Week 11 Blog Post

Final Blog Post: Convincing Coaches that the Key to Success is...Marketing?

We have finally made it to the conclusion of the course, and our last posts are intended to take a look at marketing from a "macro" perspective.  This might be a stretch, and if any coaches ever come across this, they may come for my head, but I am going to try my best to tie this in to my profession as a college football coach, and wrap up my semester long attempt at the relationship between college football and marketing.  My final post will attempt to educate my colleagues on the broader picture of marketing, that marketing is not just about advertising, sales, and the 4 Ps, but marketing is more than that.  In fact, it is the main component to all businesses, including the success of all college football programs.

As in many of my posts, when looking at this case, the Western New England University Varsity Football Program will serve as the business, and the players and prospects will serve as the customers and potential customers, respectively.

Preseason camp is approaching in just over a month, and soon all the coaches will be arriving on campus, about a week before the players arrive, to begin preparations for pre-season camp as a staff.  Undoubtedly, as we go through our team goals, the head coach will proclaim, in some form or another, "the key to our success this program's success is determined by the number of wins and losses."  Having just recently taken marketing management, I will interrupt him and say, "No coach, the key to this year's success is dependent  on how well we market the program."  This is when the rest of the staff looks at me like I have 3 heads and the head coach tells me to leave and never return.

This is when I enlighten them of my madness:

The key to any business, including Division III Football, is dependent on 3 basic principles:

1. The purpose of a business is to create a customer
- The customer is the foundation of a business and keeps it in existence.
2. The business has two - and only two - basic functions: marketing and innovation.  Marketing and innovation produce results, all the rest are costs.
3. [Marketing] encompasses the entire business.  It is the whole business as seen from the point of view of its final result, that is, from the customer's point of view.

I would remind the staff that the purpose of the program is not the number of wins, but that certainly helps with marketing our program.  The purpose of WNE Football is to create customers, that is, to recruit players that eventually decide to deposit and play football at Western New England University.  I would argue that the players are the foundation of our program's success, and that they are the ones who ultimately generate the wins and the losses.

Some of the coaches might actually agree that our players are ultimately the ones who determine the outcome of the game, they may argue that they are the ones responsible for it, but ultimately, they are the ones executing the schemes, so they may be on board with what I am saying up to this point.

My next challenge will be to convince them that the purpose of our program has two, and only two, basic functions: marketing and innovation.  As employees and stakeholders of the program, it is our responsibility to market the program to our customers and our prospective customers, get our name out there, relay the message that we are the perfect program for them and the benefits of being a Golden Bear.  In my past posts, I have discussed the ways in which we do that, which is not important at this time, all that is important is convincing my fellow coaches that marketing is key to our success at this time.  The challenge will be to convince them that innovation is the only other function of our program. I would tell them that it is our job to be innovators in every aspect of our program: our schemes, our practices, uniforms, game-day setting, study halls, off-season programs, everything!  It is our job to be innovators, to find ways to set our programs apart from others and get quality players to attend our institution.  That is the key to wins and losses.

A few more coaches might be following along at this point, but our head coach will most definitely still have a scowl on his face, so it will be important that I really bring home my last key principle.  Marketing encompasses our entire program.  It is the whole program as seen from the point of view of its final result, that is, from the customer's point of view.  Ultimately, I will challenge the staff to think about how our players and prospects view Western New England Football.  Is it the program they want to be at?  Is it the best program in the Northeast?  Is it where they want to spend all 4 (or 5) years of their college career?  How do our players view our football program, and do more players want to be a part of it?  This, ultimately, comes from how the program is run and what the players get out of it.  Are wins and losses a part of this?  Undoubtedly.  But wins and championships and not the purpose of a program.  Instead, they are a utility, a marketing tool to keep the program running at a successful rate.

Now, will my head coach be on board with me at this time?  We shall see come August...

Week 10 Blog Post

Pharmasim Impressions and Observations

Since much of our time lately has been spent working on and discussing our Pharmasim marketing management projects, this week's blog will be entirely devoted to that.  The Pharmasim management process requires a much more in-depth analysis in which it first appears.  When I first introduced myself with the program and began exploring it early in the semester, it seemed pretty self explanatory.  While all the information is in the program, you have to make sure that you purchase all the reports you need to make your future decisions.  Again, all the information is there, but your task is to find what you are looking for, decipher it, and organize it in such a way that you can effectively learn from past decisions, interpret what the competition is doing/pursuing, and analyze consumer behaviors.  I have found it essential to organize all the information in Pharmasim in such a way that you can easily find it and make sense of it.  This technique and style may vary from person to person.

