3117T Kotler Appendix

Comprehensive Cases 793

Branding Metro Credit Union

On 5 May 2000, Larry Gordon, vice-president of development of Metro Credit Union (MCU), sat in his office overlooking Brown’s Line in Etobicoke and wondered how he could develop a break-through branding strategy for the company. Larry knew that MCU offered its members many benefits as a banking alternative; however, MCU had not clearly established what it stood for in the minds of its current or potential members. In the past, it had focused on marketing its specific products and services, and although it had its own brand symbol—a capital M inside a box (see Exhibit 1), Larry realized that MCU hadn’t developed a brand that communicated everything it stood for. In late 1999, the senior management team formally adopted a retail value proposition (RVP) on which to base its future development (see Exhibit 2). How- ever, even with this RVP, they didn’t know exactly how MCU should differentiate itself. While MCU was moving to restructure its operation to become more customer centred to improve service quality, Larry knew that its competitors were doing likewise. However, MCU’s additional focus on accountability to consumers and communities, which was anchored by its member-ownership and democratic control structure, was quite distinctive, as was MCU’s corporate commitment to social responsibility. He wondered if this aspect of the firm could be used as the foundation of the core brand message. Market research from 1999 appeared to reinforce this position. Members who had joined in the previous three years had been asked why they had considered MCU. Traditional consumer choice factors were evident: convenience (10%), recommendations (14%), products or prices (18%). But, most interesting, 38 percent reported that “credit union philosophy” or “bank alternative” were their primary reasons for joining MCU.

EXHIBIT 1 Metro Credit Union logo

This case was prepared by Phil Connell under the supervision of Dr. Peggy Cunningham for use in the Inter-Collegiate Business Competition and is not intended to illustrate either effective or ineffective handling of a management situation. Some information may have been disguised in the interest of conﬁdentiality. We thank Larry Gordon of Metro Credit Union for his help and support in developing this case.

EXHIBIT 2 MCU’s Retail Value Proposition

Retail Value Proposition (RVP) • The primary element in our RVP is the distinctive Metro customer experience, which is based on accountability (i.e., co-op membership) and high quality service. • While remaining anchored in financial services, we will move beyond banking to meet the needs of our members and their communities. Related Strategic Issues •We will ensure the delivery of quality service by developing a member-centric corporate structure and operation. •We will be a niche player focused on specific market segments (to be identified) where we are most likely to present a competitive advantage. •We will offer in-house and brokered products and services, as appropriate, to meet the needs of our target markets. • Our diversification program will take place through a combination of developing new inhouse offerings, incorporating subsidiaries, and/or forming strategic alliances that: 1) complement our core financial services, and/or 2) support our branding strategy, and/or 3) build on our internal expertise, and/or 4) generate revenue to support the overall corporate operation.

Larry also thought that MCU’s commitment to providing helpful and objective advice to members, through both direct consulting services and educational programs, could be part of the branding strategy. MCU advised both individuals and small businesses on a number of issues, from investment and insurance products to automobile purchases. In addition, MCU had plans to launch a series of educational seminars for members on a variety of financial planning and other topics, particularly on issues or for groups that were not well served (e.g., socially responsible investment seminars, financial planning for single parents). While any of these facets of Metro’s services could be used as a foundation on which to build brand image, Larry wondered which would be the most powerful for a successful brand. He knew that MCU would have to assure consumers that a credit union was just as professional, secure, and able to offer state-of-the-art financial services, as a major bank. At the same time, he knew that MCU would have to offer benefits that were not available from large traditional banks. Before he could decide on a brand positioning strategy, Larry first had to decide whom to target. The MCU proposition, he realized, was not for everyone. MCU knew it would have to be a niche player. Larry was concerned that having multiple messages aimed at multiple targets would result in brand confusion. Tradi- tionally, MCU’s customers were older, educated individuals and small businesses. But Larry was aware that the non-profit sector was under-targeted by financial service providers. He believed that many non-profit organizations in Toronto, along with their employees and supporters, would welcome a committed financial institution to support them. And this would be consistent with the credit union philosophy of serving the community. Finally, there was the question of how to communicate the new brand to current and potential members. Unfortunately, with a total marketing budget—for agencies, market research, advertising, and promotion—of only $450 000, Larry knew he couldn’t afford advertising on TV, radio, and daily newspaper ads in Toronto (see Exhibit 3). He knew MCU would have to rely on highly targeted promotional outreach, special offers and events, direct marketing, and word of mouth, supplemented by targeted advertising in weeklies or special interest publications. Comprehensive Cases 795

EXHIBIT 3 Media and Advertising Costs

Prime Time Television Commercial Rates (30 seconds)1 Network Number of Stations Basic Average Cost Regional television ASN 1 $ 90 ATV 4 $ 650 CBC Regional Atlantic 5 $1000 Central 15 $6000 Western 12 $2500 Paciﬁc 6 $1000 Global 1 $7000 MITV 2 $ 500 BBS Ontario 8 $5000

Newspaper Advertising2

Newspaper Cost of Advertisement Cost per 1000 People Reached (CPM) Toronto Star $11 340 $2438 Globe and Mail $16 938 $5314 Toronto Sun $5 463 $2366

Larry shook his head. How was he going to synthesize all of this information into a single brand positioning strategy and program that would clearly communicate what MCU was all about?

The Financial Services Industry Overview Canada was renowned for having an efficient, low-cost financial services industry. For many years, it was a relatively stable industry due to strict government regulation. Today, many believe it is entering an era of hypercompetition—an industry stage defined by economies of scale and the war for customers. The dominant force in the Canadian financial services industry is the Big Five banks—Royal Bank, CIBC, Bank of Montreal, TD Bank, and Bank of Nova Sco- tia, accounting for about 85 percent of the banking market in Canada. The Big Five along with a number of smaller banks employ 221 000 people, whereas credit unions employ about 20 000. In addition, banks operate 8211 branches and 15 481 automated teller machines (ATMs). Currently, there are about 750 credit unions in Canada. Many of these have multiple branches. Credit unions and caisses populaires, the Quebec version of credit unions, have a total membership of over 10 million people. However, while membership is increasing, the number of credit unions is decreasing: For example, in Ontario there are now only 350 credit unions; just a few years ago, there were 500. This is a result of an increased number of mergers and acquisitions among credit unions so that they can better compete with the large banks. Other competitors are mutual fund companies, which have been expanding aggressively: In 1999, close to 40 percent of Canadians made mutual fund invest- 796 Appendix

ments compared with the 14.9 percent who did in 1991. Over 20 percent of Cana- dians also own stocks and bonds; 33 percent own GICs or term deposits, and 22 percent own Canada savings bonds or term deposits. With the new online stock trading, the percentage of people owning stocks is expected to increase. This is occurring at a time when the percentage of people having savings accounts is drop- ping. In 1999, 73.3 percent of people had a savings account compared with 76.6 percent only a year earlier. Finally, a number of non-traditional players are entering the financial services market to compete with both banks and credit unions. The Bank Act does not regulate these organizations. For example, such large manufacturers as General Motors and General Electric and such retailers as Loblaws, Sears, and Canadian Tire are all offering a range of financial products. They compete for customers and members with loan and mortgage companies, life and health insurance firms, pen- sion funds, and mutual fund providers. Furthermore, a number of “category killers” are coming into the marketplace, including American credit card companies MBNA and First USA.

Industry Segmentation Canada’s financial service providers market to four broad categories of customers: retail, commercial and corporate, investment, and international. The Retail Market: The financial needs of consumers have been changing rapidly. Today, Canadians expect information, choice, and convenience from retail financial institutions. They are aware of the trends in the marketplace and are quick to adapt to them. For example, 87 percent of Canadian consumers believe that it is important to have a good understanding of how the economy functions for the purposes of financial planning. Furthermore, 67 percent believe that having a better understanding of how the economy functions could actually improve economic conditions.3 There are many financial services and products from which they can choose, and multiple channels in which they can perform their transactions. Finan- cial service providers are becoming more aware of the need to segment the marketplace to address the needs of specific groups. For example, education loans are targeted to university and college students and their families, loans for mortgages are targeted to young families; RRSPs are aimed at people in their peak earning years (45 to 55 years of age); and wealth management products are designed to meet the needs of people aged 55 to 65. The Commercial and Corporate Market: As with the retail market, commercial and corporate clients of the financial institutions are being offered more choice in financial products and services. These include credit products and services such as risk management, cash management, and payroll services. Financial institutions provide businesses with working capital as well as funds to support capital projects and export operations. Small and medium-sized enterprises (SMEs) make up the majority of firms in this marketplace. Industry Canada works with members of the financial sector to inform small business owners of the various sources and types of funding available. The Investment Market: There are financial products and services for end- consumers, corporations, and public-sector organizations within this segment of the market. Individual Canadians are offered investment products by a variety of financial institutions, from banks and credit unions to mutual fund firms and stockbrokers. They can choose among stocks, bonds, fixed-return products (such as GICs), and derivatives. Many Canadians put their savings into mutual funds instead of relying on savings accounts and government savings bonds. Mutual fund companies manage about 66 percent of these assets, while banks manage about 26 percent. The International Market: Many financial institutions also export their finan- Comprehensive Cases 797

cial services. Increasingly, the ability to be a player on the world stage is the ratio- nale used to lobby for recent mergers among the big banks. Products and services offered internationally include collection services, foreign exchange, travellers’ cheques, commercial letters of credit, and risk management.

The Technological Environment Technological changes affect every aspect of the financial services industry. Tech- nology has empowered buyers who can now access a world of information with the click of a mouse. This has lowered members’ switching costs if they are interested in the services of a competitor. Credit is now portable, and buyers no longer have to belong to a financial institution to be credit worthy. Technology has also affected the economics of financial institutions, allowing many to lower their costs and increase their revenues. Technology has created new channels for service delivery. While the branch is still an important distribution channel in the retail sector, more people are using such self-service channels as ATMs and telephone and computer transactions. In fact, Canada has the highest use of ATMs and smart cards of any country in the world. Furthermore, the Bank of Montreal forecasts that by the end of the year 2000, almost 30 percent of bank profits will be derived from Internet banking households. Technology has enabled the use of credit and debit cards, two very popular options with Canadians. Accelerating technological change has affected credit union operations in several ways. It has increased efficiency and created alternative distribution systems. For example, ATMs and debit cards have increased member access to services at multiple distribution points. Technology has also changed buyer behaviour: To receive certain products, such as credit cards, many consumers are happy to use such direct means as the mail. However, for mortgages and loans, they want to personally interact with a service provider. Desire for personal service varies by customer segment, however. Younger (under 35), more affluent people with higher education are more likely to deal with a financial institution using the direct means of online banking and ATMs. In this era of rapid technological change, Larry thinks that building a strong brand is of growing importance. In an era of less personal interaction between people and their financial institution, having a brand that speaks to members and potential members is critical.

Metro Credit Union

Metro Credit Union was founded in 1949 as the University of Toronto employees’ credit union. Over the years, it has merged with and acquired other credit unions that have served teachers, health care workers, and workers in various other industries. Since the 1980s, MCU has been open to the general public. Today, MCU is a mid-sized credit union, serving over 44 000 member- owners in the Greater Toronto Area (GTA) through 10 different branches. While most of MCU’s members are individual consumers or households, about 3000 are small businesses and community organizations. MCU has over $400 million in assets, and $100 million assets under administration, that is mutual funds. Under its current by-laws, MCU may serve only customers within the GTA, though up to three percent of the membership may come from outside that area. Provincial regulators would have to approve any expanded service area. MCU is the largest credit union focused exclusively on the GTA. Certain trends have emerged in MCU’s growth. Loans to small businesses have grown rapidly, so rapidly that the MCU never needed to advertise. MCU, how- 798 Appendix

ever, will soon reach the limit on how much of its portfolio it can have in commercial loan assets. For the first time in years, the personal loan portfolio is also growing, largely because of market-leading rates for car loans. The residential mortgage portfolio, on the other hand, is stagnating due to intense rate competition in the market. Total personal deposits are not growing, as individuals shift some of their deposits to mutual funds. MCU is experiencing significant deposit growth, however, from its 1000 non-profit organizational members. Mutual fund sales are also growing significantly. Most credit unions are similar to banks in that they offer a full range of financial products and services, including chequing and savings accounts, personal loans, mortgages, RRSPs, RRIFs, Internet banking, automated telephone banking, and financial planning, and have investment and insurance services available through affiliated suppliers. In addition to its standard financial services, MCU also offers automobile advisory services, car purchase services, and distinctive consumer education seminars (see Exhibit 4 for a list of all MCU’s service and product offerings). Credit unions differ from banks in that they are financial cooperative whose customers are both members and owners: In fact, credit unions refer to customers as members. The member-owners democratically control the credit union by elect- ing the board of directors at the annual general meeting. MCU prides itself on having the largest annual meeting of any financial institution in Canada, generally with 900 to 1000 attendees. Although MCU’s membership is diverse, it is largely composed of highly educated and older individuals (see Exhibit 5 for MCU’s organizational structure).

