Week 8

Marketing 640 - Week 8

It has been a busy week!  There were some class prompts I'll start with this time around. 

One we began to talk about in class was Drucker's suggestion that the customer ultimately determines marketing decisions and what a business is because they are the ones buying the product.  I believe that there are some businesses that do not follow this thought process, but unfortunately I don't think they stay in business very long.  Not focusing on what customers want is ultimately setting yourself up for failure.  Sure not everything that people want can be achieved, but if there are many requests over and over again companies would need to seriously consider these and reach out for feedback.  Strategies like focus groups and customer feedback forms are helpful ways to address this and coincide with Drucker's suggestion.

Another Drucker discussion was on the ability to predict the future.  Drucker knew that strategic analysis could not predict the future - so the question was asked, why would you focus on historical data to predict buying habits if this was true?  I think this question somewhat relates to the one above.  Although we cannot know all the factors that are causing decisions in the future, we can use historical data to the best of our ability.  By looking at what customers want and their buying habits and trying to make decisions around that seems to be the best possible approach.  Ignoring information would be less helpful.  So even though we cannot predict everything that will happen we have to use the information we have as best we can.

One last Drucker prompt related to his '5 Certainties' of the future and whether these will change in the next 50 years.  These Certainties are:

1. The collapsing birthrate in the developed world.
2. Shifts in distribution of disposable income.
3. New definitions of performance in an organization.
4. Global competitiveness
5. Growing incongruence between economic globalization and political splintering.

I have to say for someone who mentioned we could not predict the future, Drucker seemed to nail it. In all honestly I can't imagine any of these changing in the next 50 years.   His prediction seems to be that things will change, and since I can't imagine we go stagnant all of a sudden I believe he is right.

Other Blogs

This week we were also asked to look into 3 other blogs in class.  I looked at Christine's, Mindy's, and Kenny's blogs.

I'll start with Christine's blog.  I really liked her in depth look into the Pharmasim assignment.  It made me think about how our team addressed the first round and it seemed to very different from what their team did.  I also like her comments on how Pharmasim decisions are not entirely like real-life because you can't adjust certain things, like her example of the dollar value associated with training sales staff.  I think this is a great point, there are many things that you could change in your decisions in real-life that you can't change in the simulation.  It seems like their team had a good plan going in and really went for it.  She also addressed an interesting article she found.  I think adding interesting articles helps classmates get to know each blogger a little better.

Mindy's blog was the next one I read.  She also addressed a lot of the Pharmasim areas.  In her blog she used specific reports that her group liked, and that it helpful to hear what other groups are looking and using to make decisions.  She also went on to address the 'try this' strategy of push/pull marketing.  That is one of the things I looked at in making our team decisions in the first round too.  In the week before she mentioned JC Penney and I've found their recent marketing decisions interesting too.  I think I had previously discussed them in one of my earlier blog posts, they seem to be having a lot of trouble trying to decide what customers want.  I think it took a lot for them to try something new and now address it's failure and go back to the old way.

Lastly,  I looked through Kenny's blog.  He started discussing how the class relates to his construction job and that was really interesting.  It's nice to hear how others relate to the things we are learning in class.  He also addressed the 'try this' like Mindy did, but he related it more to his job instead of the Pharmasim simulation.  It makes sense what he discussed about having to use the pull strategy in his career.  By not being able to relate completely to the simulation makes it more interesting and allows for a different view point of what we are talking about related to marketing.

Pharmasim

This week Pharmasim was all about analysis.  Since we had our individual assignment due for the situation analysis there were no decisions to be made or tried, but rather just looking at how all other decisions have worked so far.  It was good to take a deep dive into the information and really get to know the reports better.  Putting together all the information and considering all the various ways to look into everything turned out to be very time consuming, but helpful in learning.  It will be more interesting to learn what teammates came up with and whether or not any of our ideas of key focus areas were in alignment. 

Weekly Post

Questions

This week our review materials had a lot to do with the message to consumers.  We did not have any class prompts this week so I'm going to go through my questions and then some Pharmasim assignment comments in this week's blog.

