, golfing trip etc. OSB consumers are off-the-couch types, so promotions are related to outdoor activities. OSB works with Golf BC and its courses, with the Oak Bay Marine Group and its fishing resorts, and with ski resorts and tour groups. But LDB regulations make for amusing situations. A brewery isn’t allowed to connect any physical activity with beer consumption. So in a recent white-water rafting promotion, the brewery was allowed to show the river, but not a raft, or anyone in a raft.

There’s another wrinkle with the LDB that may surprise some. Since all LDB stores are government stores, you would think that, once an alcohol producer has a license to sell its products in BC, its products would automatically go onto liquor store shelves. ‘Not so. When a new product is launched, it has to be approved by the LDB’s Listing Policy Committee. After that, there’s still no guaranteed distribution. Every liquor store in the province has to be sold individually. OSB’s reps have to sell and service each government liquor store manager, just as if he were a hotelier or restaurateur. And there’s hot competition for that shelf and floor space.

Fortunately, there is ‘beer category management’, which is the same sort of process used by grocery retailers. Liquor stores put premium products in the best locations, mainstream products in the intermediate locations, value products at the back.

“It’s trading people up, which is a good thing for retailers,” says Pelkey. “Putting premium products at the front lets them make more money. Our products sell very well. You multiply the margin by the volume and you get a good profit. That’s what it’s all about, particularly for the cold beer and wine stores, which don’t have to stay with the stated price—they can charge whatever they want, as can the trade establishments.”

And what accounts for high-volume sales? A combination of reputation and marketing.

“Our strategy is always to stay with the core attributes of the brand,” continues Pelkey. “The purity, the quality, the freshness, the BC-ness. The secret is to know your consumer. It sounds simple, but if you offer your consumer a great quality product, communicate the quality and don’t disappoint, that consumer will keep coming back.”

Compared to other craft breweries, OSB conducts a lot of focus-group research. There’s an annual tracking study to gauge what’s going on in the beer industry and new advertising is tested. Pelkey says there’s a lot of emphasis on brand perception.

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“The market’s always changing; consumers’ tastes and perceptions are always changing. We also need bench-marks to see how we’re doing over the long term. And research indicates how tastes will change in the future.”

In BC, 65% of liquor purchases are in the beer category. Beer, wine and spirits, however, do not compete. “We all have share of mouth,” continues Pelkey. “In the premium category, consumers leave the store with a bottle of wine and a case of our beer. At home, they’ll have spirits, wine and beer. The only real competition is with the spirit-based coolers. We haven’t addressed that, as a company or as an industry—we stay focused on communicating our attributes and keeping consumers happy.”

Grey Advertising doesn’t have a huge annual budget to work with—about $700,000. But it has used that money effectively. Most of OSB’s advertising spend is in radio, with print ads running in the summer months (there was some outdoor last year). Although some specific ads are produced for OSB’s two biggest brands—pale ale and lager, the budget doesn’t allow for each beer to be advertised separately, so the focus is always on the core brand attributes.

“We never walk away from the core values of the brand,” says Grey Creative Director Jeff Lewis. “We keep the message consistent. Okanagan Spring Beer is from the Okanagan—a region known for its purity. It’s all-natural, premium beer. More than anything else, when it comes to branding beer, consistency is key. Plus, what we say is true. And that’s one of the big reasons why OSB is so solid. When a consumer pops open a bottle, the quality is there. There’s a lot of crappy beer on the market, but consumers now know that. They’re no longer impressed by image.

“The beer business is a tough business. ‘Very competitive. And you see a lot of breweries whose advertising is extrinsic, rather than intrinsic. Mainstream breweries promote their image outside the bottle. There’s not a lot of talk about the actual liquid—because it’s not that special. Other craft breweries focus on a goofy name, or the brewery’s size. But people want to hear about the liquid—about what they’re drinking. They want to know that it’s a quality product. Okanagan Spring always talks about what’s in the bottle.”

Lewis notes that the OSB strategy has lately become a little more fun. One recent ad (which received angry calls from ex-Torontonians) was ‘Still Not Available in Toronto’, which pointed out that Toronto enjoys black flies and one tower, while BC has towering mountains and bald eagles. Another ad noted that OSB beer is what Okanagan wine-makers drink after work. Lewis used the term for the Bavarian Purity Law—Reinheitsgebot, as an attention-getter in print ads. In radio ads, it is admitted that OSB does, in fact, use a preservative—the cap.

ok6“It is not easy to advertise beer,” continues Lewis. “You have to do work that cuts through all the other beer ads. For a brand with a more conservative stance, the ads with attitude accomplished that.

“One challenge we did have was that, as OSB became increasingly successful, people started to think that it had sold out—that the beer had somehow changed. So the marketing has always made it clear that OSB is the same company it always was. For ’98 and ’99, we used people from the brewery—truck drivers, people who work on the line, Stefan. We need to show that, even though it sells a lot more beer than it used to, Okanagan Spring Brewery is still the same group of people who are passionate about making premium beer. The Still Not Available in Toronto campaign was an interesting way of saying “We Are Not A Mega-Brewery.’

“That part of the strategy remains, along with the core values. It’s pure premium beer from a natural setting. Everything emanates from that. And when people walk into a liquor stores or see the taps at a bar, they see the different brands but they know that every beer is made to the same high standard. Okanagan Spring Brewery has a solid foundation and a very good name. That’s a great thing to work with.”

Blitz Magazine, January 2002

Cross-Burning, Cross-Border Oil & Celebrating Cruelty: A Bad Week for PR

Blitz Magazine, May 2001

In the last week, not once but three times, I’ve been gob-smacked. Dumbstruck. By PR disasters that leave me wondering what, if anything, public relations professionals are being taught. And, if they have any brains at all, why they’re not using them.

The first time was when I heard/watched BC Member of Parliament Hedy Fry tell fellow MPs, and the nation, that the practice of cross-burning was prevalent in Prince George, BC. (We now know that Fry invented the story and has trashed her career. Only her psychiatrist knows why.)

bush2The baffled Prince George mayor speculated that Fry might be thinking of another city (there’s a Prince George in Virginia). The region’s bemused RCMP boss suggested that, if someone was burning crosses, he would probably have heard about it.

The next instance of gob-smacking was care of George Bush. We know the guy’s an idiot, but I think everyone was kind of hoping that he could maybe tiptoe through the next four years with minimal damage and embarrassment. Alas…

Just after the Fry outburst, Dubya declared that a) he’s not interested in environmental protection and b) to solve the problem arising from the fact that America’s population has overwhelmed its resources, he’ll tap into the Northwest Territories’ oil and gas reserves. Oh?

It would be career suicide for any Canadian politician to agree to such a thing. So the issue will drag out for many years. By then, cars will run on electricity or compressed air (if there’s any air left) and Dubya will be a  bad memory. Still, the oil companies could send him up to negotiate with environmental groups and Canada’s aboriginal peoples. That would keep him busy, in a nice cool climate, for, oh, ten years or so.

bush1Not one day after Dubya left me speechless, I was gob-smacked again, when a local announcement had me, once again, saying ‘What the…?’ to my television.

