Final Portfolio
Marketing Thinking Challenges Maj Kristensen MKTG-446: Marketing Strategy and Implementation Fall 2012
Contents Chapter 1: Marketing Thinking 1.1 Interesting Marketing Questions ……………………………………………………………………………………………… 4 1.1 (NEW): 4-Dimensional Spherical (4-DS) Marketing Thinking ……………………………………………………………… 5 REDO – 1.2: Identifying an Organization’s Strategy …………………………………………………………………………… 6 REDO – 1.3: Creative Thinking …………………………………………………………………………………………………… 7 Chapter 2: Learning to Think in a Marketing Way REDO – 2.1: Appropriating Concepts ……………………………………………………………………………………………… 8 REDO – 2.2: Appropriating Satisfaction in a Consumer Situation ……………………………………………………………… 9 GROUP 2.5: The First Step – Recognizing the Obstacles …………………………………………………………………… 11 GROUP 2.6: Innovation and the Obstacles ……………………………………………………………………………………… 13 Chapter 3: The BIG Question(s) – Assessing the Situation REDO – GROUP 3.1: A Five Forces Industry Analysis ………………………………………………………………………… 14 REDO – GROUP 3.2: Creating a Blue Ocean in a Red Ocean ……………………………………………………………… 16 3.3: Entering a Blue Ocean ……………………………………………………………………………………………………… 19 Chapter 4: Thinking Further About Marketplace Structure and Strategy REDO – 4.1: Identifying a Target Market ………………………………………………………………………………………… 21 REDO – 4.3: Self-Selection Segmenting ………………………………………………………………………………………… 23 4.4: Predictive Analytics …………………………………………………………………………………………………………… 25 Chapter 5: Thinking Through Differences – The Nature of the Marketplace and Consumption 5.1: Consumers and Difference …………………………………………………………………………………………………… 26 5.2: The Changing Marketplace – The Twists and Turns ……………………………………………………………………… 27 5.3: Collaborative Marketing in Practice ………………………………………………………………………………………… 28 Case: Apple, Inc. - The Need to be Different …………………………………………………………………………………… 29 Chapter 6: Thinking Through the Marketing Mix REDO – 6.1: E-Commerce Offerings …………………………………………………………………………………………… 30 REDO – 6.2: The Marketing Offering – Consumer vs. B2B …………………………………………………………………… 33 REDO – 6.3: Thinking through Participatory Marketing (PM) ………………………………………………………………… 34
Final Portfolio | Page 2
Chapter 7: Co-Creating Meaningful Differences with Products and Services þ 7.2: Brand Communities ……………………………………………………………………………………………………… 36 Case: In-N-Out Burger – Keeping it Simple ……………………………………………………………………………………… 39 Chapter 8: Co-Creating (Co-Marketing) Meaningful Differences with Marketing Communications 8.1: Persuasive Marketing Communications …………………………………………………………………………………… 41 8.3: Creating a Listening Dashboard …………………………………………………………………………………………… 43 Chapter 11: The Question of Price 11.1: A Return to the Bartering System ………………………………………………………………………………………… 44 þ 11.3: Price Determination ……………………………………………………………………………………………………… 45 Case: Panera Bread Company – Believing in Reciprocity …………………………………………………………………… 47 Final Challenges þ 14.1: Creating a Marketing Thinking Challenge …………………………………………………………………………… 48 Case: Google, Inc. – Seeking the Fun in Innovation …………………………………………………………………………… 49 13.2 – Interesting Marketing Questions ………………………………………………………………………………………… 50 Extra Credit Challenges Course Suggestions & Recommendations ……………………………………………………………………………………… 51 Textbook Comments & Suggestions …………………………………………………………………………………………… 52 Note: Challenges denoted with a þ symbol indicate the challenges I find most noteworthy.
Final Portfolio | Page 3
DIRECTIONS
Marketing Thinking Challenge 1.1 Interesting Marketing Questions All of us have experiences with marketing either professionally or as consumers. Therefore, this task shouldn’t be too difficult. Put yourself in the marketer’s position and generate ten interesting marketing questions that could be useful to the marketer. Try not to evaluate your questions, simply list interesting ones. We’ll use these questions later to see how your questioning is changing.
Ten interesting marketing questions:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
What are the needs of the consumers? How can we meet consumers’ needs? What product will we make? What price will we give our product? How will we promote the product? Will we sell the product online or in brick-and-mortar stores? Should we target a segment or the whole market? Will we sell the product nationally or internationally? How will we evaluate consumers’ satisfaction with out product? How will we measure our success?
Final Portfolio | Page 4
DIRECTIONS
Marketing Thinking Challenge 1.1 (NEW) 4-Dimensional Spherical (4-DS) Marketing Thinking To get started with developing your marketing thinking, first you need to recognize the different possible directions or dimensions involved. In Chapter 1, the four thinking dimensions – creative, critical, reflective, and temporal – are discussed. For each of these thinking dimensions, provide three examples of marketing questions that represent each one.
Creative Marketing Questions:
11. How can we improve our existing products/services? 12. What ideas can we turn into new products or services? 13. How can we differentiate ourselves from our competition?
Critical Marketing Questions:
1. How can we produce our products with the least cost? 2. How can we produce our products with the highest quality? 3. How will we market and deliver our products/services?
Reflective Marketing Questions:
1. Have we been meeting our forecasted sales/income/revenue? 2. How have our products/services been performing? 3. If any problems arose with our products, what can we do differently in the future?
Temporal Marketing Questions:
1. Our products are doing well now, but will they continue to do well? 2. What can we do to prepare for issues like breaks in the supply chain? 3. Are we prepared for an economic downturn or unforeseen market changes?
Final Portfolio | Page 5
REDO: Marketing Thinking Challenge 1.2
DIRECTIONS
Identifying an Organization’s Strategy What are some of the main activities your organization or one you are familiar with performs and how do they translate into what the consumer experiences? How could these activities be done differently and how would that affect what the consumer experiences? Would such changes make a difference? Suggestion: Start by defining what you mean by an activity. How is an activity different than a product?
How do the activities of your organization translate into consumer experience? I work for the Undergraduate Admissions office of Montclair State University, under the Ambassador Program. Student Ambassadors are tasked with assisting prospective students and their families in their college search. This involves giving campus tours, running Open Houses and other special events, and answering questions via phone and in person. Though my organization deals with many different activities, in a marketing context, we function as the “face” of the university. Our purpose is to show potential students (customers, if you will) what Montclair has to offer and help them decide if this is the best place for them to continue their education. This is done by relaying relevant information about the campus and programs to the students on tours, and by providing answers to their questions and making sure they are given the information to adequately evaluate Montclair in their college selection process. The activities of my organization involve a lot of interaction with customers; almost all aspects of the job have an impact on the consumer experience. Prospective students may visit campus just once or twice for a campus tour before making a decision. Often, their interaction with the students on those visits are their only impression of the university, and a positive or negative experience can have a significant impact on their decision. As campus representatives, we are responsible for being courteous and empathetic, and providing clear and reliable assistance to our “customers”. Additionally, if they have any questions about the university or their application, they will call our office. The friendliness and helpfulness of the staff that answers their call gives them an impression of the university as a whole, and may influence their decision. How could the activities be done differently, how would it affect experiences? Would such changes make a difference? We could make changes to help prospective students feel more valued and welcomed at the university. One improvement would be to match the tour guide to the student’s major. For example, a student interested in the College of the Arts would be given a campus tour by an Ambassador in one of the CARTS programs. This way, the tour and overall campus visit experience can be tailored to match the student’s need, which will help them relate better to the resources offered at Montclair. While the logistics of matching prospective students’ with tour guides is rather complex, I definitively think it would make a difference in adding value to the customer experience. By making the visit experience more personal, prospective students will be more likely to feel at home on campus and comfortable becoming part of the community. Being able to offer this service creates a meaningful difference when prospective students are evaluating their college choices, and may make them more likely to choose to attend Montclair State University.
Final Portfolio | Page 6
REDO: Marketing Thinking Challenge 1.3
DIRECTIONS
Creative Thinking For this challenge, see if you can create three new associations. Part A. Identify two unrelated things to form a new association. What are they? Part B. Then, from the above three new associations, what new possibilities can you see in terms of potentially new product or service categories? Also, explain the connections between Part A and Part B.
Part A. New Associations 1. Dog + television 2. Cell phone + shoes 3. Plants + clothes Part B. New Product or Service 1. Dog & television: Dogs are social creatures, who can grow quite attached to their owners. Many dogs (and other pets too, for that matter) get very upset when their master is away. A "PetTV" could help ease the distress of a pet while their owners are gone - either at work or short trips. The product would be made of durable material so it can be placed in an area where the pet has access to it. The product features a screen and speakers, which transmit either a recorded message of the owner when a motion detector senses the pet, or can be connected to the owners' webcam for live chatting. The product also features a webcam, so that the owner can see the pet while away. This sort of pet-Skyping allows the pet to interact with the owner, and lets the owner check in with the pet, making time apart less distressful for both parties. 2. Cell phone & shoes: The last thing you want to bring with you when going for a run is a bulky bag, so runners opt to leave as many items at home before heading out for a jog. A special pair of sneakers can solve that problem, by having a padded section in each shoe that can store a cell phone (or other necessary items). 3. Plants & clothes: Plants can add interest and life to a home, but anyone who has dabbled in gardening knows that it is a lot of work, which can be threatened by frost in the winter months. Rather than letting all your hard work be ruined every winter, Plant Clothes let you protect your flora from bitter frost. Plant Clothes is a special breathable material that is draped over a plot of land where sensitive plants grow. The material will allow water in so that the earth does not dry up and traps heat to maintain a protective environment. By using Plant Clothes to protect your garden in the winter months, you will save time and money because all your perennial plants will make it through the winter, saving you the hassle to replant the area again every spring.
Final Portfolio | Page 7
REDO: Marketing Thinking Challenge 2.1
DIRECTIONS
Appropriating Concepts Take any concept you are familiar with from work or school and identify what you believe is the question it responds to. (1) What is the question for the concept? (2) Based upon what you identified as the question in part 1, what other related questions can you identify? And, (3) what are some of the different ways in which you could respond to these questions?
Concept: Customer relations Customer relations is the practice of building relationships between a business and its customers and potential customers. Customer relations management is extremely important to an organization because positive relationship with customers is what determines the success or failure of a business. The theory behind customer relations is that how customers are treated influences their decision to do business with a company. Effective customer relations strategies therefore has to include listening to and communicating with customers, problem solving, and showing a commitment to making customers feel welcomed and valued and meeting their expectations. 1) What is the question for the concept? How do we maintain a relationship with our customers? 2) Based upon what you identified as the question in part 1, what other related questions can you identify? - What can we do to better listen to our customers? - Are customer expectations positive or negative? - What past experiences have led to customers’ current expectations? - What can we do to improve customer expectations? - What experience are we providing our customers? - Is the experience we are providing our customers meeting or exceeding their expectations? - How can we improve our customers’ experiences? 3) What are some of the different ways in which you could respond to these questions? - We can use technology to create outlets for customers to communicate with us. This includes making ourselves available through email, social media, or phone. We can also provide forums through our website for customers to communicate with us and with each other. - We can listen to what customers are saying, and make improvements based on their feedback. If expectations are not being met, we must work to improve the experience for them. This must be done by listening to what they are unhappy with and taking their recommendations to improving it. If expectations are low, we must better communicate what we have to offer customers and follow through with an experience that matches our claims.
Final Portfolio | Page 8
REDO: Marketing Thinking Challenge 2.2
DIRECTIONS
Appropriating Satisfaction in a Consumer Situation Find an industry that is noted for consumer dissatisfaction, other than the ones mentioned in class. Using the concept of satisfaction, identify consumer expectations that aren’t being met. Then, based upon the expectations that you have identified, how could you configure a business that would operate differently? Would it involve different expectations? How would the consumer experience be different based upon what you’d be offering?
