Friday, March 5, 2010

Product Line Stretching

The definition of product line stretching is essentially, introducing new products into a product line. This means that company produce more products in different ranges; from higher end to lower end products. For example, Toyota is generally a company that produces durable (questionable) and low-price cars. The way Toyota is product line stretching is by creating a new higher end brand, Lexus. This model has increased Toyota's sales and allowed them access to different markets. Also, they are able to access new customers who are looking for a higher end trustworthy car. Lastly, Toyota has been able to scare-off competitors and improve their reputation.
Product line stretching also has been effective for Converse. They have been able to create many versions of their Chuck Taylor shoes. They range from $130 shoes that are sold in stores like Barney's, to $30 shoes that can be sold in stores like Target. We have gotten a chance to hear from a Chief Marketing Director who spoke about how they have managed to more than double sales because of this product line stretching. They have been able to tap into new segments and target different types of customers. Converse's higher end shoes have been able to target higher up customers that are looking for a more expensive shoe, but still like Converse's shoes. This hasn't diluted the companies image because they are able to maintain sales for their lower end Chuck Taylors.
Product line stretching has allowed both Toyota and Converse to reach new segments and customers that have increased their sales and reputation. Product line stretching is now always effective for companies to use, but in these two cases it has proven to be successful.

By: Hussein Zayan, Section E

Thursday, March 4, 2010

Cost-based Pricing

Kotler describes cost-based pricing as "setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk."

Staples has started a new ad campaign that showcases their low prices respective to the industry. A customer is shown exclaiming that "wow! that's a low price!" at every item he sees. Then, one employee asks another employee how many products they have, and the reply is over 7000. The employee then goes and gets a cart for the customer. This implies that all of their products are low-priced, and that the customer is going to want to purchase them. They end with the line "Staples has low prices on everything you need for your office, and we mean everything." This explicitly states their low prices on everything that was implied earlier by the commercial. Staples is positioning themselves against their competitors as the "low-price" option for those who care about saving the most money.

Ian Robertson
Section E

Advertising Objectives (Informative Advertising)

Advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time. Advertising objectives can be classified by primary purpose - whether the aim is to inform, persuade, or remind. (see Kotler, page 358)

Informative advertising is used heavily when introducing a new product category. The objective is to build primary demand. This can be used for (see Kotler, page 359):
- communicating customer value
- building a brand and company image
- telling the market about a new product
- explaining how the product works
- suggesting new uses for a product
- informing the market of a price change
- describing available services and support
- correcting false impressions

Here is an example of how Gibson tried to introduce a new product category, the Gibson robot. The item was new and in order to attract consumers, they did an informative advertising to show the potential consumers how the new guitar technology works. Gibson hopes that if people understand how amazing the robot guitar works, it will build primary demand.

Another example of informative advertising is the new Ipod shuffle. I saw this advertising and the new features of its new control on the headset made me buy this product. This video explains how the new system works (the play/pause, forward/rewind, play list and voice over system).

These two examples illustrate how informative advertising is used when introducing a new product category.

Hendy Kurniawan, section E

New -Product Pricing Strategies

In the textbook, there are two ways to pricing strategies a company can implement when introducing a new product. They are market-skimming pricing and market penetration pricing. Market-skimming pricing is defined as setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales. Market-penetration is defined as setting a low price for a new product in order to attract a large number of buyers and a large market share.

Market-Skimming Pricing

In 2006 Sony released the Playstation 3 (PS3). The price for the 60gb model was an astronomical $699 and the 20gb model was $499. Many prospective buyers were turned off by these prices because they were very high for a gaming console and the alternatives (Xbox 360 and Nintendo Wii) were much cheaper. The company issued price cuts when it introduced two models, the 80gb and 40gb, and phasing out the 60gb and 20gb. The 80gb model was priced at $499 and the 40gb was priced at $399. In 2009, Sony issued another price cut and eliminated the 40gb and 80gb models, replacing it with 120gb and 250gb models. The 120gb retailed for $299 while the $250 model retailed for $349.99. Sony also used this strategy for previous consoles, the Playstation 2 retailed for $299 at launch; Sony later cut the price to $199 and finally $99 today. The PS3 currently has the smallest share among its competition. Although this is a culmination of multiple factors, the initially high price might have turned off several prospective buyers who instead purchased cheaper alternatives such as the Nintendo Wii and Microsoft Xbox 360.

Market-Penetration Pricing

Nintendo adopted a market-penetration pricing strategy for its latest console, the Wii. The Wii was priced at $249.99 at launch, much cheaper than the 360 and PS3. This pricing strategy as well as its innovations are the main contributor to its success. It currently holds the largest market share among its competitors. Nintendo issued only one price cut so far, in 2009, lowering the price of the Wii to $199.

Jose Jacinto

Section E

Service failure

Every time when I come back home from school, there is a desperate ad attached on my front door.

This is the ad from my apartment asking for a contract renewal.

However, I am waiting for this contract to be over.

Due to the bad management, the apartment is suffering from a low rate of contract renewals.

For example, the manager never fixed the washing machine on time when it broke-down and cleaned the dirty main lobby carpet.

Residents were complaining about this issue all the time, but there was no instant response. Residents used their social networking such as Facebook, Twitter, and instant messengers to tell their friends, families, and other people how bad service this apartment is providing. The apartment was blamed for its service failure and this became the level that they cannot recover.

In order to recover their image, the apartment managers attached candies in front of every door, opened a Barbeque party, and started to check the washing machine regularly.

However, it seems that it is too late for the service recovery. The managers failed to deal with a small problem before it became a larger one. Now this big problem is choking the company’s profit to its downward spiral.

It is always important to figure out service problem first, and try to communicate in order to meet the customers’ expectations.
“People who get good services tell like 2-3 people, but people who get bad services tell 11 people” (1).

(1)source from “Wal-Mart complaints”

Jungmin Park (Mina), Section E

Good Value Pricing

As defined on p. 261 of the textbook, good value pricing is "offering just the right combination of quality and good service at a fair price." Hyundai entered the car market simply trying to offer some of the lowest prices for their vehicles, but now that they've established themselves within the market, they now offer slightly higher prices with much higher value.

