Week 12: Final Week: Community Relations & Social Media

This is the home stretch, nearing end of the marketing journey of last 12 weeks. I have enjoyed learning about the marketing function, by way of case projects, article readings, video recordings, team discussions and of course the blogging mode. Thank you !

This week's blogging topic is Community Relations & Social Media's impact on marketing.

1. Does your firm use social media in its communications effort? How? Is it effective?
I am aware Cummins uses social media for recruiting related communications and for some branding messages. Online media such as Facebook, twitter are used for recruiting announcements. I am not very aware of all the modes used for advertising our branding messages. Though I am aware our company’s brand manager and his team is actively engaged in looking at all possible modes to reach out to the customers and stakeholders that matter most to the company.

As for how effective the online communication efforts are is hard for me to answer as I do not have first hand access to that data. The limited experience I have is from participating in college campus recruiting and branding events. For sure, online presence creates interest and enthusiasm from college students interested in pursuing careers at Cummins. This question has made me curious to find out the increase in ‘application to conversion rate’ of our new hires, using the social media communication tools.

Based on my personal experiences, I would imagine that online communications effort would attract Gen X & Gen Y audience, as majority people in this group spend considerable amount of their time online.

The increase of online presence in our daily lives with each passing day is an indicator that social media would continue to gain momentum as a communication mode for most companies going forward.

2. What types of messages do you think work best in Social media? Why?
The messages that are short and to the point would be more apt for use in Social media. Messages requiring more detailed explanations, supporting data and other references are more suited for emails and other traditional forms of advertising.

Few examples of messages for social media -à

‘Cummins will be at the North American Truck Show on March xyz, 2012 – Come visit our Booth and learn about the cutting edge technological inventions’.

‘Cummins would be at UofM Fall career fair on Sept xyz, 2012. Our booth would be at the entrance of Duderstadt center, you cannot miss us! We are hiring: Engineering majors – ME/EE/CS/Aero/Materials – Remember to stop by’.

3. Will social media make other Marketing Communication forms obsolete?
Based on the change from ‘news on paper’ to ‘news online’, I would have to say that social media is moving fast to catch up to the traditional forms of marketing communications. I would not go as far as saying that social media will all together make the traditional marketing communications obsolete, because, there are some marketing promotions that cannot generate the same excitement as an in-person experience can. But I would not be surprised if social media does intake surpass the traditional non-online marketing communication modes.

Based on my experience, there would still be room for non-online advertising. For example, the excitement generated via Road shows for engine and OEM manufacturers is hard to replace by just social media communications. People like to see, hear and touch the items they are interested in buying. If their purchase is a big and expensive item, the desire to see physically is even more.

Instead of thinking whether social media would make other forms of marketing communications obsolete, I would like to think social media can compliment few existing forms and that could be a competitive edge for companies to harness.

Whether a company uses a particular media for advertising or not, every company needs to start getting acquainted to the various media options out there. As the Community Relations article points out, it is becoming critical for firms to be aware of the various social media options to find out what is being said about a particule company's xyz venture and be in a position to defend its image if erroneous information is being used to malign the company name.

There are not just couple social media options out there, but a dozen there with a new one springing almost every other day.
                                        

Interpretation of information online is different for different people. Firms need to watch out what is being said about them, whether right or wrong. You cannot defend something if you do not know it.
                                                        

                            Social Media is/will continue to spread….whether firms like it or not.
               Better to embrace this truth and learn to adapt/work in this dynamic environment.

                                                        

Week11: Customer Lifetime Value & Rosewood Hotels

Customer lifetime Value: It is hard to get a loyal and profitable customer, but fairly easy to lose one. Constant effort and strategic planning is required to keep profitable customers happy and engaged. Any company that starts to take its customers for granted is in for a rude awakening.

1. Does your company explicitly know the value of its customers?

The company I work for, Cummins Inc. puts significant focus on understanding and attending to needs of its customers, esp. the key customers! Customer Support Excellence is a key initiative at Cummins. A recent company article announcement, May 11, 2012.

Excelling at customer support across Cummins will demonstrate to our customers that we care about their success as much as we care about our own. In fact, delivering customer support excellence is one of the five growth accelerators outlined by Tom Linebarger (Cummins CEO) as necessary to accelerate Cummins growth into the future.