Industry with Consumer Dissatisfaction: Department of Motor Vehicles (Government Offices) The Department of Motor Vehicles, and most other government offices, is notorious for having high customer dissatisfaction. This is because customers are consistently having experiences that either affirm their poor expectations, or invalidate their positive expectations. The Expectancy Disconfirmation Model of Satisfaction (EDM) defines satisfaction as a process determined by consumer experiences over time. First, customers have an expectation for consumption, which is developed from either past experiences or information gathered from word-of-mouth or other forms of marketing. Then, consumers engage in the consumption experience. Based on their expectations, they evaluate whether their expectations have been met, and to what extent (either positively or negatively). This judgment then leads to new expectations for future experiences. Customer expectation is thus an integral part of satisfaction, since it serves as a frame of reference for consumers to interpret their experience. Another crucial aspect of satisfaction is the actual consumption experience, which must either meet positive expectations or exceed negative expectations. Successful marketing strategies should therefore address both expectations and experiences, and make sure that consumers are given reason to develop positive expectations and to judge their experiences as positive. Consumer Expectations: When consumers visit the DMV, they are most likely going to renew a license or plates, transfer titles, or other administrative tasks. They should expect that these routine procedures should be “in-and-out” affairs – renewing a license should be quick and easy. At the very least, expectations should be neutral, and ideally they would be high in speed and efficiency. However, the DMV is infamous for long lines, unfriendly staff, and lack of assistance. Consumers’ expectations are therefore quite negative. These expectations are developed either from personal previous experience or from the evaluations of other trusted sources (friends, family, general reputation). As consumers make necessary visits to the DMV, their experiences reflect the negative expectations they have, and their satisfaction reflects this negative evaluation. A Business that Operates Differently: The best strategy to improve the DMV experience for customers will involve improving experiences, which in turn will improve expectations. The best way to improve the DMV experience is to take advantage of technology. Most, if not all, the consumers who visit the DMV must fill out a form. Instead of wasting the paper to print forms, and wasting consumers’ time filling out forms, all forms should be available online. Consumers fill out and submit their forms online (either before coming to the DMV or at kiosks situated near the entrance), and are given a confirmation number to bring to the employees to bring up their information. When consumers arrive, they will “check in” using their confirmation number, and be put on a waiting list. They can then head to the waiting room, which will have comfortable chairs, refreshments, and entertainment. When their number is called, they approach the desk and are helped Final Portfolio | Page 9
by the staff. Staff will be continually trained in customer service and interaction, and the hiring process will screen for friendly and patient employees. Staff members will also be stationed near the kiosks, so any customer needing assistance finding or filling out forms will be able to seek their help. The consumer experience will reflect the goal of the business to give customers a positive experience. The kiosks and online services help to expedite the process of renewing license, registering titles, etc. The employees are hired to assist customers if they have questions or concerns. The waiting room serves to accommodate consumers as they are waiting. All these measures are taken to meet the “simple and easy” expectations of the consumers, and thus improving the customer experience. Such a customer experience will give impressions of efficiency, speed, and comfort. By experiencing this different environment, consumers will judge their negative expectations to be incorrect, and over time, expectations for the DMV will improve. My maintaining these practices, consumers will come to have positive expectations, and those expectations will be met and affirmed with each experience.
Final Portfolio | Page 10
GROUP CHALLENGE: Marketing Thinking Challenge 2.5
DIRECTIONS
The First Step – Recognizing the Obstacles Identify a marketing problem that you believe to be difficult or challenging. Identify the obstacles that seem to make it appear difficult. What are they? After identifying these difficulties, see if you can come up with ways to maneuver around them. What ways did you come up? In coming up with ways to deal with the problem, does the problem now seem as difficult as it did initially? In general, what does this say about problems?
Marketing Problem: Declining sales at the end of the market cycle Obstacles & Overcoming Them: - The past: the obstacles to this problem result from the previous success of the product, and the inability to break away from the familiar à It’s important for marketers to remember the temporal dimension of thinking: nothing is static, so marketers must always be thinking about the future. -
Routines: previous practices worked, so why change? à Again, the temporal dimension of thinking emphasizes change; the marketplace is dynamic, and requires marketers to anticipate changes and be prepared to alter their practices.
-
Time Commitment: so much time has been spent on current selling strategies, there will be resistance to spending time on new ideas à While much time may have been spent on the product to make it successful, when sales begin to decline, marketers must make adjustments to renew interest in the product. The time already spent on the product shouldn’t be considered time wasted; rather, it should be considered time invested to make the product successful, and new efforts are now needed to maintain and build that success.
-
Tired: marketers have worked with this product for a long time, and may be tired of the same product à Renewing interest in the product will require both critical and creative thinking. Coming up with new ideas, and choosing which of the new ideas will be best, involves new ways of looking at the product, which will rejuvenate marketers’ interest in the product.
-
Fear of failure: With past success, marketers will be afraid to “mess with a good thing” and lose their advantage à Unfortunately, when a product reaches the end of its cycle, it is already losing its advantage. This is actually a time where the product is established, and marketers can take risks and explore more opportunities and approaches without the risk of declining sales (since sales are already declining – basically, the only direction to go is up).
-
Resistance to change: people are naturally resistant to change, fearing the risk of uncertainty à When a product is near the end of its cycle, it has already achieved its maximum potential – at least in its current state. Thus, this is a time for change and taking chances, since there is now potential in new ways to approach the situation.
-
Lack of new ideas: It’s difficult to find new ideas when the same group of people have worked on the same project à This obstacle is perhaps the hardest to tackle, since changing one’s attitude isn’t necessarily going to overcome it. In this situation, it may be helpful to switch roles, or bring new members into the team to stimulate the generation of new ideas. Final Portfolio | Page 11
Are the problems as difficult as they seem? What does this say about problems? Looking at these obstacles, it’s clear that they aren’t really obstacles as much as attitudes. They are negative outlooks on the marketing process. The best way to overcome them, then, is simply to change the attitude by altering the way you look at the obstacle. Instead of focusing on the past and familiar, you should understand that marketing is about reflecting on the previous performance and anticipating change. The 4-Dimensional Spherical Thinking model stresses the importance of being flexible, and ready for changes in the marketplace. By thinking creatively about solutions, critically assessing alternatives, reflecting on the past and anticipating the future, marketers will be able to overcome these obstacles, and move forward to developing successful strategies.
Final Portfolio | Page 12
GROUP CHALLENGE: Marketing Thinking Challenge 2.6
DIRECTIONS
Innovation and the Obstacles Try coming up with a truly innovative new product or service that would be marketable – that is a new product or service category that doesn’t already exist in the marketplace. Did you find this to be difficult? Why? What obstacles might you run into that prevent you from coming up with a truly innovative idea? How can you overcome or maneuver around the obstacles?
New Product or Service: The new idea we chose was the SmartLamp®. This is a voice-activated lamp, which reacts to certain commands that you set up. Using voice commands, you can adjust the brightness or color of the light, and choose several different modes. For example, romantic mode lights up scented candles and plays music. Party mode flashes strobes, lasers, and shines a blacklight. You can connect the lamp to your computer to sync it with iTunes or install latest updates. The lamp also provides you with time, temperature, weather, traffic, news, sports, or business updates. The lamp can wake you up in the morning or alarm the police if it senses an intruder when you are not home. Wheels allow the SmartLamp to move wherever it is directed, making it essentially a personal robot. The lamp can be set to only react to your voice, making it a true household companion. Obstacles to Innovation: We found this challenge to be difficult because there are obstacles that lie in the way of our thinking process. However, identifying these obstacles is the best way to overcome them. There are many obstacles that we could have run into, which would prevent us from coming up with a truly innovative idea. People tend to think of the familiar and what is known to ease their brains and avoid the thinking process. Thinking as a group can result in what is known as groupthink, which negatively affects the thinking process as well. We struggled at times to come up with questions, and when the questioning stops the thinking stops, and this becomes a problem. We are so used to accepting the theories that already exist without asking why these theories were developed or the thinking behind them. Therefore when it comes time for us to develop a new product or service we struggle to look beyond the known because new and unheard of ideas may seem odd. These new, odd ideas may feel uncomfortable because it is thinking beyond the norms that the organization has already developed. Convincing others of your new, unheard-of idea can be a challenge as well. As students we are faced with the stress that comes along with going to school full time and working which can definitely get in the way of our thinking. Of course getting sick, or lacking sleep, food or water are some of the more obvious obstacles that can lie in the way also. It was often a struggle to focus and clear our minds of other things we may be dealing with relating to school or our own personal life. Overcoming the Obstacles: These problems can be overcome in a number of ways. First, we want to not become overwhelmed or stressed by everything we are going through and realize this will only make it harder to think. Decompression exercises can help achieve a state of peacefulness and clear thinking. We must remember that it is through the association of old and familiar ideas that brings about the new and innovative concepts. We also cannot be afraid or hesitant to come up with these new, odd ideas in order to stretch our thinking beyond the norms already set. There is comfort in the familiar, but staying within our comfort zones will not achieve new innovations. Thus, when an idea is odd or uncomfortable, it is a sign that it is truly different. Only by exploring the possibilities of such unusual ideas can truly innovative ideas be harnessed. Most importantly we must remember to keep questioning! Understanding how we can maneuver around these obstacles no longer makes them obstacles.
Final Portfolio | Page 13
GROUP CHALLENGE: Marketing Thinking Challenge 3.1
DIRECTIONS
A Five Forces Industry Analysis In this challenge, you’ll use your critical and creative dimensions of 4-DS thinking. Choose an industry of interest. Using the Five Forces Model, answer as many of the questions you can presented in the model. From your answers, what is the primary basis of competition in this industry? If you were considering entering this market, how might you do it? In other words, where are the openings to enter? What is your Red Ocean Strategy?
Industry: passenger airplane manufacturing industry The industry that we chose is the passenger aircraft manufacturing industry. This includes commercial, regional, and business jets. The top leaders in this industry are Boeing and Airbus. The other significant competitors that are chasing Boeing and Airbus in this red ocean are COMAC, Bombardier, Embraer, Cessna, Gulfstream, Dassault, Eclipse, Sukhoi, UAC and Diamond. There is a large amount of suppliers in this industry. Aircraft manufacturers receive several different categories of supplies. These categories include major structures, propulsion, aerospace commodities, purchased outside production, and technology. These supplies range from things like carbon/advanced composites, engines, reinforced plastics, small to medium-sized assemblies, and other various aluminum, titanium, or steel parts. Not all things supplied are tangible. There are many companies that provide R&D and technology concepts for these aerospace manufacturers. There are literally hundreds of suppliers that these companies choose from. Some top suppliers include Rolls Royce, HITCO Carbon Composites Inc., Aerojet, JWD Machine Inc., M.C. Gill Corp., GE Global Research, American Semiconductor Inc., Cascade Engineering Services, Global Aerosystems LLC, Taylor Aerospace Inc., Stork SP Aerospace, and the list keeps going. Although they try to remain loyal to their best suppliers, Boeing and Airbus take advantage of this vast choice of suppliers and have been able to cut significant costs. Suppliers are not powerful in this industry and cannot raise prices whenever they please because what they provide is not unique and there are many others waiting in line. Therefore, the manufacturers have the strength and control in this industry. There are numerous amounts of buyers that purchase airplanes from these manufacturers. There are hundreds of airlines in the world that need commercial airliners. Some of these airlines include United Continental, US Airways, Southwest Airlines, Jet Blue, Lufthansa, LOT, all the airlines that fall under the Alliance group, and many others. There is a tremendous amount of firms that acquire jets for business. In this industry, the more popular your brand is, the more power you have over your customers on price. Airbus and Boeing usually dictate their prices because of their reputation although they tend to give in to negotiations with loyal clients when it involves larger quantities of product. Other companies like Bombardier or Embraer must lower their prices if they want to compete with Airbus and Boeing. Therefore, when entering this red ocean as a new company, buyers will have the upper hand on price control unless your product is special and extra distinguishable from Airbus and Boeing. In this industry there are relatively not that many competitors. It has actually been referred to as a duopoly because Airbus and Boeing dominate most of the market. Since there are not that many choices, customers or suppliers will not be so quick to switch to someone else. So although it seems attractive because there are not that many fish in this red ocean, it would be difficult to break the solid loyalty that clients have with Airbus and Boeing.
