Week 8: Pricing, Channels and IMC (VS)

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'm ashamed to say it (and possibly shouldn't on a public Kelley marketing class blog), but I am a bit obsessed with Victoria's Secret. I know as a company have had their ups and downs, but just one glance at my bank account and you'll see their success (and I'm no easy sell). I think Victoria's Secret as a company utilizes their product, price, placement and promotion in a beautiful, burlesque-inspired symphony.

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

The target audience for Victoria's Secret would be women, likely professional women with disposable income (ages 22-45). They also have an offshoot, "Pink" that caters to a more youthful audience of high school and college women (age 14-22).

1. What are the tangible products the company offers?

Boudoir: Bras (both practical and impractible), underwear, lingerie, intimates
Clothing: Business casual, cruisewear, dresswear, swimwear (upscale)
Beauty: Makeup, perfume, hair products, lotions

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

What's wonderful about bras is that every woman needs one (or feels she needs one, due to our culture). Every woman has different needs when it comes to bras--bras that enhance, bras to tone down, bras to support, bras for looks and bras for comfort. But, not every department-store brand bra will satisfy those needs.

That's where Victoria's Secret comes in. Their sleek, sophisticated, black-and-pink style resonates with many women--women who will pay the extra money (a higher price) for the quality comfort, design, and look of a Victoria's Secret brand name bra.

However, Victoria's Secret offers all things "sexy" and "womanly," and once they get you in the door for a product that might be considered necessary (a bra), you must also walk through rooms showcasing lingerie, clothing, and beauty products that also help (or are perceived to help) enhance the final image: A woman who looks good, smells good, and is wearing clothes that give her confidence.

Without fail, I walk into a Victoria's Secret store expecting to spend money on only what I need (a bra, a T-shirt, etc.) and end up walking out spending more than I expected. Victoria's Secret offers knows that if they can get customers in the door (with coupons and "free panty" incentives), they can increase the dollar amount on purchases.

The company also offers a catologue and website that includes more clothing and swimwear options, offering ease of use for busy women on the go.

1. 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? 

Victoria's Secret uses an interesting approach to communication and promotion, including:

• Creative emails/mailers: Fun, flirty promotional taglines
• Events: Events for "VIP" customers with special discounts
• VS card (pink and black): The Victoria's Secret Angels card, first in pink and then in black (the color for luxury) once a cardholder hits VIP status
• "Angel rewards": A point system for Angel Card holders that offers birthday discounts and coupon books
• Special offers: Semi-annual sales, free totes with purchases 
• Free product incentives/coupons
• Secret Rewards: "Secret" amounts of next purchases when you purchase an item

All of these are well-suited for the target audience of women and for the "unique to you" bra options Victoria's Secret offers. These communications make Victoria's Secret customers feel special, sexy, and fun--likely, the messaging strategy the company has always had in mind. With this in mind, I think they have been quit successful!

The Cleopatra Colgate-Palmolive Case

1. What are the major issues in the Cleo Case from the perspective of the product, and pricing?   ----The major issues in the Cleo Case were that the product was priced at a wrong price, at a price that did not match the perceived benefit and value of the product (as compared to other brands and the saturated soap market).
2. Are there issues with the market research? ----The marketing group at Palmolive likely underestimated the public's familiarity and preference for other soap brands. When conducting marketing research, the company focused on the success they had with the smaller, more elite group rather than the group that would have made the product a success.
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?  ----The marketing group made the assumption that since the French launch did so well, that it would be the same in the French Canadian market. There was likely pressure to enter the U.S. market, depending on proven success in the North American market. This would have been a significant success for those who wanted to move up the corporate ladder.
4. Did they make the right choice?  Why or Why not?---From a marketing perspective, their linear thinking made sense (differentiating themselves from the market, comparing two similar-and yet different--countries). In a vacuum, it would stand to reason that a product priced at a luxury price successfully would do well in another market, but there are other internal and external considerations that the company didn't focus on.
5. Are companies today any better than Colgate 20 years ago or do they still make some of the same mistakes? ---Companies, under even more intense pressure to perform in markets that are ultra-competitive, sometimes do make the same mistakes. Perhaps it lies in the factor of limited time(and therefore limited market research), or in a limited understanding of all of the factors that could make or break a product launch.

Week 7: Pricing Strategy

This week, we delved more into pricing strategy (with the reading of Chapter 7, the Palmolive-Colgate Case, and a Camtasia review of pricing influences). Several different factors go into pricing--of course, you have to consider the input costs (costs of production of the product), and whether or not you want to use a fixed (such as McDonald's dollar menu) or dynamic price methodology. You will have to consider industry demands, competition, and both external and internal factors (such as luxury status, etc.).