The Vancouver Aquarium is no longer allowed to take whales from the wild. It can, however, capture dolphins. While this issue is being debated, the facility evidently though it needed some light-hearted PR. It launched a campaign celebrating its ‘Golden Girls’. In particular, one whale that has been in captivity for 30 years. Yippee.

Picture a baby girl. Your daughter, niece, sister. Snatched from her cradle and family. Caged. Taught to perform ridiculous tricks to amuse paying tourists. She matures in public, mates in public. When she produces a child, the birth is televised, people cheer, ‘Baby dies, but never mind. On her 30th birthday, her captors call her a Golden Girl and urge everyone to celebrate—and people teach their children that all of this is a good thing.

 

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(And no, the practice of keeping wild animals in captivity is not important for education—it’s a cruel hold-over from the Victorian Era. National Geographic videos, which can be bought, rented or borrowed, are way more educational.)

Massive PR gaffs, yes. But it must be remembered that, behind these gaffs, are people who are paid rather a lot of money to make sure that PR gaffs don’t happen. Public relations professionals are supposed to ‘control the message’, guide their clients, tell them what to say and, especially, what not to say. If they can’t control their clients, they’re at least supposed to make an effort. They don’t appear to be making much of an effort, not lately anyway.

bush4Whoever handles Hedy Fry should change careers. Whoever handles Bush should tighten his grip. And the aquarium’s PR people should focus on repositioning it as a strictly heal-and-release facility.

PR and publicity advisors should stop assuming that audiences are stupid. Some people may be too stunned to response immediately. Words and actions, little blurbs read, may not be reacted to, but they are stored away, perhaps sub-consciously. Eventually—often at election time, those memories will surface.

 

 

 

 

 

 

Tripping: YVR Rides High as #1

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You need to fly somewhere. You want to get there quickly, efficiently and in a cost-effective fashion. Upon arrival at your destination, you grab your luggage and get a cab. Do you care which airport you fly into?

And airports are essential. All air passengers have to use them, like it or not. So do airports need to market themselves?

The answer to both questions is yes. It’s not something most of us think about, but airports do need to market themselves—vigorously—and the Vancouver International Airport Authority is particularly good at.

The Vancouver International Airport Authority (VIAA) is a 230-employee, not-for-profit, locally-controlled corporation to which, in 1992, Transport Canada passed the Vancouver airport’s management and operation. While the VIAA has taken flack for being secretive, it has done a tremendous job of managing, and selling, the Vancouver International Airport (YVR).

When it took over, the VIAA’s first order of business was to position YVR as a gateway airport—not necessarily a destination terminal. It doesn’t appear so on a flat map, but Vancouver is the closest North American city to Asia. Travelers can save an hour by flying into Vancouver from, say, Beijing, to which it’s 800 miles closer than is Los Angeles. So YVR positioned itself as offering one-stop access to North America from Asia. It wants Asian travelers flying to the US, the rest of Canada, Latin America and Europe, to fly into, and transfer from, Vancouver.

The other target was, and remains, the cruise industry. One million cruise ship passengers pass through Vancouver every summer. And they have a choice—they can fly into Seattle and drive up.

YVR had to meet the arrival and departure requirements of all these international travelers, in addition to the needs of notoriously picky Canadians. The task was to create a facility that was efficient, comfortable and accommodating to everyone.

In 1996, the International Terminal Building opened as the first terminal of its kind in North America. It was designed especially for international connecting passengers, with state-of-the-art technology for ticketing, baggage handling and customs/immigration inspection.

By 1996, $250 million had been spent on constructing the International Terminal, installing a third runway, renovating the Domestic Terminal, adding a new parkade and creating 109,000 square feet of retail space. Work continues. In 1999, $90 million was invested in infrastructure, renovation and expansion of facilities. Also that year, work began on the $40 million Airport Connector Project, which involves road improvements and a new three-lane bridge. The YVR South Terminal, which services domestic commuter, small regional and charter airline traffic, was also upgraded. (The cost of all of this has been helped along by the much-loathed Airport Improvement Fee: $5, $10 or $15, depending on destination, payable by all departing passengers.)

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YVR’s location is, for an airport, incongruous. It’s only 20 minutes from downtown Vancouver but it’s on Sea Island, which is an environmentally-sensitive area. And it’s beside Richmond, a heavily-populated bedroom community. The VIAA pays rent ($64 m/yr) to the federal government, which owns the land, but it’s the caretaker of Sea Island and has to try to keep both environmentalists and Richmond residents happy.

YVR was one of the first airports to introduce a de-icing system which eliminates the pollutant urea from its ice control program. It maintains water, air quality and noise monitoring systems. It uses electric vehicles. It has a mobile, 20-unit environmental emergency response team. Its waste management program annually handles 470 tons of paper and 127 tons of compostable food waste. Construction projects are monitored for environmental compliance. It uses dogs to prevent bird strikes and negate the need for pyrotechnics—although YVR is located in the avian Pacific Flyway, its bird strike rate is less than half of that at other Canadian airports. From the PR perspective, all of this works—a 1999 survey found that 75% of locals had a favourable impression of this corporate citizen.

Most passengers don’t think about this sort of thing. They’re more likely to notice the airport’s amenities. Such as the 72 shops in the departure lounge. The concierge service, chapel, business centre, family rooms, nursery. The loads of inexpensive long-term parking and constant free connector shuttles. The art collection, natural light and mountain views. The dozens of multi-lingual volunteers. Cruise ship passengers have their own baggage belts and carousels. Fairmont Hotels attached a 392-room inn to the airport, which it bills as the world’s most luxurious airport accommodations. It offers day rooms, gym use, in-room airline check-in and satellite check-in. YVR’s positioning statement ‘Above & Beyond’ is something its management sticks to—and it’s true that a common reaction from arriving passengers is: “Whoa, nice airport.”

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Then there’s cargo. YVR has positioned itself as the global distribution centre for cargo between the world’s major trading blocs, particularly Asia-Pacific and North America. It’s a 30-minute drive from the US border, and from the Port of Vancouver, which is served by most international shipping lines, four railways and 400 motor carriers. The central Cargo Village houses 130 transportation companies, forwarders, brokers and other related businesses. The VIAA’s positive relationship with Canada Customs, and a pre-arrival review system, allow for international shipments to be released within 45 minutes. YVR also offers pre-clearance of US-destined cargo through Free Trade Zones (Export Distribution Centres), a 25% discount on landing fees for international all-cargo flights, a fuel tax exemption on international air cargo and 24-hour operations, all of which makes for a vast reduction in air cargo costs. Obviously, cost reductions make an airport attractive.

The pay-off of this investment and overlook-nothing organization is that, in 1999, 290,000 tons of cargo passed through YVR. That’s a 14% increase over 1998, far in excess of both forecasts and growth at other west coast airports. The International Terminal Building was meant to accommodate 8 million passengers; in 1999, 16 million passengers used YVR, allowing it to surpass San Francisco as the second-largest airport on the North American west coast. In 1994, airport revenue was $128 million, concession revenue $28 million. In 1999, airport revenue was $245 million, concession revenue $61 million. Today, YVR is one of BC’s most important economic engines, generating $4 billion in annual revenues. It supports 400 off-shoot businesses and 26,000 employees—more than the province’s mining and fishing industries combined.

