Marketing Examples

Product Line Stretching

2010-03-05T17:23:00.000-08:00

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

Cost-based Pricing

2010-03-04T23:59:00.000-08:00

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

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Advertising Objectives (Informative Advertising)

2010-03-04T23:54:00.001-08:00

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

2010-03-04T23:40:00.000-08:00

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

2010-03-04T23:37:00.000-08:00

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).

*Citation
(1)source from “Wal-Mart complaints” http://www.my3cents.com/showReview.cgi?id=67609

Jungmin Park (Mina), Section E

Good Value Pricing

2010-03-04T23:18:00.000-08:00

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

2010-03-04T22:54:00.000-08:00

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

2010-03-04T22:08:00.000-08:00

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

Brands

2010-03-04T21:41:00.000-08:00

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

2010-03-04T21:03:00.000-08:00

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 Zappos.com. Zappos.com 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 Zappos.com, 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. Zappos.com 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 Zappos.com ad helps support these findings.

At the 0:18 mark, they include a graphic that says "Deliver Wow Through Service." This further demonstrates that Zappos.com 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 Zappos.com 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 Zappos.com

Jared Fagan
Section G

Product Concept

2010-03-04T21:01:00.001-08:00

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

2010-03-04T20:44:00.001-08:00

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

2010-03-04T19:51:00.000-08:00

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.

Mysurvey.com is an example of online marketing research. Mysurvey.com is owned by WPP Group (Communications Services Group). Since 1946, Mysurvey.com has been collecting primary data from consumers through online surveys. Consumers can register and become a part of Mysurvey.com’s online panel group and express their opinions through their monthly surveys. Mysurvey.com conducts surveys on almost every topic and product. User also have the choice to allow Mysurvey.com to track some of the online advertisement they see.

Mysurvey.com 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; Mysurvey.com

Mission Statement

2010-03-04T19:34:00.000-08:00

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 google.com, 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.

*1
Armstrong, Gary, and Philip Kotler. Marketing: an Introduction. Upper Saddle River, NJ: Pearson Prentice Hall, 2009. Print.
Pg. 37

*2
"Corporate Information - Company Overview." Google. Web. 05 Mar. 2010. .

Samu Shobeiri, Section G

Distribution channels

2010-03-04T19:10:00.001-08:00

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 http://100.naver.com/100.nhn?type=image&media_id=58321&docid=22505

(2) Picture from http://blog.naver.com/tkddk2003?Redirect=Log&logNo=30078993367

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

Jungmin Park (Mina), Section E

Personal selling and Role of the Sales Force

2010-03-04T19:01:00.000-08:00

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

2010-03-04T17:17:00.000-08:00

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.
1. http://best.king5.com/winners/best-of-western-washington/4749/people/sports-team?place=4&view=List
2. http://whl.ca/index.php?s=11088&p=&year=&month=&t=archives&searchbox=best
Joel Anderson
MKTG 301, Section G

Psychological Pricing

2010-03-04T17:12:00.000-08:00

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

2010-03-04T14:57:00.001-08:00

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:
http://www.lexus.com/models/allModels/#/hybrids/

Cynthia Meadows-Read
Section E

Brand Equity

2010-03-04T14:53:00.000-08:00

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

2010-03-04T14:50:00.000-08:00

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

2010-03-04T14:30:00.000-08:00

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 uwrobot.com) 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.

http://uwrobot.com/

-Michelle Choe, Section G

Cash Refunds

2010-03-04T14:28:00.000-08:00

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.

http://www.wireless.att.com/cell-phone-service/cell-phone-details/?device=BlackBerry%C2%AE+Bold+(TM)+9700&q_sku=sku4130251

Kenichi Sato Section G

Diversification

2010-03-04T14:24:00.001-08:00

Diversification

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

2010-03-04T14:22:00.000-08:00

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

2010-03-04T13:56:00.000-08:00

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

2010-03-04T13:25:00.000-08:00

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

2010-03-04T12:51:00.000-08:00

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

2010-03-04T12:13:00.000-08:00

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

2010-03-04T11:34:00.000-08:00

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

2010-03-04T11:29:00.000-08:00

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

2010-03-04T11:22:00.000-08:00

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

2010-03-04T10:10:00.000-08:00

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

2010-03-04T02:36:00.000-08:00

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.

http://www.entrepreneur.com/magazine/entrepreneur/2010/march/205056.html

Selina Chan

Section G

Brand Positioning

2010-03-04T02:21:00.001-08:00

Brand Positioning is defined as positioning "brands clearly in target customers' minds" (Kotler 215). Brand can be positioned at any of three levels: product attributes, desirable benefit, and beliefs and values. There is a Domino's Pizza commercial (1985) successfully positioning the brand at the desirable benefit level.

First, the ads basically emphasizes only 2 outstanding advantages of Domino's Pizza. First, the ads tells us that Domino promises that every pizza delivered will be fresh because they do not start making pizza until customers call to order ("our hands do not move until you tell them to"). It is a great product attribute since not every other competitors have so many local stores to secure the high quality of every pizza as Domino, of which there are 9000 stores around the world.

Second, the ads promises a desirable benefit: delivery in 30 minutes. It is not a product attribute but a service associated to its products. By this better positioning, the brand, Domino's Pizza, is assosciated with quick delivery beside high quality in customers' minds. Calling delicious pizza without going out of home and enjoying pizza within 30 minutes are really the product and service customers are seeking for. Domino positions its brand very successful in customers' minds.

Bo Jiang

MKTG301 E

Discount Pricing

2010-03-04T01:53:00.000-08:00

Delia's is a retail store that sells clothing and accessories targeted at teenage girls and young adults. Their products range from jewelry, swimsuits, to shoes. They have a very nice selection of jeans where you can select from all shapes and sizes for different body types. When I shop there, they have a year round rewards program where every time you buy fifty dollars or more from the store, the sales person gives you an automatic stamp. After ten stamps you can redeem another purchase for twenty dollars off.

Similarly, their website offers many ways to save money when you purchase items from their webpage. For example, they will list items on sale and offer other promotion codes. The one I particularly looked at was their free shipping and volume purchasing. On Delia’s website, you can purchase items over seventy-five dollars or more by May 31^st, 2010, and receive a twenty-five dollar Rising Star coupon for a next order. In addition, there is free shipping with this special offer. This is an example of discount pricing to attract young consumers to Delia’s store. By offering a twenty five dollar reimbursement, it attracts consumers because in their minds, they will believe that it is a good deal because twenty five dollars is perceived to be a lot of money saved in the consumer’s pockets. This gives the incentive for consumers to buy more from Delia’s instead of acquiring products from other retailers such as American Eagle or Hollister.

Annie Chen

Section E

Delia's Discount

Consumer Promotions

2010-03-04T01:10:00.000-08:00

Consumer Promotions are sales promotion tools used to boost short-term customer buying and involvement or to enhance long-term customer relationships (Kotler 404).

Coupons are one of the consumer promotions used, which are certificates that give buyers a saving when they purchase specified products (Kotler 404). The cell phone coupon is very popular in Japan and is a good example of Consumer Promotions: many companies have system of distributing coupons through cell phone. McDonalds, which attracts many low-price seekers, is a good example

McDonald’s Japan promotes price reductions and also offers new products for a limited time. During these periods McDonald’s Japan heavily uses mobile promotion, not through paper. All customer have to do is to go to McDonald’s website through their website and save the page with the coupon displayed. When they get to the store, one just has to show the screen and get the discount. The use of coupon through cell phone is effective because consumers do not have to physically carry the coupon with them to the store. This is especially true in places like Tokyo where majority of people heavily rely on cell phone. These coupons (or the saved page of the coupon) can be transferred to other users through the use of infrared data telecommunication that is built into the cell phone. Thus not only are cell phone coupons eliminate the task to carry the coupon itself, it has power to duplicate itself. This form is much more efficient and powerful than the traditional coupon.

cell phone image URL: http://farm4.static.flickr.com/3371/3414216460_0443178849.jpg

McDonald's Japan URL: http://www.mcdonalds.co.jp/fanclub/mcd/index.html

Shogo Okuda
Section G

Market-Skimming Pricing

2010-03-04T00:51:00.000-08:00

Market-Skimming Pricing is when "companies invent new products and set high initial prices to "skim" revenues layer by layer from the market" (Kotler 270). There are three conditions that are necessary for market skimming to make sense and actually work. The product's quality has to match the price and customers have to be willing to pay the price, the costs of producing a smaller volume won't end up hurting the producer, and it must be hard for competitors to enter into the market and under price the product (Kotler 271).

A great example of a company that actually did this tactic was Apple in it's release of the iPhone. Initially, the Apple iPhone was priced at $599 for it's most expensive model. However, just two months later, Apple lowered the iPhone's price by $200 and then again ten months later by $100. Apple also met all three requirements for implementing the market skimming technique. It had huge anticipation for the iPhone before it came out, which led to many customers willing to pay the high initial price. This allowed Apple to capitalize and earn more revenue just off the excitement of the consumers. There also couldn't have been a negative effect of producing a small volume since even though it was hard to find iPhones due to places being sold out, dedicated customers were willing to wait until they came available. The iPhone was also one of a kind when it first came out (which it still pretty much is) and had no competition, therefore Apple did not have to worry about other company's competing and undercutting their price.

http://www.itworld.com/iphone-timeline-080609

Tyler Stinde, Section E

Message Execution

2010-03-04T00:12:00.000-08:00

Once a company has decided on a marketing strategy, they must turn their idea into a compelling advertisement that will break through the advertising clutter and grab the attention of their target customers (Kotler 363-366). This can be accomplished through a variety of common execution styles including: “slice of life,” “lifestyle,” “fantasy,” “mood or image,” “musical,” “personality symbol,” “technical expertise,” “scientific evidence,” and “testimonial evidence.” The company must also decide on the type of tone to use, and what words will communicate their creative concept in an effective way.

Take this recent Nike commercial as an example:

The tone of the ad is very upbeat. It dares people to push themselves. “Just do it”. To get across their message, they use a catchy song that communicates these values:
“It’s not how you start, it’s how you finish. It’s not where you’re from, it’s where you’re at. Everybody gets knocked down, how quick are you going to get up?”

Nike combines the “life style,” “mood,” and “slice of life” execution styles to create a truly memorable advertisement. It represents the “lifestyle” approach because it shows multiple Nike products and how they fit in with various sport lifestyles, whether it is martial arts, cycling, or basketball. It is also representative of the “mood” style because it attempts to invoke a variety of emotions like beauty, tragedy, and then ultimately triumph through perseverance. Finally, Nike also uses the “slice of life” approach where they show regular people using their products. These examples of “typical” people can be seen in the young martial artists, the gymnast, or the bull rider. Nike intersperses them with famous athletes to show that we are all part of the same movement.

Jesse Rosen, Section E

Madison & Vine

2010-03-03T23:57:00.000-08:00

Madison & Vine is 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. There are two forms of Madison & Vine: Advertainment and Branded Entertainment. I will be focusing on the second.

Branded entertainment involves making the brand an inseparable part of some other form of entertainment. The most common form of branded entertainment is product placements.

CoverGirl makeup uses branded entertainment to advertise during America’s Next Top Model. As the season nears the end, one of the elimination competitions usually involves creating a commercial for the latest CoverGirl product. Viewers then willingly sit through each contestant’s commercials. After the commercials end, the ladies are led to a CoverGirl photo shoot. At the end of the cycle, the photos are used to promote the winner.