2. If not could your company utilize CLV (Customer Lifetime Value)?

I am not directly involved on the sales and marketing function, and therefore cannot comment on the utilization of CLV at Cummins. But based on what I have seen, I would be surprised to hear if CLV analysis is not being used in some capacity at Cummins. I do plan to float this concept to my colleagues within the customer engineering group that I interact with on a regular basis.

I find the CLV analysis an excellent tool to bring objectivity in decision making. Many times subjective reasoning is critical in making decisions, but without impact and correlation to the bottom line, a purely subjective decision cannot be sustainable. CLV analysis is a good tool to bring objectivity into the decision making process without discarding the subjective nature of customer relationship management.

3. What are some of the practical issues of implementing the use of CLV in a firm

Upfront investment cost, operational cost to implement and maintain CLV, lack of historical data to predict future customer behavior, lack of company-wide buy-in towards a huge investment, lack of cohesion within various business units to make CLV a success, territorial protection within departments and scale of implementing CLV, are some of the practical issues I see with this concept.    

3.  What are the major issues in the Rosewood Case? 5. What recommendations do you have for the management of Rosewood.

I am part of Team 1, tasked with submitting case memo on Rosewood, so decided to

keep my comments reserved for the 1 page summary J.

3. Which Rosewood property would you like to visit?

I’d like to visit Las Ventanas al Paraiso, located in Los Cabos, at the tip of Mexico’s Baja Peninsula on the azure Sea of Cortez. I will be honest the pictures of this property piqued my interest. I am that customer who values what the pictures have to say or at least try to project. A week-long vacation near the beach sounds like an amazing idea to re-charge my batteries after a 12 week spring term J.

Week 10: Brand Valuation

I like all of these Brands as they satisfy one or my other need!

1.     What makes a brand valuable?

Perception of the value that a brand offers is what makes a brand valuable. The benefits, real or perceived, a brand offers or claims to offer, to its stakeholders is what makes a brand popular. A valuable brand is one that can influence the choices of customers, employees, investors and government authorities.  In a world of choices that we live in, such influence is crucial for commercial success and creation of shareholder value.

2.     What do brands do?  How do they create value?

Brands create value, real and/or perceived in the minds of its key stakeholders i.e. consumers. Brands create value by understanding the consumer needs and consistently fulfilling those needs. How the needs are full-filled is where creative marketing comes into play. Brands do create value, but whether it is real value or perceived value can have different meaning for different consumers.

3.     What are some of your most favorite brands?  Why?

I have several favorite brands depending on the particular need the brand fulfills. In apparels, I enjoy shopping at Ann Taylor/Loft (part of Ann Inc.). I like their design of clothes, the uniqueness that is season specific, durability and the price point. In home-items, I like Crate & Barrel, Bed Bath & Beyond, Target and IKEA. Each of these stores offers different items that I like to buy in different price ranges while balancing my key requisites, durability, maintainability, style, uniqueness and cost. For electronics, I like to shop at Apple & Amazon. I have transformed from an ignorant user to an ardent fan of Apple products given their evergreen ability to pleasantly surprise the customer with unique and useful feature sets. Amazon offers useful products at amazing price points (Cell phone covers @ $1.99!). In shoes, I like Aldo as comfort, durability and style are all beautifully synchronized. In cosmetics, Estee Lauder, wins my vote. Last but probably the most important category is grocery/food purchases. If cost, reliability and bulk purchase is the driving factor, Walmart/Sams club stands on top. For specific items (dried mango and sesame crackers), Trader Joes wins hands-down.

Outside the product usefulness, I also care about the social value of brands. If I learn that a particular company is misusing its workforce or exploiting cheap labor to increase its bottom line, then it would make me reconsider my brand loyalty.

4.     Should Brands be on the balance sheet?  Why?  Why not?

In my opinion, Brands should be included on the balance sheet. Not including brand value on the balance sheet appears to me like ignoring a significant asset. Following are key reasons why I vote for including Brands on balance sheet.

Ø To attach financial value to respective brand.

Ø To accurately evaluate effect of brand during a merger / acquisition deal.

Ø To determine transfer pricing & licensing agreements during brand transfers.

Ø To avoid monopolistic dominance by few companies.

Ø To institute transparency and ethical behavior in brand formation & maintenance.