In the International Air Transport Association survey of leading airports, YVR was ranked #1 in North America; #4 internationally (behind Singapore, Copenhagen and Helsinki). Business Traveler Asia-Pacific magazine named YVR its airport of choice, Conde Nast Traveler placed it among the world’s top ten. It has become a management model for airports around the world.

yvr5The VIAA subsidiary, Vancouver Airport Services (VAS), markets its expertise, operating philosophies and leading-edge systems to governments all over the world, which are rapidly dumping airport operation and financing on the private sector. VAS may take over whole airports, or perform specific services. It recently took over management of four airports in the Dominican Republic, as well as airports in Uruguay and Chile. It completed, for example, the business plan at St. Maartens, the reconstruction of the runway and apron at Moncton, the new retail plan at Wellington.

It’s easy to see that an efficient, beautiful, fully-outfitted airport is going to be attractive to those who have to use it. But VIAA has to work as hard to sell YVR to everyone who needs an airport.

Janice Antonson, the VIAA Manager of Aviation Marketing, explains: “A lot of people don’t think of airport management as a competitive business, but it is. Airlines and passengers have a choice of which airports to use. Back when Open Skies lifted restrictions on who could fly into Canada, we had a lot of new carriers flying into Vancouver and we had to compete with other west coast airports—LA, San Francisco and, to some extent, Portland. And we had to fill this new terminal.

“We work with the carriers that fly into Vancouver and are the liaison between the tourism industry and the aviation industry. Once a route is brought into Vancouver, we help market that route. Our job is to ensure that all airlines that fly in, as well as travel agents and tour operators, are aware of the connections available through the airport, and the facilities and services we offer.

“Education is a big part of the job of this marketing department. For example, to help Philippine Airlines establish the Manila-Vancouver route, I would go to the Philippines and meet with their employees, most of whom probably haven’t been here and don’t know the airport. I give a PowerPoint presentation on the airport and its location. I explain about Vancouver’s Transit Without Visa program, which means that most travelers connecting to the US, depending on where they come from, don’t need a Canadian visa. You come in on a flight from Hong Kong, you go immediately to US Customs, so you aren’t technically in Canada at all.

“When you explain this, people realize that they and their customers can save an hour in the air, and another hour by by-passing Canada Customs. When you shave off that two hours, YVR becomes the logical choice. And for business travelers, time is everything. The new airport in Seoul, for example, is over a hour from the city—YVR is 20 minutes from downtown Vancouver. That makes a big difference. And what a great stop-over city. On an overnight stay, you can go skiing, shopping, golfing—whatever, and make a short trip back for your flight out. These things are very important to passengers and airline employees. And once they know all of this, they choose Vancouver.”

Antonson also works closely with the cruise ship companies, through the VIAA membership (along with Tourism Vancouver, Tourism BC and the Port Authority) in the Pacific Rim Cruise Association.

“We have to work with both the cruise ship companies, and with the airlines that feed the cruise business,” she explains. “Despite the cruise passenger traffic we already have, we actually suffer in the summer because we don’t have enough seats coming into Vancouver. Sometimes we lose up to 11 busloads a day to Seattle because all the flights coming into Vancouver are full. So we work very hard to encourage the airlines to put on a bigger aircraft and more flights.

“We have the capacity for the traffic, but the airlines don’t have the aircraft on this route in the summer—their aircraft could be heavily directed at Europe in the summer. And cruising is seasonal. So it’s a big challenge for us to keep the carriers bringing in their service year-round. The airlines have to make sure that the yield from the seat price is right, and that it’s good enough to pull a plane off another route. And they have to know that the plane bringing in those cruise passengers will leave full. It costs a fortune to leave a plane sitting on the tarmac—planes have to keep busy, so we have to present airlines with positive passenger flow numbers.”

Antonson has found that airline economics leaves little room for patience. “Once we get a flight coming into YVR, we need time to market that flight. For example, American Airlines was flying non-stop Vancouver-Miami, which was excellent, but that route was pulled after four months because the flights weren’t full. But four months isn’t enough time to fully market a route and make travel agents aware of it. It takes a lot of time and effort to make a flight successful. But the airlines have to put their aircraft where they’ll make money.”

Antonson, who would not state her marketing budget, makes sales calls to travel professionals and, for travel agents and tour operators, she produces numerous brochures, maps and booklets—everything they need to know about the airport, its facilities, its connections, and what happens to passengers upon their arrival. For others, annual reports, Skytalk Magazine and the annual Airport Business Report, are helpful. Then there’s the hard-core process of convincing the airlines to book their routes into Vancouver. All of that goes on in boardrooms during months of negotiations.

“Our Air Service Development people are in charge of negotiating with the airlines,” continues Antonson. “Some airlines approach us, we approach some. It’s an extremely complicated business and most people have no idea of what goes on behind the scenes. We can’t have carriers landing here unless they can feed into the rest of the network—they have to be able to pick up traffic elsewhere, they have to have the right aircraft and the capacity to service the route. During negotiations, they discuss everything from who the ground handlers will be, to slot times, to catering, to aircraft size, frequency of flights, destinations, where their airport offices will be.

“The airlines have to be sure that the route will be profitable, because anything relating to the operation of the aircraft is their responsibility and cost. They become YVR tenants. They have to pay landing fees, fuel taxes, airport taxes. They have their own employees, including mechanics, on the ground. It’s a significant dollar investment for them, so we show them the traffic numbers; they see how active we are at marketing the routes. It’s not something anyone takes lightly—every landing of an Air Canada 747 from Hong Kong, for example, generates 86% of a person-year of direct employment.”

Most airports don’t even have marketing departments—just communications offices. But as YVR was the first Canadian airport to privatize, the VIAA may have felt pressure to succeed, or saw it as an opportunity to do something very well. Either way, very little has not been done well.

“YVR is not just a pretty building in a pretty city,” says Antonson. “And our mandate is to market YVR as the Pacific Gateway of choice. We’re in a competitive business and have to work to get the airlines to come here and stay here. So we’re aggressive about it—we create and try new programs first, and now we’re the leader in airport marketing. YVR is a great success.”

Blitz Magazine, July 2001

Case Study: 1-800-GOT-JUNK? Becomes a Successfully Crappy Brand

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Blitz Magazine, March 2000

A freak storm hits. As you watch hail bounce off your Jaguar, you wish you had a garage.

Oh, wait. You remember that you do, in fact, have a garage. It’s just full of. Of…you can’t remember what it’s full of.

Determined to reclaim your garage, you call a charity, which says it’ll send a truck Monday, between 8:00 and 5:00. You spend your week-end sorting through mounds of old furniture, sports gear and broken gardening equipment. On Monday morning, you lug it all down to the bottom of your driveway and head to work, thoroughly pleased with yourself.

But when you get home from work, the heap is still there. You leave a message for the charity. No one calls back.

