The End of a Rather Brief Era

Week 11 has finally come and is almost gone. With the final week of this Marketing Management course coming to an end, it is time to reflect on what has occurred most recently and throughout the course.

The End of the Simulation

My teammates and I implemented our revised plans for periods 8-10. Just like our plans for previous periods these too had to be modified to adapt to the changing situations. I've come to realize that there is no need to call the plan of the future a revised plan as the revisions should be implied. While I suppose its not impossible to never have to make any adjustments I would tend to think its quite the rarity in most businesses. I'd likely believe that if you're never revising your plans than you're doing something wrong. The appropriate changing occurred and decisions were made that ultimately landed team 4 at the top of the balanced scorecard rankings for the class. Just to brag a bit more, we held that number one spot for 5 out of the 10 periods and held strong in second place for another 4. And that one remaining period I'm quite certain was some sort of technical error on the part of interpretative simulations.

Our team had worried about whether or not we would be able to resurrect our struggling Allround product. Finally in the latter periods we were able to do so and end with the product on an upswing. A change in pricing strategy due to consumer demands and an increase in promotions were the key contributors to this success. At the same time, the success for Allround+ continued to grow and we had the company moving forward and increasing unit sales, contribution after marketing, profitability, and net income.

My experience in the simulation was a pretty positive one. While the practice sessions were certainly plentiful and helpful, it really took some time in the "real" simulation until I finally got used to the simulation and the consequences of my decisions. For the most part, I think the reactions that were generated seemed pretty realistic to what should be anticipated in the real world. The simulation is definitely a great tool for getting your hands dirty in the marketing world, without running the risk of running a real company into the ground. Hopefully, any future endeavors will be even more successful than my experience with Pharmasim.

Final Thoughts

Without rehashing everything that was discussed and learned about throughout the past 11 weeks, I'll give some of my final thoughts on the subject matter. For starters, I now see the relevance that marketing has throughout the entirety of the company. I understand the importance of researching before hand and the concept of letting a product sell itself. I grasp the difference between knowing and understanding competitors at various levels and basing your marketing strategy on what your competition is doing. I see that companies should always be aware of any competitive advantages they have and operate according to those advantages. Knowing the strengths and weaknesses of your organization and the opportunities and threats that are present is crucial for moving your business forward. That good old SWOT Analysis from way back in freshman year of undergrad at WNEC is still important and should always be in mind. I have cemented all of these things in my mind.

The most important takeaway that I have from this course and that I think is most beneficial to anyone taking this course and to those outside of it as well can be summed up in one word: consumers. Business is consumer driven. Products and services are developed based on the wants and needs of consumers. These are established by doing your research, identifying opportunities, and seeking out attractive market segments. A company must know exactly who it is that they are targeting and what need they are fulfilling. Consumers will always have different needs or wants and often times these will be changing. It is vital that the company adapts to these changes. The success of any organization no matter the size, industry, product/service being offered, location, or any other characteristic is ultimately based on knowing, understanding, and catering to the consumers.

This is the consumers' world and we're all just operating in it. 

Revisions and Creating a New Plan

As we move towards the final week of Marketing 640, our Pharmasim project is heading into its final 3 periods of simulation. After creating an initial plan and reflecting upon its successes and failures, a new plan had to be developed for periods 8-10.  As last week pointed out, the original plan was not adhered to completely and changes had to be made. Thus, the new plan for coming periods will certainly not be the same as the plan going into the previous periods.

The most prominent change is the elimination of one of our product offerings. This change has already occurred within our simulation but the original plan was to move forward with 3 products. This has since been altered and our new plan only accounts for Allround and Allround+. This was the appropriate move for our team to make as we were in a hole financially and likely would not be able to move forward with 3 products. We had a serious decline in our former star product of Allround and a miserable start with Allright, which had a negative product contribution in its inaugural period. With Allround struggling and needing more attention and Allround+ seeing growing success, it was an easy choice to eliminate Allright. There was no telling how long it would take for the product to get in the black and Allround was a previous industry leader that we felt confident could recover with proper backing. Personally, I will wonder what could have been with Allright. Our introductory period of Allround+ was not extremely profitable either, although it was not negative. This product certainly boomed thereafter and is now a profitable product for the brand. I do wonder if Allright could have done the same. Despite this wonderment, I certainly do not think our decision was a mistake as the situation called for appropriate action to move forward.

Another big change that our team is moving forward with is to get rid of the price skimming strategy. Previously, we were successful as selling a high quality product with a price reflective of its quality. As the periods progressed, the high price became more and more of an issue, especially when our prices began rising higher than the impossible to predict rate of inflation. Additionally, price was increasing in importance as a decision making criteria for consumer purchases. It made sense to move away from this high priced strategy and become more competitively priced as the periods progress. Personally, I was never quite sure as to why price was not being considered more highly from the beginning in consumer's minds. In the real world, I would never purchase a product that is priced as quality product if an equally effective product is available for a lower price. It seems more realistic to me that at least a portion of consumers are starting to weigh price more highly in their decision making in the simulation.

As we move into the final periods of the simulation, we must still remember to go with the flow and alter our plans as the situation calls for. I do feel that we are a little better prepared with this plan and have scaled our expectations back to more realistic results. With that being said, I'm sure there are more surprises left to encounter that will shake things up once again.

Putting the Plan Into Action

Last week was spent focusing on creating a marketing plan for Allstar for periods 3-7 in Pharmasim. This week then spent implementing that plan. Kind of.

I ended my posting last week making it clear that flexibility is needed and that going into this process and being willing to stray from the plan would be necessary. While the plan was adhered to relatively well, especially in the early going, making changes did prove to be necessary.

Getting restarted with the simulation, I was expecting continued success with the Allround product. After advancing through a couple more periods, I quickly found that to be much more challenging when we began focusing a great deal of attention on the new product, Allround+. It did not seem like much of our budget was being reallocated to the new product, but it sure made a big difference as the unit sales and profit began to plummet. It was rather dissatisfying to see our product go from being rated as a Star to being in the Dog category. Typically I'm a big fan of canines but not in this instance.

