MKTG411

Marketing Strategy Comparisson

2005-06-26T11:16:00.000-05:00

The make-up assignment is to take your team company's marketing strategy (as reported by your final group work assignment) and compare the strategy with two other team company strategies. You should highlight the key differences and the rationale for those differences:

Our team (Toyota – Focus on Prius) concluded that Toyota’s marketing strategy for the future should be based around maintaining market dominance in hybrid automobiles. In the team’s opinion, the way this would be best achieved would be to increase the R&D budget for hybrid technology. In doing so, Toyota would be able to introduce hybrid engine options in all of its models. By mass producing hybrid vehicles, particularly if some of the production was done in the U.S., Toyota would be able to significantly cut its manufacturing costs, lower consumer prices (and with the demand for hybrids the way it is, massive market penetration, could reasonably be expected), and shift from a direct-marketing approach to dealer-based lot sales and a sharp increase in mass advertising forms, both focused and general (i.e. PR, print, TV, web). Toyota’s task would then be to highlight the advantages of hybrids such as greater performance, reliability, low-maintenance, environmental benefits like fuel economy and low emissions, and government financial incentives.

Wal-mart differs from Toyota’s Prius in that Wal-mart’s many products are guaranteed to follow Wal-mart’s EDLP strategy. The manufacturing infrastructure for Wal-mart is already in place, and the company currently contracts with over 65,000 suppliers. Considering Wal-mart’s annual revenues of about $220 billion, the $100 million it spends on marketing/advertising/PR seems to indicate that Wal-mart’s commitment to EDLP is a forn of self-advertisement. In fact, Wal-mart differs greatly from Toyota in terms of advertising. Toyota must convince consumers that they should spend a little more for a far superior product that has short and long-run environmental and economic benefits. Wal-mart, however, typically advertises to defend itself against negative allegations that it is not a “good corporate citizen.” Wal-mart does not focus its advertising on its EDLP. Rather, it must convince people that its consumers get such great deals, and within that structure of consumer benefits, there are short and long-run social detriments. Yet said detriments are justified by the prices and employment opportunities Wal-mart offers, both questionable issues in my opinion based on Wal-mart’s labor practices and poor quality items.

Dell and Toyota are relatively different, though they share some common marketing points. First, Dell offers custom ordering of its products. Until just recently, Toyota’s Prius could only be custom ordered, though the success of the pull strategy has caused Toyota to shift this policy. Dell, however, makes a great deal of its money off of large volumes of direct sales. Toyota is now doing the opposite. Toyota uses dealerships as intermediaries, and has thus far has a big problem with demand outstripping supply, such that high volume sales have not yet been possible (simply because the Prius and hybrid vehicles are relatively new to the market). Though Toyota shares this direct quote with Dell’s group, “customer-driven, listening to its customers to provide standards-based solutions and to drive its policy of open innovation and effective R&D.” Toyota’s pricing strategy of market penetration and optional-product pricing (feature add-ons) are shared with Dell, yet Dell practices customer segmented pricing, supplier update demands, and product bundle pricing, which Toyota, as its own supplier, is not concerned with. In terms of promotion, Dell’s focus is on low cost, customization, and fast delivery. Toyota, however, is more concerned with product superiority, marketing the advantages of the product, and creating enough supply to meet demand both now and in the future. Furthermore, whereas Dell focuses on a small share of a huge market, Toyota focuses on a huge share of a (currently) small market. Both companies are very socially conscious. Both focus on environmental sustainability as Dell has recently announced its aggressive aim of a 50% increase in global product recovery, making it the first company to publicly release a computer recycling goal,” and Toyota’s Prius puts out so few emissions that the Federal Government pays consumers up to $3500 in rebates for buying a Prius.

Big Brother is Watching You

2005-06-21T20:10:00.000-05:00

http://c0x2.de/lol/lol.html

Toyota Prius Group Team Post

2005-06-21T16:00:00.000-05:00

Toyota’s Prius is currently in the (rapid) growth stage of its PLC (Pg. 330). Though even as the auto hybrid leader, Toyota has been unable to satisfy consumer demand. Initially, despite Toyota’s strong presence in the U.S. and past marketing successes, the novelty of the Prius made consumer response somewhat unpredictable. Toyota decided not to follow its past strategy in distributing directly to dealer networks, but had dealers take orders from consumers and have the cars delivered directly to dealerships from a centralized inventory. Although they were unable to fulfill demand, Toyota still captured the largest share of the hybrid auto market. In fact, demand has been so high for the Prius, that many used models are being sold for more than the already modest dealer prices ($20,975 - $26,940). Toyota has taken note of demand and has been rapidly working to keep up with it.

Toyota’s initial order-based strategy allowed it to accumulate excellent data on geographic and demographic distribution of sales. With respect to the Prius, Toyota found that the average consumer is geographically diverse, 40+, environmentally friendly, has a desire to stretch the dollar, is committed to reducing oil dependency, well-educated, affluent, and helps to shape the buying decisions of America. For Toyota, that appeared to cover a lot of potentially profitable bases, so it has since placed a far greater focus on its hybrid initiatives.