‘Next morning, you look in the phone book under ‘Trash Removal Services’. You call Guy With Truck, who says he’ll be there Saturday at 10:00 a.m. He can’t quote a price until he sees what needs to be removed. Your junk sits and waits; the city garbage men come on Wednesday, but ignore the silent plea for help.

Saturday, 4:00 p.m., Guy With Truck appears. His truck is filthy and so is he. He has one arm and one eye. Your neighbours call their dogs inside and lock their doors.

You have neglected to hide your Jag in your now-empty garage. Guy With Truck sees the Jag, sizes up your house and quotes you $600. You don’t care; you want your junk gone. You write him a cheque and watch him take two hours to load the stuff before chugging off in a cloud of exhaust.

This is not an exaggerated scenario. It happens all the time. But Vancouver entrepreneur Brian Scudamore has taken this unhappy situation and turned it into a multi-million-dollar enterprise.

In 1989, the 18 year-old Scudamore was working toward a commerce degree. At the end of his first year, he needed a summer job but couldn’t find one. Then he spotted Guy With Truck and thought ‘Hey…’.

He paid $700 for an old truck; $100 to have fliers and business cards printed. He didn’t want people to think he was a one-man operation, so he called himself ‘The Rubbish Boys’, and came up with the slogan ‘We’ll Stash Your Trash in a Flash!”. While his little brother stuffed mailboxes with fliers, Scudamore drove the lanes of the city’s west side. When he found an over-flowing garage, he knocked on the door and offered to remove the junk. By the time he returned to school, he’d made a $1700 profit.

Scudamore kept working at the business. By 1993, it was so successful, he decided to make junk removal his life. He incorporated, hired student drivers and invested in more trucks, all bearing the slogan and ‘Rubbish Boys: 738-JUNK.’ Between word of mouth and these mobile billboards, business took off. By 1995, revenues were $100,000.

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This success had much to do with how Scudamore differentiated himself from Guy With Truck. He offered same-day service and promised to remove everything except toxic substances. Rather than charging a rate based on his perception of a client’s income, he provided a printed, pre-set pricing structure (from $35 for a mattress, to $339 for a full truckload).

Not only did the Rubbish Boys not show up late, they called 30 minutes before to confirm the appointment. Their trucks were spotless. They were clean-cut, polite university students wearing snappy blue and green uniforms. They cheerfully removed your junk, and then cleaned up after themselves, sweeping garages and driveways and/or raking the grass. They provided proper receipts and, a few days later, called to make sure you were happy with your service.

junk6By 1997, Rubbish Boys had 16 trucks, 45 high-season employees and revenues of $1 million. Scudamore was nominated Entrepreneur of the Year by Ernst & Young and the Business Development Bank of Canada. He was one of 11 BC firms to make Profit Magazine’s list of 100 Fastest-Growing Companies in Canada—its five-year growth rate of 1,169% put it at #74.

There were contributing factors to this success. In Greater Vancouver, residents are allowed just two bags of garbage per week. And practically every city block hosts renovating yuppies, most of whom don’t know where the nearest dump is, let alone have the requisite vehicle.

Another factor is that charities are increasingly selective about what they take. They get way too much junk and don’t get a break from the dump—some charities spend $20,000 a year on dumping fees. You may think you’re doing someone a favour when you give an old couch to the Salvation Army, but if it’s torn or broken or water-damaged, it’s going to the dump at a pricey $65/ton (the average truckload weighs 1.1 ton).

In addition, Vancouver has many commercials and residential buildings belonging to absentee owners. These buildings are operated by property management firms—professional organizations that don’t want Guy With Truck anywhere near their clients’ properties. Also, while dumpster rental is cheaper than Scudamore’s service, construction companies often find it more efficient to hire him. Now, half of his business is residential, half commercial.

Then there’s the staffing aspect. Junk removal is an April to October business—that’s when everyone cleans up. With commercial contracts, Scudamore still has work in the off-season, but his business is largely seasonal. Seasonal business can’t afford to hire guys who need salaries; they need to be staffed by people who want to work only from June to September.

“For the first three years, Rubbish Boys was a student-run operation—you had to be a student to be hired,” recalls Scudamore. “But by 1998, I realized that, while students were professional, clean-cut and polite, they had no business experience. We were growing and we needed people who knew about building a business.”

junk5Not wanting to abandon his students, Scudamore instituted STEP, the Student Training in Entrepreneurship Program. He recruited students, and then helped them create mini-franchises. They were fronted the requisite cash and provided with a partner, a truck and a route. They received a base wage and a share of the profits; they had to do their own sales and media relations. The most profitable students in each territory received scholarships of $500 to $1000. To date, 180 students have participated.

There was more method to this: Scudamore wanted proof that his operating system could be franchised. Rubbish Boys’ 1998 earnings were $1.3 million; Scudamore saw that there was no barrier to his company’s becoming the Federal Express of junk removal. He had built his brand, it was time to franchise.

The company name became 1-800-Got-Junk? (inspired by the ‘Got Milk?’ campaign). The owner of the 1-800-Got-Junk? telephone number was persuaded to relinquish it. A $30,000, 12-line call centre was installed. Scudamore invested $500,000 in consultants and technology, and perfected a franchise system that easily allowed expansion. Information packages were produced, ads were placed in franchising magazines, the word spread, people started to call. Now there are franchises in Seattle, Portland, Edmonton, Calgary and Toronto. Scudamore’s goal is to have franchises in 30 North American markets by 2003.

junk3The 1-800-Got-Junk? system is simple. Scudamore selects two or three candidates per territory, depending on its size. Successful candidates have to know their markets and have strong sales skills. They must pay $20,000 to the company then invest another $30,000 on leasing, staffing and out-fitting an office; and on acquiring, painting, insuring and staffing trucks. Scudamore does not want franchise owners driving their own trucks.

“We want people working on the business, not in it,” he says. “These franchises are about starting from scratch and using our system to build the business. As people see the trucks and get to know about the brand, they’ll call. In the meantime, we want our franchisees knocking on doors, making presentations to property management companies and staying focused on growth.”

In addition to training, promotional materials and business plans, franchisees receive their phone systems as part of the package.

Regardless of where customers are, when they dial 1-800-Got-Junk?, they get the Vancouver call centre. The centre takes all bookings, organizes drivers’ routes and e-mails the orders to the appropriate franchisee, who re-confirms pick-ups and takes it from there.

junk4Franchise owners also receive the company’s proprietary management system—Junkware, a software package that handles all areas of operations, from scheduling to accounting to marketing.

“All of this is done on our server, but we’re not playing Big Brother,” points out Scudamore. “Junkware is a coaching tool—we want our people to succeed.”

Franchisees pay an 8% royalty, plus another 7% for call centre services. Their gross profit should be 40%, their net 20%. Fixed costs vary by market but, for a $50,000 investment, franchisees enjoy minimal risk in a lucrative, seasonal cash business. And it’s worth it. The Toronto franchisee became the largest junk removal service in that megalopolis after four months of operation. His 1999 sales were $250,000 with two trucks; this year, he has six trucks, 20 employees and sales should exceed $1 million.

 All of this without anything resembling a sophisticated marketing or media program. While Scudamore plans to actively advertise one day, he has always preferred the inexpensive, face-to-face approach.