That being said, the situation analysis was not only a major tool to create our marketing plan, but to understand Allround's position in the market.  The tasks in the situation analysis really forced you to dive into Pharmasim and pull out the essential information to analyze the market and help make decisions moving forward.  Just as Drucker said, you cannot predict the future, but you can look at past data to help shape the future.  As mentioned earlier, it is critical to analyze your past decisions, competitors, and consumers when developing a marketing plan, and the situation analysis did just that.

Working together in a team has made the project much more manageable, but I believe a much better result would come from larger teams.  The more insights and analyses would make for a better perspective of the market place, and more eyes could find more opportunities and threats within the market.  Out Pharmasim team only has two team members, and our key issues and goals from our situation analysis were essentially identical.  While it seemed obvious what our issues were, it does not mean that we chose to attack the correct things moving forward.  A few more sets of eyes could give more perspective and help find other avenues to pursue if necessary.

The most important decision our team has made thus far deals with our pricing strategy.  As we discussed in class, prices are elastic, and net income is not always related to unit sales.  The challenge for our team was to find that "ideal price".  For some reason, we felt as though we needed to drop the price of Allround during Period 3 to increase sales.  The plan worked for increasing unit sales, but it negatively affected manufacturer's sales and net income.  Our goal and challenge moving forward was to find the right price for Allround that would optimize net income, and therefore implement a premium pricing strategy.  We did so during Period 4, and saw much improved results, allowing us to raise our capacity and open up a new plant.  We then continued to raise the price but watched net income fall again, so we realized we needed to stick closer to Period 4's pricing strategy, and move forward keeping it in-line with the rate of inflation.

Two incidents in which I found most interesting were the social media and increasing awareness of Allround amongst physicians and pharmacists.  I found the social media incident interesting because it is has rapidly become such a huge aspect to marketing now, and throughout the periods, issues seem to arise throughout, making it important to always keep a handle on your social media relations.  The incident in which you had multiple options to raise awareness of Allround amongst physicians and pharmacists intrigues me as well because it was one of our goals for Periods 4-7 to have physicians and pharmacists recommend Alround more than any other product.  We decided on the most expensive option, the clinical trials to help prove to physicians and pharmacists that it was the most effective product on the market.  For some reason, this did not prove effective, and a waste of funds.  I am curious as to the most effective choice of raising recommendations from the physician and pharmacists in Pharmasim, as we still feel it is an important component to effectively marketing Allround

Week 9 Blog Post

Before hopping into the required prompts for this week's blog post, I want to express my disappointment that we were not asked to speak about performance metrics in our personal work settings.  I was going to brag and boast that college football programs have it the easiest when it comes to metrics in the sense that we get immediate feedback regarding performance in the form of game statistics, both internally and externally.  By the Monday following a Saturday game, we know how well we performed statistically compared to competitors within our conference and on the national scale.  Also, specific corporations (teams) focus on specific metrics for their dashboard.  For example, team built around their ability to control the clock will look more at time of possession, while a spread offense built around throwing the football will look more closely at passing efficiency.

Just wanted to touch on that briefly, now onto our required topics.

Managing the Marketing Metrics Portfolio: A Second Look

This week we were asked to take another look at the article Managing the Marketing Metrics Portfolio, specifically how it applies to Pharmasim.  As mentioned in the article, I think one of the most important steps to managing your metrics portfolio is by first understanding your business model.  This may seem obvious, but if you lose sight of your served market, you may be looking at the wrong metrics.  When it comes to our Pharmisim cases, we must define who are customers are, what do/will they want, who are our competitors, how do we create, communicate, and deliver value to these customers, and how do we make money in the process?  If we lose sight of our served market definition, we may begin looking at the wrong metrics.  For example, if our served definition is the cold market, our metrics should not be based off of the cold or allergy market.  Although it is a simple concept to understand, it could cause disastrous results if we begin acquiring the wrong information, or even not enough information.

