Corporate America - August 2015

FASTER FOOD: HOW APPS ARE TRANSFORMING THE WAY WE ORDER FOOD

Corporate America AUGUST 2015 • WWW.CORPORATEAMERICA-NEWS.COM

AppTastic

Putting the spotlight on mobile apps and what they can do for businesses

PLUS: IS DISNEY GROWING UP?

Becoming more interactive to appeal to increasingly demanding children.

FED-AXED?

Will European Commission put an end to proposed takeover of TNT?

HARNESSING CONSUMER ANGER

As the internet intensifies complaints and social media increases the volume of customer dissatisfaction, we take a look at how to handle minor issues before they spin out of control.

What:

We partner with high technology companies to assist in developing intellectual property assets, formulating and executing strategic plans for achieving maximal value for our clients. Our clients have achieved over $1.6 Billion (USD) in market value, either through financing rounds, merger and acquisition, licensing or litigation awards. To achieve this success, we combine professional and technical skills with level-headed business principles and experience. Or practice is devoted to supporting our client’s intellectual property asset development, commercialization and, when necessary, enforcement.

Planning:

The focal point of an intellectual property plan is to secure maximum value for intellectual property assets. This is achieved by first defining the business objectives to be achieved.

Strategy:

Once the IP plan has been identified, a management team, including business, technology and legal expertise, reviews the business objectives, considers the congruence between the plan and the objectives, then pressure tests the plan against identified opportunities to challenge that the intellectual property assets will achieve those objectives. Being dynamic, the plan will be consistently and constantly assessed, revised, and reassessed as new objectives are identified, new opportunities are presented or new challenges arise.

A coherent IP strategy will include IP landscaping to identify and analyze existing IP rights and players in the relevant technology space. The white space opportunities will be identified and an evaluation of the coherence between the IP plan and the white space analysis will be completed. In addition, IP forecasting may be undertaken to predict, based upon a third party’s prior IP behavior, what are the likely IP protection pathways a third party will be pursuing with their IP portfolio. Additionally, licensing and collaborative research and development opportunities may be undertaken, “blue sky” evaluation for next generation products and/or superseding technology and opportunities for developing IP in those areas, freedom-to-operate issues relevant to the pre-commercial products under development to minimize the risk of material liability in litigation should be undertaken and processes for dynamic and real time IP tracking within the technology space, may be implemented.

“

We combine professional and technical skills with level-headed business principles and experience.

”

Who:

Members of the firm have scientific training and regularly work across a spectrum of technologies including pharmaceuticals, medical devices, biotechnology, therapeutics, diagnostics, nanotechnology, organic and inorganic chemistry, biochemistry, materials science, agricultural chemicals, plant breeding, environmental protection systems, semiconductor processing, industrial and medical lasers, computer hardware and software, digital and analog electrical systems, water purification systems, evaporative cooling systems, skin care products, clothing, motor vehicle assemblies and systems, and general mechanical and electrical technologies.

Address: 1480 Techny Road Northbrook, Illinois 60062 Tel: 847-770-6000 Fax: 847-770-6006

info@RosenbaumIP.com www.rosenbaumip.com

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Contents 16 Feature

P&G TAKE A GAMBLE

Firm undergoes board transformation with appointment of new CEO who is to drive change as the firm announces streamlining of vast brand portfolio.

10 14

Feature

FOOD APP YOUR FINGERTIPS

Examining food apps and mobile ordering as Subway becomes the latest chain to introduce an innovate new way of ordering.

Feature

HAS YOUR BPM PLATFORM BECOME A WHITE ELEPHANT? Many users are disillusioned with their BPM investment.

A BPM expert explains why…

20

4

Feature

News

THE POWER OF CONSUMER RAGE

18 Feature

UP IN A PUFF OF SMOKE

Despite strong competition and raised consumer awareness on the ill effects of smoking, Reynolds American, the parent company of numerous cigarette firms, announced good financial results following the recent acquisition of Lorillard, Inc.

Nike and Apple back down over claims the Nike+ FuelBand, a fitness tool used to track performance, was not properly functional, despite the claims not being proved, highlighting the immense force of customer opinion.

20 New Era for Disney

22

28

EU Could Blow TNT Takeover Out of the Water

Feature

BEST (AND WORST) WAYS COMPANIES HAVE USED SOCIAL MEDIA

Social Media can be a key tool when interacting with customers. Or it can be a firm’s downfall and the path to ridicule.

32 Arby’s Bargy

On the Cover

Feature: On The App 12

Mobile apps can be an exciting and innovative marketing tool for companies looking to target their customers. We take a closer look.

August 2015 • CorporateAmerica • 3

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News

Free Multimedia Package Offers Boost to Manufacturing Industry CNC Software, Inc. partners with Edge Factor to bring free multimedia package and materials to manufacturers for manufacturing day events, bridging the gap between potential employees and potential employers.

CNC Software Inc., developers of Mastercam CAD/CAM software, has partnered with Edge Factor to produce a professional, time-saving, turnkey package of exciting media and interactive resources, called #RockMFGDay, to help make events compelling, engaging, and successful.

Spurred by record-setting participation last year, many activities are in the works for Manufacturing Day 2015, scheduled for October 2, 2015, the fourth annual industry grassroots event that is celebrated across North America and being promoted as “MFG Day.” “Mastercam has partnered with Edge Factor to produce materials to inspire young people to pursue careers in the incredible world of manufacturing,” states Meghan Summers West, President of CNC Software, Inc. “This free promotional package will help manufacturers connect with leaders and students in your community to change perceptions of manufacturing, involve kids and teachers, reach parents, spark conversations, and collect meaningful feedback on the success of their events.”

The promotional package includes a free host prize pack, Rock MFG Day 22-minute film, streaming videos, interactive CNC machining and 3D printing projects, as well as interactive activities and post-event resources for event hosts to use. All materials are optional and hosts can choose to use all or some of them, to customize events.

4 • CorporateAmerica • August 2015

Leading the Way in Domains Neustar acquires leading domain name registry provider Bombora Technologies.

Neustar, Inc, a trusted, neutral provider of real-time information services, today announced it has acquired Bombora Technologies Pty Ltd (Bombora), based in Australia, for AUD $118.5 million, or approximately USD $86.9 million. Bombora and its subsidiaries, which include ARI Registry Services, provide registry services for a number of top-level domains (TLDs) including .au, .melbourne, .sydney, and over 100 new TLDs, including several in the Fortune 500.

This acquisition expands Neustar’s registry services, which operates the .biz, .us, and .co TLDs, in addition to over 300 new TLDs. “With this acquisition, Neustar continues to gather momentum as a global leader in launching and operating TLDs.” said Lisa Hook, President and CEO of Neustar. “Managing a brand’s digital presence through the creation of new TLDs has become a key component of the CMO’s tool kit, which aligns with the services we offer in real-time authoritative identity. By combining Bombora’s strong team and market presence in Australia with Neustar’s industry leading organization and technical resources, we are positioned to expand our footprint to the Asia-Pacific region.”

If the estimates are anything to go by this is a shrewd move by Neustar, with the deal expected to contribute AUD $10 million, or approximately USD $8 million, of revenue and AUD $1.5 million, or approximately USD $1.1 million, of operating income in 2015, which reflects the adjustment for deferred revenue on a fair value basis in accordance with business combination accounting principles. Over the last two years, Bombora has grown revenue at a compounded annual growth rate of 12% to AUD $28.2 million, or approximately USD $20.6 million, in 2014 with operating margins between 25% and 30%.

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News

Californian Confidence Latest YPO Global Pulse Confidence Index shows CEOs in the state have a high confidence rate, with remained of US slightly behind.

The index for California declined 0.5 point in the July survey to 65.8 from 66.3, but still remains in very positive territory. By comparison, the YPO Global Pulse Confidence Index for the overall United States for July was 62.8, 3.0 points lower than California.

There was also a drop in confidence globally, with the YPO Global Pulse Confidence Index declining 0.6 point to 60.9 in the second quarter 2015 survey.

This was the fourth consecutive drop in global confidence from a near record high of 64.0 in July 2014, but each of the quarterly declines has been modest.

Across the globe, confidence among the nine regions was the highest in the United States, even though it declined 0.5 point to 62.8.

Confidence declined 1.6 points in Asia to 62.0, and 1.9 points in the European Union to 61.6.

Confidence rose 1.0 in Australasia to 61.4, and

2.1 points in Canada to 60.0. Latin America recorded its third consecutive drop in confidence, falling 2.3 points to 50.1, by far the lowest level among the nine regions.

In California CEOs see continuing strength in the second half. Asked to look six months ahead, more than half of California CEOs (51%) said they expected overall business and economic conditions affecting their company to be better compared with today, down from 56% in the April survey. California companies in the construction and production sections were more optimistic than companies in the services sector.

ently performing hospitality, construction and service-related sectors continue to overshadow the negative impact of a strong U.S. dollar on exporters let alone any consumption-related fears that weakness in Greece and China may have on California’s economy,” said Alan Zafran, senior managing director and portfolio manager of First Republic Investment Management and a member of YPO’s Global One Chapter.

The outlook for job growth remained very positive with 50% of California CEOs expecting to increase their employment levels over the next 12 months, down from 54% in the prior survey.

California construction CEOs were the most confident. A full 75% expected to increase employment, compared with 48% of service sector companies and 44% of production companies.