Final Portfolio | Page 14
The threat of substitutions is generally low. What is the cost for Continental, let’s say, to switch from Boeing to Airbus? Is there a large cost to switch manufacturers? Manufacturers share the same substitution threat as the airlines themselves. There are many other ways to travel like by car, train, or ship. These alternatives are definitely cheaper but nothing will get you as far and as fast as a jet. There is nothing that will transport an American businessman to Japan on the other side of the globe, within the amount of time that an airplane can. However, there are alternatives to travelling. Instead of spending a couple thousand dollars on a vacation, one might decide to purchase a flat screen TV or put a down payment on that car he has always wanted. If the demand for travel decreases, airlines will suffer and as a result, so will airplane manufacturers. These factors might be threats to consider but not enough for any major significant substitution. Airline companies like Continental are more willing to buy from reliable, airline manufacturing companies, like Boeing and Airbus, with a strong name in the industry. It may be seen as risky for them to switch manufacturers for fear that the other manufactures haven’t been in the industry long enough. It takes about 10 years to make a plane therefore expertise within the airline manufacturing industry is gained through decades of experience. The threat of new entry is not major because it is difficult to enter this industry. It is expensive and complex. Airline manufacturers have to invest heavily in new facilities, test equipment, and methods for aero-acoustics research and noise control. There has to be a lot of money for initial investment. The commercial market requires planes to be reliable, have low operating cost, and be easily maintained. All these things are not easy to accomplish together. This is why many countries failed against Airbus and Boeing. The Chinese COMAC and the Russian UAC are up and coming airplane manufacturers which are not doing too bad but still experience great difficulties catching up to the two leaders. Regulations like the limiting of greenhouse gas emissions are also of concern. Although the government removed prohibitive legal and regulatory borders that slowed the growth of the industry, there is still a major barrier to market entry which is keeping the Chinese, Russian, and other manufacturers from significantly competing with Airbus and Boeing. This barrier to entry is the certification by the US and EU aviation authorities and is difficult to acquire. Another barrier to entry is due to the fact that theses airline manufacturing companies have pressure put on them to consistently come out with new technologies that increase efficiency, due to increasing oil prices and concerns about climate and noise pollution. These manufactures continue to feel pressure to lighten the weight of airplanes and make other alterations to lessen pollution that it is easy to fail if they cannot keep up with these airlines demands. There are also obstacles that come along with implementing new technology such as keeping the planes durability and maintainability in the process. This industry is difficult to enter but not impossible. The key to having a strong start in this red ocean would be to make quality aircrafts, obtain necessary certifications, and market these planes at a drastically lower price than Airbus and Boeing to grab everyone’s attention. At first there would be tremendous losses due to the low income attained from plane sales but it would pay off in the long run because once the clientele is converted to our new manufacturer, quantity will start making up for losses incurred. However, in order to effectively do this without going bankrupt there would have to be an extreme amount of money available for investment in the beginning. Low prices to convert loyal clients would be the only way to take market share from Airbus and Boeing.
Final Portfolio | Page 15
REDO: GROUP CHALLENGE: Marketing Thinking Challenge 3.2
DIRECTIONS
Creating a Blue Ocean in a Red Ocean In this challenge, you’ll be using your critical and creative dimensions of 4-DS thinking. In MT Challenge 3.1, you were to approach an industry from a Red Ocean perspective, in this exercise use the same industry but now use the Strategic Canvas and Four Actions Framework to see if you can identify a Blue Ocean within the Red Ocean. What does your Blue Ocean look like?
Industry: passenger airplane manufacturing industry In order to figure out what we need to move away from we need to identify the current state of affairs in the particular market. Creating the Strategy Canvas below allowed us to identify and map out the current state of affairs. We determined that there were four key aspects to evaluate, which are described below. We chose the two major brands in airline production – Boeing and Airbus – as well as Bombardier, which is a small but growing company, for the analysis. First, “model options” is a rating of the amount of variety the company provides in its range of products. A large selection of models and customization options would yield a high rating. Both Boeing and Airbus have numerous options, ranging from small short-distance planes to massive cross-continental planes, and thus were rated at 5.3 and 4.9, respectively. Boeing scored slightly higher than Airbus because it offered slightly more base model options. Bombardier, on the other hand, was rated 2.0 because of its more modest and specialized product offering. The next category is “price.” This is a rating of the prices of products, taking into account the comparative value of the products. For example, since Bombardier does not have as extensive a product line, we compared their products to similar products offered from Boeing and Airbus, and determined that the prices for Bombardier is lower, resulting in a rating of 3.1. Boeing and Airbus had similar prices, but Airbus prices were overall slightly higher than Boeing. We therefore rated Boeing at 4.8 and Airbus at 5.1. The third component is “environmental consciousness.” This encompasses all green initiatives taken by the company, including reducing the carbon footprint in business practices, researching and developing alternative energy consumption, reducing the environmental impact of production and actual product use, and any other socially conscious business endeavors. All three companies were rated highly on this element. Bombardier was rated 4.1, and Boeing received a rating of 3.9 for its extensive commitment to green endeavors. Airbus received a 4.5 rating because of its clear dedication to protecting the environment, which is clearly defined on their website. The fourth factor is “speed of production.” In this industry, production turnaround time is quite high. This factor rates each company on the amount of time it takes after ordering for a product to be delivered as well as the general production load. As a smaller brand, Bombardier does not have as high a volume of orders, and is therefore rated at 2.1 for speed of production. Boeing was rated at 2.5 and Airbus at 2.8 because their turnaround time is higher, but still acceptable considering the complexity involved in producing its models. We chose these four factors for our Strategic Canvas because together they provide a comprehensive look at the passenger airline production industry. The analysis shows that there is a wide variety in model options and pricing, but not much variability in environmental consciousness or speed of production. Our completed Strategic Canvas is presented below:
Final Portfolio | Page 16
Strategic Canvas for Airline Manufacturing Industry 6
5
5.3 4.9
5.1 4.8
4.1 3.9
4
Boeing
3.1
3
2
4.5
2.8 2.5 2.1
2
Airbus Bombardier
1
0 Model Op>ons
Price
Environmental Consiousness
Speed of Produc>on
Based on this Strategic Canvas, we identified price and speed of production as areas of improvement. These are both factors where a lower score is more favorable, so the goal would be to create a business where prices are low and time of production is decreased. Model options could also be a potential area to differentiate, as the two major brands scored high in this category. The current group of companies within the airline manufacturing industry already scores highly on environmental consciousness, so our goal would be to exceed those scores. Eliminate à We should eliminate the use of non-renewable fuel options, as they are high in price and detrimental to the environment. If the current method of fueling planes continues, the supply of gas will eventually run out. Additionally, high gas prices will increase ticket prices and deter people from traveling, which will have a negative effect on the airline industry and therefore also on the airline production industry. Create à We need to find a more environmentally friendly way to fuel planes. We should create emphasis on innovation using research and development to find alternative energy sources that reduce the impact airplanes have on the environment. Reduce à Reduce model options. Airline producers have several options within several families of airplanes. This requires more time to produce models, since they require specific customization and different parts. This also increases the price of each model. Having fewer options will decrease our prices, and also differentiates our company from the rest of the industry. Raise à Raise production turnaround. Fewer model options will require less customization, which in turn will reduce the production turnaround time. By having fewer options, we can have larger inventories of standardized materials, requiring less time spent on ordering and assembling different parts. Final Portfolio | Page 17
What does your Blue Ocean look like? Our Blue Ocean is centered on the principle of “less is more.” Our company emphasizes the needs and wants of the end user – that is, the airline passengers. Air travelers don’t particularly care about the size of the plane, the number of aisles or rows, or the size and number of engines. Their primary concerns are low price and high comfort and safety. The goals of the airline production company should thus be to produce safe and comfortable passengers planes, ultimately allowing airline companies to meet the needs of their customers. By offering fewer options within its airline family, production turnaround and cost is reduced. This allows the company to offer its customers cheaper products in less time than the competition. Lower prices allow the airline industry to pass on the cost savings to its ticket prices, accommodating passengers’ desire for cheaper airfare prices. Fewer options, however, doesn’t have to mean reduced quality or comfort. The company will maintain comfortable passenger seating and cabin environment, but with less options for layout and sizing. After all, most airline passengers don’t remember how many seat rows or bathrooms there were, but rather how much legroom they had and how far back their seat reclined. The company will also focus more effort on environmental responsibility and creating airplanes with less negative impact on the environment. Greener airplanes also ultimately leads to lower prices – with rising oil prices, eliminating the dependence on non-renewable resources will decrease the cost of fueling the airplane. Again, this passes on cost savings to ticket prices, further reducing the cost of air travel. Taking emphasis away from customizing planes, which has been the emphasis for years now, and placing it on producing only a few basic models will create higher profits while lowering costs of production. This will have a snowball effect onto the consumers who will now be happy to find they can pay less to fly. Creating this new market is just the beginning, however. The business must continue to come up with new innovative ideas that set it apart in order to remain in a “blue ocean” with no competitors. The focus in the blue ocean strategy should not be taking customers from rivals but rather tapping into new markets in the industry that have been untouched. This takes a more consumer-oriented outlook while providing new value to consumers through differentiation and lower costs.
Final Portfolio | Page 18
DIRECTIONS
Marketing Thinking Challenge 3.3 Entering a Blue Ocean Research Cirque du Soleil. Is it still in a Blue Ocean? Conduct a situation assessment using the Red Ocean approach (Porter’s Five Forces). Based upon your situation assessment, how would you recommend entering this market?
Is Cirque du Soleil still in a Blue Ocean? When he co-founded Cirque du Soleil, Guy Lalierté used a Blue Ocean strategy to create a unique market for his business. At the time, circuses were geared toward children, and featured traditional circus acts primarily involving animals. Lalierté identified a completely different market: adults looking for high-end entertainment. The atmosphere he created was less about having fun, and more about being amazed. His strategy of using human acrobatics, music, and lighting, created a significantly different type of circus, which produced much success. But of course, a successful Blue Ocean market will attract other businesses. Seeing the success of Cirque du Soleil, other businesses began featuring acrobatic acts in their shows as well, making Cirque’s performance less unique. Nonetheless, Cirque du Soleil remains one of the most well-recognized entertainment shows in the performance industry, and is still rather profitable. Cirque du Soleil is currently expanding into other markets by producing a 3D theatrical film of its show, offering a low-price option for even more segments of the market to experience its show. While it’s unique niche is beginning to become a Red Ocean, Cirque du Soleil is continuing to produce innovative ideas to maintain its advantage perhaps you could call it a Purple Ocean.
Situational Assessment (Porter’s Five Forces) of Cirque du Soleil: Competitive rivalry: Cirque du Soleil does have competition now, primarily with other large circus acts like Ringling Brothers and Barnum & Bailey. However, most competitors feature acrobatics as part of their show, while Cirque includes only acrobatics, focusing on music and lighting to create an immersive experience. Buyer power: Buyers do have significant power, as there are many entertainment option, not only from other competing circus shows, but also other avenues of entertainment like movies, concerts, Broadway shows and other performances. Supplier power: Suppliers, in this case, would be the performers who act in the shows. While there is not an excess of acrobatic performers, there are enough artists that suppliers do not have significant power. Threat of new entry: It is not incredibly difficult to enter the entertainment market. However, Cirque du Soleil does have an internationally recognized name, which protects against too much threat of new entrants. It would take a lot of time and work for another company to become as universally recognized as Cirque du Soleil. Threat of substitution: There is a significant threat of substitution in this case. There are numerous entertainment alternatives, and circus/acrobatics shows are not a necessity for consumers. It will be important for Cirque du Soleil to continue to appeal to consumers to capture their interest and ensure continued sales. Final Portfolio | Page 19
How would you recommend entering this market? There are currently many different businesses in the entertainment industry, so a company looking to enter the market must provide a unique experience to consumers. This could be achieved by integrating the success of Cirque du Soleil’s human acrobatics show with the success of Broadway musicals. Combining both musical and acrobatic performance could differentiate the company so that it will still be profitable in a Red (Purple?) Ocean. They key for any strategy would be to create an experience that is meaningfully different from other forms of entertainment, whether it be in the form of entertainment content or some unique aspect of the entire experience.
Final Portfolio | Page 20
REDO: Marketing Thinking Challenge 4.1
DIRECTIONS
Identifying a Target Market Before getting into any technical discussion on segmentation, see what you can come up with for the following: Choose any market of your choice. Now, how would you identify a target market within this marketplace? Explain your process of how you would reveal the relative attractiveness across the potential groups (segments) to be identified.
