Week 4

This week we explored competitor analysis. The word analysis bring up images of studying spreadsheets and long boring days or nights. Analyzing your competitors is a crucial step in that marketing plan process. Without this you will not know what you are up against in the market place which can be disastrous.

In the Lehmann and Winer book we are given an example in chapter 4 competitor analysis in the cell phone industry. At the time this book came out MP3 cell phones were the newest thing on the market. Things have changed quite a bit since then but the illustration was still relevant. In the book they compare Nokia, Motorola, and Samsung. We already know how these companies have done since this time. At the time Nokia was the leader but has not been able to hold onto the lead. Motorola needed to find a new phone after the Razr. Now they have a line of Razr phones that are doing well. Samsung’s vertically integration and “cool” factor were highlighted and these have both contributed to their success. Today Samsung and Apple are in a cutthroat battle for the top spot in this market.

Not too long ago Apple was head and shoulders above the rest of the market. When Lehmann and Winer put together this analysis Apple wasn’t even in the conversation. They came out of nowhere by making a huge innovation and giving customers what they wanted. Fast forward to 2013 and Apple is no longer the clear leader. Samsung has caught up and the two companies are in an all-out brawl to attract customers

 

With the more recent phone being produced by these companies, Samsung looks determined to see what is not available currently and work to give that to customers. Apple has been more concerned with improving on what they did with their last phone. It is this inward focus that I believe is leading them down the wrong path. While it is wise to fix or improve things that were not the best on your own product, that is not enough to stay ahead. They need to look outside of their own four walls. Samsung is beginning to introduce phones that are still small and sleek as their regular phones but also water resistant. They offer a feature where you can answer your phone without touching it or unlocking it by looking at it only your unique eyeballs. It’s hard to know exactly what Apple is coming up with right now because they shroud themselves in so much secrecy you would think they were producing military weaponry. There has been some leaks that have led to speculation that they will improve their sub par antenna with their next phone. It looks like they are also making a slightly slimmer looking phone and a larger screen. These are all aspects that Samsung is ahead of Apple in. Samsung’s Galaxy Note II has the largest screen on that market, is about the same thickness as the iPhone, and has a slightly better antenna design.

It seems that Apple is using more resources battle copyright infringement in court than they are in creating the next ground breaking phone. They have been working on an item the doubles as a wristwatch and a phone, think Dick Tracey.

 

Other companies are working on similar projects though. Even if Apple is the first to market with this, it won’t be long before another company has theirs available as well. I am an iPhone user and I like my phone. It is simple to use and already does more than I need it to do. There may be a time that I need more out of my phone and I’m not sure my loyalty to Apple is strong enough to stop me from getting a different brand phone. Time will tell, but this will be an interesting marketplace to follow the next few years to see who is watching their competitors and factoring their competitors’ actions into what they are doing.

I was surprised to read about how easy it can be for a company to obtain valuable information on their competition. Lehmann and Winer outlined over 20 good, legal, and ethical sources of data a company can use when researching its competition. Some of them seem obvious like talking to your customers and sales team or hiring consultants. They also talked about some less conventional, outside the box ideas. By becoming a shareholder, preferably a small one, you are given annual reports, 10k statements and a great deal of other information that would otherwise be unavailable. It seems so simple but also fruitful and fairly inexpensive. When you think that Samsung could have one of its employees buy a few shares of Apple stock which are currently trading at $440.99 per share and gain all of this information it seems like a no brainer. It is certainly less expensive than the 6 figure salary you will give to a consultant.

 

Another way to gain information is by taking plant tours. This is not a common anymore. Companies are not as willing to show people around their production facilities. When I was a sophomore I was taking a marketing course. We had a large group project in which all groups in class looked at the same local company that was facing some challenges and discussed what the issues were, how to fix the issues, and ways to innovate or grow. My group decided to take a tour of the production facility to gather more information for our analysis. The company was very hesitant to allow us to come in and take pictures. We gave them our names, the name of our professor who they knew well, and our course information. They were still a little skeptical. They did let us look around and they showed us a few things. During our visit one of the people at the plant called our professor to confirm with him that we were his students. We did not think for a second that it would cause any issue to look around the plant but our professor explained their why they were hesitant. A plant can tell you a lot about a company and also give you ideas of how to produce things more efficiently or how to do it better than your competition.

Week 3

As we continue to “play” with PharmaSim we were asked to also look at the cost of the reports. In Period 1 the total of all reports was $458,920 which sounds like a lot but when you compare that to the $4.5 Million you have available it really isn’t that expensive. The first time through I actually bought every report by accident. Luckily this did not make any sort of an impact financially on the other decisions I was making. In period two the reports total rises to $482,786 and the money you have available also increases to $4.7 Million. It looks like the reports continue to rise in cost but as long as the company does well, purchasing the ones you would like should not be an issue at all.

