“Monkey wants my burger!” So do I…

I think we are looking at a tasty opportunity here. A few months ago, I started to see on TV some clever –and quite appetizing!- commercials from what for me was a little known restaurant chain: Red Robin Gourmet Burgers (RRGB). These commercials caught my attention. I had seen Red Robin restaurants here and there when travelling around the country, but I had never had any interest in visiting one of them. I didn’t know what they were about, so I assumed they were just another one of those fast-food joints that dot our malls and commercial areas. Likely, nothing special. Suddenly, I see this fun and irreverent TV spot that describes a rather interesting gastronomic offer: the Banzai Burger. A burger with, among other things, teriyaki sauce and grilled pineapple. Well, there’s a thought! And this burger was offered by a restaurant that claimed to specialize in a concept that I found rather captivating: gourmet burgers. See, if you are like most Americans, it’s likely you’ve been embarked for a good part of your life in an inspiring and not quite yet fulfilled search: the quest for the perfect burger. I know I am! And what I know is that I usually go from disappointment to disappointment in that quest. Burgers are mainly the monopoly of the dull fast food chains, which seem to make a very deliberate and concerted effort to ensure that the burgers they serve you are as underwhelming as possible and as distant from the mouthwatering ones they show in their advertising as they can. Most casual restaurants also include burgers in their menus, but apparently consider them the undeserving underlings of their gastronomical line-ups: “Burgers? Please!! Just toss in a mundane beef patty with some lettuce and tomato in a bun, plenty of greasy fries and call it a day”. Have you noticed that, even though at some of restaurants they even ask you how you want your meat cooked, you invariably get it in just one way: burned, dry and tasteless. In this context, here it comes this restaurant chain, Red Robin, that seems to understand that there can be creativity behind the way to prepare a burger, and that also understands that there are people –lots of people- who are willing to pay a premium for a great burger experience. In my case, the advertising worked and, intrigued, I decided to pay them a visit. Now, as I have indicated before, good advertising is not the only condition to profile a potential great investment. The company has to deliver on its promise. And this is exactly the reason why I decided to write a posting about Red Robin. During my visit, they delivered in spades. The Red Robin restaurant created a great impression from the moment we stepped in: the place just emanated this fun, positive and optimistic energy. The decoration was quite lively, but not loud. The place was just fun, modern and clean. Even though the place was packed –good signal!-, we were promptly taken to our table. Our waitress, Samantha, was young, outgoing and very well trained. When she knew this was our first time at Red Robin, she took us through the menu with excitement and conviction, and offered to bring an order of their famous steak fries for us to try, which she later did along with a side of Ranch sauce that, according to her, most people enjoyed with the potatoes (they were great indeed!). The menu was a burger-lover’s dream: alluring burger creations that make taking a decision an unduly tough process. Even the drinks were intriguing and different. After we ordered, and during our meal, Samantha was always attentive, making sure that our experience was great. I can go on and on, but let me just summarize it this way: I was genuinely impressed with Red Robin. The whole experience was just great. But what I found more striking was not the quality of the food –which was superb-. It was the people. The Red Robin people were really charged up. Their service was caring and genuinely warm. And that is gold. For me, the attitude and disposition of the employees in a Company is one of the best indicators of its future and potential, for at the end it is people who can create and build success. It is the cook making sure that the burgers are well done and tasty; it is the server taking care of the customers so they feel comfortable and welcomed; it is the managers, keeping the environment fun and exciting. That is what I witnessed at Red Robin.
Red Robin has a lot of room to grow: currently they have around 380 restaurants in the US and Canada, far from saturation. This shrewd advertising campaign is going to dramatically raise the awareness and interest in Red Robin among the huge segment of casual diners in the US, and those who visit will not be disappointed by the great experience offered by the restaurants. This is, in my view, the start of a great investment story. Get in before the monkey takes your burger!

General Motors: Like nothing else...