Another important concept that stands out in the article is that the decision on which metrics to include depends on the information needs of each audience.  Since we are acting as the "higher-ups" in our Pharmasim projects, its important for us to understand the same key elements as those in the "C-Suites," as described in the article.  It is essential for us in our Pharmasim projects to understand how marketing efforts are translating into important financial outcomes, the enthusiasm (or satisfaction/awareness) of our customers/end users, and the health of our brand equity and capabilities.  We can find this information in metrics such as market share, marketing productivity, ROI, and many of our survey reports geared towards consumer awareness and satisfaction.

When it comes to our performance metrics established on our dashboard for class, we have decided to come up with the following scoring system:

Cumulative Manufacturer's Sales (10%)
Cumulative Unite Sales (10%)
Gross Margin Percent (15%)
Average Marketing Efficiency Index (25%)
Cumulative Return on Sales (15%)
Share of Unit Sales (25%)

While all of these metrics were agreed upon by the majority of the class, and undoubtedly important metrics within our Pharmasim projects, this is a perfect example that not all companies need to follow the same set of metrics.  While many of the metrics may be viewed as important by all companies competing within the same marketplace, some may be more important to others.  For example, our group dropped the price of Allround and experienced a steep increase in the number of unit sales this past period.  We have since decided to incorporate a premium pricing strategy to Allround, which will undoubtedly lower the number of unit sales, but will hopefully increase net income.  Therefore, cumulative unit sales and share of unit sales will not be as important to us moving forward.  Consequently, manufacturer sales may hold more weight for our group as opposed to another.

Blog Reviews

This week I decided to look at Aleena, Christine, and Andrew's blogs.

Ironically, while I really enjoyed Aleena's blog, from the style, creativeness, depth, insight, and knowledge presented, judging by the fact that her last post was April 24th, I would guess that she is either really struggling with the class or no longer a part of it.  That's too bad because I thought she did a really good job with it.

Christine does a very good job at presenting what was asked of us in class.  What I found interesting with hers was when it came to her sharing her opinions of the Pharmasim project.  Her insight was in terms of how well her team worked together, which was very different from mine as I focused on our performance thus far.  Obviously this is not just an exercise of how effective of a marketing manager you are, but also a real life example of teamwork, which Christine did an effective job at reminding me of.

I thought Andrew did a good job analyzing other people's blogs and sharing his insights on them.  I would have liked to hear more about his insight into Pharmasim and course material, as he brought up some good points, but I would have enjoyed it more if he expanded on them a little bit more.

Sharing Some Pharmasim Secrets

The title of this section may be misleading to most since we are not at the top of the leader board when it comes to the class' balanced scorecard for Pharmasim, but I guess learning what not to do can always help others.

I must say that when you do not get the results you were hoping for, it does make it easier to see what to do and what not to do.  Our biggest struggle thus far has been our pricing strategy.  I realize we went over this in great detail during one of our Pharmasim discussions, that high unit sales does not guarantee profitability, and in case you didn't believe Professor Spotts, take my word for it as well.  We have done a great job at satisfying our consumers with our product, and we have since learned that it is time to accurately price Allround in relation to its effectiveness.  Hopefully Pharmasim will take into consideration that since we had so many unit sales, those who purchased Allround will be happy with the product and will continue to purchase it in the future, even if the price increases.  Wishful thinking? We will soon find out.

I will say though that while the Situation Analysis was very tedious, it was a very useful tool at compiling information and giving us an overall view at our company and the market.  While our performance metrics are not where we want them to be at the moment, the Situation Analysis really helped put everything into perspective for us, as each of our team members all found similar information and came up with similar key issues.

Week 8 Blog Post

College Football Programs: do our players view us as something more?

In chapter 11 of Drucker on Marketing: Lessons from the World's Most Influential Business Thinker, Drucker stated that it is the consumer who ultimately determines marketing decisions and what a business is because they are the ones who pay for the goods/services.  Is this true?  Lets look at it from the eyes of a college football coach.  What do we provide to our customers (remember, we are considering our players as our customers in this scenario, especially when they are paying $40,000+ to attend Western New England University)?  We provide a service, to mold and develop football players.  Simply, we provide the opportunity to play college football.  Some would argue that we provide the foundation for preparing athletes for the real world.  I would combat that by saying that the elements of football, such as teamwork, work ethic, honesty, integrity, and dedication, prepare athletes for life after college.  So, from the eyes of a coach, we provide the opportunity for student athletes to participate in college football.

Now, lets look at the same scenario from the eyes of the players.  Drucker stated that it is the customer that ultimately determines what a business is.  So, what do players view the opportunity to play college football?