While playing I wanted to try to create a new product to add to our line of medicine offered. I could not figure out how to do this so I assume we are not able to make such changes. I also was remembering the simulation that I used during my undergraduate degree. In that one each team in the class had a company that all started at the same point. We would compete against each other which made it challenging because you could not easily predict what our competitors would do.

I am having fun “playing” with this simulation and all of its complexities. I know I’m not ready to go live yet but I am looking forward to it.

A few other points I wanted to make from this week. In Cohen’s book the concept of tracking customer purchases came up. I immediately thought of customer loyalty card programs. Stores like Big Y and Stop & Shop give you a card that will make you eligible to certain discounts in the store and they can then collect data based and what you purchase, when you purchase items, and many other bits of information. They can use this information to make informed decisions on sales, product selections, and much more.

 

Some people are bothered by these companies having and using all this information, I personally don’t mind it.

In the class discussion this week we talked briefly about the video gaming industry. I did not realize that when Microsoft introduced the Xbox they were making very little money off of it. They had a long term strategy that they would penetrate the existing market and later see profit. In the next year they will be releasing their third system which will reportedly cost around $500. To me that seems unreasonable but I know people who play their Xbox a little bit too much in my opinion that are preparing to purchase the system and then other games to go along with. It seems that Microsoft has executed there plan just how they had originally intended.

This week I enjoyed many of the education Portal videos. Most of them brought up interesting examples that I hadn’t thought about before. The examples of market analysis were particularly helpful. I find that these videos help cement in the information we cover over the week.

Week 3 - Student Blogs

This week we were also asked to comment of two other student’s blogs. I should have asked which aspects of the blog we should look at but it’s a little too late for that now. I tried to take a look at the blog as a whole and offer some critiques or constructive criticism. Being new to blogging I am not sure how far my opinion will go with some but that’s the beauty of blogging. I can put my opinion out there and you can chose to accept it or reject it.

First, I looked a Brian M’s blog. I liked his blog. He makes effective use of pictures which is always nice to break things up visually. I like that he added a section that told us a little about himself too. I think I will try to incorporate that in mine too. He also relates some of his posts back to his own personal interests. I’m trying to work on doing this more too. I tend to get off topic easily when I do this but practice makes perfect. His blog is informative but he also tries to have a little fun with it.

I have also enjoyed looking at Aleena’s blog. Her blog was in the blogging Hall of Fame for the first week and after looking at it I said to myself “oh, that’s what I should be doing.” Aleena uses great use of images to reinforce the points she is making. She doesn’t add a lot of personal aspects to it like Brian does but she still does approach it like a book report so it’s not bad to read. She keeps her posts to the point which I like. They are not too long but she gets her message across.

Week 3

This has been another week where I find myself full of new knowledge. In fact, I thought the reading I had done last weekend had been done in a week prior. Maybe it’s just all this heat, I can’t be sure. Anyway, Prof. Spotts asks us to add a couple things to our blogs this week in addition to our typical posts so I think I will start there.

First, I wanted to look at another student’s question they posted. This question came up in many postings this week, including my own.

‘According to Druker, “Don’t do the market research for something that is not yet on the market.” This statement is a confusing to me. How this works with innovation, which Druker previously said was a corner stone of business? How does one know what to create without market research? Especially if Druker also discredits expert opinions.’  – Megan M

This became a little more confusing because it seemed to contradict some of the videos we watched this week. Drucker also states that quantitative data should not replace a marketers instincts and their gut feeling. I think basically Drucker is saying that a marketer has to know what they are doing to make good decisions consistently. You cannot replace a marketer with a number crunching computer.

He does not say to discard market research altogether. I think some quantitative research can be helpful even for new products. Conducting a focus group that you show the new product to can give some great feedback to assist in the decision making process.

 

Reality testing is another form of testing that may be useful. We were given the example of the Chrysler Company making a prototype convertible and driving it around town to gauge the reaction the public has to the vehicle. This seemed to work well for them. It may not also be practical with every product but when possible it may be very valuable.

We were also given the example when IBM passed on the opportunity to enter the market of personal computers but they decided this new market was too small and was not worth the investment. The same opportunity was not passed by Apple and they saw great success. IBM relied too heavily on research compiled for a market with a product that did not yet exist. Apple on the other hand relied more on instincts and they had a strong feeling that this would be a hit.

 

This is also an example of how important it is to ask the correct question. If you ask the wrong question then you will get data to support a wrong answer. IBM asked how large the market for home computers is. They did not ask what a home computer can replace that is currently on the market. Eventually the computer replaced the type writer which had a large captive market that liked this new technology.