One result that was particularly shocking to me was in regards to pricing. As our products our based on quality and we went into the plan with a price skimming strategy, we always had the intent of being a relatively high priced product. I was surprised to see how little prices increased through the periods, and also how inflation rates were not rising nearly as quickly as before. As a result, our prices became too high and problematic for consumers. This was not something I was anticipating and called for an adjustment in our thinking.

One rather pleasant surprise was the success of Allround+. While it got off to a slow start, more than likely due to our poor initial backing of our new product, Allround+ came together and quickly began earning more and more market share and adding to our contribution after marketing. It was very important in keeping Allstar moving forward while our original Allround was beginning to decline.

What was not as shocking to me to see in hindsight was the failure of Allright. I think I glorified the market attractiveness of both the cough and allergy markets among all households in Pharmasim, especially the allergy market. Both ended up being much tougher to enter and establish than anticipated. This was proven when Allround+ had much poorer results in its initial period. When we found that Allright had a negative impact on contribution after marketing, I was not too shocked and felt right away that we should pull the product and bring more focus back to Allround.

The one mind boggler that I still can't seem to personally figure out, and our team as a whole is struggling with, is in regards to the sales force. No matter what adjustments we make we never seem to curb our problems there. This last period, I took the approach of matching Sales Force personnel as identical as possible to the respective share of each channel based on percentages. This effort also failed, just as the rest of our attempts have. After each attempt at reallocating as been unsuccessful, I'm left with the temporary conclusion that we just need to add sales force into every channel until the prompts disappear. Of course there's no money in the budget for this solution to be practical.

Planning was a very long, thought provoking process. After such an effort to plan for periods 3-7, it is rather annoying to see so much changing needing to be done. This just goes to show the importance of gathering information beforehand, analyzing it well, and determining to the best of your ability the potential outcomes. Clearly, the more accurate your predictions are, the more effective your plan will be, and the less you will need to stray from that plan.

After much thought and research I've reached my final conclusion: I plan on planning better next time.

Developing a Marketing Plan

This past week has been spent focusing on developing our Pharmasim marketing plans in our teams. I'm happy to say that this portion of the course went much more smoothly than the individual situational analysis. It is much nicer to have teammates to discuss things with and bounce ideas off. While often times I prefer working individually so as to not run into barriers with my thoughts or ideas, I much prefer the team format for the marketing plan as it was helpful to share ideas and rationalize them to others to ensure the best strategies were being taken. And speaking of strategies, let's get into that right now.

My main focus on the strategy going forward was to develop the Allstar Brands into an industry leader. It was clear that they dominated the cold market but the struggles were quite obvious in the cough and allergy markets. Thus, I was on board with developing new products to enter these markets from the get-go, which my team chose to follow through with. We will be introducing two new products. The first, Allround+, will be a cough remedy targeted to all households in the Pharmasim world. The second, Allright, will be an allergy remedy again targeted to all households. I thought that these were the two best markets to pursue in moving Allstar forward. The cough and allergy segments are not very large, especially compared to the cold market, but still presented an opportunity to be profitable. The competition within these segments was rather limited with only a few products available in each. It would be easy for us to introduce a brand that can compete right away.

There were additional market segments that were available to us that we collectively chose not to pursue. A product was recently introduced by a competitor specifically targeting children in the cold segment. Allstar had the opportunity to introduced a competing product. In my opinion, while this may have proved to be a profitable product itself, I believe it would have had a negative impact on the sales of Allround due to cannibalization. The risk of cutting into current sales with the two products we chose to introduce appear to be much less than with introducing a children's product. My thought was always that there was no need to interfere with the current product that is a Star in the market and for the brand.

Another reason that the choices were easy to make is because they were in demand by the consumers within Pharmasim. There was a call for remedies that were symptom specific and not multiple in nature. Consumers only wanted to take in a remedy what they were intending to treat and nothing extra. These two products will be exactly what consumers are looking for.

In introducing these products, our team chose to implement a price skimming strategy. We have seen that Allround is perceived as a high quality product and is perceived as a highly priced product as well. Consumers are willing to pay for a good quality product. My thoughts were that it is best to continue to uphold a standard of high quality throughout the Allstar brand and not just in one product specifically. Therefore, setting a higher price to reflect the high quality of the product made the most sense.

One final note to discuss is the need for flexibility moving forward. Obviously, this plan was created for a reason. It was thought out and anticipated to be the best strategy for Allstar as the periods progress. Therefore, it will be stuck to early and often. With that said, it is important to continue to analyze the environment and see if things change, if our decisions are working, or if something is taking a turn for the worse. If the situation presents an opportunity to do something that strays from the original plan, an appropriate decision needs to be made that best suits the brand in the future. Planning is very important to do and is best when it can be adhered to but it is by no means concrete and must be adjustable at any point in time.

A Welcomed Relief

What a week it has been. My family could not have picked a worse time to have new flooring installed downstairs. Or maybe it was my boss having me work 28 out of the 31 days in August that is doing me in. Regardless, this week's shortened blog post was welcomed and is certainly invited to stay a while. On to the top metrics from my point of view.

Units Sold

This metric seems appropriate to me as it dictates market demand. Not only does it dictate the demand for Allround's product in particular but for the market as a whole. That whole concept of supply and demand makes me think that knowing the demand side of things is awfully helpful in determining what to supply. This would be no different in Pharmasim.

Market Share

Market share is important to help you determine where you are in relation to the overall industry or a particular market segment, as well as where you stand among your competitors. It helps to dictate how well you're doing in particular areas, which segments might need work, and if there is a competitor who is clearly dominating that you might want to pay more attention to or direct your advertising comparison towards.

Brand Awareness

There have been many times in my personal life where I have found a fantastic product that I would have loved to use a long time ago had I known about it. It is important that people know about the brand. And it is even more important that the brand knows whether or not the people know about the brand. Because if the people don't know and the brand doesn't know that the people don't know, who's ever going to know? You know?