The moot point is how to quantify Brand Value. Brand evaluation models outlined in the course pack article offer some good suggestions, but I am not sure if the evaluation will be straight-forward. We shall find out during the brand valuation project when evaluating Mr. Woods brand value decline after the 2009 episode.

Week9: Culinarian Cookware. Pricing and Promotion Strategy

 1) Was the previous promotion effective in achieving the goals specified in the case. Most importantly was it profitable?

Given that Culinarian Cookware has established itself in the marketplace as an elite brand (advanced performance technology for serious cooks, leader in metallurgy technology and the first manufacturer to provide benefits of copper cookware with effortless cleaning and maintenance), my assessment of the case indicates that the previous promotion of price discounts was not successful in achieving the goals the company would have liked to go after. I want to highlight that there is no mention of what the company’s goals were in 2004 when it offered its first price promotion or at least it did not come out clearly in the case write up. It is not until 2006, that the company clearly outlines its strategic priorities, to inturn use to define its marketing promotions.

Even if Sr. Sales Manager, Victoria Brown, is right in highlighting that the outside consultants’ calculations are not correct and in turn revenue from sales of CX1 went up during the period of March-May, 2004, I chose not to focus on the mathematical calculations when deciding success of the promotion for following reasons.

(a)    Sales of CX1 went up only during the promotion period and did not remain high after the promotion. Therefore, the brand excitement was built for a reason different from what Culinarian Cookware is trying to advocate.

(b)   The discount did make the retailers happy as they were able to sell products to the customers, but only 30% of the customers who buy cookware shared that price is the most important criterion (Exhibit 3). The remaining 70% customers need to be found and better understood to sell quality cookware to.

(c)    Price discount does dilute a company’s image when the company is interested in competing over superior product offerings.

(d)   Since there is limited data on cannibalization and inventory cost savings, I did not include that in my assessment of the promotion’s success, but that is a critical factor to not ignore.

If the 2004 promotion’s goal was to sell more units without concern to revenue generated, customer loyalty built and brand image impacted, then I can agree the promotion achieved its goals. But I don’t think that is what the company goal was after learning about its priorities documented in 2006.

Second part of the question asks about profitability. I am not sure if profitability is asked about the promotional period only or for the year that price promotion was offered. The incremental contribution impact formula can be used to calculate whether price discounts on CX1 model resulted in increasing revenue for Culinarian Cookware. To calculate profitability of the promotional model, it is critical to evaluate sales not just for CX1 product line, but also for the other three product lines, DX1, SX1, PROX1 to identify if other product line sales were cannibalized due to increase in CX1 sales. If only CX1 sales are taken into consideration, then assuming there was decrease in 2004 March-May normal sales (not as much as 24% but between 15-20%) then, incremental contribution impact calculations indicate increase in contribution. But again, as mentioned above, sales of CX1 cannot be taken in isolation to find profitability numbers.

2. What aspects of the promotion worked best and which were less successful?

Promotion offered some benefits but in my understanding of the case, it appears the side effects were more beneficial than the direct benefits that probably Culinarian Cookware was interested in. Following are the positives that can came out from the promotions.

(a)    Promotion worked well for retailers especially the ones in the 50% category who chose to only transfer 10% of the offered 20% discount to the customers.

(b)   Data gathered from the 2004 promotion highlighted that price discounts are useful to attract cost conscious customers but not necessarily brand conscious buyers.

(c)    Price discount may have helped to advertise Culinarian Cookware amongst first time buyers.

As the answer to the first question highlights, there were several aspects of the promotion that were less successful or rather detrimental to Culinarian Cookware’s market place, key being dilution of elite brand image.

3. Should Culinarian run a promotion prospectively?  Why or why not? 

Marketing promotions should be well-aligned with the company’s strategic objectives to achieve profitable and sustainable results. From the case, I could not gauge whether in 2004 the pricing promotions were aligned up with the company’s strategic objectives since there is no mention of the strategic objectives/priorities in 2004. It is not until 2006 that the CEO establishes the company’s strategic priorities which must be used as guiding principles when defining its promotional plans. In 2006, Culinarian’s CEO, Audrey Roux, took the right step of establishing the strategic priorities for the company, namely, (1) widen its distribution network, (2) increase its market share of the premium cookware segment, (3) preserve its prestigious image, and (4) continue to capture revenue growth of at least 15%, while maintaining pretax earnings margins of 12%.