First, Hyundai offered "America's best warranty," and now they are introducing Hyundai Assurance. Hyundai states that if you buy a new vehicle now and lose your income within the next year, you can return the car to them. Hyundai is offering these things for still relatively low prices. The warranty shows that they believe their cars to be of very high quality, and the Hyundai assurance represents good customer service as they try to adapt to the changing needs of their target markets. Even though Hyundai isn't the cheapest car manufacturer, the things that they offer for their products make it a "good value" purchase. Hyundai realized that customers valued high quality (warranty) and high service (Hyundai Assurance), but couldn't necessarily afford the more expensive cars, so they created a reasonably-priced product line that offers high value to consumers. Hyundai has created this "customer perceived value" by offering the best warranty in America, and also by becoming the first company to offer a return program for lost income. After Hyundai introduced these things, many competitors followed suit and started offering similar deals. These other companies wouldn't have copied these promotions if they didn't add value to their product. In addition, Hyundai builds goodwill in the commercial using words like "faith" and "An auto-maker that has your back, isn't that a nice change?" Obviously Hyundai feels that these changes (increased product quality, service) add value to their product or they wouldn't have been able increase their product prices and still be able to sell their product

Ian Robertson
Section E

Customer Retention as a part of CRM

Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and growing customers (see Kotler page 14).

Customer retention is the loyalty of the consumers to the company. Consumers make loyalty decisions based on customer satisfaction. Outstanding marketing companies go out of their way to keep important customers satisfied. Most studies show that higher levels of customer satisfaction lead to greater consumer loyalty, which in turns result in better company performance. Smart companies aim to delight customers by promising only what they can deliver, then delivering more than they promise. (see Kotler page 14)

Since satisfaction depends on the product's perceived performance relative to buyer's expectation, companies have to perform what they promise to the consumers.

About two weeks ago, I went to Chipotle restaurant in the U-District Ave. It was a Mexican restaurant. I purchased a steak burrito after lining up, and there was a problem during the payment process. I gave him my debit card and showed him my UW student id card (to get a free drink). After all the payment was done, and I was about to put the receipt in my pocket, the cashier told me that he charged the wrong price to my debit card. I was confused, I thought he charged too low so I just gave him my debit card. Apparently, he charged my card about couple cents higher than it should have been charged. I was still confused because it did not say the payment was voided, and he gave me two different receipts instead (with different amount of purchases). I just stood there for a moment and tried to understand the receipts, the cashier knew I was unsure about what he just did. He asked me if everything's alright and tried to explain the process he just did. I understood what he was trying to do, but it did not say void or negative amount in one of the receipts. I figured I would just trust him and if he did charge me twice, I would not care about it since there would be nothing I can do.

However, when I was walking away from the cashier towards the fountain drink machine, the cashier knew I was walking while still trying to figure out the receipts. After I gave up and I was about to get my drink, he ran up to me and told me to wait here because he wanted to give me a gift card. I told him it was not a big deal and he did not have to do that. He insisted and he went inside the kitchen and came out after a moment. He gave me this gift card and he apologized to me because he made me confuse and it was his entire fault in the first place. I thanked him for his kindness and concern.

His action made me delighted. The food was always good, but that cashier did something extra that I was not expecting him to do. I perceived their performance to be higher than my expectation. I was satisfied, and they had successfully practice their consumer retention effort. I am even more loyal to the restaurant, and I keep telling my friend about how great the service perfomance was. “Delighted customers not only make repeat purchases, they become ‘customer evangelists’ who tell others about their good experiences with the product” (see Kotler page 4).

The reason why a company should consider consumer retention is because it is an indicator of long-term viability of a firm, maintains product/service performance, builds strong customer loyalty and less expensive to maintain.

Here are some pictures of the gift card he gave me:

Hendy Kurniawan, Section E

McLobsters and Test Marketing

When you're a giant company like McDonald's, with locations all over the globe, you can perform test marketing in your own stores. Take the McLobster for instance. I'm sure it began during an idea generation, what Kotler defines as "the systematic search for new-product ideas." They must have said, "Hey, what is missing in our Canadian/New England market?" Or maybe they just really liked the idea of going into the lobster sandwich business and asked themselves, "Who would eat this?" Or maybe it wasn't an internal idea source, maybe it was external, coming from a consumer or supplier. Either way, the McLobster passed the idea screening stage "which helps spot good ideas and drop poor ones as soon as possible."

Next, came the product concept, "a detailed version of the idea stated in meaningful consumer terms." This would go something like, "The McLobster: real Atlantic lobster spread over the length of a bun and smothered in creamy, white McLobster sauce...mmm, I'm lovin' it!" Then they turned it into a product image, where it became more than just a description, and was either drawn out, or a physical representation of the McLobster was created.

Eventually, after the marketing strategy development stage where McDonald's described their target market, the planned value proposition, and the sales, market share, and profit goals. Finally, they would have performed a business analysis on the McLobster, reviewing sales, costs, and profit projections to see if they fit with the objectives of the company.

Then would have came the fun parts, such as product development, where they would actually create the McLobster. Perhaps sea food specialists would be consulted. McDonald's wouldn't then just commercialize the product to every McDonald's that serves to their target market, they would first have to do test marketing, by introducing the product and marketing program into real market conditions. Here, they would offer the McLobster at certain locations within their target market.

Test marketing is easy for a company like McDonald's, that can experiment with their products within their own restaurants, simply by doing small, local promotions and offering it on their menu with a big "NEW" next to it. The McLobster must not have been profitable enough to mass commercialize, but to my understanding it has been re-introduced over the years as a seasonal product. We can only hope that eventually it will catch on in Canada and New England enough to where they might offer it around the Seattle area, which is known for consumers who love their seafood!