Perceived Effectiveness vs. Perceived Price (Tradeoffs)

I overlooked this throughout most of my time in the practice rounds but I have found it to be quite telling. A product can only be worth the value given to it by its users. In the case of a medicinal product, consumers want the damn thing to make them better. So the product is only worth how effective it is. It is important for a brand to be aware of how the price of their product is being perceived versus how effective it is. They should be aware of undervaluing or overvaluing their products and keeping one in line with the other.

Net Marketing Contribution (Contribution after marketing)

This number is perhaps the most telling in that it lays out for you how effective your marketing approach is. It factors into it what a brand did for marketing in a period and what results they have received. It doesn't get much more useful than that.

Good Thing It's Only a Simulation

No more messing around. Play time is over. After having used Pharmasim in a practice mode on an individual basis for many weeks, the team phase has finally begun. Finally, its the real deal, of the fake world that is. It is nice to be able to throw some ideas on to other people and get feedback other than just second guessing yourself. It's also nice to see some new elements tied in with the simulation, rather than retrying different decisions in the same circumstances to find the best outcomes. Included in those new elements were a couple of decisions that were to be made by the teams.

Our first decision to be made was in regards to our presence on the internet and in social media. We were to choose between developing a website and an interactive blog for customers to visit or we could choose to create a Facebook and Twitter account for customers to interact with. First things first, how does Allround not have a website to begin with? I'm not totally certain on the time period this simulation is taking place in but if Facebook and Twitter are around we're at least into the new millennium. Every company should have a website to visit. With that said, our team chose the social media route. While I'm shocked that the company didn't already have a website, it seems to make more sense to use the more popular and interactive feature than to simply create a website. While the blog may have lead to some interaction with customers, I strongly felt and my partners seemed to agree that Facebook and Twitter would be much more highly visited and effective than a blog. Judging by own social media experience, I definitely think blogs are far less frequently visited.

The second decision our group was faced with was much more of a dilemma than simply choosing how to better reach out to our customers. This decision involved how to handle an expiring batch of product. Just like not having a website previously, I cannot fathom how such a large quantity of product can be so close to expiration, especially considering the explicit terms that the retailers have in insisting that they do not receive product that is within one year of expiration. Nonetheless, a decision had to be made as to whether or not we should send the product out and hope that it was not sent back to us, get rid of the product altogether at a cost of $100,000 or to sell the product to another party with less strict expiration rules at less than cost, resulting in a $50,000 loss. In my eyes it was a no-brainer. There was no sense in sending out the product to our regular retailers only to have it sent back. This would not only be a hassle but could have a negative effect on relations. Selling at less than cost to a less strict retailer was never an option. The 1 year rule was obviously created with the purpose of not putting expiring products on the shelf. Why would we want to risk having a product that won't be effective on the shelf, hurting our brand image in the eyes of the consumer who did not get the effects they would have by purchasing a batch that was not expired? Additionally, I personally wouldn't trust a company that looks to purchase products on there way out at a cheaper rate so they can profit more. Had I looked past all of that in making my decision and decided the company needed to save money, it still would not have been worth it for a $50,000 savings in the grand scheme of things. Getting rid of the product and taking the hit on the cost was the only viable option that I saw in this scenario.

Based on these two decisions that had to be made, I'm glad that this is only a simulation and not a real company that is faced with these dilemmas. I would be nervous to buy from, let alone be employed by, a company that is so behind the times and apparently careless with their inventory. Thankfully, it is only a simulation. Looking ahead, I wonder what else is in store for our team as we move through the rest of the periods in the simulation. Clearly, it will not be following the same story as the practice mode was telling and I am excited to see how well our team does at handling the new surprises thrown our way.

The Consumer Experience

Having a great deal of experience in various customer service industries, I am pretty well versed in handling customers. I have seen a whole lot of the good, the bad, and the extremely stupid when it comes to customers. What I had yet to see until this week was the real behind the scenes to these customers. This weeks' material gave an insight into the minds of customers, how to analyze them, and ultimately benefit your business. I now have a much better understanding but am still left with some thoughts on the subject, especially on some things that were not covered within the discussion.

Customer Profitability

While reading from the Lehmann and Winer text this week, I got to thinking a lot about how profitable some customers are. The goal of business is to maintain repeat customers. But I have discovered in my time that customer retention does not necessarily lead to profits in all cases. Customers can be unprofitable based on how they shop. 

In analyzing my current work, I can see many examples of this. We offer a special that changes daily to entice customers to try new things and reward repeat customers who stick to their usual by giving them an opportunity for a price break every now and then. What I have noticed is that there are customers who only purchase the special on a daily basis. Others only come in when a particular item that they enjoy is on special. In both instances, these customers never make a full priced purchase, leading to very minimal profits, if any, as some of the specials wind up distributing product at cost. One particular customer would only come in when the milkshakes were on special. This special was designed to get customers in the habit of coming in during a hot afternoon for a refreshing shake but was priced to do little more than cover the cost of making it. Since the time we have stopped running this special, this customer has never been seen in our store again. These type of "deal prone customers" as they are labeled in the text are not exactly what businesses have in mind when seeking customer retention.

However, this is not to say that all customers who come in for a deal do not have the potential to be profitable. In fact, great deals or even freebies have proven to be very beneficial to many businesses in getting customers in the door. One initiative we have taken is to offer a free ice cream cake to all new residents in town. As part of their welcome package, they receive a voucher in the mail to redeem their free cake within 30 days. The customers who come in for this freebie are being introduced to our product and great service in the hopes that they will be extremely satisfied with both and come back for more on a regular basis. These customers who entered because of a deal have a much greater potential to wind up being more profitable for our business than those mentioned earlier.

The Importance of After-Sales Service

While most companies place a lot of importance on great service before and during a sale, it is equally important that the service that is provided to a consumer post-sale is just as good. We see the importance of after-sales service at my business on a regular basis, but more so from the customer's perspective. At our shop, every piece of machinery we have is crucial in the creation and preservation of our products as well as all of our ingredients. These various refrigerators, freezers, air conditioning and other machinery are all very important and need to be functioning appropriately for us to be able to operate. In the event that a problem arises (which occurs far too often for our liking) we count on the after-service sales of different companies to fix the problem and get us back to full functioning capacity. This is typically more important to us and will be of more value when going into an initial purchase than almost any other factor involved in our decision making process.