From the 2005 telephone survey commissioned by Culinarian, it is evident that unaided brand awareness of Culinarian ranges from 15% respondents with household incomes under $75,000, and 25% for those with household incomes over $75,000. Therefore, definitely, there is room for running promotions prospectively. But the key is to run the promotions that align well with the company’s objectives. Following are few suggestions on potential promotions to run.

a)      Well-made television advertisements in popular channels such as food-network that the most likely buyers of Culinarian watch. The ads should clearly highlight the differentiating values that Culinarian offers.

b)      Relevant advertisements in online media such as Facebook, Twitter to target young working women who are looking for the right product to make their life easier and may not mind spending the extra dollars to get that additional value.

c)     Continue the retail sales training on product technology and features, as this is an established program that is a good forum to spread product value to retailers.

d)     Continue to conduct customer surveys, to identify what the customer is interested in. Existing methods such as warranty cards, telephone surveys and new methods such as  online surveys maybe worth pursuing.

e)     Remain connected with the market to identify what your competition is offering, you may learn something that your own promotions are not showing. Customer maybe willing to buy single cooking items in non-holiday season but may only buy bundled items in holiday sales.

Single item Vs Bundled set!

Week8: Pricing Channels & IMC

This week’s focus has been on Pricing and Integrated Marketing Communication (IMC). I have read the first chapter (Chap 8- Developing Channel & Logistics Strategy) for this week and am half way through with the next one (chap 9- Developing Marketing Communication and Influence Strategy). I have watched one of the Camtasia videos but have yet to watch the other video.

1.      Reflect on a firm or product you like which you believe is highly effective in bringing all the elements of the Mix together to create beautiful symphony for their consumers.

                                

I decided to pick IKEA (home products company) as my example. IKEA is effective in bringing all the four elements of the marketing mix together, namely, product, price, place and promotion. Another reason for picking IKEA is as it is fresh in my mind, after visiting the one in Bellevue, Washington yesterday J.

Product: Home items ranging from silverware to bed-frame and everything in between. The products at IKEA are catered well to the urban dwellers needs, not bulky, are useful, easy to assemble and last but not the least they satisfy the style quotient.

Price: One of the key factors favoring IKEA’s popularity is affordable prices. I agree the product quality is not stellar for some items, say wood furniture. But that’s the differentiating factor because IKEA is not trying to sell a product to last a lifetime. They market their products to fit needs for individuals who want a useful, stylish but most importantly affordable product and care less for product life.

Place: IKEA is not in every location, but they have built their brand image that people interested to buy are willing to travel the extra distance. For example, Columbus, IN does not have an IKEA (should not be surprising given the size of town), but neighboring city Cincinnati (1.5 hour from Columbus, IN) has an IKEA. The IKEA at Cincinnati caters for needs of several neighboring cities. From the company’s standpoint it does not make sense to open an IKEA in cities within 100 mile radius because they have come to realize the investment involved in opening in IKEA does not justify the return when they can get their customers to visit the nearest IKEA which is usually drivable distance.

Promotion: This is an interesting category to talk about in case of IKEA. I call their advertisement unique but still conservative in nature or at least I have not seen a lot of advertisements repeating periodically in popular media such as television. IKEA’s advertising typically is a very different advertisement on face book or a small banner such as ‘Good Design can Make Everyday life better’ on a postbox on a busy street. As a consumer I like the sparing but thought out promotions more than the run of the mill repeated logo advertising. IKEA often times opens stores in big cities near airports as a means of advertisement at high traffic areas. They have built a positive image through their simple, affordable and unique product offerings.

During our ‘window shopping’ (as put by hubby dear J) visit to IKEA yesterday, we bought 2 bed-side lamp shades, 2 comforter covers, 2 big and 2 small storage containers for $85. I consider that a bargain considering a decent comforter cover costs anywhere from $30 all the way to $150. I liked the products I picked up, as it full-filled my (consumer) needsà product is useful and has nice spring shades as that’s what I was looking for; price is competitive as I would not get the colors and quality I was looking for in the lamp shades and comforter covers elsewhere; place worked out well as we were visiting Seattle this week anyway; promotion was an interesting one as our visit to IKEA yesterday was driven by my sis-n-law suggesting to check out the comforter covers there since she had bought a few couple months back and liked it (even after machine wash).