To close this series of postings on General Motors (GM) and its potential as a long-term investment, I want to briefly cover the last great example of sharp marketing in GM’s portfolio: the Hummer.
When Hummer was finally made available to the mass consumer market with the introduction of the H2 model, GM was capitalizing on two key equities the brand had already developed. The first one was the mythical, larger-than-life personality the humvee had built through its successful performance in the armed forces. The second: the mystique created by its rare appearances in civil society as a coveted symbol of power and exclusivity for a handful of players able to foot the $100K+ tab for the privilege of flaunting an original Hummer (later dubbed the H1). Marketed as a luxurious, yet rugged and masculine vehicle, the success of the H2 was immediately obvious, and very quickly the Hummer made its presence being felt in the national highways. The H2 made many drool and a few others mad: the huge, powerful vehicle launch came to be at a very inconvenient time, exactly when the price of oil started to climb. Many would-be Hummer owners hesitated to commit to this gas-guzzler’s unquenchable thirst, and the fewer that embarked on it, were stung by guilt. It didn’t help that he Hummer became the preferred target of the green crowd, who heavily criticized the wasteful fuel consumption of the Hummer and the frivolity of those who would buy this all-terrain behemoth just to take it from their driveways to the office and back. GM’s reaction was quick and brilliant: the H3 was born. What made H3 such a masterful move was GM’s ability to position it as a smarter, more nimble Hummer, without undermining at all its powerful and virile image. The H3 preserved the rock-climbing, trail-blazing, river-crossing, neighbor-impressing capabilities of the Hummer proposition, at a far more acceptable price and fuel-consumption levels. GM’s message: indulge! GM got it right, and they’ve continued supporting the Hummer on an ongoing basis with enticing communications that pay off the emotional driver behind the desire for such an unstoppable all-terrain: facing a fairly routinary, structured and all-too-convenient life, sub-urban consumers dream with the freedom and the challenge of overcoming every obstacle in a boundless discovery of new, remote places… of course, in the comfort of leather seats and a top-notch audio system. It’s all about personal power. The amazing array of exciting TV commercials and print ads developed to support Hummer is mind-boggling. Every single one conveys exactly the same message: an extraordinary vehicle that will negotiate any obstacle to take you anywhere you want to go. But it is brilliantly done by molding the message to address –and feed from- vastly diverse lifestyle and value contexts, so as to be relevant to different consumer segments. From the promise of transferring your strong and daring video game self into the real world, to nurturing your subconscious desire to transcend through heroic deeds: it all is possible with a Hummer. The relevance and quality of Hummer’s positioning and support is evidence of GM’s ability of not only obtain in depth consumer insights, but most importantly, leverage them and translate them into relevant product propositions. And that exactly is the key to build long-term leadership and growth… like nothing else.