EXHIBIT 4 MCU’s Service and Product Offerings

•Telephone banking •Term deposits • PC banking • Index-linked term deposits •Tele-service centre • Canada Savings Bonds • Payroll deposit • Seniors’ package •Premium savings • Children’s account • Regular chequing • Electronic bill payment • Daily interest chequing •Travellers’ cheques/insurance • US $ savings/chequing • Foreign exchange • Flat-fee chequing packages •Money orders and drafts • 14 cash machines • Safety deposit boxes •ATM/debit card • Club accounts • Interac direct payment •Organization accounts • Interac and PLUS networks •MasterCard • Personal loans • Gold MasterCard • Personal lines of credit • Car Facts Centre • Car leasing • AutoBuy car purchasing services • Car loans • Loss of job mortgage insurance • Business accounts •Credit insurance • Business loans • Home insurance • Business lines of credit •Term life insurance • First and second residential mortgages • Auto insurance • Reverse mortgages • RRIFs • Home equity lines of credit • Over 600 mutual funds • Multi-option mortgage • Socially responsible mutual funds • RRSPs • Financial planning • Financial education seminars Comprehensive Cases 799

EXHIBIT 5 Company Members structure Democratically elect

Board of Directors

Hires

Chief Executive Officer (CEO)

Hires

Management and Staff

Membership, Fees, and Financial Performance Member Shares Although a credit union’s customers are also its owners, investment in the credit union is unlike an investment in a publicly traded corporation, as the values of owners’ shares do not fluctuate over time. To join MCU, members are required to make an initial investment of $5. Through a specified formula, their investment must gradually increase to $125 over a period of five to nine years. Membership shares cannot be redeemed until the owners close their accounts with MCU. Members may receive an annual dividend on their investment.

Fees In general, the fee structure of financial institutions varies according to the type of account, the number of different transactions that a customer typically makes, and the way in which they conduct transactions—branch banking, telephone banking, Internet banking, ATM. The fee structure of MCU is no exception. In general, MCU maintains relatively low to average fees for most standard transactions. However, it is about to introduce a new fee schedule with several distinctive features. MCU will be eliminating fees for use of its 10 ATMs for all members, regardless of their account balances, transaction volumes, and number of accounts. In addition, it will be introducing a relationship pricing benefit: Any member household with a total banking relationship—all deposits and loans— exceeding $75 000 will also have unlimited free Interac ATM service, as well as free chequing and Interac direct payment services for all members of that household. MCU expects both of these offers to be popular with current members and attractive to those who may consider joining MCU. The credit union hopes that latter relationship pricing benefit will help counter the accessibility problem in having only 10 branches in the GTA.

Financial Performance The 1999 ﬁscal year was very successful for MCU: Total assets grew by 4.8 percent, deposits by 7.3 percent, and loans by 2.2 percent. Earnings before interest and taxes were $1 594 249 (see Exhibits 6 and 7 for balance sheet and income statement). Given 1999’s healthy ﬁnancial performance, the board of directors 800 Appendix

EXHIBIT 6 MCU Balance Sheet

Metro Credit Union Limited Balance Sheet (March 31, 1999)

Assets March 31, 1999 April 1, 1998 Cash resources $7 670 767 $4 645 813 Loans to members 311 322 592 304 603 478 Investments 38 906 855 33 220 946 Capital assets 5 366 920 4 287 428 Other assets 4 755 588 4 489 112 368 022 722 351 246 777 Liabilities Members’ deposits 339 767 349 316 783 382 Operating loan — 7 000 000 Other liabilities 4 878 114 5 317 970 344 645 463 329 101 352 Liabilities qualifying as regulatory capital Class A investment shares 7 672 970 7 222 214 Class B bonus shares 741 498 609 893 Membership shares 4 000 063 4 544 451 12 414 531 12 376 558 Total liabilities 357 059 994 341 477 910 Members’ equity Retained earnings 10 962 728 9 768 867 368 022 722 351 246 777

announced a five percent dividend on shares. Over recent years, the most significant area of growth occurred in the investment services area: Assets under administration—mostly member mutual fund investments—grew by 63 percent. In total, MCU’s income increased by 119 percent. MCU is very clear about how its profits are earned and distributed. Like all credit unions, it operates under the philosophy that its profits are member profits. Since credit unions are member owned, all of the profits are returned to members in the form of improved services, financial reserves, dividends, or community donations. This is in sharp contrast to what the Big Five banks do with their profits, which were over $9 billion in 1999.

MCU’s Distinctive Offerings

As a socially responsible, community-owned, democratically controlled ﬁnancial institution, MCU presents a distinctive, accountable, and high-quality alternative to consumers, small businesses, and organizations. It also offers its members some products and services that differentiate it from its rivals.

Beyond Banking: Car Facts Center and AutoBuy Car purchasing is a major ﬁnancial decision for consumers, most of whom are not prepared to make well-informed decisions in their own interest. Car Facts, which is used by about 1000 members each year, is a free advisory service for all MCU Comprehensive Cases 801

EXHIBIT 7 MCU Income Statement

Metro Credit Union Limited Statement of Earnings and Retained Earnings (Year ended March 31, 1999)

Revenue 1999 Interest on loans: Residential mortgage loans and home equity lines of credit 14 112 802 Personal loans and lines of credit 6 549 219 Commercial loans and mortgages 1 778 080 Investment income 1 635 557 Other income 3 966 920 Other assets 28 042 578 Financial expenses Interest on members’ deposits: Demand deposits 837 963 Term deposits 3 890 735 Registered savings plans 4 901 940 Registered income funds 1 255 136 Dividend on Class A Investment shares 505 555 Dividend on Class B bonus shares 27 685 Dividend on membership shares 127 870 Interest on external borrowings 162 813 11 709 697 Operating margin 16 332 881 Expenses Amortization of capital assets 991 497 Amortization of goodwil 27 560 Data processing costs 1 194 242 Deposit insurance premium 688 848 General and administration 2 979 225 Occupancy 1 635 957 Provision for impaired loans 111 063 Salaries and beneﬁts 7 046 083 Loss on disposal of capital asset 64 157 14 738 632 Earnings before income taxes 1 594 249 Income taxes Current 413 724 Deferred 13 336 400 388 Net earnings 1 193 861 Retained earnings, beginning of year 9 768 867 Retained earnings, end of year 10 962 728

members considering the purchase or lease of a new car. A Car Facts advisor provides all the information and advice a member purchasing a car could need, including financial and non-financial information. The former may include which deal- ers are providing the best deals or how to finance a purchase at the lowest rates. The latter may include actual information about different vehicles that a dealer may be reluctant to reveal. The AutoBuy program goes one step further. On a fee- for-service basis, the AutoBuy advisor shops for the car for the member, doing all the legwork and getting the best deal on the desired car. 802 Appendix

Socially Responsible Investment Centre Like other financial institutions, MCU offers a full range of investment and mutual fund services. Its point of differentiation is in its being one of the largest Ontario retail centres for the sale of socially responsible mutual funds. The national credit union system owns the family of Ethical Funds, the largest and most successful socially responsible funds in Canada. This family is considered the MCU “house brand” mutual fund. MCU’s financial advisory service department provides members with free per- sonalized financial planning, financial education seminars, and direct assistance with investments. As well, branch staff also serve as investment advisors to assist members with basic investment planning and mutual fund purchases. However, despite MCU’s sales of socially responsible mutual funds, it does not have a single specialist in this field, which may be a shortcoming in the future.

Fair Pricing Policy MCU is one of only two financial institutions in Canada that have formalized a fair pricing, or rate guarantee, policy which guarantees that the best rates are auto- matically applied to qualified members. This policy stipulates that any two members meeting the same criteria will pay the same price for services. For example, all members who maintain a certain balance in their accounts or purchase a certain number of products or services will be offered the same rate on a new loan. Effectively, this means that members should not have to question staff and service personnel about the “best offer.” There are no hidden deals in their product mix that are offered to one type of member that are not offered to all people in this class. While MCU is very proud of this policy, it has both advantages and disad- vantages in its business. The upside is that it clearly illustrates a business relationship based on trust and integrity. As a part-owner of the business, the member should expect nothing less. This characteristic will appeal to some consumers. The downside is that MCU is vulnerable with other consumers. In a market in which rates are often negotiated, the more aggressive, better-educated consumers can sometimes walk across the street and get a slightly better rate from a competitor. MCU will disclose and apply its best rate upfront, where other institutions will more selectively disclose and apply their best rates and selectively one-up the competition. As a result, the policy most likely helps to retain some business, while other business is lost. After extensively reviewing the pros and cons of this policy, MCU remains committed to it, as both the right thing to do and a marketing strategy that helps ensure that pricing benefits are going to the best—loyal, long-term— customers. Larry believed the policy was part of a package of values benefits provided by MCU to its members, but was less certain that it could be a major component of MCU’s marketing strategy.

“Trusted” versus “Accountable” Advisor Larry believed that its services helped present Metro as a consumer-oriented, consumer-driven and consumer-owned, beyond-banking company. In fact, he thought that promoting MCU as the “trusted advisor” or the “cooperative advisor” could be an excellent strategy. However, this idea was not without contro- versy. Senior management had discussed the internal conflict inherent in being both an advice-giving intermediary and a product-selling organization. For example, if a member paid the AutoBuy advisor to find the “lowest cost deal” and the advisor found low-cost dealer financing, MCU could lose a loan. Likewise, an invest- Comprehensive Cases 803

ment advisor might tell a member to take deposits out of the MCU and put them in external investments, which would provide much lower return for MCU. In both cases, MCU hoped to strengthen a proﬁtable long-term relationship, but sometimes at a short-term cost. At this time, however, MCU management had held back from using “trusted advisor” as the central point in the retail value proposition, instead focusing on the concept of credit union “accountability” to members.

New MCU Branch at Bay and College In September 2000, MCU would be launching a major initiative that it expected would dramatically increase its exposure to the Toronto community. It was opening a new branch on the corner of Bay and College Streets in Toronto to be a “new showcase service centre.” It was to become a high-profile symbol of the “new” Metro Credit Union, and it would make MCU the first credit union on Bay Street, right around the corporate offices of the Big Five banks. The new branch design incorporated leading-edge retailing concepts. Design- ers were given the mandate to create a branch that looked nothing like a bank. The result: an exterior dominated by two large video screens, one facing Bay Street, the other facing College. The video boards would broadcast an eclectic range of visuals, statements and photos about the Credit Union, membership benefits, and special offers. MCU hoped the video boards would become the focal point of this very busy intersection, which 10 500 pedestrians and 21 100 vehicles cross daily. Inside, the branch would display such things as the history of MCU with creative storyboards and imagery. A member information board would display post- ings by and for members. An expanded Car Facts Center would be stocked with helpful books, brochures, and a service specialist. There would be a “Welcome New Members” area so that existing members could avoid what MCU hopes to be a very busy part of the branch. There would be a Member Education Centre with easy chairs and many books and pamphlets, newspapers, magazines, and videos with helpful consumer financial planning information. The waiting line would feature reading material to reduce the monotony of being in a line-up. A full-size café would feature live music and lunch seminars on financial planning and other interesting topics. Larry Gordon and the rest of the management team were very excited about the grand opening in the fall. They intended that the new facility be part of a “progressive, happening urban scene.” Larry had no doubt that developing a branding strategy that could be rolled out at the same time as the opening of the new branch would increase Metro’s presence in the Toronto marketplace.

Social Responsibility at MCU

Since its inception, MCU has been committed to social responsibility, manifested through a number of initiatives.

Social Audits MCU is a pioneer in the social audit process, which assesses how well an organization is meeting its objectives in regard to social responsibility and member, community, and employee relations. To its knowledge, MCU was the first Canadian financial institution to publish a social audit report, which was in 1993. In 1996, MCU had its social audit externally verified—another first. MCU’s 1998 social audit ex- 804 Appendix

amined the organization’s commitment to its internal and external community, including: an assessment of MCU’s membership, speciﬁcally MCU as a democracy; its consumer policies; its responsiveness to its members; and its employee relations, including compensation, work environment, and employee support.

Socially Responsible Investment MCU also manifests its social responsibility and community-service philosophy through counselling its members on socially responsible investment. MCU sells no- load Ethical Funds, which meet high standards in both ﬁnancial performance and social responsibility; the First Ontario Fund, which invests in job-creating businesses and cooperatives in Ontario; the Clean Environment Fund; and several other socially responsible funds.

Donations The Canadian Centre for Philanthropy’s Imagine campaign suggests that corporations donate one percent of pre-tax profits to charitable causes: MCU makes con- tributions at a rate double this standard. While the banks are major charitable donors in the community, MCU donates a higher percentage of profits than any of the major banks. Another MCU innovation, believed to be the first in Canada, is its Spare Change Program. Most members have spare change in their accounts—not round dollar figures—and generally regard these sums as insignificant. MCU encourages members to sign on to the Spare Change Program, which takes their spare change once a month and applies it to one of three special donation funds, which the member designates. The money in these funds are donated to community groups working on environmental issues, homelessness, or children’s issues. More than 2000 members joined the program in the first year.

Community Development Serving the community within the GTA is central to MCU’s operating model. It tries to provide support in many ways in addition to making donations. About 85 percent of every dollar deposited in MCU is reinvested locally in the form of loans and mortgages to individuals, organizations, and small businesses. MCU recently concluded an agreement with the Calmeadow Foundation to take over ownership and operation of Metrofund, Canada’s largest micro- enterprise loan fund. Metrofund specializes in providing very small loans to dis- advantaged people who are starting self-employment businesses and would not qualify for traditional commercial ﬁnancing. In another initiative, MCU will be partnering with a downtown Toronto community service agency for a Community Banking Program. This program will provide a half-time on-site MCU community banker who will help provide basic banking services and information to the clients of the community service agency.