Joshua Gray
Section G


A name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from other seller’s. Brands help recall past experiences, and communicate to customer’s their vertical and horizontal differentiation. Brands can command a price premium over competitors as, to consumers, they can represent reliability, guaranteed consistency, status, and many other sentiments.

One of the most established brands in the USA and even worldwide is Budweiser. Budweiser as a brand has become synonymous with the American man and due to its success as a brand it has vaulted past other major US beer distributors to become the best selling beer in the USA. Even though Budweiser consistently loses to other similar beers within their price range, their brand image is strong enough to defeat the competition.

Budweiser has worked hard to build their brand as a whole but it’s interesting to see the differences between how they build the brand of their two flagship products Budweiser and Bud light.

Budweiser has kept their advertising focused on establishing their brand as an American staple that embodies the ideas and aspirations of the hard working American men.

Bud light however has taken a completely different approach, positioning themselves as a fun beer for the funny intelligent social young adult.

It is definitely interesting to see to see an iconic company take two different approaches with their similar products. They have have two distinct brands that represent completely different ideals for what is merely a light version of their original product. It perhaps says something about the importance of brand building and brand loyalty in the beer industry. They undergo a tremendous amount of effort and expenses to establish unique brands for their individual products.

Thanks for reading,

Wyatt Bricca
Section E

Service Output - Zappos

Service output (SOs) are the productive outputs of the marketing channel that end-users have demand and preference for. The SOs represent all of the aspects of the shopping experience that affect how an individual buys a product as opposed to simply what they buy. It is important to note that SOs do not involve the product itself (i.e. quality or price). The main categories of service outputs include bulk-breaking, waiting delivery time, product variety, spatial convenience, and customer service. Every business has service outputs, but each business varies in the amount of importance they place on each SO.

A company that stresses service outputs as a part of their positioning is is an online retailer that initially focused on selling shoes, but they have now expanded to include clothing and accessories (i.e. handbags, cosmetics, etc). One of the core values that the company holds is that customer service is of utmost importance. They have effectively used this SO to create a reputation that if a customer is going to go to, then they can expect to be treated as a truly valued customer. Customer service is used in a variety of ways, including free return shipping (to mitigate financial risk that customers may feel from online shopping), ability to return an item within 365 days of receiving it, and also by offering perks for return customers. also places importance on the product variety SO. They demonstrate this SO by continually pointing out that they offer a large selection of shoes (over 90,000) and a wide variety of clothing. A recent ad helps support these findings.

At the 0:18 mark, they include a graphic that says "Deliver Wow Through Service." This further demonstrates that is using customer service as a value proposition to its customers. At the 0:21 mark they begin to stress the product variety that they offer. These two SOs have really enabled to become an incredibly successful company. It will be interesting to see if more companies decide to take a similar approach to service outputs as that of

Jared Fagan
Section G

Product Concept

A product concept plays a vital role in the new-product development process. It serves as a means by which to present a new-product idea to consumers. A product concept can be presented either physically or symbolically. It is through the use of the product concept that companies can receive feedback from consumers as to the possibility of implementing and furthering the proposed concept (Kotler 237).

With people being more conscious of the environment as of late, steps are constantly being taken to make all parts of our daily lives more eco-friendly. Within the automotive industries, hybrid cars are starting to become more common with vehicles such as the Toyota Prius becoming abundant on the roads. With this being said, car manufacturers are all pushing towards having at least one hybrid car available. This trend has now reached Ferrari who recently revealed their Ferrari 599 hybrid also referred to as HY-KERS at the Geneva Motor Show. They released this car at the motor show strictly as a concept vehicle however, just as with all product concepts, it is serving as a image of what is possibly to come in the future. In actuality, they are currently trying to take this concept into production and have it available within the next five years.

Here is a link to the article with more information about the Ferrari 599 hybrid. Ferrari Hybrid

Darren Oh
Section G

Discount Pricing

This is an ad for LA Fitness. It is a coupon for for one day of the month to save $30 on a monthly fee. It is only good for a certain amount of time and starts on "Black Friday". LA Fitness is taking a discount approach to lure in new customers. They are temporarily lowering their price for one month of membership, however they will have the customer pay the full price after that until they decide to end their contract. This is a good way for LA Fitness to attract new customers. Getting a month of membership for free is a great deal and most people would come to sign up for that. It also states "Contact me Now for info" putting an emphasis on the "now" making the consumer feel a sense of urgency as if they dont act on this sale now it might not ever become available again.

Jennifer Cheadle

Section G

Online Marketing Research

Online Marketing Research is method in which companies can gather primary data through the internet. Companies can conduct “internet survey, web-based experiments, online focus groups, or tracking consumer online behavior” to better understand consumers. is an example of online marketing research. is owned by WPP Group (Communications Services Group). Since 1946, has been collecting primary data from consumers through online surveys. Consumers can register and become a part of’s online panel group and express their opinions through their monthly surveys. conducts surveys on almost every topic and product. User also have the choice to allow to track some of the online advertisement they see. has a point system in which users can gain points and redeem the points for cash. For every survey completed, consumers are awarded a certain amount of points. Consumers can earn up to $4,000 dollars just by completing surveys and offering their opinions on certain products and topics.

Shufen Wu
Section E
Sources: Kotler, chapter 4 page 109;

Mission Statement

Mission statement is a statement of the organization's purpose - what it wants to accomplish in the larger environment. *1

A mission statement should be the driving principle behind the whole organization. The mission statement of the company should be strongly emphasized in, if not embraced by, every employee's mind, regardless of their division in the company. A successful company is a company where the mission statement of the company directly correlates into its marketing decisions, starting from identifying its marketing and business objectives, marketing environment, strategy (which includes segmentation, targeting, and positioning), and implementation.

In the case of google, their mission statement is as follows:

To organize the world's information and make it universally accessible and useful.*2

You can break this statement down into three main goals.

A) Organize the world's information
B) Make the information universally accessible
C) Make the information universally useful

In the following advertisement by google during the third quarter of this year's Superbowl, which was the very first google advertisement on TV ever in the United States, these goals can be identified.