General Motors: An Innovations Revolution

In this third installment of my analysis of General Motors’ (GM) rise as a marketing powerhouse, I want to refer to yet another pillar of GM’s resurgence: its Chevrolet division. During the last couple of years, GM has been engaged in an exciting turnaround of its once flailing Chevrolet division. Chevrolet has always been GM’s workhorse. Considered its “popular” brand, that is, the brand targeted at the mass, mid-priced segment, Chevrolet cars had been, at best, uninspiring. There was not a clear position for Chevrolet. The brand churned a massive number of styles, very much unrelated except for one thing: their lack of character –and, some would add, quality. In a very typical mistake made by many corporations, GM at some point considered that the middle-class consumers need for an affordable, no frills car meant that its customers could forego style and the fundamental drive to fulfill significant emotional needs within a mainly rational choice. Toyota and Honda did not make the same mistake, and their respective Camry and Accord models thrived by offering consumers affordable style, durability and reliability. In my view, GM learned the lesson, and took the initiative of carefully re-evaluating Chevrolet’s personality. GM addressed two fundamental questions: what was the brand to stand for? and, consequentially, what kind of cars should be developed and marketed under the Chevrolet brand name? I think GM cracked the code: if I had to summarize the chosen positioning for Chevrolet, I would define it as “the smart choice”, underpinned not by low price, but as technology-driven efficiency. A mindful brand that pursues innovation as a way to provide the best overall value to today’s conscientious consumer. The first step was to resuscitate a model that was pretty much written off: the Malibu, and make it the unquestionable flagship for the brand. Malibu provides Chevrolet with a clear focus and a base personality the consumers could first identify, and second, relate to. The Malibu was completely re-engineered. A generous dose of stylish design and technical performance to match its adversaries made the Malibu a remarkable contender in the leading mid-price category. But the real breakthrough was in also positioning Chevrolet as the innovator in fuel-efficiency and alternative energy vehicles, spearheading and bringing to market GM’s innovations in that area. Once again, this move fully pays off the brand’s chosen positioning: technology-driven efficiency. Please notice that Chevrolet’s innovations are not about performance, comfort or luxury. No frivolous (although nice!) heated windshield cleaning fluid here: it’s all about efficiency, lower costs and lower consumption of limited resources. It's what Chevrolet refers to as Fuel Solutions. Eureka! In one swap, Chevrolet is covering two relevant, very real and closely linked concerns of today’s consumers: a) the personal, financial concern with the rising costs of energy, and with it, b) the awakening to the reality that natural resources are indeed finite and that it's everyone's responsbility to do their part to conserve them. This is the drive behind the surging interest for sustainable and ecologically sound products.
General Motors has vigorously driven this positioning for Chevrolet. It started with their FlexFuel vehicles, uniquely suited to consume E-85 ethanol fuel, and taken to new heights with the much touted and highly anticipated Chevy Volt, a long-range –and cool looking!- electric vehicle slotted for launch in 2010. I am particularly impressed by the iconic system developed to represent this approach, whereby a very clever representation of each of the alternative-fuel types Chevy is offering or working on are shown under the theme “Gas-friendly to gas-free”. The vitality, breadth of innovation and commitment this simple array projects give Chevrolet instant credibility and appeal.
Once again, Chevrolet represents yet another proof of General Motors marketing prowess. I can see no flaw in their approach, and compared to the endless shots of fast cars running on smooth roads that are the staple in car advertising, GM is developing brands with real souls and personality. Consumers are paying attention. Your investment portfolio should too.

GM: renewing heritage

In this series of postings, I am discussing the various signals I am seeing that, in my view, point to a rebirth of General Motors (GM) as a leader –beyond sales volume- in the automotive industry, and therefore, profile the Company as an attractive investment. In my previous posting "Full speed for General Motoros", I explained why I think the work behind Cadillac is just right. Now, I’d like to turn my attention to another treasure been dusted by GM off from the antiques coffer: Buick. Support behind Buick is not new. Since several years ago, GM has been trying to rejuvenate this brand, but its efforts had been, at best, tepid and somewhat erratic. What was Buick? A family car? The launch of the Rendezvous seemed to suggest that. A sports car? Tiger Woods took a few swings at it. It feels like GM knew there was valuable heritage in that brand, but was not finding the right way to unleash it in all its full potential. Then Lacrosse and Lucerne made their debut. Mmmh… I am sure Buick dealers started to see a slightly different type of crowd asking about these models. Sleek, with an abundance of features, nicely appointed, yet with the promise of a brisk, fulfilling driving experience. A true sub-premium offering was born. GM had found the sweetspot for Buick. An elegant, pleasant, smooth experience but with the impetus of a thoroughbred. Beatiful!! Actually, not a bad positioning, is it? And hence “Drive beautiful” was coined. A great product vision does not need much explanation. Once you hit the “big idea”, the way forward becomes clear. The right concepts and communications just flow out of this big idea. And “Drive beautiful” has engendered a series of great Buick models that completely belie the previous perceptions of Buick as a stodgy, old and declining brand. The latest addition to the family is the Enclave, a bold yet sophisticated SUV experience. Buicks are beautiful, paying off a concept that is absolutely in tune with today’s inward-looking consumer, who gives special value to aesthetics, harmony and a personal sense of pleasure. Buick is then yet another great proof of General Motors promising revival.