“Paid advertising has never given us the same return as the face-to-face sales,” he explains. “We’ve tried radio—it wasn’t worth it. We had a little more success with newspaper advertising, but it’s too expensive. We do decals and t-shirts; we’ll take part in home and garden trade shows, construction and renovation trade shows. We just stay out there and keep reaffirming the brand. For us, the most effective way of communicating is via our trucks, our fliers, word-of-mouth and media attention.”

Scudamore has received loads of media attention. He coaches franchisees on how to garner it, and he gets involved in community events. For example, when the community of White Rock was devastated by rain and mud last year, Scudamore’s staff went there to clean up. Scudamore also invented a program called PRIDE: People Removing I-Sores Dumped Everywhere, through which 1-800-Got-Junk? works with community volunteers to clean up littered areas.

Last year, the company posted a website (www.1800gotjunk.com or www.rubbishboys.com). The site gets about 1,000 hits a week, but few people book on-line, preferring to call.

The slogan ‘We’ll Stash Your Trash in a Flash!” slogan is long gone. Now, trucks carry the new phone number and the website address. Liberal distribution of bright, die-cut fliers and $10 or $20 TrashCash coupons remain a mainstay, as does old-fashioned cold-calling.

So Scudamore has taken the most simple of businesses and given it an efficient franchising system and an easily-remembered call-to-action phone number. To date, he and his staff have delivered 15 million pounds of junk to dumps and recycling depots. He has 20 full-time employees and 75 seasonal employees. Sales for 2000 should hit $4 million. And he has no competition. Or….?

“I do have competition,” he says. “The guy with the truck.”

 

Case Study: It’s Onward & Upward for Uniglobe Travel

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The airlines have slashed travel agent commissions; we’re supposedly in recession. ‘Tough times for travel agents? Not if they’re with Uniglobe Travel.

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You may recognize the name of U. Gary Charlwood, Chairman of the massively successful Century 21 Canada. The business philosophy of Mr. Charlwood (as everyone calls him), in a nutshell, and as his entrepreneurial history suggests, is ‘Sell, Sell, Sell, Service, Service, Service and Be Very Very Well-Organized.’ He also believes that, once you articulate your vision and give your staff the tools with which to carry it out, you should leave everyone alone to do their jobs.

After building his real estate operation into the force that it is, Mr. Charlwood knew that his philosophy, coupled with his co-operative consumer marketing methods, could be applied to other service industries; and he believed that an internationally-recognized consumer travel organization could succeed through strength in numbers of locations, and high sales volume. In 1980, he founded Uniglobe Travel International.

Today, Uniglobe is the world’s largest travel franchise company, with 1997 sales of $2.7 billion. It employs 6,000 people at 1,000 offices in 20 countries, with head office in Vancouver. It owns Uniglobe CruiseShip Centres and San Diego-based convention organizer Uniglobe Main Events. It was the only travel company recommended as a franchise buy by The Wall Street Journal’s 1998 National Business Employment Weekly Annual Listing and, in the travel industry, only American Express has higher unaided brand identification. Its first Middle East markets opened last year; it will next expand into Central and South America, the Far East, and Africa.

The reasons for Uniglobe’s success are varied, but basic.

First, it filled a niche. Any travel agency, of any size, is built on a core base of business accounts, and it used to be that only large corporations had access to the complete range of travel perks and services. Uniglobe specialized in providing big company services to small and mid-sized businesses (with 5-50 travelers). It now holds 100,000 corporate accounts; 70% of its business is corporate, but its goal is to increase its leisure business and bring the mix to 50-50.

uniglobe2Next, Uniglobe offers a superior franchisee support system. To be successful in this ultra-competitive field, travel agents need strong brand identification, technological support, access to professional training and development, back-office management controls, effective marketing plans, solid relationship with preferred suppliers and access to promotional initiatives. Uniglobe delivers it all, right down to free office automation. The high brand awareness is a big draw for potential franchisees, and Uniglobe spends $20 million annually on international brand identity, advertising, promotions, public relations and direct sales programs.

Another key to Uniglobe’s success is its commitment to a high level of customer service. Its research shows that consumers expect a professional agency to address four service categories: Cost Containment & Control, Experience & Expertise, Accessibility & Advanced Communications, and Reliability & Responsiveness. So Uniglobe gives people what they want. It guarantees the best possible value in all fares and constantly evaluates cost-management strategies, savings opportunities and spending patterns. Experience & Expertise are handled by Uniglobe’s franchise recruitment and selection process.

“We’re so well-known as a leader in both travel and franchising, that people looking at franchising automatically come across Uniglobe,” says Laurie Radloff, President of Uniglobe Travel Western Canada. “And when we’re looking at new markets, we’re careful in our recruitment. A lot of people today are dissatisfied with what they’re doing. We know that there’s great personal satisfaction in owning your own business, and we know that Uniglobe agents love what they do, so we do print and radio campaigns with the theme ‘Do What You Love’. We talk to the banks and chambers of commerce to see who’s successful in their areas; we look at existing agencies to see if there are people who we feel can represent our name. We never place a franchise for the sake of having an outlet—we want to make sure that our name and brand are handled properly and that we have the right cultural fit. There’s a very high level of trust among those using our name, so we have to have the right people.”

Who have to have money. “They do have to be properly capitalized, although we don’t cause them to buy any products,” continues Radloff. “They pay Uniglobe a royalty, starting at 10% for every dollar they earn in commission. As sales rise, that percentage declines. That royalty could be a little high, but that’s because Mr. Charlwood knows what level of support franchisees require. We often hear about franchisees of other companies who are unhappy with the level of support they’re getting from their franchisor but that’s because, financially, the franchisor can’t do more.”

Uniglobe provides professional training in sales, customer service, marketing and operations, as well as on-going support in business administration, sales development, financial controls, market research, strategic planning and supplier relations. All of this translates into better customer service, and the level of experience and expertise that customers want.

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Consumers want accessibility? No problem. The Uniglobe Customer Commitments promise that phone calls will be answered by the third ring, that callers never hold longer than 30 seconds, and that every call is returned within the hour. You find yourself trying to tell the customs officer/janitor in Novosibirsk that you’re supposed to be in Newark? Uniglobe has a 140-language interpretation service. ‘Course, that shouldn’t happen anyway, because Uniglobe guarantees error-free reservations and 100% accuracy in documentation. There is a Lost Luggage Control System, a 24-hour Rescue Line and the promise that service complaints will be resolved within 48 hours, supplier complaints within 15 business days.

Technology is another important component at Uniglobe, which has its own software: Travel Manager, and Software for Agency Management. Also, Uniglobe Net News, an extensive agent Intranet, piggy-backs Uniglobe Travel On-Line, an Internet booking and information system which was launched three years ago.

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With Uniglobe Travel On-Line, consumers can book car rentals, hotels and flights, choose seat assignments, order special meals, obtain street maps, book cruises and tours, research destinations and find restaurants, currency information, last-minute promotions and weather reports.