Essentially, the entire America’s Next Top Model episode is a CoverGirl promotion. Even when the show breaks for commercials, it is likely that another CoverGirl ad will be played. The product becomes integrated within the show. Viewers have no choice but to view the advertisements if they want to see the episode.

Juliann Morrison, Section E

Personal Selling

2010-03-03T23:16:00.000-08:00

Mary Kay Cosmetics, unlike most other consumer product companies, relies primarily on personal selling which takes place in independent interactions or at Mary Kay parties where sellers and buyers meet. While Mary Kay products are available online for purchase, customers buy products through thousands of independent consultants nationwide because Mary Kay products are not available in retail stores. Advertisements such as this personal Mary Kay beauty consultant ad communicate the product to customers. This example introduces customers to new beauty products and the concept of a personal seller who is in direct contact with the customers (and goes through the the sales process, beginning with prospecting and ending by closing and doing a follow-up). These beauty consultants represent the company to consumers, acting as salespeople to share information with consumers about various products and also listening to their opinions to find the best fit for the consumer’s needs and wants.

Personal selling is discussed by Kotler in Chapter 13 during which he describes the purpose of it as not only making sales but building customer relationships. The role of the sales force is crucial because it provides a direct, interpersonal link of marketing communication. Aside from representing the company to the customers, personal sales representatives also represent the customers to the company, bringing back insightful information to management in order to improve the products and services. As Kotler indicates, in order to be successful a company’s marketing and sales departments should work together to effectively reach consumers and accomplish objectives just as Mary Kay has done in the beauty industry.

Ashley Russell, Section E

Marketing Mix (Review)

2010-03-03T23:02:00.000-08:00

Time and time again BMW has demonstrated its effective marketing mix which is evident in the advertisement below. First let’s break down the Marketing Mix into the four Ps: Product, Price, Promotion, and Place (concept discussed in Chapter 2 and in lecture). BMW manufactures high-quality automobiles which come in a variety of styles and designs. BMW offers everything from small cars to large cars, SUVs, convertibles and motorcycles. The sleek design and sporty appearance of all BMW vehicles has allowed the brand to build an excellent reputation for itself in the luxury car industry. BMW positions itself with the slogan “The Ultimate Driving Machine.” The price of BMWs is on the higher end which is consistent with its positioning as a high quality brand offering cars with superior performance. BMW does not offer large discounts on their vehicles because this strategy would go against their higher price point and positioning for the elite. If an average person could buy a BMW due to allowances or other large deals, that would take away from the brand’s value. In terms of promotion, BMW print advertisements like this one appear in sophisticated lifestyle and business magazines in order to capture their more affluent target market. Since performance is another key aspect, BMW sponsors professional race cars, is promoted at racing events and in other driving publications. Lastly, place, another element in the marketing mix, applies to BMW’s channels. Its vehicles are only sold through BMW dealers or other luxury car dealerships which also offer high-end brands such as Mercedes, Porsche, Audi (not brands like Honda for example). The exclusivity of retailers adds value to this elite brand, emphasizing it’s only for those who desire an “ultimate driving machine.”

Ashley Russell, Section E

Consumer-Oriented Marketing

2010-03-03T22:57:00.000-08:00

While reading chapter 16 on Marketing Ethics and Social Responsibility and having recently visited PCC while shopping for groceries, I made a connection with the way PCC is specifically marketing to its customers. PCC’s focus is on sustainability, community and being environmentally friendly. It provides an easy way for customers to buy the kinds of products that support this type of socially responsible spending. I believe PCC is using the method of consumer-oriented marketing in that it goes beyond customer’s expectations in supporting environmentally friendly grocery selling. According to the text book customer-oriented marketing “means that the company should view and organize its marketing activities from the consumer’s point of view. It should work hard to sense, serve, and satisfy the needs of a defined group of customers” (Kotler 492). In satisfying its environmentally friendly customers, PCC is not only committed to serving its customers it also educates customers on nutrition, food safety and earth friendly food practices. PCC also has taken extreme measures to make the stores themselves as sustainable as possible. All stores are designed to have low energy impact on the environment. Each store is different but some of the ways they have met these needs are using natural lighting by adding skylights in the stores, using non-toxic paint on all its walls and harvesting rainwater. As you can tell, PCC has taken customer concerns of being environmentally conscious and made its own efforts to exceed customer’s expectations for the company.
-Hayley J. Sanders
MKTG 301 G

Social Marketing

2010-03-03T22:50:00.000-08:00

Social marketing is the use of commercial marketing concepts and tools in programs designed to influence individuals’ behaviors to improve their well-being and that of society.

With the Olympics recently wrapping up, Athletes have been front and center in the media. To promote remaining clean from steroids, United States Olympic Committee partnered with the Ad Council to create the Don’t Be an Asterisk campaign. The campaign includes print ads, commercials, and radio spots.
Don’t Be an Asterisk is an example of social marketing because the ad’s ultimate goal is to deter steroid use. It uses strong words to help protect societal health: Don’t let steroids make you fake. Don’t be an asterisk. Also, the campaign takes preventative measures by aiming their efforts at young adults on Facebook, Twitter, and Youtube.

Juliann Morrison, Section E

Time Pricing

2010-03-03T22:42:00.000-08:00

“Using time pricing a firm varies its prices by the season, the month, the day, the hour.” (Kotler, 307) Time pricing is a type of segmented pricing along with product-form pricing and location pricing. Segmented pricing happens when the difference in prices is not based on difference in costs.
Pacific Beach Apartment Rental in California is a classic example of time pricing.

Here is what they have on the Ad:

Low Season Price : $800
High Season Price : $1200 per Week

SEASONAL RATES:
* Peak Season requires one week minimum, Saturday to Saturday.
* Off season requires 3 night minimum

Off season Nightly Rates:
Weekends (F,S,S) 150.00
Weekdays (M-T) 125.00

Price Table
January 1, 2009 - June 12, 2009 800.00 per week
June 13, 2009 - August 14, 2009 1200.00 per week
August 15, 2009 - December 20, 2009 800.00 per week
December 20, 2009 - January 3, 2010 1200 per week
January 3, 2010 - June 14, 2010 800.00 per week

Prices for this apartment pick during summer months and Christmas Holidays season. They don’t only vary prices, but also vary minimum reservation period requirement. By employing this revenue management they not only take advantage of pick period but also try to spread the demand and ensure some amount of revenue for the whole year.

Elizaveta Koval, Section G

Click-only Company

2010-03-03T22:09:00.000-08:00

Click-only companies, as defined by Kotler are "The so-called dot-coms, which operate only online without any brick-and-mortar market presence" (428).

The internet connects these companies directly to the consumers. There is no building to go to if you want to buy their products in person. You can't wander into a store and try clothes on before you buy them, it's all done online.

An example I found of a company, such as described by Kotler above, is ModCloth. According to the About Us section on their website, "ModCloth.com is an online clothing, accessories, and decor retailer that aims to provide a fun and engaging shopping atmosphere for you, our customer." They don't have any brick-and-mortar market presence. If you want one of their products, the only way you can have it is by ordering it online.

I thought this store was interesting because there aren't a lot of apparel stores that are strictly internet based, at least none that I'm familiar with. Most stores I've seen or heard of have a building I could go to and try clothes on AND buy online (click-and-mortar), like Urban Outfitters, Forever21, Target, etc.

Plus, ModCloth interacts with customers via social network sites like Twitter and Facebook, or requests feedback through their blog. Definitely a Click-only Company.

Nikki Macgregor, Section G

Value-based Pricing

2010-03-03T21:56:00.000-08:00

UGG boots from Australia has been very popular during the winter. Almost every college girl owns a pair. Nordstrom sales price $179.95 a pair. We can get it for cheaper such as $150 or even below $150 if you make a bid. Mostly the UGG boots to the USA are produced in China. And the material cost plus shipping cost to America is $45 to $55 per boots. If store bought in wholesale, it will be even cheaper. However, there is a huge gap between the real production cost of the product and its retail price. After the products are displayed at Nordstrom. The price does not just include the material cost. The commercial and the store give a higher value to the product, for example, UGG boots are from Australia, imported from Australia added more value to a pair of ugg boots. Furthermore, they claimed UGG boots are made of real sheepskin, which can definitely keep your feet warm in winter. Lastly, since everybody has been buying them, everybody wants to join the club and own a pair. When the sales amount go up, it showed that people start to agree the value of UGG, then the company will not likely to lower the price when facing a high demand. So high demand of the boots kept the value excess its costs. Not for too long, UGG boots have become a trendy footwear in the winter.

Ying-Ju Lai. Section G.

Sales Promotion

2010-03-03T21:54:00.000-08:00

Sales promotion is short-term incentives to encourage consumers to purchase a product of service, it offers reason to buy now.

This video is a classic example of sales promotion that we all know. Billy Mays did these kinds of adds for years and they always stuck. He offers double or triple the offer or a reduced price, but you have to call in right then to get it.

-Dane DuBose Section G

Outcome Fairness

2010-03-03T21:37:00.001-08:00

Outcome fairness deals with the outcome or the result that the customer receives from the service recovery process (Stephen A. Samaha's lecture notes). It is when the customer receives the outcome in a desired fashion. Therefore, the outcome should include an apology, a fixed problem, a helpful employee, and anything else the customer is expecting.

I thought of this example based on my experience with Helzberg Diamonds. I bought my girlfriend a diamond necklace from Helzberg on Valentine's Day. The company screwed up and forgot to put my apartment address on the delivery package. As a result, I had to drive 20 minutes to pick up the package the day before Valentine's Day.

This is a great example of outcome fairness because of the way the Helzberg handled the situation. I called the company to complain and they immediately apologized. The company openly admitted it was the company's fault. Secondly, the company immediately offered me store credit for the mistake. On top of that, the customer service representative was very polite. This is outcome fairness because I got the outcome I wanted of getting store credit and an apology. The way Helzberg handled the situation met all of my needs.

Trevor Power , Section E

Consumer Buyer Behavior

2010-03-03T20:59:00.000-08:00

Not too long ago Starbucks came up with a concept called "my Starbucks idea" . This was an opportunity for customers to publicly post their suggestions and desires where they would be heard and seen by those who could make them happen. Unfortunately the idea did not get a very good start, and in its first year very few ideas were posted.

More recently Starbucks joined facebook and twitter, officially becoming part of the social network and beginning to use it as a portal into the minds of their consumers. Starbucks now has official social networkers employed who's job is to update and keep track of the facebook, twitter, and other social networking accounts. Through these accounts Starbucks has been able to get the consumer desires and qualms with the product and methods of the company that they originally hoped for with "my Starbucks idea". Not only have they finally gained direct access to their buyers, they have finally had success with "my Starbucks idea" which now has constant posting and has actually been used to implement consumer driven change.

Starbucks' method of accessing their consumers is a direct linkage into the consumer buyer behavior described in Armstrong and Kotler's textbook. The company is now able to learn about the buying behaviors of their consumer market. The consumers are giving the company information about why they buy, what drives them to buy, and what would get them to buy more. Online social networking has given Starbucks the power to access those that drive their business and are allowing the consumer buyer behavior to determine the future of the company, as it probably should.