Defining the Target—Financial Services Consumers

Larry had no doubt that the target market decision and branding decision were connected. Since MCU served two major constituencies—end consumers and the small business and organizational marketplace, Larry started to compile information on these markets to help him in his decision-making process. Comprehensive Cases 805

Canadian Attitudes toward Financial Institutions Credit Union Central of Canada commissions an annual survey of Canadian attitudes toward financial institutions. Goldfarb Research conducts these studies using a panel of 1600 Canadians. One of the first trends noted in these annual surveys is Canadians’ negative attitudes toward banks. • Eighty-two percent think banks make too much money, compared with only 31 percent who think credit unions make too much money. •While only 25 percent of the sample think banks are working well, 41 percent think that credit unions are. Despite these attitudes, most Canadians still deal with banks, often because they don’t perceive any features differentiating financial institutions. Canadians select financial institutions that they believe will keep their deposits safe. Once they have this assurance, they look for financial institutions to provide other things including: • knowledgeable, friendly service • ease in completing transactions • the presence of deposit insurance • convenient locations •a range of diverse products and services If these criteria are not met, Canadians may switch institutions. Fees and rates of return may influence switching. It must be stressed, however, that these price-based reasons are well down the list of reasons for switching. Items that link to the quality of service ranked higher in importance (see Exhibit 8 for individual reasons for switching financial institutions as outlined in Goldfarb’s report). Finally, the studies note that Canadian’s respect for banks has fallen to an 18-year low. Respon-

EXHIBIT 8 Goldfarb’s Report: Reasons for Switching Financial Institutions

% of Those Who Switched . . . 1992 1993 1994 1995 1996 1997 1998 Poor service 34 34 33 36 40 34 37 More convenient 33 31 29 33 27 30 27 location Moved to another city 18 13 17 14 13 15 14 Preferred staff at new 881112 12 16 13 location Better rates on loans 10 13 14 12 12 15 12 More convenient hours 14 12 11 17 17 14 11 Offered additional 6798988 products and/or services Better rates on savings 6 8 5 8 7 10 6 Better rates on term 8566786 deposits ATM available 7 8 7 8 7 8 5 Offered promotion 1212332 Other 8 8 11 13 13 10 11 806 Appendix

dents were asked to rate the institutions, where 100 points was the maximum rating they could give the institution. Credit unions consistently received the highest rating (see Exhibit 9 for the complete results). Overall, Canadians negative attitudes toward banks may present an opportunity for credit unions to grow their market share if they can communicate why or how they differ from banks. The 10th Annual Financial Attitude Survey conducted by Investors Group of Winnipeg provided Larry with more helpful information. This survey revealed that Canadians are an increasingly well-informed and confident group of investors. Over one in three Canadians now have a written financial plan to guide their investment: Men are somewhat more likely to have a financial plan than are women. Fewer Canadians are relying on the media, co-workers, or friends for financial information, and more are seeking guidance from financial advisors. Over 20 percent go to their financial institution for investment information, while 18.7 percent seek out financial advisors. Sixteen percent of Canadians see themselves as aggressive investors, while 42.1 percent take a more conservative stance. In general, Canadian investors are well educated, sophisticated, and confident. Finally, the National Credit Union System’s market growth opportunities working committee has identified a number of demographic trends that are having an impact on credit unions’ strategies: Baby boomers with increasing wealth are targets for retention: Over the next 20 to 30 years, parents of baby boomers will pass away leaving their estates to their children. This will be the single biggest transfer of wealth in history. Baby boomers are, therefore, key members that credit unions must retain. Youth is an important target for growth: People in the 19-to-24 age bracket are consolidating their relationships with financial institutions. This is the stage in their lives when lifetime relationships with institutions form. The youth market, therefore, is a major opportunity for credit unions to secure customers. Many of these people are students struggling to pay higher tuition costs and, while they may be costly to serve now, they will soon be productive wage earners struggling to deal with the debt they acquired as students. Surveys have shown that this group prefers technology-based, convenient financial solutions to their problems. They demand speed and services that immediately meet their expectations. Teens are a new target with increased spending power: Teens are increasingly independent consumers. They look for products and services directed specifically at them. They will be experimenting with financial institutions for the first time. Demographic trends also exist within local marketplaces. Toronto, Montreal, and Vancouver are some of the world’s most ethnically diverse communities, for example. Some credit unions, like VanCity, have branches in predominantly Chi- nese sections of Vancouver where service providers are trained to meet the specific needs of this community. Manitoba has some of the largest concentrations of Abo- riginal people; therefore, Assiniboine Credit Union tailors some of its offering to

EXHIBIT 9 Goldfarb’s Report: Comparative Ranking of Financial Institutions

1992 1993 1994 1995 1996 1997 1998 Credit unions 59 60 58 57 56 56 56 Caisses populaires N/A 69 62 56 53 53 54 Trust companies 51 52 51 52 50 49 50 Banks 57 57 56 53 47 47 44 Comprehensive Cases 807 the Aboriginal community. Credit unions know they must respond to the local trends in their own marketplaces to be successful.

Changing Attitudes toward Social Responsibility In addition to consumer attitudes about banks, Larry was aware of other key public attitudes. According to the Canadian Centre for Philanthropy, a recent national opinion poll found that 72 percent of Canadians are more likely to buy goods or services from a company that commits resources to social and community concerns; 68 percent are more likely to invest their money in companies that demon- strably support the community; and 41 percent believe successful businesses should focus on social and community issues rather than proﬁts. While these attitudes work in MCU’s favour, Larry also knows that expressed attitudes do not necessarily produce follow-through behaviour by consumers. Con- sumers are increasingly interested in corporate social responsibility, but few are willing to sacriﬁce anything related to price, convenience, or service quality.

Small Business and Non-Profit Market Many credit unions, like MCU, hope to take a bigger bite of the small and medium-sized business market. Credit unions currently have about 13 percent of this marketplace; but regional differences determine whether commercial lending is a prime area of their business. Caisse Centrale Desjardins du Quebec is a leader in business financing. Commercial lending is substantial in Alberta, BC, Saskatchewan, and Manitoba, but it is low in Ontario and much of Atlantic Canada. Although similar in some ways to those affecting end-consumers, variables affecting buying decisions made by business buyers are different: In general, business buyers are more technical, price oriented, highly trained, and risk averse than the end-consumer. MCU segments the commercial and corporate market, or non-personal market, into four groups: • businesses (any size) • non-profit organizations • housing co-ops • clubs, or informal, non-incorporated groups MCU provides each of these four groups with tailored services and pricing designed to address its distinct banking needs. For example, businesses are more likely to be seeking credit than non-profits. The non-profits, on the other hand, are very deposit and transaction service oriented. The housing co-ops, being large housing projects, have service needs that relate to having a monthly cash deposit (monthly rent cheques and coin deposits). They also need consolidated information on rent cheques written on accounts with insufficient funds. Thus, for the housing co-op sector, MCU set up a successful partnership program to provide special banking benefits to housing co-ops with special rates and a growth-related marketing fee paid to the local federation. Up to this point, MCU has never actively advertised to small businesses. It had relied on word-of-mouth communications that generated enough business to fill its loan capacity. It has a full-time dedicated salesperson, George, who does outreach for this marketplace. He has been very successful at bringing in accounts. George has found that MCU’s community orientation and its approach to social 808 Appendix

responsibility are very important in reaching parts of Metro’s market, especially housing co-ops and non-proﬁt organizations. Being a community-owned and controlled bank is something that community groups can relate to.

The Non-Profit Market in Ontario Given that the non-profit sector had been a small but important part of MCU’s customer base, Larry thought that this market might be a very lucrative area for MCU to pursue more aggressively. In addition, the community-focused and socially responsible operating philosophy of non-profit organizations in general was similar to that of MCU. Thus, by targeting non-profit organizations, it would be pursuing not only a potentially promising business market but also a market that was congruent with MCU’s objectives as a community-serving organization. Larry knew that there were little market data available on non-profit organizations, particularly in the GTA: To pursue this market, he would have to make some good market-sizing estimates. He did know that the Ontario non-profit sector as a whole received $39 billion in revenues in 1994. Of these, 31 percent went to hospitals and 22 percent to teaching institutions, which together composed only five percent of the number of charities in Canada. Larry also knew that Ontario’s charitable sector had the largest revenues per capita. He was able to gain some additional data from the Canadian Centre for Philanthropy (see Exhibits 10 through 11).4 These data, however, do not isolate the GTA market. MCU would not be able to service very large institutions such as major hospitals and univer- sities. Its market would be the smaller and mid-sized community institutions and organizations in the GTA, which Larry estimated to have many hundreds of millions of dollars in banking business.

Public Larry knew that the choice of a primary target was an important aspect of brand strategy development. However, he also hoped to ﬁnd a brand positioning that would speak to the selected primary target on one hand without alienating or con-

EXHIBIT 10 Distribution of Charity Types within Ontario

Type of Charity Percentage Number Arts and culture 5 1138 Community beneﬁt 7 1653 Education 6 1604 Health 5 1190 Hospitals 1 271 Libraries and museums 2 475 Places of worship 37 9253 Private foundation 6 1479 Public foundation 5 1134 Recreation 2 612 Religion 7 1644 Social services 13 3147 Teaching institutions 4 885 Other 2 405 Total 100 24 890 Comprehensive Cases 809

EXHIBIT 11 Total Revenues and Percentage of Total Revenues Received by Type of Charity

Type of Charity Percentage Dollars Arts and culture 3.2 1 234 937 Community beneﬁt 2.5 951 738 Education 5.5 2 131 859 Health 8.8 3 415 459 Hospitals 30.7 11 917 017 Libraries and museums 1.7 661 562 Places of worship 6.0 2 317 142 Private foundation 1.9 720 978 Public foundation 3.2 1 236 028 Recreation 0.5 197 136 Religion 4.0 1 546 401 Social services 9.8 3 818 284 Teaching institutions 22.2 8 592 525 Other 0.1 45 465 Total 100 $38 786 531

fusing Metro’s other important markets on the other. The thought entered his mind that perhaps he should be looking for something with more universal appeal, but just what that “something” was eluded him.

Decisions

The slogan that MCU used on all of its promotional materials referred to MCU as “Much more than a bank.” Promotional materials also used such titles as “Frus- trated with your bank?” MCU’s main objective with these slogans was to present itself as a banking alternative. Larry was increasingly unsure whether simply pre- senting MCU as a general alternative to banks was really powerful. He also ques- tioned what this did to differentiate Metro from other credit unions. Larry had no doubt that MCU had some attributes that differentiated it from its competitors: Its operating philosophy, its policies and procedures, its products and services were drastically different. Larry was still uncertain of which direction to move. What market niche could MCU best serve? How could MCU build and present a powerful and distinctive brand in a very competitive market? While MCU had been very successful in past years, Larry was concerned that MCU needed a break-through branding strategy focused on some clearly identified market segments. The task was like beginning a giant jigsaw puzzle: Larry felt he had most of the pieces, but he just wasn’t confident he knew how to fit them all together. Fortunately, a member of his marketing department had sent him a memo regarding branding and positioning that he hoped might give him some academic insight into his problem (see Exhibit 12). Reading through this reinforced the importance of the task to MCU’s future success. Maybe he needed a consultant to guide him through this complex process. 810 Appendix

EXHIBIT 12 Metro Credit Union

Memo To: Larry Gordon From: Marketing Department Date: May 2, 2000 Re: Some information on branding and positioning

Hi Larry, I gather Jack Trout and Steve Rivkin are real authorities on branding and positioning. I found some material in a couple of articles they have written. The ﬁrst one gave some insight into differentiation, here’s what it said:5 The principles of simple, common-sense thinking can be applied to any discipline in marketing. Compa- nies have to differentiate; they must supply customers with reasons to buy from them instead of their competition. That reason then gets packaged into a simple work or phrase and positioned in the minds of customers and prospects. Differentiation comes in three parts:

• Having a simple idea that separates a company from its competitors • Having the credentials or product that makes this concept real and believable • Building a program to make customers and prospects aware of the difference

The second one suggested some similar “guidelines” on a branding strategy:6

• A marketer’s message has to make sense in the context of the category • The secret to brand differentiation is understanding that your differentness does not have to be product related • To build a logical argument for your difference, you must have the credentials to support your differentiating idea—to make it real and believable • Every aspect of a marketer’s communications should reﬂect its difference: advertising, brochures, Web site, sales presentations

Hopefully that’ll give you some academic insight into your strategy Larry. Good luck!

Notes 1“Estimated cost of network commercials,” Media Digest, 1999–2000:22. 2Keith J. Tuckwell, Canadian Advertising in Action 5th ed., Toronto, ON: Pearson Education, 2000:332. 3Canadian Bankers Association, “Survey of Canadian attitudes,” 6 June 2000, www.cba.ca. 4Canadian Centre for Philanthropy, “A provincial portrait of Canada’s charities,” research bulletin, 17 May 2000, www.ccp.ca. 5Jack Trout and Steve Rivkin, Marketing News, 7 December 1998. 6Jack Trout, Advertising Age, 22 November 1999. Comprehensive Cases 811

Landmark Sports Group: Athlete Relationships and Olympic Promotions

In July 1998, Sharon Podatt, vice-president of Landmark Sports Group, was approached by a small Canadian investment firm Patrick Ross Financial Limited to develop a sponsorship program to increase awareness of the firm among Cana- dian investors. Patrick Ross believed that it could benefit from the excitement surrounding the upcoming Sydney Olympics. While the firm knew that the Olympics was a powerful attraction through which many firms had enhanced their image, it didn’t have the resources to be an official Olympic sponsor. The request caused Sharon to review some of her past projects at Landmark Sports Group. She couldn’t believe how many hours had gone into each one. Especially challenging had been her efforts combining Olympic athletes with programs that would benefit their corporate sponsors. Landmark represented many Canadian athletes and worked to develop sponsorship opportunities that matched athletes’ images and skills with the communication needs of Canadian companies. Sharon enjoyed her role as vice-president of Landmark and knew that the upcoming Sydney Olympics was a great sports marketing opportunity. One of her most memorable promotions with an Olympic theme had focused on Kerrin Lee-Gartner and her sponsor Midland Walwyn (acquired by Merrill Lynch in 1998) for the 1994 Olympics. Much had changed since 1994. Sharon was particularly concerned about the new, strict regulations on athlete sponsorship and “ambush marketing.” The Syd- ney Olympic Committee defined “ambush marketing” as the unauthorized association of businesses and their goods and services with the marketing of an event, such as the Games, without paying for those marketing and association rights: “Ambush marketing is detrimental and damaging to the success of the Games and to the rights of official Games sponsors and licenses and has the potential to mislead the public.” Given the regulations, Sharon knew it would be difficult to develop a powerful campaign for her new client. It would take considerable brainstorming to develop another comprehensive and exciting sports marketing promotion.