But most importantly, you have to consider the perceived value and benefits from a consumer's vantage. As the text suggests, customers "act on the basis of their perceptions of price and benefits," and their resulting purchases set the demand for a good or service. It's a delicate balance of matching the perception of benefits with what they might consider a "fair" price.  In order to "enhance value," a marketer will have to determine whether a company will add to perceived benefits or reduce the perceived price.

Pricing structure will change with the introduction of competitors, new products, etc. I drive a Mazda 626, for example. The Kelley Blue Book Value of my vehicle has dropped dramatically in the past few years, while the Blue Book Value for my brother's Honda Civic has dropped only slightly. This difference in value perception is in part due to the perceived benefits of the Honda Civic: Good gas mileage, safety, reliability, and sturdier engines. Due to Honda's good track record, they have earned a reputation of building quality, economical, safe, reliable vehicles--thus, their perceived value is higher (and pricing remains stable).

Similarly, Apple is able to price their products at a much higher cost due to their products' perceived value and the perceived benefits to Apple consumers. Therefore, while comparable products exist (the market is now saturated with tablets, for example) Apple is able to price their products at a much higher cost.

Week 6: Product Development Management

This week, we are learning different methods of developing products. This week, we read Chapter 6, the Colgate-Palmolive/Cleopatra case, "Apple and Innovation," and watched two videos (Rory Sutherland and David Bell) as well as two Camtasia presentations.

We also had a quiz and Ideation project (due tomorrow)--whew!

Learning Questions:

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

iPhone: This iPhone a phone (Actual product), but also provides me with the ability to call, surf the internet, or take photos (Core benefits). Having the iPhone means being able to sync and access the iTunes store, the iCloud and applications (Augmented products). Having an iPhone is also sometimes seen as a status symbol.

My Car: My Mazda is a car (Actual product), but provides me with the ability to travel to destinations, listen to music, and transport passengers (Core benefits). Augmented products associated with the car could include satellite radio and OnStar.

1. Products are tools (drill) that provide consumer benefits. If the a better tool comes along that provides the same core benefit but is easier to get, cheaper, or more fun then the old tool will be obsolete. Can you think of cases where products have become obsolete?
   

The typewriter gave way to the computer processor, the rotary phone gave way to dial versions (and then cell phones), computer storage floppy disks gave way to portable drives and CD-Roms, music records gave way to tapes (and then CDs/mp3s), and the list goes on. All offer the same core benefits: Recording written words, dialing/calling other people, storing data, and listening to recorded music. However, over time the preferences changed to fit the needs/wants of consumers (to make things easier/smaller, etc.).

1. 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?
   

I can see how technology can prompt shorter product lifecycles--which leaves limited time to refine and test the product (particularly in the market testing phase). This could result in products that are cheaper but sub-par. However, in our "disposable" technological culture, bringing products to market quickly is a necessity if a company wants to make a mark.

What is a Customer?

In one of my other classes, we were introduced to this quote by Ghandi. It's yet another reminder of why it's important to truly understand a customer's needs and wants:

“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”

― Mahatma Gandhi

Week 5: Fashion Channel Case Memo

A brief update on the past week (and a reason I've been MIA):

Shortly after turning in our contribution to the team marketing plan (alternative fuel vehicles), we breezed into our next group project: The Fashion Channel case memo. It was the first time I've worked on something like this, and it was interesting to get in the mind set of someone in such an interesting position.

We decided to target the "Fashionista" segment (rather than a "something-for-all" approach) due to the higher ROI and spending dollars. This segment enjoys ahead-of-the-curve fashion trends and makes fashion a priority (recommending itself well for the focus of the Fashion Channel).

I was proud that our team was able to gather and consolidate our thoughts/calculations--and during one of the busiest weekends as well (Easter). Our case memo gives good insight into why this could be a good direction to take, and even arguments mitigating the risks associated with targeting a single marketing segment.

Now, we're breezing into Week 6 (Lesson 3), or the "Invent" portion of marketing on behalf of a consumer.

Week 4: Segmentation, Targeting, Differentiation, and Positioning

Reading Reflections:

STDP is all part of the process of obsessing over the consumer. Who is the consumer? What are their needs? How do we reach them? How do we stand above the competition? Segmentation examines what differentiates target consumers (both characteristics and preferences). Demographics, like age, is all a part of segmentation. The wants and needs of one age group can differ vastly from another age group with a different set of experiences and life changes. A child, for example, would have different interests and wants than a teenager.

Companies will use segmentation in order to target this type of consumer. They can use undifferentiated (single segments) or differentiated (multiple segments) approaches. Positioning then focuses on the strategy of how a brand will use this information to target this consumer.