To fulfill its high demand for hybrid vehicles and exert market dominance, Toyota is now considering manufacturing its hybrid vehicles in the United States and returning to dealership-based placement. Toyota will continue product development on the Prius and is working to take the lead in R&D on next generation hybrids, from compact sedans to SUVs, all with cleaner, faster, more relaible, and more efficient engines. With the introduction of hybrid vehicles, Toyota used a great deal of direct-marketing to what it believed to be the most likely consumers (economic, environmentally friendly, etc.). Now, however, it would be wise and likely for Toyota to shift its efforts as it intends for all of its vehicles to be hybrid-electric by 2012. In the future, Toyota should build upon its traditional advertising methods (commecrials, print ads, informative and purchasing websites,), increase PR, which currently plays a large part in promoting this environmentally friendly vehicle (particularly with celebrities and government agencies (with cash and tax-rebate incentives) helping with promotion), and personal selling (training salespeople). All of the aforementioned methods should be focused on reminding the consumers of the many benefits of owning a hybrid vehicle, from reliability and performance, to economic and environmental advantages. With more focused and increased sales and production efforts, Toyota will be able to pass along its cost savings to society. Whereas Toyota’s Lexus RX400h hybrid has a base MSRP of $10-15K more than the standard models, Toyota should seek to shrink that gap as production and sales increase, while still being able to charge a slight additional premium for the many hybrid advantages. Who knows… with the ever-increasing power of blogs in marketing, Toyota may also wish to sponsor a blog(s) to facilitate promotion.

For more information on specific subject areas, check out the following links:
Brandon: Marketing and Society
Dan: Product
Lisa: Promotion
Jason: Place
Lina: Price
Sheila: Segmentation

Study Guide

2005-06-20T20:10:00.000-05:00

Hey guys. I didn't get a great sense in class as to how much interest there was in a final study guide, but I figured since I got a decent response from the people that used the last one, I'd post another. The midterm covered a few very specific subject areas, so I figured I'd make this one a bit more (actually, considerably more) comprehensive. It covers all twenty chapters and is about thirty-six pages long. As with the last guide, you will need a PDF viewer to open it. The most common is Adobe Acrobat Reader (which can be downloaded for free from the Adobe website). The way I compiled this study guide was by reading the chapters in the book. I took all of the highlighted concepts and noted subconcepts and put them into the guide. When the definition required further elaboration in order for one to gain a better grasp of the concept, I provided elaboration and subpoints. To complete the guide, I took notes in class. Subjects that were covered in greater detail in class and on the PowerPoint slides than in the book were added under their respective sections in the study guide by chapter and definition (I usually made notes under the definition and sometimes added brief commentary). I hope this helps. If there are problems (i.e. typos, missing info, etc.) with the guide, please email me to let me know. Thanks.
Click here to download your copy of the study guide.

Blog Assignment Checklist

2005-06-20T14:32:00.000-05:00

Individual Blog Work

Intro Post 1
Intro Post 2
Topic Post 1
Topic Post 2
Topic Post 3
Topic Post 4 - Presentation Post
Reference Post 1
Reference Post 2
Team Post 1
Team Post 2

Weekly Blog Post Requirement - Satisfied
All comments (and there were many) on my blog responded to requirement - Satisfied

6+ Comments on Team/Fellow Topic Members' Blog Postings
Comment 1
Comment 2
Comment 3
Comment 4
Comment 5
Comment 6
Comment 7

Extra Credit
1.) 2%: Search Engine Listing
2.) 2%: Response Entry to Classmate's Posting

Update: Team Toyota

2005-06-18T22:48:00.000-05:00

Hey Team Toyota,

Don't forget to meet around 5:30ish in class on Monday. Also, I thought you guys might be interested in this, as well as what GM is doing (Great article by the way). For some unrelated off-beat news in blog format, I came across this. Also, if you have any free time, perhaps my favorite blog aside from Turd Thursday is Post Secret. It's definitely worth checking out.

Enlightened Marketing? (Topic Related Post 4: Presentation)

2005-06-18T14:34:00.000-05:00

I was watching Dateline last night, and I saw this report on Wal-Mart®, and due to the nature of the report, I figured Wal-Mart would be a perfect candidate for my presentation. The report was on Wal-Mart’s ethical practices overseas. As my topic is Marketing and Society, Wal-Mart’s ethical practices, or lack thereof, provide me with more than adequate information for my presentation. I did a little fishing around and came across an article called Wal-Mart's Pay Gap, by Sarah Anderson, on PoliticalAffairs.net, originally from the Institute for Policy Studies in Washington, DC. What I learned is that CEO compensation, as of April 15th of this year, showed that Wal-Mart CEO H. Lee Scott Jr. made $17,543,739 in total compensation last year. The average pay for leading U.S. CEOs is about $9.6 million. So Scott’s pay is 871 times greater than the average U.S. Wal-Mart worker, 50,000 times higher than Chinese Wal-Mart workers.

Not including about a quarter of Wal-Mart part-time workers, who are assumed to make considerably less, average Wal-Mart workers earn nine to ten dollars per hour… “37% lower than the national average wage of $15.35 for production and non-supervisory workers… As a result of Wal-Mart’s low wages, many employees of the world’s largest company must rely on government healthcare, food, housing and other aid. A study by Congressional Democratic staff estimated that Wal-Mart workers receive on average $2,103 per year in federal subsidies alone” (Anderson).

What I’ve just mentioned is limited to the U.S. alone, where, due to strict laws, Wal-Mart’s low wages are still within the legal realm. What is of more concern to me are Wal-Mart’s incredibly low international wages. According to the International Labor Rights Fund, among other sources, in Bangladesh and China, Wal-Mart subcontracted employees make about 17¢/hour, 46¢ in Indonesia, 23¢ in Nicaragua, and 53¢ in Swaziland.

The report I watched on Dateline showed working and living conditions primarily for workers in Bangladesh. According to the report, Wal-Mart claims to abide by all labor laws in the countries where it subcontracts and terminates relations with factories that do not. However, according to hidden camera reporting, as well as interviews with factory workers in Bangladesh, none of the factories in the report were abiding by national laws, as they are not really enforced. Furthermore, the camera crew went into the homes of some of the workers… makeshift huts where people often live with co-workers and prepare and eat food on the ground. In times of heavy rain flooding, they have no homes.