History of Landmark Sports Group

Elliot Kerr, president of Landmark Sports Group, was the driving force in the company. He built the company from almost nothing to its current status as a major competitor to International Marketing Group (IMG). In the early 1990s, IMG was the largest sports marketing ﬁrm in Canada. Having worked at IMG himself, Elliott took a hands-on approach and developed most of Landmark’s earliest clients by cold-calling companies in various industries.

This case was prepared by Lauren Dmytrenko and Phil Connell under the supervision of Dr. Peggy Cunningham for use in the 2001 Inter-Collegiate Business Competition and is not intended to illustrate either effective or ineffective handling of a management situation. Some information may have been disguised in the interest of conﬁdentiality.

Sharon Podatt, fresh out of university and completing a one-year post- graduate degree in marketing and public programs at Humber College, approached Elliot to work as a six-month, pay-free intern at Landmark. Initially, Landmark operated with just the two of them at the helm. Sharon’s experience with event management through her volunteer work at the Special Olympics and related sports activities proved to be invaluable. Landmark’s activities include acting as an agent for many sporting and related industry personalities. Its extensive and impressive client list includes such famous names as Silken Laumann and Elvis Stojko. (See Exhibit 1 for the full client list.)

EXHIBIT 1 LSG Athlete Client List

Golf • Rob McMillan –Member of the 2000 Canadian Tour –Winner of the 1996 Manitoba Open –1996 Canadian Amateur Champion • Dawn Coe-Jones –Winner of Three LPGA Tour Events –1995 Winner of the LPGA Tournament of Champions •Liz Earley –Member of the LPGA Tour –1999 Second Place at Canadian Women’s Professional Golf Championship Diving •Eryn Bulmer –2000 World Cup Bronze Medallist, 3m –1999 Canadian National Women’s Diving Champion 1m, 3m. –1998 National Women’s Record Holder, 1m & 3m Springboard –1998 Canadian National Women’s Diving Champion, 1m, 3m –1997 World Cup Champion Mountain biking • Alison Sydor –1999 World Cup Champion –1999 Silver World Championships –1999 & 1998 First Overall World Cup Title –1999 Gold Medallist, Sydney, Australia, Pre-Olympic World Cup –1996 Olympic Silver Medallist –Three Time World Champion (1994, 1995 & 1996) Equestrian • Ian Millar –Two-time World Cup Champion –Canada’s Premier Equestrian –7 time Olympian • Jonathon Millar –Grand Prix Rider • Amy Millar –Grand Prix Rider Speed skating • Catriona LeMay Doan –2000 Canadian Sprint Champion –1999 First Overall World Cup Standings, 500m –1998 Canadian Female Athlete of the Year –1998 First Overall World Cup Standings, 500m & 1000m –1998 Olympic Gold Medallist, 500m (set Olympic record) –1998 Olympic Bronze Medallist, 1000m Hockey • Jayna Hefford –Two Time Gold Medallist Women’s World Hockey Championships (1997 & 1999) –1999 World Championships Tournament Leading Scorer, All-Star Selection –1998 World Championships MVP –1998 Olympic Silver Medallist •Vicky Sunohara –Three Time Gold Medallist Women’s World Hockey Championships (1990, 1997, 1999) –1998 Olympic Silver Medallist, Two Time Gold Medallist Women’s World Hockey Championships • Lori Dupuis –Two Time Gold Medallist Women’s World Hockey Championships (1997 & 1999) –1998 Olympic Silver Medallist Comprehensive Cases 813

EXHIBIT 1 Continued

Curling • Russ Howard –Two Time World Champion (1987 & 1995) Figure skating • Marie-Claude Savard-Gagnon –1997 Canadian National Pairs Champions and Luc Bradet • Elizabeth Manley –1988 Olympic Silver Medallist Kayaking • Caroline Brunet –Three-Time World Champion (1997, 1998, 1999) • Karen Furneaux –World Champion (1998) Alpine skiing • Allison Forsyth –Two-time World Cup Silver Medallist Wrestling • Daniel Igali –1999 World Champion Broadcasters • Michael Lansbury –Director of the Toronto Blue Jays on CTV Sportsnet –Director of the NHL—Canada Cup, 1987 (CTV) and the 1994, 1996–1999 Canadian Figure Skating Championships (CTV) –Director Live/Host Studio of the 1994 Winter Olympics, Lillehammer –Director of Stanley Cup Playoffs 1995–1999 (CBC) • John Shannon –Executive Producer CBC “Hockey Night in Canada” –Producer of the 1994 Winter Olympics—Lillehammer and the 1992 Summer Olympics—Barcelona –Producer of the 1993 NHL All-Star Game—NBC • Rod Black –CTV Sports • Don Cherry –CBC Hockey Night in Canada • Bob Cole –CBC Hockey Night in Canada • Chris Cuthbert –CBC Sports • Kerrin Lee-Gartner –CBC Sports –1993 Sports Federation Female Athlete of the Year –1992 Olympic Gold Medallist—Downhill, Albertville • Paul Martini –CBC Sports • Daren Millard –CTV Sportsnet •Greg Millen –CBC Hockey Night in Canada –Colour analyst, 1994 Winter Olympics for CTV • Jim Nelford –Golf Commentator • Scott Oake –CBC Sports • Leo Rautins –CTV Sports, Raptors Basketball Analyst –ESPN Basketball Analyst • Elﬁ Schlegel –NBC Sports • Michael Smith –CBC Sports –1996 Gold Medallist Gotzis Decathlon –1995 World Championships Bronze Medallist Decathlon • Barbara Underhill –CTV Sports • Debbi Wilkes –CTV Sports •Al Strachan –CBC Hockey Night in Canada –Toronto Sun Motivational speakers • Silken Laumann –Former Olympic Rower • Rubin “Hurricane” Carter –Former Boxer • Stephen Brunt –The Globe and Mail • Cary Mullen –1994 World Cup Champion Downhill • Richard Peddie –President, Maple Leaf Sports and Entertainment Other • Michael Burgess –Singer 814 Appendix

Kerr’s focus on developing long-term relationships with the athletes proved to be very rewarding, and most of the firm’s first clients still remained with it even after they retired from professional sport. Landmark’s reputation as a respected athlete agency grew to include strong capabilities in event management. Golf tournaments, skating tours, and other promotions were developed in-house. Much of Landmark’s early business arose after Elliot developed programs and initiated contact with prospective companies whose public relations could benefit from including a sports marketing component. A unique characteristic of Landmark’s sponsorship drive was its interest in pursuing non-traditional sponsors rather than the Coca-Colas and Nikes of the world: Land- mark had been particularly successful in showing smaller firms the power of sports sponsorship. (See Exhibit 2 for a profile of Landmark.)

EXHIBIT 2 Landmark Sports Group Agency Profile

Our Philosophy The Landmark Group, a sport and special event marketing company, was founded in February 1987, based on the principles of integrity, honesty, old-fashioned hard work, and the mandate to always approach a client’s business in an innovative manner. These principles have been strictly adhered to, and as a result, the Land- mark Group has grown into a truly national sport and special event marketing company operating from our base in Toronto. The business philosophy at Landmark is simple. We work harder than the competition with desire, determination and dedication. • Desire to deliver value for the dollars our clients spend. • Determination to ensure our service always exceeds our clients’ expectations. • Dedication to excellence, because excellence is not just an ideal to strive for, but an expectation to be met. The first order of business in everything we do, is to understand our clients needs, assist in creating realistic expectations, and then develop partnerships with them to achieve their stated goals. This is truly evident in the four main divisions of our organization: event management, corporate consulting, athlete representation and sponsorship, and media sales. Event Management The organization, planning and implementation of any type of special event is a major undertaking. After studying a client’s needs and objectives, involving them in targeted events, acquiring secondary sponsors, ne- gotiating facility contracts, and overseeing the thousands of details around such an exercise, the Landmark Group implements all aspects of sport and non-sport involvement. This includes development of all collateral materials associated with events, as well as all required public relations. In effect, we offer a complete service on a fully turnkey basis. Securing Sponsorships Mounting and staging an event can be costly depending on the size and scope. Many events are conducted annually, while others are held on a one-time basis. With each type of event, sponsorship and/or donation dollars are required to competently and effectively conduct the activity. The Landmark Group has developed a reputation for efficient and expedient sponsor acquisition at all levels. Public Relations Our staff are skilled and experienced in their public relations activities which include: preparation of news re- leases, orchestrating press conferences, liaising with the media, organizing special media functions, and developing full public relations plans. Collateral Material The Landmark Group has the resources to design and produce a wide range of collateral materials for any event. These may include items such as logos, posters, brochures, print advertisements, pins and assorted clothing (T-shirts, sweatshirts, hats etc. . .). Corporate Consulting The Consulting Division of the Landmark Group is enjoying tremendous growth with a diversified group of clients. Our philosophy is not to simply be a supplier to our clients, but to interact with each of them to develop innovative, ‘trailblazing’ programs. The Landmark Group believes our clients should lead with a proactive mentality as opposed to a reactive response in the special event industry. Comprehensive Cases 815

EXHIBIT 2 Continued

Whether it is guiding our present client base in the corporate sector on the use of sport or non-sport (environment, arts, music, cause related) activities to meet marketing and communication needs, or analyzing current activities for new and/or prospective clients, the Landmark Group has developed a reputation for providing in- sightful, critical analysis and artful marketing strategies. With rising costs, increased clutter, and perceived ineffectiveness of mass media on one side, and the phenomenal growth and use of events for a targeted marketing approach on the other, there is a fiduciary responsibility to choose events wisely and thereafter measure their effectiveness objectively. The Landmark Group is capable of providing a careful analysis of your organization’s marketing and communication objectives, undertaking a creative review of programs that would most effectively meet those objectives, developing an integrated strategy of involvement in an event program (e.g., sponsorship, trade and consumer promotions, cause related activities, additional extensions) and then detailing a qualitative and quantitative evaluation (pre and post) of all event marketing and program activity. Athlete & Personality Representation Over the last ten years, the Landmark Group has established many solid relationships with Canada’s elite amateur, Olympic, and professional athletes, and television personalities. Each athlete in their own way possesses attributes we all strive to acquire and use in our personal, social, and business lives. Many of today’s blue chip corporations have discovered, through the use of sponsorship, how athletes can enhance a company’s business image for the consumer. The Landmark Group secures and negotiates on behalf of the athletes and personalities with respect to their availability and remuneration for a given event or sponsorship opportunity. The Landmark Group also: • Negotiates merchandise/endorsement relationships • Negotiates equipment contracts • Develops and coordinates personal appearances • Develops and manages media relations strategies •Provides financial management Sponsorship Sponsorship Packaging In addition to professionally preparing and printing a final document, the Landmark Group can accurately develop targeted and fully descriptive sponsorship packages that will: • Review and analyze the specific property/properties • Determine and define objectives • Develop strategies and tactics •Create uses for the property to meet specific industry/corporate needs Sponsorship Solicitation Through our database system, the Landmark Group has an enhanced ability to service current clients in addition to developing a working file on prospective partners. • More than 2000 companies on our database • Companies available by industry category •Cross-referenced to individual contacts • Key variable fields include: –Most recent meeting/contact –Response/Feedback –Status –Budgeting process/timing The Landmark Group is able to easily retrieve, manipulate, and report this data to deliver an accurate and quick response. Sponsorship Servicing • Once a corporate partner is secured, servicing the relationship becomes key. • Regular communication is mandatory to maintain corporate relationships. • Landmark can develop a communication link and provide feedback, support, and other service elements to maintain and help the partnership grow. continued 816 Appendix

EXHIBIT 2 Continued

• Regular contact/meetings can be arranged by Landmark. •We would work together to develop cross-promotional opportunities with other sponsors. Speakers Network This area provides sports related speakers from diverse backgrounds, which include present and former top Canadian athletes and prominent media personalities. The focus and topics they discuss can be tailored to suit any audience, for example, team work, leadership, striving for personal growth and excellence, staying competitive, and the pursuit of a dream. Our speakers network gives you access to a wide variety of speakers to accommodate any event from annual meetings, open houses, workshops, clinics, to employee functions.