2.      Who are the target audience for the company's market offerings? 

Target audience for IKEA’s market offerings are cost conscious buyers, primarily, young adults starting their careers, students, couples setting up their first home and international visitors looking to setup their home during their temporary stay in a new country.

3.      What are the tangible products the company offers?

IKEA offers almost all kinds of home products, most of which are tangible in nature. These can range from kitchenware to home décor’ to bedroom setup to anything else of utility in the house.

4.      How does the company utilize price, and place to enhance the value of its offerings and why do you think there choice work well together?

Ikea's mission statement states the company is in business to produce high quality products at a low cost. But what does that truly mean? Price for one consumer may not have the same significance as that for another consumer in the respective product category.

Identify the target audience; its’ needs; its location and work hard to satisfy its needs. IKEA has learnt to do this well. The company has adopted Michael Porters’ strategic model when defining its strategy. Achieve overall low-cost leadership in the industry; Market products that are differentiated; Focus on market segments for growth in cost and/or differentiation. The company has identified the space it wants to operate in and the right mix for that space, which has contributed towards its success.

5.      Does the company have a unique approach to communications with their target audience?  How is the approach well suited to the other elements of their mix? 

IKEA is using Integrated Marketing Communication (IMC) to generate value in minds of its consumers. Price is definitely a competitive advantage for IKEA but price alone does not differentiate the chain from its competition. The product offerings along with unique ways to advertise are helping promote its brand well. IKEA’s promotional ways match up well with other elements of its marketing mix, product, price and place as few examples below highlight.

Week 7: Colgate Palmolive Cleopatra Case

                                                                        

1. What are the major issues in the Cleo Case from the perspective of the product, and pricing?

Other than language there are not a lot of similarities between France and Quebec. Colgate Palmolive Canada team made the first mistake in assuming commonalities between France and Quebec for success of Cleopatra soap in Quebec. Success of a product in one region does not guarantee success in another region unless the markets are identical. Launching a product as an exclusive top of the line product without understanding the market needs was the company’s next mistake. The state of the Canadian soap market was fierce with competition and consumers had well established loyalties towards select few brands. Competition was based primarily on price. Given this market situation, launching a high priced soap without an understanding on consumer needs appears to be a flawed marketing strategy.  The company got blinded by its success in France and ignored some obvious marketing checks prior to launching the product in Quebec.

For example, research was conducted in Toronto while product was being launched in Quebec. Product stakeholders in Colgate Palmolive Canada division were not all convinced towards the Cleopatra soap launch in their country. The market research data showed positive results towards Cleopatra soap, but what was not learnt was whether the consumers would buy the product at the price that Colgate Palmolive was planning to sell?

2. Are there issues with the market research?

Market research from Toronto is relied on solely for product launch in a different region, Quebec. Market success from France is used to establish marketing strategy for product launch in Quebec, when the two regions are very different from one another. Red flags from the market research are ignored. For example, consumers are very sensitive to price when buying soap in Canada, still Cleopatra is introduced as a high priced soap without understanding consumer appetite for high priced soaps. Colgate Palmolive product managers in Canada are not in agreement with the Cleopatra marketing test plan, but the decision is taken to storm ahead. Incomplete market research work is done; consumers show positive reaction to Cleopatra soap but more in depth analysis is not carried out to understand consumer reaction to the high price product plan.

3. What organizational issues come in to play in the case?  Who are the players and how do their positions in the company impact the market entry?

Lack of consensus and buy in from the stakeholders involved in Cleopatra launch in Canada, namely, product managers, Colgate Palmolive executives and consumers.  Few parties that are keen on the product launch are pushing their agenda without taking due note of the concerns of the other parties. Colgate Palmolive executive team keen to conquer the Canadian soap market, falls short on performing due diligence to understand the new turf and blindly falls for a sub-par launch plan.

Bill Graham, Divisional VP Marketing for Canada and Steve Boyd, Group Product Manager for Canada are key players in devising the Cleopatra Canada launch plan. Stan House, Assistant Product Manager, is in awe of Steve Boyd’s enthusiasm of success. Ken Johnson, Manager, resents the brand thrust of Cleopatra but is unable to stop the crusade of Cleopatra product launch.