“A thriving technology sector, robust commercial and residential real estate market conditions in key metropolitan markets, and consist-

New Frontier in Employee Rights Frontier Communications and Communications Workers of America Reach Agreement in Texas and Missouri.

Frontier Communications Corporation and the Communications Workers of America District 6 (CWA) are pleased to announce the signing of an agreement that will benefit CWA-represented employees in Texas and Missouri and Frontier’s future customers in Texas. The agreement is an important step forward in the process to complete Frontier’s planned acquisition of Verizon’s wireline business and assets in Texas, California and Florida. The CWA supports the proposed acquisition and believes it is in the public interest and the interest of its members.

The CWA represents 2,000 Verizon workers in Texas and Missouri. This agreement provides the workforce in both states assurances for the acquisition and how the acquisition will affect them. It also includes operational benefits to allow Frontier to implement its local engagement model in the Texas markets. Reaching this agreement early

allows these dedicated men and women to focus on delivering state-of-the-art broadband, voice and video services to Frontier’s future residential and business customers.

Frontier has agreed to honor and extend the existing collective bargaining agreements for two years. Highlights of the agreement include: Employee job security protection, extending the existing contracts for two years with wage increases in each year and the addition of 60 new union-represented jobs in Texas and Missouri.

As part of this agreement, Frontier and the CWA will form a Partnership Forum that will promote innovation of Frontier’s products and services and the service experience our customers receive.

All commitments by Frontier are designed to ensure that the workforce stays highly motivated and trained to deliver the best possible service to its future customers in Texas.

tions,” said Daniel J. McCarthy, President and Chief Executive Officer of Frontier. “We value our positive relationships with our employees and their unions and rely on them to help us live up to our goal to `Put the Customer First’.” Mr. McCarthy added, “Our discussions with the CWA about this acquisition have been beneficial to union-represented workers and will ultimately benefit Frontier’s customers in Texas, California and Florida. We look forward to building a strong partnership in the years ahead.”

CWA District 6 Vice President Claude Cummings said, “We have reached an agreement with Frontier that is in the best interests of telecommunications workers and consumers. We hope to build on this partnership going forward.”

“I am very pleased with the professionalism and progress made during this latest set of negotiaAugust 2015 • CorporateAmerica • 5

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News

Liberty Global Increases Stake in ITV Virgin Media parent company has increased its stake in British broadcast company whilst categorically denying plans for a takeover.

Liberty has announced that it has acquired 138.7 million shares in ITV plc, increasing its existing stake to a total of 398.5 million shares in ITV or approximately 9.9% of ITV’s ordinary shares outstanding.

The American firm has stated that they do not intend to take over ITV, whilst also making it clear that they do legally have the right to announce an offer within the next six months, leading to speculation that Liberty is looking to expand its portfolio to include the British media outlet.

Mike Fries CEO of Liberty Global, commented on the share increase.

“Given ITV’s operating and stock price performance, we were able to increase our stake to 9.9% with no incremental investment by hedging our existing equity position. This investment remains an opportunistic one for us in our largest market.

ITV is a well-run company with attractive growth potential, and we are pleased to increase our position as their largest shareholder.”

6 • CorporateAmerica • August 2015

Paid to Behave Discover card offers a good grades reward program, with new student Cardmembers able to earn a $20 cashback bonus each school year for good behaviour.

The direct banking and payment services company is giving students who sign up for a new Discover student credit card an added incentive to get good grades while they are in school. New student cardmembers who apply after July 23, 2015 will be rewarded with $20 in Cashback Bonus if their grade point average is 3.0 (or equivalent) or higher each year they are enrolled in school, for the first five years from the account opening.

“This best in class program for new Discover cardmembers gives students an opportunity to earn a bonus for hard work in their classes,” said Ryan Scully, a marketing vice president at Discover. “It is also a good way for students to experience the benefits that come with being a Discover cardmember.”

The Good Grades $20 Cashback Bonus will be in addition to the current rewards structures for the two student credit cards Discover has available. Discover it chrome for Students offers an automatic 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases quarterly whilst Discover it for Students offers 5% cash back in categories that change each quarter, up to the quarterly maximum in combined purchases, when you sign up. Both cards also earn 1% cash back on all other purchases.

When students become a new Discover cardmember they receive a variety of benefits that continue even after school. All Discover cardmembers receive their recent FICO Credit Scores for free1 and have the ability to view key factors that impact their scores. They will have access to Freeze ItSM – an on/ off switch for their card. Cardmembers can freeze their card in seconds using our mobile app or website to prevent new purchases, balance transfers and cash advances. Discover cardmembers also have the support of award-winning U.S.-based customer service.

“We think it’s important that students understand good credit habits and the importance of a healthy FICO Credit Score,” Scully added. “Once a student graduates, they will continue to get these great features to help achieve their personal goals and better prepare them for the future.”

This is the second Good Grades Reward program for Discover. Discover Student Loans launched a Cash Reward for Good Grades program in 2014. Customers who have a Discover student loan can go to DiscoverStudentLoans.com/Reward for terms and conditions. Customers who obtained a Discover student loan after April 30, 2014 and are a new Discover Student cardmember are eligible for both bonuses and must apply for and redeem them separately.

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News

Say Kaboom!

Users are able to post or send self-destructing, time-limited pictures and messages on any social network with Kaboom, a new mobile app set to rival Snapchat.

The app is the invention of AnchorFree, the creator of the popular secure browsing application Hotspot Shield, today announced the launch of Kaboom, a free iOS and Android application that allows users to send self-destructing pictures and messages to any recipient on any social network.

With Kaboom, users can post self-destructing pictures and messages on social networking sites such as Facebook and Twitter, or share them via SMS, WhatsApp, or email. Simply create the message in Kaboom and then share it via a secure link on the platform of your choice.

Designed to enable users to have full control over the information they share, the app has the option to choose the amount of time or the number of views messages can be viewed before expiring.

All expired messages and images are immediately deleted from Kaboom servers.

For example, Kaboom users will have the ability to make their pictures disappear from Facebook.

Friends will no longer need to ask you to remove a picture they don’t like; all pictures posted with Kaboom will simply self-destruct on Facebook after a period of time or a number of views as determined by the user.

Users that share through text messages and the WhatsApp messaging platform will also be able to add self-destruction capabilities to any message or image they share.

users to make that information disappear whenever they want, allowing them to be more open and easy going when sharing online.”

Gorodyansky added, “Kaboom is a natural extension of AnchorFree’s mission. While our popular Hotspot Shield app enables users to consume content securely and privately, Kaboom enables users to create and share content ephemerally and privately. We want to add privacy controls to every social network you use.”

Recipients do not need to have Kaboom installed on their device to view messages and images sent by the application as they are delivered via a secure HTTPS web link that can be viewed in the browser for users that don’t have the Kaboom app.

“Kaboom is meant for anyone who wants to have full control over the pictures and information they share with friends through text messages or social networks,” said David Gorodyansky, AnchorFree CEO and founder. “Kaboom enables

Student Loan Shake-up New program from DRB allows MBA candidates to finance their degrees with amongst the lowest rates in U.S. DRB, a marketplace leader in student loan refinancing, today announced it will now offer prospective MBA students the opportunity to finance their MBA degree at some of the lowest rates in the country. This marks DRB’s first student loan for in-school borrowers.

Under the program, DRB will offer current MBA candidates both fixed and variable loans with terms ranging from 10 to 20 years (10 and 15 years for fixed and 10, 15, and 20 years for variable). Variable rates start at 3.25% and fixed rates start at 5.25%. The DRB application process resides online, 24/7, at www.student.drbank.com with instant approval for qualified, prospective MBA borrowers.

“Students are quickly realizing there is a better way to pay down debt and take charge of their financial future, and DRB is proud to play a significant role in that trend,” Mr. Lieberman said.

Since launching this product in 2013, DRB has originated $950 million in student loan re-financings for over 9,000 professional degree holders in the United States.

“Student loan debt is one of the largest financial burdens that many of us will face in our lifetimes,” said Gary Lieberman, Chairman of DRB. “For professionals and MBA students, that debt load can now be managed much more effectively.

We plan to provide some of the best interest rates in the country for students at top MBA programs.

We are continuing to lead the way in innovation in this space by being the only lender to offer in school MBA borrowers a 0.25% discount on their DRB loan when they graduate and start working.

We expect this offering will expand our borrower base significantly and provide an opportunity for us to develop long lasting relationships.”

August 2015 • CorporateAmerica • 7

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News

Boost in US Base Pay Predicted for 2016 WorldatWork’s annual survey forecasts salary budgets for the United States and 18 countries and predicts that base pay for U.S. employees will make modest gains in 2016.

United States employees could see a modest boost in pay for 2016 according to the 42nd annual “WorldatWork 2015-2016 Salary Budget Survey.” Forecasts show the average 2016 budget for raises in the United States is projected to be 3.1 percent. Budgets increasing pay at U.S. employers have improved slightly since 2013, up from 2.9 percent to 3.0 percent in 2014 and 2015.

WorldatWork, a nonprofit human resources association and compensation authority, released today its annual salary budget survey which covers projected budgets for base salary increases, promotional increases, total rewards strategies and human capital expense strategies. Participants for the 2015-2016 survey represent companies from 19 countries including Canada, Australia, China, India, Russia and the United Kingdom.