This demand for quality service after sales is not just relevant in machinery and other things where regular maintenance is a given. This is also important for us from the warehouse where we purchase the majority of our ingredients and packaging products. In the event that a product is out of stock, discontinued, or simply not offered by this particular warehouse, we have a tremendous sales manager that goes out and finds a company that can provide us with what we need, regardless of the fact that he will not be making a profit from this transaction and it will not directly benefit his own company. This type of service goes a long way and is never overlooked by us, making us a very happy, and more importantly for our supplier, a repeat customer.

The Transaction Utility

One topic that I found quite compelling in the reading this week was the concept of the transaction utility. The idea that businesses are informing consumers of what they have gotten or what they have preserved, rather than what they have lost is one that is smart and one that I have noticed quite a bit.

The first place I ever noticed the transaction utility being present was when shopping at Kohl's. Whenever I would check out of a store, the cashier always circled or highlighted and verbally informed me of the amount of money I saved on this trip through sales, clearances, coupons, or any other form of discount. Very little attention was paid to the price I actually paid outside of the exchange of payment itself. After noticing this on every trip I would take to Kohl's, I began noticing this in other places, particularly grocery stores. This trend was catching on and there were always savings to be highlighted.

And after a while, I got to thinking. Why are there always savings being highlighted? I began looking around at Kohl's and realized that there was not a single item in the store that wasn't being presented at a discounted price in some way. Shopping at a grocery store, provided that you have store card, nothing was ever purchased at full price. Additionally, I began to realize that at Kohl's in particular, I never shopped there without an additional 15-30% coupon in my hand or some other enticing offer. In fact, I had become one of those aforementioned deal prone customers that my business fears so much. Yet, Kohl's was still making a profit off of me, and every other customer who was in the store and shopping at a discount. Because unlike the deals at my business, these deals are set to entice but still be quite profitable.

I realize now that even the most basic sale that they offer, typically buy one get one 1/2 off, is no sale at all. This is simply the normal price that one should pay for them to maximize their profits. So what is in an MSRP? Are all of these numbers being inflated and overvalued just so that the customer thinks they are getting a great deal, when in reality they are paying what the product or service should be valued at in the first place? This transaction utility manipulates customers into believing that these extraordinary sales are a great savings and quite beneficial and that we are getting a steal at these prices. And stores are extremely effective in doing this. If you price the same exact product in two different stores at $19.99 but one store comes equipped with a 50% sign while the other makes no mentioned of a sale, what is going to look more enticing to a customer?

The transaction utility is a sneaky, devilish tool being used by companies to provoke customers into buying. It is highly effective, very smart, and is making me want to end this blog right now and go find a sale. 

The Benefit Ladder: Tangible and Emotional Benefits

As discussed this week in class, products and services offer both tangible benefits that actually serve a purpose to the consumer, as well as emotional benefits that satisfy the consumer and help them respond to particular products and services. Looking at the Pharmasim simulation, both tangible and emotional benefits can be found.

The Allround product is created to fight cold, cough and allergy. The purpose of the product is clear, meaning that the tangible benefits are clear. The consumer who uses the product will receive a treatment to eliminate the symptoms they are feeling from their body, leading to a healthier consumer. With the tangible benefits come emotional benefits. People will feel better about feeling better, and as a result will feel good about the product. Peace of mind is a benefit that this product offers as consumers can be comforted in knowing that should any of the applicable symptoms arise, they have a trusty solution to their problem and will be able to go on about their lives normally. The benefits of Allround are very clear to be both tangible and emotional.

In the classroom discussion, I got the sense that people were more conscious of tangible benefits and felt that they were more important than emotional benefits of a product. In my particular industry, I do not think that's the case. Take our standard sundae or ice cream cone as an example. The product is clear. But what tangible benefit is it providing? In reality, the items we offer are more of a luxury item and not at all considered a necessity. I suppose you could argue that the tangible benefit is to satisfy hunger. In the end, I'm not buying that. We are considered a "frozen dessert retailer" officially, dessert being the key word meaning your hunger was satisfied before coming to our establishment. If anything, I would say that our tangible benefit is more of a hindrance on some consumers as we directly conflict with the weight loss, summer beach bodies, and lower cholesterol that so many desire. So if there is not a clear tangible benefit, it has to be the emotional benefits of our products that keep customers coming back for more. Indeed I find that to be true. People become attached to a particular product or a certain flavor that they have always loved. Some people even become attached to the shop itself. We have many people that have moved away to different cities, states, and even countries, yet every time they come back home they always come back to the shop they grew up going to. There is clearly an emotional benefit for our customers that supersedes the tangible benefits that the majority of our products offer. While this may not be the case with every company, it is certainly true for ours. 

Cognitive Dissonance 

I found the discussion on cognitive dissonance to be quite interesting. There were numerous different outlooks on this subject that all brought up interesting points. I certainly understand how this post purchase dissonance takes place and have seen examples of it in myself and from others. What I would most like to discuss is two of the questions posed in class.

The first question centers on why companies don't do more to prevent or alleviate cognitive dissonance. The way I understand it, companies are not trying to have a buyer experience cognitive dissonance after they purchase their good or service. They would much rather prefer a customer be completely satisfied and not second guess their decision at all. That is why companies make information easily accessible to consumers, have a sales and support staff available for their use, and try to provide great customer service after purchase. Most companies would find it hard to do any more to prevent cognitive dissonance. It is other companies that are the ones causing the cognitive dissonance to occur because they are also doing their job in spreading information about their products or services. Now that a consumer has made a purchase and they begin to see promotion of a similar product, it is only human nature to second guess yourself and think what would have been had you chosen the other option previously. This is not reflective on the efforts of the original company you bought from in anyway but is rather reflective of a consumer being unaware of all choices available to them. This leads into the second question that I wanted to focus on: whether or not an educated buyer makes a difference. Absolutely! An educated buyer is the best way to prevent cognitive dissonance from occurring. It is up to the consumer to research all available options to them, weigh the pros and cons, and determine what product or service will benefit them the most and create the most value for them. A consumer who does their research and narrows down their decision based on all available options will likely not experience cognitive dissonance. The only way this can occur is if the product does not live up to expectations, a change in what benefit the customer needs occurs, or the consumer simply makes a bad decision. 

