Y&R Beyond 2000 Newsletter

HOT PRODUCTS OF 2001

Under this section we collected products and services we believe created a breakthrough during the last year, or became mainstream products.

Personal loans / credit

The improving consumer expectations about personal situations, the more favourable credit conditions and lower interest rates resulted in a 35% increase in personal loans and a 74,6% increase in housing loans within the first 10 month of the year. What was the bulk of the money spent on? Catching up with the latest household items, replacing the old ones, or just taking a holiday abroad to rest.

Something to think about: As the market develops will the financial services industry educate and help the consumer manage their debt for the benefit of consumers and the industry?

Mineral water

Hungary is well known for its rich mineral water supply. Although Hungarians don’t drink as much mineral water as consumers of other western markets do, like Austria, or Italy but their consumption is increasing quickly. Current annual per capita consumption is around 40 liters, with an approximate 60% penetration rate – developed from a 2 liter per capita level of the early 1990’s.

Something to think about: purity, authenticity and health seems to be a category necessity (source BAV research). Who will be the next to follow Römerquelle in creating a unique personality to his brand and add more emotions to brand equity? Who will expand the offering into bottled water for pets which has happened in other markets?

Private labels

People have accepted the concept of private labels, and more consumers came into contact with private label products: retailers increased their franchise dramatically during the past couple of years and let large shelf space for their own labels produced by local manufacturers from chocolate to cereals. Private labels already account for more than 1/3 of the total category turnover in certain, low-consideration categories, like paper products. Tesco, as one of the most aggressive retailers, managed to create the strongest retail brand, far ahead of several established FMCG brand names -- according to a recent Y&R BrandAsset Valuator survey.

Something to think about: How can manufacturers of branded goods make the price premium accepted by our price conscious consumers in the future? When will the hypermarkets introduce “House Brands” to compliment “Private Label Brands” which will expand their brand replacement offering into non FMCG categories?

Mobile phone service - oplogos

People will aim to stand out from the pack by forging distinctive brand identities. Creating a personal brand will be an ongoing process and may include the adoption of unique "packaging" (clothing and accessories) and individual "taglines". Mobile phones equipped with an individualized cover are not enough anymore. A mushrooming number of oplogos and bell sounds became important items of self-expression.

Something to think about: What will be the next hot item of personal branding? Tattoos?



BRANDS OF THE YEAR

SUCCESSFUL BRANDS OF THE YEAR

Bee:

The Pannon GSM sub-brand targeting teens was one of the most successful launches of the year. Target-tailored use of media vehicles, talk-of-the-town teasers and promotions that built image as well, and several creative executions supported the Bee launch. The Bee case demonstrated the need for handling youngsters as a unique high potential segment, not just in media selection, but in branding and communication style as well.

Something to think about: Do you have a defined and well targeted teen brand in your brand portfolio?

Renault Thalia:

Great positioning and a product tailor made to a price-sensitive market proved that people are willing to spend their money on cars other than Suzuki. Thalia drove Renault to the No. 3 position in 2001 on the new passenger car sales chart, and to the top of the „Car of the Year” vote on the http://www.auto2.hu web site.

Something to think about: What’s the relevant and differentiating value you give to your customers in your product offering?

Harry Potter:

An excellent example of building a strong brand and merchandise element without a major advertising campaign. Word of mouth created a must-have item on the bookshelves of teens – parallel to international hype. Harry Potter made spectacles fashionable again, sending consumers to the opticians. The bestseller also increased sales at bookstores and created a new topic of conversation among teachers, children, psychologists and other experts. Watch for kids carrying broomsticks with them as the latest “must have” fashion accessory.

Something to think about: What are the inherent elements of these types of phenomena which attract global youth and how can these be applied to other youth brands to have a similar impact?

“Being local, acting local”

a. Consumers value brands considered local (even on a regional level). Speaking the local language, finding the right mix of traditional and contemporary, and being a good brand citizen are essential elements to bonding consumers to certain brands. … And you don't have to spend huge advertising budgets to gain consumer preference: sometimes word of mouth and leveraging historic positive emotional associations can help develop a cult brand. Several cases proved people have renewed loyalty to local brands if they feel it's relevant and providing the right mix of rational and emotional benefits to their life: Traubisoda, Balaton szelet, WU2, or Sport szelet just to name a few.

b.Not just consumer goods, but sport clubs, teams, musicians, films became heroes of the community. Yonderboi, Anima Sound system, or DJs like Sterbinszky became popular and favored next to international stars. The cult film ‘Moszkva tér’ achieved surprisingly high viewership.

c.Sport offers an opportunity for marketers to really think locally when it comes to sponsorship: basketball teams, like Körmend, PVSK-Mizo, gained national recognition as well, but they are real heroes fans got crazy about in their region.

Something to think about: Are your local brands making it easy for consumers to “act local” by “being local”?



BRAND FAILURES OF THE YEAR

Ko-Ko: Media hype around boxer István Kovács didn’t help him defend his world championship, resulting in headaches for several sponsors, as well how to make the most out of their sponsorship.

Something to think about: When Michael Jordan retired, Nike continued its association with him because he represented timeless values. Will brands that associatde themselves with Ko-Ko because of his sporting triumphs abandon him because of a one time event or will they leverage a deeper and more powerful association?

Scooters (without branding): Word of mouth and the internet created the buzz around scooters and marketers immediately put it on the prize list of their promotions, but people still drive their cars, ride their bikes, or just simply walk.

Something to think about: Was the scooter a fad/fashion product or a fun, alternative mode of transportation that manufacturers believe in and are committed to?



MEDIA VEHICLES OF THE YEAR

Safety nets/wallpapers around building renovations and construction sites started their own life; even separate campaigns were dedicated around these media: Sprite, Stella Artois, and Pantel were among the pioneers using this facility.