A) Organize the world's information

Even though there is no direct message here that says "you can acess world's information!". the message in this video accomplishes this exact goal by showing that you can go on google and search for any information, whether how to study abroad in paris or where cafes are located in your geographical area of interest. It also suceeds in showing the "world" part of the goal by showing that you can not only search information about your own country, but about anywhere in the world (in this case Paris, France in particular).

B) Make the information universally accessible

By watching this ad, you can easily identify that information available on google is easily accessible. By just going to, you can access tons of information you want to find. Not only that, in the context of this ad this "guy" who is conducting all these searches is believed to be in the United States at one point and in France at another. Thus, it can be seen that google's information is available at various places in the world with just an internet connection.

C) Make the information universally useful

This ad shows how google search engine is an indirect component of the "Parisian Love" that ends in a happy ending. The "guy" accesses google to easily find the information he is looking for easily, in most cases the very first link provided. Also, when the guy types in a search for a flight to Paris, google not only gives him link to the airline websites, but also gives him the flight information right on the search page itself, thus eliminating the need for him to look any further.

Thus, as it can be seen by the case of google, many successful companies implement their mission statement as a basis of their operations. Google has successfully created an advertisement where positive emotions and company's missions are successfully portrayed.

Armstrong, Gary, and Philip Kotler. Marketing: an Introduction. Upper Saddle River, NJ: Pearson Prentice Hall, 2009. Print.
Pg. 37

"Corporate Information - Company Overview." Google. Web. 05 Mar. 2010. .

Samu Shobeiri, Section G

Distribution channels

Distribution channel is “a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user” (3)

In general, the distribution channel enhances a company’s operations by dealing with customers more efficiently. The channel is not only a market supplier but also a partner of the company that works as a team to achieve higher quality performances. Thus, utilizing the distribution channel effectively is considered as one of primary factors of accomplishing a successful marketing.

However, the distribution channel could be turned to a threat. The most extreme case would be regarding the international business.

Assume that you own a company who supplies coffee beans. You sold the coffee beans to an exporter at $0.90/lb. The exporter then sold the beans to an importer in other country at $1.00/lb (10% mark-up). The importer sold the beans to a distributor at $1.50/lb (15% mark-up). Then the distributor’s “magic” occurs. The distributor sold the coffee beans to a retailer at $24.00/lb (700% mark-up). Finally, the retailer sells the coffee beans to customers at $36.00/lb.

Your company receives almost nothing for this sales transaction due to the distributor’s mark-up. In order to be profitable, you should shorten the distribution channel.

It is risky for a small business to sell a product without the distribution channel’s support. However, if the company is not satisfied with its performance, they need to shorten the channel or get efficient (lowering a unit cost) to be more profitable.

* Citations

(1) Picture from

(2) Picture from

(3) Kotler, Marketing An Introduction, pg.294, Pearson Prentice Hall, 2009

Jungmin Park (Mina), Section E

Personal selling and Role of the Sales Force

According to Kotler, personal selling involves interpersonal interactions between salespeople and individual customers (Kotler 386). These interpersonal interactions can take form of: face to face, by phone, through video, web conference, and through an online messenger. Salespeople play an important role in representing a company and gaining customers trust. Through salespeople, companies are able to build long lasting and loyal relationships with their customers. In many cases, customers decide to shop at a specific store only because of the relationships that they have built with that store’s salespeople. According to Kotler, salespeople not only represent a company to customers, but they also represent customers to the company and help achieve the overall goal-customer satisfaction and company profit (Kotler 386). A good example of a company that uses salespeople to create a strong, loyal, and a long lasting relationship with their customers is Safeway Inc. Safeway strongly emphasizes the important of customer service and what role their employees play in the companies overall goal. When I worked as a sales clerk at Safeway, I had to represent Safeway to its customers. Part of my job requirements included: approaching potential customers, gathering information on customers’ needs, building relationships with customers, communicate company’s services, and finally making sales. Working with customers gave me a perfect position to gather information on what customers like and what they disliked. These gave me an opportunity to communicate with my department's manager and letting him know what customers though of different products and what Safeway can improve.

Olga Fedorovskaya
Section E

Service Outputs: Silvertips

When thinking of a company that has good service outputs, I immediately thought of my company, the Everett Silvertips Hockey Club. The Everett Silvertips are a fairly new hockey organization in the Western Hockey League, displaying the finest minor league (ages 15-22) hockey in North America. My current role in the club is Marketing and Game Operations Intern, which is going to turn into a Marketing and Ticketing Executive position when the 2010/2011 season is underway. We have averaged over 6500 roaring fans for each of our home games, totaling to over 1,750,000 in our seven season existence. According to King 5 News: Evening Magazine, the Silvertips ranked 3rd for best sports team in 09’, of all Western Washington teams. They were behind the Sounders in first and Seahawks in second (1). Also according to WHL.CA, Everett has the best fans in the league, voted by all teams in the WHL (2).
Besides the success the players have produced on the ice, I think our service outputs is what puts on top of the league when it comes to fan satisfaction. We hit the five major concepts mentioned in class: bulk breaking, waiting/deliver time, product variety, spatial convenience, and customer service. Bulk Breaking: while we do give better options to our season ticket holders, we do value fans that can only make it to a selective amount of games. Besides offering season tickets, we also offer flex packs, which fans can pick any 8 games, not 8 that are pre-selected (which most teams do.) We also have tickets available upon walk-up that are reasonably priced. Waiting/Delivery Time: is the same around the league; tickets can be bought by walk-up at arena ticket office and online or on the phone with Ticketmaster ®. One thing I noticed that we do, which other teams don’t, is that we have a phone line connected directly to our office. By calling this line, fans can buy tickets through our ticket executives, with NO service charge tacked on. This is not only cost saving, but also time because the lines are drastically shorter and quicker than the general ticket windows. Also a additional value we added for the 2009/2010 season is that our ticket executives can send you a virtual copy of your bought ticket, for no additional cost, that can printed out at your own convenience. Product Variety: the Silvertips highly recommend fans to follow the team on the road, visiting other arenas and showing their dedication to the team. The Silvertips make this convenient by having links on our website to other team’s site to buy tickets. We also work in relationship with other events at Comcast Arena, producing optimum fan perceived value with the ease to attend multiple events. Spatial Convenience: one of the best aspects given by any event at Comcast Arena in Everett, especially for the Silvertips. The Silvertips have teamed up with the city of Everett to make the best traffic scenarios around game/event time. While it may take over an hour to get your parked car to the freeway after a Mariners of Seahawks game, events at Comcast Arena are exited at a premium time and convenience. Parking garages and lots are spatially spaced out and there are multiple routes to the freeway. Customer Service: I believe is our best service output. We care about our loyal fan base. Working the Guest Services Table on game nights I have tried my best to be as friendly and genuine as possible for each fan. Having knowledge of information and exact stats around the league and a grip of complementary events surrounding our product, we always have an immediate answer to fans questions. Some fans come up with great excitement, which I try to continue and increase in them, by increasing their already high level of perceived value. On the other hand fans might come up in an upset attitude. I try my best to fulfill their request to achieve the value that they deserve. Another thing members of our staff do is remember as many fans as we can by name. This might be a daunting task as we see over 6500 faces a game, but acknowledging each fan individually and forming relationships is the best way to retain and have them spread the word about our great organization, which will lead to new acquisitions and add-on selling.
Joel Anderson
MKTG 301, Section G