Full speed for General Motors

I am excited about the prospects for General Motors (GM) as a great stock for long-term investment. I see several of its divisions powering ahead with all cylinders running. And consumers are paying attention. I will be covering the different signs I am seeing about GM getting it right in a series of postings, just because there is much going on and much to discuss. I can’t avoid drawing a historical analogy to 1941: it seems that the relentless expansion from Japan’s Toyota may have finally awakened a sleeping giant.

To start this series of posting, let’s focus on GM’s efforts in the top end of the market, the luxury segment, where its lunch has been eaten for way too long by European, and moreover in recent years, by the Japanese offers represented by Infiniti, Acura and the indisputable leader, Lexus. A few years ago, Cadillac initiated an extremely well orchestrated effort to revive a brand that at that time, in the mind of the consumers, only stood for 30-mile-per-hour seasoned seniors indulging in their golden years. A complete re-design of Cadillac’s line and an energetic, cool campaign started changing those perceptions. The effort reached its pinnacle with the launch of the Cadillac Escalade, that immediately became the gold standard for SUV opulence and coolness among the young crowd -by the way, quickly displacing the then heavyweight champion, the Lincoln Navigator-. GM continues to support the brand, and the latest campaign around the Cadillac CTS is the best yet. It is great how, in its commercials, the perfectly targeted spokespersons, exuding a cool, unpretentious confidence, go in a rather matter-of-factly way over the features of the car. Yes, they are the features to be expected from a luxury car… but the difference in Cadillac, what is really important is that when you turn the car on… it will return the favor. This is a brilliant, insightful, and totally relevant way to speak to the affluent young professionals in their own language. What is most impressive is how compelling and personal the message is, and how precise it is at capturing the sensual nature of the pleasure associated with driving a powerful and luxurious car. GM dismisses the conventional and undifferentiating car talk, which everyone else claims time and time again –yeah, yeah, exciting, exhilarating… ho-hum-, and engages the luxury consumers in a peer-to-peer dialogue, reaching deep inside at their truest emotions and desires. The message is targeting the soul, not the brain. The campaign is superbly produced and the talent is spot on for the message. I can only see Cadillac comfortably expanding the space it occupies in the luxury segment. And that is high-octane fuel for GM’s growth.

Java energy, Monster profits

When driving by a gas station the other day, I saw a sign announcing the latest hit on one of the most amazing success stories in the last years. Hansen Naturals (HANS) has been riding wild on the base of its very successful line of energy drinks, Monster. The sign that I saw advertised the latest addition to their Monster product range: Java Monster. In my view, a stroke of pure genious. Energy drinks as a category has seen double-digit growth in the last years, ever since Red Bull was introduced in the US several years ago. Hansen Naturals was able to take the lead in the category through a shrewd mix of great, cutting-edge products, aggressive distribution, and a vigorous line-extension strategy. Much has been said about Hansen Naturals and the wild increase in its share price. Many have questioned its valuation. The stock reached an all-time high north of $68 in early November, just to fall back to around $40 after what some considered a soft quarter. Yet, the share price has recovered to $49 in just a few weeks. The growth story behind Hansen Naturals is far from over. This latest introduction of Java Monster is just one more indicator of the firm grip the management has on its consumers' trends and lifestyles. Uniting two of the most relevant staples in today's Gen-Yers (energy drinks and coffee) in one product is quite smart, and as mentioned, it only demonstrates that Hansen Naturals is way capable of keeping its finger in the pulse of this important segment, and that it has the creativity and the executional drive to decisively act on the insights. As long as Monster continues to show such a proactive and vibrant vitality, profits will folow. And so far, it seems there is plenty of energy behind Monster.

Laptop wars: Dell strikes back

Who would have ever imagined that a Dell (DELL) computer could be cool? That's what Dell has achieved with the launch of its new range of low priced, yet rabidly hip Inspiron laptops. Just in time for the back-to-school season!