My first question related to communicating a message to consumers.  In a world where so many people have DV-Rs and the opportunity to fast forward through commercials it makes it more difficult to get people to pay attention.  We also talked about in class how people have more than just the television in front of them at all times.  There are so many times when commercials come on and I go straight to my phone or tablet to keep occupied.  So how do companies balance between conveying their message and getting the attention of the viewers to watch?  I've seen so many commercials that are funny and entertaining, but I have no idea what the commercial is trying to sell to me.  Or other commercials that are all about a product, but I'm too bored to watch.  I think companies that have something catchy, like a specific jingle or slogan, can provide an entertaining commercial and still have people remember what company the commercial represents.

Another note from the weekly material related to keeping promotions consistent across channels.  My question was whether this meant solely the message or whether it meant that the promotion offered should be all the same.  I get so many emails that have in-store only or online only sales - are these companies going against the consistent strategy?  I have to think that they are, because personally I can't stand when companies do this.  It seems that it's always the one I don't want that I get the sale for and it turns me off to purchasing something from them at all.  Banana Republic and Petco seem to be notorious for this in my inbox.

My last question was addressed in class.  Since we were talking about public relations, I automatically thought of Carnival Cruise Lines and their recent blunders.  I think at this point there is not much they could do to come back from the hits they have taken recently.  The stock is doing better than I would have imagined, but not going strong (see article: http://www.fool.com/investing/general/2013/05/09/carnival-stock-it-gets-worse.aspx ).  On the up side if you are willing to risk going on this line prices have dropped dramatically for them to try to fill up the ships.

Pharmasim

Also this week we began working on team Pharmasim sections.  It's been an interesting switch to this version as there are many more incidents and decisions to make as part of the team.  It has been nice though having input from a group and working together to make decisions that can be supported.  We have been off to a good start in this round with stock price steadily increasing.

We have put a reliance on the market update to give us a strategy which has worked out well.  That report got us to look into alligning our sales force which we did in the first round.  Then we have increased a little more since then due to channel increases.  We have also looked into cannibalization and some promotion information.  We have compared our promotions to other companies which lead us to some increases in the co-op and POP sections.  We started a website with Adworks which has been doing well. 

Next we will be looking launching a new product!

Interesting Article

Yesterday I mentioned that I did not see any interesting marketing articles over the weekend to post on here.  Today I have!  See the below article for ways that companies get creative with their logos to instill almost subliminal topics inside.

http://finance.yahoo.com/news/corporate-logos-that-contain-subliminal-messaging-152827219.html

Week 6

Class Prompts

I'd like to go through quite a few class prompts this week so instead of starting with my weekly questions I'm going to start here and tie some question information into the prompt discussion if I can. 

One note was to put something interesting you saw in marketing this week.  I did post something this week (last post on May 8th) and I'd like to refer to that one because I haven't seen anything that has caught my eye since then.  I looked through my email to see what great Mother's Day specials came through to see if any got my attention, and there was absolutely nothing unique or special about a single one that I saw!  Very disappointed.  Anyway, my last post about Krispy Kreme donuts and their ability to go about an beyond just still seems very incredible to me.  It makes me wonder how they work with their employees to ensure they provide such great service.  Great employees make you want to go back.  I personally go to Dunkin Donuts (easy locations), but some locations alone are much better than others - the one in the gas station on Sumner Ave. in Springfield MA has always been my favorite due to one of their employees.  It didn't take much, but it made me go out of my way to that one if I had extra time to. 

Another question today was the 'myth' of the irrational customer.  I personally agree with Drucker in that customers are rational, it's just trying to determine why they do what they do.  One of my questions this week related to Comcast and their services.  I think that the Cable service they provide is better than Dish/DirecTV because I've seen what happens to some of these in rain storms.  I would guess that Comcast could consider my decision to be irrational if I switched.  Though Comcast's ability to make me wait, repeat my self over and over to five various people on the phone, and constantly increase my bill makes me consider the others every single time I have to call them.  Companies don't always want to know what they are doing wrong and just chalk it up to bad customer habits or decisions, when in reality most decisions have a reason even small.  I heard one new donut place was opening up on the right side of a busy road when there are two Dunkin Donuts on the other side figuring it would get all the customers that were going in the other direction, even though it may not seem that is a reasonable decision - to avoid crossing the street.