“The Internet travel segment is growing very quickly,” says Radloff. “Booking travel this way is a big leap of faith at first, and there’s no question that a well-trained travel consultant is the best value. But if a client’s on a plane at 2:00 a.m., and wants to make a reservation on his laptop for a 10:00 a.m. connecting flight, we have to be able to provide that service.”

Uniglobe is careful to see that this system does not exclude its agents. An income-splitting formula pays franchisees a referral fee, 10% of online revenue is distributed through a group fund, and another 10% goes into an advertising fund.

“The site is good for our agents too,” continues Radloff. “At 2:00 a.m., that client’s only other option is to call the airline to book that flight. This way, the agency gets a little commission and gets the data on the booking and can follow up with the client. The site gives clients 24-hour access; it gives agents a 24-hour office. Plus, you don’t have to be an existing Uniglobe client to use the online service, so agents gain access to new clients.”

Uniglobe Travel On-Line is a separate public company and its stock hasn’t done that well, but the site is coming along, with a booking-to-looking ratio of 1:74 and sales of $5 million to November 1998, as opposed to $1 million for all of 1997. And it’s a great system. But so is Microsoft’s Expedia, one of the web’s most popular travel sites. So, in November, Uniglobe entered into a joint-marketing agreement with Expedia. This accomplished two things—a tough competitor is now a partner, and Uniglobe has access to Expedia’s three million customers and is closer to attaining the aforementioned goal of a 50-50 leisure-business mix. (In the travel business today, leisure is the hot market—no matter how tight the economy is, seniors and Boomers will keep traveling.)

Cyber-competition is only one challenge facing travel agents. There are also increasingly complex bulk-purchasing and fare packages, frequent flyer programs and the ubiquitous fly-by-night operations which muddy the waters for reputable companies. Consumers now have so many choices that a successful travel agency has to give customers special reasons to come to it, and stay with it. Those reasons have to be brand loyalty and value-added products and services. Which have to be communicated through marketing, advertising and public relations.

The Uniglobe marketing plan is written following consultation with franchisees. Preferred supplier recommendations are then collected, and listened to. All travel agencies have preferred-supplier relationships; Radloff says that Uniglobe takes its relationships more seriously than does its competition. And these relationships are crucial to stretching the Uniglobe advertising budget. Uniglobe spends $1 million annually on straight advertising, but that budget is extended by as much as 40%, due to the fact that 75% of advertising is co-op (and most visuals are provided by suppliers).

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The plan includes four main marketing pushes per year; one or more could be on cruises, one could be the Caribbean in January, another on Europe in June—it depends on supplier input and on what key interest areas have been identified among travelers. The international quarterly campaigns come out of California; they are supplemented with regional, then local, campaigns. Most advertising is print; outdoor and telemarketing are not used. There are six to eight weeks of television each year, radio use is rising and direct mail is a constant, with 100,000 pieces mailed quarterly.

The non-Canadian markets handle their own advertising. Radloff says that, in Canada, the advertising focus is on offering holidays at destinations where the Canadian dollar will go the farthest.

“We sell on value, not on price. For example, people frequently say they want an inexpensive holiday and that they don’t care about their hotel, but that hotel becomes important when they get there. We can provide a nice hotel at a price they can afford because we use our clout and buying power to deliver quality products in a cost-effective manner. We also provide products like Rescue Line, Travel Manager and a preferred-rate hotel program called Key Cities—this is all extra value at no extra cost to the consumer.”

Uniglobe’s strategy for 1999 is to position itself as ‘The Navigator of Options’, with the goal of convincing consumers that Uniglobe agencies can best help them wade through the sea of travel options. Uniglobe’s corporate marketing uses the Uniglobe Travel Plan, a travel purchasing system which incorporates Uniglobe Travel On-Line and the Uniglobe Cruise Program. From the client’s perspective, it is a travel management and purchasing system; from the agent’s point of view, it is a sales kit with corporate proposal templates and a PowerPoint presentation.

“Our corporate marketing is mostly face-to-face,” says Radloff. “We have a professional, well-trained sales force and our salespeople are out knocking on doors, calling on clients, making presentations. No one at Uniglobe waits for the phone to ring—they’re out closing sales and getting the business.”

One very important aspect of Uniglobe’s communications activities is positioning. Not positioning as in ‘We’re A Really Good Travel Service,’ but as in ‘We’re A Really Good Travel Service and We’re On Your Side!’.

“Since its inception, our focus has been on building the Uniglobe name into the most widely-recognized name in travel—to be to travel what Campbell’s is to soup,” explains Radloff. “So while the competition advertises price, we talk about other things. People like to spend their money locally, so we talk about the fact that Uniglobe’s agencies are local but have global clout. But, to take that name recognition further, and to inspire confidence, we’ve positioned ourselves as problem-solvers and as the advocate for the traveling consumer.”

Two years ago, when Canadian Airlines had its near-death experience, Uniglobe was the only travel company that leapt into the fray, with Radloff appearing on Canada AM and various radio programs to talk about how having only one Canadian airline would not be in the best interest of consumers because of the negative impact on service, pricing and availability. While we assume that there’s no point in going to Hawaii because of the exchange rate, Uniglobe is out telling the media that the Asian market for Hawaii has withered, hoteliers are under tremendous pressure, air space has tripled and fares are down from $600 to $99. Every time a travel scam pops up, so does someone from Uniglobe, educating consumers about what to watch for. And, thought his may be stretching things a bit, after the recent Carnival Cruises on-board fire, Uniglobe became the exclusive dealer of Evacuate, a smoke-hood-in-a-can which provides 20 minutes of clean air. 

All of this is advocacy, it is brand-building, it is confidence-inspiring PR. And PR is a huge component of marketing at Uniglobe, where every message sent to the public is, quite literally, identical. This is achieved through the Agency News Media Program, a PR-Program-In-A-Box created by Uniglobe’s PR firm, Vancouver’s Verus Group.

“Uniglobe is one of the more enlightened corporations I’ve worked with, in that Mr. Charlwood has always instinctively understood that marketing and PR should be inextricably linked,” says Verus Group president Wayne Hartrick. “In some organizations, the PR and marketing functions are clearly delineated, which is a shame because there should be a coordinated strategy between them so that every dollar and every employee hour spent is leveraging their combined impact.”

To that end, Uniglobe’s four annual marketing pushes are supported by PR pushes on the same subjects. If the company is marketing cruises, Verus writes releases on cruises. It then sends the releases to national publications, then to all franchisees, who send them to their local papers. If a local paper asks a franchisee to write an article, it’s ready to go—Verus has already written it; the franchisee just changes the by-line. Promotion may be the intention, but it doesn’t carry the aroma of advertorial; publications passing it on to their readers do so because it’s useful, helpful information.

“This method has helped our agents become known in their communities as experts in their field,” says Radloff. “It is an extremely cost-effective way of achieving our marketing objectives, because it’s exposure that brings with it a credibility that you won’t get if people know you’ve paid for it.”

As mentioned, Uniglobe’s Agency News Media Program is literally in a box. It is a kit which includes articles and news releases on the subjects determined by the marketing plan, plus a 30-minute video, and a workbook that teaches franchisees how to deal with journalists and earn credibility in their communities. New franchisees come to Vancouver for PR training, then Verus Group staffers coach agency owners over the phone, encouraging them to work the program, and motivating them to build their profiles in their locations. If that sounds like a pain for both sides, it evidently was, initially.