The breakout of the new line was backed by a very strong advertising campaign. The whimsical TV spot cleverly emphasized on the vibrant array of colors available to match your individual mood and lifestyle. It was quite refreshing to see Dell selling image and emotion, instead of just deals, technical features and the ever lower price that shaved their margins to microscopic levels. (which ultimately led them to trouble a couple of years ago and forced the return of Michael Dell at the helm of the cybernetic behemoth). Coolness and value are a magical formula for the Millennial generation, whose scrimp-and-splurge philosophy in life is what makes them feeling completely in fashion with a Prada skirt and a Target t-shirt. It seems that Dell finally cracked the right value equation for today's consumer.

I am convinced that Dell is back on track and that we'll see more of this powerful combination of signature Dell value and the up-to-date, contemporary image that was so badly needed to put the brand back into the minds of the mobile generation. Next stop: smart-phones?... what do you think? Dell share price has been on the rise since July 2007. Right now, at $28, the stock is close to its 52-week high of $29.61, but it is still well below the $40 it commanded before the start of operational and pricing woes that hit the stock in the second part of 2005. With the strong demand for computers and particularly notebooks projected for the coming years, Dell seems well on its way to revisit that price level.

Fat profits with Alli

Glaxo SmithKline (GSK) has recently launched a new weight loss drug named Alli. Alli is more than a drug: GSK has designed a whole program around Alli, and in a very honest way, warns the public that losing weight with Alli requires discipline and commitment. This is, for me, the key to its incipient success. Obesity is a serious pandemic in America, and consumers are worried about their weight. But they are exposed to a constant barrage of weight loss products offerings of dubious procedence and even more questionable effectiveness; products that offer magic formulas to lose weight while you keep eating like a Roman emperor and spend your weekends watching TV in the comfort of your couch. A combination of skepticism and desperation grasp over-weight consumers who know they need help, yet feel they are victims of unscrupulous scammers who prey on their weakness: what to believe? Who to trust?. So, when a reputable, Big Pharma company like Glaxo SmithKline finally comes to the rescue and launches a weight loss program, consumer will listen... and buy. This a serious Company that can be trusted. GSK has launched Alli in a quite vigorous way, and it's diffcult to miss their very well done TV commercials and their aisle displays at key retailers like Wal-Mart and Walgreens. Awareness of the new proposition must be high, and I assume some robust trial has ensued. I think Alli is a great initiative from GSK; in my view, this business will turn into a gold mine for this Company.

At $53, GSK share price is a little depressed right now as collateral damage of the sub-prime-driven market turmoil. It looks like a good opportunity to fatten up your portfolio.

Disclosure: I own shares of Glaxo SmithKline

Coke is it!

I used to be an avid Pepsi drinker. For me, Coke was a fairly standard, no-frills kind of drink. However, during the last couple of years I've seen with growing admiration the dramatic push The Coca-Cola Company (KO) is making in terms of innovation and outstanding product quality. First it was Coke Zero. Although skeptical at the beginning, it took me a couple of months to try this product; I mean, what could be so different from Pepsi One, anyway? Boy, was it different!! The first taste made me a convert. What a product!! Refreshing, flavorful and yet quite light. This successful introduction was followed by Coke's latest brilliant moves: the launch of Diet Coke Plus -Diet Coke with added vitamins and minerals-, and the acquisition of Glaceau, the manufacturer of the wildly successful VitaminWater line. Both initiatives strongly position the company to fully leverage the already robust -and still growing- consumers demand for healthier, balanced products that support their quest for overall well-being. In the best tradition of a consumer goods leader, Coca-Cola is strongly supporting both products with integrated marketing campaigns across several mediums. Perhaps the best example of advertising at work is VitaminWater. After just a few weeks of closing the Glaceau deal, Coca-Cola launched a vibrant, massive multi-media campaign to support VitaminWater, reinforcing its positioning as a hip, alternative brand for the in-crowd.

All this activity has not gone unnoticed in Wall Street. Coca-Cola share price has increased from around $44 in October 2006 to $54 in late August. While at 24 times trailing earnings the stock is not exactly cheap by historical standards at this point, I think Coke's portfolio strategy is definitely working. The Company is asserting its leadership position in the beverage market through a demonstrated understanding of what the consumers want and, most importanttly, where they are going in terms of priorities and needs. Growth at Coke can only bubble up.