If you have been dreaming of Jennifer Hawkins a lot recently – we doubt you are alone. It may however, have less to do with the wholesome beauty of this Aussie Icon, and more to do with her role as the face of another Aussie Icon.
Myer has been parading Ms Hawkins around quite a bit during the lead up to its public share listing – and it has less to do with marketing their products or latest promotion, and everything to do with increasing its brand awareness – and potential market capitalisation.
In a timely follow-up to our recent article on how marketing can increase the value of your company, Myer is using this exact tactic to entice retail investors (mom and pop investors) to buy shares in the company. By advertising everyday in the paper and on TV, Myer is increasing our awareness of the brand, building an affiliation to the brand and therefore a greater desire to own a piece of this retail icon. It even has the effect of creating a need – so we feel that we do not want to miss out on owning a share of Myer.
If you believe what analysts are saying about the Myer float, retail investors should be wary of the price. They have highlighted that:
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Myer is a mature business (109 years old) |
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Interest rates have started rising and are expected to rise further over the next 2 years |
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Little cost cutting opportunities left |
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Not increased individual store sales |
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The 2 major shareholders are selling most or even all of their 92% holding |
However, most analysts are still predicting that Myer will be over subscribed by the retail market. Why is this so?
It is fair to say that the average retail investor is less sophisticated than institutional investors. They are more swayed by seeing the Myer brand at every turn and less concerned that Myer is being priced similar to David Jones (which has been achieving growth in store sales and has had its share price increase by over 150%).
Myer is playing on this fact and spending big on advertising. ‘You got these people trying to flog an expensive product to ill-informed retail investors that get taken away by the marketing hype,’ said IG Markets research analyst Ben Potter.
Readers might remember the Pacific Brands float and the hub of marketing activity around its individual brands as well as the umbrella corporate brand. We don’t see those ads much anymore and Pacifc Brands is trading at 50% off its initial float price.
But we would be remiss not to mention another aspect of marketing that Myer is doing really well. One of the fundamentals that is increased by building a brand is profit – through both increased sales, but also customer loyalty and therefore more profitable sales.
Myer achieves two thirds of all its sales from the 3 million Myer One cardholders. These are customers that Myer knows very well. It has detailed records of spending patterns, demographics etc that it can use to help it market better and increase sale to these customers.
Whatever the outcome of the Myer float, it is clear that Myer has a very good and thorough understanding of a number of the fundamentals of marketing and Branding and is using these for a better outcome for its current shareholders. Lets hope that it continues doing this for its future shareholders.