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Best Buy rewards loyal shoppers with heavy discounts

Best Buy, Inc. (NYSE: BBY) will be treating some of its best customers to product giveaways and discounts come this Sunday night, when the retailer will open stores to a select group of customers who are subscribers to the retailer's "Rewards Zone" customer loyalty program.

According to The Wall Street Journal, Best Buy's customer loyalty program now includes 24 million members, up from seven million a year ago -- a spike that happened when the company abolished the annual $9.99 program fee for the "special club."

This could inspire more customers to shop at Best Buy during the holiday shopping season, although the company said that overall it expected a less-aggressive promotional environment this year.

The retailer is expecting between 500 and 1,000 customers to show up for special holiday shopping events like this special Rewards Zone night, although it was not clear if that number was nationwide or per store location (I'm guessing it was the latter).

I'm still wondering why competitor Circuit City, Inc. (NYSE: CC) does not have a program like this.

Product packaging works harder, gets weirder

The conventional wisdom used to be that shoppers went looking for their favorite brands and that consistency of product packaging assured customer loyalty. Apparently marketers now have decided that good old reliable product packaging is making those products invisible to consumers. According to the New York Times, Pepsico (NYSE: PEP), known for its resistance to label design changes throughout its long history, is now changing some label designs every few weeks.

The problem is that, with the internet and hundreds of television channels, it's becoming increasingly harder for marketers to get their messages out to customers. Product packaging now has to do more than simply identify the goods within, but actually reach out and grab your attention. Hence, Mountain Dew bottles that appear to have been tagged by graffitti artists, or Unilever's (NYSE: UN) shampoo bottles shaped like video game joysticks. Target Corp. (NYSE: TGT) has been in the forefront of bringing eye-catching advertising to its themed store aisles.

There are other motives for this experimentation with product packaging as well. Some companies are searching for ways to reduce container sizes and to have less environmental impact. Some household product manufacturers are looking to make their once utlitarian packaging so pleasing that people may be willing to display it in their homes.

And it looks like things are only going to get weirder. Pepsi has a plan in the works for cans that spray a pleasing scent when opened. And you know that product packaging that talks to you can't be that far down the road. If you thought pop-up ads and TV commercials were annoying, just wait for the day you go into the shop and all the products are screaming for your attention.

Southwest vs. JetBlue: Battle of the Brands

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.

There really isn't much of a battle of the brands between Southwest Airlines Co. (NYSE: LUV) and JetBlue Airways Corp. (NASDAQ: JBLU).

Southwest Airlines is clearly the superior brand. It's the low-cost airline that everybody loves. I've flown Southwest a few times myself and found the service good, though I was annoyed by the trash that I found underneath my seats. I've never flown JetBlue because it doesn't fly out of my local airport in Philadelphia, while Southwest does.

In some ways, it's not a fair fight between Southwest and JetBlue. Southwest. which was founded in 1971, operates 2,800 daily flights in 60 airports in 59 cities across the United States. JetBlue is eight years old and serves 50 destinations with 550 daily flights.

Investors also prefer Southwest. Its shares are only down 3 percent this year, compared with the 17 percent decline for JetBlue.

Though its tempting to argue that Southwest will destroy JetBlue in the marketplace, I'm not ready to write off the scrappy New York-based airline quite yet.

Continue reading Southwest vs. JetBlue: Battle of the Brands

General Motors vs. Toyota: Battle of the Brands

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.

The sad part about this subject is watching these two companies going in almost opposite directions -- at least for now. General Motors General Motors Corp. (NYSE: GM) has a current market capitalization of $18 billion versus the behemoth Toyota Motor Corp. (NYSE: TM) with a massive market capitalization of $236 billion, over 13 times bigger than GM. Yet on the surface one would never guess these numbers as their revenues are fairly close in comparison: GM for 2007, estimates revenues of $173 billion, and Toyota's at $200 billion.

It's what's underneath the hood that distinguishes these companies.

Toyota has just come off a five-year period of growth in its per-share earnings at 26% per year, an astounding accomplishment for such a large company. General Motors has experienced flat to negative earnings per share growth over the same five-year period. Toyota is opening new plants, both in Japan and the U.S., to handle demand, while General Motors is closing plants to save costs and resources.

Toyota has set itself apart as the undisputed world leader with the hybrid auto: half combustible engine, half battery powered. The hybrids are still at a price premium to comparable standard combustible, gasoline-powered models, but they will close that gap over the next two or three years. The hybrids come in luxurious lines of the Camry, the Highlander SUV, and the Lexus RX series, as well as the economical Prius model. GM has yet to enter the hybrid field in a serious way.

Continue reading General Motors vs. Toyota: Battle of the Brands

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Last updated: February 12, 2012: 04:51 AM

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