Anyhow, in some factories, the supervisors claimed to pay their workers $2/hour, but upon interviewing the workers, Dateline found that workers were paid around 12-17¢/hour, in accordance with the findings of the article. Other factories admitted outright that they paid their workers 17¢/hour, which, mind you is legal in Bangladesh. However, what is not legal is the fact that in the factories, employees often work 70-120 hours/week without any overtime pay (and sometimes deprived of standard pay to conceal, in documentation, their illegal overtime hours) to fulfill Wal-Mart quotas. Walmart's response to Dateline was that it had inspector checking factory audits, and would do so again to make sure that the factories were in compliance with Wal-Mart standards, yet the report showed that the audits were frequently lied on to conceal illegal policies. That was in the report and Wal-Mart still responded with that defense! If workers attempt to abide by the law and leave, or if they fall asleep at their posts, they may be physically abused or fired (also illegal). Unfortunately, as the people have no other means for survival, many of them living off of water and lentils, sometimes not eating (Chicken for dinner would cost about a week’s salary), they have no choice but to stay in their miserable jobs.

Wal-Mart has tremendous power in the global marketplace as the world’s largest company, so it can force its 68,000+ suppliers to cut costs or face elimination. “According to one company report on its monitoring program, ‘We [Wal-Mart] also know our customers and stakeholders expect our merchandise to be made in factories where workers are treated fairly and have superior working conditions.’ However, watchdog groups charge that there are rampant violations of worker rights in factories that produce goods for Wal-Mart shelves” (Anderson). In fact, a decent portion of the Dateline special was devoted to Wal-Mart responses to criticisms of illegal worker conditions. According to the story, one factory owner tried to increase his costs by about 1¢/unit to increase worker wages, as the increase would substantially improve their living conditions. Apparently, Wal-Mart came back and demanded that he lower his costs by 2¢/unit, or Wal-Mart would discontinue business with him. With no other choice, the owner did so, thereby effectively reducing worker wages. Unfortunately, in such-circumstances, Wal-Mart’s market dominance holds many factories hostage, and while Wal-Mart is repeatedly criticized for breaking up unions in the U.S. and firing union conspirators, in China, Wal-Mart workers “face an official ban on independent unions,” and “a study by the National Labor Committee found that workers in China's Guangdong Province who made toys for Wal-Mart toiled as much as 130 hours per week for wages averaging 16.5 cents per hour (below the minimum wage) and no health insurance” (Anderson). In addition to being underpaid, workers in many factories “alleged that doors were locked and they were not allowed to leave the garment factory until the Wal-Mart quota was filled” (Anderson).

Wal-Mart is frequently under great criticism. Among the many criticisms are its ethics policies and mistreatment of employees, notably in wages, its union busting tactics that leave its employees making about $2/hour less than average unionized workers, its nearly-unaffordable company health plan, the manner in which it sucks life out of mom-and-pop businesses, and the fact that it is the most sued private entity in the world, behind only the U.S. government.

In a response to criticisms stemming from Wal-Mart’s unethical practices, its CEO “claimed that the company’s profit margin per worker is too small to all them to pay workers more. This argument does not consider that higher wages in the pockets of Wal-Mart’s 1.3 million U.S. employees could have an enormous impact on national consumer spending, including spending at Wal-Mart” (Anderson). This is a response that comes from the head of a company with $10 billion dollars in annual profits, and a massive advertising and PR budget, millions of dollars of which are spent on suppressing the image of Wal-Mart as a corporate monster that exploits slave labor and puts competitors out of business.

According to Chapter 20 of Kotler & Armstrong’s Principles of Marketing 10th ed., Enlightened Marketing is defined as, “A marketing philosophy holding that a company’s marketing should support the best long-run performance of the marketing system” (K&A, 647) Enlightened Marketing is broken down into five principles (K&A, 648):

1. Consumer-Oriented Marketing: A principle of enlightened marketing that holds that the company should view and organize its marketing activities from the consumer’s point of view

2. Innovative Marketing: A principle of enlightened marketing that requires that a company seek real product and marketing improvements

3. Value Marketing: A principle of enlightened marketing that holds that a company should put most of its resources into value-building marketing investments

4. Sense-of-Mission Marketing: A principle of enlightened marketing that holds that a company should define its mission in broad social terms rather than narrow product terms

5. Societal Marketing: A principle of enlightened marketing that holds that a company should make marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests

After going through the elements of Enlightened Marketing, Principles of Marketing goes on to say that “92 percent of consumers said they believe it’s important for companies to be good corporate citizens. More than three-quarters responded that they would switch brands and retailers when price and quality are equal for a product associated with a good cause” (K&A, 649). Unfortunately, that’s where Wal-Mart has consumers trapped. Their slave-labor policies allow them to charge much lower prices than their competitors, while still making sizable overall profits. With such incredible buying power, as both the world’s largest superstore chain, as well as the world’s largest company, while Wal-Mart may be known “for the warm way it treats customers, it is equally well known for the cold, calculated way it wrings low prices from suppliers” (K&A, 443).