Allie Peha, Section G

http://mystarbucksidea.force.com/ideaList?ext=0&lsi=0&category=Social+Responsibility

Advertising Objective (Reminder)

2010-03-03T20:51:00.000-08:00

An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time (pg. 358). Basically, it is the goal the company has in showing an advertisement. This example focuses on reminder advertising, which is meant to maintain customer relationships and put the product in consumers minds, usually done with more mature companies.

I saw an example of this while watching the Olympics. It was a Coke commercial and I looked it up youtube.com.

This is a good example of reminder advertising because it makes consumers think about the product and maintains the relationship with the consumer. This commercial is perfect because most people know about the TV show The Simpson's and it adds comedy to the commercial. It also sends a message that Coke is always there for the consumer. Even when times are down, such as the current economy, you will always be able to have a Coke. I believe this commercial accomplished both goals of reminder advertising because it effectively put the product in the customer's mind and maintained the relationship with the customer by using a current show The Simpson's.

Trevor Power , Section E

Comparative Advertising

2010-03-03T20:31:00.000-08:00

Comparative Advertising is defined as when advertising, a "company directly or indirectly compares its brand with one or more other brands" through the textbook. In the one-minute ads, PEPSI directly competes with Coke on the same stage. The two men are quite friendly to each other and not differentiated until the scene comes to PEPSI and Coke. The "PEPSI" man tastes Coke and thinks it is a way worse than his PEPSI; the "Coke" man takes PEPSI and does not want to give the can back. Then PEPSI man becomes angry and punches the Coke man to "territorialize" back his PSPSI can.

The message PEPSI is trying to send is that PEPSI products are unique and there is no alternative. Another message is that the major competitor of PEPSI, Coke, is way worse than PEPSI. It is typical comparative advertising; even more PEPSI directly compares its brand with another brand, Coke.

However, the effects to do so may not be as good as expected. First, consumer reflection. Since PEPSI and Coke are really not very differentiated from each other; some consumers even can not distinguish them. The strong message PEPSI tries to send about the strength of PEPSI does not really let comsumers agree on that. Not all the consumers prefer PEPSI over Coke, even more people likely prefer Coke since Coke seems to have more market shares than PEPSI. This ads might not have the effect that acquires "neutral" consumers and weakens Coke consumers' loyalty; conversely, Coke fans may reflect very negatively and drive themselves more far away from PEPSI products.

Second, comparative advertising like this ads may cause the two competitors to produce campaigns that attack each other. Too many negative elements are not appropriate to be applied in ads because consumers would get tired and leave both of the two alone if PEPSI and Coke keep insulting each other and revealing some factors neither of them ever want the public to know. That is the reason why firms should be careful about comparative advertising.

Bo Jiang

MKTG301 E

Co-Branding

2010-03-03T20:16:00.001-08:00

Co-branding

Co-branding is “the practice of using the established brand names of two different companies on the same product” (Armstrong and Kotler pg. 216-217). This is usually done because the two companies have strengths in different areas and by putting their brands together, a new brand, which is good in successful categories is born. For example, Betty Crocker is a well known brand of easy-to-make meals and desserts. Betty Crocker is especially good at baking mixes. However, Betty Crocker brand does not make chocolate even though they have brownie mixes. To make the product even better, Betty Crocker partnered up with Hershey’s Chocolate. Betty Crocker Hershey’s Chocolate Brownie Mix creates a broader consumer appeal, attracting both Betty Crocker fans and Hershey’s chocolate lovers.

DARYA SHUR, Section E

Product Bundle Pricing

2010-03-03T19:53:00.000-08:00

The textbook defines product bundle pricing as “combining several products and offering the bundle at a reduced price” (274). This strategy can be effective at selling product accessories that customers would not buy outside the bundle. This can increase the total profit gained from each customer even if the profit margin on each item sold in the bundle is lower than if they had been sold separately.

Walmart provides an excellent example of product bundle pricing with the way they sell video game consoles. The company’s “Xbox 360 Super Elite 250GB Bundle,” for example, includes an Xbox 360 console, Final Fantasy XIII, an Xbox 360 250GB hard drive, 2 Xbox 360 wireless controllers, an Xbox 360 wired headset, an Ethernet cable, a standard definition Xbox 360 composite A/V/ cable, and a Final Fantasy face plate. This package sells at a price of $399. This saves the customer roughly $35 compared to if these items were purchased individually.

Walment knows that a customer buying an Xbox 360 is likely going to want at least some of the other items included in this bundle at some point in the future. By selling all of the items together in one package, Walmart ensures that they receive some profit from selling each of these items rather than allowing the customer to purchase the extra controller or Final Fantasy XIII from Bestbuy or Gamestop at a later date. This bundling also provides added value to customers who save time and money by buying all of these items at once.

Scott Hardy, Section E

Customized Advertising on Facebook

2010-03-03T19:49:00.000-08:00

Facebook currently offers a self-service system that allows advertisers to design their own ads and tailor them to Facebook users. The advertisers can take full advantage of all the personal information users provide on their profiles. They can then aim their ad "toward finely segmented groups of Facebook's 400 million members, based on gender, age, location and preferences like favorite movies and activities." Facebook users will then see ads that are specifically targeted toward them based on some of the personal information they provided. This may seem like a very efficient way to reach consumers, but the technology is being abused by many advertisers.

The current problem on Facebook, is that many advertisers send customized ads to users, but the actual product or service being offered has nothing to do with the content in the ad. Some ads will also start with a hook that is related to a user's preferences, but the rest of the ad will be totally unrelated. An example that exhibits both of these poor advertising practices targeted people who had listed that they were fans of Eddie Izzard. The ad said, "Are you a fan of Eddie Izzard? We need 100 music and movie lovers to test and KEEP the new iPad." Not only does testing an iPad have nothing to do with Eddie Izzard, but clicking on the ad took users to prize-rewards.net, a site that does not offer iPads for testing, keeping, or anything.

Facebook is trying to crack down on abuses like this, and it is imperative that they do so in order to attract legitimate advertisers. Users who are burned by ads like the Eddie Izzard iPad illusion, are likely to lose faith in all Facebook ads. As we talked about in our class lecture on customer service, the creator of a product or service is responsible for customer service of all the channels and collaborators that handle its product/service. Facebook is definitely responsible for the actions of its advertisers, and will be the one to suffer if these deceptive abuses continue. Users will stop clicking on ads, and legitimate companies will pull their advertisements.

John Gardner, Section E

"Ads Posted on Facebook Strike Some as Off-Key" New York Times. 3 March 2010.
nytimes.com/2010/03/04/technology/04facebook.html?ref=business

Segmented Pricing

2010-03-03T19:27:00.000-08:00

Segmented Pricing

Awers Inc. manufactures and sells red salmon caviar both online and at a brick and mortar retail location. Awers practices SEGMENTED PRICING because they sell their “product at two or more prices, where the differences in price is not based on differences in costs" (Armstrong and Kotler pg. 275). For example, a 200-gram can of caviar costs $5.99 in the retail store and only $5.90 online. This price difference is not due to costs because there is only one factory that makes this product and then it is distributed to the retail store and the online store. Online there is an $18 fee for special refrigerated shipping and handling, but this does not affect the price, since it is an add-on price. The segmented prices reflect differences in demand as well as customer perceived value.

www.redcaviar.com

DARYA SHUR, Section E

Viral Marketing

2010-03-03T19:18:00.000-08:00

Our marketing textbook defines Viral Marketing as the internet version of word-of-mouth marketing. Examples include Web sites, videos, e-mail messages, or other marketing events that are so infectious that customers will want to pass them along to friends.

In other words, viral marketing gets past walls people place to ignore advertisements and create a form of entertainment while putting a brand or business in the mind of the viewer. This allows companies to control the messages they are sending to the public, leave a positive message about their brand with with the viewers, and have viewers pass on the message to others directly. They then do not have to pay for the ads distribution and get greater interest in its viewing.

This is a video of actual dancers perform in a real train station. T Mobile hired many dancers to dance surrounded by unexpected bystanders. T Mobile caught many of these bystanders using their phones to take pictures, text friends, or call others to document the scene they are witnesses. They closed with the single line...

"LIFE IS FOR SHARING"

T Mobile effectively created an entertaining video while managing to promote their product and brand. Specifically they showed how their products play a crucial and entertaining role in everyday life. They inform viewers to never miss an opportunity to catch a create moment and share it with others.

Erin Hoff

Section E

Advertising objective

2010-03-03T19:12:00.001-08:00

Advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time (Kotler p. 358). The Uniqlo's (A Japanese fashion brand) advertisement is a good example of Informative advertising, which is used heavily when intoducing a new product category (Kotler 358): It is strictly using its advertisement to inform the market about its presence in the United States.

The photo shows the advertisement of UNIQLO at Soho district in New York before its first store opened there. As it is visible from the photo, the advertisement only includes a company logo, a URL, and a sentence saying "open 2006 fall". The advertisement does not persuade anything, nor does it remind anything. By keeping its advertisement minimal, UNIQLO is building strong presence in the viewer's mind. This is because this advertisement's goal is to let the viewer know about a brand called UNIQLO: the primary goal is to create awareness in the people's mind.

Shogo Okuda

Section G

Service Recovery and Social Marketing

2010-03-03T16:43:00.000-08:00

On his website Dr. Bret L. Simmons tells the story of his own personal experience with service failure, and how AT&T was able to use social marketing as a means to discover the problem and eventually engage in service recovery.

Service Failure
Dr. Simmons was promised $300 in gift cards from AT&T when he switched to their service for cable and internet. He was very satisfied with the product he received, but was not so happy with AT&T's failure to deliver his promised rewards. He was given only half of the promised amount, over a month later than he was told they would arrive, and when he tried to activate one of the cards his cable and internet stopped working.

The Benefit of Social Marketing
At this point Simmons became truly frustrated and decided to rant about AT&T on Twitter. Soon after, he was contacted by an AT&T representative who asked for Simmmons' number and merely passed it onto someone else. This case of procedural unfairness frustrated Simmons even further, so he went back on Twitter and complained again. Soon after, he was contacted by the same representative who apologized, and made sure that his phone number made it to the right people--an example of interactional fairness--which impressed Simmons and gave him a positive view of AT&T's employees, though not necessarily their system which forced the representative to pass on Simmon's number rather than helping himself--another example of procedural unfairness.

Service Recovery
In the end, Dr. Simmons got his full $300 reward--outcome fairness--though AT&T clearly has some issues it needs to address in terms of inconveniencing the customer and wasting his/her time.

Summary
AT&T did a good job of monitoring and addressing customer complaints. Social media sites, like Twitter, can be very beneficial to companies who may not hear from their distraught customers another way.

Marissa Violante
Section E

Informative Advertising

2010-03-03T08:09:00.000-08:00

According to Kotler, the three main purposes of advertising are to inform, persuade, or remind. Some of the goals of informative advertising are: explaining how a product works, constructing an image for the brand, informing potential customers of services offered, and correcting mistaken impressions.

The following advertisement for General Motors cars is an example of the later goal. Many consumers believe that Japanese cars, like Honda and Toyota, always deliver better fuel economy than American made cars, like GM's products. This ad presents the EPA estimated fuel economy for several GM vehicles in an attempt to show potential customers that their assumptions about the company's cars may not be entirely accurate. The ad does not directly state the comparison to Honda and Toyota, instead opting to talk only about GM's cars, but the suggestion that viewers would be surprised by the fuel economy of the GM vehicles means that the company believes that consumers view the GM product line as being deficient in this area, which would imply a comparison to other companies' offerings.