Average total salary budget increases in the United States have been steadily rising from the all-time lows recorded during the 2009 recession when the average salary budget increase reached 2.2 percent (mean). Organizations continue to converge on increased budget amounts between 2 and 4 percent. Last year, respondents projected that the 2015 average total salary budget increase across all organizations, employee categories, regions and industries in the United States would reach 3.1 percent (median: 3.0 percent), but actual numbers fell short.

“With the slowing of growth in budgets for salary increases, there is speculation of a ’new normal’,” said Alison Avalos, sr. manager of research for WorldatWork. “Although many reports indicate improvements in the economy, the competition for talent hasn’t heated up — employers are able to retain the talent they need with current practices. The thawing of prevalent pay freezes in 2009 have helped overall averages recover to the 3.0 percent mark, but this may be the ‘new normal’ until additional pressure on wages comes from somewhere else.”

The salary budget increase averages of participating organizations reported a variance among major U.S. metropolitan areas, although the medians are firm at 3.0 percent. While there are no extreme outliers, a few areas deviated from the national average trend line this year. The following cities reported a rise from 2014 to 2015 by three to four8 • CorporateAmerica • August 2015

tenths of a percentage point in average total salary budget: Detroit, Miami, Portland, San Diego, St. Louis and Tampa. Projections for 2016 are again diverse among cities when looking at average budget figures, stretching from 2.9 to 3.2 percent.

Of the industries with a survey sample greater than 30, eight reported a drop in the size of mean salary increase budgets. Mining, Quarrying and Oil and Gas Extraction, Construction, Agriculture, Forestry, Fishing and Hunting — which have been leading all average budget increases fell from 0.6 to 1.3 percentage points this year.

Mining, Quarrying and Oil and Gas Extraction is at the bottom of the list with a 2.5 percent salary budget increase after increases of 4.1 and 3.8 percent the previous two years.

Even though the size of all salary increase budgets, including merit budgets, remains on the conservative side, there is still good evidence of differentiation of awards. Looking at employee performance in 2014, organizations averaged a 2.7 percent merit increase for midlevel perform-

ers (median: 2.8 percent) and a 4.0 percent payout for top performers (median: 4.0 percent).

The 2015 data shows that 76 percent of organizations are now utilizing market-based pay increases, a 2 percentage point improvement from 2014.

The usage of most types of bonus programs has also increased, consistent with findings from other surveys focused on bonuses that WorldatWork has conducted. Most programs held steady in their usage since 2014, with a few declining only slightly. Noncash recognition and rewards are one of those categories showing a decline, from 2 percentage points down to 49 percent.

In 2014, all countries participating in the survey reported salary increase budgets at or above 2013 levels. This year, most of the 19 participating countries report a marginal increase with a few declines. In 2014, China was the leading country in the growth of its average salary budget increase with 8.2 percent (median: 8.3 percent).

This year, China’s average increase has dropped to 7.8 percent (median 8.0).

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News

Stock Market Gets Soul Boutique cycling fitness firm SoulCycle Inc. has announced that it has filed a registration statement to offer stocks on open market.

The firm has filed a Form S-1 with the Securities and Exchange Commission relating to the proposed initial public offering of its common stock. The number of shares to be offered and the price range for the proposed offering have not yet been determined.

Stocks for the unique cycling class company are not yet available to purchase publically and will not be unless the initial public offering goes ahead.

Growth is clearly SoulCycle’s primary aim in filing to sell their stocks on open markets.

Established in 2006, the firm has introduced the innovative model of boutique cardio fitness to the marketplace and reinvented indoor cycling by offering customers classes which involve fashionable music, inspirational instructors, candlelight and innovative spaces designed to create a unique and inviting experience for customers bored by conventional fitness classes.

Classes are designed to make participants feel “like they are partying in a healthy nightclub” according to the firm, which aims to foster a community feel to classes by focusing on the “energy of the pack” and attempting to create a bond between participants.

American Equity to Offer Stock for Public Offering American Equity announces public offering of common stock with a forward component.

American Equity Investment Life Holding Company announced today that it has commenced an underwritten public offering of 8,600,000 shares of common stock, of which 4,300,000 will be subject to the forward sale agreement described below. In conjunction with this offering, the underwriters will be granted a 30-day option to purchase up to 1,290,000 additional shares of common stock.

In connection with the offering of its common stock, the Company expects to enter into a forward sale agreement (and, to the extent that the underwriters exercise their option to purchase additional shares, the Company will enter into an additional forward sale agreement) with an affiliate of RBC Capital Markets, LLC (the “Forward Counterparty”), under which the Forward Counterparty or its affiliate is expected to, subject to the satisfaction of certain conditions, borrow from third parties and sell to the underwriters 4,300,000 shares of the Company’s common stock.

Settlement of the forward sale agreement will occur on one or more dates specified by the Company within approximately 12 months after the date of the prospectus supplement relating to the offering.

Pursuant to the terms of the forward sale agreement, and subject to the Company’s right to elect cash or net share settlement, the Company plans to issue and deliver, upon physical settlement of such forward sale agreement, 4,300,000 shares of its common stock to the Forward Counterparty at the then-applicable forward sale price. The remaining shares of common stock in the offering will be newly issued by the Company.

American Equity intends to use the net proceeds from the offering for general corporate purposes, including contributions to the capital and surplus of its life insurance subsidiaries.

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Feature

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Feature

Food App Your Fingertips Examining food apps and mobile ordering as Subway becomes the latest chain to introduce an innovate new way of ordering.

Apps are becoming increasingly prevalent, with companies using the technology in increasingly creative ways to interact with and entice customers.

Customers are able to check their bank account, buy anything from clothes to groceries and even donate to charity using their mobile devices. Now the focus is on ordering food, with fast food restaurants increasingly embracing the technology to offer customers a quick and easy way to order food while on the move.

The latest offering is from Subway, with the sandwich retailer offering customers an app which allows them to order and pay for food remotely.

Later this year, the brand also plans to add PayPal, a global leader in digital payments, as one of the convenient options customers can use to pay for meals when they order remotely or pay in-store using the SUBWAY App’s mobile payment feature, highlighting the firm’s dedication to making ordering even easier for their customers.

The company’s website order.subway.com also allows customer the luxury of remote ordering, with customers able to choose a restaurant, customize and place their orders then collect them at the location.

Valencia Johnson, restaurant Manager for a branch of the sandwich chain in Los Angeles, said the new app was designed with a clear focus to make customers lives easier.

“Our customers are at the center of everything we do, and we know mobile is playing a key role in all of their lives. The new Subway app makes ordering onthe-go that much easier.”

Fast food chains have been offering order apps for years, making Subway a late joiner to the market. Taco Bell and Domino’s Pizza both launched their highly successful apps last year, with Domino’s recently reporting that the technology was big hit in their core UK market. Chief Executive Officer David Wild stated that app orders now overtook sales from their website.

“We’ve had a strong first half, driven by an excellent performance in our core UK business, which has again recorded double digit like-for-like sales growth. Our international operations have also shown improvements compared to last year.

Our success in the UK is a result of the investment we have made in marketleading e-commerce initiatives. Our App has now been downloaded over 10 million times and our App sales have overtaken desktop sales for the first time.”

Convenience and remote ordering have helped drive this increase in app orders for the pizza chain, with customers also able to order using a voice platform. This innovative technology makes the app even easier to use and offering further time savings to customers whose priority is convenience.

Taco Bell’s offering gives customers the opportunity to view and select ingredients to customize their order, with additional functions including the ability to paying securely and collect the order conveniently through the chain’s drive-thru or in a separate line within the store.

Ease of use is a major contributor to the technology, with Taco Bell keen to emphasise the unique nature of their “Rotate to Reorder” feature which enables customer to reorder customized favorites which have been saved to the app by simply flicking a button.

Brian Niccol, the President of Taco Bell Corp, made it clear that the new app was a sign of a new era in the fast food market.

“Decades ago, your car keys were the ticket to convenience at the drive-thru.

Today as food culture changes and generations grow up with smart phones, our customers seek restaurant experiences that fit their lifestyle. We believe mobile ordering and payment is the biggest innovation since the drive-thru. Our new mobile ordering app is just the beginning of how we’re using technology to break down the walls of our restaurants and become more transparent with our customers about our food.”

Unlike ordering face to face, where customers could potentially be embarrassed by large orders, mobile apps allow remote ordering which entices customers to buy more food without the fear of judgment. The ability to view the entire menu, including additional items, also entices customers to spend more on their order by adding extra products. Customers driving home from work are able to ensure their food is waiting for them at the store when they arrive, limiting the amount of time tired and hungry consumers have to wait.

Convenience is the key to success of mobile food apps, as proved by Taco Bell’s highly popular “Rotate to Reorder” feature. With customers constantly on the lookout for easier methods of ordering food quickly, finding new ways of integrating the technology with their order process must be a priority for fast food firms.

This unusual feature is doubtless influenced by the vast choice customers have when deciding what to have for dinner. Using unique features to encourage return customer has paid off, with Taco Bell’s app a huge success with high download and order rates.

Although many of the larger chains have already embraced mobile app ordering, some are still behind, with McDonald’s rumoured to be testing the means to allow customers to order via their app. Currently the fast food giant has an app, but customers can only find restaurants or view the menu. A new app could encourage customers to return to the former giant of the fast food world, which has recently shown poor results, with the second quarter showing that global comparable sales at McDonald’s have decreases by 0.7%. An engaging app consumers can order from could pull the burger chain back from this and cement their place in the industry.

