Carrots dressed as Sticks

As we all know that incentives play an extremely important role for businesses. A business is able to succeed when it has a strong and an effective value chain and a value delivery network. A value chain is when all the departments in a company work together in order to create value for the customers. Departments consist of employees and thus if employees are motivated only then the departments will perform satisfactorily. Hence, motivation plays a very crucial role. A good way to motivate the workers of a company is by dressing sticks as carrots. Due to this method, a company will be able to increase the efficiency and effectiveness of its employees. This is an extract from the article I read:

"At the beginning of the week, some groups of workers were told that they would receive a bonus of 80 yuan ($12) at the end of the week if they met a given production target. Other groups were told that they had “provisionally” been awarded the same bonus, also due at the end of the week, but that they would “lose” it if their productivity fell short of the same threshold. Objectively these are two ways of describing the same scheme. But under a theory of loss aversion, the second way of presenting the bonus should work better. Workers would think of the provisional bonus as theirs, and work harder to prevent it from being taken away".

Guys, do check out how this method is better than other ways to motivate the workers of an organization and do give feedback.

http://www.economist.com/businessfinance/displayStory.cfm?story_id=15271260

Business Expectations

Guys, we all know that every business is affected by the micro and the macro environment. We also know that the macro-environment includes the economic environment. Business expectations affect the economy profoundly. If business owners think that the future is bright for the economy, they will invest more in order to reap the gains of the future. This increase in the current investment automatically improves the economy. On the other hand, if the business owners think that the future is gloomy, they will reduce their current investments which will automatically affect the economy adversely and will create those gloomy conditions predicted by thr business owners.

Nowadays, in America expectations for the future have become quite positive which will lead to an improvement in the economy. Thus, expectations is an extremely powerful force in an economy. Kraft’s agreed £11.9 billion ($19.7 billion) bid for Cadbury, thrashed out in the early hours of January 19th may therefore mark the start of a trend which may lead to the improvement of the global economy. Guys, check out this article on how these positive expectations will affect the American economy in the future.

http://www.economist.com/businessfinance/displayStory.cfm?story_id=15323694

Society or the Customer in Societal Marketing

Guys, there are some companies which think that by portraying themselves to the consumers as being socially responsible, these companies will be able to attract more customers. In societal marketing, there are three aspects which should be considered. Those three aspects are the customers, the company and the society. If the company will only focus on the society and end up ignoring the needs and wants of the consumers, it will sign its own death warrant. This is an extract of the article I read:

"Here's an example: I recently discovered a nice Spanish Tempranillo wine at Trader Joe's. It's made by Albero, it's organic and it's only $6 a bottle. If Albero has slapped an organic premium on the bottle--selling it, say, for $15--I may never have tried it. And if it wasn't organic, I probably wouldn't be a raving fan. But because it's cheap, delicious and organic, Albero can consider me its best customer".

Guys, check out this article and do give feedback.

http://www.forbes.com/2010/01/14/social-responsibility-market-research-entrepreneurs-sales-marketing-helgesen.html?boxes=entrepreneurschannelinentre

The New Definition of a Luxury Car

We know that those firms which differentiate their products extensively, they are able to charge a premium price for their products. For example, luxury car makers have been able to differentiate their cars on the basis of performance, extra features or room in the car. However, times have changed. Nowadays, car makers are charging premium prices for their luxury cars on the basis of their cars being climate friendly. Car makers have realized that customer centered product development entails that you produce what the customer wants. So, if the customer cares about the climate and is prepared to pay a high price for such a car, then so be it. This is an extract from the article I read:

"Here's what I mean: We have a couple of new car companies, Tesla and Fisker, making expensive electric cars (actually Fisker still is getting ready to produce). The Tesla is a small sports car and sells for $120,000; the Fisker is to go for around $80,000. Those are luxury car prices".

Guys, check out this article as to how the definition of a luxury car has changed and do give feedback.

http://www.forbes.com/2009/12/17/luxury-cars-green-business-autos-flint.html

How the recession has changed U.S. Consumer Behavior?

Guys, bad times are definitely problematic but they teach people many useful and important lessons which they may never would have learnt in normal times. All of us know that the American economy has been in a recession for the past couple of years. This recession has been extremely damaging for the American economy, but this same recession taught American consumers a useful lesson. This is an extract from the article which I read:

"McKinsey research found that, in any given category, an average of 18 percent of consumer-packaged-goods consumers bought lower-priced brands in the past two years. Of the consumers who switched to cheaper products, 46 percent said they performed better than expected, and the large majority of these consumers said the performance of such products was much better than expected. As a result, 34 percent of the switchers said they no longer preferred higher-priced products, and an additional 41 percent said that while they preferred the premium brand, it “was not worth the money" ".

