Bucko

PayPal started life at Confinity which was a company that developed software, PayPal was created as a money transfer service and probably would have stayed there as a point of sale application. However, it was fortunate that Elon Musk arrived on the scene as Confinity was merged with X.com one an internet banking company that Elon had founded. Elon had the vision and confidence to see the potential in the PayPal application and after some senior management changes it was the only Confinity application to survive and be developed further. This shows yet again that unicorn business need a visionary to succeed.

PayPal acquisition by EBay helped leverage it’s brand identity and differentiated it from the traditional credit card companies.   This allowed it to become the preferred payment process for EBay users and this allowed the brand to reach a wider number of consumers.

PayPal was fortunate to have its genesis towards the end of the .dot com financial crash and that it had a start-up internet bank in its DNA. The choice of the name PayPal was a stroke of genius as this implied that this was a friendly service that was on your side. It was a brand image that worked well in any country.

It was helpful that in early stages that the financial regulator did not create any roadblocks and that the traditional banking and credit card business did not see the disruptive threat.

PayPal saw that there was a gap in the market as at that time cheque payments were common and credit card transactions required repeatedly filling in forms. Also for both users and merchants the process was slow and expensive. It was also fortunate that at this time internet technologies and bandwidth speeds were increasing rapidly and consumers were making more internet sales transactions.  It identified that its customers were using technology more (mobile devices) and had a busy lifestyle.  The target customer wanted a quicker and simpler payment system that worked.

PayPal positioned itself as an independent (not linked to a financial institution) payment process that was quicker , easier and more importantly secure which was a process that the customer could trust. The association with EBay was important as the customer had the choice to use PayPal or repeatedly enter credit card information. It was being seen as an easier option which caused the majority of EBay transactions to be processed through PayPal.

PayPal has had to work hard to differentiate the brand in what is a very competitive market, its main selling point is that it requires less form filling to complete a sales transaction and that the process is less exposed to fraud when compared to other payment types. However for PayPal it was necessary to add services to its portfolio as this was a way to use its reputation and infrastructure to show it was a business that could provide credit services and payment services for merchants.

PayPal was spun off from EBay and then acquired the XOOM corporation which allowed PayPal to provide FX services basically money transfers between countries. Slowly through acquisition PayPal is growing its position in the market and this had allowed it to offer a portfolio of individual and business financial services.

It was the acquisition of Braintree which protected the brand position and allowed expansion of services, Braintree provides the payment software infrastructure that merchants use and also had the Venmo application which allowed users to send small payments to each other for free which was what drove EBay to make the acquisition.

PayPal is continuing to position itself as the alternative to banking and to be the primary financial product that we all use with a growing portfolio of services and we can see how this is promoted in this TV advert.  Its tagline is the ‘New Money

This is an interesting time for PayPal as whilst it has differentiated itself from the larger financial institutions,  there have been significant threats from other start up business especially as PayPal is now an established business.   PayPal seems to be trying to protect the brand by adding services through brand acquisition,  however there is a risk in this as when a brand ceases to innovate it can loose its identity.

It was expected that the competition to PayPal would come from traditional banking and credit card businesses as these have been seeing PayPal taking revenue and market share from them and are now trying to use technology to be a significant alternative.    Then there is a greater risk that a disruptive business can come  from the startup and technology spaces which are a bigger threat. Businesses like Apple Pay , Google Wallet, Square and Dwolla are offering alternative payment solutions and these business also have a strong brand identity and more importantly a large amount of valuable customer data.

What is a risk for PayPal is that a technology has arrived with our Smartphones called ‘Tap n Pay’ payment solutions and we now carry an electronic wallet of payment methods on our phones. None of these need the PayPal services to allow us to make payments.

An example where there is a risk is that a bank like Barclays now has a payment app which piggybacks on a mobile payments service called PingIt ( PingIt  )it will only need for a ‘Tap n Pay’ reader to be connected to the home computer or tablet and then we have a newer payment system that has bank support and security.

PayPal has identified that this is a risk and is supplying an app and contactless card reader to merchants, this does work well but the transaction fees are high. However in the markets where cheque payments are common, the PayPal infrastructure is more attractive to the merchant. The bigger concern for PayPal are the banking apps as these allow you to make payments quickly from your account and are guaranteed by your bank. Whilst PayPal can offer credit payments, holding deposit amounts would make it just another bank.

The acquisition of the Venmo application has allowed PayPal to protect its market share by launching mobile payments between devices. However, the more services PayPal adds in someway it becomes less different and just another bank.

References

PayPal (https://www.paypal.com/gb/home)

Barclays Bank Ltd (http://www.barclays.co.uk)

How did Nando’s UK become one of the country’s most popular restaurants ?