Then we discussed some pricing strategies.  Will pricing objectives strategies impact the net contribution model?  The answer is absolutely! Depends on price elasticity, a change in the price could significantly affect the units sold, which in turn influences the demand and the market share of the product.  If a customer introduces a new product using the penetration method (offering a low intro price) the goal is to get a higher market share and demand, but price will be lower in the model.  If the customer uses the skimming method then the original two factors of demand and market share may be lower but the price will be higher.  So depending on the amount of each, the company needs to look at all the various options to see where the net contribution model is where they want it to be and go with those.  Changes in each part of the model will impact the remaining parts.

Drucker has his own take on pricing strategies.  He believes that the companies should look at the price the customer would pay for the product and then determine a cost that works with that price.  There doesn't seem to be a model or calculation, but rather just a look into the market to see where the customers would buy a product.  Rather than set pricing based on a percentage above cost, this method would be to fix costs to make it work at a good price.  If companies looked at products this way they would be able to more clearly see products that cost more than they are worth and not venture out into those products.

Pharmasim

Pricing Strategies can be implemented in the Pharmasim program.  Below is a look at the various stratgies and different things to consider in the Pharmasim world.

EDLP (Every Day Low Price) - This is the Wal-Mart approach.  In Pharmasim we could look at our gross margin and bring the price down to a low reasonable price for customers that is still above our gross margin to ensure we are making a profit still.  We'd need to also consider our advertising strategy in Pharmasim here - if we are going to go for the EDLP method we may want to reduce the high priced advertising company we have and focus our strategy on benefiting the consumer with the low price instead of trying to compete on quality.

High/Low Pricing - This is showing the customer an originally high price and offering sales.  We could do this with the use of coupons in Pharmasim.  If we keep the price high and offer the higher coupons this would really show the high/low pricing.  We could also use this in our channel discounts with our distribution channel customers (B2B) by increasing or keeping a high price and then offering the largest channel discounts.

New Product Skimming - This is introducing a new product at a high price and really showing the quality of the product.  This would be the opposite of the strategy mentioned for EDLP.  I would think we would want to look at our competitors, make the new product price above theirs, and keep that high priced advertising firm to show our great quality.  We will sell less, but hopefully at a much nicer gross margin.

Net Product Penetration - This will be similar to the EDLP method just the price will be an introductory one instead.  We can start off low to build a customer base and then eventually incrementally increase as we have those loyal customers and move to a high/low strategy or stay low if our gross profit proves to be effective.  This should allow us a high market share.

Krispy Kreme

In reading a new e-book by Scott McKain (who I recently saw speak at a seminar) titled "Digging Wells and Building Fences", he mentioned a blog.  The blog is titled "100 days of rejection" by Jia Jiang, and I had to look it up.  Jia Jiang was determined to get rejected by outrageous requests 100 days in a row in an effort to get over that fear.  Well, Kristy Kreme donuts didn't allow this request to be answered with a 'No'... see article below.

http://www.huffingtonpost.com/2012/11/28/jia-jiang-rejection-therapy-krispy-kreme-jackie-braun-video_n_2206217.html

Two separate ads in one

Did anyone else see this?  It's a differnet ad depending on the height of the person viewing it...kids get one message and adults get another.

http://news.yahoo.com/blogs/trending-now/anti-child-abuse-ad-aims-help-kids-speak-165043599.html?vp=1

This is incredible.