Landmark’s Relationship with Kerrin Lee-Gartner

Kerrin Lee-Gartner (see Exhibit 3), one of Canada’s premier downhill skiers, grew up in the small British Columbia mining town of Rossland, the home of another famous Canadian skier, Nancy Greene. Kerrin began skiing at three and proved a natural downhiller. She participated in racing programs at the local Red Moun- tain Ski Club, eventually competing in provincial races. A one-year break from the sport at age 13 and not meeting provincial team standards at age 15 only strength- ened her determination and desire to win. Named to the National C team in 1984, Kerrin joined the World Cup circuit a year later. Despite significant potential, she initially had her share of bad luck. She suffered a number of serious injuries, which demanded months of rehabilita- tion and a significant amount of time off the snow. In an elite athlete’s world, time away means time lost keeping pace with the sport as well as an inability to compete. However, determination to win allowed Kerrin to finally reach her first World Cup top-three podium result in 1991. In the period before the Olympics in Albertville, France, the Canadian Alpine Ski Team had been demoralized by injuries and mediocre performances. But as happens so often at big ski-racing events, one individual can turn a team around. Kerrin stepped forward and lifted team spirit and Canadian hopes onto her shoul-

EXHIBIT 3 Kerrin Lee-Gartner

Source: Kerrin Lee-Gartner, 22 June 2000, www.kerrinlee-gartner.com. Comprehensive Cases 817

ders. She won a ﬁrst-ever Olympic gold medal in the downhill event, realizing a lifelong dream. The early 1990s was a period of rapid evolution for sports marketing ﬁrms. Suddenly, agencies that could represent the interests of amateur and professional athletes were in demand. Kerrin, following the success in Albertville, selected Land- mark to act as her agent to help her coordinate her obligations as an athlete. Fur- thermore, as training costs increased, athletes also found that sponsorship was necessary to help them cover living, training, medical, and travelling costs. Landmark’s straightforward and honest approach to the agency–athlete relationship helped set the stage for some exciting sponsorship opportunities for Kerrin, as the 1994 Win- ter Olympics in Lillehammer, Norway approached.

Working with Midland Walwyn

In mid-1992, Landmark approached Midland Walwyn (MW) with a sponsorship program designed with Kerrin in mind. Given that the next Winter Olympics was only two years away in Lillehammer (due to the change to split the Winter and Summer Olympics to alternating every two years), this was an ideal opportunity to capitalize on Kerrin’s latest success and market MW. Instead of waiting for a firm to approach Landmark, Elliot Kerr approached MW with a sponsorship plan. Created at a time of deregulation in the Canadian financial services industry, MW had unique regional and market strengths, which meant, to Elliot, that a “nationally” focused program would be ideal for it. MW was one of the country’s top five underwriting firms, with about 600 000 client accounts. Its strength in IPOs, knowledge of a number of industry sectors, expertise in developing innovative products, and relationship-focused client service accounted largely for the firm’s success. Its asset management business, Atlas Asset Management, offered 24 externally managed mutual funds. MW also ranked high among institutional investors for its equity research group. (See Exhibit 4 for financial data on MW.) Landmark recognized that RRSPs and investment-based companies were starting to gain a high profile among the Canadian public. Further- more, competition between investment firms was growing, as the baby boomers neared the height of their working careers and began to think of retirement. Elliot believed that the ability to create goodwill for the company through sponsorship was an ideal way to attract new clients as well as retaining current ones. Landmark knew that the key to successful sponsorship programs was having a multi-faceted, integrated, high-impact program. While much of the sponsorship fee paid by MW was to obtain rights to have its logo placed on Kerrin’s clothing,

EXHIBIT 4 Midland Walwyn Five-year Summary Data

Year Sales* Net income* 1993 496.00 63.04 1994 471.50 29.08 1995 517.97 18.66 1996 719.20 49.45 1997 846.71 58.53 Growth Rates 14.30 1.84

*Millions of dollars Source: Industry Canada, 15 May 2000, strategis.ic.gc.ca. 818 Appendix

this was only the start of the program. For alpine skiers, their headgear—helmet, toque, or headband—was the only piece of equipment where they could exhibit names of sponsors. The remaining space on their uniforms often had advertising, but it belonged to the Canadian Ski Team sponsors and to the organizers of each race or tour. Knowing that Kerrin would have a lot of exposure in the upcoming World Cup season, MW prominently displayed its logo on both her helmet and her toque and cap that she would wear immediately after the races. It considered the exposure of the MW logo as equivalent to free television and print advertising, especially if Kerrin reached the podium. Kerrin and Landmark worked with MW to develop a series of videos that centred on her relationship with her MW broker. These videos had credibility because Kerrin already had a very successful working relationship with a MW broker from Calgary before her sponsorship deal attained through Landmark. This also kept the videos from violating the dictates of the Canadian Advertising Stan- dards. (See Exhibit 5 for excerpts from the code.) As well as showing Kerrin meet-

EXHIBIT 5 Excerpts from the Canadian Advertising Code

Canadian Code of Advertising Standards May 1999 Revision Self-Regulation of Advertising in Canada The Canadian Code of Advertising Standards (Code), which has been developed to promote the professional practice of advertising, was first published in 1963. Since that time it has been reviewed and revised periodi- cally to keep it contemporary. The Code is administered by Advertising Standards Canada/Les normes canadi- ennes de la publicité (ASC) (formerly the Canadian Advertising Foundation/la Fondation canadienne de la publicité). ASC is the industry body committed to creating and maintaining community confidence in advertising. The Code sets the criteria for acceptable advertising and forms the basis upon which advertising is evaluated in response to consumer or trade complaints. It is widely endorsed by advertisers, advertising agencies, media that exhibit advertising, and suppliers to the advertising process. Consumer complaints to ASC about advertising that allegedly does not comply with the Code are reviewed and adjudicated by the English national and regional Consumer Response Councils and by their counterpart in Montreal, le Conseil des normes (collectively referred to as Councils and individually as a Council). These au- tonomous bodies of senior industry and public representatives are supported and co-ordinated by, but altogether independent from, ASC. Trade complaints about advertising, based on the Code, are separately administered under ASC’s Trade Dispute Procedure. Definitions For the purposes of the Code and this document: • “Advertising” is defined as any message (the content of which is controlled directly or indirectly by the advertiser) expressed in any language and communicated in any medium (except those listed in Appendix “A” to the Code) to Canadians with the intent to influence their choice, opinion or behaviour. • “Advertising” also includes “advocacy advertising”, “political advertising”, and “election advertising”, as defined below. • “Advocacy advertising” is defined as “advertising” which presents information or a point-of-view bearing on a publicly recognized controversial issue. • “Political advertising” is defined as “advertising” by any part of local, provincial or federal governments, or concerning policies, practices or programs of such governments, as distinct from election advertising. • “Election advertising” is defined as “advertising” regarding a political party, a political or government policy or issue, an electoral candidate, or any other matter before the electorate for a referendum, that is communicated to the public within a time-frame that starts the day after a vote is called and ends the day after the vote is held. In this definition, a “vote” is deemed to have been called when the applicable writ is dropped. Comprehensive Cases 819

EXHIBIT 5 Continued

Application The Code applies to “advertising” by (or for): • advertisers promoting the use of goods and services; • corporations, organizations or institutions seeking to improve their public image or advance a point of view; and • governments, government departments and crown corporations. Exclusions Canadians are entitled to expect that election advertising will respect the standards articulated in the Code. However, it is not intended that the Code govern or restrict the free expression of public opinion or ideas through election advertising, which is excluded from the application of this Code. Scope of the Code The authority of the Code applies only to the content of advertisements and does not prohibit the promotion of legal products or services or their portrayal in circumstances of normal use. The context and content of the advertisement and the audience actually, or likely to be, or intended to be, reached by the advertisement, and the medium/media used to deliver the advertisement, are relevant factors in assessing its conformity with the Code. In the matter of consumer complaints, Councils will be encouraged, when in their judgment it would be helpful and appropriate to do so, to refer to the principles and standards expressed in the Gender Portrayal Guidelines (as amended from time to time) in order to identify acceptable standards respecting the representations of women and men in advertisements. The Code The Canadian Code of Advertising Standards is widely supported by all participating organizations, and is designed to help set and maintain standards of honesty, truth, accuracy, fairness and propriety in advertising. No advertising shall be prepared or knowingly exhibited by the participating organizations which contravenes this Code of Standards. The provisions of the Code should be adhered to both in letter and in spirit. Advertisers and their representatives must substantiate their advertised claims promptly when requested to do so by one or more of the Councils. 1. Accuracy and Clarity (a) Advertisements must not contain inaccurate or deceptive claims, statements, illustrations or representations, either direct or implied, with regard to price, availability or performance of a product or service. In assessing the truthfulness and accuracy of a message, the concern is not with the intent of the sender or precise legality of the presentation. Rather, the focus is on the message as received or perceived, that is, the general impression conveyed by the advertisement. (b) Advertisements must not omit relevant information in a manner which, in the result, is deceptive. (c) All pertinent details of an advertised offer must be clearly and understandably stated. (d) Disclaimers and asterisked or footnoted information must not contradict more prominent aspects of the message and should be located and presented in such a manner as to be clearly visible and/or audible. (e) Both in principle and practice, all advertising claims and representations must be supportable. If the support on which an advertised claim or representation depends is test or survey data, such data must be reasonably competent and reliable, reflecting accepted principles of research design and execution that char- acterize the current state of the art. At the same time, however, such research should be economically and technically feasible, with due recognition of the various costs of doing business. (f) The entity that is the advertiser in an advocacy advertisement must be clearly identified as the advertiser in either or both the audio or video portion of the advocacy advertisement. 2. Disguised Advertising Techniques No advertisement shall be presented in a format or style, which conceals its commercial intent. ing with her broker to help answer typical client concerns, the video productions used footage of her races and training. The finished videos were used at sales meetings to encourage new clients to work with MW. The success of Kerrin and MW’s relationship depended on Landmark’s ability to coordinate and organize programs between the two. In addition to the clothing and video production, it produced a number of promotional commercials showing Kerrin racing and winning, posters, and photo cards. Kerrin also took an active role in contributing columns to MW sales brochures and client newsletters. 820 Appendix

Her personal interest in assuring that her own future was secure was evident in the commitment she made to her sponsorship deal with MW. Representatives at MW often proclaimed to Sharon at Landmark how happy they were with this great friendship with Kerrin. Having worked on many other sponsorship deals, Sharon found that these relationships were much more successful when the athletes took it upon themselves to contribute as much as they could to the sponsoring company.

Developing an Olympic Promotion

Knowing that Kerrin would not be allowed to display its logo during the Olympics, MW sat down with Landmark to brainstorm about how it could capitalize on the growing popularity and spirit of the Olympic Games. MW was not large enough internationally to justify the expense of becoming an official Olympic sponsor, and regulations outlining what symbols and phrases non-official Olympics sponsor could use were becoming more stringent. The discussions between Land- mark and MW representatives always came back to the idea of providing their current clients with the opportunity to travel to the Olympic Games in Lilleham- mer to personally cheer Kerrin on. Sharon knew from the outset that organizing the trip would be an enormous challenge, given that the final decision to use the trip as a contest prize was not made until late summer of 1993. MW agreed to pay all the expenses for the trip as well as pay Landmark a management fee to compensate for the time and effort it put into the design and execution of the trip. (See Exhibit 6 for a full budget for this campaign.) The trip promotion began with the distribution of 300 000 magnets that featured the draw date for the contest and the prizes available to

EXHIBIT 6 Budget for the Execution of the Kerrin Promotion

Banners 500 Business-class air travel 10 000 Entertainment (sleigh ride, tours, etc.) 1 500 Expenses 1 000 Gas 500 Gift baskets 300 Ground transportation 400 Hired guide 1 000 Hotel 12 000 Landmark management fee 10 000 Meals/snacks/drinks 6 000 Olympic event tickets 10 000 Parking 150 Photography 500 Promotional materials 500 Tolls 100 Van rental 1 000 Pre-tax total 55 450 Taxes 8 318 Total $ 63 768 Comprehensive Cases 821

MW’s current client base. Each magnet had printed on it the client’s identification number for the draw. The primary objective for the Olympic promotion was not to attract new clients, but rather to reward current customers for their commitment to the company—a goodwill building tactic. That was the easy part. Sharon then had to coordinate the full logistics of the trip that would be rewarded to three individuals and their guests for a total of six adults. The original plan was to have personnel from MW accompany the winners on their trip abroad. However, MW executives found that they could- n’t spare this much time away from the office, so Sharon was put in charge of acting as the winner’s host. The trip was to include airfare, hotel, meals, tickets to Olympic events, and all travel during the stay in Lillehammer. A full itinerary had to be planned. It was fortunate that Sharon had contacts in the media who helped her find accommodations and tickets, given their scarcity and her tight timeline. The objectives of the trip were to provide the winners with an experience that few individuals have the opportunity to enjoy, given the high costs of attend- ing the Olympic Games, and to focus on providing Kerrin with Canadian support while in Norway. Therefore, Landmark and MW would provide all winners with clothing emblazoned with the MW logo as well as signs to display while cheering Kerrin on during her races. To kick off the promotion, Kerrin flew to Toronto to participate in drawing the winners’ names and to telephone them to say that they had won the draw. (See Exhibit 7 for Landmark’s Olympic Plan.) While the promotion complied with the laws and regulations governing advertising and promotions, Sharon was concerned that some might regard this contest as a form of ambush marketing, since the official Olympic sponsors and the Cana- dian Olympic Association (COA) might see it as implying that the sponsoring company was an Olympic sponsor, when MW had not actually paid for that entitle- ment. In fact, ambush marketing is often considered the practice of deceiving the public through taking advantage of subtle (and not so subtle) messages that cre-

EXHIBIT 7 Olympic Plan for Kerrin Lee-Gartner

Plan A: Kerrin medals • Determine Midland Walwyn identiﬁed apparel requirements. • Obtain media list from Canadian Olympic team media attaché who is responsible for media/athlete relations. •Tour downhill and GS sites to determine athlete accessibility after race. • Determine athlete protocol post-event including possibility of drug test, required media interviews, etc. • Ensure Midland Walwyn apparel is on site at all times. •Identify appropriate Midland Walwyn representative and coordinate interviews and photos. •Make any arrangements to send information and photos to Canadian media in Canada. •Medal presentations –No sponsor identiﬁcation possible. –Midland Walwyn group to be present with banners. –Arrange possible photos with group. • Determine plan for Kerrin’s return to Canada (airport greeting, luncheon, press conference) Plan B: Kerrin does not medal • Determine (if possible) the “story” behind not medalling (for example, a fall). • Plan to coordinate interviews with Kerrin and Midland Walwyn representative. • Show Midland Walwyn support. 822 Appendix

ate an association between a company running a promotion and the Olympics. Therefore, Sharon maintained close contact with the COA to ensure that Land- mark did not violate any regulations with regard to ambush marketing.