I recently bought a new car (Nissan Altima) and made sure that during this process I researched all options that had any interest to me. I did my research based on the money I was willing to spend and sifted through all my options. I determined the best fit for me based on all of the benefits I valued most and made my choice. As a result, I have not experienced cognitive dissonance because I was a well informed and educated buyer. I took into account all the information that was given to me by various companies, made my well-educated decision, and was extremely content in making it. 

If only I had bought that Aston Martin...

Keep Your Friends Close and Your Competitors Closer

On to week 4 of Marketing Management and we take a closer look at competitor. Even before getting to the lecture and discussion on the subject, I found that there was some debate as to the proper way of handling competition in marketing. Some of the articles presented to us conflicted with one another on how to handle the matter. Some urged for greater attention to be paid to a company's competitors while others suggested a more internally focused approach. After reviewing all of the materials, I was left with many thoughts and a few that connect to some current events.

Going a la carte

The live class had a conversation that briefly mentioned cable providers and their struggles in surviving against places that offer on demand material without the hefty price of subscribing to an all inclusive service. Just before this lecture was recorded, I watched a piece on my local news about cable companies making a change to accommodate this customer demand. Rather than forcing customer's to pay for a variety of channels, many or more likely a majority of which are never viewed, customer's would now be able to pick and choose which channels they would like to receive. This "a la carte" option would be much more consumer friendly and allow them to avoid paying for the aspects of the service they have no interest in. As a consumer and a cable customer, I would love having an option like this as the majority of channels my family subscribes are simply part of the package and have no real benefit to us. I would be impressed to see a cable or satellite provider offer this to customers. I think it would be a great marketing campaign that would attract many customers, wouldn't you?

Apparently, this is not something that marketers were forecasting as a new business strategy as this concept is not something being brought on by companies but rather being pushed for by government. Connecticut Senator Blumenthal recently signed on as a co-sponsor on Arizona Senator McCain's "a la carte" bill that is trying to put pressure on companies to switch to this approach to benefit consumers. The bill now has bipartisan support but is likely to meet resistance in Congress. 

In my opinion, this is a great opportunity for a company to jump ahead of the competition and offer this service without being mandated to do so. On the local piece that I watched, every person interviewed supported the bill and said they would much rather choose their TV programming in this manner. This seems like a concept that can be researched very easily and would satisfy many customers. So why not look for a competitive advantage in the industry and make this a la carte dream a reality? I'm talking to you, Comcast.

Customer Loyalty

What I'm about to suggest is quite radical. Don't give up on it too early. There may be a problem with too much customer loyalty.

As this marketing class was quick to establish, the goal of a business is to gain repeat customers. Customer retention is hugely crucial to a company's success, making customer loyalty essential. I am not disputing the importance of keeping customers, but some of the class discussion centered around technology got me thinking a bit. Certainly, a company wants brand loyalty. The ultimate goal of Apple is for all of its customer's to choose Apple products over any competitors. What I begin to question is where does that loyalty need to stop? Does a company want that to stretch to product loyalty?

Let me further explain. If a customer becomes absolutely loyal to a product, that means they are likely in love with everything that product has to offer. Couldn't this lead to a customer becoming satisfied with only a current offering and not at all intrigued by a new model coming out of the same product. Perhaps a customer loves the iPhone 5 so much that they'll have no interest in the new offerings that come along with the iPhone 6. Or what about those users who have an iPhone 5 and love the multiple purposes it serves. Because of their ultimate satisfaction with the product, they see no use for the iPod or iPad whatsoever. What I am suggesting is that you certainly want brand loyalty but not necessarily product loyalty. If a consumer becomes to enveloped by one particular product, they may not see or even care to see the benefits of another.

So how much brand loyalty is too much? Maybe I'm getting carried away a bit, but this concept would only come into play in certain situations. During this week's lecture, there was a lot of discussion regarding Samsung and Apple and their different offerings. One student made a point that the latest iPhone is rumored to be complete with a larger screen, reminiscent of the Galaxy S3 and S4 offered by Samsung. This is showing that Apple is currently chasing their competitors when it comes to their market planning. But is this a good thing for them to do? Thus far, Apple has survived on doing things their own way and have built a loyal customer base that expects them to continue doing what they do well in their next products. With a very strong sense of brand loyalty, would it make sense for Apple to alter their brand to match their competitors? If they do choose to change based on their competition, their strength in brand loyalty may turn into a weakness as the consumer's who prefer Apple for being Apple may no longer be satisfied with their new product offerings. 

In the end, customer loyalty is still the ultimate goal as it is the key to customer retention. These two ideas were merely suggestions and help lead me to two conclusions. One is that a company must be strong in marketing all of its product to its consumers, showing the specific benefits of each offering so as to not have one constantly overshadow another. Secondly, a company must be smart in sticking to their competitive advantage and providing their loyal customer base with what they are demanding which us ultimately defined by conducting quality market research.

Unforeseen Competition

One topic that was covered quite a bit within the week's material deals with identifying competitors. Different levels of competitors were discussed and it was pointed out that they can be in different industries altogether from what a specific product or service actually is. It was also brought up that often times competitors arise that are completely new and were never anticipated to be competitors. This is the case for the cigarette industry.

http://www.nbcnews.com/video/nightly-news/52558842#52558842

The above link brings you to the NBC Nightly News story about e-cigarettes. They are becoming increasingly popular among today's cigarette smokers. Some use this product as a safer alternative to cigarettes while others use it as a tool towards quitting. Regardless of the intended use, there a certainly benefits to the product as mentioned in the video. More importantly for the cigarette industry, they are taking market share.

Because of the growing popularity, the top cigarette companies should now view e-cigarettes as competition. Indeed they are doing so as the industry leaders are now showing interest in either developing their own version or becoming involved with pre-existing products. This is a perfect example of an industry being introduced to a new competitor and being forced to respond accordingly in order to maintain their market share and not lose their competitive advantage.