I chose to identify a target market within the shoe industry. A shoe manufacturer may make many different types of shoes – sports, casual, business, party – all of which appeal to different target markets. The first step is to identify segments by unique responsiveness. This is best done by matching a psychological profile to each type of shoe: •
Sports shoes: athletes and active consumers who are looking for high quality, supportive shoes for their athletic needs
•
Casual shoes: almost all consumers who need durable, comfortable shoes for everyday use
•
Business shoes: professional consumers, who need shoes appropriate in a formal environment, who may also be looking for style, comfort, or both
•
Party shoes: younger consumers (teens and young adults) looking primary for shoes appropriate for social outings, valuing style over comfort
The next step is to define each segment based on various criteria (age, gender, disposable income, accessibility, willingness to adopt new trends, attitudes, and current competitors) in order to identify the attractiveness of the market: Criteria
Segment 1: Sports
Segment 2: Casual
Segment 3: Business
Segment 4: Party
Attitudes
Need high quality, regardless of price
Need affordable and comfortable
Need professionally accepted style but value comfort because of all-day wear
Style over comfort
Age
Late teens to middle age
All ages
Young adult to middle age
Young adult
Gender
Primarily male
Both
Both
Primarily female
Disposable income
Varies, but willing to spend large amounts
Varies, not willing to spend
Higher than other segments
Varies, willing to spend
Accessibility
High, social media
Varies
High, through select social media
High, social media
Willing to adopt new, but also strong brand loyalty Many well established brands and brand loyalty
Not necessarily, mostly stick to safe, established brands
Not necessarily, but potential with good quality brand
High, current trends are important
Many competitors, no brand loyalty
Many, but not many targeting this segment specifically
Many competitors, some brand loyalty
Willingness to adopt new trends Current competition
Final Portfolio | Page 21
Analysis of each of these segments will determine which segment has the most potential, and would thus be the most attractive. Each segment (excluding attitudes) will be rated on a scale of one to three, with one indicating the least potential and three signifying the highest potential. The segment with the highest total will be deemed the most attractive. Criteria
Segment 1: Sports
Segment 2: Casual
Segment 3: Business
Segment 4: Party
Age
2
3
2
1
Gender
2
3
3
2
Disposable income
3
2
3
2
Accessibility
3
2
2
3
Willingness to adopt new trends
3
1
2
3
Current competition
1
2
3
2
Attractiveness Score
14
12
*15*
13
The casual shoe segment has the lowest score, and thus is the least attractive. The segment is already captured by the competition, so there is little potential for this group. Likewise, the party shoe segment is also captured by the competition, and is therefore not attractive. The sports shoe segment has a higher attractiveness score, but is mostly captured by the competition and offers little potential for expansion. The business shoe segment has no specific focus from competition, which provides for some potential within the group. Strategies should focus on creating a product that offers high quality and professional style, but also emphasizing comfort. This combination, combined with a brand that exemplifies this goal, would be able to capture a significant portion of the market.
Final Portfolio | Page 22
REDO: Marketing Thinking Challenge 4.3
DIRECTIONS
Self-Selection Segmenting Identify three different companies that you believe to be using a self-selection segmenting strategy. Describe their strategies and explain some of their similarities and differences. Also, explain which do you think would be more effective and why?
The trouble with targeted segmenting strategies is that marketers cannot ever know all aspects of consumers’ lives, behaviors, and needs. Thus, segmenting may not identify real differences in value for consumers. Self-segmenting strategies, on the other hand, place emphasis on attracting customers rather than pursuing them. Such a strategy focuses on putting value in the company’s products or services, rather than on pursuing customers. This allows the customers to self-select the products and services that will provide the most value, rather than having a predetermined choice pushed upon them. It’s beneficial to both the customer and the business, since the customer can ensure a more personalized fit, while the business can spend less money on target marketing, and more resources on developing and improving the products and services they offer. Lenovo – Lenovo allows consumers to select exactly which personal computer is right for them. Their product offerings include tablets, laptops, and desktops, with much variety in each. Their computers have two basic distinctions: “IdeaPad” or “ThinkPad.” IdeaPad is an “everyone” computer for the average user, while ThinkPad offers more advanced and technical features, typically suited for business professionals. Within these two distinctions are several different lines, focusing on different features like weight, screen size, graphics cards, and processors. Once consumers choose their computer, they are then able to customize their PC further – choosing colors, hard drive capacity, memory, preloaded software, and accessories. This strategy allows Lenovo to combine various features to design different types of personal computers, but lets the consumer choose which is best for them. One downfall of this strategy, however, is that with so many choices, marketing may be required to help consumers identify which solutions will suit their needs. This could be addressed by providing detailed information about the different functions and uses for the features, which would help customers identify which features will have the most value for their individual needs. Victoria’s Secret – Victoria’s Secret lets customers self-select when shopping for lingerie. The company offers a wide variety of styles to compliment and accentuate all kinds of body shapes. Their online store features a “Bra Finder,” which allows consumers to sort all the styles and narrow down the choices to best meet their needs. In their brick-and-mortar stores, the products are placed throughout the store in categories, and the staff is trained in measuring sizes and helping customers select the product they want. This is similar to Lenovo’s strategy, but has less customization than Lenovo: whereas Lenovo allows customers to further customize their personal computer after selecting a certain model, Victoria’s Secret only offers each “model” in different colors (and sizes, but in this case only one size is ideal for the consumer). Fairway Market – The supermarket chain Fairway proclaims itself to be “like no other market.” This is accomplished, in fact, by actually being like every other market, because it combines all the attributes of specialized grocery stores, like Whole Foods or a farmers’ market. Fairway includes a locally grown produce section, natural and organic selections, and low cost options. This way, all consumers are able to find the groceries they need at that particular time in their lives. For example, a Final Portfolio | Page 23
college student looking for bargains can find low cost groceries, while a health-conscious parent can find organic or locally grown groceries for their family. This strategy is different from Lenovo or Victoria’s Secret, since each product in the cannot be further customized. This is more of a true self-selecting strategy, since consumers will require little to no help from the staff to find the selection that fits their need. Which do you think would be more effective and why? I think Fairway Market’s strategy is the most effective. While Lenovo offers many options, it may become overwhelming for the consumers to find what they are looking for because there are too many choices to make. Victoria’s Secret offers fewer choices, but still requires most consumers to seek help to identify the products best suited for their needs. In Fairway Market, the choices are clear, and it is easy for consumers to determine what choice they want to make. Furthermore, if the consumers later in their life are under different circumstances and need a different option, it is simple and easy for them to make a new choice to reflect those needs.
Final Portfolio | Page 24
DIRECTIONS
Marketing Thinking Challenge 4.4 Predictive Analytics Research the topic of predictive analytics and identify what its capability and use is currently. Based upon what you find, what new marketing strategies does it suggest and when would it be applicable?
Predictive analytics is all about data. Predictive analytics applies statistical procedures based on patterns in the data to predict the behavior of customers, products, services, markets, or other business outcomes.1 Statistical models can show relationships between many factors, providing predictions to identify risk and opportunities for a company. Because predictive analytics is based on data analysis rather than intuition, decisions allow for increased efficiency and reduced risk. Predictive analytics is also a proactive process – instead of looking backward to analyze what happened in the past, the focus is looking forward and asking “what’s next?” or “what can we do about it?”2 One of the most well known uses of predictive analytics is credit scores. Factors such as credit history and loan applications are integrated to produce a score that predicts the likelihood of a consumer making future credit payments on time. Best Buy was also able to improve its operations through predictive analytics. The company determined that 7% of its customers were responsible for 43% of its sales, and from that insight decided to segment its customers based on shopping patterns and redesign the in-store experience to reflect the buying habits of those particular customer groups.3 Furthermore, Olive Garden uses predictive analytics to forecast staffing and food preparation requirements, efficiently managing its staff and significantly reducing food waste.4 Marketing strategies can benefit from the development of predictive analytics. Models can be developed to integrate information from social media. By aggregating data from consumers, either broadly or within a certain target market, marketers will be able to find patterns in the behavior and experience of consumers. These patterns can be used to customize in-store or online experiences, develop products and services to accommodate the needs of consumers, and provide an altogether better experiences for consumers.
1
http://www.information-‐management.com/channels/predictive-‐analytics.html http://www.forbes.com/2010/04/01/analytics-‐best-‐buy-‐technology-‐data-‐companies-‐10-‐accenture.html 3 http://searchbusinessanalytics.techtarget.com/news/2240025448/The-‐top-‐five-‐predictive-‐analytics-‐strategy-‐tips 4 http://searchbusinessanalytics.techtarget.com/news/2240025448/The-‐top-‐five-‐predictive-‐analytics-‐strategy-‐tips 2
Final Portfolio | Page 25
DIRECTIONS
Marketing Thinking Challenge 5.1 Consumers and Difference Choose a product or services category of interest and then identify some of the ways in which they are being differentiated by consumers in the marketplace. Then offer what you think might have been the lines of questioning that led up to these forms of differentiation. What might be some of the strategic implications to what you have revealed?
Consumer differentiation can be seen in hair care supplies. This product category includes all hair-related products, from shampoo and conditioner to mousse and hairspray. Consumers differentiate these products into daily use, weekly use, or sporadic use, for curly hair or straight hair, thick hair or fine hair, and high end or economical value. The basic line of questioning that led to these forms of differentiation is diagnosis. Consumers diagnose what hair type they have and what style they would like to achieve. This diagnosis includes assessing the consumer’s hair type (which includes criteria like texture (curly, wavy, straight), thickness, whether or not it’s color treated, current condition (dry, oily, split ends), as well as determining what result the consumer desires (casual or formal, updo or down, and so on). Based on this needs analysis, they select the products they feel will allow them to achieve the result they desire. The strategic implication for this type of questioning is that marketers need to listen to the customers. Marketers must be perceptive to their needs, and understand what product solutions will be of value to consumers. For example, consumers who are looking for products to style their hair but have little time to get ready would likely appreciate an all-in-one product that reduces the steps needed to achieve a desired style. Products should also target the specific hair concerns. For example, consumers with long, dry, color-treated hair would find value in a product specifically made to provide moisture to the hair while strengthening strands to grow long and strong. To stay competitive in a fast-paced, ever-changing industry like the hair care industry, marketers must be sure to listen to the changing needs of their consumers and meet those needs as soon as the consumers have them.
Final Portfolio | Page 26
DIRECTIONS
Marketing Thinking Challenge 5.2 The Changing Marketplace – The Twists and Turns Choose a marketplace of interest. All marketplaces are undergoing change in one form or another. It’s simply a matter of looking for change. Identify what changes you believe are occurring. What is causing the changes? Are the changes moving the market into unexpected directions? What makes them unexpected? How will the changes affect marketing in this market?
The market research industry is currently undergoing a gradual but steady change. In the past, the focus of market research has been on quantitative measurement. Quantitative research focused on logic and producing concrete numbers and data, which could then be statistically examined and analyzed. The problem, however, is that market research is conducted about consumers, who are human beings. Human beings have never been known to be logically driven – rather, they are driven by emotions, intuition, and seemingly inexplicable reasoning. Thus, a change is happening in the marketplace to a focus on qualitative study. Market research is moving in a more “fuzzy” direction. This is an unexpected direction, since research has always been more number- and logic-oriented than emotion-oriented. However, open-ended questions and prompts about feelings rather than thoughts are consistently being shown to better explain and predict human behavior. These changes in thinking within the industry are improving the marketplace. As predictions and insights become more accurate and relevant, companies are beginning to see a newfound value to market research, which is increasing the demand for qualitative research, and further catalyzing the change in the marketplace.
Final Portfolio | Page 27
DIRECTIONS
Marketing Thinking 5.3 Collaborative Marketing in Practice Go online and find companies that are utilizing collaborative marketing through their web sites. What features or aspects are being provided that involve consumer collaboration? How are they using them in their marketing? How effective do you think they are? What other collaborative means could they utilize?