Week 2

Where to begin? I don’t know where exactly to start. I suppose I will start where it seems most of the questions are coming from, the confusion between sales and marketing. In Cohen’s book he even confesses that his own confusion led him to turn down a very good job opportunity as the vice president of marketing. It is very important to understand the difference in sales and marketing.

Drucker explained by saying that sales focuses on the needs of the seller and thus the need to convert a product into cash, while marketing focuses on the needs of the buyer and the need to satisfy the customer through the products produced. I think this is the best way to state it. Marketing is really trying to create a customer base and brand value. We began talking a little about branding and that is exactly how I think of marketing. You are creating your brand identity and protecting your identity in the marketplace.

I think a great example of this that is taking place today involves the New England Patriots. In case you are not familiar with the story the here is a quick overview. Aaron Hernandez, a fairly prominent young player on the Patriots, was part of a murder investigation for about a week before police took him into custody on charges relating to the same murder case. About two hours after he was arrested the Patriots released him for the team and began doing everything thing in there power to make it known that they had no idea about this side of Hernandez’s life and even their owner Robert Kraft went as far to say they were “duped” by Hernandez. In the week following they offered their fans two days in which they could bring back any Aaron Hernandez jersey and exchange it for any other player’s jersey at no cost.

The Patriots were actually losing money by doing this. They also were sending a clear message to their fans that this is not what their organization is all about. They do not want Hernandez and his actions associated with the team. They are protecting their brand as an organization that conducts itself as outstanding members of their community and society. As the sage continues, I have been impressed by the marketing efforts from the top of the organization to the bottom.

I also think of the difference between retailers like Macy’s and JCPenny. Rarely do I see any promotional materials for Macy’s stating the prices of items. However JCPenny regularly does the opposite.

JCPenny uses its advertising dollars to help increase sales. While Macy’s tries to promote their brand. In the last year they have had ads showing all the celebrities whose items they offer all in the store together.

They try to send the message that they have everything you could be looking for at Macy’s. But also they look like they are having a little funny while they are working. Macy’s is a place you will go and be treated like a friend would treat you, or at least that is how they are marketing themselves. During the holidays they run TV commercials displaying scenes from recognizable movies throughout the years where people are asked where they got an item and they respond “I got it at Macy’s” or other ways Macy’s has appeared in countless movies. Every year they also hold the iconic Macy’s Thanksgiving Day Parade.

They are making themselves a part of your holiday tradition and by doing so they are tying themselves to feelings of family togetherness and holiday cheer. I can’t imagine how much it costs Macy’s to do this each year but the brand value that is added by doing it is likely just as high. Macy’s also offers a special mailbox during the holidays for children to drop off their letters to Santa.

They also offer a free smart phone app to track your holiday cheer and add to the “Believe Meter” they have in all their stores. None of these actions bring in money directly. However, they add to the overall impression the brand leaves on families.

 

JCPenny is known for their door buster sales and coupons the day after thanksgiving. This is a day that has become viewed in a slightly negative light, especially recently and JCPenny is tied closely to it in customers minds.

The other tradition JCPenny has been known for over the years is their Christmas Catalog. I know I looked at these for countless hours and made lists tirelessly to show my parents EVERYTHING I wanted that year for Christmas.

Likely these catalogs have caused countless headaches for parents and similar amounts of heartaches for you children.

Marketing can help sales when done effectively. Macy’s is certainly a profitable company. But when sales is the focus it can be troublesome for the image of your brand.

Also this week we talked about the vision of an organization and their mission statement. We learned that you do not want to make your organizational vision too narrow. I immediately thought of Cornelius Vanderbilt. Vanderbilt made a great deal of his fortune by shipping goods and people via water ways. He had countless boats in his fleet. If in his visions he limited himself to travel by sea then he would have missed the business that he is best remembered for. Vanderbilt sold his fleet and invested everything into the emerging railroads. One of his greatest achievements was building the iconic Grand Central Station in New York City.

Vanderbilt would have been successful without the railroads. But by seeing himself as a transporter of goods and not a sea transportation company, he allowed himself to stay open to a great opportunity that made him a legendary businessman.

Also this week we began looking at our PharmaSim simulation. I was excited when I heard we were doing this. I used something similar while finishing my undergraduate degree. My team was fairly successful with the simulation but the biggest take away was how much your strategy really means to your success. Many groups in our class had difficulties because they were constantly changing their approach to the market. As I continue to practice and “play” with the simulation, it seems this is the case with this simulation too. I will explore more as the next few weeks come but so far it looks like your success is dependent largely on the strength of your strategy and your execution of that strategy.

This week has been full of information but it has all been useful. I am looking forward to the following weeks and especially eager to continue reading Cohens book on Drucker.