Moving Forward

No matter the approach a company decides to take in regards to viewing its competition, it is important that they continue to look towards the future. In doing the same, I am looking forward to connecting this new knowledge to Pharmasim and better analyzing my competition for decision making. I continue to find connections between the course material and the simulation that will enhance my decision making and overall experience. It's almost as if the course was designed that way.

Market Planning, Market Analysis, and more Market Planning

Another week of marketing down and this one came with much greater pleasure for me. For once, I feel I’m finally caught up with the work and not rushing to get through the material (as I post this blog last minute of course). Having more time on my hands, I was able to enjoy class a little more and gain a greater appreciation for the material. Now, for what I came away with this week.

Dishonesty in Marketing

Referencing the question that was posed in class discussion, I would agree with the general feeling of the class that most companies would prefer not to alter their marketing and be dishonest based on what the customer wants. However, I think there are numerous examples of where this does not hold true. One such example I can think of is not at all company specific but rather can be linked to much of the food industry: the declaration of “0g Trans Fat”. The consumers who are becoming more health conscious realize how bad trans fats can be and are looking to avoid their consumption. Companies are claiming that their foods do not contain trans fat when in reality many of them do. The amounts are low enough per serving size that they can legally claim this as true but in reality it is not the case. This scenario is companies taking advantage of a loophole created by the FDA, but I still feel it fits in this discussion.

Another example I can think of is in regards to flavoring and is again more of a generalization than a specific attack. I look at different juices and see that there are many options that are organic, completely naturally flavored, and very health conscious. Then I see advertisements for a product where the commercial says “natural flavor”. The intention here is to make the consumer think they are drinking an all-natural product that will be quite healthy for them. The reality is that while they are not lying about containing natural flavors, there are also artificial flavors present. Sometimes the natural versus artificial flavoring will be at 10% to 90% respectively, yet a company can still prompt you to enjoy their “naturally flavored” product. This is another example of marketers misleading customers based on what they seek in a product.

I am happy to say that in my current organization we strive to avoid any dishonesty regardless of what the consumer wants. One opportunity that we have is in one of our specialty products. We offer an ice cream that is made without sugar as the number of diabetics who frequent our store looking for something for their needs is quite high. Most of the customers who fall into this category are calling for a “sugar-free” product. What we offer is a “no sugar added” product. The product is made using Splenda rather than sugar, including any additional ingredients we add to it for different flavors. However, the ice cream mix that is used does have very low amounts of natural sugar in the mix. Sugar-free would be much more marketable to those following a regimented diet compared to no sugar added. However, we chose to go the honest route instead of lying and telling customers something they’d rather here.

Identifying the Right Metrics

A continuing topic that has appeared in back to back weeks is an organization setting metrics to measure their performance. Throughout the discussion on the subject, there has been a consensus that results based metrics are clearly the better indicators of how a company is performing. The other metrics, in-process metrics, are not nearly as effective at telling a company how well they are doing. They are not nearly as measurable and cannot help determine how well a company is performing and how good a job they are doing of meeting their ultimate goal of profit.

Wait a minute—I thought that companies were striving to earn loyalty from their customers? Didn’t our class just spend a great deal of time concerning how repeat customers are essential for the success of the business? Repeat customers are much better to have than trying to constantly get new customers. So when I look at these in-process metrics, I see a great value in them. Customer satisfaction is a metric I would certainly want measured. If a customer is not happy, they are certainly less likely to come back to a particular product or even a company as a whole. An in-process metric like product defects sure sounds important to me if you want to keep customers. They’ll be much more inclined to steer clear of a product if its constantly defective. Results based metrics are certainly good at telling you all about your sales and the amount of current customers you have. But in the end of the day, the main goal is customer retention and in-process metrics will give you a much better clue as to how many of those customers intend on coming back compared to results based metrics. If a company wants those ever so important results based metrics to look satisfactory in the next year, they ought to pay attention to the in-process metrics as well.

Market Anaylsis in PharmaSim

A note from the simulation activity in regards to market analysis. The market research that is conducted and made available to students using the simulation offers a great deal of insight that (once I become more adept using the simulation) will help to make decisions. In comparison to the total marketing budget, the cost of such research is quite low and is well worth the money spent. After completing phase 10, I note a total marketing budget of $51.4 million. The total cost of the research made available for period 11 is a mere $741,422. That is less than 2% of the total budget. Again, money well spent when it comes to informed decision making.

Price Discrimination

One classmate question that I found intriguing was actually touched upon briefly in class but still left me with some thoughts. The question asked about companies offering discounts based on volume as we do in the simulation to retailers or wholesalers and how that fits into violation of rules prohibiting price discrimination. The answer seems to be that this is not price discrimination in anyway because the same discounts are available to all those who purchase the product. They all have an opportunity to earn the same price break by purchasing in the same amounts. It is not offered to a particular group but rather made available to everyone. But I don’t see this as being all that true. Certain retailers have a greater buying power than others based on their product offerings, size of their store, number of chains they have open, or other factors. A company like Walmart has a tremendous advantage in buying power over many others retailers. So if a volume discount is being offered at an amount that only Walmart can feasibly buy, isn’t that in effect giving a particular company a special discount on a product? While it may be a legal loophole, it sure looks like it could be a case of price discrimination.

Looking Back

In taking a look at some previous blog’s from classmates, one in particular caught my attention. Jennie’s blog about her experience at Friendly’s interested me. Her dissatisfaction with her experience was quite obvious and left her with questions about the marketing strategy of Friendly’s. Her prices went up without explanation and she was left in wonderment. I would certainly share the same reaction in being displeased, but in thinking about it, it makes sense that she was unaware of the change. A company would not want to promote a price increase for the same offering. Rather, they want to market a product or service and offer an extra incentive for it, in hopes that people will try it, like it, and come back for more. They don’t want to alert you when you’ll have to spend more to keep you away. Jennie was clearly one who was coming back for more, until the deal was no longer present that is. Now Friendly’s must do their market research and identify Jennie’s displeasure with the price increase and determine whether or not they should reinstate that fine deal. My advice to Jennie: come to my ice cream shop for your sundae instead. Homemade is always better. It’s a bit of a drive but well worth it.