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“The program takes patience and commitment,” says Hartrick. “It’s a challenge to get everyone to do PR because people are busy and there’s always another priority. And they get discouraged—we’ll issue a release, the franchisee can’t find an interested reporter and gives up. We encourage them to try other things, show them how they can become regular columnists and how to make presentations to corporate and community groups. This program of encouragement is crucial. Eight years ago, we just distributed the kits and had a 10% implementation rate. Now, with daily contact, we have a 62% implementation rate, and it’s climbing.

“This is all about credibility. If you’re writing in the local paper, or being quoted by your local media, your other marketing activities are met with less resistance. Uniglobe’s combined programs are generating 400,000 impressions per day from print alone, and these impressions carry the extra impact of having grass-roots credibility.

“Our research shows that most consumers see travel as a problematic experience,” concludes Hartrick. “We make sure that Uniglobe gets its name in the media for the right reasons—because it’s solving problems for people and providing useful information as well as quality, high-value products. The whole principal behind this, after all, is to do something well and get credit for it.”

 

Blitz Magazine, January 1999

 

 

 

Case Study: Subway Wraps Up Its Region

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A lot of British Columbians think that Subway is a BC company. They see Subway outlets while vacationing in other countries and just assume that Subway is another BC firm that has done well.

But Subway is not a BC company. It was founded in Connecticut, in 1962. Today, there are 13,000 Subway restaurants in 68 countries—1,300 in Canada. It is the second-largest franchise in the world, next to McDonald’s, in front of 7-11 and Century 21; and it is the largest franchise in BC.

In 1987, Gerry Lev, then a Calgary franchise consultant, discovered the Subway concept at a trade show. There were 1,000 Subways worldwide, none in Western Canada. In 1988, Lev founded Subway Developments of BC, and the division celebrates its 10th anniversary with 218 stores. And, out of all Subway divisions, and in terms of sales, the BC division is at the top, leading by up to 25%. If that lead is narrowing, it’s because BC has become the model for divisions which are following its lead and catching up.

How can this be? There are only 3.9 million British Columbians. But they eat a lot of Subway sandwiches—400,000 a week, putting annual sales at $90 million.

The answer lies in a potent combination of organizational ease, corporate savvy and media communications, all boosted by the intrinsic qualities of the BC lifestyle.

In the first place, as Lev explains, Subway restaurants are easy to own. “When you buy a franchise, you buy an operating system which has been perfected over time. One of the hallmarks of our system, and our success, is KISS—Keep it Simple, Stupid. The recipes are simple, procedures and operations are simple. There’s no cooking involved, so we don’t need thousands of dollars worth of equipment. The cost to open a Subway franchise is $140,000—a McDonald’s franchise can run from $700,000 to $1 million.

Secondly, Subway has benefited from a lack of competition. “In 1988, there were no sandwich chains in BC,” continues Lev. “There were sandwich stores, in office buildings, closed in the evenings and on week-ends. There was no alternative to burgers, and Subway sandwiches quickly became the perfect alternative, but with the convenience and economy offered by fast food.”

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The price of a Subway sandwich begins at around a dollar and, although the corporation’s research shows that portability is not a major factor overall, it’s probably a bigger factor with BC consumers, who appreciate the fact that they can buy their lunch on their way to work or school, or stow one in a knapsack to eat at the beach or on the mountain.

 “Freshness is our biggest selling point, value is number two,” continues Lev. “But what brought Subway to the forefront is the fact that our sandwiches are not pre-made. People watch their meal being made—precisely to their instructions. The Subway bread is baked in front of customers, which is another selling point; and there’s our traditional ‘U-Gouge’, which is a way of cutting the bread so the contents of the sandwich won’t fall out.

“Variety is another selling point. We have something for everyone—meat, vegetarian, low-fat—and one of the best breakfast sandwiches in the industry. But, getting back to the KISS formula, we’re in the business of appealing to the masses. Some Subway stores offer soup and salads, and we have items like potato chips. But our business is selling sandwiches.”

The Subway benefits are not difficult to communicate to a receptive public—everybody loves a sandwich. The big challenge has always been budget. Subway collects advertising funds from franchisers, and that money is spent on ‘national’ (North American) advertising, care of Chicago agency Hal Riney & Partners. That agency works with a corporate board, and a franchise board, while keeping everyone moving in the same direction—no mean feat, considering the company’s growth: from 10 restaurants to 1,000 in the first 20 years, to 11,000 a decade later, to 13,000 six years after that.

In addition, each division has its own advertising agency. The marketing plan comes from head office in Connecticut, Riney develops is nationally, and the local agencies worth with their own franchisee boards to develop the plan locally. In BC, the agency that is i2i Advertising & Marketing, and its annual budget is $4.5 million. That’s not much for the ultra-aggressive fast food industry, but it’s way more than the franchise had in 1991, when i2i partners Stuart Ince and Cam Iverson began with Subway.

“Back then, Subway BC was 14 stores and the franchisees had just pooled enough money to hire professional help,” recalls Iverson. “That amount was below $100,000, so the account didn’t interest many agencies. But we knew the chain would take off here. It fit the west coast lifestyle, and it fit well in terms of competing against other fast food chains.”

The BC division took off in 1993, when the franchisees decided to go beyond the 2.5% of sales which they were contracted to put into advertising and begin an Additional Funds Program, becoming the first Subway division to do so.

The extra budget immediately shot up our presence—and sales,” says Iverson. “The sub sandwich is part of the eastern deli mentality. With the extra money, we were able to make the Subway sandwich a BC thing.”

Therein lies the key to Subway BC’s success. “We made ourselves a BC company, and part of the BC community,” Iverson continues. “This wasn’t strategy—our franchisees are BC people and they want to be part of their communities and do things they can be proud of. So, aside from spending advertising dollars wisely, we get involved in events and promotions at a very local level—and it’s that community involvement which explains why so many people think that Subway’s head office is here.”

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Subway BC is big on philanthropy. It raised $35,000 for Canuck Place (at the beginning, before the band-wagon effect kicked in). Ditto with AIDS Vancouver. Its Heroes for Hunger program gave a free sandwich to anyone who delivered a Food Bank donation. Every day, Subway feeds supporters of something: the Terry Fox Run, the Children’s Festival, the March of Dimes, Boy Scouts, the BC Boys Choir, Minor League hockey and Little League baseball. It supports scholarships, and it bought the ‘Shout No!” program, working with police and schools on child safety.

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These are, of course, promotions. But community involvement is Subway BC policy, and philanthropic promotions stretch advertising budgets. “We don’t do many things in a huge way, and we never pick causes for profile,” says Lev. “Most international companies don’t get involved with local figure skating clubs, and we don’t get the publicity that others get, but we reach thousands of people by doing a lot of little things.”

Subway has also been smart about advertising. This has not always been easy, considering the fact that half of its radio spots and all of its television ads are created in Chicago. It took a while for US creative teams to realize that Canadian and American sensibilities aren’t the same.