Despite this high uptake of apps among larger companies, smaller fast food providers are often slower to embrace new technologies which could put them further behind the their competitors. Investing in this technology is crucial to retaining customers and stimulating growth in a competitive market.

August 2015 • CorporateAmerica • 11

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Feature

On the App Mobile apps can be an exciting and innovative marketing tool for companies looking to target their customers through the popular technology.

Two-thirds of American own a smartphone, according to research by Pew Research Center, with the technology now featuring heavily in modern life.

Apps help to integrate the technology with modern life by performing time saving functions such as allowing the transfer of money or data to another person, allowing users to shop on their phones or providing the user with an interactive map of their trip home.

Businesses can capitalize on this by offering function apps to customers, either for free with a fee for use or by making consumers buy the app. By integrating the function with their own products firms can attract customers using the convenience of the app.

An example of this is GoEuro.co.uk’s new app, which simplifies the process of booking international travel. The app offers users the ability to search and book travel by train, coach and air around Europe and can source travel from 33,000 unique destinations and offices the travel services of three apps in one. This eliminates the confusion caused in booking foreign travel through contact with numerous different languages.

Leisure apps are also increasingly being created by businesses to integrate their products or services into apps focused on social media, games or clothes shopping.

Styloko, an online fashion directory service, has recently launched a shopping app, The WantList. Available on iOS, The Wantlist allows users to save products, receive offers and sales alerts and interact with a global community of fashion lovers, integrating with Styloko’s primary services. Retailers connected with the app includes FarFetch, Net-a-Porter, Matches Fashion, Yoox, Bloomingdales and more. This provides customers with a large choice, as well as an easy way to shop for clothes online, as well as promoting the firm’s online services.

However it is important to know the environment before plunging in. Research by ebuyer.com, an online retailer, has mapped out the market making it easier for businesses to find see where to aim an app.

By conducting research using their customers ebuyer established market trends, such as the most popular style of apps. These proved to be functional map apps, with 85% of survey respondents installing them on their phone.

However, the other most popular apps were all leisure orientated, with 71% of participants having games, 67% having music and 65% social media. Although maps were the most popular, the figures for the leisure apps are not far behind, indicating that whilst maps are ultimately the most important to users, they are also highly likely to have recreational apps.

On a daily basis social media is used the most, with 52% stating they used these apps every day, followed by news apps at 48%, and games with 45%. Again the evidence highlights the popularity of recreational apps and apps aimed at informing users.

Phones trump tablets as the most popular way to use apps, with 71% using them on their smartphone compared to just 29% who accessed them on tablets, showcasing the importance of convenience. However, remote use was clearly not 12 • CorporateAmerica • August 2015

as important a factor as 65% of participants told ebuyer that they sued apps at home, indicating that less access to tablet technology rather than a need to use apps on the move was to blame for fewer users accessing apps on tablets.

Android was found to be the most popular operating system with 61% of ebuyer’s customers using it, , followed by Apple’s iOS system with 31%, whilst windows trailed behind with just 7%. Android’s popularity is unsurprising considering that the appeal of apps is focused around both convenience and choice: Google’s mobile OS currently has over 1.3 million apps for its users to choose from.

Half of participant’s in the survey also found themselves hoarding apps, with 50% stating that they had 25 or more stored on their device, illustrating that initial marketing of an app is crucial, as customers are less likely to delete them once they have downloaded them.

25% installed a new app every week, probably owing to the larger storage capacity of modern smartphones, which highlights the need to maintain visibility in app stores once the software has been launched.

With regards to the question of revenue, 72% of the survey’s participants would pay for apps, whereas 28% would never pay for one. Additionally 75% would trust an app with their personal details, offering the scope for businesses to both charge for the initial installation of the app then offer the user additional in app purchases to enhance the experience. 70% would purchase in app products, which are particularly prevalent in game apps where users can often buy tokens to skip difficult levels or increase their game playing time.

Ages is also an important factor, with the ebuyer survey determining that those in the 65-75 age group were 65% more likely to use tablets than smartphones, whilst 91% of 17-24 year olds use smartphones over tablets. Older users were also less likely to pay for their apps, with 45% of 65-75 year old stating they would never pay for apps and 52 % that they would never make an in app purchase. By contrast 71% of 17-24 year olds don’t mind paying for their apps.

This information will enable businesses to assess what the best style of app to use to reach their target audience and to potentially release multiple apps aimed at different segments of their customer base.

Danny Young, Content Manager for ebuyer.com commented on the suprising nature of the results.

“The survey information was rather interesting as It gave us a great insight into who uses apps and how they enjoy interacting with them. The data highlighted a number of different attitudes towards apps which actually took us by surprise.

Whether this was a more relaxed attitude towards trusting personal details and information with 3rd party programs, willingness to pay for apps or the popularity of social media apps across the age ranges.”

Ultimately, apps are an exciting technology which allow businesses to experiment with different ways of interacting with their customers. By examining the market firms will be able to make informed decisions about how to market their app and what style and genre would be best suited to their customers.

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Feature

Has Your BPM Platform Become a White Elephant?

Asks Nigel Warren Many users are disillusioned with their BPM investment. A BPM expert explains why…

BPM Suites promise a more visual approach to developing business applications, an approach that should enable closer collaboration between business stakeholders and IT professionals. But, in reality, they suck.

Don’t believe me? Then take a look at the recruitment pages of BPM companies, such as: “Junior Application Developer – required experience 2-3 years in Java centric application development, experience of J2EE, Oracle, DB2 and SQL”.

These requirements reveal that many BPM Suites are still highly technical products, meaning business stakeholders and IT specialists still struggle to collaborate throughout the process improvement lifecycle. Business departments and even IT Departments end up out-sourcing development on BPM Suites to system integrators. The learning curve is simply too long and too steep to achieve the required expertise in-house.

When development gets deeply technical like this, you inevitably re-open that divide between business stakeholders and developers, and the risk of communication breakdown, late discovery of requirements and scope creep become far more likely.

But worst of all, it’s this reliance on consultants that is a real barrier to agility.

There has to be a specification, a budget and a project plan. You end up with change request log-jams. However much these heavyweight BPM Suites claim to be built for change, the reality for businesses at a commercial level is that it doesn’t quite work out that way.

So what’s the answer?

Low-code Development Platforms are now regularly mentioned in analysts’ reports , that predict dated and IT centric BPM Suites are going to suffer dwindling demand, particularly for fast paced process improvement projects in areas such as customer service and digital innovation. The idea behind Low-Code Development is that you make it easier to achieve ‘software-powered’ business improvement without needing to code i.e. program.

Moreover – thanks to Cloud or private Cloud deployment – a business is not dependent on its IT department to install servers and software before a project can start.

So you now have a choice for how automation gets built. You can talk to your central IT department and see how they can help you. Or you can turn to a low-code development platform and build it yourself. That may sound daunting – but as there’s little or no programming involved, it’s not so difficult. You can learn how to use a low-code platform very quickly.

The need for speed!

Process improvement champions are chiefly attracted to low-code development methods in order to “jump the IT queue”.

With 80% of CIOs complaining that they’re unable to hire and retain sufficient developers with the latest technology skills, lengthening IT queues have become the norm. When process improvement specialists and business leaders are told they’ll have to wait for six months or more for development support from central IT, a more D.I.Y. approach starts to have real appeal!

14 • CorporateAmerica • August 2015

The other reason people are attracted to low-code is lowering the risk of software development.

You don’t associate DIY with lower risk?

This may seem counter-intuitive; how on earth can a DIY approach to software development be less risky than relying on the technical skills of programmers?

Chances are, you or colleagues close to you are already doing this. For example, if you’ve ever set up a blog or a website, then you used an off-the-shelf Cloud solution such as WordPress - because it comes complete with templates, navigation, styles, publishing and revisions all built in. With lots of ready-made wizards to take the strain, you can rapidly create a beautiful and customised blog or website - without learning to write HTML! A Low-code platform (like MATS®, for example) offers all the same kinds of advantage. It’s got a lot of wizards and templates built in that help you create workflows, databases, user interfaces, reports, service level alerts and communications without having to program.

You configure a business solution by filling in forms and selecting options - a kind of ‘drag & drop’ alternative to programming. In itself, that’s not a guarantee of lower risk, but the business practice changes this approach enables can lower risk!

Lean startup - if you’re going to fail, fail faster.

By now the average IT reader is probably ‘throwing a fit’. They’ll be thoroughly unimpressed with the suggestion that line of business managers should start a DIY approach to building business applications. Clearly such people cannot program. And to cap it all I’ve proposed that they should fail quickly. They may think I’m an idiot who should be locked up for my own protection?

But in truth, more and more business solutions are being built this way. Gartner predict around 20 per cent year on year growth of technology spend initiated outside of central IT. And the results are often remarkably fast and successful.

Here’s why…

Test and Learn This is where you create a minimum viable product and then test it with customers. See what they think – what they like; what they want different.

The brilliant thing about this is you can build something basic really quickly – perhaps 20 per cent of what you need. Then, based on user or customer feedback, you get a very much better understanding of what the next 80% looks like.

When you show people something working – what it looks like, how it behaves -you suddenly unlock their ideas and excitement. “Can it do this?” “Can this bit work differently?” “We need this extra field.” “We need this kind of report.”