Psychological Pricing

Kotler defines psychological pricing as a pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product (Kotler, 276). Below is an example discussing the shoe brand Manolo Blahnik, which has incorporated this pricing strategy into their marketing plan.

Those who know a little about fashion know that Manolo Blahniks are high-end, designer heels. However, few can actually afford these exceptionally high-priced shoes that range from $500-14,000). While Manolo Blahniks may be higher in quality than your average high heel, the pricing of these luxury items seems to be an example of psychological pricing. I find it hard to believe that their prices truly reflect their quality, and instead reflect the customer-perceived value. Much of this customer-perceived value can be credited to its rise in popularity with the rich and the famous (thanks to its frequent features in the show Sex and the City). As a result, many fashionable women today see Manolo Blahniks as a must-have accessory to flaunt their status and style. This perceived value also comes from their pricing. The Manolo Blahnik brand has positioned itself high up on the pricing spectrum, convincing their buyers that these shoes are high-priced for a reason. Manolo Blahnik prides itself in its exclusivity based on their high prices and limited availability of each design. Manolo Blahnik has done quite well with their pricing strategy considering their fame and success.

Lexus Hybrids: Product Line Stretching and Shifts in Secondary Cultural Values

Lexus has recently developed a new line of "hybrid" vehicles. This is a response to the shift in secondary cultural values towards clean living with the environment. Fairly recently, people have realized and taken to heart that the nature of the environment we live in is very fragile and finite and the things that we choose to do impact that environment either positively or negatively. With more coverage on "Global Warming" more people have pledged to take their part in keeping our world clean and reducing their carbon emissions. One major way of accomplishing this is by biking rather than driving or buying a car that is safer for the environment such as a hybrid. Lexus has noticed this shift in its customer's cultural values and decided to react to not only keep their customers but also create delight and goodwill in developing a product that is safer for the world, hence the new line of hybrid cars. Overall, this is just an example of a company responding to cultural trends. According to the text, "43 percent [of people] say they will be 'extremely green' within the next 5 years" so Lexus decided to appeal to consumers who fall into both categories of desiring luxury vehicles while still sustaining the environment.

Rather than just developing one hybrid car to reach the segment I just mentioned, Lexus built a line of hybrids at varying price points to capture various levels of consumers. This is an example of Lexus demonstrating product line stretching within one line; this is also the case in each of their sedan, performance, luxury utility, and convertible lines. With the lowest price point, the HS Hybrid 10, starting at $34,650 to the highest price point, the LS Hybrid 10, starting at $108,800 to capture varying levels of luxury car seeking consumers who also value the environment.

Even with their reaction to changing cultural values and product-line stretching, Lexus has still maintained their positioning as a high end, luxury vehicle offering both exceptional performance and quality. The Lexus brand and reputation tells the consumer that they are still receiving a luxury vehicle yet with the added bonus of environmental sustainability.

This link goes to the hybrid line on the Lexus website:

Cynthia Meadows-Read
Section E

Brand Equity

According to Armstrong and Kotler, brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service. (Armstrong & Kotler, 211) Brands with high equity rate win in the marketplace not simply because they deliver unique benefits or reliable service. Rather, they succeed because they forge deep connections with customers. There are four consumer perception dimension to score the brand equity: differentiation (what makes the brand stand out), relevance (how consumers feel it meets their needs), knowledge (how much consumers know about the brand), and esteem (how highly consumers regard and respect the brand). Thus, these brands must be distinct.

An example of a brand with a high equity is Christian Louboutin. Christian Louboutin is a footwear designer who launched his line of high-end women's shoes in France in 1991. Since 1992, his designs have incorporated the shiny, red-lacquered soles that have become his signature. Referring to the four consumer perception of brand equity, Louboutin fulfills all four factors. With shiny, red-lacquered soles and high stillettos that differentiate Louboutin from other posh and luxurious shoe brands, Louboutin has lured women all over the world who deemed themselves to be brand conscious consumers, wearing only and only high-end fashion brand shoes.

In terms of the relevance power, Louboutin carries a high level of satisfaction that meets women's needs when living their expensive lifestyle standard and simultaneously, showing power as they go out and about socializing. Additionally, Louboutin has done a great job in endorsing their brands by attracting celebrities to get to throw their Loubs on when attending special occasions, such as in movie premiere events, gala dinner, etc. This concept sinks into customers' mind that by putting on their Loubs, they are as classy and fancy as they could be. Alas, the better off the name of the French red clogs will be.

