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.

                           

                                     

Week 5: How can marketing help Fashion Channel industry and few other thoughts…

Having submitted the first deliverable for our team last week-end, this week was spent working on the Fashion Channel case. Alternative fuel vehicle (AFV) to Fashion Channels (FC), there sure is a difference in the industry requirements. But what I have come to realize is, when thinking about new marketing initiatives in an existing space, one is faced with similar questions, why segmentation, why target a particular segment, does this strategy capitalize on our strengths well, will this strategy fetch us the biggest bang for our buck (ROI), is this the best strategy given our competitive landscape?

Alongside working on the Fashion Channel case, I read Chapter 5 of the text. Quite honestly, first I was not sure if we will be covering this chapter, because in the lessons breakdown on Angel, there is no mention for Chapter 5. After Lessons 2 when we move to Lessons 3, Chapter 5 somehow is not mentioned in either place unless I missed something. Anyhow, I decided to read the chapter as next week is a busy week at work, so decided to get my bases covered. I am glad I read the chapter, because I enjoyed understanding about the three key marketing objective categories, Marketing, Financial and Societal. I liked what I read in the marketing support section. There is no denial that customer service is one of the key areas that companies need to focus on when evaluating their marketing support plans. Without good customer service infrastructure, all marketing efforts can soon become worthless. But alongside the customer service focus, internal marketing is an equally important piece to make the marketing efforts successful. If the internal parties are not on board the marketing initiatives, the results will be sub-par or not achieved at all.

Lastly, I cannot go without sharing an example of poor customer service that was a key topic of discussion in our household this week. Marketing efforts are of no value if they are not followed through as promised. We bought our first lawnmower from Sears a year and half back. It is within manufacturer warranty till August 2012. We use it only 7-8 months in a year, during non-winter months. Since the time we have bought the mower, we have had to take it back to Sears 5 times for repair. The repair takes minimum 2 weeks. In the past five times, the repair seems to be have been some adhoc arrangement, we should not be returning back to the repair shop so often. As we speak, our mower is again at the repair shop of Sears. Our lawn is on a flat service, we are not big gardeners so don't do much beyond the minimum mowing, keep the mower clean, use the suggested grade fuel and oil it as often as the manual suggests. At every repair visit, we have asked the Sears store folks, are we doing anything to make it stop so often, the answer is always ‘No you guys are fine’. So this time, my husband decided to call the Sears customer service and give our feedback with as much details as we could recollect on all the prior repair trips. The feedback was returned by an apology and nothing else, no option for a temporary mower, or suggestion to return the repair tax charges (how so ever small they are) or a confirmation/assurance that the next repair will be permanent. We are seriously thinking of getting a new mower (and not from Sears) after this Fall! Customer service is key to keeping customers happy. No wonder Sears is shutting down 20% of its stores country wide.

Lawnmower's importance is really felt in Spring when grass grows at an exponential rate :)!