When you get this kind of feedback early on in a project, it’s not ‘scope creep’, it’s just a more accurate statement of requirements. And this is what reduces the main risk factor in software development – late discovery of requirements because business people and developers have such difficulty eliciting and communicating requirements.

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Feature Should all software projects work this way?

No – I’m advocating Gartner’s so-called ‘Bi-modal’ approach where Mode 1 is a traditional and more cautious approach, and Mode 2, which is more agile and experimental.

With Mode 1 the emphasis is on scalability, stability and accuracy. Clearly that’s the right approach for back office, systems of record, where reliability and accuracy are paramount; and changes are seldom required or can be planned with plenty of notice.

Mode 2 is better suited to “systems of engagement” – the systems and processes required to win, serve and retain customers. Here businesses value agility and speed to deployment over stability and accuracy, because clearly if you have a burning customer experience problem, you need to address the issue fast.

Equally if you’re launching new marketing and sales initiatives, the window of opportunity may be short, even temporary. Clearly in these situations, Mode 2 is the required approach.

Faster “ramp-up” a key benefit for IT Low-code development platforms clearly help make Mode 2 possible – by reducing the ramp up time that is normally associated with traditional development technologies and heavy weight BPM Suites.

Naturally you don’t have to subscribe entirely to the kind of DIY, businessled approach outlined above. Many IT organizations are now adding a Low-Code platform such as MATS® to their software portfolio simply because they can offer faster and more agile projects, with faster ramp-up of developer skills. Lowering the learning curve and training investment that’s required to master more traditional and technical development tools is a huge benefit to IT departments that are struggling to retain increasingly valuable programming staff.

Designing for engagement and emotion Forrester’s Low-code platform expert Clay Richardson provides the following perspective on how test and learn and Low-code development techniques apply in the Age of the Customer.

“The age of the customer means putting the customer at the center of everything you do. That changes the way we think about designing solutions.

Instead of focusing on internal systems we need to think about the emotional impact on a customer. It’s a different way of approaching building systems and solutions, having empathy with the customer and what they’re trying to get done, and designing the system to be as convenient as possible and to deliver delightful experiences.”

So why try to predict how a customer will feel when you can ask them? Just as an optometrist tests their eyeglasses solution with ‘is this better or worse? And how about this?’, Low-code’s test and learn approach lets us experiment to discover how an application makes the customer feel, rather than making our own assumptions of what they will want.

As Emma Chase, author of the New York Times best seller ‘Tangled’, says: “Assume nothing. Even if you think you know everything. Even if you’re sure that you’re right. Get confirmation.”

Author Nigel Warren is Head of Marketing at global Low-code platform developer MatsSoft. com. Nigel has worked in the business process improvement sector for over twenty years with companies including SAP, Nimbus, TIBCO and MatsSoft.

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Feature

P&G Take a

Gamble

Firm undergoes board transformation with appointment of new CEO who is to drive change as the firm announces streamlining of vast brand portfolio.

The company, which owns the world’s largest portfolio of household brands including Ariel and Febreze, has announced that David S. Taylor, currently Group President of Global Beauty, Grooming and Health Care, will succeed A.G. Lafley as Procter & Gamble’s President and Chief Executive Officer, which will come into effect in November of this year.

Mr. Taylor has been appointed to the Company’s Board of Directors. On November 1, 2015, A.G. Lafley will become Procter & Gamble’s Executive Chairman. In this role, Mr. Lafley will lead the Board of Directors, and provide advice and counsel to the CEO and P&G leadership on Company and business strategies, portfolio choices, and organization decisions.

Jim McNerney, lead director of P&G’s Board, said of the new appointment: “We thank A.G. for returning as CEO to lead P&G’s transformation. The Company is now organized into four industry-based sectors with a focused portfolio of 10 categories and 65 brands that play to P&G’s strengths. Productivity results are strong and sustainable. Stronger category business and product innovation plans are in place.

Now is the time to transition to David as CEO, while continuing to benefit from A.G.’s strategic counsel as Executive Chairman.”

Mr. McNerney expressed the Board’s confidence in David Taylor. “David is a proven leader who has the experience and track record of delivering results. He has a broad understanding of P&G’s business, having worked on several categories in multiple regions around the world. He has helped build many of the Company’s most successful brands and businesses.

The Board is confident that David will lead P&G to execute the company’s strategies to win with consumers, and improve shareholder value.”

“I am honored to serve as P&G’s CEO,” said Taylor.

“I believe in the power of P&G people, brands, 16 • CorporateAmerica • August 2015

products and values. P&G is transforming to be a faster-growing, more profitable Company. I am committed to the strategies, and look forward to leading the people of P&G to win with consumers, drive growth and create shareholder value.”

A.G. Lafley served as CEO from 2000 to 2009, and returned to the role from retirement in 2013. Since 2000. Lafley has played a central role in leading P&G to double the Company’s sales and nearly triple its market capitalization, resulting in significant value creation for shareholders. Since 2013, Mr. Lafley has led the P&G team to focus and balance the Company’s goals, strategies, portfolio and structure for improved performance.

“We are leading P&G’s most comprehensive transformation in our history,” said Mr. Lafley.

“We are a more focused and balanced company, committed to winning with consumers and creating value for shareholders. We have strengthened our brand and product innovation pipeline, while streamlining our cost structure. With our plans for portfolio realignment essentially complete, P&G is positioned to deliver improved results. The Board and I are confident that now is the time to transition the CEO role to David who will sharpen the strategies and lead the execution of the next important phase of building a better P&G.” Taylor joined P&G in 1980. He has helped to build many of P&G’s core businesses, including Baby Care, Family Care, Hair Care and Home Care. He has led global businesses, and lived and worked in North America, Europe, and Asia. Most recently, Mr. Taylor served as Group President of Global Beauty, Grooming and Health Care. Prior to that, Mr. Taylor was responsible for Family Care and Home Care, both of which delivered consistent double-digit profit and mid-single-digit sales growth under his leadership. He has worked closely with Lafley on the Company’s recent strategy to strengthen and focus P&G’s business and brand portfolio.

This streamlining of the business is a key aspect to the firm’s transformation, with the company announcing in July that they has agreed to merge 43 of their beauty brands with Coty Inc. The brands involved in the transaction include the firm’s global salon professional hair care and color, retail hair color, cosmetics and fine fragrance businesses, along with select hair styling brands.

Lafley made it clear in his statement on the transaction that this marked a key step towards the firm focusing its attention on select markets.

“This represents a significant step forward in the work to focus our portfolio on 10 categories and 65 brands that best leverage P&G’s core competencies.

We have leading global brand positions in these categories, consumer preferred products and leading brands in the largest markets. These businesses and brands have historically grown faster and have been more profitable than the balance. We expect these ten categories to grow and create value as we focus the energy and resources of the company exclusively on them.”

“The merger with Coty, a strategic acquirer, will provide an excellent new home for these businesses and brands, as well as for the talented people who are operating them. We look forward to a successful transition and we will work together to maximize value for the shareholders of both companies” he added.

Ultimately P&G’s new strategy is a gamble on the strongest market, with the firm having to decide which brands will make them the most money.

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Feature

Up in a Puff

of Smoke

18 • CorporateAmerica • August 2015

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Feature Despite strong competition and raised consumer awareness on the ill effects of smoking Reynolds American, the parent company of numerous cigarette firms, announced good financial results following recent acquisition of Lorillard, Inc. The firm which is the parent company of Camel and Pall Mall manufacturer R.J. Reynolds, reported second quarter adjusted EPS of $1.02 (excluding transaction costs related to the acquisition of Lorillard) up 14.6% on last year’s second quarter results. The firm believes that sales have benefitting from higher cigarette and moist-snuff pricing.

Reynolds also announced board approval for a dividend increase of 7.5%, as well as a two-for-one stock split which will allow the firm to increase the number of shares available on the stock market.

The firm’s second quarter adjusted operating income increased 19.2% from the prior-year quarter, to $832 million, benefitting from higher cigarette pricing and the completion of the federal tobacco quota buyout. Also known as the Tobacco Transition Payment Program, the US government funded scheme was an extension of a program which began in 2004, with tobacco farmers able to sign up to receive subsidies to supplement their income following the loss of the quota system and help farmers adapt to the free market. The scheme was extended until 2014 when it finished, which now means that growers have less power to set prices in the market.

Overall the company’s first half adjusted operating income came to $1.5 billion, up 17.9% from this time last year. This led to an increase in the company’s adjusted operating margin for the quarter of 4.2 percentage points from the prior-year quarter, to 44.4%, bringing first-half adjusted operating margin to 42.4%, up 4.4 percentage points.

Andrew D. Gilchrist, RAI’s Chief Financial Officer, commented on the financial results and made it clear that the firm’s acquisition of Lorillard had significantly impacted on the results.

“Following RAI’s successful bond offering related to the Lorillard acquisition, the company’s initial focus will be on deleveraging, while continuing to return exceptional value to shareholders.”

“In addition, our full-year adjusted EPS guidance has been increased to a range of $1.90 to $2.00 on a split-adjusted basis, up from a prior split-adjusted range of $1.83 to $1.90. We expect to narrow this 2015 guidance range with the reporting of our third-quarter results after further assessing our new business dynamics following the acquisition” he added.