Some may view as the coach's point of view, its an opportunity to play college football.  Others may view it as a way to stay in shape, some may view it as an opportunity to hurt people, and many view it as a means of scratching a competitive itch.  Some players view it as an opportunity to improve their social status, while others may view it as an opportunity to make their families proud.  Some players may view college football as a means to a career, either playing as a professional or coaching later on down the road.  Some may view college football as a way to keep them out of trouble, or help build a resume.  Clearly, the opportunity to play college football is more to a player than just that.  The opportunity to play college football may be a combination of those listed above, or even another reason that hasn't been touched upon.

To summarize, college football programs provide the opportunity to play college football, there's no denying that.  But they also offer other opportunities as well, and we as coaches and administrators must be aware of that.  The same holds true of any business.  While you may provide a specific product or service, your customers may view it as something more than that, which is why Drucker was correct in saying that the consumer ultimately determines marketing decisions and what a business is, since they are the ones paying for it and getting what they want out of it.

PHARMASIM

This week we were asked to look at the performance metrics available within the program, and determine which metrics should be used to evaluate team performance against each other, as part of a balanced scorecard.  Obviously, sales revenue, market share position, and profitability are metrics that cannot be denied and should ultimately be incorporated in the evaluation.  I think marketing efficiency index, return on marketing, and capacity utilization should be incorporated into the scorecard as well.  All of these metrics look at the efficiency of the company, and ultimately, we should be evaluating the return on marketing as that is the main focus of the course.  I feel as though we should be evaluated on how efficient we are in managing the different marketing areas in Pharmasim, as each team has put themselves in different scenarios up to this point, so we should see how efficient we are from this point forward in working together as a team.

Looking Elsewhere

Earlier in the week, we were asked to look at the blogs of 3 of our colleagues, none of which can be a member of our Pharmasim team.  This week I decided to look at Alexis', Abhishek's, and Kristin's blogs.

Alexis' blog is a very easy read, and she does a nice job of setting up a conversational style to it.  She does a good job addressing the issues presented in class, incorporating real life experiences, and elaborating on her thoughts and ideas.  I also really like how she touches upon Pharmasim every week and gives her insight and opinions as to what happened during a particular week and why they happened.

I really like how Abhi's blog is set up, and is very user friendly.  He does a good job at addressing all of the prompts given for the week and I like how he answers his own questions that he gave earlier in the week for the class discussions.  He touches upon a lot of different areas in his blogs, and personally I would like to see him stick to fewer ideas and elaborate more on them.

Kristin's blog is a very enjoyable read as well.  I like how she incorporates pictures and comics into her blog, as it gives it a nice change of pace and an informal feel to it.  I like how she recaps on her findings of Pharmasim and expresses her interest in hearing more about other people's findings.  She seems to be using the blogs as a way to gain insight into Pharmasim, which is a very smart technique.  

Week 7 Blog Post

Are we Pushing or Pulling recruits to Western New England?

As discussed in class and outlined in our "Try This!" for this week's Marketing Management exercise, we looked at the methods in which manufacturers can move their products through a channel of distribution specifically by using a "push" or "pull" strategy, or a combination of the two.   A push strategy is when the manufacturer uses incentives to get channel intermediaries, such as wholesalers or retailers, to buy and stock their products, and subsequently sell them to consumers.  The imagery is that the product is being "pushed" through the channel, since intermediaries will not buy the product unless they are given incentives.  On the other hand, a pull strategy is when the manufacturer stimulates consumer demand, so that consumers go to the retailer and demand the product.  The retailer, not wanting to lose a sale, then goes and demands the product from the wholesaler; who, in turn, then goes to the manufacturer and purchases the product. This strategy is based on consumer demand "pulling" the product through the distribution channel.

When executing our recruiting strategy at Western New England University, we use a combination of a push strategy and a pull strategy when trying to land recruits.  The reason for this is because each recruit is unique and different from another, so each strategy for landing a recruit must be customized or tailored in some sort of way.  Therefore, there are cases in which we pull for recruits and push for recruits.

For this example, we will look view Western New England University as the manufacturer and the Varsity Football Team as the product.  The recruits will serve as the consumers, and their high school coaches will serve as the channel intermediaries.

