| A
lot of
times, a company. s marketing and/or
advertising campaign(s) seriously affect
business, either positive or negative.
Identifying advertising and marketing
campaigns that will either be extremely
successful or extremely bad for
business can be a good way to pick a stock.
Of course, you need to make sure a
company has good financials, a product or
service that doesn. t , and a
future. But all else being equal, sales
competitions between companies can be
won or lost on a marketing or
advertising campaign.
General terms,
while good guidelines, are relatively
vague by definition without some
examples. Let. s look at some of
the best and worst marketing strategies
of companies that everyone knows.
Take a look
at Pepsi. Pepsi. s advertising campaigns
and marketing strategies have produced
dramatic effects on sales both up
and down. Let. s look at the bad
news first.
Pepsi wanted to
expand. That. s a reasonable aspiration
for any company. So their marketing
department and product development
came up with some new drinks.
Clear Pepsi was one of them. It tasted
like Pepsi, felt like Pepsi, smelled like
Pepsi, but it sure didn. t look
like it. The public completely rejected
this idea. Sales were horrible. No
one wanted to drink something that looked
like water; people wanted their good
old artificially colored and artificially
flavored Pepsi cola. Then came
Pepsi Kona. In other words, it was Coffee-Cola.
It was basically a bizarre mix
of flavors with extra caffeine and a strange
aftertaste that no one could quite
put their finger on. The public said
"no" to the Coffee-Cola idea
too. Can you guess what the company.
s stock did after these
blunders? Sales dropped, profits
dropped, the stock price dropped.
Pepsi had
its good points too. The Pepsi Challenge
proved to be one of the greatest
advertising ideas the company ever
had. Suddenly, it doesn. t matter
if everyone says they like Coke
more; Pepsi is favored even by die-hard
Coke fans and famous people too. Sales
increased steadily, and it was a good
way to grab customers who previously
only drank Coke. This contributed to
increased Pepsi sales (sometimes at the
expense of a Coke customer).
If you
can identify great (or even above average)
advertising campaigns early, chances
are that the company (all else being
equal) will make more money than projections
call for. The McDonald. s
Monopoly game caused customers to keep
coming back so they could go for the
million-dollar prize. That drove up
sales, as well as the stock. The
introduction of the Coca-Cola Classic
rebounded Coke from a big loss.
Marketing can have a huge impact on a
company and on stocks, and learning from
and identifying great and awful
marketing strategies in the beginning
can lead to lots of profit, or the
avoidance of a huge loss.
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