Apple, Volvo, The Economist: Everything that matters this morning

Good morning and welcome to Marketing Week’s round-up of the news that matters in the marketing world today.

The Economist launches new TV ad

The Economist has launched its first new brand TV ad in more than a decade as it looks to “reinforce a more emotional connection” to the brand and attract a wider audience.

The campaign, entitled ‘Never Stop Questioning’ and developed by long-standing agency Proximity, follows the life of a young girl with a curious mind.

It will run in high-reach broadcast channels including Sky, Channel 4, ITV and Channel 5 in the UK and CBS, NBC, Fox, ABC and News 12 in the US.

“We have made a strategic investment to talk with our target audience in a way that reinforces a more emotional connection to our brand,” CMO Mark Cripps explains.

“We have a loyal and dedicated readership that perceives great value from their relationship with The Economist and truly loves out brand. Our readers never stop questioning the world around them and we believe this campaign will attract a similar audience and encourage them to learn more about The Economist.”

Apple shares slump 10% after sales warning

Apple’s shares were down by almost 10% at the end of Thursday after it was forced it to downgrade revenue forecasts following a slowdown in sales in China.

The tech company is expecting to make around $84bn (£67bn) in revenue in Q4 2018, down from the previously expected $89bn.

This is 5% lower than the same period last year and Apple’s first year-on-year quarterly decline since 2016. It is also the first time the company has revised its guidance to investors in more than 15 years.

Alongside economic deceleration in Greater China, which accounts for almost 20% of its revenue, boss Tim Cook blamed troubles in developed markets where fewer customers than anticipated upgraded to Apple’s newest phones.

READ MORE: Apple shares close nearly 10% lower after sales warning

British army targets ‘snowflake’ millennials in recruitment drive

The British army is calling on “snowflakes, selfie addicts, class clowns, phone zombies, and me, me, me millennials” to join its ranks in its latest recruitment campaign titled ‘Your Army Needs You’.

Targeting 16- to 25-year-olds, the ads – which were created by Karmarama and based on the ‘Your Country Needs You’ poster from the First World War – are an effort to show the army “sees people differently” and “recognises their need for a bigger sense of purpose”.

In the campaign the army says it could use the compassion of snowflakes, the stamina of gamers, the self belief of me, me, me millennials and the confidence of selfie takers.

UK defence secretary Gavin Williamson says the campaign, which will run across TV, radio and outdoor, is a “powerful call to action that appeals to those seeking to make a difference as part of an innovative and inclusive team.”

“It shows that time spent in the army equips people with skills for life and provides comradeship, adventure and opportunity like no other job does,” he adds.

READ MORE: UK army recruitment ads target ‘snowflake’ millennials

Volvo walloped with $778m emissions cost

Volvo Group has set aside $778m (£616m) after it came to light last year that its truck and bus engines may be exceeding limits for toxic nitrogen oxides.

The costs have been based on factors including vehicle testing and statistical analysis, however Volvo declined to say how many vehicles were affected.

The next step, the Swedish truck maker said, will be to “define how to implement corrective actions concerning the component in vehicles affected by the issue,” which will be done together with relevant authorities.

Claes Eliasson, Volvo’s head of media relations, told Reuters: “In the US market we have replaced the affected component with another, new component in new production and we will do so for other affected markets in the first half of 2019.”

Volvo is anticipating this to have an impact on operating income in Q4 2018 and a negative effect on cash flow to “gradually ramp up in the coming years”.

READ MORE: Truckmaker Volvo to take $778 million emissions hit

Coca-Cola completes Costa buy

Coca-Cola has completed the $4.9bn acquisition of Costa from Whitbread PLC following approval from regulatory authorities in the European Union and China.

Costa, which has operations in more than 30 countries, gives Coca-Cola a significant footprint in the global coffee market, which is growing 6% annually.

“We see great opportunities for value creation through the combination of Costa’s capabilities and Coca-Cola’s marketing expertise and global reach,” says James Quincey, CEO of The Coca-Cola Company. “Our vision is to use the strong Costa platform to expand our portfolio in the growing coffee category.”

Friday, 4 January

Greggs taps into flexitarian trend with Apple-inspired launch of vegan sausage roll

Greggs is tapping into consumers’ growing desire to adopt a flexitarian diet by introducing a vegan-friendly sausage roll.

The new edition will be available from today (3 January) – just in time for ‘Veganuary’ – and is made from puff pastry, vegetable oil and “bespoke Quorn mince filling”.

Greggs unveiled the new product on Twitter yesterday with an Apple iPhone-inspired video, detailing the spec of the sausage roll, under the message “The wait is over… 3.1.19”.