At the end of the high school football season, which is usually right after Thanksgiving weekend, college coaches begin going out and visiting high school seniors in school to inform them of their institutions and football programs, and establish a relationship with them to help motivate the rest of the recruiting process for the future.  Because of our budget and resources, we as coaches have to carefully plan our schedule and routes when visiting recruits in school.  This requires us to set up appointments through the school ahead of time, so we do not show up unannounced, which can generate a negative impression from teachers and administrators.  The way in which we usually do this is through contacting high school coaches as to what prospects could be a good fit for us, and when would be a good time to come in and meet with them.  This is a prime example of a push strategy.  We are pushing the high school coaches (the intermediaries) to allow us to come in and have them sell us to the potential consumers, or have us as coaches sit down and meet with their players.  Most of the time, many of the high school athletes, especially those out of the general vicinity, have never heard of Western New England University, so they are not demanding us until we come in and get a chance to meet with them, or expose them to our product.

There are cases in which we utilize a pull strategy as well.  Although most of the time we utilize a push strategy, the are times in which recruits demand that we come in and visit with them.  We spend a great deal of time building a database of potential recruits, and a wide-spread advertising plan to reach out to them via email, letters, post cards, phone calls, text messages, and social media techniques.  Sometimes, this generates enough interest amongst recruits that they mention us to their college coaches about potential schools in which they want to continue their academic and athletic careers.  From there, we will receive emails from high school coaches expressing interest for us to come in and visit their particular players because their is a demand for our product.  This is an example of a pull strategy because the manufacturer (WNE) stimulates consumer demand, so that consumers (high school recruits) go to the retailer (high school coaches) and demand the product.  The retailer, not wanting to lose a sale, then goes and demands the product (WNE Football).

Week 6 Blog Post

Last week, I stepped away from my traditional form of incorporating football into my blog post, mostly because last weeks prompts were difficult to tie into the subject, but also an attempt to mix it up.  This resulted in my first week ever not reaching the Blog of Fame, and being the competitor I am, it's time to get back on top.  To go along with what Drucker believes, if it ain't broke, don't fix it...improve it!

Pricing and Distribution Strategies in College Football

In this week's lecture, Professor Spotts touched upon the pricing strategies of college students, and how scholarships at the Division I level, academic scholarships, financial aid, and possible in-state tuition prices affect decisions when students decide on the school of their choice.  This is a similar issue when coaches go out recruiting athletes for the next year's class.

The luxury of being a Division 1-A (FBS) coach is that you have the most full-ride scholarships of any NCAA sport at any level (mostly because of the number of players on a football roster).  FBS Schools are allowed 25 full scholarships per year (no more than 85 players on a roster at one time with scholarships).  Obviously, as you decrease in division, the less athletic scholarships available, but schools are allowed to divide up their scholarships.  For example, if a school has 2 scholarships left, but 4 players they want to sign, they can essentially give each player a half-ride, or divide them up however they see fit.  FCS Schools (1-AA) are allowed 63 scholarships on a roster, and up to 30 can be awarded per year, Division II schools are allowed 36 scholarships to be distributed, and as we well know, Division III is not permitted to give out any athletic scholarships.     

Obviously, the ideal pricing strategy is to be an FBS School and have the ability to sign an entire recruiting class using full-ride scholarship offers.  It becomes more of a numbers game at the FCS and Div. II levels because you have the ability to divide up your money amongst your players.  Obviously, the higher up in division a team is, the more appealing their pricing strategy can be to their customers: high school recruits and their families.  At the Division III level, we do not have the ability to offer an EDLP strategy through full athletic scholarships, but a student can qualify for academic scholarships and financial aid, which affects us when we compete for a player who is also getting attention from schools at the FCS and Div. II level, especially since we are a private institution.  

This past year we actually were forced to change our pricing and distribution strategy in terms of recruiting.  The issue arose because we were told by the school that the more students we were able to recruit and bring in, the more funding we would get from the school.  So, since we did not have the ability to set prices for our players with the use of scholarships, we went out and attempted to utilize a Sales Oriented strategy to try to maximize the amount of customers (recruits) we could earn.  With the use of technology, these did not affect us when emailing or messaging recruits, since we have the ability to do that in mass amounts.  The problems laid in making phone calls, hosting visits, but mostly when scheduling high school visits.  Every year around the end of November through December, college coaches go out and visits recruits in school.  Since we have a limited budget in terms of the number of vehicles we can use and the amount we can spend on hotels and gas, we have to devise a plan to hit as many schools as possible.  Our head coach, who is in charge of recruiting Connecticut, which is where we get most of our team from, will literally visit every single school in the state during that time frame.  I on the other hand, had 10 days to visit as many schools in Long Island and New Jersey, and not being familiar with the area, it posed quite the challenge.  It was important to plan my visits around players that had shown a lot of interest in WNE, and that we were interested in, as well as visiting as many of the surrounding schools of these players so we could give our "sales pitch" to as many high school players in a face-to-face manner, and establish a relationship with them in 30 minutes of time.  