The important thing is that American consumers now believe that even times change, they won't waste their money on expensive products because they are not worth it. So, guys check out this complete article as to how the economic environment can affect the consumer buyer behavior.

https://www.mckinseyquarterly.com/Operations/Product_Development/How_the_recession_has_changed_US_consumer_behavior_2477

Successful New Product Development

Guys, new product development is extremely important for those firms who have an image of innovation in the minds of consumers. Many firms try to introduce new products but only some of those products end up being successful. There are three things which a company should keep in mind when developing a new product which will allow the company to win the race in new product development.

1. Keep it Focused: The company should clearly know what it want to achieve through the introduction of the new product. As it is written in the seven habits book, the company should be aware of the end of what it is trying to achieve. If the company can clearly envision its product's end, it would really help the company to anticipate any future problems.

2. Nurture a Project Culture: The company should encourage a project culture in the company. Due to this culture, the different departments will be able to co-ordinate with each other more effectively and thus they will be able to introduce a successful product. Guys, we should all appreciate that sir manaan tried to create this project culture in us through the project assignment he gave us.

3. Talk to the Customer: Another important factor is which we studied throughout our marketing course. The company should constantly remain in contact with the customer. This will allow the company to understand the needs and wants of the customer which will allow the company to indulge in customer centered new product development.

Guys, check out this article on how to ensure that your new product development is a success and do give feedback.

https://www.mckinseyquarterly.com/Operations/Product_Development/The_path_to_successful_new_products_2489?gp=1

Nokia and the Problems at its Door

As we all know that there are three different approaches to marketing. They are entrepreneurial, formulated and intrepreneurial marketing. Entrepreneurial marketing is when a new business starts up and starts to cater to the needs and wants of consumers. A lot of creativity and innovation is present in companies practising entrepreneurial marketing. For example, Nokia anticipated the shift to software and services much earlier than other handset-makers. It launched Ovi in 2007, almost a year before Apple opened its highly successful App Store. A few months later, Nokia bought Navteq, a maker of digital maps, for a whopping €5.7 billion (then $8.1 billion), to be able to offer better location-based services. Shortly thereafter, Nokia launched Comes With Music, an innovative pairing of a handset with a digital-music subscription.

However, after establishing themselves, businesses indulge in formulated marketing which is much too formal and creativity may take the back seat in such a marketing. Thus, due to a lack of creativity and contact with customers, the business may suffer. For example, the first version of Nokia's smart-phone, called the N97, was a let-down. It has as many bells and whistles as a Swiss army knife, says Carolina Milanesi of Gartner, a market-research firm, but its software, based on Symbian, makes them almost impossible to use. “It is like having a Ferrari body with a Fiat Cinquecento engine inside,” she says.

All this proves that Nokia will have to focus again on creativity and a passion for solving consumer problems. If Nokia does this then it will practice intrepreneurial marketing. Last February Nokia’s management kicked off what is internally known as a “transformation project” to address all these concerns. “We needed to move faster. We needed to improve our execution. And we needed a tighter coupling of devices and services,” explains Mary McDowell, Nokia’s chief strategist. The firm has since introduced a simpler internal structure, cut its smart-phone portfolio by half, ditched weaker services and begun to increase Ovi’s appeal to developers by allowing them to integrate Nokia’s services into their own applications. While giving Symbian a makeover it is also pushing a new operating system, called Maemo, for the grandest, computer-like smart-phones.

Guys, I tried to explain the different approaches to marketing strategy by using the example of Nokia. I included some extracts from the article I read about Nokia. Guys, check out the entire article and do give feedback.

http://www.economist.com/businessfinance/displayStory.cfm?story_id=15213843

Porter's Five Forces

Michael Porter's five forces are an extremely good measure of evaluating the structural attractiveness of a market segment. Competitive rivalry within an industry is one of the forces. For example, Gillette Mach 3 Turbo does not faces the type of strong competition which other products may face in other industries. This may be due to the fact that its brand image is far more powerful compared to its competitors. Gillette's differentiation strategy has allowed it to maintain its competitive advantage. For example, recently Gillette has introduced the Gillette Fusion brand which has further cemented Gillette's reputation of being a true differentiator.

Gillette's ability to charge a fairly high price for Mach 3 Turbo clearly indicates that its customers does not have that amount of bargaining power which they may have in other industries. The recent hike in sugar prices also shows that customer bargaining power is extremely low in Pakistan. If this sugar cartel would have known that the consumers may stop buying their sugar, they would not had indulged in such an activity. Furthermore, this price hike also shows that this sugar cartel has no threat of substitute products. If they knew that consumers will start buying alternative types of sweeteners, again they will never increase the price of their product.

