Coca Cola Blak

I'd Buy That For A Dollar: Bain To Exit Canadian Discounter

Dollarama Inc.’s foray into the luxurious C$2 bracket for some of its batteries, potato chips and other items didn’t slow the chain down – the move seems more Nintendo 3DS than Coca-Cola Blak. Bain Capital is exiting its stake in the Canadian discount store, which said in June that it would pay its first quarterly dividend and announced double-digit sales and earnings increases.

Bain bought 80% of Dollarama in 2004, investing C$374 million in the C$1.02 billion deal. The 667-store chain went public in late 2009, shortly after a gloomy era for many buyout-backed retailers. Shares were trading at C$32.50 Tuesday afternoon, compared with an IPO price of C$17.50.

Dollarama said Bain will sell its remaining 9.16 million shares for C$32.50 each in a block trade to an unnamed financial institution. The Montreal company has roughly 75.5 million outstanding diluted shares.

Bain, whose retail holdings include Guitar Center Inc. and Burlington Coat Factory Warehouse Corp., didn’t offer stock in the main part of the IPO, but sold some when the overallotment option was exercised, and began unloading shares in secondary offerings early last year. 

“Consumers all across Canada continue to discover Dollarama’s compelling merchandise offering,” the company said in June when it reported results for the quarter ending May 1. Dollarama said its “healthy balance sheet and strong free cash flow generation provide us with financing capacity and flexibility to continue pursuing our growth strategy” and repaying debt.

During the quarter, comparable-store sales rose 3.4%, as sales rose to C$346.3 million from C$311.9 million a year earlier and net income increased to C$30.4 million from C$22.5 million.

Some Laws Should be Followed | OSKOUI+OSKOUI Blog

A number of new products are introduced every year and 95% of new products introduced fail according to Cincinnati research agency AcuPoll. Established brands in the market often time introduce a new product outside of their category and it can hurt them. Sometimes timing is the problem, sometimes quality is the problem, but I’m going to discuss the companies that veer too far away from their expertise and stretch their brand too far so that it doesn’t fit with their brand image. I’ve recently been reading “The 22 Immutable Laws of Branding,” written by Al and Laura Ries, and have discovered many useful marketing tactics for brands to follow. The law of expansion explains that to build a strong brand in the minds of consumers, it is important to contract a brand and not expand it. The law of contraction states that narrowing your product and category focus is key to dominating a category market. Also the law of extensions explains that the easiest way to destroy a brand is to put its name on everything. These laws are important to build and maintain a strong brand in the market place. Below are cases that have broken these laws.

Misses Chevrolet is a brand that looked at their short term needs and didn’t narrow their focus. Chevrolet has an abundance of car models which makes it difficult for consumer to assign a brand name to each product. Chevrolet has individual brands such as Camaro, Caprice, Cavalier, Corsica-Beretta, Corvette, Kumina, Malibu, Monte Carlo and more. Lumina drivers say they drive a Chevy while the Corvette owner says they drive a Vette; this is a dangerous branding problem. This expansion of models confused customers with the brand name. The brand name is extremely important for the longevity of a brand’s success. Coca-Cola did not follow the rule of expansion.

Coca-Cola is known as a top Cola drink. In 2006 they introduced Coca-Cola Blak, which was a Coca-Cola and coffee energy drink. It was soon discontinued in 2008. If Coca-Cola would have kept their focus narrowed on the soft drink industry they wouldn’t have failed with Coca-Cola Blak. In this example, Coca-Cola broke the rule of contraction.

Coors is associated with beer. But in the 1990s they tried to put out a bottled water because bottled water was a trend at the time. Coors Rocky Mountain Spring water did not attract their loyal fans because their fans wanted alcohol from Coors, not water. This is a prime example of sticking to your category and thriving in the expertise of your brand. Coors broke the rule of extensions by placing their brand name on a product outside of their category.

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