Cullen Kester, Section G

An Example of the Impact of Public Relations

2010-03-02T22:49:00.000-08:00

Audi, a car brand featuring German-engineered luxury vehicles, has proven that public relations (defined as: building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, etc. - pg. 375) is a valuable tool to be used through its sponsorship of the U.S. Ski Team. Audi (whose slogan is "truth in engineering") has made a documentary called Truth in Motion, which features the U.S. team during their grueling months of training up to the Olympics. In a press release, Audi tells about its documentary and how it will be made available for free on iTunes.

The company's support of a U.S. Olympic team gains it much favor among the public, especially with its timely announcement weeks before the Olympics when Americans are feeling more spirited about their nation than ever. This use of public relations could get the image of Audi in consumer's mind better than advertising could. While consumers block out advertisements, public relations which features the company as a sponsor of something that consumers can be passionate about will usually cause consumers to think of the company in a positive manner. The promotion of the U.S. Ski Team as exemplified by Audi's description about its documentary: "Ultimately, it's a story about individuals, driven by personal motives, propelled by individual talents and challenged in ways that are uniquely human." This goes along with what are Audi's core values of innovation, its pursuit of better solutions, its commitment to its cars like the team's commitment to skiing, etc. In part of the press release, it states: "The film, according to Audi of America CMO Scott Keogh, provided a change to chronicle the technology, innovation and willpower that define both Audi and the U.S. Ski Team." You can tell that Audi is trying to tie its image with a skiing culture that Americans could identify themselves with or aspire to be like.

The fact that the documentary also allows a greater market to see this film and allows Audi's name to really get out on the market. As Kotler states, "PR is playing an increasingly important brand-building role. Public relations can be a powerful brand-building tool." (pg. 377) Public relations clearly allows Audi to build its brand name and get it into consumers' minds in a way that advertising might not be able to.

Here is a video featuring some scenes from the documentary:

-Caroline Tsoi, Section E

Advertising Virtually

2010-03-02T22:28:00.000-08:00

As written by Kotler, advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. He states, "Advertising is also very expressive-it allows the company to dramatize its products through the artful use of visuals, print, sound, and color" (Kotler, 355).

When I read that sentence, I thought about how companies market in the virtual world Second Life (SL). In May 2007, Kraft, together with IBM and National Grocers Association, launched Phil's Supermarket in SL. Kraft paid an undisclosed amount of money to sponsor the virtual market and is the only food manufacturer whose brands appear in the store. It originally used SL to showcase 70 new products as part of its sales pitch to retailers, but because the store is a permanent feature on SL, it also serves consumers who have a presence in the SL community.

When entering Phil's Supermarket, differing virtual Kraft products float and rotate in the air. Avatars, virtual members of SL, have the ability to touch these products and receive more information about them. For instance, when I touched Philadelphia's Cracker Spreads, I was able to get its ingredients and nutrition information. Due to this feature, consumers gain insight on what new product they want to purchase on their next grocery trip. This new approach of interactive informative advertising gets consumers more involved than the traditional forms of advertising (i.e. print ads, commercials, etc.). As we discussed in class and as Kotler mentions throughout his book, consumers' role in marketing is greater now than ever before. While speaking about Kraft's launch in SL, Kraft North America president Rick Searer states, "We are looking at our products through a new lens-the eyes of the consumer."

To summarize, Kraft advertises on SL to reach out to the virtual community by promoting its products through the artful use of moving icons which provide consumers with interactive information.

Amanda Saechao
Section E

Market - Skimming Pricing (Price Skimming)

2010-03-02T22:05:00.000-08:00

According to the textbook "Marketing: An Introduction" by Armstrong and Kotler, market-skimming price or price skimming is a strategy of 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 skimming makes sense only under certain conditions: the product's quality and image must support its higher price, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more, and finally, there should be a high entry barrier of the industry.

An example that would fall under this category is Amazon-Kindle unveiled by Amazon. Amazon's first offering of Kindle in November 2007 sold out in five and a half hours, and the device remained out of stock for five months until late April 2008.The original Kindle device features a 6 inch (diagonal) 4-level grayscale display, retailed for US $399. Amazon subsequently lowered the price to $359. The $40 drop brings the Kindle down from the initial $400 price it was introduced at. The price drop makes the Kindle even more compelling, that Amzon started to launch more typed of Kindle: Kindle 2, Kindle DX, and even Kindle 2 International Version. Amazon has not only applied the market skimming price strategy, it has also done a great strategy in selling this particular product. Amazon understands that the practice of ‘price skimming’ involves charging a relatively high price for a short time where a new, innovative, or much-improved product is launched onto a market. The objective with skimming is to “skim” off customers who are willing to pay more to have the product sooner; prices are lowered later when demand from the “early adopters” falls. When the demand from "early adopters" falls and more people eventually purchase Kindle with lower prices, Amazon then began to expand the product development by introducing more products still related to Kindle. This is even more of a strategic move by Amazon.

While the battle this year has seemed to focus on Amazon vs. Sony, the moves by Amazon appear to be part of a broader strategy to strike preemptively with a number of competing products hitting the streets. With the concept of market-skimming price, Amazon has a bright prospective in the development of its Kindle.

Clairine B. Runtung
Section G

Understanding Consumer and Business Buyer Behavior: Lifestyle Concept

2010-03-02T21:10:00.000-08:00

According to Kotler, lifestyle is a person's pattern on living as expressed in his or her psycho-graphics. It involves measuring consumers' major AIO dimensions--activities (work, hobbies, shopping, sports, social events), interests (food, fashion, family, recreation), and opinions (about themselves, social issues, business products). Kotler then states that "when used carefully, the lifestyle concept can help marketers understand changing consumer values and how they affect buying behavior. Consumers don't just buy the products, they buy the values and lifestyles those products represent. (Kotler, pg. 141)

An example of a company who has done a great job in implementing the lifestyle concept is Marlboro cigarettes, built by Phillip Morris. International tobacco promotion and marketing acts as both a lens for viewing the effects of globalization as well as a vector for its progression. As global communication through television, internet, and other mass media affects the lifestyle of consumers worldwide, tobacco companies track and respond to shifts in the needs, wants, and lifestyles of their targets. There are two things that Phillip Morris did to apply the lifestyle concept in marketing Marlboro: the existence of "Marlboro Man" as its marketing campaign and their appeal to young adults' lifestyle nowadays.

While trying to figure out how to boost their sales, Phillip Morris came up with targeting the men's masculine lifestyle as the key to promote Marlboro. What they did was, they invented this masculine icon of "Marlboro Man" (picture is above) who basically were all sorts of rugged individuals who smoked their cigarettes while performing equally manly tasks, from fixing their cars to fishing or hunting. Most of the Marlboro Men were perceived to be mostly cowboys. The concept of Marlboro Man has urged those who aspire to live the lifestyle of "Marlboro Man" to go to the store and buy Marlboro cigarettes.

Secondly, as globalization promotes the homogenization of values and lifestyles, Phillip Morris has done a lot of marketing research in different countries and different regions to observe the lifestyle it could use as a concept to reach its most profitable target market. An example would be the image of Marlboro in Jakarta, where I was born and raised. The concept of "Marlboro Man" being rugged individuals with the icon of hunters or cowboys would not have worked had they applied it to the market in Jakarta. Instead, often times I noticed Marlboro as one of the sponsors for night life events, reaching out to clubs packed up with young adults.

Hendy Kurniawan, Section E

Comparative Advertising

2010-03-02T19:16:00.000-08:00

The textbook discusses the various types of advertising that companies can engage in. One of the types is comparative advertising, which occurs when a "company directly or indirectly compares its brand with one or more other brands" (Kotler 358). An example of comparative advertising is this T-Mobile commercial. Although it does not make many comparisons with its competitors, it does tells customers that they can have a cell phone plan that is half the price of AT&T and Verizon. The company singled out its competitors and explicitly stated that T-Mobile is less expensive.

Although this type of advertising can be beneficial because it provides an opportunity for companies to tell customers why their products or services are superior, it also must be used with caution. As many of us have seen with the countless commercials that AT&T and Verizon have created to take stabs at the other company, it is clear that choosing this tactic may open a can of worms, leading to the competitor fighting back even harder to prove its superiority.

Karlyn Kurokawa, Section E

Exclusive Distribution

2010-03-02T19:02:00.001-08:00

The textbook defines exclusive distribution as giving a limited number of dealers the exclusive right to distribute the company’s products in their territories (307). This technique can enhance a product’s image and allow for higher markups.

One example of a company that has utilized this idea in a manner slightly different from what is described in the textbook is Whole Foods. The textbook describes exclusive distribution predominantly as a producer strategy in which a company gives the rights to sell their product to only a select number of the many distributors who are willing to sell it. Whole Foods is primarily a distributor, but they have still managed to use this strategy to their advantage. Rather than waiting for producers to approach them with an offer, Whole Foods actively seeks out the producers of attractive products that are new to the U.S. market and asks for exclusive distribution rights. They also work directly with some suppliers to develop products specifically designed for their stores.

The Whole Foods website lists a total of 77 items carried exclusively by their store (http://www.wholefoodsmarket.com/products/exclusive-products.php?CID=&P=2). Each of these items has been evaluated by Whole Foods to ensure that they meet the company’s quality standards. Customers can identify products that are exclusive to Whole Foods by looking for their exclusive symbol (shown below) on the packaging.

Scott Hardy, Section E

Branding and Packaging: Tiffany &Co

2010-03-02T15:12:00.000-08:00

According to Kotler, branding is “a name, term, sign, symbol, or design or a combination of these that identifies the product or services of one seller or group of sellers and differentiates them from those of competitors.” Packaging is simply “the activities of designing and producing the container or wrapper for the product.

The statement “diamonds are forever” has had a major impact on women ever since the statement came out. Today, Tiffany & Co, a premier jewelry company that sells fine diamond rings, bracelets, necklaces, and other accessories including crystal items and even clocks, is a superior, suave, and select jeweler desired by many women. You can see it through college campuses; earrings with the Tiffany & Co. symbol pressed into the fine metal, labeled rings, and the famous Tiffany & Co. key necklaces, almost all of these items adorning the “please return to Tiffany & Co, New York” symbol. An example of this is in the picture.This one symbol alone brands the company apart from other fine jewelers and is something that sets the Tiffany & Co prestige unique from other companies. This brand is very identifiable to the consumer as she would immediately know that the item is authentic to Tiffany & Co and is backed by the impression of being an item of quality, value, and prestige.

Something unique to Tiffany & Co. is the packaging; the infamous “Tiffany’s Blue Box.” This box is essentially the packaging for the jewelry item as it contains/wraps the product. Something interesting about this “blue box” packaging is that it seems to have led consumers to easily recognize the brand. Therefore, Tiffany & Co. uses branding in multiple facets, both the symbol on the jewelry as well as the box itself that identifies the product and differentiates it from other competitors. Without even seeing what is in the box, the blue box makes a statement that there is a Tiffany & Co. item inside of it, and this is very distinguishable from all other jewelry companies. In this commercial company, the highlights are the captures of the blue boxes in different scenarios. Certainly, this is a way of branding for Tiffany & Co. as it seems that a lot of the hype is around the box itself and clearly identifies the item to the company exclusively.