R.J Reynolds, the firm’s main subsidiary is also doing well, with its second cigarette shipments were up 4.4% from the previous year quarter, benefitting from the addition of the Newport brand in June, following the Lorillard acquisition.

RJR Tobacco’s retail market share is reflected on a pro-forma basis for the company’s new brand portfolio following the Lorillard acquisition and divestiture to ITG Brands, LLC (ITG). RJR Tobacco’s total second-quarter cigarette retail market share was down 0.1 percentage point from the prior-year quarter, at 31.8%.

The addition of the Newport cigarette brand, a popular menthol cigarette brand, contributed to strong overall marketplace performance of RJR Tobacco’s growth brands in the second quarter. The combined retail market share of Newport, Camel and Pall Mall increased 0.2 percentage points from the prior-year quarter, to 29.2%. These brands now make up about 92% of RJR Tobacco’s total cigarette retail market share.

Camel, one of RJR Tobacco’s signature brands, also had a strong second quarter.

Camel’s cigarette retail market share was in line with the prior year quarter at 8.2 percent. The brand continues to benefit from its menthol styles, which utilize capsule technology, with menthol styles accounting for 3.5 points of retail market share in the quarter.

Pall Mall, RJR Tobacco’s value brand, did not see the same success, with its retail market share down 0.3 percentage points from the prior-year quarter, at

7.8%, which the company states is because: “the company continues to balance share and profitability for the brand”.

However, the impact of this is lessened by the firm’s overall hold of the market, which remains vast, with the company owning a large number of brands and subsidiaries which allows them to spread the risk across the tobacco market.

Another of their subsidiaries is the American Snuff Company, which offers a range of smokeless tobacco products. They also benefited from the loss of the quota buyout, with a 17.9% increase in operating profit to $130 million.

American Snuff’s flagship brand, Grizzly, performed very well in a highly competitive environment. The brand increased second-quarter retail market share by 1.3 percentage points from the prior-year quarter, to 31.1%, on volume growth of 7.1%. Grizzly further strengthened its position in the rapidly growing pouch segment, and now represents about 45% of the total category pouch styles.

Reynolds American also operates in the natural tobacco market through their subsidiary Santa Fe, which produces a number of natural, rolling tobacco products. Santa Fe was among the best performers in the results, growing their second quarter operating income by 48.9% from the prior-year quarter, to $125 million, driven by higher pricing and strong volume growth. For the first half, the company’s operating income increased 45.8 percent from the prior-year period, to $217 million.

Santa Fe’s second-quarter operating margin increased 7.6 percentage points from the prior-year quarter, to 57.2%, with first-half operating margin rising 6.7 percentage points, to 55.7%.

Natural American Spirit, the nation’s top-selling super-premium brand, increased second-quarter retail market share by 0.3 percentage points from the prior-year quarter, to 1.8%, on volume growth of 25.1%.

This growth is exceptional considering the growth in less traditional areas of the smoking industry, such as the increasing popularity of unconventional tobacco products such as e-cigarettes and vaporisers, as well as the increasing health campaigns which have led to consumers reducing their consumption of cigarettes for health reasons.

One of Reynold American’s biggest competitors, Altria Group, which owns a number of subsidiaries which rival Reynolds’ such as John Middleton, a top cigar firm and Philip Morris USA which owns popular brands including Benson & Hedges and Marlboro, has recently announced that they are involved in a project to develop e-vapor products for sale in the US in order to keep up with the growing demand.

This increased demand for alternative smoking products could lead to Reynolds American branching out, but for now the firm has a positive financial outlook and a strong market share, illustrating that despite strong competition and increased consumer awareness US customers continue to purchase their product.

A rise in Government legislation designed to reduce the number of smoking related illnesses by discouraging customers from smoking has also impacted on the industry. The FDA has launched public health campaigns across the US to discourage smoking and introduced the nationwide Family Smoking Prevention and Tobacco Control Act, which restricts the tobacco industry by, among other things, prohibiting the tobacco industry from introducing new products without oversight. This has introduced a new era in the industry where tobacco products are subject to public health-based regulation.

Despite these new restrictions, Reynolds has proved resilient, thanks to their vast portfolio of products. However, the future looks insecure for the company, with increasing pressure on tobacco companies and legislation constantly being created to control the industry and encourage consumers to limit or stop their consumption of the product, Reynolds may find further diversification is the only option.

August 2015 • CorporateAmerica • 19

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Feature

New Era for Disney Disney unveils detailed look at Shanghai Disneyland, the firm’s first theme Park in mainland China, following key merchandising changes designed to keep firm in line with ever changing children’s entertainment market.

The Walt Disney Company has unveiled key creative elements of Shanghai Disneyland, including its six themed lands filled with world-class attractions and live entertainment spectaculars, many of which are firsts for a Disney theme park.

This venture comes not long after the company announced that they would be merging two of their departments in order to move more into the interactive merchandise sector in order to keep ahead in an increasingly technology driven market.

The new theme park is a joint venture of Disney and its partner Shanghai Shendi Group. Shanghai Disneyland is designed to appeal to Chinese guests, using the best of Disney and delivering it in a way that is created especially for this audience. The new venture will extend the 60 year legacy of Disney Parks around the globe.

There will also be a Shanghai Disneyland Hotel is an elegant Art Nouveau-inspired resort with a touch of Disney magic and imagination, while the Toy Story Hotel immerses guests in a world inspired by the toys from the Disney- Pixar series of Toy Story animated films.

Disney Chairman and CEO Bob Iger revealed a scale model of the world-class theme park and displays showcasing key highlights of unique attractions, entertainment, dining and hotels at a presentation held today at the Shanghai Expo Centre.

‘We are building something truly special here in Shanghai that not only showcases the best of Disney’s storytelling but also celebrates and incorporates China’s incredibly rich heritage to create a one-of-a-kind destination that will delight and entertain the people of China for generations to come.’

‘We are taking everything we’ve learned from our six decades of exceeding expectations – along with our relentless innovation and famous creativity to create a truly magical place that is both authentically Disney and distinctly Chinese’ he added.

Since breaking ground in 2011, Disney and Shanghai Shendi Group announced that they were expanding the park by adding additional attractions and entertainment to allow more guests to have a spectacular Disney experience at the Grand Opening which is due to occur in spring of 2016.

The new park will also include the ‘most interactive castle at any Disney theme park’, the Enchanted Storybook Castle which will also be the tallest, largest and most interactive castle at any Disney theme park as well as the first castle in a Disney 20 • CorporateAmerica • August 2015

theme park that represents all the Disney princesses.

This news comes after an announcement at the end of June that the firm would be merging two of its divisions, Disney Consumer Products and Disney Interactive.

The firm will entwine the two sections names to create Disney Consumer Products and Interactive Media, which will be run jointly by Leslie Ferraro, Co-Chair, Disney Consumer Products and Interactive Media and President, Disney Consumer Products and Jimmy Pitaro, Co-Chair, Disney Consumer Products and Interactive Media and President, Disney Interactive.

The new structure is designed to share technological expertise and maximize opportunities and efficiencies across two divisions that have increasingly become focused on similar objectives of delivering cutting-edge, interactive consumer experiences and products. In addition, the change will more effectively leverage Disney’s extensive licensing structure and retail relationships across both segments. In addition the combining of the two departments will allow Disney to compete in a market which is increasingly becoming dependant on technology.

The move comes following poor third quarter results for the interactive department, with Disney reporting a drop year on year in interactive revenue from $ 266 million 2014 down to $ 208 million over the same period in 2015, highlighting that the section is not adapting fast enough to changing consumer tastes.

Jimmy Pitaro who will be jointly running the new section, highlighted the firm’s new emphasis on combining their products and technology to attract a new generation of cyber-savvy children.

‘We are looking forward to leveraging Disney Interactive’s digital, technological and mobile expertise to explore the unlimited possibilities that this partnership represents.’

Piatro’s colleague who will be running the newly merged department alongside him, Leslie Ferraro, echoed his sentiments.

‘The timing of this announcement could not be better, with both divisions seeing great success in the marketplace with technology-driven initiatives alongside our more traditional lines of business.’

A new team called DCPI Labs will focus on using cutting edge technologies to create new immersive products. DCPI Labs will report directly to Ms. Ferraro and Mr. Pitaro.

Disney Publishing Worldwide, a leading publisher of children’s books that has increasingly blended technology with storytelling to create interactive story-based digital experiences, will also report jointly to Ms. Ferraro and Mr. Pitaro.

Disney’s traditional consumer products portfolio which includes product development, licensing, and retail relationship management, will continue under Ms. Ferraro’s leadership. Mr. Pitaro will continue to manage social and mobile games, Asia games, online media and sales, and Disney Infinity.

Tom Staggs, Chief Operating Officer, The Walt Disney Company, commented on the changing market and the need for Disney to continually evolve to meet customer’s needs.

‘Both Disney Interactive and Disney Consumer Products have a strong track record of connecting people to their favorite stories and characters. As technology and digital entertainment continue to evolve, a shared innovation strategy will enable this new segment to create unique and engaging products and experiences that exceed consumers’ expectations.’

Asia, as an emerging market, is key to Disney’s strategy, with the firm also teaming with Japanese clothing brand UNIQLO to create ‘MAGIC FOR ALL’, an interactive marketing campaign featuring clothing branded with Pixar, Star Wars, Marvel and Disney imagery as well as innovative new products, pop-up displays, and in-store and online customer experiences.