Apple Support Apple Inc incorporates consumer collaboration on its Support site. In addition to providing tutorials and manuals on their support site, there is also a “Communities” section, which allows consumers to collaborate to provide tips and solve issues with Apple products. If a consumer is unable to find the solution to their problem from the frequently asked questions, manuals, or tutorials that Apple has provided, he or she can post the question or problem on the Communities site. Other consumers can then reply with their input to help the original poster find a way to fix the issue. Consumers can also post general resolutions if they have been able to solve a problem, to allow other consumers to find the solution without having to ask for it. Official representatives from Apple also monitor the Communities site, adding their own information and helping to solve problems as consumers post them. This is a very effective use of collaborative marketing, since it saves the company the hassle of testing for and providing solutions to all the possible problems that may arise with their products. By allowing consumers to respond to each other’s problems, the company may not even have to be involved in the troubleshooting of its products. Simply by providing this Community site, they are able to quickly and easily provide support to their customers. Lay’s Potato Chips Frito-Lay’s has launched a new campaign that involves consumer collaboration. Their “Do Us a Flavor” campaign is a strategy to determine new flavor options for their potato chips. In the first phase of the campaign, consumers were able to submit their flavor suggestions on either the Lay’s website or their linked Facebook page. Consumers could choose up to three flavors from a multitude of options, name the flavor combination, and design the bag’s packaging. Consumers could then share their new creation, view other consumers’ submissions, and vote for their favorites. The next phase of the campaign involves professional judging of the flavors, which will lead to the top three flavors being produced and sold in stores. Participants of the campaign can also sign up to receive a coupon to purchase those flavors when they are available. This is a very effective use of consumer collaboration, as consumers are likely to purchase the new chips since they were a part of the product development. This could be improved, however, by keeping the consumers involved through the judging phase. Instead of having the flavor combinations judged and chosen by professionals, a handful of top choices should be selected, produced, and made available for sale to the public for a period of time. Consumers would then be able to purchase and taste the options, and could then vote for the top finalists to determine the new flavor to be added to the permanent product line. By incorporating consumers in the entire development process, consumers will feel appreciated and involved, and more likely to purchase the product and recommend it to others.
Final Portfolio | Page 28
DIRECTIONS
Case: Apple, Inc. The Need to be Different Given Apple’s history and the situation it finds itself in today, is it possible for Apple to stay on its path of creating meaningful differences in terms of changing the ways things are done and not to becoming the established or status quo? State your position. How would you advise Apple? Be explicit and provide relevant examples.
When Apple was first founded, the company’s goal was to be different than the established norms. Thirty years later, however, the situation is changing. Apple has established itself as a trendsetter, defining the standards for all the product categories it produces. In many ways, Apple is still questioning the status quo, but it has also become a part of the standard offering, trying to keep up with the rest of the industry. For example, when the iPhone was first introduced, it was a revolutionary new look at smartphones and the technological capabilities and possibilities that cell phones possessed. Now, however, smartphones are a dime a dozen, and Apple’s is no longer ahead of the curve. With the most recent release of the iPhone 5, many consumers complained that nothing new had been introduced in the product, and that it lacked certain features that are standard on competitors’ smartphone devices. What’s important for Apple is to be flexible in their goals – they were once all about being different, but to remain competitive, they will have to adapt and change their thinking. The electronics industry is moving quickly, so Apple will have to ensure they are not held back by the need to be different. If certain product features are considered the standard, Apple must accept those standards and adhere to the expected features, rather than always trying to be different from the competition. An example is the data port on its iPods, iPhones, and iPads – for most electronics currently being produced, the standard is a mini- or micro-USB port, whereas Apple steadfastly used its proprietary 30-pin port, and now the newly introduced “Lightning” port. I believe Apple should continue to value creativity and innovation, thinking up new solutions for consumers. However, they should not dismiss what is already established as good thinking just for the sake of being different. Such close-mindedness could lead to Apple being left behind as competitors develop new ideas and solutions. The truth remains, however, that consumers continue to buy Apple products, even if they are lacking other industry-standard features or inferior to competitor products. Only time will tell whether or not such a change in strategy will become necessary for Apple to be competitive.
Final Portfolio | Page 29
REDO: Marketing Thinking Challenge 6.1
DIRECTIONS
E-Commerce Offerings Go online and conduct a search for “e-commerce examples.” Identify several websites that you believe are well-designed sites from a marketing perspective. Describe in detail what is being offered through the design of their websites and why you believe these aspects to be important to their marketing strategy.
IKEA The website for Swedish furniture company IKEA is an excellent example of a well executed website. Brick-and-mortar IKEA stores are well known for allowing customers to touch, feel, sit on, and otherwise interact with the furniture and providing sample set-ups of the furniture in mock rooms. This approach is carried over into their website as well. Products are separated into categories based on the room of the house they are intended for, and each category provides images of sample rooms, with links to the products used in each room. Individual product pages show all color options for the product, alternate view pictures, and measurements of the product (as well as the dimensions of the unassembled package), which allow customers to assess fit before making a purchase. Once customers have made the decision to purchase a product, they can purchase the product online or check the availability of the product in nearby IKEA stores. IKEA’s strategy is all about providing customers with an interactive experience, and their website provides the in-store experience to consumers who are unable to visit the store.
Final Portfolio | Page 30
Converse Converse is a popular shoe design and manufacturing company. The company’s website is excellently designed from a marketing perspective. The visual look and feel appeals to its target market: “hipster” young adults. It is interactive, with pages to view all the different product categories – and articles related to those products – as well as a “create” section where a consumer can customize their shoe exactly as they want. This website aligns well with its customers’ needs, and successfully carries out its strategy of appealing to its younger audience’s affinity for the Internet and appreciation for unique products and custom options.
Dyson Dyson is known for engineering vacuums (and other related products) that are radically different from the products of its industry competitors. Their strategy is to differentiate themselves in meaningful ways from the competition, and their website helps to accomplish this task. Their website features a sleek black background and clean, linear components, reflecting the Final Portfolio | Page 31
nature of the product. The website offers technical information about its products, describing the engineering and technology behind each model and its features. Consumers are also able to purchase parts and find support for their products, which shows Dyson’s commitment to service after the initial purchase.
Salomon/Bonfire Bonfire, a sub-brand of Salomon, is a leading brand in snowsport gear. The company’s interactive website allows both novice and expert skiers and snowboarders to find the jacket, pants, or accessories to fit their need. The top navigation allows consumers to select which type of product they are looking for, and then filter the available products by fit, color, price, and other features. This filtering tool is a great feature from a marketing perspective, because it allows consumers to identify which product is best for them, without extra work from the marketer. Their strategy is to offer products to satisfy the needs of a variety of different users, and their product filtering tool effectively allows consumers to identify what products will be able to provide them with the best value.
Final Portfolio | Page 32
REDO: Marketing Thinking Challenge 6.2
DIRECTIONS
The Marketing Offering – Consumer vs. B2B Choose a consumer and a business-to-business market and a product or service of interest for each. After reviewing the numerous marketing mixes presented and other sources you might find relevant, develop what you believe would be the most appropriate mixes for each of the markets you have chosen. In each case, explain why you believe your marketing mixes are the best. How do they differ? How do the differences between mixes suggest different strategies? In each case, explain what it is you are fundamentally offering and provide a detailed explanation for each of the above questions.
For the consumer market, I chose books. The current book industry has expanded to include both printed books as well as digital books, so marketers must address both avenues of product delivery. I believe the best marketing mix for this market is Value-Viability-Virtue-Variety-Volume. In the age of technology, reading books is becoming overshadowed by movies, television, and Internet content. It’s important for marketers to maintain and develop the value of books in the market. Likewise, viability must be considered to make sure that books continue to stay relevant despite the instant content provided by the Internet. Marketers should also work to maintain the virtue of a book – specifically, books are beginning to be considered traditional, pure, or old-fashioned. Marketers must make sure that the attitude toward books remains positive. Additionally, marketers must provide variety in the books, both in subject matter and in delivery – books are now not only offered in hardcover and paperback, but also in digital formats for use on iPads and Kindles. Finally, a large enough volume of products must be retained to meet the demand of consumers, but overstocking should also be taken into consideration. This marketing mix takes the consumer into its consideration, while also retaining some of the insights from the traditional 4 Ps marketing mix. The components of the 5-V mix are from the consumers’ perspectives, incorporating factors that have meaningful impacts on the consumer. At the same time, the mix also still considers aspects of the 4 Ps: value and variety relates to the product, viability relates to price, volume relates to place, and volume relates to place/distribution. Such a marketing mix illustrates a compromise between traditional marketing theories with contemporary ways of thinking. For the business-to-business market, I chose cotton manufacturing. Before clothing can be sold to the public, the cloth to make the clothes must be manufactured by a B2B company. For such a company, the most appropriate marketing mix includes customer service, teamwork, service quality, and excellence. Since the products that are produced by the cotton manufacturer will be sold to another company to be made into clothing, customer service is key to ensure that companies continue to choose the cotton manufacturer as their cloth suppliers. Teamwork is necessary to ensure that the products are made in high quality and on time to meet the supply demand. Service quality is essential to ensure that when clothing manufacturers order cloth, they are supplied with the needed materials in a timely manner to maintain production schedules. Finally, excellence in product quality is crucial, since the product will be modified by the clothing company and ultimately sold to end consumers, who require high quality products. The nature of the business-to-business market is that it is based on a mutual relationship between two (or more) companies. Suppliers and manufacturers work together to produce the goods to sell to consumers, and this can only be accomplished through cooperation and an understanding of the end users’ needs. This marketing mix takes that into consideration, and emphasizes both the need for quality of products and services and the importance of maintaining strong, mutual relationships.
Final Portfolio | Page 33
REDO: Marketing Thinking Challenge 6.3
DIRECTIONS
Thinking through Participatory Marketing (PM) Choose any product or service situation of interest. Research the situation and identify the various entities that might have a vested interest in the situation. Map out a collaborative network, provide a description of each of the participants, and explain why your collaborative network would work best for this situation. As part of your description, explain how each of the members of the network would benefit from their participation. In what forms would the benefits come? Explain how you, as the marketer, could increase their benefits through your participatory role(s). What forms of participation could you contribute to the process? Be explicit.
Local Organic Farmers Organic Packaged Food Manufacturers
Average Customers
The Green Scene Organic Superstore Organic Beauty Product Manufacturers
Green Consumers Organic Cleaning Prduct Manufacturers
The Green Scene – Organic Superstore This collaborative network is centered on a hypothetical store called “The Green Scene” that would serve as one-stop shopping for all green and organic products. The store has a food section with both fresh produce and packaged goods, as well as sections for beauty products, cleaning products, clothing, and other consumer goods. Local Organic Farmers Organic farmers local to the location of the superstore will serve as suppliers of the fresh produce for the store. Because organic farming doesn’t involve pesticides or genetically altered plants, the supply of produce can vary, which means the Final Portfolio | Page 34
Green Scene store will need a few suppliers, so that a shortage from one supplier will not be detrimental to the inventory of the store. These farmers will contribute to The Green Scene by providing goods to be sold in the store, which receiving the benefit of having their products distributed with little work required on their part. Organic Packaged Food Manufacturers For food supplies not grown locally, the Green Scene store will have a small amount of suppliers to provide packaged goods. Organic Beauty Product Manufacturers Many companies produce and sell organic beauty products, but are limited to one or two local stores and online sales. The Green Scene will sell these products in their superstores, which is mutually beneficial: the Green Scene has its supply of products, and the manufacturers will have a retailer for their products. Organic Cleaning Product Manufacturers Just like beauty product manufacturers, many companies that produce organic, chemical-free cleaning products. Again, this collaboration will be mutually beneficial, as the Green Scene gets its supply of products and the manufacturers will have a retailer for their products. Organic Clothing Manufacturers Again, the Green Scene will be able to sell clothing made of organic materials, and the manufacturers of these products will have a retailer to sell their goods. All the above manufacturers contribute by providing goods so that the Green Scene store does not have to manufacture such products itself, and the manufacturers benefit by having their products sold through the store. Green Consumers Consumers looking for green and organic products will benefit by being able to find all the products they need at the Green Scene store, and their business contributes to The Green Scene’s revenues. These customers will also contribute by helping to promote the store through word-of-mouth with their friends and fellow green consumers. Average Customers Even consumers who do not regularly purchase green and organic products will be able to benefit from collaboration with the Green Scene. They will benefit by being provided a location to browse all available green and organic goods in one convenient place, and the Green Scene will gain them as potential customers. Just like green consumers, there is potential for these consumers to contribute to the promotion of the company’s name. Marketer’s Participation As a marketer, I could help increase the benefits of participants by facilitating communication to link participants together. Connecting green product makers with the superstore is helpful to both parties, as the producer is able to sell its products in stores without having to incur the costs of renting or buying a storefront to sell only those products, and the store is able to make profits by reselling the products without the cost and process of manufacturing them. For consumers, I could make sure the layout of the store id designed in a logical and flowing manner, to facilitate the shopping process and make it quick and easy for consumers to find the products they are looking for.