Something to think about: Isn`t the recent controversy over use of this type of advertisement hypocritical? Other types of billboards sprout like grass in springtime. Why not support an idea that offsets the expense of renovation so that cities can more quickly reclaim their fading beauty?

HEALTHY / SAFE FOODS:

Hungarians tend to learn differences among various food products not just by price and by brand, but by packaging information as well. Reading label information, ingredients, origin, manufacturer guide them in selecting healthier options. Let’s admit, recently published articles just confuse people: it turns out that a “good” food has negative side effects, but a “bad” product is necessary to keep you healthy, fit and happy. Eggs, chocolate, and butter are the recent winners of this debate.

Olive oil: after spending numerous holidays in Mediterranean countries, Hungarians put olive oil into their menu. Cookbooks, recipes and articles on nutrition recommend using olive oil. Additional to that, retailers give larger and larger shelf space to this product. (Tesco has already launched its own private label olive oil).

Red wine: strong marketing efforts were made to rebuild the demolished image of the Hungarian wine industry. Mid-priced red wines will be the definite winners of this attempt.

Fast food restaurants will include healthier foods on their menu, like fish, poultry, mineral water. New ones will offer more vegetables, more exotic, oriental food.

Something to think about: How will growing health consciousness change product preferences in lifestyle?

TRAVEL AROUND THE COUNTRY / OUTDOOR ACTIVITIES

Festivals, cultural events, roadshows attracts record masses - opportunity for consumer contacts

People move out of plazas and shopping malls to hang out in cafes and the open-air pubs that mushroom around the cities. Cultural festivals (Kapcsolatok koncert, Budapesti Búcsú, Mûvészetek Völgye) became indispensable events, tens of thousands of people visit them every year. New additions targetting youngsters are popular as well, like Hysteria New Year’s

Eve celebration, or Budapest parádé. Branded roadshows jazz up the life of local communities, providing huge opportunities for marketers developing a strong brand experience: Tesco, TV2/Dáridó, Coca Cola, Borsodi brewery, and Westel are ones we recalled as events in a town/region.

Something to think about: Will Hungary become the series of hyped sponsored activities like in the U.S. where every action is an endorsement of the brand god or will brands recognize the need of consumers to feel that they are not being bought and ruled over? Will Hungarian companies/brands reach the point that a well know charge card reached in the U.S. when they created an entire advertising campaign based on the fact that they sponsor events? Should the consumer be grateful? Sometimes yes, but forcing a thank you sometimes does more harm than good.

Popularity of branded sporting events, like Nike half-maraton, Balaton cross-swim, Strandpöttylabda championship, Schorbert Norbi’s free fittness trainings on Margitsziget are clear indicators that a growing number of adults are getting out of their armchairs to participate in some type of leisurely sports activity.

Something to think about: Are your products available at these events (where people are willing to spend easier and most probably less price sensitive)? Are you demonstrating the inherent connection your brand has to the event or are you treating attendees like everyone else?

BRANDED REGIONS

Recent government support to boost tourism will create intense competition among regions and cities to attract local and international visitors. Branding and consistent communication will be crucial to differentiate tourist attractions from each other. Initial propositions are Pécs, “the mediterranean city”, Veszprém the “city of queens”, or Székesfehérvár the “city of kings” should be filled with content over the years to make these brands come alive for visitors and locals alike.

Something to think about: Since mineral water is such a hot item globally due to its health associations, why doesn’t Hungary with its incomparable range of mineral springs use it to differentiate itself as a travel destination? And not just for people with ailments but to the general travel market looking for something unique in their travel destinations.

WEB SITES TARGETTING WOMEN

Traditional portal sites developed a vertical system: specialized to subjects. The recent launch of Nõk Lapja Café (http://www.noklapja.hu), and Origo.hu’s Nõi Lapozó (http://www.origo.hu/noilapozo/index.pcgi) are clear indicators that webmarketers realize women surf the web as well, not just computer maniacs.

MEDIA CHANNEL OF THE YEAR

SMS.

By 2001 it became clear that WAP will not revolutionize communications, but there are several tools to support SMS communication. Cost conscious Hungarians sent more than 16 million SMS on New Year’s Eve/New Year’s Day 2002 (nearly 5 million mobile phone subscribers, 70% of recent acquisitions are pre-paid accounts). Banks use SMS for value-added services, Westel offer SMS magazine subscriptions, and SMS-chatting is a widely-used option. Despite the limited copy length, SMS campaigns will be essential elements of consumer contact and promotions as well.

Something to think about: SMS is to telecoms what email is to the internet – the most popular use of the medium beyond its original reason for being. Will they remain separate or will they come together to form the first widespread example of digital convergence.

TEENS TOTALLY WIRED

How do adults think they can rule the world when they can’t even play computer games or program their VCR? This question from a teenager has never been more true than today. Teens are avid mp3 listeners, chat on-line and on-the-go with their mobile. Communication to them should consider these alternative media tools as well.

Something to think ahead: Using new media (both as communication channel or props, promotional prizes) may not only be interesting but a necessity when it comes to talking to teens

Websites recommended to put your pulse on the local trends: www.index.hu, www.origo.hu, www.teveclub.hu, www.sziget.hu, www.est.hu and their discussion forums.

Source - Y&R Budapest

It’s not intended to be a deep analysis, but more of a subjective summary of highlights we, as advertising experts observed and will remember. We hope that these glimpses inspire you to think creatively about your brand and about your company. Special thanks to our colleagues for their insights and ideas that enriched this report.

For more details, or for further consultation call/e-mail Attila Kecskeméti (473-3257, attila_kecskemeti@hu.yr.com), or your direct agency contact.

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