As of the knowledge factor of the brand equity, Christian Louboutin has a strong background and qualifications of shoes, who then finally in 1992 opened his flagship store in Paris. The fact that his first store showed up based off of Paris, a city known best with its glamour fashion brands (Hermes, Chanel, Dior, and Vuitton, to name a few), has furthermore added valuable points in the eyes of target consumers. The joy of owning and walking in their Loubs makes women feel more respectable, that this feeling puts a personal integrity value atop of $800 - $1000 Louboutins' price range. Consumers clearly regard and respect the brand that they are willing to spend that much money out of their pocket to be able to feel the mental power Louboutins offer. It is not over-exaggerating to say that Christian Louboutin has built a deep connection with both its current and prospective consumers.

Clairine B. Runtung
Section G

Good-value Pricing

Good-value Pricing

Good-value pricing is offering the right combination of quality and good service at a fair price. (p. 261 Kotler).

Aldo offers high-fashion shoes and accessories at very affordable prices. The company carries men’s and women’s shoes, sneakers and sandals with new designs and styles that come out every week. Almost all of the companies shoes are under a $100 per pair, with most being in the $40-$60 range. The store also offers many sales throughout the year that draw in customers to their products.

In this commercial we see many people of different ages, colors, and backgrounds just dancing around and having a good time and also looking good. The commercial portrays the company as associating with people of all different types who are very outgoing and like to express themselves.

Frank Luong, Section G

Customer-Percieved Value

Kotler defines "customer-perceived value" as the customer's evaluation of the difference between perceived benefits and costs of a marketing offering in comparison to other offers. (Pg. 14) Although this concept value was introduced early on in the course, I found an interesting way that it could be applied to the website, UW Robot.

UW Robot (at is an online service that automatically checks closed UW classes every 5 seconds and informs registered users via text (and now AIM) immediately when an opening appears. Users are able to enter the SLN of any class that they had wanted to get in, and the Robot will just continuously check until the class status changes. This is an ingenious idea because I am sure that more times than not, a lot of students aren’t able to get into their desired classes due to it being closed or having too little spots left open. The UW Robot takes care of this by doing the labor in checking the time schedule.

In the past, the UW Robot has been free of charge and so it gained popularity and rose in usage. According to their FAQ on their website, the Robot serviced about 11,000 students last quarter, a number far larger than their $20/month investment could handle. Because of the increased number of users, the UW Robot now charges a $5 fee for a class and an additional $1 for each related SLN (for example, for a quiz section.) Even though the UW Robot is just an online program on a website, students continue to use it widely despite the new $5 fee. I believe that this is an example of high customer-perceived value, in that the UW Robot customers value the benefit of getting into their desired class more than the cost of $5.

-Michelle Choe, Section G

Cash Refunds

In the marketing textbook, Kotler says that "cash refunds," also known as rebates, are similar to coupons expcet that the price reduction occurs after the purchase rather than at the retail outlet. Stores often use this technique of selling and this is seen mostly as mail in rebates.

In my particular example, the price of the Blackberry is $299.99 with a 2 year contract. After a mail in rebate the price is only $199.99, but you must pay the $299.99 today, and receive the rebate later. However, ATT advertises the Blackberry with a price of $199.99. This seems like a way to attract the customers to the item by showing the low price.

Kenichi Sato Section G



Diversification is a strategy for company growth through starting up or acquiring businesses outside the company's current products and markets. (p.44 Kotler)

During AMD’s brighter day’s as a producer of microprocessors from the early to mid 2000’s, the company acquired the GPU producer ATi in a blockbuster deal in the computer world. AMD and ATi are one of two major players in each of their respective industries, with their only rivals being Intel and nVidia respectively. AMD’s acquisition helped the company have more power in the computer hardware industry with the ability to produce high quality video cards and motherboard chipsets. The acquisition was vitally important to AMD with their struggles from 2007 to 2009, due to the poor performance of the Phenom 1 CPU architecture, as the revenues from the video cards of their ATi division was what kept the company afloat. A great advantage for AMD is that they are able to tap into a new market of customers. Computer builders who swear loyalty to Intel over AMD are buying the company’s ATi video cards due to their price/performance over nVidia’s counterparts.

The company’s goal for the future is the implementation of a new technology that merged the GPU and CPU, code named Fusion. Interesting enough, AMD/ATi’s rivals Intel and nVidia are also looking to do the same with Intel’s Larrabee and nVidia trying to get into microprocessor production. These two companies are at a serious disadvantage to AMD/ATi, however, since they must develop their technologies from scratch which costs them billions of dollars and many years to get it down right.

The year of 2010 will be very interesting for the company with AMD making a comeback with its new processor line up and ATi’s complete domination of the DirectX 11 Video card market with its Radeon 58xx series.

Frank Luong, Section G

Competitive Strategy

The textbook by Armstrong and Kotler mentions Competitive Strategy as the company's strategy to gain strategic advantage by positioning their offerings strongly against competitors' offerings in the minds of consumers. No single competitive marketing strategy is best for all companies. Thus, each firm should consider its own size and industry position compared to those of its competitors. There are winning strategis for large firms, but there are also losing ones. (Kotler, 67)

An example of two strong competitors in luxury-car industry are BMW and AUDI. Take a look at the picture of two billboards above, where both are dueling, with AUDI's bilboard showing the all new Audi A4 along with the headline: “Your move, BMW”. Santa Monica BMW, a local dealership, took on the challenge and entered a virtual chess game by responding, "checkmate.", with a much bigger billboard showing BMW M3 Coupe. When talking about competitive strategy, companies think through a complete contingent plant. They do not just think about the best, but they try to think and foresee all possibilities that their competitors might do. The advertising battle war between AUDI and BMW is a good example of how BMW could identify its competitor, AUDI. BMW proved to have thought broadly, by responding to take on the challenge using the chess jargon, equipped with a bigger picture of the car on the billboard.

To be able to win a competitive advantage over a competitor, a company needs to not only be creative, but be able to develop competitive actions and reactions that allign with their objectives / goals. Audi and BMW is and will still be competitors, however, both prove to be battling in a healthy competitive environment. Certainly, with different target markets and approaches to the consumers, both companies will strive to achieve their goals / objectives.