Kelcey Simpson, Section G

Idea Marketing: Social

2010-03-02T14:40:00.000-08:00

According to the textbook, social marketing is “the use of commercial marketing concepts and tools in programs designed to influence individuals’ behavior to improve their well-being and that of society” (203). Essentially, social marketing is a campaign that targets and points at societal needs, problems, and health. This type of marketing is said to typically go the promotional aspect of the P’s in the marketing mix while it looks at a wide array of other aspects in the social marketing climate. This social marketing is considered to be taking the product into the “idea” aspect of market offering.

Currently, Dove, a company known for moisturizing creams, body washes, deodorants, and other body care items, is partnering in the Campaign For Real Beauty through the Dove Self Esteem Fund that missions itself behind the statement, “Let’s make peace with beauty.” Dove contributes to this effort by donating a portion of their product profit to the Self Esteem Fund. This sets up self esteem classes that help pressured and struggling girls and teenage women who have difficulty priding their personal body image. As seen in this commercial specifically, Dove is showing their efforts towards this goal; acknowledging real beauty in the world versus the fake, perfect perception society typically portrays in ad campaigns. This shows Dove backing a cause that is meant to improve young women’s well-being which affects society as a whole, the essential aspect of social marketing. Nowhere in this ad does the viewer see a single Dove product, but at the end of the commercial, the Dove brand name is stated to be backing the campaign. Certainly, this social effort supports their company by showing customers that Dove contributes to humanitarian efforts. As a customer purchasing from Dove, one might feel more encouraged to purchase a product that goes towards such a cause, and knowing that Dove does this could potentially affect a customer's purchasing decision. Certainly, as a whole, Dove clearly exhibits an aspect of social marketing as it strives to help redefine stereotypes and “make peace with beauty.”

Kelcey Simpson, Section G

Line Extensions

2010-03-02T13:45:00.000-08:00

Kotler states in ch. 7 that line extension is "extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product category".

Michael Jordan is a brand known worldwide. Many believe that he is the best player that ever played the game. His success in the 90's after winning six champions has soared his popularity to new heights. Wave after wave of shoes have been on the market for over twenty years. At first, shoes came in one style every year and it's purpose was for use on the basketball court. However, as Jordan's popularity grew, there was a demand for anything "Jordan" grew. Now its not hard to find Jordan shoes in array of colors, sizes, and uses. In fact, new Jordan shoes come almost every week!!! Demand from "metro sexual" man have even caused a supply of Jordan casual shoes for everyday wear. And shoes for women and babies have been available for many years. The picture above shows baby Jordan shoes in many forms and colors. This picture clearly represents "line extension" by showing the how Jordan shoes have been extended to different colors and flavors. However, It doesn't stop with shoes. A trip to the mall or your favorite retailer online, one can buy Jordan shirts, shorts, hats, sweaters, sweats, or jackets in a variety of sizes and colors whether you are a man, woman, child, or baby.

Tu Pham

Section E

Social Marketing

2010-03-02T13:07:00.000-08:00

Kotler describe social marketing in ch. 7 as " the use of commercial marketing concepts and tools in programs designed to influence individuals' behavior to improve their well-being and that of society.

How many times have we seen ads like this in magazines or TV? This is the perfect example of social marketing because this ad is clearly trying to influence people's behavior. The message marketed is designed to warn people about the risks involved with smoking and to influence people to stop smoking. In the picture, Ronaldo Martinez is telling the world that smoking gave him throat cancer which caused a hole in his throat. Now Ronaldo has to use this hole to breathe and uses a machine to speak. This powerful image is marketing an idea, in fact, it's marketing a social idea that smoking is a health hazard and has its consequences. And if one does not stop, one could end up like this man.

Tu Pham

Section E

Branding

2010-03-02T11:57:00.000-08:00

Branding is a name, term, sign, symbol, or design or a combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors (Kotler). It is important for a company to have a good brand image embed in its target customers' mind. A good brand image can be a strong tool against your competitors.

Wal-Mart is a good example of this. This giant is now trying to make its supply chain greener (The New York Times, Feb. 26, 2010). Wal-Mart not only makes this decision for idealization, but also to make itself more competitive toward its competitors. People are now more aware of the ability of a company to be environmentally friendly. In addition to its slogan 'Save money, Live better', which suggests the seller is selling everyday low price; the giant believes that their decision of making the supply chain green will attract more customers to shop/shop more at Wal-Mart. After its scandal of being claimed to underpay its employees, Wal-Mart is also trying to use this strategy to bring back customers' confidence in them. When thinking of Wal-Mart, people used to think about low prices, but now they may have a greener image in mind when Wal-Mart comes around.

Chen, Hsiang Ting (Nita)

Section G

Captive Product Pricing

2010-03-02T11:38:00.000-08:00

EDIT: I mistakenly believed this example to be and hence called this example "Optional-Product Pricing." However, this is actually a Captive Product Pricing Example! Props to Shogo Okuda for his input from Section G.

Kotler defines optional-product pricing in Ch.9 as “the pricing of optional or accessory products along with the main product.” Essentially, it revolves around the idea that there is going to be a base price for the main piece of product/service, with optional adds on at a certain price to go along with the product or service. The example Kotler gave in the beginning of the chapter was with the airline industry – focusing on Ryanair.

With reading Scott Hardy’s post also about optional product pricing and the airline industry and how customers are feeling pinched for their money, I wanted to go off onto my own tangent…

Something VERY SIMILAR to optional product pricing is -- Captive pricing as Kotler defines the term as "setting a price for products that must be used alogn with a main product", in page 272.

If optional product pricing is potentially going to bring dissatisfaction among many customers in the airline industry, is there an example where a similar pricing strategy (captive pricing) is extremely effective? After thinking long and hard, I thought of something that many college kids do every day… --- play video games.

The PS3, one of the premier video game consoles was released in 2006. Now it’s 2010 and with a price drop, it is only $299.99 for the do it all system. With the hefty price tag (although it has gone down from the $599.99 it started at in 2006), it hasn’t stopped many players from buying the ‘add ons.’

Here's the commercial I was looking at.

In my fraternity, going from room to room, PS3’s (and XBOX 360’s even more so) are a staple product that can be found. On top of this, many of them have a lot of the essentials – the video games and controllers. People with the consoles can usually be found with 2-3 controllers and a minimum of 5 video games. This doesn’t seem expensive, but a typical NEW video game retails at $59.99 for both the PS3 and Xbox 360. In addition, controllers range from $29.99 to $39.99 for both system platforms. This means that it would roughly take buying 5 brand new games to equal the price of a PS3 system ($299.99) or buying 4 brand new games to equal the price of an Xbox 360 ($199).

From the number of controllers, to the different video games, to different system maintenance equipment such as inter-coolers, it is evident the cost of the add-ons do add up. However, this doesn’t stop gamers from purchasing.
There aren’t any campaigns against Microsoft or Sony for the cost of games or controllers. People are still purchasing the equipment. Hence, it seems that optional product pricing is perfect for this industry.

The question I would like to propose then is … does it matter what type of good or service it is for a specific pricing strategy to be effective? Does it matter on the type of the customer? Does it matter on the industry?

Francis Legaspi, Section E

Cover Girl Advertising and Public Relations

2010-03-02T10:36:00.000-08:00

According to Marketing An Introduction Ed. 9 book, the definition of advertising and public relations are as following:

Advertising is “any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.”

Public relations is “building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.”

Cover girl is a brand of women cosmetics consisting mascara, lipstick, facial powder, etc. I want to talk about this cosmetic brand because its advertising and public relations have been successful in promoting its products and broadcasting good company image.

Cover girl does not only advertise its products through television commercial, but it also sponsor through American Next Top Model (ANTM) show. This is one way to advertise to a specific target market and to use public relations in the media.

By sponsoring ANTM show, consumers can see the transformation of models before and after using Cover Girl products. The advertising message speaks for itself through the transformation. This helps Cover Girl gain attention and communicates its message to the viewers. In addition, Cover Girl use product publicize through one of the challenges in ANTM show by having the top three models use their products and act in a commercial. A Youtube video below showed the Cover Girl commercial
challenge in one of ANTM cycle.

Since the models in ANTM show are normal everyday women, Cover Girl’s sponsorship has created awareness of its products to consumers, persuading them that they can be as beautiful as these women in the show by using the products. The ANTM’s winner also gets to be a main Cover Girl commercial. By helping a normal everyday woman achieve her dream, Cover Girl gain favorable publicity and build good company image.
In my opinion, I think Cover Girl did a good job in communicating its advertising message and publicizing its brand name.

Jessica Chayavichitsilp, section G

http://www.youtube.com/watch?v=2Be5GIPLA9w&NR=1

Advertising appeals with PR and social marketing

2010-03-01T23:42:00.000-08:00

Advertisements can be seen everywhere via TV, billboard, and many other places. According to the textbook, advertising strategy consists of two major elements: creating advertising messages and selecting advertising media (Kotler, page 361). Creating advertising messages includes breaking through the clutter, creating a good message strategy and message execution. To create an effective advertising message, it is important to have the creative concept---the compelling “big idea” that will bring the advertising message strategy to life in a distinctive and memorable way---as a guide to appeal consumers.
In this example which I found from Youtube, Starbucks used a mix of these concepts plus societal marketing to express their care and support towards the voting, as well as connecting and maintaining public relations, social welfare and social responsibility to the public.

Ai (Beanca) Ho, Section G

Cause- Related Marketing

2010-03-01T22:21:00.000-08:00

Cause- Related Marketing is a strategy designed to help a company build a better brand image by associating themselves with a worthwhile cause. the goal is to help the company promote and sell its product or service and at the same time bring attention and support to the worthwhile cause.

http://www.youtube.com/watch?v=00Sy8Rf1dpM

In this example Disney is trying to encourage people to volunteer at local organizations that help their communities. They are doing this by offering free admission to their theme-parks for those that complete a day of community service. Disney's hope is that the one day ticket they are willing to give you will inspire you to help your community and also that you will want to spend additional days at their parks beyond the one free day, and that while you are there you will spend money on other things in their parks, or maybe stay at one of their hotels.

Cause- Related Marketing is not without its issues. Some people thing that large companies that engage in this practice are exploiting these causes to sell product and don't care if their efforts actually help. While determining the reasoning behind a company's motives for engaging in cause- related marketing would be impossible, one would hope that it would be for the shared benefit of both parties not exploitation.

Matt Brown
MKTG 301 Sec. G.

Notes: (Video Embedding disabled by Disney)
Sources: (Armstrong, Kotler; Marketing, an Introduction)

Exclusive Distribution

2010-03-01T19:00:00.000-08:00

Do you ever see something that you wish you could have, but much to your dismay can’t seem to locate that product for the life of you? Chances are that product was exclusively distributed.