Celebrity Endorsements

I saw this article on Yahoo.com and had to share it here.  It's about celebrity endorsements gone wrong.  It seems like some of these stars have had a few PR issues that caused them lots of money.  Do you think that the companies used these decisions as a marketing opportunity?  By showing customers that they would not stand for some of the celebrity foolishness, did they earn some points and make some customers like them a little more?

http://finance.yahoo.com/news/8-celebrity-endorsement-disasters-203135313.html

Week 5

Class Questions

As in previous weeks, I will begin with going through some of my questions from class this week. 
One of my questions related to the idea from Drucker that change is required by companies.  He mentions that any company that remains at status quo will fail.  Although I agree with that as a generalization, I think there are some companies that makes changes and should have remained at status quo.  I think a good local example is Friendly's.  Now that they have had so much financial difficulty, they are trying to go back to their 'old ways' and bring back the original Friendly's.  They got so far away from it I'm not sure they can go back.  Had they just stuck with the burgers and milkshakes that people expected rather than try to compete with other chains - would they have had so much trouble?  I'm not sure they would have.

One of my questions that was discussed in class was when should you start to implement a new product - during the old product's maturity or decline?  We talked about starting a new product early to ensure early adopters are covered since those in the decline stage are generally a small population. 

Prompts

There were a few prompts given out in the class discussion this week that I'd like to go through.

One was to explain the strategy between Neiman Marcus and Target joining together for a marketing campaign based on the Luxury article.  The strategy of Target is easier to see as it's the lower end market that is trying to gain some popularity and 'luxury' by teaming up with those Neiman Marcus customers.  The strategy of Neiman Marcus is not as clear.  There are many reasons why luxury or high end stores would want to get together with non-luxury brands, one of the popular reasons seems to be to gain new customers.  This is an easier way to get their name out to people who don't generally shop with them, but riskier since their current shoppers may not like the luxury brand being associated with non-luxury items.  My teaming with Target, Neiman Marcus could get more customers that may be in the early stages of their life (young families) to look into Neiman Marcus in the future when they may be making more money to be able to afford to shop there.

Another prompt was to explain what Drucker meant when he discussed premium pricing as a bad strategy.  This got my attention as I was reading because there are many companies who use this as their strategy.  He explains that when goods are actually premium this is not bad, but when regular goods try to add on 'bells and whistles' to their regular products to increase price is when this becomes an issue.  I believe he used the Xerox example where they started adding so many high priced features when customers really just wanted a cheap basic copier. 

Pharmasim

On to our fictional medication world of Pharmasim...

We were asked to look at the various types of new potential OTC meds that we could add to our brand line with Allstar during section 4 of the simulation.  To define the market with these potential new products I would say they would fall into the 'product development' category for all of them.  They are new products and services for Allstar that would be reaching our existing markets.  By looking at our market as the cold/cough OTD medicine category I would say any of the potential new options fall into those categories (child cold, 12 hr cold capsule, or 4 hr cough).  There is some overlap with the 'market penetration' category as we discussed these potential options may cannibalize our current product as well.

This week we were also asked to look into market demand for the various potential products we could include.  I started by looking into comparable products between the new potential lines and the overall market.

Total unit sales at my point in the simulation is at 575.9 and market penetration across all cross sections is 64.8% leading to market potential of 888.73 for the overall market.

For each potential unit, I took the product closest to the new market.  It appeared that with all these various vendors the most likely target group was mature and young families looking for cold medicine.  For this cross section the the market penetration was 67.2%.

In the 12-hr capsule market I looked at the brand Extra, which had 32.8 units sold.  Based on the 67.2% market penetration I would estimate the potential to be 48.8 units.

In the 4-hr cough market I used both Coughcure and End, which had a total of 81.1 units sold.  Based on the 67.2% market penetration I would estimate the potential to be 120.1 units.

In the child cold market I used Coldcure as an example, which had 46.8 units sold.  Based on the 67.2% market penetration I would estimate the potential to be 69.6 units.

We also discussed that some of these products may cannibalize some of the original formula sales which would only be beneficial if the profit margin on the new product is higher than the original.  This would impact the decision of the new product as well. 

Linked In Article

Below is an article I found interesting.  I recently began 'marketing myself' more by signing up for Linked In again.  I had previously signed up when I was in college and looking for a job, but completely let my online image go after I started by career.  In a recent conference it became apparent on how great it was to be able to connect with people in business through this site and became active again.  Here is a Jim Cramer with his feeling on the LinkedIn stock.

http://finance.yahoo.com/news/cramer-heres-why-linkedin-getting-142434642.html