Final Portfolio | Page 35
DIRECTIONS
Marketing Thinking Challenge 7.2 Brand Communities Go online and identify brand communities for a product, service, and a B2B company. Are they using some of the suggested strategies ideas from the PowerPoint? If so, which ones? Are they using other strategies that weren’t presented? Describe them. Which strategies do you think are effective and which ones aren’t? Explain why. What other ways could the marketer participate (contribute) in each of these situations?
With the prevalence of social media, it is now quite common for communities to develop based on shared interests. I’ve noticed that frequently this shared interest is a book or movie franchise, like Harry Potter, Twilight, The Hunger Games, and so on. Without necessarily the intention of the franchises’ marketers, fans of the books or movies band together into a brand community. As the brand community for a particular brand grows, it becomes important for the marketers of the brand to be at the very least aware of the community, but even more so to be involved in it as well. An example of this is the marketing group for the Hunger Games movie franchise. The brand community for this product developed as the first book in the series was adapted into a movie, with consumers drawing together in anticipation of the film. The brand community is comprised of consumers who have come together on several social media platforms to share their common experiences. On sites such as Facebook, Twitter, and extensively on Tumblr, community members exchange ideas and share fan art, pictures, news, and rumors. Following the success of the film, it seemed that the franchise’s marketers realized the potential of participating in the brand community, and began to acknowledge the fan base. They followed a form of the “transparency is a mandate” strategy idea by disclosing information about the film through social media outlets, rather than keeping information hidden (and risking information leaks). For example, after the casting process began, the chosen actors were announced on the official Hunger Games website and social media profiles, allowing fans to be a part of process and facilitating the build of excitement for the next movie installment. The Hunger Games marketers also use other strategies that we didn’t specifically discuss in class: recognition and sharing targeting. The recognition strategy involves recognizing and sharing the fan art of members of the brand community. The Hunger Games Facebook page would showcase one or two fan-created artwork, giving credit and a link to the fan’s profile page. This allowed the marketers to help spread media to the community, as well as taking an active role in the providing and sharing of information. The sharing targeting strategy does exactly what the name suggests – its target purpose is to be shared among the brand community. Instead of releasing a static poster for the upcoming movie, marketers instead released a “motion poster,” which features an animated version of the film’s logo. This motion poster was intended to be shared online through social platforms, rather than just presented as a print advertisement. Overall, it seems the current strategies are working. In particular, releasing the casting information and the “motion poster” seemed to create the most energy within the brand community. This sort of transparency allows fans to discuss their expectations and impressions about the film with other community members. While the marketers do encourage the sharing of the information they provide, they aren’t specifically defining the consumption – rather, they are just making information and updates relevant to the movie available to the members of the brand communities, and allow them to share the information amongst each other. Sharing this information (especially since the information would likely be leaked anyway) promotes buzz about the film and helps to portray the marketers and the entire franchise as one that values and appreciates its fans. Final Portfolio | Page 36
What I would like to see is the marketers increasing their participation in the brand community, but in a more receptive way. Rather than providing the information, they could use strategies like releasing the reigns, greater listening, and throwing open the doors. Because these movies will be based largely on the book series, which the vast majority of brand community members have read, it would interesting to allow the fans to participate in the creating of the movies. This could involve letting fans vote on or recommend cast members, taking input on specific scenes to include in the films, or even offering opportunities for fans to be extras in the movies. Such tactics would place an emphasis on people – rather than only letting fans consume what the marketers provide to them, they could be allowed to take an active role in the process of creating the movies. Such strategies would help to create a “we” perspective, making the brand community members feel like integral members of the franchise.
An example of less successful brand community marketing is that of Netflix. For years, Netflix had a loyal brand community, based largely on the uniqueness and quality of its service. It gained preference over similar companies (like Blockbuster) because it offered the convenience of DVD delivery right to a consumers’ mailbox, rather than requiring a trip to the local store. When online streaming came along, consumers were thrilled, and the brand community grew and thrived. Users participated in brand communities both on Netflix’s website as well as on social media sites. On Netflix’s site, users rated and reviewed movies, helping to create a user-generated database of recommendations. Netflix’s development of its recommendation system further helped users find available films that matched their specific taste. Through social media, users shared what movies they had or were planning to watch, spreading the news about new titles available for instant streaming. Netflix utilized the “birth” strategy idea by incorporating the recommendations and ratings system into their website. Providing a forum for its customers allowed for a brand community to develop, bringing its users together through the shared act of watching, rating, reviewing, and recommending movies. This strategy worked quite well, because it helped to jumpstart the creating of the Netflix brand community. As awareness of the brand and its customer base grew, Netflix flourished. After its initial success, however, Netflix seemed to stop participating in the brand community and listening to its customers. Netflix made changes to the user interface and functionality of its website, without such changes being requested, needed, or useful to users. Then, Netflix implemented the infamous price increase. While it would be understandable to increase the price of its service in order to offer more film and TV show options, the price increase did not result in a dramatic increase in content. Not long after, Netflix announced that it would be splitting its services into two companies – one for online streaming, one for DVD delivery – with no price adjustment. This seemingly unjustified price increase, combined with the marketers’ poor communication of its decisions to the consumers, resulted in a negative impression for many users, and significant loss of customers. The most obvious strategy for Netflix marketers to enact is to resume its participation and make positive changes to its contribution. The damage of its past actions is already done, so the focus now should be to regain its reputation within the brand community and general public. One important strategy to follow is the transparency mandate – rather than making behind-the-scenes decisions, marketers and decision-makers should disclose their actions and the reasoning behind each business move. This way, users do not feel that changes are forced upon them, but are rather made with the best intentions. Netflix marketers also need greater listening – by tapping into the feedback given by members of its brand community, marketers will be able to better identify existing problems to address, as well as finding potential product improvements to make that will actually be appreciate by its users.
Final Portfolio | Page 37
As a communications B2B company, Cisco understands the importance of participating in its brand community. Their website features a “Communities” section, which features a Learning Network (for users to become familiar with all the services offered), a Developer Network (with resources and support for developers), and a Support Community for users to interact with each other to discuss solutions to common issues. Cisco also has a page dedicated to connecting user with all their various social media platforms, which include Facebook, Twitter, Google Plus, YouTube, blogs, and forums. Cisco uses many strategies, including diversity, throwing open the doors, and social themes. As evidenced by the multitude of social media profiles marketers have created for the company, as well as its own communities and forums, a diverse group of user is able to join the brand community. Cisco carries out this strategy by not only having those profiles, but by also actively participating in the communication to its followers. All the different accounts are frequently updated to inform community members of news, programs, and products related to Cisco. Through its extensive networks, Cisco has thrown open the doors to collaborating with outsiders, and maintains this network through its website and media profiles. Cisco emphasizes open sourcing, soliciting its users for more ideas and collaboration. Cisco’s marketers have also taken a stab at the social themes strategy, by providing social activities for its community members. On its Facebook page, for example, the “SuperFan” initiative gives recognition to its community members. Cisco also has a “Social Rewards” program, which gives credit to users for their participation within the site, which further encourages communication and participation among the brand community. Another way Cisco could participate in its brand community would be to offer offline events for its users. Events that aren’t based explicitly on using its products, but rather on developing relationships between brand members or giving back to the community. Such activities would bring the emphasis away from focusing too much on only the products, and more on the people that use the products. Additionally, Cisco could create a more independent network for brand community members – rather than monitoring all its social platforms, they could allow other users to be moderators. This would lead to a more open channel of communication between members, since they will be free to just converse with each other rather than through the company itself.
Final Portfolio | Page 38
DIRECTIONS
Case: In-N-Out Burger Keeping It Simple What other marketing lessons do you think the INO example suggests? Offer additional strategic recommendations that might be helpful? What types of changes could occur in the marketplace that would affect INO’s success? How could they prepare for these changes?
The case of In-N-Out Burger gives an excellent example of a successful yet subtle company. In comparison to multinational fast food restaurants like McDonald’s, INO Burger may seem to be far behind the competition. In reality, however, INO has achieved a much more understated success – McDonald’s is widely known as a cheap and quick place to eat, and provides only a removed, unemotional functional product for its customers. In-N-Out Burger, on the other hand, does provide food, but it is part of an overall emotionally engaging experience. Customers do not come to INO just because they are hungry – they come because they are craving the personal and exciting experience that they have come to expect from INO. INO’s brand community, centered on its “secret menu,” is an example of co-creation. This secret menu is where the value from practice comes from. The value of the INO experience comes not from consuming the secret menu items, but stems from the ability to be able to order from this special menu and the feeling of inclusion that comes with it. Further enjoyment is provided to brand community members because of the vocabulary of the secret menu. Rather than just ordering a burger without meat, customers can ask for a “wish burger” (as in, “I wish there were meat in this burger”). Rather than ordering a burger with grilled onions and a mustard-cooked patty, customers ask for an “animal style” burger. This esoteric terminology helps to foster a feeling of exclusivity and adds to the experience. INO helps to foster this value by training its staff to know the secret menu items, and staff members are happy and eager to help customers order in this unique way. An important component of a healthy brand community is transparency. A company should not keep its operations secret from its customers. In-N-Out Burger has followed this rule by publicizing its secret menu on its website, calling it the “Not-SoSecret Secret Menu.” By providing the names and descriptions of its most common secret menu options, INO has thrown open the doors to consumers, inviting anyone to join in on the experience. The entire INO brand community is very open and welcoming, and many members serve as evangelists, promoting the secret menu to new customers and helping to initiate them into the community. A recommendation for In-N-Out Burger would be to further release the reins to customers. INO has clearly already given control to customers by allowing them to order from the secret menu, but this could be taken even further. Allowing customers to modify the product enhances the experience, so the general mandate should be that if a special request is possible, it should be honored. For example, I came across a “survival guide” written by a INO brand community member for Serious Eats (http://aht.seriouseats.com/archives/2011/03/the-in-n-out-survival-guide-we-ate-every-single-item-on-thesecret-menu.html), wherein the blogger ordered every item on the secret menu. During this endeavor, the blogger noticed a fellow patron putting French fries on his burger, and attempted to order a burger with fries inside. The surprising answer he got was “Sorry, we just can’t do that.” Though this request would require no special effort on the part of the INO cooks, they were not able honor this wish. INO could improve the value of its customer experience by training its employees to understand that if it can be done, it should be done. This will allow the ultimate customization for its customers, and will help to solidify its reputation as a truly unique establishment. In-N-Out Burger also needs to prepare for any changes in the marketplace that could affect its success. One of the reasons for INO’s success is that it is unique – most restaurants only allow changing menu items in terms of toppings, not the Final Portfolio | Page 39
intricate customization that INO offers. However, other restaurants could see the potential, and promote a secret menu of their own. In-N-Out Burger’s East Coast counterpart, Shake Shack, is already beginning to honor off-menu requests, albeit not as extensively as INO. I would recommend that INO take an active part in developing its secret menu offerings. This could be achieved by asking customers for ideas, or by experimenting themselves with new combinations. By actively improving the options available to its secret menu customers, INO will ensure that it is maintains its reputation for a unique customer experience, and will continue to be successful.
Final Portfolio | Page 40
DIRECTIONS
Marketing Thinking Challenge 8.1 Persuasive Marketing Communications Identify a product oriented company and a service company that you believe exhibits the use of persuasive tactics in their marketing communications. For each company, explain what forms of persuasion they are using. Then explain how you believe these practices may be contributing to or detracting from their reputation within their respective industries.