Exclusive distribution is when a limited number of dealers have the exclusive right to distribute the company’s products in their territories (Kotler 307). This practice is very common among extremely rare items as well as those items reserved for the upper echelon of society. These goods can range from limited edition collectibles to multimillion-dollar automobiles.
Having been a so-called “sneaker head” I have experience my fair share of exclusive distribution. Urban dictionary defines a sneaker head as “a person who collects limited, rare, OG, or flat out exclusive kicks [shoes]. Usually the collection consists of Jordans or Dunks.” During my tenure as a sneaker head I had to keep up on the release dates of these rare and collectible sneakers. Now, these rare and collectible sneakers wouldn’t just be sold at any store, they would be sold to incredibly specific retailers meant to sell those types of goods. Nike has collaborated with a small number of specific stores in which they release their line of SB (Skateboarding) shoes, one of those stores being Goods, located in downtown Seattle. Stores like Goods experience exclusive distribution since they receive a limited number of these rare products; once they sell out, that’s usually it, since Nike rarely reproduces these collectibles. Often times, during release dates of highly hyped shoes there will be an extremely long line day, even weeks, before the store actually launches the shoe. The demand is so high that retailers usually sell out before catering to all customers in queue. Exclusive distribution is a crucial part of the “shoe game” because it provides sneaker heads with another reason to be involved. Some shoe gurus join the sneaker scene for style, some join to resell, and some join to be different. Whatever the reason is exclusive distribution has allowed for these people to express themselves.

Exclusive distribution is not just evident in the shoe world it can be seen wherever there are limited releases or high-end goods like supercars. Just like Nike collaborates with these specific stores, Bentley, Rolls Royce, Bugatti, and other top-notch car manufacturers only sell their cars at very specific dealers. Once again, this is an example of exclusive distribution.
Exclusive distribution is all around us; sometimes we just don’t notice it because often times we aren’t the targeted market for these goods.

The video below shows a group of sneaker heads awaiting the release of Nike Air Yeezy's at Goods in Seattle 3 days before the launch date. Goods is an exclusive distributor of rare and limited Nike sneakers.

allowscriptaccess="always" allowfullscreen="true" width="425" height="344">

-Jon Honari, Section E

Optional-Product Pricing

2010-03-01T18:30:00.000-08:00

Optional-product pricing is defined in the textbook as “the pricing of optional or accessory products along with a main product” (272). This pricing method allows companies to present a low base price that is capable of attracting customers while maintaining the possibility of generating high customer revenues by selling costly add-ons later.

Optional-product pricing is a technique that it becoming increasingly popular in the airline industry. In the past, most airlines have charged higher ticket prices that they do now, but these ticket prices provided the customer with more than just a small seat and transportation from one airport to another. Among other things, airlines have historically allowed their flyers to check a limited number of bags free of charge and provided customers with free in-flight snacks. Increasingly, however, airlines have changed their strategy. Now tickets are generally priced fairly low most airlines charge customers separately for virtually anything beyond the ticket. Most airlines now charge for snacks, the use of headphones, checking kennels for pets, reserving a window or isle seat, checking bags, and many other things. These fees are not trivial either. Airlines generally charge around $25 to $35 to check each bag and, in 2008, the major airlines made about $1.1 billion on baggage fees alone (http://www.cbsnews.com/stories/2009/06/08/travel/main5071069.shtml).

This strategy may have been successful at generating revenue for the airline industry, but it has also resulted in a considerable backlash among consumers. As the following video demonstrates, many consumers see the use of an excessive number of fees as a way to squeeze additional cash from them and are actively fighting to avoid fees when possible.

Scott Hardy, Section E

Branded entertainment, product placement

2010-03-01T01:30:00.000-08:00

Branded entertainment (or bran integrations) involves making the brand an inseparable part of some other form of entertainment. The most common form of branded entertainment is product placements - embedding brands and props within other programming (Kotler 365). Product placement advertising is widely used in the age of numerous challenges to getting the message to the consumer. Since people are being empowered by such devices as TiVo and internet, they are now able to avoid boring advertisements. In the modern age marketers try to implement better ways to call attention to their products.

Product placement in popular TV shows tends to solve the problem of viewers fast forwarding through the advertised messages. Here is an example of placement of two cereal brands: Frosted Flakes and Cocoa Puffs. Extremely popular TV show "Friends" feature these products in one of their episodes. One of the characters is eating the cereal and even quoting parts of the famous lines "Grrrreat" and "Coo coo". The viewer cannot dodge this cereal promotion unless they skip a chunk of the episode.

Although these promotional tactics prove to be very effective, overuse and blunt product placement can avert customers from these shows altogether. It can create negative feelings such as resentment if the marketers will "throw" messages in front of consumers eyes. Product placement must seem natural and non coercive, so the consumer can still enjoy their show without being disturbed by the promotional tricks of the advertisers.

Ekaterina Ogay
Section G

Pricing

2010-03-01T01:05:00.000-08:00

Price is the amount of money charged for a product or service, or the sum of all the values that customers give up in order to gain the benefits of having or using a product or a service (Kotler)

Pricing is an important to a business; it must set prices so that it can profitable. Flawed pricing can lead to loss of customers, profits and market share. We will discuss the pricing strategy of Apple, Inc., a company that produces a wide-array of technology products.

Value-based pricing

Apple adopts value-based pricing, (setting prices that are based on buyers' perceptions of value rather than on seller's cost), more specifically value-added pricing. Apple products usually cost higher than other market offerings from other brands, however it has features that justifies the higher premiums. For example, the iPhone has touch screen functionality and has the ability to run several applications available at the App Store. This enables the iPhone to be a mobile phone,a mp3 player, a gps, a hand-held gaming system and much more. Macbook Pro's are highly-priced compared to market offerings by Hp, Dell, and other laptop manufacturers. The base model of the current Macbook Pro retails for $1,199. However, Macbook Pro's have the ability to dual-boot and run OS X and a Windows operating system. They also offer a plethora of other features that increases its value such as LED-lit screens, an aluminum body, prolonged battery life and much more.

New-Product Pricing Strategy

For the iPad, Apple used a market-penetrating pricing strategy, along with other pricing strategies such as product line pricing strategy. Market-penetrating pricing is defined as setting a low price for a new product in order to attract a large number of buyers and large market share. The iPad is priced competitively against its competitors (Amazon kindle, Sony e-readers, Netbooks). By doing this, Apple hopes to increase its market share and quickly attract a number of buyers.

Product Mix Pricing Strategy

Apple adopts a product line pricing strategy for most of its products. Product line pricing is defined as setting the price steps between products in a product line based on cost differences and customer perceptions of the value. For example, Apple sells its iPods at various price points. The iPod touch is priced at $199 for the 8gb model, $299 for 32gb, and $399 for the 64gb model. The price savvy consumer might gravitate towards the lower 8gb model but a heavy-user with little regard for price will purchase the models with higher memory capacities. The other iPods such as Nano, Classic, and shuffle also follow a similar pricing scheme.

Apple also uses optional-product pricing . Optional-product pricing is defined as the pricing of optional or accessory products along with a main product. A variety applications that are usable on the iPhone and iPod touch can be only purchased directly from Apple's App Store. If a user wants to legally download certain mp3 songs, albums and video files, they can download those files from Apple's iTunes Store. Users can also customize the hardware of their Macbooks and Macbook Pro's; they pay extra for upgrades in hard-drive space, Random Access Memory (RAM), processors and much more.

Apple occasionally uses product bundle pricing as well. Product bundle pricing is defined as the combination of several products and offering the bundle at a reduced price. For example, during the summer of 2009, Apple bundled certain iPods and printers with Macbooks and Macbook Pro's for the retail price of the Macbook or Macbook Pro.

Price-Adjustment Strategies

Apple also applies psychological pricing. Psychological pricing is defined as a pricing approach that consider the psychology of prices and not simply the economics, the price is used to s ay something about the product. The higher prices of Apple's products compared to its competitors triggers signals to consumers; exclusivity, high-quality, uniqueness, coolness factor, etc. They also incorporate psychological pricing in a different way. As stated previously, the different variations of the iPod Touch retail at different price points. While applying product-line pricing, I also believe this strategy also urges its consumers to step up to the next model and pay more for a higher model. For example, the $399 iPod touch yields the best value because the price per GB is $6.23 ($399/64) while the $199 yields a price per GB of $24.88 ($199/8). These cues could lead to a purchasing decision that a customer did not anticipate (i.e wanting to purchase the 16gb initially, but ended up purchasing the 32gb or 64gb model).

Note: All the definitions were obtained from the textbook.

Jose Jacinto

Section E

Image Differentiation

2010-02-28T22:04:00.000-08:00

A company can obtain competitive advantage by differentiating itself from the competition. Kotler states, “It can differentiate along the lines of product, services, channels, people or image” (186). Once a company identifies its points of differentiation, if it has more than one it must then decide which ones to use, how to use them and to what target market to direct them.

Because of the potential costs associated with the choice of differentiation the most effective difference or differences must be chosen carefully. Kotler lists several factors worth considering when making this choice. They ask: is it Important, Distinctive, Superior, Communicable, Preemptive, Affordable, and Profitable? (189).

If a company chooses to differentiate based on image, Kotler also says the following: “A company or brand image should convey the product’s distinctive benefit and positioning. Developing a strong and distinctive image calls for creativity and hard work” (188).

Well, creativity is exactly what dairy farmers in Washington State have called upon to differentiate themselves and their image. Recently, a radio ad by the dairy farmers of Washington State expressed that their milk was of higher quality because of the way they treat their cows. They expressed that the difference comes from how comfortable they make their cows by providing them with cow mattresses. Among others, this differentiation could certainly appeal to animal lovers and those moving toward organic products.

While the radio ad is not available to listen to, the following website of the Dairy Farmers of Washington contains verbage along the same lines. The other website listed is a post from another site regarding the benefits of cow mattresses and the production of cow’s milk.

http://wadairy.com/pgs_farm/cow_care.shtml
http://www.npr.org/templates/story/story.php?storyId=112954171

Jenniffer Wellbrock
Mktg 301 Section E

Message Strategy

2010-02-28T18:08:00.000-08:00

Message Strategy is the first step in creating an effective advertising message. It provides the foundation for the rest of the advertising campaign. According to Kotler the first step of developing a message strategy is "identifying customer benefits that can be used as advertising appeals" (Kotler 363). From past chapters and lectures we have learned that customers buy products based on their perceived value and benefits they offer rather than for the product in and of itself. An advertisement's success is rooted in its ability to communicate the products benefits and value to particular customers.

The next step of message strategy outlined in Kotler is the development of a creative concept. This is defined as "the compelling big idea that will bring the advertising message strategy to life in a distinctive and memorable way" (Kotler 363). This may manifest itself as a phrase, a visualization, or both.

Finally, the creative concept will provide guidelines for the construction of advertising appeals. These advertising appeals should have three characteristics: they should be meaningful, point out benefits that makes the product more desirable. They should be believable and thirdly they should be distinctive, meaning they should tell how the product is better than the competitor (Kotler 363). The hit television series Mad Men features a scene in which one of the main characters Don Draper makes a advertisement sales pitch that illustrates the important qualities in a message strategy (unfortunately the embedded feature on this youtube video is disabled, sorry for the inconvenience):

http://www.youtube.com/watch?v=5y4b-DEkIps

Don Draper illustrates the proposed message strategy for a lipstick. He does so by identifying a unique customer benefit, the benefit of having a unique kiss, the ability to mark a woman's territory, her man. The creative concept manifests itself in the form of the phrase "Mark Your Man". The advertising proposal is meaningful, believable, and distinctive.

Nick Unan

Section E

Managing Marketing Channels

2010-02-27T22:13:00.000-08:00

“Marketing channel is a set of independent organizations that help make product or service available for use or consumption by the customer or business user.”