So, is Wal-Mart using Enlightened Marketing? Well, when is comes to consumer oriented marketing, yes and no. Most consumers do not support sweatshop labor, but as demonstrated by the survey, if it means lower prices, most seem to favor lower prices. Innovative marketing is not really an issue, simply because Wal-Mart either carries products made by other companies, or it subcontracts to have products made to a sufficient level of quality at low prices. With respect to value marketing, Wal-Mart does appear to provide value to its customers through its EDLP (everyday low price) strategy (though “Wal-Mart has been sued by dozens of small competitors charging that it lowered its prices in their specific areas to drive them out of business” (K&A, 390)), yet it does so at the expense of ethical treatment of many of its workers. In order to consider sense-of-mission” marketing, I had to look up Wal-Mart’s mission statement. Unfortunately, as much as I tried to find one online, there just didn’t appear to be a mission statement available to the public. Suspect. The closest thing I could find was a “vision statment,” that includes the following, “We are dedicated in recruiting rewarding, and retaining employees of good moral standing (9) by providing benefits for excellent performance, providing clean environments to work in, and by providing equal-opportunity for all individuals.” You’ve read what’s above. What do you think? If that’s part of Wal-Mart’s mission, then sure, they defined it in “social terms,” but their follow-through just doesn’t appear to be there. As far as societal marketing is concerned, Wal-Mart’s dedication to low prices definitely fulfills consumers’ wants and Wal-Mart’s requirements, but how about the long-run interests of consumers and society? Both are in question here. While consumers may continue to get low prices, will Wal-Mart be able to continue exploiting sweatshop labor without serious consequences? Sadly, the answer would seem to be “yes!” As the largest corporation in the world, Wal-Mart appears almost unstoppable. The only thing that seems to slow it down is when towns unite to protest Wal-Marts moving into their towns, which often just results in a Wal-Mart springing up not too far down the road and eventually assimilating itself into the area. In my opinion, Wal-Mart’s strategy is enlightened with respect to offering phenomenal consumer value in exchange for profit, but pretty unenlightened with respect to its monstrous ethics practices. Yet Wal-Mart appears to be satisfying consumers and dodging its many lawsuits well enough, and with approximately one out of every two-hundred-or-so employed Americans working for Wal-Mart, it doesn’t appear to show any signs of slowing any time soon.

Works Cited:
1.) Kotler, Philip. Principles of Marketing, 10th ed. Prentice Hall, 2004. New York.
2.) Wal-Mart Vision Statment
3.) Wal-Mart's Pay Gap
4.) Human Cost Behind Bargain Shopping

For more information on pending litigation against Wal-Mart, as well as info from Wal-Mart's perpective, check out Wal-Mart facts. You can also find Wal-Mart's full code of ethics there in PDF format. I read it. Comparing it to the Dateline report is almost comical.

Toyota Prius Individual Team Post: Marketing and Society

2005-06-14T21:58:00.000-05:00

So after flipping through Chapter 20 again on Marketing and Society, it appears as though I got the easy job of explaining how the concepts therein apply to the Toyota Prius. As you might have guessed, it's a no-brainer, so I'm just gonna' go down the list here. In a previous post of mine, I gave a brief rundown on Marketing and Society for the Prius, but now I'd like to go into a little more depth. Marketing and society is broken down into two sections: Social responsiblity and marketing ethics. If you take a look on my blog, I put up a post entitled Marketing and Society that gives a solid rundown on how individual consumers respond to marketing. Most consumers are concerned with excessive markups, deceptive practices on behalf of the firms, high-pressure selling, shoddy or unsafe products, planned obsolescence, etc. In this respect, the Prius has made doing my part of the team work a little more difficult in that no consumer complaints of those natures exist except for one issue with shoddy products which I will address a little later.

The real reason the Prius is not coming under fire is simply because it is such a great product. For a great deal of consumers, the draw is environmental friendliness. Well, according to this emissions table based on the very first Prius, Toyota really raises the bar. According to the Prius page on Toyota's website, the Prius has an "Advanced Technology Partial Zero Emission Vehicle (AT-PZEV)rating." Even for the non-environmentally-conscious consumer, the Prius' benefits can't be denied. From a marketing standpoint, "70% less greenhouse gas escaping into our environment" tends to look pretty good for Toyota no matter what. Criticisms in Kotler and Armstrong focus highly on impacts on society as a whole, for which the Prius appears to be a shining beacon of hope. The four primary concerns in the text are excessive materialism, too few social goods, cultural pollution, harming competition, and too much political power. To each of these, I offer a counter-argument from the Prius. The Prius is reasonably pricces at around $22,000 new, so for a car that hasn't yet really depreciated, I'd say materialism is not of major concern. With regard to social goods, harming competition, and political power, the Prius has encouraged other automakers to enter the underexploited hybrid vehicle market during the recent times of high gas prices. Ultimately, hybrid technology will hopefully greatly reduce U.S. dependency on oil. In fact, GM has already developed a hybrid truck used by the U.S. military. Other competitors include Ford and Honda (Apparently due to Toyota's greater marketshare most people don't realize that Honda's Insight is a better vehicle with better fuel economy).

I believe that environmentalism and environmental sustainability are pretty much self-explanatory in this case, but just in case, I should let you know that (and this covers cultural pollution too) according to Russ Auto Group's website the government offers incentives of up to $3500 for driving the Prius or an equivalent hybrid vehicle. The Prius has long-term environmental benefits, and as Toyota holds several of the development patents on certain aspects of hybrid technology, there is long-term profit sustainability. Right now, Toyota's primary concern for sustainability is more in parts (i.e. Aftermarket battery producers).

Toyota also appears to be adhering to the societal marketing concept of enlightened marketing whereby it supports its consumers' wants, its own requirements, long-run consumer interests, and long-run societal interests. Unfortunately (or not) for Toyota, the Prius is both a salutary and a desirable product simultaneously, but lately the latter has appeared to be the more prominent of the two categories. Demand for the Prius severely outstrips supply. The lowest current waitlist from a dealer in the U.S. is about two months, and that is only because Toyota has increased production (thereby lowering some of its own costs) to 100,000 cars. Though some people have recognized the Prius as being such a great car that it has marketed itself. In fact, people seem to want it so bad that they are willing to pay "private sellers and used car dealers $1,000 to $3,000 above the advertised price" for used ones. Yikes!