Events at Lillehammer

MW received exposure at the Olympic Games a number of ways. First, Sharon and all the winners and their guests received clothing emblazoned with the MW logo to wear to all the events they attended. At the downhill events, they car- ried huge banners featuring the MW logo to cheer Kerrin on. Although it was exciting for Kerrin to see these banners—she later exclaimed that no one had ever made banners for her races before, they weren’t as successful promotional tool as hoped. All MW logos had to be taped over after an encounter with the Olympic “logo police.” Nonetheless, MW’s contest winners looked impressive in their sponsored clothing, and they caught the eye of the local media who proﬁled the group in a large newspaper spread. (See Exhibit 8 for translated copy.)

EXHIBIT 8 Oslo Newspaper Photo and Article Translation

Caption under photo: “Lucky Ones: ‘They like ski jumping,’ says the six lucky winners of an Olympic trip from Canada. From left to right: Rosalyn and Jack Shuster, Bonny Thomson, Glen and Jane Hodge and George Thomson.” Canadians with Winner Luck Not all Canadians win an Olympic Gold Medal but the six above won 10 days of luxury at the Lillehammer Olympics. Glen Hodge from Trail in BC has always had winner’s luck. Bonny Thomson from Nanaimo in the same province has never had winner’s luck. Neither has Jack Shuster from Montreal been surrounded by luck in all his life. But in November last year the lucky star shined over their Canadian sky. Among 300 000 people, they were drawn to take their guest to 10 days of luxury in Lillehammer, Norway. Why? The Canadians put their savings in a national investment company by the name of Midland Walwyn. “Unbelievable! I didn’t believe when the company called and told me about the trip to Lillehammer. In Canada it is forbidden by law to receive a prize without a competition. To bypass this law, they had to answer a skill testing question like how much is 25 4/5 3? You were allowed to use a calculator so I answered 17 immediately,” says Glenn Hodge with a smile. When he, his friend Jane, and the two other couples boarded the plane in Canada, their life of luxury started. It was first-class flying, big comfortable chairs, multi-course meals, and an endless supply of drinks. And since the flight, the luxury has continued. “‘Please sign here” says a waitress when she arrives with the bill, and I sign, and sign,” says Glenn Hodge. “I grab my golden pen and sign thousands of Kroners. Everything is being paid for us, food, hotel, drinks, tickets to all of the events, closing ceremony.” “Yesterday we had dinner with the Gold medallist from Albertville, Kerrin Lee-Gartner, and tomorrow we are going shopping to Oslo,” his friend Jane says. “And Friday is a sleigh ride. We are so busy,” she continues. On their hasty trips between the arenas in the Olympic cities, Hamar, Gjovik, and Lillehammer, they are taken by private driver, a 24-year-old Norwegian music student whom the Canadians think is the most polite, nice, and friendly person they’ve ever met. If all Norwegians are like him, they have reason to be proud people, says six happy Canadians. Comprehensive Cases 823

Post-Event Recommendations

Feedback from the trip was generally positive. (See Exhibit 9 for the winners’ com- ments.) The detailed schedule was both a benefit and a liability: At times, the group felt they had to follow the schedule, even though more exciting events were taking place, such as a medal presentation. Nevertheless, the winners did see more of the Olympic Games than most people could manage independently. For MW, the initial objectives of the promotion were met, though it later wondered how it could have targeted some of its higher-end investors, who had a much higher stake in the company. Overall, Sharon was very pleased with the outcome of the Kerrin promotion and, more importantly, she believed that MW achieved its objectives. She believed the program was successful in a number of ways and hoped that her experience with this Olympic promotion would benefit future endeavours surrounding the Olympic Games. However, as with any promotion, there were areas that could be improved. Sharon noted the following recommendations in her post-event report to MW: •Consider the contest qualifiers by their level of investment with Midland Walwyn. • Project coordinator should be in Lillehammer at least a day before the arrival of the group. That way this person can already be oriented to the surroundings, determine and deal with any concerns with the schedule, have knowledge of any local items, and generally be prepared for their arrival.

EXHIBIT 9 Quotes from Trip Winners Sent to Midland Walwyn

Jack • Experience of a lifetime! •Warm friendly people, interesting activities, and truly exciting events. • Became a Viking for an evening! Rosalyn • Beautiful country with picturesque sunny days. Excellent hospitality, interesting meals, a new experience every day. • Overwhelmed by the work involved and the thousands of volunteers that it takes to organize the Olympic Games and to organize our trip. Everyone should be proud. Bonnie • Lots of exciting things to see and do. Beautiful setting, charming people, fun activities. •A great chance to enjoy a different culture and experience new foods. George • Had a great time! We laughed, took a sleigh ride in the snow, met new friends, and took home many fond memories. • First class trip all the way! Glen • Fun group to travel with and great hospitality. • Really enjoyed meeting so many people and trying out a new language. • All the events were thrilling to be at live and experience the Olympics ﬁrst hand. Jane •Truly enjoyed the experience. The events were exciting, the Norwegian people were enthusiastic and hospitable, and we had an opportunity to see many new and interesting things. •Will talk about the trip for many years. 824 Appendix

• The attendees should wear Midland Walwyn-identified ski suits. Every sponsor or group of clients at the Games were easily identified by their matching ski suits. It looks great as well as official when a group is all together in corporate- identified ski suits. • It was not necessary to provide every meal for the group. Breakfast was included with the room, every lunch was arranged usually at the hotel because it was convenient and accessible, and dinners were all pre-reserved. It would have been enough for breakfast and some dinners to be arranged and paid for and have the group pay for their own meals outside of the planned ones. • It would be better not to print a schedule with all activities planned. Just letting the group know what events you have purchased tickets for and the travel itinerary worked fine. Other events, such as the broadcast centre tour or the dinner with Kerrin, are difficult to schedule precisely, and a printed itinerary makes incorporating changes difficult. The printed schedule didn’t leave room for such spontaneous Olympic activities as Canadian athlete presentations and receptions.

A New Decade in Olympic Sponsorship

Sharon learned a great deal from her first Olympic promotion. Kerrin Lee- Gartner was also happy with the event. In fact, although Kerrin’s sponsorship deal ended after she retired from the World Cup Tour, she remained with Landmark as she jumped into an active post-skiing career. As a commentator on CBC, Ker- rin has seen many other television commentators join Landmark’s prestigious list of athletes and celebrities. Now Sharon had a new challenge. She had moved up to VP of Landmark through her years of dedication to the company and its innovative practices. The financial management industry had also taken a huge jump, and with the introduction of e-commerce, the marketing opportunities were endless, and the competition was fierce. It was summer of 1998. The Sydney Olympics were coming up in September of 2000, and excitement was building. Patrick Ross Financial had approached Landmark with the question of how it could jump on the “Olympic bandwagon.” Although, it was much smaller than MW, with only 100 000 clients and operating only in Ontario and Que- bec, it was a similar organization in terms of its business and customers. One executive who had worked at MW with Landmark on the Kerrin promotion had left MW after Merrill Lynch acquired the company and taken a senior position at Patrick Ross. He was so pleased with the Kerrin promotion that he wanted Landmark to develop a whole promotion strategy for the Summer Olympics in Sydney. Patrick Ross didn’t have any ideas about whom it wanted to sponsor or how it wanted to run the promotion. It contacted Sharon to ask her to develop a promotional strategy. Its only guideline was that the budget for the promotion could not exceed $150 000. It wasn’t sure how it wanted to target the promotion to its 100 000 clients, but knew that the promotion would have to have wide appeal to reach as many of its clients as possible. Patrick Ross gave the demographic and financial profiles of its customers to Sharon to assist her in developing the promotion. (See Exhibit 10 for the profiles.) It knew that Land- mark had a great list of individual athletes and that it was very experienced in developing sports marketing opportunities. Therefore, it simply left it up to Sharon to come up with a great idea. There was a fundamental difference between this program and the Kerrin promotion. During the Kerrin promotion, Comprehensive Cases 825

EXHIBIT 10 Client Profiles

Patrick Ross Financial Demographic Proﬁles Age Percentage Clients Sex Percentage Clients Under 30 15 15 000 Males 73 73 000 30–45 30 30 000 Females 27 27 000 45–65 40 40 000 Total 100 100 000 Retired 15 15 000 Total 100 100 000 Occupation Percentage Clients Blue collar 14 14 000 Professional 20 20 000 Retired 15 15 000 White collar 51 51 000 Total 100 100 000 Financial Proﬁles Income Bracket Percentage Clients Amount Invested Percentage Clients Under 30 000 7 7 000 Under 50 000 27 27 000 30 000–50 000 13 13 000 50 000–100 000 25 25 000 50 000–70 000 18 18 000 100 000–250 000 17 17 000 70 000–90 000 24 24 000 250 000–500 000 18 18 000 90 000–100 000 19 19 000 500 000 13 13 000 100 000 19 19 000 Totals 100 100 000 Totals 100 100 000 Total assets under administration: $15.4 billion

Landmark was responsible only for the execution of the promotion rather than its development. For Patrick Ross, however, Landmark would have to select an athlete, put together an innovative promotional strategy, and implement and execute the plan in September 2000. Before Sharon could begin developing a promotional strategy for Patrick Ross, she would have to carefully review the issue of ambush marketing. She knew that many of the regulations had become more strict since Lillehammer and that she would have to familiarize herself with them.

Ambush Marketing at the Sydney Olympics

For years, companies have used ambush marketing at the Olympic Games. Many smaller companies simply cannot afford to become official Olympic sponsors. And since the Olympics allows only one official sponsor per product category, some large firms who are shut out of official sponsorship use ambush marketing, find- ing unauthorized ways to exploit the Olympics as a promotional opportunity. They accomplished this through indirectly connecting the Olympics with another promotion. (See Exhibit 11 for examples of ambush marketing.) 826 Appendix

EXHIBIT 11 Examples of Ambush Marketing Techniques

• “At the Atlanta Games, non-sponsors Nike and Samsung employed classic ambush tactics, using special sports centers as well as billboards near the main stadiums to promote their brands. Post-Games research showed they made their mark with consumers many of whom thought the two companies were ofﬁcial sponsors.”

• “Molson’s ‘I Am Canadian’ ads crossed the ambush line, so the COA took action. The ads, parodying famous horror movie scenes, ended with the line: ‘The three scariest words in Japan this winter: ‘I am Canadian’.”

•“... a MasterCard ad featuring Elvis Stojko didn’t refer to the Olympic Games. However, Patricia Staker, senior manager of sponsorship marketing at the Royal Bank of Canada (an issuer of VISA cards), points out that the fans in the background were waving Japanese ﬂags. She says that’s an example of how sophisticated ambushers have become.”4

• “Nagano Olympic Organizing Committee (NAOC) ofﬁcial covered up the brand name of giant TV screens installed in two ice hockey venues. . . . It cost the NAOC more than 1 million yen to have the inconspic- uous name removed. . . . The Hotel’s shuttle bus had an advertisement for Pepsi on its side, but it was changed to Coca-Cola, a long-time Olympic sponsor, while maps of the city produced by American Express were collected and distributed elsewhere since VISA paid a minimum of US$40 million to be the ofﬁcial credit card.”5

• “While Chrysler Canada was the Canadian Olympic Association’s (COA) automotive sponsor, it did not pick up the TV sponsor rights from the CBC, partly because of the cost. . . . Instead GM bought those rights which is perfectly legitimate. . . . The problem was newspaper banner ads by GM that used the words ‘Nagano’ and ‘Olympics.’. . . These were stopped by the COA.”6

•“Take Timex, for instance, whose competitor, Swatch, was the ofﬁcial Olympic timekeeper. The company, which sponsors athletes including Anne Montminy, rolled out a brilliant multi-media campaign through Ogilvy & Mather of Toronto that ran in Canada during the Olympics. One of the print ads had a turquoise Indiglo dot marking Atlanta on a map of North America. There was no use of trademarks or anything else ‘ofﬁcial,’ but Timex found a way in nonetheless.”7

“Industry analysts say ambush marketing has become a big problem for Olympic organizers in recent times as the cost of sponsorship packages has soared while exclusivity for sponsors has become virtually impossible to guarantee.”1 The Atlanta games were often criticized for the sheer amount of commercial material that was present during them.2 Therefore, the IOC, COA, and Sydney Olympic organizations are under pressure from potential “official” sponsoring companies to regulate ambush marketing to maintain sponsorship exclusivity. It is in the best interests of these Olympic regulatory bodies to respond to these companies because the marketability of the sponsorship opportunities depends on the level of exposure that the companies receive. Therefore, increasingly strict regulations have been placed on advertising and promotions using Olympic themes for the Sydney Olympics. In fact, the Sydney Organizing Committee for the Olympic Games (SOGOG) is so concerned about non-sponsors that it intends to run its own promotional campaign to explain the difference between official and non-official sponsors to the public.3 SOGOG has outlined specific regulations for non-sponsoring companies and has branded many of the “Olympic” trademarks as belonging to SOGOG before, during, and after the Olympics. In fact, it is virtually impossible to asso- ciate a company with the Olympics in a legal and ethical manner. The regulations include about 30 words and phrases that cannot be used for any commercial use without licence from SOGOG. (See Exhibit 12 for the full publication.) Comprehensive Cases 827

EXHIBIT 12 The Sydney Organizing Committee for the Olympic Games (SOGOG) Brand Protection8