Clairine B. Runtung
Section G

Service Outputs

In the end, all users prefer more services to fewer, that is obvious. But the bigger question is how much are people willing to pay for these services? In this commercial by Wendy's it bashes on restaurants (like Red Robin) saying that the services they provide add up too many costs, and drive prices too high for the average consumers. Service outputs include bulk breaking, waiting delivery time, product variety, spatial convenience, and customer service. This commercial focuses on customer service and the spatial convenience and how unnecessary it is in getting your wings. Although many people enjoy these features, like a fancy bartender, cool decorations on the wall, tv's playing sports games, and birthday services, the prices that these services come with outweighs the actual benefit. This allows Wendy's to position itself as a cheaper, quick and easy, efficient purchase with more value for your 4.99$ purchase. What they are really saying, is that you can get the same product as other restaurants at a much cheaper price, if you avoid all the 'unnecessary' service outputs.

Brandon Brron

Product Position/Competitive Advantage

Product Position means the way a product is defined by consumers on important attributes; the place the product occupies in consumers’ minds (Kotler 185). Kotler also adds that products are created in factories and the brand is created in the consumer’s mind. Dyson, the vacuum company, has created its brand in consumers’ minds, as an elite, never loss of suction vacuum cleaner company.

From the beginning, inventor, James Dyson, worked endless hours to create and patent his cyclonic suction vacuum. He was frustrated with the amounts of money spent on a vacuum cleaner that would only work for a short period of time. So with expertise knowledge and the luck of fate, he was able to introduce a cleaner in 1983.

Today, many consumers have the perception that Dyson products are the best in its class. The superior quality, craftsmanship, and customer service have increased the brand’s image. Dyson promises to never lose suction when vacuuming for quite some time. Although costly, consumers rather spend the money on an excellent vacuum cleaner than constantly buying a new one every few years. This example can relate to Kotler’s concept by proving Dyson has the ability to place their brand and products on a positioning map, showing the contrast between competitors. Two aspects could be higher price, but better satisfaction. With positioning, comes differentiating, Dyson vacuums have competitive advantages over other cleaner products, because of its patented cyclonic suction power and ease of use. With this advantage/benefit the high price of the vacuum can be justified to consumers. What sets Dyson apart from other competitors is the fact that they offer products with a certain guarantee; with that guarantee Dyson is able to actually deliver its promise and live up to what they say.

Vincent Nguyen
Section G

External Idea Sources

External Idea Sources is a part of Idea Generation process of the New-Product Development Process. This is the process of reaching out to your suppliers, distributors, competition, and most importantly your customers.

Domino's Pizza got the idea for new pizza from their customers (or thats at least what their marketing campaign is claiming). After reaching out to focus groups they learned from their customers that most people were very unsatisfied with their pizza from Dominos. Many customers related how the crust tasted like cardboard.

After taking in all the complaints by customers and hearing that most customers believed Domino's Pizza needed to start from scratch if they wanted to continue to compete in the pizza business, Dominos did just that. They created brand new doughs and sauces to use on the new pizzas. These new pizzas are the center of Dominos brand new campaign. The campaign seems to be working as I know a lot of people who have been talking about Domino's Pizza as of lately.

Troy Savisky
Section G

Social Marketing

Social Marketing is defined as the use of commercial marketing concepts and tools in programs designed to influence individual’s behavior to improve their well-being and that of society (Kotler 203). Kotler also adds that social marketing includes campaigns that emphasize environmental issues, to increase awareness and promote a sustainable world.

Recently there has been more campaigns and promotion for making our world a “greener” place. With climate change and global warming being the most widely discussed issue, consumers and the public are finding ways to take small steps towards a better, more environmentally friendly lifestyle. One way is to decrease the usage of plastic bottles, which occupy landfills after they are used. A social idea and campaign for canteens have been pushed to consumers. Bottled water is essentially tap water sold at a marked up price. Companies such as Klean Kanteen have advocated from the beginning that stainless steal canteens store clean, cool water, are bpa free, cost effective, and better for the environment. This example can relate to Kotler’s meaning of social marketing because companies such as Klean Kanteen have been placing their products on university campuses to generate the notion that canteens are essential for students/people who drink plenty of water, cost conscious, and having an urge to help the world, environmentally. Posters, product placement, and ads inside magazines have displayed Klean Kanteen as a necessity for drinking water. The company itself has generated their mission to improve the well being of the world by reducing plastics in landfills, and many consumers who also believe this, have caught on.

Vincent Nguyen
Section G

Decline Stage

Decline stage is defined as the product life-cycle stage in which a product’s sales decline (Kotler 250). During this stage of any product, sales are diminished and consumers’ taste shifts to a newer or better offering.

Since its introduction in 2001, Apple released the iPod, a revolutionary portable music device. At the time, consumers lugged around compact discs to listen to their music, but it was the Apple iPod that enabled everyone to carry hundreds of songs in their pockets. Throughout the decade, the iPod has been upgraded with more memory, a slimmer profile, and additional models in the iPod family. With the passage of time, more competitors become visible and technology becomes more advanced. To compete in the dynamic music device market, Apple released the iPod Touch and iPhone, which are devices that can do pretty much everything; carry music, play games, surf the web, and etc.

Although the original iPod is a classic and a break-through product, sales have declined and Apple has been debating whether to drop the iPod Classic and mainly focus on new products such as the iPhone, iPad, and etc. This example of Apple’s iPod relates to Kotler’s definition of decline stage because it shows a company introducing a product and leaving it on the changing market for quite some time. Carrying a weak product can hurt Apple’s profits by continuing making the iPod classic and it may even take up unnecessary time in their management division. With the iPod Classic in the decline stage, Apple can only look forward to what they do best, which is to innovate and produce new products that appeal to consumers.

Vincent Nguyen
Section G

Brand Extension

A Brand Extension is defined as "using a successful brand name to launch a new or modified product in a new category" (Kotler 221). My example is the XBOX video game console. XBOX is the first Microsoft product in the video game console industry. The Xbox was released on November 15, 2001 in North America, February 22, 2002 in Japan, and March 14, 2002 in Australia and Europe.