Until the end of last month, only one issue remained questionable for Toyota, and that is the recent ethics issue surrounding the Prius. Toyota has issued recalls on past models of the Prius for problems with the electric power steering gearbox and malfunctioning rear brake lights, but some Priuses were reported to be stalling and shutting down at highway speeds; clearly dangerous. Toyota investigated the problem and found that 23,900 2004 and 2005 Priuses had a problem with the car's complex software. Owners were sent a notice to bring their cars in for an hour software upgrade according to CNN Money. If Lisa's blog is true, Toyota's biggest concern now will be how to market to men.

Blog-Related Post 2: What? You Don't Trust The Company?

2005-06-14T20:11:00.000-05:00

Ethical or not? Yes, I am still on my Gretchen Morgenson kick, so I looked up one of her articles from this past Sunday entitled What? You Don't Trust the Company?. In the article, Morgenson describes a shady $150 million investment in Pathmark, a northeast supermarket chain, one of which happened to be one town over from me when I was growing up. Anyhow, according to Pathmark, last Thursday "83 percent of the company's shares were cast in support of the deal. The company said it would issue new shares in exchange for the investment." At first glance, the article gives the appearance that the investor, California-based Yucaipa, purchased the company for about $7 a share. Considering how Pathmark reported an operating loss of $251 million for the past year, Yucaipa's expertise might actually benefit investors, but there's a catch. While Yacuipa initially gets a 40% stake, it can excercise warrants to buy an additional 20%, giving it a controlling stake. According to Morgenson, "Corporate boards, when they are negotiating to sell a controlling interest in their companies, are obligated to try to secure the best value for shareholders. But 40 percent may not be viewed as a controlling interest, even though the deal allows for a 60 percent stake later." Well, something seems fishy here to me then. The article says that reported offers came in for as much as $8.75 a share to purchase the company, and speculation remains as to whether or not there were higher offers. For $1.75 a share more, you'd think investors might be a little pissed, huh? Maybe if they knew what was going on they would be. Investors were asked if they supported the deal for $7 a share, but although the $8.75 offer was made June 1, Pathmark did not disclose the information to investors until June 7, two days before the vote, in a regulatory filing no less. That means that many voters may have been potentially unaware of the higher bid. Considering Morgenson's article from last week that I referenced in my last post and Pathmark's massive losses, I suspect that the "sale" is designed to bolster the company, hide problem areas in the short-term, and benefit the top shareholders. If I had options in Pathmark, I would be excercising them and selling off my stock (At $8.99, up from $3.50 last fall and $4.48 prior to the Yucaipa announcement). I suspect trouble's afoot, and even if Yucaipa does rejuvenate Pathmark long-term, the stock is overly inflated in the short-term right now from the "sale."

Blog-Related Post 1: Merger Motives

2005-06-14T19:36:00.000-05:00

In my less-than-humble-opinion, I think America's news publications have degenerated into such garbage that The Daily Show can often be a better source of news than the Sunday paper. I still happen to enjoy The New Yorker, The Economist now and then, and, my guilty-pleasure, The New York Times (Though a lot of it is pretty slanted). Since I've been down in Philly, I've been reading more of the Times simply because it is easily accessed online through Bloglines and NYTimes.com. In doing so, I have come across an author who I fancy quite a bit by the name of Gretchen Morgenson. As such, I have been checking out her articles. She published one nine days ago called "What Are Mergers Good For?" Well, it seems I'm not the only one intrigued by her writing, because I found a great blog by Steve Hannaford here. What I learned the article and his commentary is essentially that mergers and acquisitions are often used to "mask deteriorating financial results... and reap outside executive pay." Lovely. So how does this fit into marketing and society you ask? Well, a huge part of marketing and society is ethical marketing, not only to the consumers, but also to the investors, and "the complexity of folding companies into one another makes it more difficult, whether by accident or design, for investors to fathom what's really going on." What mergers and acquisitions often do is show artificial increases in gross revenues while masking problem areas in net incomes. Whether or not the investors come out on top usually remains to be seen by post-merger performance of the core business and company as a whole, but investors are often un or underinformed. Furthermore, employees may suddenly and unexpectedly lose out. "James Kilts, the chief executive of Gillette Company, stands to make $165 million from merging that venerable Boston company with Cincinnati-based Procter & Gamble," though his benefit is done at an expense whereby "many current Gillette employees will lose their jobs." Understandably, jobs may be cut by a company to save money, but I don't see how that justifies puting $165 million dollars into one man's pockets at the cost of thousands of workers' livlihoods.

Nike's Supply Chain: Linked by the Hands of Five-Year-Olds Part II (Topic Related Post 3)