“It used to be a horrendous problem,” recalls Lev. “I spent a lot of time saying ‘No, not in Canada.’ I don’t have to do that anymore. Now, they know Canada well and we get Canadian versions of everything.”

Once i2i has the marketing plan, it can do what it likes—another success ingredient.

“The BC franchisees are left alone in terms of advertising and promotions,” says Iverson. “And they’ve been aggressive at putting together deals which build Subway’s presence far beyond the dollars they have to spend. We have to work harder to push media dollars into creating image, so we’ve become involved in loads of cross-promotions and have forged strong relationships with media partners. Those promotions have been a large factor in putting us ahead of other Subway divisions.”

Subway runs ten major promotions a year. Its biggest is the annual ‘Survive in Style Sweepstakes’. The concept was a small part of the national marketing plan, but i2i worked with Global Television to make it fit the BC culture, and it took off.

“The national promotion was about fast food survival tips,” says Iverson. “We made it about what you need to survive in BC. We have a true partnership with Global in that we plan it together and tie it in with Global’s Sports Page. Then we give away vehicles, scooters, mountain bikes, cellular phones, vacations–$100,000 worth of prizes. It’s now bigger than most of Subway’s national promotions.”

Another major promotion is the chance to win a trip to the Stanley Cup Finals—essential, of course, for the all-important 18-34 male demographic. “Sports are very important to us and we don’t have the money to participate in the TSN buy,” continues Iverson. “The Stanley Cup promotion lets us tie ourselves to hockey without becoming involved with a team. We’re perceived as being sports-related, even though, at the professional level, McDonald’s is much more invested. We’ve done a little guerrilla marketing…I guess we’ve stolen some thunder.”

(In that vein, one famous tactic is the use of the Subway plane. If Subway can’t afford to sponsor an event, it rents a plane, attaches a banner and repeated flies over the event. After seven years, this remains one of Subway BC’s most successful marketing tools.)

Another smart move was looking at the competition and going in the opposite direction.

“Corporately, our market is 18-49, and that is what our media buys target, but we stay very aware of the 12-17 customer,” says Iverson. “McDonald’s targets families. Teens don’t want to be where families are. So we’ve presented Subway as the cool place to go. We aligned ourselves with the younger radio stations; the Z95—Subway sticker prize campaign was extremely successful. And we created the Sub Dude and got involved with snowboarding at the beginning of snowboarding—there was a time when no self-respecting snowboarder would be caught without a Subway sticker on his board. Teens love us—not only is a Subway sandwich a cool food to eat, but their parents don’t mind. Now, it’s kind of a cult food.”

As far as Lev is concerned, the Subway market is anyone with teeth. “It’s anyone who can eat a sandwich. BC has the largest senior population in Canada and seniors are concerned about blood sugar, fat and cholesterol. And children are the grown-ups of tomorrow. But we don’t have the funds to go after individual markets.”

So individual markets are targeted quietly. “A child’s choice is the determining factor of where parents go, but kids want toys,” explains Lev. “If Dairy Queen advertises a toy promotion, it’ll get the families. We can’t advertise that way, so we have a Kids Pack program—a school lunch with a sandwich, drink, cookie and toy. As a result, we feed more BC elementary students than anyone else.”

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In BC, more than any another Subway region, women are a larger market: 50%. “Between 7:00 p.m. and 11:00 p.m., we get men; that’s when we sell the foot-longs with double meat and cheese,” says Iverson. “But at lunch, 60% of sales are to women. At the beginning, we had to focus on the 18-34s, then we built in the 12-17s, then we spread out to the 12-49s. Now, half of our customers are women. So we’ve broadened the net further. We run ads on female stations like KISS and QMFM, focusing on four-inch sandwiches, the lighter lunch, the sandwiches with six grams of fat or less.”

Subway heavily promotes the latter, but the low-fat aspect adds irony to any discussion involving the fast-food industry. “North Americans are fatter than ever, fries and chocolate are the top-selling foods, steakhouses are North America’s fastest-growing restaurant category and Wendy’s salads are gone,” says Lev. “So while it’s great that people see Subway sandwiches as an alternative to foods that they deem to be fattening, I’m not sure that they care about fat. People may think more about nutrition, but whether they act on it is a different matter. It’s just that the sandwich connotation is more positive.”

Connotation is another important point. “We’re careful to position ourselves in the sandwich category because of the submarine connotation,” says Iverson. “The submarine is rooted in the Northeastern US Italian-American community, where it’s a mainstay. In BC, before Subway came here, submarines were seen as something that fat men ate while they watched TV. Nobody had heard of a meatball sandwich. Or a foot-long steak-and-cheese with Marinara sauce. We communicated a different connotation for BC. Now, we sell a lot of those sandwiches.”

“Kentucky Fried Chicken is now KFC and McDonald’s calls its burgers ‘sandwiches’,” adds Lev. “Subway has never used the word ‘submarine’. As we’ve built our brand in BC, the focus has been on sandwiches, and the fast, inexpensive made-to-order meal. We’ve always promoted our 6” sandwiches—never our foot-longs. The 6” sandwiches fit with BC eating habits, and we won and R&D award when we devised 4” deli rounds, because we created a food that was appropriate for our market.”

All Subway restaurants sell 16 sandwiches—12 corporate, four local. The latter are created by franchisees, and this allowance is yet another reason for Subway’s success.

“The franchisees can choose what they sell, as long as it’s on Subway bread,” explains Lev. “And there’s no test kitchen, anywhere. We try things. If they work, great. If sandwiches don’t move, they come off the menu.”

i2i has used this flexibility for the highly-successful Sub of the Month promotion. “The freedom to create menu deviations has been a real bonus—and franchisees’ input is listened to,” says Iverson. “If head office were to introduce a sandwich which the franchisees knew no one in BC would eat, they could opt out. And we can push sandwiches which fit the BC culture. For example, we knew that chicken would work here, and that a Caesar salad would work here, so we helped develop the Kickin’ Chicken Savoury Caesar. It took off and became a national campaign. And the Sub of the Month program allows us to regularly present a different reason to come to Subway. It’s not rocket science, but it gives us product news and drives traffic.”

The two other Subway divisions which are catching up to BC are Alberta and Minnesota. They too have followed the formula of becoming part of their communities’ fabric, while staying with the national plan.

“A lot of other markets ran their own programs and, in the process, created too many Subway faces,” continues Iverson. “National ads would say one thing, local ads would say another, promotions would say something else. We create our own advertising and promotions, but we stay close to the national campaigns. So the advertising is different, but there’s always something that ties it together.”

Iverson says that the real credit goes, of course, to Gerry Lev and the Subway franchisees.

“Gerry’s progressive—he knew he needed to do more than just sell franchises. He’s a great communicator, he keeps everyone informed, brings in educational speakers. His franchisee support system has really helped the growth of this division. And the franchisees put a lot of energy into staying ahead of the pack. They’ve been willing to take risks and increase their spending. So we have BC people who have worked hard to put a BC face on an American corporation. And sales are way higher than in any other division. It’s an impressive accomplishment.”

Blitz Magazine, May 1998