Another force to be reckoned is that of the threat of new entrants. There are some industries where a single or a couple of large companies have emerged which are charging high prices and still they are not providing satisfactory service to its customers. This may happen due to a massive initial investment required to enter that industry. KESC (Karachi Electric Supply Company) is an example of such a company. Any new entrant will have to install all that infrastructure which is essential for an electric company but which is extremely expensive.

There are some industries where the bargaining power of suppliers is quite strong. For example, the textile mills are a constant victim of this force. When yarn producers demand high prices just because they are protected by the government from foriegn yarn producers, textile mills have to pay that price in order to meet their export orders, otherwise risk maligning their reputation in the foriegn markets. Guys, check out this information on Porter's Five Forces and do give feedback.

http://en.wikipedia.org/wiki/Porter_five_forces_analysis

Economic Environment

As we all know that economic environment affects a business profoundly. If there is a recession in the economy, the demand for luxury goods falls. However, if the economy is going through a boom, the demand for durable and luxury goods is quite strong. 2009 proved to be an extremely tough year for the global economy. It was the most severe depression for Britain after the Great Depression. However, it is being said that 2010 will be a good year for Britain's economy. Now is the opportunity for the businesses of Britain to decide their course for the future. As Britain's economy will improve in 2010, demand for durable goods may also increase. Thus, economic environment is an extremely important factor in every business' macro environment. Check out this article about Britain's economy in 2010 and do give feedback.

http://www.economist.com/world/britain/displayStory.cfm?story_id=15214018

Macro-environment: Government intervention

We all know that every company is affected by all those societal forces which affect the company's ability to serve its customers. Government is also an important part of this macro-environment. The best example of how a government's role can affect the businesses of a country positively is that of the American government. We all saw when the big insurance companies and banks started to fail in America, how the American government bailed out those companies through its massive bailout packages. Thus, governments can play a major stabilizing role for the businesses of every country. Guys, check out this article about how the American governments treat its bankrupt companies and how this treatment has helped the American economy over the years.

http://www.economist.com/businessfinance/displayStory.cfm?story_id=15211818

Co-branding

As we all know that co-branding is when two established companies decide to produce a new product as a joint venture. Both of their established brands prove to give a boost to the new product. For example, recently Microsoft Corp Chief Executive Steve Ballmer unveiled a new Hewlett-Packard Co tablet computer. Microsoft, the world's largest software maker, and HP, the top personal computer maker, are the latest companies to eye tablets that bridge the gap between laptops and smartphones. Guys, check out this joint venture and do give feedback.

http://www.reuters.com/article/idUSTRE6054LT20100107?type=technologyNews

Taglines

We were discussing this concept in the class the other day. As Omer Farooq mentions in his post that taglines are phrases which communicate to the consumers something about the product. I completely agree with this definition. Furthermore, I also think that taglines do not necessarily describe an attribute about the product which is beneficial for the consumers. The tagline can be a phrase used to catch the attention of the consumers. For example, in Mirinda ads the tagline "Orange Dekha To Moun Bola Mirinda" does not say anything which seems to be beneficial for the consumer. The ad itself and the tagline attracts the attention of the consumers. So, taglines do not have to communicate a benefit to the consumers about the product. What do you guys think?

Political Environment and its impact on businesses

Every business is affected by its micro and macro-environments. The macro-environment of a business includes all those societal forces which affect the micro-environment of the business for example the economic and the political environment. In the political environment, a government can pass some rules and regulations which may affect a business profoundly. For example, recently Ottawa has shot down a ruling by Canada's telecoms regulator, opening the door for a fourth national mobile-phone operator to roll out its service in Canada. This decision will increase competition in the telecom sector and it may adversely affect the structural attractiveness of the sector. Check out this article relating to this move by Canada and do give feedback.

http://viewswire.eiu.com/index.asp?layout=ib3Article&article_id=865078071&pubtypeid=1162462501&country_id=1490000149&fs=true&rf=0

Economic Situation and Consumer Spending

Many factors affect the consumer buying behavior such as the cultural, social, personal and psychological factors. In personal factors, the economic situation of the country holds great importance in the world of today. If there is a boom going on, people spend a lot. However, if there is a recession, people may cut back on their spending as it is happening this Christmas in America. American consumers are looking out for good bargains and they are planning their shopping budgets more than ever before because of the recession in America. American businesses have also responded to the price sensitiveness of the consumers by cutting their prices and by offering good bargains to the consumers. Thus, in the long run only those businesses will prosper which will satisfy the needs and wants of the consumers. Guys, check out this article about Christmas sales in America and do give feedback.

http://www.forbes.com/2009/12/16/holiday-season-shopping-economics-opinions-contributors-john-zogby.html?partner=contextstory