Dell currently has over 30,000 partners which they believe add value to Dell’s product and expand Dell’s reach in marketplace. In 2007 Dell built PartnerDirect program to enhance their partner relationship management. This program is now available in 140 countries. Paul Shaffer, director of channel marketing, talks about this program on facebook

http://www.facebook.com/pages/DELL-PartnerDirect/34497893743?v=app_4949752878

This program:
1) Enhance partner profitability
2) Minimize channel problems with help of Dell Direct teams
3) Leverage online capabilities for partners
4) Supports multiple partner business models
5) Provides improved partner service and support

Elizaveta Koval, Section G

Push Marketing

2010-02-27T20:25:00.000-08:00

A push strategy involves "pushing" the product through the market channels to final consumers. The producer directs its marketing activities (primarily personal selling and trade promotion) toward channel members to introduce them to carry the product and promote it to final consumers (Kotler 356).

Here Vector Marketing Corporation is a multi-level company that appears to implement the pull strategy. Vector is part of Cutco Corporation, a New York based company. It employs salespeople who work on commission based pay. Many salesmen are college students and recent high school graduates. Vector uses personal selling to push their product through the channels to reach the consumer. The company mainly markets Cutco kitchen knives to customer through one-on-one demonstrations. The sales force scouts for potential customers by looking through their contacts and using other people's references. Salespeople become channels by purchasing their own set of knives, independently finding contacts, setting up appointments, and using their own techniques to interact with customers. This is a clear example of pull strategy because the customer is being not demanding the product but the salesperson is creating that demand for them. The chain of communication goes from the Vector (producer) to salesmen (channels) to the consumers.

Ekaterina Ogay
Section G

Horizontal Marketing Systems

2010-02-25T22:34:00.000-08:00

With the economy at a downturn, companies throughout many industries are finding it difficult to maintain the same profits that they experienced in the mid 2000’s; that is, before the subprime mortgage crisis. During tough economic times, rivalry between companies heavily increases; this means, companies need to work especially hard to remain competitive and visible in consumers’ eyes. In our Marketing textbook, Armstrong and Kotler reinforce the importance of developing channels. A very powerful way of working together to combine financial, production and marketing resources to accomplish more than any one company could alone is called horizontal marketing system.

Companies often join together to market an existing product, or create a new distribution venture to market a new product because they lack tangible and intangible resources, physical and capital resources, and an established brand name in order to reach customers effectively for ultimately a successful joint effort. A great example of horizontal marketing systems that I found is how Apple and Starbucks announced music partnership in 2007. The purpose of this partnership was to allow Starbucks customers to wirelessly browse, search for, preview, buy, and download music from iTunes Music Store onto their iPod touch, iPhone, or PC or Mac running iTunes. Apple’s leadership in digital music together with the unique Starbucks experience synergized a partnership to offer customers a world class digital music experience.

Apple benefits from this partnership with higher iTunes sales because Starbucks has a lot of loyal customers that take the time to visit, relax and enjoy the unique Starbucks experience. When Apple first introduced its iTunes music store, it hoped to sell one million songs in six months, but to its surprise, Apple sold over one million songs within the first six days of its iTunes music store opening. With such loyal online music consumers, Starbucks benefit’s from higher sales, increase in market share, and stronger customer loyalty. This example demonstrates how two companies can join forces to follow a new market opportunity. This opportunity allowed Starbucks and Apple to both gain something of greater, than otherwise would be possible if they somehow attempted this strategy independently.

Alex Brynza,
MKT 301 Section E

Product Line and Product Bundle Pricing

2010-02-24T23:41:00.000-08:00

In today’s highly competitive business world, companies have to rely on multiple pricing strategies to conduct business. According to Armstrong and Kotler, product line pricing is a type of a pricing strategy that a company uses when it develops a line of products in the same family, rather than just one product (Kotler 271). Different products within a product line are priced differently. It is important that when using the product line pricing that a company establishes defined price steps between the different products to justify the difference in prices. For instance, a company has to convince or show to consumers that a more expensive product in its product line has more value than a product that is cheaper. Another type of a pricing strategy is product bundle pricing. Product bundling pricing involves a company combining several of its products and offering them together as a bundle at a reduced price (Kotler 274). A good example of a company that implements both of these pricing strategies is Microsoft Corporation. Microsoft has developed a program line that starts with the basic programs such as OneNote for $79.95 and ends with Outlook with Business Contact Management for $679.95 (www.microsoftstore.com). To promote the sales of its product or introduce customers to some of its new products that consumers otherwise would not buy separately or wouldn’t try at all because they are too expensive, Microsoft bundles up those programs with a more popular programs that everyone needs and sells them together at a reduced price. For instance, Microsoft’s Office Home and Student Suite includes Word, Excel, PowerPoint, and OneNote programs for $149.95. If someone were to buy all four of these programs they would spend $409.8 (OneNote 79.95+ 109.95Word + 109.95 Excel + 109.95PowerPoint).

Olga Fedorovskaya

MKTG 301 E

Price Elasticity of Demand

2010-02-24T16:43:00.000-08:00

Price Elasticity of Demand (PEd), or the slope of the demand curve, is originally an economics term but has important implications in marketing as well. Simply defined, PEd tells us the responsiveness of demand (customers) to changes in price. Due to the nature of the demand curve, the slope is always negative: a decrease in price (P) will increase demand (D) and vice versa. For example, Figure 1 shows a slope of -1, and Figure 2 shows what would happen if the P fell by -25% (D will increase by 25% as a result). The negative property will be ignored when finding the quotients (D/P) to make things easier. If PEd is 0, then you have a perfectly inelastic demand: where the price does not affect the demand at all (there is a vertical line on the graph). If PEd is between 0 and 1 (.23, .47, etc.), then you have an inelastic demand: where the price and demand change, but demand does so in a smaller proportion. For example, if P changes 25%, then the D’s change will be smaller in comparison to P’s change, say only 20% (20/25= .8). Unitary elasticity occurs when the change in price is proportional to the change in demand, recall 25%/25%= 1 from above (ignoring negative signs). If PEd is between 1-∞, then label as elastic demand (D) where demand is greatly affected by any price (P) change e.g. 50%/25%= 2. On the extreme side, if PEd is ∞ (infinite), then we have a horizontal line where a price change receives no demand at all.

Now that the simple model of economics is over with, let’s move onto some examples. As of this day, a large 3-topping pizza from Pizza Hut costs only $10 ($1 extra for stuffed crust) as a promotional offer (I get coupons in the mail). Let’s assume the demand at this price is 10,000 in Seattle. With this information, we’ll examine changes happened with an inelastic demand curve and with an elastic demand curve.
First the inelastic demand curve. At a price of $10, there are 10,000 customers (10K). If the price increases by only $1 for the same pizza, the demand will fall only change by 1,000. The slope of the curve is P/D x ∆D/∆P= 10/10,000 x 1,000/1= 0.10.

The demand is much more price sensitive with elastic demand. For example, a $1 increase reduced the demand by 6,000 (unlike 1,000 in the previous example). The slope (sensitivity) of the demand is P/D x ∆D/∆P= 10/10,000 x 6,000/1= 6.

As you can see, the price changes can be the same in both situations, but demand varies greatly depending on the sensitivity (elasticity) of the demand. Demand in Figure 3 is not very price sensitive, while demand in Figure 4 is.
Some example of products with PEd of 0 may include necessities such as water and food. For these, everyone would try to get they’re hands on no matter what the price.
Price elasticity of demand has important implication for marketers because with these models and numbers, they can estimate their demand, price and overall profit. For example, imagine that Pizza Hut is in situation Figure 4. It has a demand of 10,000 at a price of $10 per pizza. Bob, an experienced manager at Pizza Hut, proposes that marketers increase the price of pizza to $11 to increase profit (assuming $11 x 10,000= $110,000). Even though you’re fresh out of college, you know that not everyone has the same perceived value at $11. So you sketch a graph to show Bob that with an elasticity of 6, demand will drop to only 4,000, leaving you with a profit of only $44,000 ($11 x 4,000).
With this information marketers can also predict market share at this price (everything else constant—such as pricing of competitors).

Viktor Brynza
MKT 301 Sec. E

Value-Added Pricing

2010-02-23T20:50:00.000-08:00

Many company's are challenged to build its pricing power, which is "its power to escape price competition and to justify higher prices and margins without losing market share (page 262)." In order to increase the company's pricing power, company's adopt value-added pricing which is defined as "attaching value-added features and services to differentiate a market offering and support higher prices, rather than cutting prices to match competitors (page 262)." This primarily applies to commodity products simply because these types of products have little differentiation and extremely intense price competition.

Starbucks, founded and created in Seattle, never once compromised its price. Even with the economic downturn, Starbucks did not decrease its price, but instead increased its price. The company primarily focuses on people versus the products and offers the highest quality coffees. They believe that the connections they create with the communities around them is what has kept customers loyal.

Although many individuals find the $4.00 average price of Starbucks to be ridiculous, their financial statements prove that little will the increase in price effect their earnings. According to Hoover's, revenues for the company in 2007, 2008, 2009 were $9,774.6, $10,383.0, and $9,411.5 (in millions), respectively. Starbuck's financial statements prove that although the company increased its prices for a cup of coffee, the result did not effect its earnings.

In the end, Starbucks has stayed true to its name, still focused on the people versus the products and offering the highest quality coffee. In addition, the company implemented a rewards program in which customers accumulate points to receive a free coffee. The company has also created a blog site in which customer inputs can be seen and heard, and the company maintains close relations with all their customers through this website by responding to the individual requests. If the individual shares an idea, the company will note it, discuss why its probable or not and provide feedback. Starbucks is truly taking innovative measures in order to assure customers that the higher prices are supported.

Below is an image of a Starbucks Menu:

http://www.austinconventioncentercatering.com/images/starbucks-menuWEB.jpg

Reference Pricing

2010-02-21T20:07:00.000-08:00

Being comparative is a natural human instinct. Most rational shopper wants to buy a product or a service if its price first matches his or her perceived value. Then the rational buyers might compare its price that this store offers relatively to other stores. The buyers might also have a set price in mind. Sometimes buyers do not have all of the relevant information to know how much a certain product or a service is worth, and this is where marketers can come in and assist (or trick if you have a negative view on marketing) and help buyers make buying decisions. Marketers can convince the buyers to purchase their product or service by implementing reference pricing strategy, most prominently used in discount stores. Reference prices are prices that buyers carry in their minds and refer to when looking at a given product. Reference price is one component of psychological pricing, in which the sellers consider the psychology of prices and not simply the economics.

Nordstrom Rack is a great example of a store that utilizes reference pricing to sell its product. Nordstrom Rack is the discount/clearance store for Nordstrom and it typically carries overstocked inventory from Nordstrom and other big name brands, original Nordstrom Rack brand such as Evergreen and returned merchandise from Nordstrom. There are very few instances where there will be the same product being sold at the regular store and the Rack (ex. Burberry Weekend Cologne). All the products from Nordstrom Rack are in perfect conditions, Nordstrom would never sell a damaged product even if it’s at a clearance division. Therefore, products are never discounted for the lack of quality. Basically, every Nordstrom Rack products have a price tag that list the original price of the merchandize and the reduced price that the buyer would have to pay. This is a great example of reference price because it tells the buyer directly how much he or she is saving by buying the product (it does not say how much you save on the price tag but the buyer can just subtract the new price from the original price). Any rational buyers would feel like he or she is getting a bargain and this obviously would be a strong influence in buyer’s purchase decision. Many Nordstrom Rack products are still relatively expensive. For example, a Hugo Boss tie might cost $49.99, but it does not match up to the perceived value for a buyer since the very same product might cost as much as up to $129.99 at a Hugo Boss department store. Once again, a rational buyer would recognize that this price is a bargain and that might very well influence his decision to purchase the product. Other times, the buyers might not have a perceived value set in mind for a product (like I wouldn’t know how much a Calvin Klein dress would normally cost). In this case, the reference pricing strategy would assist the buyer by letting him or her know what the perceived value is from the original retailer’s perspective and how much of a bargain the buyer would gain.