2005-06-14T17:18:00.000-05:00

For those of you who read my last post, you might be intrigued to know that according to Kotler and Armstrong's "Principles of Marketing" 10th ed., "92 percent of consumers said they believe it's important for companies to be good corporate citizens. More than three-quarters responded that they would switch brands and retailers when price and qulaity are equal for a product associated with a good cause" (K&A, 649). Why do I mention this you ask? My topic is Marketing and Society, which is covered in Chapter 20. I thought that Nike's exploitation of sweatshop labor in Southeast Asia was a perfect example. Chapter 20 spends a bit of time explaining the concept of "societal marketing," which is, "a principle of enlightened marketing that holds that a company should make marketing decisions by considering consumers' wants, the company's requirements, consumers' long-run interests, and society's long-run interests. According to K&A, it seems that Nike fails to satisfy three of these principles by using sweatshop labor. Consumers don't appear to want sweatshop labor, and I highly doubt that consumers or society have the long-run interest of perpetuating a cycle of said form of labor when Nike competitors such as New Balance can produce a shoe (In 2001, 75% U.S. made at a cost of $4/shoe made in 24 min. vs. $1.30 in China in 3 hours) under decent labor conditions, of equivalent or better quality, for competitive prices. While sweatshop labor does appear to satisfy Nike's requirements, the negative image of sweatshop exploitation has, and may continue to, hurt Nike's brand image. For more info on specific producers, you can check out this BusinessWeek article as a starting point, but it's a bit outdated, so if you are really interested, scan it for key points and expand your research from there. Though an even better website can be found here. For those of you who remember customerization from Chapter 3, Nike offers a custom "build your own shoe" program online, where users can have their names inscribed on the back of the shoe. The gentleman in the aforementioned article asked for the word "Sweatshop." Sad as his correspondence is, it's actually quite hilarious. I suggest you check it out.

Nike's Supply Chain: Linked by the Hands of Five-Year-Olds

2005-06-14T16:05:00.000-05:00

So I was reading a posting on Tammy's Blog about how, "To protect their brand equity, Nike has decided not to allow Sears stores to continue to carry their products." Well, Kotler and Armstrong's "Principles of Marketing" 10th ed. goes into a bit of detail on brand positioning, stating that "The strongest brands go beyond attribute or benefit positioning. They are positioned on strong beliefs and values" (K&A, 292).

Well, as an experiment on said "beliefs and values," how would you feel if I were to tell you that those Nike's in your closet or on your feet may have been made by the hands of a five-year-old Indonesian girl? Don't believe me? Check out this article. If Nike is concerned about its brand image, maybe it should stop using sweatshop labor. I don't think I can jusitfy dropping $100.00 on a pair that Nike had stitched together for a few cents by little underpaid hands. Instead, Nike is more concerned that its shoes will end up in K-Mart, recently acquired by Sears, and make the brand appear more "low-end." Perhaps Nike is right... I know five-year-olds have hands that can sew in much harder to reach places than mine and do a better job of it. However, I also have a conscience that allows me to sleep at night.

Want a Free iPod?

2005-06-08T16:10:00.000-05:00

Speaking of viral marketing... check out this free iPod site
. If you join this group with a valid email (and you make up a password), you can get a free iPod very easily. It actually works... I've had four friends get them already.

And so it begins...

2005-06-08T11:15:00.000-05:00

For those of you that have been keeping up with my blog, you may have noticed that I submitted a shirt design called "Well, do they?" to Threadless.com to be voted on and hopefully printed.

If I get enough high scores the shirt will be printed and sold from the site and I will win some prizes. Take a look at it here, and if you like it, sign up and give it a score. Thanks!

For all you derelicts out there...

2005-06-07T16:58:00.000-05:00

Just when you were thinking to yourself, "Damn, I'm gonna' fail that MKTG411 midterm," who came to the rescue? That's right, yours truly. So for all of you degenerates and reprobates out there that didn't do the readings, and for those of you that just need a quick-reference study aid, here it is... my Study Guide for chapters 1-12 of Kotler and Armstrong's 10th ed. Principles of Marketing textbook. Every highlighted definition in those chapters is included in this guide, as well as sub-topic notes, and in some cases, minor commentary and pertinent in-class information. Unfortunately, there are no pretty pictures in this guide, so I suggest you use it alongside the text and/or the class PowerPoint® slides. I have not yet reviewed this guide, so as comprehensive as it may be, it may still include a few typos. The file is in PDF format, so you will need a program with which to view it. Due to varying platforms, I suggest the most universal PDF reader, Acrobat, by Adobe. You may download it free. Feel free to leave comments with suggestions on how to improve upon this guide (i.e. typo corrections, more info), and let me know if the guide helps. If you have any further questions, comments, or concerns, feel free to email me. All of the book info was gleaned from: Kotler, Philip. Principles of Marketing, 10th ed. Prentice Hall, 2004. New York.

Do Birds Have Sex?

2005-06-02T22:59:00.000-05:00

Apparently I had entirely too much free time on my hands one day, as I asked myself, "Do bids have sex?" In retrospect, I realize that I must have been in a strange frame-of-mind at the time, so in order to justify my unhealthy thoughts, I decided that perhaps it would be best to funnel them into a creative outlet and profit off of them. As such, I made a shirt with a beautiful graphic and the aforementioned question

With my overabundance of free time that day, I looked up the answer. Obviously birds do mate, but they do so in a strange manner known as the "cloacal kiss." For more information on the peculiar process, I suggest you check out this detailed explanation. Anyhow, I suppose now is as good a time as any to break the news about one of my new companies. In about a month-and-a-half, my best friend/business partner (which, by the way, works out surprisingly well) and I will be selling of our first clothing company Varsity Drinking. We have liquidated everything but our online presence and turned distribution over to the profit-gouging clothing makers at Cafepress. For any interested parties, bidding for our designs and the domain name www.VarsityDrinking.com will be starting at $10,000 in about a month. Email me if you are interested. Then, in July, we will be launching our new site Bongo Tees. Right now, we have our old company's very first flash page up (very dated) as filler material on that site, but there should be a countdown to launch page up by Saturday, followed by the stoe itself. The site will feature faux vintage humor t-shirts, so be sure to check it out. We had a couple of shirt designs around that we didn't want to use for one reason or another, so I got the bright idea to turn them into cash. This is going to be out test-run shirt, so to speak. I submitted it to the Threadless submissions contest. So you can check out that page this week, go to my shirt design, and vote on it (Give it a 5 please if you do vote). The three shirts that get the most votes in a week are manufactured and sold by threadless, and they pay out $400 in cash and $100 in gift-certificate money. If this goes well, we are going to put up our other backshelf designs to raise more capital for Bongo Tees. By the way, don't vote for any of the IFC t-shirts, those are in a separate running. Anyway, if Threadless makes this shirt I suggest you buy one (P.S. $500 sells my rights, so I make no money off of it then). Not only can you say you know the guy that designed it, but it makes a great conversation piece and causes people to waste their time looking up useless information about how birds have sex. For further updates, check out Lane's site, Turd Thursday.