Introduction The Sydney 2000 Games (Indicia and Images) Protection Act 1996 (the “Act”) is a Commonwealth Act, which came into effect on 28 June 1996. The Act provides that the Sydney Organizing Committee for the Olympic Games (SOGOG) and the Sydney Paralympic Organizing Committee (SPOC) have the power to use and license others to use various “indicia and/or images” for commercial purposes. Any unlicensed commercial use of the protected indicia and images is prohibited. The “indicia”, or words and phrases, which are protected are listed in the Act and are set out in the brochure. The images which are protected are “any visual or aural representations that to a reasonable person, in the circumstances of the presentation, would suggest a connection with the Sydney Olympic Games or Paralympic Games.” Who Does the Legislation Apply To? The legislation applies to: • any person who applies the indicia or images to any goods or services (i.e., a manufacturer) • any person who contracts a manufacturer to do so • any participants in the supply chain (e.g., retailers, distributors) • any person aiding, abetting, counseling or procuring a breach of the Act Protected Words and Phrases • Olympic, Paralympic, Olympiad, Paralympiad, Games City, Millennium Games, Sydney Games, Sydney 2000, Share the Spirit, Summer Games, Team Millennium • Any combination of the word “Games” and the number “2000” or the words “Two Thousand” • Any combination of “24th”, “Twenty Fourth” or “XXIVth” and the word “Olympic” or “Games” • Any combination of “11th”, “Eleventh” or “XIth” and the word “Paralympic” or “Games” The following combinations of words are also prohibited, namely any combination of a word in List A with a word, words, phrase or number in List B. List A List B Olympian Bronze Olympics Games Paralympian Gold Paralympics Green & Gold Medals Millennium Silver Spirit Sponsor Summer Sydney Two thousand 2000 Aim of Legislation The purpose of the legislation is to assist SOGOG in raising revenue and therefore preserving the financial integrity of the Games by regulating the use of indicia and images associated with the Games. Without this protection, the value of an official license to use the indicia and images could be diminished by ambush marketing, with a loss of revenue to the licensed person and to SOGOG. “Ambush marketing” refers to the unauthorized association of businesses and their goods and services with the marketing of an event, such as the Games, without paying for those marketing and association rights. Ambush marketing is detrimental and damaging to the success of the Games, to the rights of official Games sponsors and licenses and has the potential to mislead or deceive the public. Commercial Use The protected indicia or images must not be used “commercially.” That is, that may not be applied: •To a person’s goods or services for advertising or promotional purposes in a manner likely to enhance the sales of those goods or services, and; • Where it would suggest that the person is or has been a sponsor of the Olympic or Paralympic Games or both, or is or has been a provider of other support for the Games or any event organized by SOGOG, SPOC or other Games-related bodies such as the Australian Olympic Committee Use of the indicia in a language other than English is prohibited, as is using other words and phrases, which are so similar to the protected indicia that a reasonable person would be likely to mistake them for protected indicia. 828 Appendix

There are several jurisdictions sponsorship regulation. The COA has jurisdiction over all Olympic sponsorship issues within Canada; the IOC has international jurisdiction; and together with SOGOG, the IOC has jurisdiction during the Syd- ney Olympic games. The COA prohibits any use of the word “Olympics” or the Olympic rings symbol for commercial purposes at any time without proper regis- tration with the COA. It may waive that prohibition, but will rarely do so for a non-official sponsor. Therefore, using the Olympics for any commercial (other than editorial) purposes is strictly prohibited, regardless of whether a company is an Olympic athlete sponsor. The Olympic charter, developed by the IOC, specifies regulations during the Olympic Games themselves. “Except as permitted by the IOC Executive Board, no competitor who participates in the Olympic Games may allow his/her person, name, picture or sports performances to be used for advertising purposes during the Olympic Games.”9 Therefore, any athlete or other individual whom Patrick Ross chose to endorse or sponsor would be unable to promote Patrick Ross in any way in Sydney, including wearing any form of apparel bearing a logo other than that of an official Olympic sponsor. Sharon learned that the promotion that Landmark ran in 1994 would no longer be considered appropriate. She was beginning to realize that running any kind of promotion during the games or one using Olympic symbols was in direct violation of these regulations. Sharon decided that she was not interested in challenging the legal and ethical issues inherent in ambush marketing. She intended to make the promotion that she developed for Patrick Ross legal and ethical in the eyes of the COA, IOC, and SOGOG, and did not want to take any chances by breaching those regulations. She knew that promotions that were a little closer to those ethical boundaries might be more powerful, but it was not worth Landmark or Patrick Ross’s reputation to take any chances. While Sharon was confident in her decision to remain within these boundaries, she was also aware that this major constraint would challenge her creative abilities. She would have to ensure that any promotion would focus entirely on the athlete or individual. She had been in contact with the COA directly and was told that the regulations became a little less restraining after the Olympics and that a promotion that focused on a “personality” without direct association with the Olympics was entirely acceptable because it promoted the individual, not the Olympics. However, the more she explored the issue, the more complex it seemed to become. Sharon was glad she had done this research. The COA had instructed her that their tolerance for violations of the various regulations was very low and they were willing to shut down any promotion that crossed its boundaries.

A Challenging New Promotional Opportunity

Sharon didn’t have much time to put the promotion together. She thought about her athlete list and about the advantages of the promotion with Kerrin. Given the strict regulations on ambush marketing, she’d have to use her creative prowess. She reviewed the boundaries of this promotion: It would have to be legal and ethical and follow all the rules and regulations established by the COA, IOC, and SOGOG. She had a small budget of $150 000 for the entire promotion, and she had just over two years to put it together. (See Exhibit 13 for media costs.) She also considered what she had learned running the MW promotion. How, for example, could Patrick Ross speciﬁcally target higher-end investors but Comprehensive Cases 829

EXHIBIT 13 Sample Media Costs

Prime Time Television Commercial Rates (30 Seconds)10 Network Number of Stations Basic Average Cost Regional Television ASN 1 $90 ATV4$650 CBC Regional Atlantic 5 $1 000 Central 15 $6 000 Western 12 $2 500 Paciﬁc 6 $1 000 Global 1 $7 000 MITV 2 $500 BBS Ontario 8 $5 000

Newspaper Advertising11 Newspaper Cost of Advertisement Cost per 1000 People Reached (CPM) Toronto Star $11 340 $2 438 Globe and Mail $16 938 $5 314 Toronto Sun $ 5 463 $2 366

also use the promotion as a tool to create general goodwill? What individual or individuals on their client list would be most effective in reaching the customers of a small but mature ﬁnancial institution? How could they use a “personality” effectively in this strategy, and how would they translate that idea into an exe- cutable plan with a tangible, measurable result to which customers would respond? Sharon knew it would be challenging, but sports marketing was her passion, and she knew that she could come up with something that would be both successful and memorable.

Notes 1Chris Prichard, “Aussie Olympic committee takes on ambush marketing,” Marketing Magazine, 1 September 1997, Web site. 2Jeremy Barker, “Nagano makes Olympian efforts to protect its sponsors,” Marketing Magazine, 16 February 1998, Web site. 3Ofﬁcial Web site of the Olympic Games www.olympic.org, Section 45 of the Olympic Charter, By-Law Number 3. 4Prichard, “Aussie Olympic committee takes on ambush marketing.” 5Barker, “Nagano makes Olympian efforts to protect its sponsors.” 6Lesley Daw, “Guardians of the rings,” Marketing Magazine, 13 April 1998, Web site. 7Lara Mills, “Ambush marketing as an Olympic event,” Marketing Magazine, 19/26 August 1996, Web site. 8SOGOG brochure on brand protection. 9Barker, “Nagano makes Olympian efforts to protect its sponsors.” collections.ic.gc.ca/heirloom_ series/volume4/380-381.htm 10“Estimated cost of network commercials,” Media Digest, 1999–2000:22. 11Keith J. Tuckwell, Canadian Advertising in Action 5th ed. Scarborough: Prentice-Hall, 2000:332. 830 Appendix

Becel Margarine: Reinvigorating Growth

On December 15, 1999, Ross Hugessen, brand manager at Unilever Canada, reflected on the last several months of managing Becel margarine, one of the company’s most important brands. Becel had just been awarded a Cassie for advertising effectiveness and it appeared as though Becel would end the year with a record market share in the $450M margarine/butter category. It seemed as though things had never been better for the business. Ross knew however that as soon as he returned from Christmas break, he would be faced with some important issues regarding the brands’ future in the New Year. For some time, Becel had been a very strong player in the market, having grown substantially in its relatively short history. But while Becel was still growing, the growth trend was below that of prior years and well below what senior management had come to expect. Positioned as the “best margarine for your heart’s health,” Becel had a compelling point of differentiation that seemed to be one of the key reasons the brand had done so well. However, this positioning had been attracting several new competitors at a price point considerably below the premium price around which Becel had built its business. In addition, marketers in the margarine category had to deal with some very tight regulations. For example margarine in Quebec had to be white, not butter coloured. These regulations limited the potential for margarine brands like Becel to come forward with much innovation. Ross had to evaluate the brand from all angles in order to determine the best strategic plan to deliver the significant short and long-term growth that was expected by Unilever. Even though the brand had met with record share, the rate of growth had fallen below what was expected for 1999. Becel had been built by targeting older, educated and affluent adults, but Ross began to question the ability of Becel to gain a higher share among members of this target market. Furthermore, although the Becel communication strategy had been very successful, it didn’t seem to be driving the rates of growth it had initially, although clearly advertising had been proven to drive sales. The advertising campaign had been running for many years and had been developed by his boss. Ross knew it would be difficult to justify the same amount of spending on advertising for his brand if the returns were less than before, especially as other brands in the company were vying for the same budget dollars. Ross wondered if the brand team could determine a convincing strategy that would shape the future success of Becel margarine and maintain its share leadership and growth momentum.

Unilever Canada

Unilever Canada is a division of the international Unilever group, which is headed by two parent companies, Unilever NV and Unilever PLC headquartered in Rotterdam

This case was prepared by Phil Connell under the supervision of Dr. Peggy Cunningham. We grate- fully acknowledge the support provided by Mr. Ross Hugessen and Ms. Jan Mollenhauer of Unilever Canada. They took time out of very busy schedules to work on this case. The case is not intended to illustrate either effective or ineffective handling of a management situation. Some information may have been disguised in the interest of conﬁdentiality. (This case may not be reproduced without the express written consent of Unilever Canada.) Copyright, Queen’s University School of Business, 2001 Comprehensive Cases 831

and London respectively. Unilever was formed in 1930 when the British soap-maker Lever Brothers merged with the Dutch company Margarine Unie. This allowed both companies to beneﬁt from many raw materials and resources that they had in common. Today, Unilever is one of the world’s largest consumer products companies. In 1999, Becel Margarine fell under the foods division, Lipton. In addition to having a category leading position in the margarine market with over 8 brands, including Becel’s competitor Fleischmann’s, Lipton also sold products in the tea, soup, packaged side dish and pasta sauce markets. Unilever’s other major division was Personal Products, marketing such products as Dove, Sunlight Detergent, Salon Selectives and Degree. The Personal Products brands often took priority for marketing budgets due to the competitive nature of their markets.

Becel Margarine A History of the Becel Brand Becel Margarine was launched in 1978 as a premium priced product, positioned as the heart healthy margarine choice. Lipton’s intention at the time was to create a brand that helped consumers meet their needs for heart health, as had been the position in Europe for 20 years prior to the Canadian introduction. Becel entered the market using very direct communication about the health advantages of the product. Over the years, as Becel began to gain some success with its positioning, it increasingly attracted competitive attention. Nabisco with their Fleischmann’s brand was most threatened, since it was the leader in the health segment of the market. Kraft also responded as it realized that the health segment growth was taking share away from mainstream brands like Parkay. Also, the Dairy Bureau (butter) increased its marketing efforts since it perceived that the target market for butter and Becel seemed to be the same. Furthermore, private label brands launched their own products using “me-too” positioning strategies, at significantly reduced prices. Despite the uniqueness of Becel’s positioning, the brand struggled for many years. By 1991 the brand had only managed to establish an 8.1% share of the market, and had very limited growth at only 1–2% per year. Furthermore, as a result of new legislative guidelines, many of the direct, rational messages about Becel’s heart health benefits could no longer be used. By 1991, Lipton knew they had to take the brand in a new direction or risk discontinuing the brand. The company considered several options for growing the Becel brand. Lipton considered a price decrease, to increase volume; however, health brands in other categories typically had large price premiums that successfully delivered strong profits. Moreover, many consumers perceived a relationship between price and quality. The company also thought about re-positioning the product—maybe not enough Canadians were concerned with heart health? Finally, Lipton considered dramatic increases in advertising support for Becel, but getting approval for heavy investment in a brand with poor volume was not really an option. Management decided that the only viable alternative was to try to grow the brand through a new break-through communication strategy without any change in expenditure. The advertising budget would have to support Becel margarine, as well as the newly launched line of cooking oil and spoonable dressings. In 1991, Lipton was finally able to devise a strategy that would eventually make Becel the leading brand of margarine in Canada. It developed a communication strategy that would revolve around the notion of “living a life that is young at heart.” This strategy allowed Lipton to communicate a simple message that became the emotional benefit associated with consuming Becel. Becel’s “Young at Heart” advertising campaign depicted the benefits of being young at heart through consumer’s hope and optimism as expressed in the tagline 832 Appendix

“Becel takes your health to heart”. The actual ads featured active, fit outgoing seniors enjoying life to the fullest while enjoying a heart healthy diet—which included the consumption of Becel. Seniors were used to create an association between Becel and living life to the fullest at a time in life that is often associated with health deteri- oration. The TV campaign, featuring the famous Jimmy Durante song, focused on the emotional benefits of Becel, while a comprehensive print campaign delivered the rational heart health messages of Becel (See Exhibit 1 for sample Becel print ads). Together, this communication strategy provided consumers with a powerful reason to believe in the product. Becel was ready to embrace mass consumption. In addition, Becel started to educate consumers and health professionals about the dietary benefits of margarine through the Becel Heart Health Information Bureau. The Becel Heart Health Information Bureau sought to disseminate key brand messages based on sound scientific principles, while maintaining its objectiv- ity and credibility. With increased marketing spend directed to Health professionals, Becel built a solid reputation as a leader in Heart health and nutrition education. In 1998, Becel continued to develop the communication strategy even further and launched an interactive web site (www.becelcanada.com). The website was an extension of the Becel Heart Health Information Bureau and provided information on meal planning, cooking recipes, the basics of heart-health and of course, product information on the Becel line-up. In addition, there was a portion of the site dedicated exclusively to health care professionals.