Jason Lao, Section E

National Brands vs. Store Brands

2010-02-21T14:11:00.000-08:00

Until recently, national brands have had a significant advantage over store brands, but today that is all changing. Today, store brand sales are increasing rapidly due to a number of reasons.

First off, Kotler describes a store brand (or private brand) as a brand created and owned by a reseller of a product of service (215). Store brands are also known as “generic” or “no-name” brands. Private brands have become successful in society because they offer a greater selection as well as providing higher quality than in the past. Selection and quality improvements have led to consumer confidence and acceptance. The majority of consumers feel that these generic products match the quality of their rival national brands. For example, as a college student I usually try to save money where I can. When I go to the grocery store to purchase some food I am almost always able to save a few bucks here and there by opting for the store brand products. Think of the cereal aisle in a grocery store. One entire aisle devoted to this product and there are literally hundreds of cereals to choose from. Often times, Tony the Tiger gets the best of me and has me flocking towards that delicious box of Kellogg’s Frosted Flakes, but when I see Kroger Frosted Flakes in a bigger box at nearly half the price how am I to say no? I feel that this doesn’t only apply to low-income college students, but rather everyone in society. During this recession, everyone is looking to pinch their pennies and store brands are a way for that to be accomplished.

Now, in order for national brands to compete with store brands they must invest valuable time and money into research and development to create new brands, features, and constantly improve the quality of their goods. They must also run strong advertisement campaigns to promote their product. With the world we live in today, it is becoming more difficult for these national brands to have an edge over store brands.

All in all, people have become more accepting of private brands because of the higher levels of quality and a vast variety of goods to choose from. Today, sales of store brand goods are growing much faster than the products of national brands. Store brands are a staple of the world we live in today, the world that is continually striving to satisfy customers by offering low prices and great products.

-Jon Honari, Section E

Value-added Pricing

2010-02-21T10:57:00.000-08:00

Value-added Pricing is when companies attach features or services to their products to differentiate them from competing products and support having higher prices.

I was just browsing Yahoo News and I found this article about the "Safest House in the World." It's about a house in L.A. that is a modern-day fortress. I thought it was a good example because it lists a bunch of features that makes this particular house so much better than other houses with panic rooms. It's not only safe but luxurious too which helps account for it's selling price of $7.25 million.

Here are some examples of the features it includes:

"The heavily fortified and super secure residence occupies an easily defended promontory with 360-degree views. The well-defended dwelling stands five stories tall, measures almost 8,000 square feet and includes 32 rooms that all sit atop a virtually impenetrable batcave-like garage that will hold six, preferably armored, cars."

"deluxe creature comforts such as an elevator for whisking folks from the garage level to the living levels, a gourmet kitchen with granite counter tops and commercial grade appliances, two offices, a wine cellar and a home theater."

"The safe cores consist of entire sections of the residence that can be isolated from the rest of the home and where the homeowner can retreat in complete safety -- not to mention luxury -- from an outside threat that might include an intruder, a natural disaster or even a nuclear, biological or chemical attack."

"There is also a built-in barbecue center and a spa situated under the heliport designed for emergency evacuations in the event of a home intrusion or for fire emergencies."

These are all examples of value-added features that justify the house's price of $7.25 million. It incredibly safe and can keep it's residents safe from even nuclear attacks. With it's luxurious design and top of the line security system, I'm sure Al V. Corbi (the man who designed the home) could even have his share or market-skimming and get maximum revenues layer by layer.

see article here

Nikki Macgregor, Section G

Service Recovery

2010-02-19T22:51:00.000-08:00

“Service recovery can turn angry customers into loyal ones. Companies should take steps not only to provide good service every time but also to recover from mistakes when they occur” (Kotler, 255)

Recently Toyota announced two safety recalls that cover some of its models. Both recall campaigns address conditions related to the accelerator pedal. Now Toyota is taking actions to recover and reassure its customers in company’s future service quality.

Though Toyota is a car manufacture, not technically “service” company, I think it is reasonable to assume that it not only makes car, but also provides services that result in safe driving experience.

In the commercial below Toyota reassures customers that their safety is still a top priority, it admits the mistakes, and promises to learn from them.

Elizaveta Koval
Section G

Value Added Pricing

2010-02-19T13:32:00.000-08:00

Value-added pricing is attracting value-added features and services to differentiate a market offering and support higher prices, rather than cutting prices to match competitors (Kotler 260). Some companies do not have to enter into price wars yet still be profitable. We see this in high fashion market. A good example is Armani.

Some product can be very expensive, yet is very popular. An example is Armani clothing. Although the product of Armani is often very expensive, Armani has a solid brand and many people buy Armani products. For example, Armani suit here has a price tag of $1895.00 and Nordstrom offers to sell in its store. Rather than offering a low quality suit with a less price tag, Armani offers high quality designers suit with a high price tag. It uses high quality wool that makes the jacket comfortable. The contemporary design designed under the name of Armani lets the customer have the latest trend, justifying the high price tag. The fact that Nordstrom offers this suit and actually making sales illustrate how some customers are seeking values in the products they buy and they are willing to pay for it.

Nordstrom Armani page
http://shop.nordstrom.com/S/3064633?Category=&Search=True&SearchType=keywordsearch&keyword=armani+suit&origin=searchresults

Shogo Okuda
Section G

Consumer-Generated Marketing

2010-02-17T17:31:00.000-08:00

As described on page 19 and 20 of the textbook, the term consumer-generated marketing describes marketing messages, ads, etc. that are created directly by consumers with or without the encouragement of the company whose product is depicted. This form of marketing can be an effective, low-cost method of spreading the word about a a market offering, but can sometimes backfire if consumers aren't pleased with the product or service.

A good example of a product that has resulted in a lot of negative consumer-generated marketing is Apple's new iPad. In this instance, many consumers were unimpressed with the product because it failed to provide many new features and hasn't effectively differentiated itself from other Apple products like the iPhone or Mackbook. The following link is to a video on collegehumor.com mocking Apple's promotional video for the iPad. The video highlights a few of the reasons that consumers are unimpressed and tries to satirize the overdramatic nature of Apple's own ad campaign. I have also included a link to Apple's original video. The College Humor video is much more entertaining if you've seen Apple's video first.

College Humor video:

WARNING: There is some adult language in the video. There is some swearing, but it's beeped out for the most part. However, if that kind of thing may offend you, you may just want to skip this video. Otherwise, enjoy a good laugh.

http://www.collegehumor.com/video:1928558a>

Apple's original promotional video:

http://www.apple.com/ipad/#video

Scott Hardy, Section E

Good-Value Pricing

2010-02-17T12:31:00.000-08:00

This Mattress Depot USA commercial is a prime example of a form of good-value pricing. According to the textbook, good-value pricing strategies are "offering the right combination of quality and good service at a fair price" (Kotler 261). A type of good-value pricing for retail stores is everyday low pricing (EDLP). With this pricing strategy, stores charge a constant price with very minimal or no temporary price discounts. Other stores, such as Wal-Mart and Safeway, have also adopted this pricing strategy, which is in contrast to high-low pricing, in which retailers charge higher prices on a daily basis, but also has promotions and discounts on certain items quite often.

In this commercial, Mattress Depot USA promises that customers will not only be able to purchase a quality, comfortable mattress, but they will also have the convenience of being able to purchase the mattress whenever they want because they have low prices everyday. Through this commercial, it is clear that Mattress Depot USA is striving to provide a quality product at a fair price.

Karlyn Kurokawa, Section E

Psychological Pricing

2010-02-16T23:12:00.000-08:00

Psychological pricing occurs when sellers consider the psychological factors of price not simply the economics (Kotler, 276). Examples of this strategy exist all through the market one of which is the pricing of UGG slippers. The UGG brand has swept through that fashion world in recent years attracting consumers around the world from many different demographics but competitors have offered similar products in the past without this same result. The price tag on a pair of moccasin UGG slippers is $100. The price on a pair that looks almost identical, sold at L.L. Bean is half that at $49.95. The difference in price is not due to a drastic difference in quality, both are made from sheepskin and both have indoor/outdoor soles, the difference in price is an example of psychological pricing. The UGG brand prices their product higher because consumers look to the brand as a higher quality option even if actual improvement in quality is minimal. The psychological pricing scheme is meant to keep consumers thinking that the UGG brand produces the highest quality sheepskin shoes, enticing buyers into buying their products.

The L.L. Bean Slipper: $49.95

The UGG Slipper: $100

Captive Product Pricing

2010-02-15T22:24:00.000-08:00

Captive-Product Pricing is one pricing strategy used by manufacturers. Kotler defines captive-product pricing as, "setting a price for products that must be used along with a main product" (Kotler 272). Producers of captive products often price the main product low and then set high markups on the supplies or expendable products. According to Kotler many companies make very low margins on the main products but are able to make very high margins on the expendable secondary products.

The text mentions video game consoles, razor blades, printers, and theme parks as examples of companies that use captive product pricing. An excellent example of a company that employs captive product price strategies is Verizon Wireless, who sell the popular Motorolla DROID phone. In this case the pricing can be broken down into two part pricing. The price of the service is broken down into a fixed fee plus a variable usage rate (Kotler 273).

Verizon, as the exclusive carrier of the DROID, offers massive discounts on the actual phone to lure customers to sign up for a Verizon data plan. Extra minutes, internet, gps services, and applications all offer Verizon high margins of profits, while the resale of the DROID phone likely provides little gross profit. Wireless companies all employ captive product pricing strategies, Verizon is just one great example of the prolific price strategy.

Nick Unan
Marketing Section E

Allowances - Trade-in Allowances

2010-02-14T20:24:00.000-08:00

Normal 0 0 1 212 1210 University of Washington 10 2 1485 11.1282

According to the book, an allowance is “promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way” (Kotler 274). Trade-in allowances are “price reductions given for turning in an old item when buying a new one” (Kotler 274).

As the book mentioned, this is a prominent promotion in the automobile industry; however, it is also seen in retail industries. M-A-C Cosmetics does a “Back to MAC” allowance. This program rewards customers for bringing back 6 empty containers of their makeup products (eye shadows, mascara, eyeliner, etc.) in return for a new lipstick. The company then recycles the containers efficiently, and the customer has something to show for their effort.

This program has multiple benefits for customer and company. It promotes customer loyalty, by rewarding customers for purchasing and using multiple containers of their product. When the customers come in to return their old containers it also gets the customer into the store, where they are likely to buy more than just the free lipstick the promotion promises. On another note, it is positive marketing for the company because it shows their commitment to “going green”. Environmental responsibility is important to many people, and to some customers this may be enough to get them to purchase M-A-C products over their competitors (e.g. Sephora, Clinique, etc.).

Back to M-A-C

Sam Bowman, Section E