Yet another followup to my second class posting (Topic Related Post 2)

2005-05-30T22:47:00.001-05:00

In addition to my post on individual work on marketing and society, I am the marketing and society expert for Team Toyota.
For our group project, we have selected Toyota's hybrid car, Prius, as our focus. Naturally, when I learned we were doing this, I rejoiced. As the marketing and society expert in the group, the major focus of my section of the project is social responsibility. Hopefully this one will be a no brainer. Toyota was even kind enough to put a fuel cost savings calculator on their website. And I even found a loveley emissions table showing exactly how low the Prius' emissions actually are. In addition, my teammate Dan's blog says that to "encouragege the use of hybrid [vehicles]" the federal government offers a "tax deduction for new Prius buyers." Could the benefits therein be any more obvious? Consumers can purchase a Prius for about $21,000 brand new, a fact gleaned from InternetAutoGuide.com, which incidentally offers a great deal of insight into customer "value" opinions of the car beyond economic savings. The site also states that actual fuel consumption is a bit higher than the EPA's rating. Nonetheless, for a car with quite a bit of interior room, at least enough to seat five people and have trunk space and leg room leftover, delivering gas mileage better than my motorcycle did is quite impressive. In addition to preserving natural resources and producing far fewer emissions than standard internal combustion engine vehicles in its class, the Prius also delivers excellent economic benefits. As Dan stated, the government offers tax incentives, which, accoring to Russ Auto Group's website, can amount to about $3500. Add that to the fuel cost savings, and the consumer has saved quite a bit of money. The cost of ownership of a 2005 Prius in the period of 2005-2009 is also about $22,000, compared to the average cost of about $29,000 for other cars in its class. Now the only thing left for Toyota to resolve is the prevalent social stigma attached to an American male driving a little four-cylinder hatchback. Good luck R&D.

Chapter 20 Notes

2005-05-29T21:13:00.000-05:00

As a followup to my last post, click here to download my notes for chapter 20 in PDF format. The information is from the following source:

Kotler, Philip. Principles of Marketing, 9th ed. Prentice Hall, 2000. New York.

Marketing and Society (Topic Related Post 1)

2005-05-29T18:05:00.000-05:00

This is my second primary class posting for Marketing 411 . You will note that on my lefthand toolbar I have links to my team members' blogs, search engines for use in this class, and links to the blogs of the other members of the class responsible for information on marketing and society.

Marketing and Society is the topic that I will be covering for class, the primary concerns of which are social responsibility and marketing ethics. As such, I have included some background information on my subject below, primarily gleaned from chapter 20 of Kotler and Armstrong’s Principles of Marketing (9th ed.).

According to Kotler and Armstrong, “Consumers, consumer advocates, government agencies, and other critics have accused marketing of harming consumers through high prices, deceptive practices, high-pressure selling, shoddy or unsafe products, planned obsolescence, and poor service to disadvantaged consumers” (Kotler, 749-750). Critics respond to each of the concerns respectively by saying that with regard to:

Price:
1.) High costs of distribution tends to inflate prices marginally because intermediaries mark up the prices on their services. Resellers, in order to create customer convenience, accept the fees of said intermediaries to do work that would otherwise be the responsibility of manufacturers or customers themselves.
2.) High advertising and promotion costs, while they may increase prices, can be justified on two grounds. First, generic brands may be offered, but customers may still opt for a more expensive name brand based on the want of psychological benefit value. Second, if consumers expect to be informed about what is available on the market, they must reasonably expect manufacturers to spend a lot on advertising.

Deceptive Practices:
1.) Deceptive practices are typically broken down into the subcategories of pricing, promotion, and packaging. In the first case, consumers may be misled with such devices as comparing the actual price to a phony high retail list price. In the second case, consumers may be led to believe exaggerated things about the performance or value of a product. In the third case, the consumer may be led to believe that the contents of a package offers more than it actually does (i.e. potato chip bags that may be large but are mostly filled with air). Legislation has been put in place to protect consumers from such deception, but most firms avoid deception in the first place, simply because it can potentially hurt long run business.

High-Pressure Selling:
1.) If undue selling pressure is applied, consumers may “complain to Better Business Bureaus or state consumer protection agencies,” though in most cases, high-presure selling, while potentially effective in the short run, can hurt long run business (Kotler, 752).
Shoddy or Unsafe Products:
1.) Most manufacturers want to make good products so as not to come into conflicts with consumers or regulators, not to face potential liability suits, and to keep customer satisfaction from consumers and potentially referable clientele.

Planned Obsolescence:
1.) Planned obsolescence does not really exist beyond consumer driven obsolescence (i.e. fashion style changes are driven by high market demand). Most “planned obsolescence” today exists because of competitive market forces and technology at work, usually resulting in better products

Poor Service to Disadvantaged Consumers:
1.) Unfortunately, this criticism is often true because large discount chains often keep a practice of “redlining,” or economic discrimination. Hence, smaller suppliers operate in low income areas, creating higher prices for poorer people. The FTC (Federal trade commission) has “taken action against merchants who advertise false values, sell old merchandise as new, or charge too much for credit,” however, such measures cannot fully remedy all problems related to poor service to disadvantaged consumers (Kotler, 756).