Nando’s is a global restaurant chain which is famous for it’s flame grilled Peri Peri chicken and the business has created a strong narrative regarding the brand’s creation. What is appealing is that they have associated the chicken with a miraculous event in Portugal and that Peri-Peri is its heart and soul as it is created from Birds eye chilies grown in Mozambique. There is also a reference in the branding to the fact that this is a South African brand and there is an  87 degrees initiative where all brand headings are aligned at 87 degrees.

Initially the brand was started in the UK in 1992 with the focus on being a takeaway only chicken restaurant and was primarily in the big cites, as with other takeaway food businesses there was a pressure from the customers and there was a move to service restaurants (eat in and takeaway), this was an initiative started by a new executive trying to recover what was a failing business. It is interesting as this was a time of uncertainty the individual restaurants could choose their own design and decoration with only the cockerel ‘Barci’ and the Peri Peri chicken being a brand consistent. At the time for what was an unproved business model, I think the management wanted to see what worked, also the restaurant owners wanted to differentiate themselves from competing chain restaurants such as Pizza Hut.

This is valid as Nando’s pricing is between Mc Donald’s and Pizza Hut and it is difficult to be different at this price point. You can still see some of these design variations in the earlier Nando’s restaurants, however as the brand expanded and more restaurants were built then more branding elements became standard at every location.

This is a Nando’s restaurant in London which shows the earlier brand identity.

Nando’s UK is making changes to its brand and is trying to leverage its origins in Africa to reinforce its mission and brand identity. This is interesting as there is a big focus on the narrative around the Peri Peri sauce and its African heritage, in the UK an interest in chilies is evolving and growing especially around the hotter chilies.  This is illustrated in the Nando’s Our Brand Story story  where the design of the restaurants are changing to reflect the African heritage, the Cockerel image is being altered and the red colour of the chili is becoming prominent in the restaurant decoration. Also, signage will now be in an African script and elements of African artwork will be incorporated.   This will take time as customer feedback will be critical as there are risks in changing brand identity.

This is a Nando’s restaurant in a regional retail park and it shows some of the new brand identity.

In the UK Nando’s is not the only grilled chicken restaurant and there is strong competition from Caribbean Jerk chicken restaurants, also there are other brands such as Five Guys burgers which also have a good narrative and compete for market share.  Nandos’s focus is giving you the best Peri Peri chicken experience in both their restaurants and takeaways. The staff in the restaurants work to make visiting a fun experience.

What is interesting is that after a rocky start Nando’s gathered what is a cult following and this may be something unique to the UK. The timing was good as it was time of Cool Britannia and there was more confidence in the economy and people eat out more. Some marketing genius started the rumour of the mythical High Five / Black card which gave you and four people free Nando’s for a year, there was huge interest in this, which various celebrities were reputed to own. This made the restaurant more interesting and is supported by a page on the website which directs people to the loyalty scheme.

what-is-high-5-black-card

It is helpful that the popularity of the brand continues and is still visited by celebrities and sporting superstars as this generates media interest and free publicity.  Here the brand can work with new artists in advertising that leverages the brand but also as Nando’s is popular the artists brand can get wider attention.    Here we see this synergy between Nando’s and a British band ‘The Vamps’

Customer demand has caused Nando’s to supply a bottled range of Peri Peri sauces, marinades , peri-mayonnaise and peri salt. These are sold in supermarkets and compete against other hot sauce brands (Caribbean and US), however it is the customer recognition of the brand which drives sales as they want to recreate the experience they had in the restaurant, it helps that Nando’s provide recipes on their website. I find the Caribbean sauces a little hotter and combine the two as a marinade.

However, this is an established brand with a large number of restaurants across the UK and an example of this is central London where there are 18 restaurants. A problem for a large brand in a competitive market is sitting still and not evolving the brand identity, there is a risk in this as new competitors can by their uniqueness gain market share.

It is possible that Nandos being a very popular restaurant chain with significant word of mouth resonance it is somewhat a ‘cash cow’ and there is less need for investment into marketing campaigns.   It is rare to see a Nandos advert on our TV channels and on the rare occasions when there is an advertising campaign they can be a little weird.

This contrasts with the South African parent company whose adverts are deliciously political –

For a popular and established brand it can be difficult to make revolutionary changes to the brand identity as there is a risk of alienating your customers,   however there are risks with being conservative as there are other competitors wanting to take your market share.

There is another chicken in town –

References

Nandos UK  (https://www.nandos.co.uk/)

Nandos SA  (https://www.nandos.co.za)

The Vamps (http://www.thevamps.net/)

KFC UK (https://www.kfc.co.uk)