Mon, Aug 08, 2005 - Page 11 News List

Hello Kitty craze a tough act to follow

COLLECTIBLES After sales shot up as high as 36 percent, President Chain Store is looking for a way it can build on the consumer loyalty gathered from a successful strategy

By Jackie Lin  /  STAFF REPORTER

A young woman poses for a photograph with a number of her Hello Kitty magnets, a President Chain marketing strategy that has become a popular hobby in Taiwan.

PHOTO: LU CHUN-WEI, TAIPEI TIMES

After a marketing campaign of collectible Hello Kitty magnets became an immensely popular hobby in Taiwan, President Chain Store Corp (統一超商), which runs the nation's largest convenience store chain, 7-Eleven, is now finding itself in a complex situation.

On one hand, all the efforts in the campaign were paid off as the chain saw record-high monthly sales in both May and June. But because this strategy proved so effective, President Chain is striving to come up with more powerful ploys to top the Hello Kitty idea.

In late April, President Chain started a three-month-long marketing tactic featuring the Japanese cartoon icon Hello Kitty. President Chain invested NT$200 million (US$6.3 million) which had proven to be an amazing catalyst to stagnant sales in Singapore and Hong Kong, where the campaign was first introduced.

The campaign will officially come to an end tomorrow, although some outlets have already run out of the three-dimensional magnets.

Fueled by this campaign, President Chain's sales totaled NT$8.43 billion in May, up 22 percent from NT$6.93 billion a year ago, and the figure continued to soar by 36 percent in June to NT$9.39 billion. Last month's revenues are yet to be made public.

Accordingly, the company's average share price also climbed from NT$58.18 in May, to NT$61.84 in June and further to NT$62.35 last month on the local bourse.

In what it claimed to be the most expensive and comprehensive marketing strategy in the nation's convenience store history, 41 different patterns of Hello Kitty magnets, together with coupons, were given away to consumers who spent over NT$77 each visit to its 3,800-strong outlets nationwide.

The aim was to push up the average spending per transaction from the original NT$62.

During this period, more than 100 million magnets were handed out and only 8 percent of the coupons were used, according to Lillian Lin (林立莉), a public relations manager at the company. In the last month, magnet boards were sometimes in short supply as the chain did not expect such an enthusiastic response.

Limited effect

This is very different from convenience store chains' usual marketing activity, of giving discounts to the second same-item purchased, which can only exert a limited effect, analysts said.

"Convenience store chains cannot lure consumers simply by waging a price war. It requires creativity in both product mix and services," said Jeff Lai (賴建都), a professor of advertising at National Chengchi University.

The company's strategy has propelled other chains to follow up with similar ideas, but the effects varied and analysts estimated that President Chain's revenue might fall back to its previous level without the stimulus of the marketing program.

Taiwan FamilyMart Co (全家便利商店), the No. 2 player, saw its June sales decline by 3.12 percent year-on-year to NT$2.3 billion. It then followed in late June to give away self-designed lottery tickets and offer cash prizes for purchases reaching the NT$66 mark.

At the same time, it was rumored that Taiwan FamilyMart planned to use another famous cartoon figure, Doraemon, to compete with President Chain's Hello Kitty campaign.

But FamilyMart refuted this rumor, stressing that their lotto program has helped July sales rise by more than 10 percent from the June figure, said Esther Lin (林翠娟), a public relations manager at the firm.

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