The sausage roll is shot from various camera angles, with information about the product including the fact it has a vegan core and is 10 mega-bites, as well as the fact it represents the  “next generation of sausage rolls”.

The post sparked a flurry of comments – some positive, some negative – and has been retweeted more than 6,000 times and liked by 35,000 Twitter users.
The move comes after animal welfare group PETA launched a petition calling for the new menu item. It was signed by more than 20,000 people.

“Like many food retailers we have seen increasing demand for vegetarian and vegan products,” chief executive at Greggs Roger Whiteside says.

“We have been trying to develop a vegan version of our famous sausage roll for some time now. It has not been easy but our taste panel customers all love this one, so we have decided to launch it as our contribution to Veganuary.”

Meanwhile, across the UK the flexitarian trend is continues to gather steam, triggering more brands to offer vegan or vegetarian alternatives.

This year, a record 14,000 people have signed up to Veganuary, an annual movement which encourages people to go vegan for the month of January.

READ MORE: Greggs launches vegan sausage roll

John Lewis sees Christmas sales boost thanks to last-minute rush

John Lewis & Partners experienced a 4.5% climb in sales in the week ending 29 December compared to the same week in 2017, thanks to a Christmas Eve shopping rush.

Beauty and wellbeing products saw a 25.3% increase in sales, while fashion sales increased by 10.7%.  Home sales dropped by 2.3% on last year but gift food sales grew by 103%. Meanwhile, electrical and home technology sales rose 3.1%.

Sales at Waitrose & Partners climbed 19.2% in the same week, however sales for the week to 22 December were down 11.7% compared to the equivalent weeks last year.

Overall, the John Lewis Partnership saw sales rise 11.1% for the week ending 29 December.

Cathay Pacific to honour slashed ticket prices in major fare blunder

Airline Cathay Pacific has pledged to honour the business-class tickets it mistakenly sold to travellers for just a fraction of the usual asking price.

The Hong Kong-based airline sold business-class return flights for August to New York from Da Nang in Vietnam for just $675, with the same route costing $16,000 in September and October.

Cathay Pacific has since confessed to its blunder. And despite acknowledging its mistake the airline said it will honour the tickets sold.

“Happy 2019 all, and to those who bought our good – VERY good surprise ‘special’ on New Year’s Day, yes – we made a mistake but we look forward to welcoming you on board with your ticket issued. Hope this will make your 2019 ‘special’ too,” the airline tweeted.

It is not yet known how many fares were sold as a result of the ticketing blunder.

READ MORE: Cathay Pacific to honour $16,000 fares sold for $675

New campaign for Linda McCartney Foods champions kindness

Mary McCartney, the daughter of Paul and Linda McCartney, has creatively contributed to and directed a new campaign titled ‘Kindness Forever’ in a nod to her mother’s vegetarian food range.

Featuring footage of the family from their own archives, the film aims to portray a message of kindness which Mary believes is born from a belief her mother held.

Accompanied by music from Paul McCartney’s band Wings, the spot reveals a series of vignettes featuring people in various stages of their meat-free journeys.

Several shots show people playing with animals while demonstrating love and affection toward friends and family while digging into some of the products the vegetarian range has to offer.

The film is supported by taglines such as: “It’s cool to be kind”.

“When my mum first started talking publicly about vegetarianism, it wasn’t the mainstream movement that it is today; she was a genuine pioneer of changing the way we look at what goes onto our plates and how we treat the world around us,” Mary says.

The campaign will go live this month amid the Veganuary period when many people adopt a vegan diet for January.

Home entertainment market grows 10%

The home entertainment market grew by 10% in 2018, bringing the total value of the category to £2.34bn, according to figures by the British Association for Screen Entertainment (BASE).

Some 63% of consumers prefer to rent or stream film and TV content, while ownership remains a significant contributor to the market’s success, with 37% of category value generated by people choosing to buy and own content.

However, just 59% of transactional spend is still attributed to physical content with DVD, Blu-ray and 4K UHD Blu-ray discs continuing to be a key driver across the market as a whole.

According to the BASE, strength of new release film in particular is also driving performance in other areas. In addition, the growth of digital transactional has surpassed all expectations last year, reaching a total market value of £400m.

The research indicates Universal Pictures continues to lead the way as the top distributor by volume and value share.

Wednesday, 2 January

Business chiefs fear worsening UK economy

Business leaders are pessimistic about the future of the UK economy as fears over Brexit continue to rise among those at the top of their industry.

According to research by Ipsos Mori, which surveys senior leaders at the UK’s 500 largest listed and private companies, businesses are worried about the year ahead. It finds 74% are pessimistic about 2019 – an increase of 8% from last year with many becoming increasingly concerned about Brexit.