Department stores decide to take on the Discount stores

As we all know that department stores are those which have a wide product line and each product line is operated like a different department. However, in recent years, these department store have been hit hard by the discount stores which offer merchandise at lower prices. Now, the department stores have finally come up with a strategy in order to counter the threat of the discount stores. After Christmas, these department stores like Macy's and JC Penney are going to start a promotion campaign in which they will offer big discounts in order to increase their sales and their market share too. Check out this article about how will these department stores will implement their strategy and do give feedback.

http://www.forbes.com/2009/12/17/after-christmas-deals-business-retail-shopping.html?partner=popstories

Partners which enhance your competitive advantage

Every business tries to capture as many customers it can. It can do this providing the customer with a greater value which may be in the form of lower prices or higher quality of the product etc. Similarly, in variety seeking buying behavior, businesses also try to persuade the consumer to try a new product. If the product is found suitable to the consumer, he/she may adopt the product. This is also the case with business to business marketers. Businesses selling goods or services to other businesses may also try to convince their customers that they are offering the better deal compared to their customers. Businesses may also choose those partners which may enhance the competitive advantage of the business. For example, there are news coming in the media that Japan Airlines Corp. is likely to choose Delta Air Lines as its overseas partner, ending its ties with American Airline and the Oneworld alliance group. Japan Airlines, Asia's largest airline by revenue, has decided that moving to the Delta Airlines would come with more benefits for its restructuring and future growth prospects. In short, in order to create the maximum value for their customers, businesses partner with those businesses which may allow them to satisfy the wants of their customers in a better compared to their competitors. Guys, check out this article about Japan Airlines and do give feedback.

http://www.forbes.com/feeds/reuters/2009/12/18/2009-12-18T085630Z_01_TOE5BH08D_RTRIDST_0_JAL-UPDATE-1.html

Geo-Demographic Segmentation

Marketers can segment consumer markets by a method called geo-demographic segmentation. In this method, the marketer divides the market firstly geographically and then the marketer divides the different geographic regions on the basis of demographic variables such as income. American businesses can use this method to identify new market segments for their products especially the producers of those products which are bought by high income consumers. Recently, American cities like El Paso, Bakersfield, Omaha and various other low profile cities have experienced an increase in incomes of their citizens. Thus, American businesses have this opportunity to set up their operations in these cities to take advantage of the increasing wealth in these cities. Guys, check out this article about this new trend in America and do give feedback.

http://www.forbes.com/2009/12/15/income-cities-rich-lifestyle-real-estate-salary-unemployment.html

Product bundle pricing and unfair competition

In product bundle pricing, a business combines two or more products and then sells it at a lower price. This strategy may allow the company to dispose those products which are not selling well. However, sometimes this same product bundle pricing may be seen by the government competition agencies as being unfair competition for the other competitors. For example, recently the European Commission decided to go after Microsoft for bundling its web browser with its operating system. In short, product bundle pricing may be sometimes considered illegal by the government. Check out this article about technology firms and anti-trust and do give feedback.

http://www.economist.com/businessfinance/displayStory.cfm?story_id=15127168

Delay in new product development process

When a company wants to introduce a new product into the market, it has to start its new product development process. The new product development process can be of three types. These three types are customer-centered, team-based and systematic new product development. One good point about the team based new product development over the systematic new product development is that it may develop the new product in a short period of time. The systematic new product development process may take more time which may harm the product's position in the market. Two good examples are Boeing and Airbus. Both these companies' planes finally took to the air more than two years late and far over budget. Moreover, both were developed in unnecessarily complicated ways, even though big aviation projects are difficult enough without taking on further risks. Guys, check out this article about both these companies and do give feedback.

http://www.economist.com/businessfinance/displayStory.cfm?story_id=15127526

How to revive personal brand names?

As we all know that brand equity is extremely important nowadays. Personal brand names are quite popular such as the personal brands like Warren Buffet and Oprah Winfrey. Businesses pay millions of dollars to associate their products with such personalities in order to promote their products. As a result, such personalities or opinion leaders also indulge in person marketing in order to improve their image in the eyes of people. However, sometimes such personalities and their personal brand names may suffer due to some bad publicity for example the recent news of Tiger Woods' confession to marital infidelities. This news damaged Tiger's brand immensely and the golfer and his family will suffer a heavy financial price in addition to the personal cost of his alleged misbehaviour: Gatorade, Gillette and Nike are at least temporarily suspending deals that, with prize money, had made him the first athlete to become a billionaire, according to Forbes magazine. So, how can personalities repair all this damage done to their brand names? Check out this article relating to how can Tiger Woods repair the damage done to his brand name and do give feedback.

http://www.economist.com/businessfinance/displayStory.cfm?story_id=15108526