4. Did they make the right choice?  Why or Why not? 

Given the mature nature of Canadian soap market and consumers sensitivity towards price, Cleopatra launch in Canada was not the right choice. Instead of a high price product launch, Colgate Palmolive needed to understand what is it that the consumers are looking for if anything at all in the soap category. Is there room for a new soap launch, if so, what are the areas of gap that the new soap maybe able to fill in and compete on, is price the only factor to compete on, are there existing Colgate Palmolive brands that can be re-positioned to increase market share?

5. Are companies today any better than Colgate 20 years ago or do they still make some of the same mistakes?

This is an interesting but relatively tough question to answer. I do not have adequate data to say that companies today are better off than 20 years back. I’d like to think that some good lessons have been learnt from failures of the past. But product failures of recent times suggest that companies still continue to make similar faults.  Failure of Eurodisney comes to mind to highlight mistakes or rather incorrect assumptions companies make when deciding on a new product launch. The confidence of Disney was partly based on the number of Europeans visiting US Disney parks. Europeans would be visiting the US parks because they were in America however, not visiting America specifically to go to the parks. All attendance predictions were based on parks in the US which is an Americanized assumption not valid for Europe. Furthermore, all calculations treated Europe as a general mass of people rather than many individual countries. There were several other issues with this product launch, but the key to highlight is success from one region cannot be assumed to be the ticket for success in another region. 

Even the Mickey’s could not save Eurodisney from its ill fate.

Week 6 – Product Development & Brand Strategy

Thanks to Rory Sutherland, this weeks’ learning has been interesting and fun. I have enjoyed listening to the successful advertiser. The concept of perceived value versus real value was the most interesting to me. Examples of diamond shaped Shreddies hit the point home on perceived value. I personally agree to the perception of good wine being tied to price as have witnessed that among my social circle. David Bell’s video on Dodge Ram example highlighted the importance of understanding customer preferences to identify how the product should look and feel like. Chapter six gave good examples to explain the process of developing a product from idea generation to commercialization. A typical product goes through one or all of the stages of a product’s lifecycle, introduction, growth, maturity and decline.

Consider various "products" you use.  Can you think of the various levels of this product?

In order to develop a product that will be sustainable, it is critical to understand what the products’ core is, what the actual product is and what falls in the augmented category. Of products I use, MAC and Iphone are the first two examples that come to mind. I have been using MAC for close to five years. I have been an Iphone user for only six months, but have become a fan. These products provide the basic functionality of a laptop and phone respectively, but additionally offer many benefits such as the ability to download apps, use wi-fi and utilize the music player functionality to name a few. The ability to take notes and put reminders on my smart phone is an augmented level benefit that I as a consumer appreciate a lot.

Can you think of cases where products have become obsolete? 

Online news media has made newspapers close to being obsolete unless you belong to the generation that still craves for their newspaper and morning tea. Online news media are the same cost if not cheaper, can be accessed from anywhere and offer the same benefits as a hard copy news paper. Kindle has made books obsolete in some capacity. Smart phones such as Iphone, Blackberry, Android have replaced Palm devices. Cameras with ever increasing functionalities are continuing to replace their previous models on a regular basis. A hammer was a required item in every household a couple decades back, now electronic drills do just about the same job in a much shorter time and with less effort. VCR (Video Cassette Recorder) to DVD (Digital Versatile Disc) transition is another example of product gone obsolete.                                                                

                                  

Considering the diagram of page 102 of your text how do you think product development has been affected by shorter product lifecycles?  Has technology affected product development?

Shorter product lifecycles have shortened almost all stages of the product development process. The pressure to release the product fast is one of the worries for marketers; another big worry is to enhance product functionality on an ongoing basis to remain competitive in the market place. Reaching the maturity state is tough but even tougher is to remain at this stage. Technological advancements have been instrumental in reducing the product development cycle time to levels that were un-imaginable a decade or two back. Life time of personal computers, laptops, mobile phones, smart phones and just about any electronic gadget is continuing to shrink. In fact, many companies are starting to market their electronic gadgets with an implicit indication to the buyer that a replacement in couple years may be required (to remain ‘abreast’ with technological advancements).

Another interesting activity for this week has been to exercise one’s creative thinking via the Ideation project. Talking about creative thinking, I get reminded of a Dilbert joke one of my team members shared a few years back.