Ipsos Mori asked chairmen, chief executives and other senior managers if they thought the prospect of Brexit was worse today than they predicted 12 months ago with 67% saying their company was worse off, up from 56% a year ago.

Ben Page, chief executive of Ipsos Mori says: “Britain’s largest businesses feel Brexit is having a more profound impact on British business than our business leaders thought it would a year ago — 67% of ‘captains’ think that their company is worse off.”

The Prime Minister is still negotiating with the EU but many are concerned about the prospect of a no-deal being reached as the proposal cut-off date for Brexit – 29 March 2019 –  looms closer.

£ READ MORE: Business leaders fear deteriorating economic conditions in UK

Iceland founder criticises HMRC ‘red tape’ as ‘just madness’ after facing potential £21m fine

Iceland’s founder has hit back at HM Revenue & Customs (HMRC) criticism of the shop’s Christmas saving scheme.

The frozen-food giant offered low-paid staff a Christmas savings scheme which meant employees who opted in would have money deducted from their pay, which was put in a separate account that staff were able to have returned on demand.

However, the plan meant some employees’ pay fell below the minimum wage and despite being voluntary HMRC has accused the company of breaching minimum wage rules, threatening it with a bill of at least £21m as a result.

Iceland’s founder and chief executive, Sir Malcolm Walker, described the dispute as “just madness”, according to The Times

The alleged underpayment is of about £3.5m a year for six years with Iceland potentially being forced to pay £21m – double the amount of the alleged underpayment.

Walker told the Times that he was challenging HMRC’s claims and was prepared to go to court if necessary but also wanted to tackle the “growing red tape” for businesses.

He said he had prepared a document entitled The Campaign for Common Sense detailing the “growing red tape and bureaucracy affecting business”, but said that few in government were interested in tackling the problem.

£ READ MORE: Iceland landed with £21m savings club bill by HMRC

Nākd unveils first ever TV advert with £1.5m campaign

Natural Balance Foods is launching its first ever TV campaign for its Nākd snack bars.

The health food company is investing £1.5m into its  “Mind Blown” campaign which launched yesterday (1 January).

Created by agency Recipe, the campaign consists of 20- and 30-second TV adverts which see various people try a wide-range of the snack bars. One spot includes a man bringing his girlfriend into a doctor’s surgery after her mind has “been blown” by trying a Blueberry Muffin Nākd bar.

Jamie Combs, founder of Natural Balance Foods, says: “2019 is a big year for Nākd and we are passionate about bringing our customers the best tasting bars and exciting new flavour combinations, with the wholefood message at the heart of everything we do.”

The brand will also be running campaign activity throughout the year, including in-store promotions and social media activations.

Greenwoods Menswear becomes latest victim of struggling high street

Greenwoods Menswear, which was rescued from administration less than 18 months ago, has gone into liquidation, becoming the latest victim of the struggling high street.

The 158-year-old menswear shop has stores predominately in the north of England with many local papers reporting the permanent closure of their town’s local Greenwoods.

Greenwoods, which in the 1990s had about 200 shops, went into administration in September 2017 but was acquired by Versatile International Trading which saw 40 of its stores saved.

A notice posted in store windows suggests that the Greenwoods name may not survive. It reads: “All outlets of Versatile International Trading Ltd t/a Greenwoods Menswear have now closed for business permanently.”

Greenwoods is the latest in a long line of high street retailers to struggle amid soaring rates, and competition from online retailers such as Amazon and comes after the appointment of administrators to HMV.

£ READ MORE: Who’s next as Greenwoods Menswear joins the high street casualties?

Rail companies face protests after ticket price hike

Train

Rail companies are facing a backlash over an increase in rail prices with passengers staging protests at stations across the UK.

The fare increase comes into force today, with commuters banding together on social media to organise protests under the banner #RailRevolution.

The rise in England and Wales – the highest since January 2013 – will mean an average 3.1% increase on tickets in England and Wales with the price of some annual season tickets going up by more than £100.

The increase comes after a year of strikes and poor time-keeping with demonstrations set to take place at stations including King’s Cross in London, Norwich and Sheffield.

Andrew Jones, the rail minister, said fare rises had been higher under the last Labour government: “For the sixth year in a row fares are only rising with inflation. Labour’s 13 years in office saw inflation-busting fare rises of up to 7.5%.”

One in seven trains have been delayed by at least five minutes in the past 12 months – the network’s worst performance since September 2005 – according to the Press Association

READ MORE: Rail users to mount ‘national day of action’ over 3.1% fare rise

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