Luxury carmaker Audi is an example of a product-oriented company that uses traditional marketing communications, but is also beginning to adopt non-traditional methods of marketing. Though the campaigns do acknowledge the changes in the world of marketing, however, the tactics are still primarily outbound. Audi engages in traditional marketing communications, like print, television, or radio advertising and sales promotions through dealership promotions, but is also moving into utilizing word of mouth advertising. For example, Audi capitalized on the popularity of the iPhone by launching a free iPhone game, called the A4 Driving Challenge. This game served to promote Audi’s A4 as well as the entire brand, and gained credibility with consumers for being current and technologically forward. Though the game did have some technical difficulties, it helped to generate buzz about the brand as users downloaded and shared the game. This approach was definitely unique and contemporary, but it did not encompass a truly collaborative orientation of contemporary marketing. The game was merely released to the public – it was not the result of listening to customers’ needs and addressing their desire for a product-inspired smartphone game. It was an attempt to spur sharing among its target audience (iPhone users) and take advantage of social media to generate viral marketing. In that respect, Audi has been fairly successful in establishing its reputation as a luxury brand for forward-thinking and technically advanced consumers. Overall, however, Audi’s marketing communication still has much improvement to make to become truly collaborative. This would be achieved by not creating targeted social media marketing campaigns, but rather by using more inbound tactics to draw customers in. For example, making videos about the type of cars the company makes, or the thinking and technology that goes into the cars, available through blogs or videos would allow consumers to identify themselves as idea customers and seek out more information about Audi, rather than Audi attempting to access who they determine to be potential customers with media they deem valuable to the consumer. The key strategy is to listen to the consumers, and based on what they find valuable, create content and make it available for them to seek out, which will result in the appropriate customers being drawn in to the brand. Mysha Day Spa is a health and beauty shop that I have frequented from time to time, which provides an example of a service company that uses persuasive tactics in their marketing communication. The company uses several forms of persuasive marketing. As it is not a very large company, they do not use extensive advertisement, but I have seen ads in local newspapers and signs around town close to the spa’s location. Their advertising serves to create awareness for the company, and in some way to differentiate their services from the many other health and beauty shops they compete with. The advertisements reflect the contemporary and relaxing environment of the spa and are targeted toward consumers in their teen years and up. The company primarily uses orange in its décor and advertising, and advertises itself as ideal for both men and women looking to relax or pamper themselves. The company also engages in direct marketing, both through their email list and Facebook page. Through those mediums, Mysha Day Spa communicates information about special events and sales promotions. Sales promotions are used throughout the year, and are primarily package deals on the offered services. For example, around Valentine’s Day, the spa will offer couples’ packages featuring his and her massages or facials. Additionally, the spa will select one service every month and offer a special discount on that service for the duration of the month. Other promotions have included discounts to randomly selected fans of the Facebook, which helped Final Portfolio | Page 41
to increase the spa’s fan base. These marketing communication tactics are all outbound, seeking out consumers rather than letting consumers seek the company out. The advertisements target certain groups, rather than simply promoting the services and letting customers seek out the company. While the sales promotions do provide beneficial discounts, these discounts are only offered when the marketers decide to make them available, and are only for select services. Such promotions will only be valuable to customers if they desire to purchase the specific service the discount is for. These marketing communication practices do contribute to Mysha’s reputation, since the advertisements make consumers aware of the company and the promotions provide worthwhile discounts to customers. Adopting more collaborate marketing communication strategies, however, would be even more beneficial to the company. Instead of advertising to target a group, the company should focus on advertising the services they offer and the experience they provide. This way, consumers who are attracted to those offerings will be inclined to frequent the spa. Mysha should use its social media profiles to provide relevant information about health and wellness, like simple home remedies and articles about recent developments in the industry that will provide value to customers. Finally, Mysha should make discounts available to consumers all the time, or make the discount for any service, rather than only a specific service. This provides greater value to customers, since they are free to choose the services they want to purchase, rather than only being able to receive a discount on a service they may not necessarily have wanted or needed.
Final Portfolio | Page 42
DIRECTIONS
Marketing Thinking Challenge 8.3 Creating a Listening Dashboard Choose any product or service category of interest. Identify the various related online communities and sites that you think would be interesting to listen in on. Then, go to one of the dashboard websites and create a listening dashboard for the product or service you have chosen. What are they talking about? How could you participate?
I chose to research hair products. There are many online communities where users will share pictures and tutorials of hair styles. Social media sites like Tumblr and Pinterest are a place for stylists, experts, and novices can come together to share inspirations, tips, and provide recommendations. It would be interesting to listen in to these exchanges, to see what opportunities exist for marketers to participate in the sharing of ideas. The following is a snapshot of the dashboard I created and followed for keywords like “hair,” “hair products,” and “hair styles.”
Based on what is being said on social media about hair products and hair styles, there is definitely potential for marketers to participate. Instead of simply using outbound communication techniques to try to sell their products, marketers can follow the lead of the community members to provide valuable contributions. Rather than an ad for a new leave-in conditioner, marketers can instead post video tutorials for what hairstyles can be achieved using the new product. Marketers can create their own blog posts or share others’ about new tips and tricks. Users could be asked to try and review new products, thus producing honest and relevant word-of-mouth recommendations. The key to success here is to remember that participation is a two-way street. Marketers must first and foremost be listening to consumers and considering what they are adding to the community. Only then can marketers begin to identify what additional contributions will be valuable to the users.
Final Portfolio | Page 43
DIRECTIONS
Marketing Thinking Challenge 11.1 A Return to the Bartering System To get a better understanding of the role money plays in terms of price and today’s marketplace, consider how things would be different if all exchanges took place based on bartering and money didn’t exist. What would be the differences in the marketplace both small and large? How would marketing be different? What would strategy involve in a bartering system?
At first, the idea of a marketplace based entirely on bartering seems highly unrealistic and complex. Without money serving as a medium to equate all goods, how is the marketplace supposed to determine how many pounds of meat is an appropriate trade for a haircut? There are so many aspects of value to consider – in this example, how long did it take to prepare the meat? What resources were needed to raise the animal? How much time did the slaughtering take? For the haircut, how much time will it take? What tools (scissors, comb, etc.) are needed for haircut? Is the meat worth more or less because it is perishable, compared to a haircut that “expires” when the hair grows out? These are just a tiny fraction of the questions that would have to be asked in order to determine the fairness of bartering with two different items. On the other hand, using money is also a complicated system. All the pricing strategies that exist are based on various approaches to determining the value of a product. Even when using a standardized money system (which it isn’t even exactly – think of all the various currency exchange rates), there are still questions to answer. Will fixed costs be included in the price? How big a margin should there be above the cost? Should services be priced per hour or by flat rate? As it turns out, using a system based on money doesn’t make pricing all that much simpler. In that respect, using a system where all exchanges were based on bartering rather than money would have a relatively small difference from the current marketplace. So what does a bartering system look like in practice? A bartering system would be different from the current marketplace – it would be more complex, but also similar in some respects. Because there would be no general money system to serve as the “middle” man in pricing, there would be a bigger emphasis on value, and more specifically, individual value. Rather than setting the price of a good or service to be a certain amount of money, each business transaction would require two parties to agree on their bartered exchange being equal and fair to both sides. This makes the whole system of commerce more organic and individually oriented. A certain good may hold high value to one customer, but lower value to another. In turn, the bartered goods or services that these two customers give to the seller may have different values between the customers, but the same value to the seller (thus allowing the seller to trade the good for those exchanges). As a very basic example, a book vendor may sell a book to a customer in exchange for a cup of coffee, then sell the another copy of the same book to a new customer for a set of silverware. The two customers may not feel that a cup of coffee and a set of silverware are equal in value, but they will agree that their individual items were a fair trade for the book. The above example shows that a bartering system involves a lot more ambiguity and complexity, which is different from the more standardized money-based system. At the same time, however, the bartering system is simpler, because only the two parties involved in the exchange need to agree on what a fair trade will be. It is similar to participative pricing strategies, wherein the customer participates in determining the price value of the good or service being purchased. It makes the entire trade process more individualized, emphasizing personal value rather than “market value” or “retail value,” which is based on an overall market orientation. The result is a system that does not differentiate based on price differences, but on other factors in value. The emphasis is not on the exchange of money, but on the exchange itself. A bartering system would feature fairness based on mutual consensus, and will emphasize the development of friendships and business relationships, and would result in a shift toward viewing quality and craftsmanship and factors for differentiation, rather than simply costs. Final Portfolio | Page 44
DIRECTIONS
Marketing Thinking Challenge 11.3 Price Determination Identify organizations that you believe are using the three different pricing approaches (i.e., cost-based, competitive-based, and market-based pricing). How did you determine their pricing method? What effects do you see playing out in their respective markets stemming from their pricing approach/strategy? What would you recommend?
An example of organizations using cost-based pricing is airplane manufacturing companies, like Boeing and Airbus. These companies base their business on the manufacturing of extremely expensive and complex products, and thus construct their pricing strategies solely on costs. For Boeing, Airbus, and other airplane manufacturing companies, they must know the costs that will go into production in order to properly price their products to make a profit. Prices, then, are determined based on various fixed costs incurred by the manufacturer, including all the expenses involved in running a production facility. These costs include, for example, renting or owning the property, building management, utilities payments, administrative support, machinery support, and manual labor. Additional considerations stem from the cost of all the resources necessary to produce the airplanes – whatever costs are incurred from suppliers must be carried through to the price for the finished product. For these manufacturing companies, one of the implications of a cost-based pricing approach is that their only major form of differentiation is the price of their products. This places emphasis on taking measures to reduce the cost of production. I would recommend that a company using cost-based pricing work on fostering relationships with suppliers. Such relationships will be beneficial, because good communication and secure relationships will allow the supplier to offer lower prices on resources. Additionally, the company could engage in joint ventures with other similar companies to help reduce costs. Overall, the goal for an airplane manufacturing company is the make sure that costs are always being considered, and they are the primary source for pricing and thus play an integral part in the success of the business. Online retailer Amazon provides a good example for a competitive-based pricing approach. When it first launched its Kindle Fire tablet product – and later with the introduction of newer models – the pricing was not based on the costs of the products, but rather on making it competitive compared to other big-name competitors like Apple’s iPad. Many articles address the production cost of the Kindles compared to the prices of the tablets. The cost to Amazon to produce these Kindles is high compared to its price range ($200 to $500 – compared to $300 to $700 for iPads). Amazon made the decision to price its products lower in order to gain access to a group of consumers that may be unwilling or unable to pay the higher prices for iPads, despite having similar costs. In an attempt to offer its tablets at even lower prices, Amazon also offers the tablets with advertisements at a discounted price. The goal of this pricing strategy isn’t to achieve a certain profit margin or cover a percentage of costs – rather, the aim is to make a profit by capturing customers that would have purchased another more expensive brand of tablets, or who would not have purchased a tablet at the higher prices. So far, it seems that this strategy is working well for Amazon. When the Kindle Fire was first released, it was a hot item, especially for consumers who wanted to own a tablet but didn’t want to spend as much money on it. My biggest concern would be whether or not Amazon is actually making enough of a profit per unit to continue its strategy. As long as costs are low enough to enable them to make a profit by selling the tablets at competitive prices, then it seems that their strategy is helping to draw customers from Apple and other brands and I would recommend they continue their practices, but still keeping an eye on costs and ensuring they maintain a profit. The organization that makes the card came “Cards Against Humanity” uses market-based pricing for its most recent holidaythemed expansion pack. Though the rest of its products have set retail prices, this particular product is priced based on Final Portfolio | Page 45
participative pricing. The expansion pack can only be purchased online through their website, where the company lists its costs: $1 to print the cards, and $2 to ship them. They provide a promotional video to explain how the “Pay what you want” program works, and in this video they suggest paying $5 for the cards (or, jokingly, one trillion dollars). Despite the suggested price, however, they will accept as much or as little as the customer wants. At first thought, it would seem that allowing customers to “buy” the item for free would result in a loss of profits. However, I believe that by providing the costs to the customer, many will feel at least obligated to pay the $3 to cover their costs, and some guilty consumers will likely pay more than the suggested amount to cover the loss from other buyers. Cards Against Humanity has only had this promotion for the current holiday season, so it remains to be seen what kind of a profit the company is able to make. I think it will likely prove to be a beneficial strategy, especially since the product is an expansion pack to the original card game. I would predict that new customers are enticed by the “pay what you want” promotion, and purchase the expansion pack for whatever price they choose in addition to purchasing the original starter pack, causing a boost in sales for the company. I would recommend that the company continue to price its products using this market-based strategy, and even expanding the promotion to include its other products as well. This is a relatively different pricing strategy, not used by other card game companies, so by using participative pricing for its products, the company will have the added bonus of generating word-ofmouth promotion as consumers tell their friends about this new and unique purchasing program.