Working with Pharmasim

I finally have had an opportunity to devote some time to the simulation. Going into my first run through of the simulation, I wanted to make sure that I first and foremost became familiar with how to use the simulation, properly executing decision, and all of the basics in using the program. I was trying not to concern myself too much with results, how effective my decisions were, and heavily scrutinizing where I went wrong. This would prove to be quite difficult as I progressed. Nonetheless, I've gained a better understanding of the simulation and its operation and have come away with a few different observations.

I Have No Clue How Long a Period Is

I tried to seek out the answer to this to no avail. I'm sure it's out there somewhere and I'm simply overlooking it. But what I was estimating a period to be seemed like a very low assumption to what it actually is. The most notable factor this is based on is the rate of inflation. Early on I paid little attention to raising the price until I finally realized just how quickly competitor's prices were rising and how far behind my prices were compared to them. Finally, I raised my prices a bit and when comparing them to the inflation rate, I was not even close. I now believe that these periods are much longer than the perhaps 1-3 months I had assumed. If not, I'd hate to see the cost of fuel.

Can't Forget About the Science Behind the Product

In adding a new product, I found that you had to start from scratch in every area of the simulation compared to making alternations to the Allround brand with suggestions already being made for you. It was in the advertising that I had the most trouble as it took me some time to figure out what I was supposed to be advertising. I guess I forgot that people with allergies tend to sneeze, feel congested, and have a runny nose because I neglected these other areas in advertising, solely focusing on the fact that the drug was intended to combat allergies. I now know more attention must be paid to ensuring that all treatments are properly covered in advertising.

Capacity is the 8th Wonder of the World

I was aware that in our simulation in particular, the ability to make changes to manufacturing capacity was taken away from us. What I was not aware of was how much of a frustration capacity would be. It seemed to me that every time I advanced, I was working over capacity and I was completely unaware of how to get back down below capacity. My original inclination was to begin discontinuing brands to get under capacity but just as I was about to take that step, more capacity was added. In no time, I was over that additional capacity. My initial thought is that it is a good thing that the company is increasing its manufacturing and increasing its sales but a company is also not capable of running over capacity for any kind of duration. I'm exactly sure what is triggering this to occur or how best to change it without eliminating brands altogether. Capacity is proving to be very frustrating, confusing, and annoying. Good thing I'll never experience any struggle like that in the workplace.

More to Learn

Mostly I have learned that there is a ways to go. Much more time needs to be spent working in the simulation to get a better feel for different actions. I need to devote more time to reading into the various information that has been given and connecting them to my decisions. At this stage, I know well enough how to operate and progress through the periods. Now it is time to be more conscious of exactly what decisions I'm making, their effect on the company, and analyzing the results I achieve. I'm eager to begin the "Try This!" so I can go into the simulation with a little better direction than I previously had.

My Second Week in Marketing

After the first week being a short one running into the weekend and a technical issue giving us a fits, I found myself cramming to find time for the material of week two. Despite the time crunch, I found myself once again intrigued by the topics and discussion that was occurring, prompting many thoughts.

Missing a Mission

A good portion of this week’s material focused on the mission statement of an organization, the details contained it, and how it is the basis of a company creating a plan and getting all employees moving in a common direction. Upon looking at my current organization I realized that there is no mission statement. Currently I am a store manager of a small ice cream parlor that has been family owned for over 30 years. I am the first of my kind as the store has never had anyone in a managerial position outside of the owners. Because of this situation, I don’t find much need for a written mission statement as is the case in most organizations. In the Lehmann text, there is a discussion about marketing planning that I see as being applicable to mission statements as well: “the plan is a written document, not something stored in a marketing manager’s head”. In the case of my organization, there is no need because the mission is not really applicable to rest of the organization. We have anywhere from 3-8 employees at any given time during the year, most of who are not yet legal adults. Their needs and desires are far different from that of the owners. While the owner worries about making a living, supporting his family, and properly running his business, the employees mostly think about getting out of work as early as possible and when that paycheck is coming in so they can plan their next outing. In this scenario, there is no need for the mission of the organization or the strategies which are being undertaken to be written down and made public information. The thoughts rarely need to leave the owner’s head and only do so when I can assist in decision making or planning. When that situation does arise, a direct conversation does the trick rather than having to reference the old company manual.  By and large, this organization has been a one man show and has presented no need for a traditional written mission the way a standard organization does. There is never a change management. There are no different departments working towards a common goal. There is just a man producing products and his employees serving customers and cleaning up shop. The mission is simple: provide great customer service and keep people coming back for more.

Speaking of coming back for more…

It is undeniable that an organization survives based on having loyal, repeat customers (with the exception of a mortuary). Being a part of a small business is no different and perhaps even more so true compared to larger organizations. The lessons from this week stressed the importance of keeping customer’s satisfied and coming back for more. A lot was made about the metrics and how to measure quality and performance. In my organization, we are lucky to be able to get very accurate and reliable metrics directly in store. First of all, we see exactly who are repeat customers are on a daily basis. We recognize those coming in for the usual and are well aware if somebody hasn’t stopped in for a while. We see exactly what products are selling more and what is not going as fast. Therefore, we know what customers like and what they prefer given the options presented to them. We know that we can test a product and determine its potential based on how well it sells and what customers think. One of my best metrics we have for determining the quality of our products is the sample spoon. When a customer comes in whether they are a new or a returning customer and they try something new that we have introduced or perhaps just something they’ve always skipped over and never had before, we receive instantaneous feedback. Sometimes they will declare its delicious and get it. Other times they will say it’s not to their liking. Perhaps it was good but not good enough to stray from the usual. No matter what their reaction, it is right there in front of us and easy to interpret. The immediate response that is available in our organization makes for great opportunity to give the customers more of exactly what they want, improve upon what they don’t like, and ensure a quality experience. And that is what brings people back for more.