Becel Today Brand Performance As a result of the comprehensive Becel communication strategy, the brand went from being a small player to being the market leader within a relative short time frame. In 1992 when the “Young at Heart campaign” was launched, Becel had a 17.7% dollar share of the market. By early 1997, the dollar share had increased to 28.4%. Sus- tained growth and impressive market share results had been achieved. This was not small feat since at the same time Becel had commanded the highest price premium of any brand in its category. This price premium helped the brand management team justify the high levels of spending on advertising. (See Exhibits 2A and 2B for a full analysis of the market share data and Exhibit 3 for a proﬁt/loss statement. See also Exhibit 8 for media costs.) Brand Awareness, Trial and Loyalty The success of this communication and positioning strategy was even further realized in consumers’ awareness of Becel in the market. Brand awareness of Becel increased substantially from 1992 onwards. In addition to consumer brand awareness, the actual the number of consumers in the market who had tried Becel had also increased substantially. Even more impressive was that Becel had the highest consumer loyalty of any brand in the category at 50%—in a category where brand switching was very high (see Exhibit 4 for full analysis). Given that brand awareness was so high, it is not surprising that consumers also had a very good understanding of Becel’s position in the marketplace. It was very clear that Becel’s heart health message was getting through, substantial por- tions of the market believed that Becel was the heart health expert. Overall, there was no question that Lipton had developed a successful strategy for a strong product.

The Spreads Category Competitive Environment By 1999 the health segment of the margarine market had become very competitive, with many brands attracted by the success of Becel and consumer interest in healthy Comprehensive Cases 833

EXHIBIT 1 Sample Becel print ad 834 Appendix

EXHIBIT 1 Continued Comprehensive Cases 835

EXHIBIT 2A Market share data analysis

Volume and Dollar Share Growth 35 31.6 31.9 28.4 30 25.8 23.4 25 21.7 21.1 21.6 18.6 19.3 20 17.7 17 $ Share 13.7 15.2 15 Tonnage 8.6 9.2 10 5 0 1992 1993 1994 1995 1996 1997 1998 1999

Source: AC Neilsen

Dollar Growth: Market versus Becel

20% 16% 16% 14% 15%

8% 10% Market $

5% 5% 5% 4% Becel $ 5%

0% 1996 1997 1998 1999

Source: AC Neilsen

Volume Growth: Market versus Becel

20% 17% 17%

15% 11%

10% Market Tonnage 6% 4% 4% Becel Tonnage 5% 2% 2%

0% 1996 1997 1998 1999

Source: AC Neilsen

products. Even with the health segment growing, Becel’s most formidable competitor was butter. Butter had just over 50% of the market in Canada and Ross knew that in order for Becel to grow, it had to make further inroads with butter users. The Dairy Bureau (who markets butter on behalf of Canadian dairy farmers) was very aggressive with positioning butter on its primary beneﬁt of taste and naturalness. Its campaign highlighted the “naturalness” of dairy over the perceived “processed food” reputation 836 Appendix

EXHIBIT 2B Market share data analysis (Continued)

Total Margarine/Butter Market SPREADS MARKET $ 450m +2%

+3% 48.5 51.5 +1%

Butter Margarine

Total Margarine/Butter Spreads Market Tonnage +2

30% +1%

70% +2%

Butter Margarine

Competitive Brand Shares - Margarine 1999 - $ 222M +3

Becel 1% 15% Fleischmann's 31.9% Canola Harvest Parkay 15% Lactantia Private Label 4% 3% A/O 20% 5%5% Imperial Olivina Comprehensive Cases 837

EXHIBIT 3 Becel Profit/Loss Statement

Actual 98 Actual 99 (000s) (000s) Standard Cases 1 537 1 562 Gross Sales 55 629 58 746 Total Costs 36 567 39 947 Gross Proﬁt 19 062 18 799 Market Expenditure 5 200 3 800 –Advertising 3 200 1 800 –Promotion 2 000 2 000 Proﬁt before indirects 13 862 14 999

of margarine. The butter industry led the category in advertising spending with over a 50% share of voice, with about $7M in spending every year with television and print. Another competitive threat was posed by Parmalat, a large producer of butter. Parmalat had recently begun to promote its Lactantia margarine using a positioning strategy that leveraged the ﬁrm’s association with butter: “the makers of great tasting butter now bring you great tasting margarine.” Parmalat only had a small portion of the margarine market share, but it was increasing. Ross could not ignore the potential threat that this product posed. Finally, there were two other brands that Ross knew he had to keep an eye on. Canola Harvest was a product that had a small share of the national market with its strongest market being in Western Canada. This product was positioned as the margarine with the best taste and best health because it contains canola oil. Retailers liked the product because it seemed to offer many of the same beneﬁts of Becel, but at a much cheaper price. The other product Ross viewed as a competitive threat was Olivina, which was positioned using a “Mediterranean diet” association. This product had only secured about 0.6% of the national market, but was showing strong growth. Ross knew that health professionals were starting to rec- ommend the use of olive oil instead of margarine. Ross also knew about the growing interest in olive oil since Unilever had recently bought the Bertolli brand. This caused Ross to wonder if he had the right range of products. (See Exhibit 5.)

Examining the Marketing Mix Targeting the Market The demographics of people who use margarine and butter are quite diverse. An analysis of the demographic characteristics do show some interesting trends in the consumers that Becel and its competitors attract. Specifically, there is an interesting dichotomy between the types of consumers that purchase margarine versus those that purchase butter. A substantial portion of the volume of margarine purchased is by people with large families, particularly ones with four or five members and who tend to have lower than average incomes. (See Exhibit 9.) Conversely, the total volume of butter consumed was disproportionately weighted towards families without children and families with older children. Fur- thermore, a large portion of butter consumers tended to be over 55 years of age and the most affluent buyers. The target market for Becel tended to be very close to that of butter. However, most households bought both margarine and butter. Ross knew that the reasons people bought butter were quite different from the reason they bought a health margarine. 838 Appendix

EXHIBIT 4 Brand awareness, trial and loyalty

Brand Awareness

99 89 92 100 81 84 76 80 58 60

0 1988 1992 1993 1994 1996 1998 1999

Brand Trial

72 68 70 80 58 51 60 45

40 25

0 1988 1992 1993 1994 1996 1998 1999

Advertising Awareness

35 40 30 27 27 26 24 30 22

0 1988 1992 1993 1994 1996 1998 1999

Looking at this data made Ross’s job more difﬁcult. The demographics showed that Becel had been doing exactly what it was intended to do, serving the needs of those pursuing heart-healthy lifestyles. In addition, they had secured very high customer loyalty. Those who purchased Becel satisﬁed almost half of their margarine volume requirements with Becel. Other brands weren’t remotely close to this degree of brand loyalty. Yet Becel’s growth rates were beginning to slow down. Ross wondered why? Ross had a look at some market data that showed what consumers tend to look for when purchasing margarine (see Exhibit 6). The data showed that individuals who purchase margarine exclusively on the basis of taste seemed to account Comprehensive Cases 839

EXHIBIT 5 Becel’s line-up of products

Description of products:

Becel Regular Ð Becel margarine is Canada's most popular choice for heart healthy eating. It is: • low in saturated fat and non-hydrogenated • an excellent source of Vitamin D and a good source of Vitamin E.

Becel Light Ð Becel Light is an ideal choice for people who want the benefits of Becel and who need to reduce their caloric intake. Becel Light has: • 50% less fat and calories than regular margarine or butter;

• Becel RSF (Reduced Saturated Fat) Ð For people that need to significantly reduce the saturated fat

• 67% less fat than regular margarine or butter; • 65% fewer calories than regular margarine or butter.

• Becel Salt Free - Becel Salt Free is a good choice for Canadians who would like all the benefits of Becel, but must adhere to a sodium-restricted diet.

Becel Oil Ð Canola Based Liquid Oil 840 Appendix

for the lowest volume of margarine purchased. Those who purchase exclusively on the basis of health or price reasons accounted for almost the same percentage of volume of margarine sold. However, this was really just scratching the surface. For the most part, consumers purchase products for a variety of reasons and margarine is no exception. Thus, the data further showed what percentage of margarine consumption was based on the interaction between taste, health and price. Apparently individuals considering all three attributes purchased the largest percentage volume of margarine. Looking at this data, Ross realized that he would have to consider the complex interaction of taste, health and price in deciding what his new marketing strategy would be.

Pricing Considerations Becel’s price has remained relatively consistent over time, but since its inception Becel has been priced at a premium to other margarines to reﬂect the premium quality formulation. See Exhibit 7 for further pricing information. Interestingly though, all margarines are priced lower than butter. Butter was the highest priced spread in the category and had the ability to demand a premium price because of its strong heritage and loyal user base. Butter had always been the gold standard for taste and best for baking. Margarine had always been considered a cheaper alternative to butter and so the largest share of the margarine market was held by more price-driven brands. In fact in consumer surveys, price/value was the biggest reason for buying margarine over butter. Thus, pricing strategy was an important area Ross had to give more consideration to, if he wanted to grow volume.

Channel Considerations The channels of distribution for packaged goods are quite broad: grocery stores (Loblaws, Sobeys), convenience stores (Beckers), discount super stores (Wal-Mart, Zellers) and club stores (Costco) are just a few examples of the retail outlets through which packaged goods are sold. However, the dominant force in these channels is the grocery channel. Throughout Canada in the last decade, the grocery industry has seen intense consolidation and increased growth of private label products. In 1999, the consolidation became even greater as Canada’s biggest grocery chain, Loblaws, acquired Quebec’s Provigo chain. Historically, Quebec had been the biggest market for butter and Becel’s weakest market.

The Future of Becel

Ross glanced out his office window as he considered the various strategies that Becel could follow. Becel was an important business and any strategy taken also got lots of attention from the European head office. In fact, the Europeans were strongly considering using the Canadian advertising idea. Ross needed to carefully review what he saw to be some of his major alternatives before proceeding with a decision that would reinvigorate the expected growth for Becel. Ross began to prepare his recommendation and outline the long-term vision for Becel. He had to get going since it was due within a month. Just as he sat down to consider his options, the phone rang. It was his new advertising agency telling him about some new butter advertising that challenged the health benefit claims made by margarine. The ad actually made a specific reference to the ingredients for Becel, paralleling butter as “Nothing but Good Stuff.” This was going to be a difficult day. Comprehensive Cases 841

EXHIBIT 6 Margarine Buyer Considerations

Taste vs Health vs Price Homescan—National Buyers (Projected) % Buyers Eq. Vol % Volume

Taste or Health or Price 9 776 100.0 239 253 100.0 Excl. Health 1 644 16.8 27 646 11.6 Excl. Taste 1 333 13.6 21 118 8.8 Excl. Price 1 359 13.9 28 765 12.0 Health and Taste 1 176 12.0 27 842 11.6 Health & Price 711 7.3 17 925 7.5 Price & Taste 1 766 18.1 52 685 22.0 Taste and Health and Price 1 786 18.3 63 271 26.4

EXHIBIT 7 Spreads Category Pricing Information

Product Average Retail Price General Butter $3.08 General Margarine $1.45 Health Margarines $2.09 Taste Margarines $1.51 Price Margarines $0.98 Becel $2.10 842 Appendix

EXHIBIT 8 Media and Advertising Cost Estimates

1 Primetime Television Commercial Rates (30 Seconds) Network Number of Stations Basic Average Cost

Regional Television Atlantic TV Network 1 $90 ATV4$650 CBC Atlantic 5 $1 000 Central/Quebec 15 $6 000 Western 12 $2 500 Paciﬁc 6 $1 000 Global 1 $7 000 MITV 2 $500 BBS Ontario 8 $5 000 Cost of Production: one commercial $300.00 2 Newspaper Advertising Newspaper Cost of Advertisement Cost per 1000 People Reached (CPM) Toronto Star $11 340 $2 438 Globe and Mail $16 938 $5 314 Toronto Sun $5 463 $2 366 Cost of Production: one ad $25.00

EXHIBIT 9 Consumer Household Profiles

Margarine Households •4 members • head of household 45 • strongest in lower income households • families/empty nesters and childless couples ( $70 000) Butter Households •3 members • head of household 45 • strongest in high income households ( $70 000) • strongest with empty nesters Becel Households • Strongest with empty nesters •65 •Afﬂuent with high incomes

Source: Nielsen Homescan

Notes

1“Estimated Cost of Network Commercials” Media Digest 1999–2000 ed., p.22. 2Tuckwell, Keith J., Canadian Advertising in Action 5th ed., p. 332. Pearson Education Canada: Toronto, 2001 Becel, Lipton, Sunlight, Salon Selectives, Dove, Degree, Fleischmann’s are all trademarks of Unilever Canada.