In addition, businesses are primarily in the field of creating private goods, many of which create public costs (i.e. selling more cars may require more roads, parking, traffic control, police, pollution regulation, etc.). If producers are forced to bear the social cost burden, then said costs might be reflected in final prices. If prices were too high, consumers could move to less expensive competitors. If consumers are forced to bear the social costs, they might seek alternatives to products that include such costs at a high expense.

Large companies are also often criticized for wielding too much political power, though with many competing market forces, most large businesses are counterbalanced by competing forces with just as much power in opposition.

Based on the aforementioned concerns, ehtical and marketing responses have arisen in the forms of different marketing philosophies, ethical codes, environemtnal movements, and consumer movements. All of said responses are outlined in my notes on chapter 20, from which I have noted all of the key concepts. My notes on chapter 20 will be posted for download in PDF format shortly. Though in the meantime, several other valuable resources exist for information on marketing ethics and corporate social responsibility.

Items for Sale

2005-05-23T22:39:00.000-05:00

For anyone in the market, I have the following for sale:

1.) 1996 Audi A4 2.8 Quattro Sedan in Laser Red with black leather interior. I'd have to check (As I've been in Spain for about four months), but I think the car should have around 84K miles on it. It's a five speed, and it has just about every factory option available (No navigation) for that year. I have also put some custom parts into it including European projector bi-xenon headlamps, European tail lights, and an aftermarket sound system. For more information, please email me.

2.) 1994 BMW K75 Motorcycle (Round headlight model without fairing). I was driven off the road last summer on my bike, so it has been laid down on the left side at low speed. The bike has many extras and every available factory option including the highly sought-after heated hand grips. According to my shop's estimate (Which I believe I still have a written copy of), the bike needs approximately $1500 put into it. I simply don't have the time to do it, so I am selling the bike. K75s are now considered collector's items in the U.S., so when fixed, this bike could fetch around $4-6K easily for someone with the time to fix it. I can get more info and pictures to anyone interested. Just send me an email. If not sold, the bike will be listed elsewhere for sale within the next week or two.

Interesting...

2005-05-23T22:37:00.000-05:00

My one big pet peave is the word "interesting." Interesting is a meaningless substitutive adjective that should be eliminated from the English language. If something is "interesting," there is a reason why it is interesting, so why not just use an appropriate adjective instead? As far as I can tell, interesting is most often used when an individual recognizes that something intrinsically profound exists about a subject, but said individual knows neither what is profound about it, nor why it is profound... nor does he care to find out. He simply acknowledges that something is "interesting" about a subject. If you can... eliminate this dismissive word from your vocabulary and add other useless words in its place if you must (Suggestions: Uxorious, akimbo).

Business Update

2005-05-23T14:15:00.000-05:00

Archetype Partners has officially been shut down as of this morning. Check back here for updates on the launch date of the new sites.

MKTG411

2005-05-18T18:31:00.000-05:00

Hello,

My name is Brandon and this is my first entry on my blog:

A little bit about myself:

I was born in Norwalk, Connecticut, on November 4th, 1983, making me a Scorpio. Until May 13th, I had been living in Madrid, Spain. My permanent address is in Westport, Connecticut, approximately 2.5 hours northeast of Philadelphia. I am a student at Colgate University in Hamilton, NY, where I have two English majors and an Economics minor. I will be living in Philadelphia to take classes at Wharton until June 24th. Thus far, I have found my classes and professors to be phenomenal, but the rest of the school is a completely disorganized chaotic mess. When I return to Connecticut, I will be going on a northeast tour with my band Sabrosa, for which I play percussion and keys. You may visit our website, Sabrosa, but the final site will not be ready for about a month. For updates and general humor, I suggest you check out one of our lead-guitarist's websites, Turd Thursday. His name is Lane, he is my brother from another mother, my best friend, and a clever and hilarious individual. For an idea of where the band's website is headed, check out Lane's birthday invitation. Lane is also my business partner, and he and I have run online businesses together since 2002. Archetype partners was originally our parent company, and we specialized (and still do) in corporate branding and web design. However, I will be officially shutting down the website within the next few days. To see a sample of recent work, check out The Johnson Museum Website. Archetype is closing down to make way for our new parent company, which I will post when the site is ready. Currently, we are still running our first clothing company, Varsity Drinking, but as we would like to invest more heavily into our next project, that company and domain name will soon be up for sale. Our next project should be ready for launch sometime around the beginning of July, at which point I will post a weblink. Said "project" is my current occupation, and it consumes most of my time when I am not doing schoolwork. Unfortunately, I am unable to post more information at this time due to confidentiality concerns. In addition to my own companies, I have worked for the following: HWH Public Relations, HWH New Media, and McKenzie/Hubbell Creative Services, among others.

When I am not obsessively working, I really like to cook, play drums and guitar, write songs, and play sports. Unfortunately, my favorite sport, wrestling, is not something I can do anywhere, so I run a lot. Philadelphia's roads do not seem very conducive to running, which may hinder my attempts to train for the Chicago Marathon, so I may take up biking (On that note, if anyone has an old junker bike or can tell me where I might find a thrift store with one, you'd make my day). Biking would also be a good way for me to learn this city, as I have been back here a week. I'm still having culture shock because of people speaking English, no music in the streets, bad wine, and because people look at me like I'm nuts when I hold doors and ask them what floor they're going to so I can push the elevator button for them). I believe this entry should now sufficiently demonstrate my participation in this class. If you would honestly like to know anything more about me, feel free to email me, or check out my resum? which will be available online when the new parent company's website launches.