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.
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