One area this week that I found myself questioning after further thought was the concept involved with earning more money through repeat customers. It is completely sensible to me that repeat customers are less expensive than trying to acquire new customers. But it was also explained that as you receive more loyalty and get the same people coming back, you will continue to bring in their money and your expenditures will be going down, increasing your profitability. While in theory this may be true, I question its validity in one sense: is any organization ever done looking for new customers? No matter how successful you are, there is always room for growth and the potential to provide to more customers. Does an organization ever stop their efforts to acquire new customers? Customers that can turn into loyal customers just like the current ones you have? Based on that logic, the expenses would never really end up going down. Regardless of lower expenses or not, the fact still remains that it is those loyal customers who are the crux of an organization’s success.

Cohen’s Eight Principles

1.       Maintain absolute integrity
2.       Know your stuff
3.       Declare your expectations
4.       Show uncommon commitment
5.       Expect positive results
6.       Take care of your people (customers and employees)
7.       Put duty before self
8.       Get out in front

In the text Drucker on Marketing, Cohen explains how marketing is leadership using 8 principles he found in researching effective leaders. In looking at my current organization, I see many of these qualities within the owner that make him an effective leader. One of the principles that he follows well is #3. There are not many expectations of the employees in our organization. They are not expected to accomplish great things nor are they challenged with impossible tasks. The expectations are made very clear and are more importantly explained as to their importance. If something is expected to be done, there is reason behind it. More so than declaring specifically what is expected, I think it is very helpful for employees to understand why it is they are doing something. Another principle that he excels in is #6. Our little store is known for exceptional customer service and making sure that everyone who walks through our door is treated wonderfully. The same way we are to treat our customers is the same way that the owner treats his employees. This makes it much easier to replicate this attitude and conduct towards customers, which also reflects on principle #8. Being that we are a small business, the owner, in addition to running the business, as all the same jobs as the employees. Everything that is expected of us is done by him on a daily basis. Thus, there is always an example being given of the appropriate way of doings, reflecting back on #3. Additionally, this keeps the owner in tune with the customers and the daily operations of the store, making it easier for him to ensure that he is properly managing every aspect of the organization and making him an effective leader.

In looking back at our lack of a traditional mission statement, I think that the owner being such an effective leader is partially responsible for why we are able to get away without one. Being so heavily involved in every aspect of the organization makes it much easier to keep control of what goes on and ensuring that things are done the way he sees fit. But in addition to that, it is his ability to effectively lead his people that allows his ideas and his way of doing business to be implanted in the rest of our minds, even without a document spelling out how we are supposed to operate. This type of leadership would help to instill a mission statement or even a marketing or strategic plan in any organization. Certainly there is a need for the written documents in the larger organizations but having an actively involved, caring, and committed leader will only strengthen the mission, take what is on paper, and help put it into action.

A smaller approach

I'm beginning to see that most of what is discussed may not necessarily be reflective on a small business. My current position and my previous work experience has been in small businesses. So far I am enjoying seeing what is applicable in a small business setting and comparing it to how larger organizations operate. Seeing what classmates have to say is helpful, but at the same time I am often visualizing myself working for a large corporation and applying these concepts. I think that having an appreciation of both ends of the spectrum will enhance my experience with marketing.

Introduction to Marketing

Week 1 was set to be an introduction to marketing. I was hoping I was not going to be reading the Merriam-Webster definition of marketing or a reiteration of the 4 p’s as my previous marketing courses have been focused on. What I discovered instead was a great deal of information, some of it that may even be controversial, that took a much more in depth looking at marketing. There were many things I found to be quite interesting in the week 1 material.

The Artificial Need

I took a specific interest in this week’s discussion about whether or not companies create an artificial need for their products. Drucker states that the primary purpose of a business is to create a customer. In order to create a customer, you must have something to offer the customer that catches their attention and will address a want or need that they have. I tend to think that in most cases it is not creating an artificial need that attracts people to a product but rather suggesting a way that a product will fulfill a need that is already present. Taking the bottled water example from class, the immediate need that was addressed by having bottled water is to take water with you on the go. You will not spill as you would with a conventional drinking glass. Water is now readily available at all times. No need was artificially created or perhaps even prevalent in many consumers’ minds. All that occurred was that this idea was suggested to consumers. The same holds true for the fast food examples that were also discussed. The suggestion was made that a fulfilling meal could be made in a very short amount of time that satisfied a consumer’s need for a meal during the day.

With that said, I can see an argument for the contrary. Why is it that people drink bottled water when they’re not on the go? Why do people with a full fridge leave home and quickly return with a bagged dinner? The original suggested needs are no longer being fulfilled. Rather it is a company who has successfully integrated their product or service as being commonplace in the consumer’s life. This has become the norm and although there may not be an overwhelming need for a specific product or there is a more than suitable alternative, the consumer has become so used to and comfortable with something that it now becomes a preference. Thus, a customer is created.

Profit Maximization

The hot topic of profit maximization presented some interesting arguments this week. My view on the matter is heavily influenced by my experience with a local, family owned ice cream parlor. In this shop, the owner makes a comfortable living, but nothing that would create a big demand for his job. After being in business for 30+ years, there is not currently and has never been a focus on profit maximization. The main focus there has always been to create quality products and provide exceptional service to keep people coming back for more. The prices are very affordable. The only instances where prices get raised are when the prices of supplies demand an increase. The nearest competitors charge nearly double his prices for similar products but his prices remain low. The profit margin for each individual item that is sold on a daily basis is quite low. The only way that this store remains in existence and the owner gets to have a decent living is by having happy, returning customers. Had he ever switched to a profit maximization focus and not kept his prices low and focus on creating a good experience for every customer that came through the door, the business would not have survived for over 30 years.

What's to Come

The big takeaway from week 1 for me is that I am far from fully grasping what marketing is. More importantly, I am actually intrigued to do so. I am anxious to learn more about some of the topics that were teased early on, such as the difference between marketing and sales, the need for marketing throughout the entirety of a business, or the ethical considerations in marketing. There is a great deal left to learn, some of which I find myself already internally debating on whether or not I buy into. Only one week in but based on what has been learned and what has been hinted at so far I have find this course should be much more interesting than what I was expecting and am looking forward to what is to come.