Microsoft successfully used its brand name which is the symbol of world technology leader in consumers' minds to launch its gaming console, XBOX, in the console market. XBOX was instantly recognized as the gaming console with the latest technology in the world and it was fast accepted by consumers worldwide.

Region Units sold
(as of May 10, 2006)
North America 16 million November 15, 2001
Europe 6 million March 14, 2002
Asia 2 million February 22, 2002
Worldwide 24 million

Unlike spending huge on building a new brand name and advertising it, XBOX entered the gaming console market and jumped to be the strongest competitor of Sony's PlayStation, which is the biggest giant in the industry. Without the reputation of the brand of Microsoft, it is hard to imagine that consumers would recognize and accept the new product so rapidly.

Bo Jiang

MKTG 301 E

Service Failure and Service Recovery

Doctoral Candidate Steve Samaha presented a lecture about Service Failure and Service Recovery. Within days, my son and I personally identified with these concepts.

Service failure can occur on multiple dimensions. A core service failure occurs when a customer is not able to use the product or service they have purchased. A service encounter failure occurs when customer interaction with employees of a firm leave the customer feeling negative about the firm. Inadequate responses to other types of service failures entail their own category of service failure.

My son experienced the first type of service failure. On Saturday morning, he discovered that his World of Warcraft Account had been hijacked. The hijacker put an authenticator on his account, so he could not log in. (An authenticator is a second level of password protection which requires hardware that gets plugged into a USB drive. A random number generator generates a second password, which must be entered after the first password.)

My son's father is the accountholder, so efforts to contact Blizzard went through him. Telephone support was impossible, so my ex contacted Blizzard via e-mail and got an automated response that they would get back to him. In the mean time, my son contacted one of his guild members (If you play WoW, you know what that means, if you don't, it doesn't matter for this marketing example.) via chat, and let her know that his account had been hacked. She let him know when the hacker had been online, and later when he logged in. My poor son could do nothing. He knew his character was online, probably selling all of his good stuff, and he was powerless to do anything.

On the five dimensions of service quality, Blizzard ranked high on 'assurance' and 'empathy,' however, they failed to deliver 'reliability' and 'responsiveness,' which resulted in the service failure. (I am ignoring 'tangibles,' as I cannot find a way that it would apply.)

Service Recovery

When Blizzard responded, they took immediate steps to restore my son's account to him. My son had to make a second request to get the authenticator removed. His account was restored to him Sunday evening. Overall, Blizzard did a great job, albeit not as quickly as we would have liked. (We later learned that a different support channel would have served him quicker.) They assured my son that all of his items would be returned to his characters within 36 hours. The items were returned within 4 hours. The hacker had looted the Guild Bank; my son expected he would have to go through the logs and return all of those items manually. Blizzard actually returned all of those items directly to the Guild Bank. In addition, Blizzard let my son keep the gold that the hacker had acquired but not yet sold.

Blizzard also took the time to educate my son about how to contact them in the future. They actually have a dedicated support channel for when a person's account is hacked.

Overall, this was a successful service recovery, and my son will probably be more loyal to Blizzard, as the service failure was modest and the recovery exceeded his expectations. He now will be an easier customer to service, as he knows that there are multiple support channels, and he will use the appropriate one in the future.

Becky Stevens
Section G

Madison & Vine: Mixing entertainment and advertising

Kotler describes Madison & Vine Advertising as “a term that has come to represent the merging of advertising and entertainment in an effort to break through the clutter and create new avenues for reaching consumers with more engaging messages” (Kotler 363).

With the mass quantity of advertising consumers are inundated with on a daily basis, marketing professionals are beginning to get creative in their methods. By integrating marketing and entertainment consumers feel less directly pursued and are generally more open to advertising; they are less likely to tune out advertising that is secondary to the entertainment value provided by whatever they are watching than they are to change the channel or ignore a direct advertisement.

Sex and the City provides a great example of Madison & Vine Advertising. While designers are not directly marketing their products to consumers, they promote their brand name and the couture lifestyle through the characters in the show/movie. As the video clip shows, the introductory song is called “labels or love”, which musically implies that high-fashion labels are more important to the artist than love (or anything else, for that matter), suggesting the same thing to the viewers. Time and time again the show reinforces the positive influence of couture on the characters from various designers. By Carrie, Samantha, Charlotte, or Miranda wearing a designer’s clothing or accessories they are advertising to the consumer on a deeper level than just a commercial; women identify with these characters, and if high-fashion designers advertise through the characters, selling a lifestyle, thus they reach the consumer on a less biased and more influential level.

The New Product Development Process

IdeaPaint , a paint that turns any surface into a dry-erase board, is a good example showing how students take advantage of the environment and have it invented. It is now found in 10,000 locations around the world, including MIT, MTV Networks and The Limited Brands. I would like to use this to illustrate the new product development process.

It first starts from Idea Generation which came by brainstorming by a student, Jeff Avallon and his friends in a study room with walls covered in Post-it notes. They thought walls could act as collaboration tools. They came out many ideas to have the concept of being able to write over an entire wall. After Idea Screening, they decided to devise an erasable paint to satisfy their want. To testify the feasibility of the idea, they seek help from two professors, a college-board member and a parent to see if they believed in the idea and put investment. This is called Concept Development and Testing. After that, they started to find the target market, not only for school, but also for work and home. During Marketing Strategy Development, they need to plan the potential price, distribution, and marketing budget. Profits goal and marketing mix strategy were planned in the business plan and would be evaluated in Business Analysis. Now, they were going out of concept but take actions by producing a prototype, Product Development. As they said, when IdeaPaint finally had a prototype, “they had a conversation with everybody at school, Babson, who could be a potential customer or user.” When the final product was ready, they let the school be the first customer. This was the way they tested the Market. Finally, Commercialization means to introduce IdeaPaint into the market.

Selina Chan

Section G