During the second week of December, we were informed that the school was no longer going to give us extra funding based on the number of students we brought in, so we had to change our distribution plan on the fly to a more Customer Oriented strategy.  We had to change our focus, not towards recruiting as many players as possible, but recruiting more quality players.  Again, since we had no scholarships to give, this created quite the challenge.  The new strategy was easier in the sense that we did not have to manage as many prospects and recruits, but difficult in terms of finding finding the players, evaluating them through film study and interviews with players and coaches that have worked with them and against them, and trying to land them.  

Some of the time, when recruiting players, we have to implement a Competitor Oriented Strategy as well.  We compete against Slave Regina University and Endicott College for a lot of our players, as we are very similar in what we have to offer academically and have been at the top of the conference the past few years.  I am curious as to whether or not other organizations go through the amount of changes we have to make in terms of pricing and distributing strategies when it comes to our recruiting plan.  Just 2 weeks ago, we finally decided on our roster for next season's preseason camp, and we will find out how effective our strategy was in terms of the number of wins and losses we will compile.

Nike Football Advertising Campaign

When looking at different advertising campaigns, Nike is definitely at the top when it comes to marketing, as they always seem to be the innovators of their industry and one step ahead of the competition.  For instance, check out the link below:

http://link.brightcove.com/services/player/bcpid390534381001?bckey=AQ~~,AAAAEN5stVk~,ClMjWCb9_K5TNwUlFmPqOHtxZRnEI9ww&bctid=2325128950001

Nike produces a buzz about their products, even before they are available to the consumer.  The Calvin Johnson line was not made available until this weekend, but has been running campaigns for the product line well before its introduction, and well before football season.

Nike is so far ahead, that it forces its competitors to try to keep up, even if the are not ready to, as seen in this ad by under armor.  UA claims to be innovating, but hasn't produced yet.

Week 5 Blog Post

Target & Neiman Marcus: A for effort, F for...failure.

As seen in our reading, "The Slippery Slope of Brand Extension," there are cases when high priced, luxury brands, team up with non-luxury, inexpensive brands in an attempt at brand extension.  In any case, the larger risk lies on the luxury brand, as thee is a fine line between the company extending its brand into the affordability market, and losing the luxury-ness of the brand.      

"Collaborations between luxury and non-luxury brands are risky for the luxury partner. They can attract nega- tive attention, disappoint existing customers, damage the luxury brand’s image and lower the Luxury Brand Status Index, thus diluting the luxury brand if that brand’s customers perceive the collaboration’s results as inappropri- ate for the brand. When the product of such collaboration is finally introduced to the market, the resulting product’s luxury status depends on whether or not the product has kept the luxury facets, such as outstanding quality, unique- ness, scarcity, exclusive distribution, carefully selected points of sale, high price, history and heritage" (Stankeviciute, 2011).

The purpose of downward luxury brand extensions is to help attract customers that are currently not considering a specific luxury brand.  There have successful cases in which collaborations between luxury and non-luxury brands: Jimmy Choo and Hunter, Rolls-Royce's introduction of it's Ghost model, and Armani's "lifestyle brands".  Obviously, the purpose of Neiman Marcus collaborating with Target was an attempt at tapping into a new market and providing more affordable luxury products through Target.  Also, Target was looking to set themselves apart in their market, by providing luxury products at more affordable prices to its consumers.  While it was a valid effort, it was an epic fail, as detailed in the article below.  The quality of the products was not near the standards of what Neiman Marcus was traditionally known for, and the pricing of the product line was too high, both for the target market and the quality of the product produced.     

Epic Retail Fail: Where Did the Target + Neiman Marcus Collection Go Wrong?

Deadly Sin #1: Seeking High Profit Margins and Premium Pricing

This week in class, we looked at whether or not it is beneficial to charge a premium for products.  Drucker lists premium pricing as his first of The Five Deadliest Marketing Sins.  But what about luxury brands such as Apple, Rolls Royce, and Gucci?  How can they charge such a high premium for their products and still be successful in their markets?