Star Wars is among Disney’s latest acquisitions, with the firm acquiring Lucas Film in 2012. The move from children’s animated movies into adult fantasy shows a need to diversify into new markets.

The firm’s major competitors in the film industry, including Twentieth Century Fox and Time Warner, have been making a range of films and TV shows aimed at different audiences for many years, whereas Disney has diversified around the same age group to encompass merchandise and theme parks. However, with their target market becoming increasingly adult in tastes thanks to exposure to social medias Disney has had to expand into other film genres aimed at older audiences.

These developments illustrate Disney’s drive to move forward with the market, which has become increasingly interactive as the firm’s target audience, young children, are exposed to more and more technology. Increasingly expensive gifts are also driving the market further towards interactive toys and products based on apps and website content.

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Feature

EU Could Blow TNT Takeover

Out of the Water

Investigation by European Commission into proposed acquisition by FedEx could potentially quash deal which was set to create industry leading global delivery service.

The in-depth investigation centers on a potential breech of the EU Merger Regulation and whether the takeover would offer significant competition for the only two remaining players in the market, DHL, owned

by Deutsche Post, and UPS, a US-based company.

or beyond and on whether the timing of the delivery is express or ‘deferred’. This offers potential for the Commission to break up the European subsidiaries of the existing companies to create smaller firms and open the market up to further competition.

FedEx could use the takeover, if it goes ahead, to increase their global market share in the small package delivery sector by taking over both TNT’s existing customers and using their global influence and their own US based customers, who could move from other delivery firms to use TNT Express if it merges with FedEx. The US based firm already has a small European reach but acquiring TNT would secure FedEx as a contender among the big European delivery companies.

The contentious deal is also being reviewed by other antitrust agencies, including the Ministry of Commerce (MOFCOM) in China and Conselho Administrativo de Defesa Econômica (CADE) in Brazil, according to FexEx.

A strong dollar means FedEx would be getting a good deal if the transactions does go ahead, with the deal currently valued at $4.8 billion or €8.00 for each TNT Express ordinary share on a fully diluted basis.

The Dutch delivery company would be a useful addition to FedEx’s portfolio, with their second quarter results showing strong growth, with revenue growth at 6.2% and adjusted operating income of €41 million including Outlook-related transition costs.

However, the EU Commission, which must approve the deal before it goes ahead, are sceptical that the deal will benefit customers and other businesses operating in the industry. Commissioner Margrethe Vestager, in charge of competition policy, commented on the importance of the investigation.

“Many businesses, and in particular e-commerce, rely heavily on affordable and reliable small package delivery services, and many consumers depend on these services to ensure rapid and safe delivery of goods they have bought. The Commission must therefore make sure that FedEx’s takeover of TNT would not impede effective competition and would not lead to higher prices for consumers.”

There are implications for the wider industry, with the Commission’s initial findings suggesting that small package delivery services can be divided into several segments, depending notably on whether the destination is in the European Economic Area (EEA) 22 • CorporateAmerica • August 2015

David Binks the President of FedEx Express in Europe, was optimistic that the deal would still go ahead.

“We will continue to work together with TNT Express to meet the European Commission’s need for additional due diligence and are confident that the combination of both companies will increase competition and create benefits for customers. “We continue to make progress on all of the necessary regulatory steps around the world that would allow us to complete this transaction in the first half of 2016 and unite two great teams that share a passion for customer service.”

TNT were keen to state that they were eager for the deal to go ahead and stated that it would provide benefits for both shareholders and customers.

“Once approved, the joining of FedEx and TNT will create benefits for all stakeholders. It is intended to provide customers access to a considerably enhanced, integrated global network, combining TNT’s strong European capabilities and FedEx’s strength in other regions globally, including North America and Asia.

TNT’s customers would also benefit from access to the FedEx portfolio of solutions, including global air express, freight forwarding, contract logistics and surface transportation capabilities.”

However, the investigation could potentially scupper the deal, which cannot go through without the Commission’s approval. A proposed takeover of TNT

by UPS was blocked by the commission in 2013 over concerns about competition. The deal would have left customers with insufficient choice and increased prices for services according to Joaquín Almunia, who was in charge of competition policy at the time.

“Many businesses active in the EU Single Market need to send small packages to another European country with guaranteed delivery on the next day.

This requires access to affordable, reliable services that truly fit their needs. These businesses would have been directly harmed by the takeover of TNT

by UPS because it would have drastically reduced choice between providers and probably led to price increases. We worked hard with UPS on possible remedies until very late in the procedure, but what they offered was simply not enough to address the serious competition problems we identified”.

In the case of the UPS takeover, the Commission found that the possible benefits of the merger, i.e. any cost-savings passed on to customers as a result of the combination of UPS and TNT’s air networks, would not have been sufficient to outweigh the negative effects on competition. Since FedEx have offered a similar argument in favour of their takeover bid for TNT, which is a market leader in European small package deliveries, the deal could potentially collapse in the same way the UPS one did.

The cost of delivery in Europe can be a major issue to global e-commerce firms, with price discrepancies across the continent leaving firms with little choice but to pay high costs to ship products to customers.

FedEx customers in the US could potentially see this cost reduced if the merger with TNT goes ahead, but, with the deal so similar to UPS’s failed attempt two years ago, approval from the EU Commission looks highly doubtful.

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The Power of

Consumer

Rage

Nike and Apple back down over claims the Nike+ FuelBand, a fitness tool used to track performance, were not properly functional, despite the claims not being proved, highlighting the immense force of customer opinion.

The class action lawsuit refers to the claims that the firms violated consumer protection laws with regards to the Nike+ FuelBand by giving false and/ or misleading statements regarding the Nike+ FuelBand’s ability to accurately track calories, steps, and NikeFuel, a measurement of progress invented for the product. The statement adds that there were breaches of the warranty terms of the Nike+ FuelBand although these are not specified.

This outcome highlights the power of the consumer, with the pressure placed on the firm being the sole reason for the pay-outs. There is currently no evidence that the bands were not functional and as the court has not decided in favour of either party, the sportswear giant could have stood its ground and refused to compensate. With little evidence being cited by the website, the court would probably have found itself in favor of the firm.

A statement made on the website nikefuelbandsettlement.com says that Nike and Apple deny the claims in the lawsuit and maintain that they did nothing wrong or illegal and the Court has not decided which side is right.

The rise of the internet has led to increasing customer power, with consumers often venting their feelings on social network sites such as Twitter, Facebook and Instagram leading to firms backing down.

However, despite this customers will still be compensated, with Nike due to provide a $15 payment or $25 gift card redeemable at Nike-owned stores in the U.S. and Puerto Rico, and online at Nike.com, for each Nike+ FuelBand purchased by members of the Settlement Class during the class period for which a valid claim is timely submitted. Each class member who timely submits a valid claim may choose between the monetary payment and the gift card.

Although often these consumer issues can be minor, product related problems, they can even extend to boardroom decisions, such as the recent backlash against reddit CEO Ellen Pao, who eventually resigned from the link based social network site following a colossal backlash to her management style which even led to death threats. Although reddit offered a supportive statement following Pao’s exit it was clear that the consumer disapproval was a large aspect of her leaving.

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Bloomua / Shutterstock.com

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Feature Her resignation came following an early apology in which Pao addressed the numerous comments made by the platform’s users about her poor decision making.

“We screwed up. Not just on July 2, but also over the past several years. We haven’t communicated well, and we have surprised moderators and the community with big changes. We have apologized and made promises to you, the moderators and the community, over many years, but time and again, we haven’t delivered on them. When you’ve had feedback or requests, we haven’t always been responsive. The mods and the community have lost trust in me and in us, the administrators of reddit. Today, we acknowledge this long history of mistakes.”

The mention of July 2nd refers to the sacking of the firm’s popular employee Victoria Taylor, who headed the Ask Me Anything section of the website. The controversial firing led to reddit users shutting down sections of the site in protest, as users often volunteer to monitor parts of the website.

The user interference in such an internal corporate issue showcases the power customers now have over companies, with the internet providing them with a global soap box from which to shout their grievances.

Companies have found themselves forced to engage in online social media debates with customers, and often apologizing as a result of problems. A key example of this is mobile phone networks, whose every outage is often reported on social media networks by outrages customers, forcing firms to acknowledge the problems and often apologies for the problem.

Customers also regularly complain over poor customer service, leading to companies apologising for incidents which cannot be proved for example a staff member being rude to them or discriminating against them, leading to firm’s being forced to apologise for fear of having their reputations ruined.

Overall, companies need to preserve their reputations by ensuring customers remain happy, whilst being diplomatic in order to not openly admit wrongdoing, especially if it cannot be proved. Firms must use their marketing to appeal to customers to limit the potential damage, by ensuring customers are aware of a business’s ethics as part of their marketing campaign.

When damage does occur companies must try to limit its effects, whether by proving or disproving the claims or by apologizing even if they are not at fault, as any denial or lack of contrition could be viewed by consumers as arrogant.

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Best (and Worst) Ways Companies have Used Social Media Social Media can be a key tool to interact with customers. Or it can be a firm’s downfall and the path to ridicule.

Do not use stock responses, as these can seem impersonal and make customers distrust the company.