Drucker Chapter 3

In the third chapter the point was made that businesses have two functions, innovation and marketing.  By innovating, businesses stay current and fresh. Jack Welch, former CEO of GE, once said “innovation is a constant thing…If you do not have an innovative workforce who is excited to come into work every day, you are dying, waiting to wither away on the vine.” If businesses continue to do the same thing that made them successful in years past they will fail. The competition will have a chance to catch up and will learn from their mistakes. The innovative business will not only learn what to change to overtake their opponent, they will also change with the market as the demands of customers change.

Also in this chapter we learned how success can be evaluated internally. This is to say how profits are measured internally. In this case the example of a human resources department was used. The success of the department is dependent on the satisfaction of the customer. If a department is looking for new employees then they will be relying on the HR department to provide them what they need. They will likely want the best person for the job but they also may need to fill the position quickly. In this case the HR department needs to quickly identify the top candidates to bring in for an interview and not waste time on too many candidates. Assuming they do a good job, the department making the hire will be satisfied and this will add to the success of the HR department. Everyone in a company is involved in a business regardless of the area you operate in. everyone’s output must result in a profit, or return on investment. The profit is evaluated by the organization which your business supports.

Drucker wrote that the first question in marketing is “What does the other party want?” then we ask “what does it value?” After this we need to know what their goals are and what does it consider results? With these questions answered we can determine who the other party is and also which other parties we can target.

Drucker Chapter 2

In the second chapter we looked deeper into what Drucker thought the purpose business is. He did not like the fact that people thought there were different ethics to be followed in business and a person’s everyday life. He felt as though people should use the same set of ethics in everything they do. This will help a business be a positive influence on their community, their country, and the world. Drucker also said that a business must make profit but should not be looking to maximize their profits. In maximizing profits, a business tends to take advantage of a certain factor that does not need to be used as leverage. He also says that there is no proof that a company will become more prosperous when they increase profits. This does not necessarily save a failing company and it will not keep a successful company successful over the long term. Another point made was that when costs of doing business rise it does not always work to simply pass these costs onto the customer. This is an example of why raising prices does not always help a business. A restraint with rising food prices may raise the prices on their dishes while another chooses not to and the one with higher prices may begin to see a decrease in sales and eventually fail.

William Cohen, the Author of this book, even makes the point that the profit motive is not enough for professionals in making career decisions. He uses the example of a high school football team. The players on the team work very hard, give up free time, and are happy and without complaint while receiving no payment. This shows how many other factors are important to many individuals other than money. Many people pick a career that is less lucrative because they are happier doing it than doing something else that would get them a higher salary.

Profit is necessary for businesses however. Profits are like oxygen to a human body.  A certain amount is necessary for survival but too much can cause damage and possible be fatal to the human body or in the case of profits to a business.

Drucker wrote “The customer is the foundation of a business and keeps it in existence. He alone gives employment. To supply the wants and needs of a customer, society entrusts wealth-producing resources to the business enterprise.” He made this statement to reinforce the fact the businesses are in business to create customers not profits.

Drucker Chapter 1

To begin our course on marketing, we were introduced to Peter Drucker and his views on marketing. It does not take long to learn the Drucker feels very strongly that marketing is immensely important.  In the first chapter, we learned about the six eras of marketing. These eras were the craftsman and simple trade era, the production era, the selling era, the marketing era, the marketing company era, and finally the societal marketing era. After learning about each of these it is clear that we are not yet in the societal marketing era. In this era, companies are mindful of the impact their marketing efforts have on society and they take responsibility to be sure they are doing their part to improve society. Companies are not just looking to increase profits as high as possible and at any cost necessary but they are attempting to create customers rather than convince people to buy a product.

The modern form of marketing came about in 1650 in Japan. It was introduced by the Mitsui family who at the time were simple retailers but today the family has built the largest corporate conglomerate in Japan and one of the largest publically traded companies in the world. It took another 250 years before these same principles were put into action in the United States by Sears, Roebuck. It took until the 1920s in Europe for modern marketing to be used due to certain prejudices between classes of individuals. Drucker saw the first product in the United State to truly be marketed happen in the 1940s with the Cadillac. Drucker also saw that modern production methods intended to give a competitive advantage could be overcome with effective marketing. The Rolls-Royce Company denounced the advantages of Ford’s assembly line by offering individually machined automobiles that were promoted as “never wearing out”.

Drucker acknowledged the Era Theory but he did not necessarily agree with it. Drucker felt that innovations and innovators defined marketing, not just the era we found ourselves in. Forward-thinkers did not follow the crowd but they risks and tried new ideas. These people took advantage of the situations they were in and what they were given to work with to make the most of what they had. Drucker believed that a successful marketer did what they needed to in order to ethically provide society what it wanted and needed.