Premium pricing is defined as the "practice in which a product is sold at a higher price than that of competing brands to give it snob appeal through an aura of 'exclusivity'".  Drucker's two prime examples are of Xerox and the entire American automobile industry, both of which were the innovators of their specific markets, but ended up losing the market share to Japanese companies.  Based on Drucker's examples, his definition of premium pricing did not refer to high pricing as a result of a better product, but instead the addition of add-ons or an increase in size to allow increased profits.

So, when we look at luxury brands and their premium pricing strategies, we should realize that the pricing is not based on all the bells and whistles in which the product might possess, but the actual quality of the product.  For example, when looking at the market for laptops, Apple charges a premium price for its MacBook line of products, which is considerably higher than their competitors.  The reason for the higher price is not because it has different capabilities than its competitors (as most laptops now offer similar products with similar services), but because of the quality of the product.  Apple is known for their high quality products that last, and a high level of customer service.  This is what the customer is paying for, not for add-ons or bells and whistles.

Remembers, total profit is margin multiplied by sales, so successful marketers should be seeking optimal profit margins that combine with sales over time to equal maximum profits.  When understanding Drucker's first sin, we must realize that not only would the quest for high profit margins ultimately fail, but that it could result in the loss of the entire market to a competitor.

PHARMASIM

Classifying each line extension for Allround

Once we reach Period #4 in Pharmasim, we have the option of introducing a line extension to Allround+.  Our options for the brand extension include a 4 hour children's cold liquid, 12 hour multi. capsule, and 4 hour cough liquid.  Before we can classify each line extension, we must define our current market.  Allround is an over-the-counter cold medicine produced by Allstar Brands.  Now we can classify each line extension according to the chart above.  

4 hour Children's Cold Liquid: Choosing to introduce a children's cold liquid would be an example of Market Development.  Because we already define ourselves as an OTC cold medicine, a children's cold medicine would be essential an existing product, but would allow us to enter into a new market, therefor creating a niche product.  This product does have the potential to create cannibalization, as we are already defined as an OTC cold medicine, and introducing another cold medicine could interfere with our existing sales.  

12 hour Multi. Capsule: Choosing to introduce a 12 hour multi. capsule would be an example of Market Penetration.  Since we already define Allround as an OTC cold medicine, a 12 hour multi. capsule would essentially be the same product, just in a different form (capsule instead of liquid).  This would be an example of an existing product entering into an existing market, and would have the highest potential for cannibalization because, as mentioned before, it is essentially the same product as Allround, just in capsule form.

4 hour Cough Liquid: Choosing to introduce a 4 hour cough liquid would be an example of Product Development.  Because we classify ourselves as an OTC cold medicine, a cough liquid would be an example of a new product, but in an existing market.  Allround is already being used as a cough remedy by our consumers (as seen in the Brands Purchased Report), even though its specific intention is for cold relief.  Because of this, a cough liquid has the potential for cannibalization as well, since Allround is already being utilized for cough relief.  

Market Demand

Next, it is important to look at the market demand for each of the line extensions offered for Allround+. In order to do so, we should consult the Brands Purchased Report and Decision Criteria Report.

Brands Purchased Report

Above is the Brands Purchased Report for Allround.  It shows the Total Market Units Purchased (541.4 mil.) and Allround Units Purchased (116.1).  Below this information, there is "Pct. of Market", "Brand Share", and "Pct. of Brand".  Each is categorized by Cold, Cough, and Allergy.  So, out of the entire 541.4 mil. units purchased in the market, 73.9% was for cold relief, 14.9% was for cough relief, and 11.2% for for allergy relief.  Next, we can see that out of the 541.4 units purchased in the market, Allround accounted for 21.7% of cold purchases, 35.3% of cough purchases, and 1.4% of allergy purchases.  Lastly, of the 116.1 mil. units of Allround purchased, 78.4% was for cold remedy, 24.4% for cough remedy, and 0.7% for allergy remedy.

When looking at the decision criteria reports, the above shows a cross section of young families seeking cold relief, which would help determine the effectiveness of a 4 hour children's cold liquid, since young families are the dominant market for purchasing such a product.  When researching information for introducing a 4 hour cough liquid, we would take a cross section of consumers seeking cough remedies, which is pictured below.