Final Portfolio | Page 46
DIRECTIONS
Case: Panera Bread Company Believing in Reciprocity Research Panera and find out how the PWYW pricing is working. If it is working, explain why you believe this form of pricing works. What suggestions would you make and when would this type of pricing be appropriate?
The Clayton “Pay what you want” restaurant has been quite successful. Panera has since launched several more “Panera Cares” restaurants, including one in the Chicago area (its biggest market to date). Ronald Shaich, founder and chairman, reports that the first restaurant has had good turnouts in terms of what customers are paying. About 60 percent of patrons will meet the suggested price, 20 percent leave more, and 20 percent will leave less or nothing5. This has generated enough revenue to keep the restaurant in operation, with a few thousand dollars a month above costs, which the company invests in community goodwill, like job training programs for at-risk youth6. This form of pricing works because Panera has successfully communicated the goal of the endeavor – to give back. From employees at the entrance explaining the process to using the term “suggested funding levels” on the menu, customers that are new to this pricing can easily be introduced to how it works. Though some customers inevitably will try to take advantage of the system – what Shaich calls “lunch on Uncle Ron” – the majority of customers understand that the intention of the restaurant is that of shared responsibility. This type of pricing could be successful in other business endeavors, as long as the company communicates that the pricing is done in the spirit of social responsibility. I think a key factor to Panera’s success is listing the suggested donation prices – by providing a suggested amount, one that is close to the suggested retail price, many customers will chose to just pay the suggested amount, or round it up to the closest dollar. Any customer who is financially able and who sees the good that the company is doing will pay more, offsetting those that cannot pay full price. I would suggest that this type of pricing be implemented in a market comprised of both upper class and lower class customers, so that those less fortunate can benefit from the program, and those able to afford it will support the company’s ability to continue the endeavor.
5
http://www.huffingtonpost.com/2012/06/21/panera-‐pay-‐what-‐you-‐want-‐_n_1615427.html http://usatoday30.usatoday.com/money/industries/food/2011-‐05-‐16-‐panera-‐pay-‐what-‐you-‐can_n.htm
6
Final Portfolio | Page 47
DIRECTIONS
Marketing Thinking Challenge Creating a Marketing Thinking Challenge
Create an interesting marketing thinking challenge that you believe will promote students’ thinking.
Marketing Thinking (MT) Challenge: The Road To Recovery _______________________________________________________________________ Identify a company that has a negative reputation within the marketplace. What actions or events led to its current position? Explain what steps, if any, the company has taken to improve its brand. Based on what you’ve learned, what marketing strategies would you recommend to help this company recover its image?
Figure: Building an Image
Final Portfolio | Page 48
DIRECTIONS
Case: Google, Inc. Seeking the Fun in Innovation From what is described above and from what you can find out about Google, would you characterize Google as a thinking organization? If so, what are its thinking characteristics? If it is not a thinking organization, what would be needed to elevate it to a thinking organization? What suggestions would you offer to Google to create an even better environment for thinking? Explain the role Google’s culture plays in their strategy.
Google is definitely an example of a thinking organization. Their entire business model is based on fun and innovation, which are key components of a thinking organization. Emphasis on “play” is a vital creativity, and Google certainly takes steps to achieve this. Google claims that “work and play are not mutually exclusive,” and incorporates fun into its business practices. For example, Google participates in April Fool’s pranks and posts coding challenges in the bathroom. These activities show how Google promotes thinking and stresses that innovation is its bloodline. Google also fosters a supportive and open environment wherein employees are free to develop new ideas and find solutions to problems that have yet to be solved. Google’s general philosophy is “to provide generous, quirky perks that keep employees happy and thinking in unconventional ways.” They want work to be fun and challenging way to develop oneself, while also being a part of a company that creates things that matter. Google values collaboration both internally and externally. The majority of Google employees do not have private offices, but are instead teamed up with other employees. This practice leads to synergies and encourages collaboration between individuals within the company. On an external level, Google has taken initiatives to support the open source developer community. The 2005 Summer of Code mentoring program exhibits one of the ways Google participates in external collaboration. The program was offered to students to help them get involved in open source software, and also provided Google with a sustainable stream of new contributions to help it advance as a thinking organization. Google’s organizational culture reflects the characteristics of a thinking organization, and is an important component of their strategy. They aim to maintain a culture that fosters fun, creativity and innovation. They promote thinking at an individual level, and make sure employees feel appreciated and challenged. The culture at Google is one that promotes intrinsic motivation within individual employees, which totals into innovation and advancement for the company. In its discussion of the company culture, Google talks a lot of innovation and creativity, but not much is mentioned about failure. The paradox of success is that you need failure to achieve it, and as such Google should be sure to embrace failures. Though failures are most often associated with defeat and lack of fulfillment, they can also offer value in the insights they provide. Google should therefore place emphasis on the necessity of failures and the lessons they teach. Especially for a company like Google that is constantly on the frontline of development there are bound to be some mishaps. Embracing these failures will prevent any undertaking from being a complete loss, because at the very least it led itself to awareness, understanding, and future improvements.
Final Portfolio | Page 49
DIRECTIONS
Final Marketing Thinking Challenge Interesting Marketing Questions In reflecting over the course, generate ten interesting marketing questions that would be useful to a marketer. Then compare these questions to the ones you generated in the beginning of the semester in Marketing Thinking Challenge 1.1. What insights can you see between the two lists of questions?
Ten interesting marketing questions: 1. How can we move beyond traditional marketing methods to connect with our users and potential costumers? 2. Are we placing value on questioning norms internally? Do our employees feel free to make suggestions for improvements? Are we willing to embrace those suggestions? 3. Are our products/services providing true value to our customers? 4. What are we doing or can we do to better listen to our customers? 5. How can we bring innovation into our product development? In what ways can we work with our customers to identify new avenues of improvement? 6. What improvements do we need to make in our customers’ experience? 7. How are we challenging ourselves? What can we do to make sure we are always on our toes and staying ahead of the curve within our industry? 8. Is our company accessible to consumers? Are we making ourselves available to feedback and contributions from our customers? 9. What strategies will we adopt to price our goods/services, and what implications will those strategies have on our business in the future? 10. Do we remain open-minded and adaptive in our business practices? Do we continue to move away from the familiar? Looking back on my answers from the first challenge, I definitely see a progression in my thinking. I purposely chose not to look back on the questions until I had completed these new ones, to get an honest comparison between the two. The questions from the first challenge are more “surface” level questions. There is not much evidence of deeper thinking or of taking in all aspects of marketing. The questions I’ve generated for this challenge, however, encompass a more holistic look at contemporary marketing, and reflect a growth in my thinking ability. Throughout this class, I have come to see that marketing involves so much more than just creating a cool product and trying to convince consumers that they can’t live without it. Marketing, and specifically non-traditional marketing, is actually an intricate journey into the lives of consumers, which involves understanding not just their wants and needs, but also their expectations and determination of value. Marketing takes this understanding and uses it to develop products and services that provide a meaningful impact on consumers. Interesting marketing questions, then, must include questions that ask marketers to challenge the norms, look for meaningful differences, and think deeper than just buying and selling.
Final Portfolio | Page 50
DIRECTIONS
Extra Credit Marketing Thinking Challenge Course Suggestions & Recommendations Based upon your experience in the Marketing Strategy course, what suggestions or recommendations would you make to improve the course? Also, describe what the course experience was like for you. Your feedback is important to the development of the course. Thank you.
Looking back over the past few months, I would have to say that this class has been a bit of a rollercoaster for me. I was initially very excited to be taking the capstone course for my major, since it would be the culmination of the work I’ve put toward my degree. After the first class, once I understood what was to be required for the course, I was a bit afraid. In the past four years, I have not been exposed to a class where such deep thinking was required. Sure, I’ve taken a class or two where the entire grade was based on a final project, but the requirements of that project were clearly laid out and very specific. This class, on the other hand, is much more abstract in its requirements, which was scary for me since it was an unfamiliar method of operation. As the class progressed, however, I felt I was beginning to get the hang of things, developing my thought process as I completed the marketing thinking challenges. When the time came to receive my midsemester portfolio feedback, however, I returned to feeling afraid for my performance. It was very discouraging to find that all my hard work was only worthy of a red light, and essentially on the track to failure. I decided to change my attitude for the rest of the semester, and re-read my challenges with a critical eye. Going over the feedback, I did see that some of my earlier challenges did not display any evidence of higher-level thinking. I dedicated a large potion of time to reviewing the chapters in the textbook and the class presentations, and reworked my challenges. I made sure that all of the new challenges also showed evidence of thorough contemplation and evaluation. Now that the semester is coming to an end, I can say without a doubt that this has been the most labor-intensive class I have taken in my entire college career. I have not only worked but also thought harder for this class than any other course I have taken. As a result, I do see a change in how I approach challenges and obstacles. Overall, I think this is a very challenging course to take – as it should be, since it is the capstone course for the marketing major. What I first considered to be an overwhelming amount of work and impossible requirements has actually turned out to be a comprehensive shift in the way my fellow students and I think. Having high expectations for us students has helped to push us beyond simply following directions – we are now better equipped to dig deeper. For myself, and I’m sure for my fellow classmates as well, I feel this is some of the best work I have done in school. That being said, I do have some recommendations for improvement for future classes. Receiving feedback after the midsemester review was very helpful, and I wish there would have been more opportunities for comments on our challenges. I suggest that instead of one mid-semester portfolio, students should submit two tri-semester portfolios. The first portfolio should be submitted a month or so into the semester. This will have given students time to become familiar with the structure of the class, and have begun to develop their thinking. Receiving feedback at that time will be extremely helpful for students going forward in the class. For students that have not yet understood the requirements, or who may be on the road to flat lining, receiving a red light will be a wake-up call for them to better prepare for the rest of the semester. The second portfolio should be submitted a month or so before the end of the semester. This gives students the change to reevaluate their position in the class, and make any adjustments if necessary. For students who received a red or yellow light, this is an opportunity to “redeem” themselves, and to see if they have been able to get on track to success. Having two portfolios will also help students not to feel so overwhelmed by the course – since there are intervals for them to ensure they are successfully progressing in the class. Final Portfolio | Page 51
DIRECTIONS
Extra Credit Marketing Thinking Challenge Textbook Comments & Suggestions Based upon your experience reading and using the textbook for the course - Marketing Strategy: The Thinking Involved - what comments and suggestions would you make? Also, how would you compare the textbook to other textbooks you have used in the past? Thank you.
Overall, I enjoyed the textbook. Marketing Strategy – The Thinking Involved, much like the class itself, is very different from what I have experience in other courses. I would describe it as more of a journey into changing your thinking, rather than just a presentation of vocabulary and theory like other textbooks. The content of the book is very relevant to a business student like myself, since the focus is not on learning terminology and facts, but rather on applying theories to pertinent situations. This makes the lessons more relatable, and because they are more likely to resonate with students, provide a more lasting learning experience. My favorite element by far is the inclusion of the “bubble guys.” These simple graphics additions tie together all the chapters and make the entire reading experience engaging and almost interactive. I love that the bubble guys, much like the student, develop as the book progresses. This is a detail that’s not at all necessary for the textbook, but adds an important element of personalization to the book. In my experience, I have not read many textbooks that acknowledge the reader. It may not be the “proper” way to write a textbook, but I think that addressing the reader using second person within the writing, or symbolically with the bubble guys, helps to capture the students’ attention and makes reading a textbook (often a dreadful experience) more interesting and exciting. The only complaint I have about the book is a minor aesthetic comment. I do understand that printing the textbook in full colors raises the price – and I much appreciate the affordability of the book – but it was distracting to have photos in the book and not be able to distinguish colors. Since the bubble guys are white/gray, their images are particularly affected by not being printed in color, but for other images, like those in the decompression exercises, I would have liked to see them in color. Ultimately, however, I prefer having the textbook be more affordable and monochromatic than colorful and expensive. My suggestion then, would be to promote to students that the textbook is available as an e-book (a fact which I was not aware of) if they would like to have the full-color experience, so to speak.
Final Portfolio | Page 52