Another key tip is to respond to posts, even if they are uncomfortable. Smucker’s, the jam and preserves firm, has been accused by GMO Inside, an organisation which increases awareness on Genetically Modified Foods, of deleting Facebook posts which reference the firm’s GMO policy. Deleting posts on a certain topic or which paint the firm in a bad light can impact negatively and suggest censorship.

Laurin Rinder / Shutterstock.com

A top tip for successful Twitter use is to avoid company themed hastags, where the # symbol is used to allow customers to write something around a certain topic linked to the firm’s account. An example of this is the British supermarket chain Waitrose, which launched the “#WaitroseReasons” in 2012, which allowed customers to explain why they liked shopping in the upmarket food retailers.

The discussion quickly descended into rampant mocking of the chain.

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And finally, the best way to handle social media complaints is to prove to users you are dedicated, responsive and interested. A good example of this would be Nike’s separate account dedicated to handling customer complaints: Nike Support. Despite their denials and eventual backing down in the case of the Nike+ FuelBand issue, the firm has a good strategy with its support Twitter account, which is separate to their promotional account and offers personalized support to customers.

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Food Revolution American fast food industry embraces Chipotle as the Mexican chain reports impressive second quarter figures and launches new marketing campaign.

The restaurant chain has reported good second quarter financial results, with revenue increasing by 14.1% to $1.2 billion and comparable restaurant sales increased by 4.3%.

These results followed equally high results in the first quarter of this year, during which revenue rose by 20.4% to $1.09 billion and comparable restaurant sales climbed by 10.4%.

Chipotle’s net income was $140.2 million, an increase of 27.1% and the chain’s diluted earnings per share was $4.45, an increase of 27.1%.

Overall Chipotle has opened almost 100 new restaurants this year alone, highlighting the firm’s strong focus on growth. These new ventures were a key factor in the company’s revenue growth, and they bring the total number of restaurants the firm operates to 1,878.

The firm’s success is partly owing to their new approach to fast food. The market in the US is currently saturated with burger joints and restaurants which serve fried food, usually products such as chips and steaks. Chipotle offers customers a diverse menu of fresher foods including burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. This has helped solidify the firm’s place in the competitive fast food industry.

Steve Ells, founder, Chairman and co-CEO of Chipotle, highlighted this whilst discussing the firm’s financial results.

‘We feel good about our second quarter results, as our revenue, average restaurant sales, and comparable restaurant sales have continued to grow even comparing to a very strong 2014. The strength of our business is the product of our unique food culture and unique people culture, and we constantly find ways to improve, and overcome challenges we encounter – whether that means non-GMO ingredients, adding new pork suppliers to ensure food with integrity, or reinventing the way tortillas are made at scale. Our relentless focus on the key drivers of our business allows us to continue to change the way people think about and eat fast food.’

Monty Moran, Ells’s co-CEO, indicated that employee culture also helped the business to achieve the results.

‘We consistently deliver this strong performance because of our amazing people culture, consisting of teams of top-performing employees who are empowered to achieve high standards. We are completely focused on strengthening this culture, by teaching people how to empower those around them to be at their best and developing leadership internally, and by making further investments in our teams, most recently by adding benefits for our hourly employees, including increased paid vacation and sick days and tuition reimbursement. Today, we have developed more top performing managers and crews than ever before, and our field leadership knows that their success arises only when they completely devote themselves to the betterment of the people around them.’

The emphasis of the new campaign is firmly rooted towards differentiating Chipotle from their competitors. Customers will be able to play The “Friend or Faux” game, where consumers must choose a Chipotle menu item and one of a number of fast food menu items, and then compare and match 20 ingredients, identifying which menu item contains each ingredient, the Chipotle item, the fast food item, or both. The menu items will include a variety of Chipotle’s burritos, bowls, tacos and salads, as well as items such as burgers, burritos, tacos, sandwiches, salads, and pizzas available from a number of common fast food brands.

In addition to this a “study guide,” where users can learn about the ingredients, showcasing the range of fresh, whole options found in Chipotle’s menu compared to that of other fast food restaurants, will also be available.

To encourage customers to play the game and join in the marketing initive Chipotle will be offering users who complete the ingredient comparison experience a special buy-one-get-one-free mobile offer, as well as an entry into a national sweepstakes. The national sweepstakes will award 50 grand prize winners with one year of “Free Burritos for You and a Friend” and 100 first prize winners with a “Catering Party for 20” where available. Users who share the “Friend or Faux” website on their Facebook and Twitter pages will receive a bonus sweeps entry.

The game will be optimized for mobile and desktop use, and will be accessible by the firm’s website and the campaign will be supported by extensive online advertising.

The new advertising campaign was designed specifically to showcase the firm’s ethos of better quality ingredients, explained Mark Crumpacker, Chipotle’s Chief Creative and Development Officer.

‘There’s been a lot of talk recently about fast food companies removing artificial ingredients from their food, but most of these announcements cover only a portion of the thousands of additives used in processed foods. Through ‘Friend or Faux,’ we are giving consumers an entertaining way to contrast the collective beauty of Chipotle’s food with the complex ingredient lists that make up many fast food and packaged food items. By engaging people in a way that makes them more curious about what they are eating, we hope they will better understand the options that are available to them.’

The new campaign could drive growth for the firm and add further improvement to their already impressive financial results. The company has broken into the US fast food market and is there to stay.

These results comes just days after the company announced a new integrated marketing campaign and interactive digital experience that invites consumers to learn about the differences between Chipotle’s ingredients and those commonly used to make fast food.

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Arby’s Bargy Arby’s, the fast food chain, which specialises in sandwiches, burgers and other meals rich in meat, has responded to vegetarian customers in a tongue-in-cheek open letter following announcements of good financial results thanks to remodelled restaurants and a strong growth strategy.

The firm used the letter as an advertisement, by including several mentions of their ‘We Have The Meats’ slogan, or variations of this. It begins with a message of support to customers who choose not to eat meat. ‘We respect you. We respect your life decisions. With that in mind, we want it to be abundantly clear that this letter is not meant to sway or convert you. We’re sharing this to offer our support.’

The communication, which was shared via a press release, comes hot on the heels of positive financial results for the restaurant chain. Arby’s, the first nationally franchised sandwich restaurant brand in America which now operates over 3,300 restaurants worldwide, posted strong first quarter financial results, with 9.8% year on year growth in their same‐store sales. This growth was driven primarily by an increase in transactions combined with the company shifting their product selection towards serving more premium products on the menu.

The company used the financial results to reinforce their plans to surpass $4 billion in system wide total sales by the end of 2018. The goal represents a nearly 25% increase in system sales for the firm, through a combination of average unit sales growth and new unit development. In 2014, system‐wide sales totalled an impressive $3.26 billion for Arby’s.

Arby’s first quarter results were only the beginning, indicated the company’s CEO Paul Brown, with the firm’s focus clearly on marketing their meat products.

‘We are off to a great start in 2015, continuing our momentum from last year.

We have a compelling vision for the Arby’s® brand and a clear system wide business strategy in place. These results validate our efforts to be the preferred destination for top-quality meats along with a Fast Crafted™ service experience that truly resonates with our guests.’

Arby’s is looking to build new restaurants as well as is remodelling existing restaurants across the system to a specification they call ‘the Inspire design’. To date the chain has remodelled nearly 40 restaurants and expects to remodel 180 in total by the end of this year. The company states that evidence shows that remodelled restaurants have increased sales of 15% or more, although in some cases this can be as much as 20% or more.

This experience was resonating with some guests in the wrong way, as Vegetarians have clearly been vocal about the firm’s provocative slogan, with the open letter attesting to various communications from non-meat eaters. The open letter states: ‘It is understandable that you disapprove of our meat-bravado. Your voices have been heard. Letters, emails, voicemails, Tweets and Facebook comments - we hear you. We love our meats, but realize they’re not for everyone.’

The communication then pitches a product to vegetarians, albeit a surprising one. ‘Then on Sunday, June 28, we launched a meat innovation that has likely tempted you: Brown Sugar Bacon. It’s our pepper bacon, glazed in-restaurant with brown sugar and then cooked to perfection. It may be hard to resist…even for you. Hardcore vegetarians likely won’t budge, but for those of you who are on the fringe or new to the game, avoidance can’t be easy.’

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Arby’s used colloquial language, with terms such as ‘we hear you’ and variations of this used throughout the text. The collective term ‘we’ proliferate the letter, offering a supportive tone to an advertisement whose primary aim is to sell them bacon.

The letter later advises vegetarian customers to contact their ‘Vegetarian Support Hotline’, with an online link which takes the user to a section of Arby’s website where the hotline details are housed. The jovially worded letter offered support to customers who could not cope with the temptation to eat the meat products.

‘We, at Arby’s, have created this temptation. So, we’d like to help. We’re giving you a number to call: 1-855-MEAT-HLP. This is a Vegetarian Support Hotline.

When your nose betrays you and alerts the rest of your senses to find and devour this sweet meat, please call 1-855-MEAT-HLP. You will receive the support you need to resist this gateway meat and get tips on how to avoid temptation.

Delicious. Sizzling. Temptation. Be strong. We’re here for you.’

The open letter, which could be viewed as a crude and childish attempt to advertise their products and cause a fuss, has certainly worked, with the communication being widely reported and vegetarians responding to the letter on blogs or magazine articles. With impressive financial results and a strong growth strategy it is fair to say that this letter will not be the last America hears from Arby’s.

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