- Published: January 31, 2014
Poor JC Penney. The once proud retailer has certainly struggled in the last few years leading many to wonder what the future holds. The problems started a 2012 when a new management team was brought in to boost sagging sales. Their big strategy was built on the relatively simple idea of convincing customers that Penney was a store that offered a wide variety of products at good prices. Unfortunately, they faced an enormous hurdle as many customers only thought of JC Penney as a place to shop for bargains. In other words, it is not a retailer that comes to mind for general shopping only when there are good deals. So in an attempt to change customers’ perception, Penney essentially abandoned sale pricing and instead tried to lure customers with advertising that promoted everyday low pricing and very few sales.
The result was a disaster. A large percentage of their customer base, who considered themselves bargain hunters and enjoyed the feeling of believing they were getting a fantastic deal, stopped shopping and overall sales dropped dramatically. This resulted in the new management team being fired. A new management group entered and promptly returned to the old strategy of offering regular sales.
Yet today the bargains customers are perceiving may not what they seem. As discussed in this Time story, the pricing strategy that entices customers through advertising by suggesting extremely large discounts may not actually be what it appears. The reason has to do with product list price or, as the story calls it price anchoring, which is the product’s full price before any discounts. But as discussed in this story, the list price set by Penney on some products may be outrageously high, and even much higher than recommended by the product’s manufacturer. Even more, the hike in list price appears to be aimed at products that are likely to be in demand at certain times of the year, such as a bump up in jewelry pricing right before Valentine's Day.
While this may appear to be unwelcome publicity for Penney, this strategy could work if consumers remain driven by the notion of obtaining a bargain. Also, this strategy is by no means restricted to just Penney. Several other retailers have also been accused of the doing the same.
- Published: January 29, 2014
In our discussion of the New Product Development process, we emphasize the overwhelming importance of conducting marketing research prior to product launch. As we explain, research plays a key role in each of the steps in this process. This includes research to help identify potential new products (Step 1: Idea Generation); research to test customers’ response to “mockup products” (Step 3: Concept Development and Testing); and testing customers’ response to actual products in real market settings (Step 6: Market Testing). However, we also note that conducting market research for new products can be quite difficult, especially for products that may be viewed as highly innovative.
A good example of problems marketers face when trying to use market research for breakthrough products can be seen in this story from Knowledge@Wharton. In it, the authors discuss how market research, or lack of it, may in some ways be blamed for what some claim is a significant product category failure – the 3-D television. What comes out of this story is how some tech companies appear to only give lip service for the need to undertake quality research, especially prior to product launch. These tech marketers seem more concerned with getting the product to market and then testing, which we indicate in the What is Marketing? tutorial is often a mistake.
The story includes a look at how leading television manufacturer, Vizio, bypassed pre-product launch research for its 3-D television, which was eventually discontinued due to low demand. It suggests studies may have been able to uncover some of the issues that would eventually lead to the product’s failure, such as lack of 3-D movies, consumer dislike of wearing 3-D glasses and the perception of the television leading to certain health issues, such as headaches and eyestrain.
The story also touches on the philosoply Steve Jobs had with the development of technology products, which were not necessarily supportive of using market research. As noted in the story, in many ways Jobs was anti-research and also not inclined to follow the ideas found within the well-known Marketing Concept.
Overall, this is an excellent story on how not undertaking market research may come back to bite companies. It also offers insights on why companies choose to forego research when developing new products.
- Published: January 28, 2014
Most of the items we list in our Marketing Stories section are gathered from respected news organizations, such as leading newspapers and business magazines, that we feel take an objective view of what is being reported. But we also provide links to stories that may be viewed as somewhat less objective. The best examples of this are stories from publications produced by industry trade journals and marketing research firms. In these cases, before listing the story we do our best to examine it closely to make sure the contents are informative, fairly objective and not purely promotional.
This story in strategy + business is a perfect example. While this story is written and published by the consulting firm, Booz & Company, if one looks past what may seem like an effort to promote the company’s services, what is presented is extremely compelling. The story reports on survey research conducted among chief marketing officers and it focuses on their strategies for using digital marketing, including online and mobile methods. The results include ideas for what type of digital marketing approach a company should take given its overall strategy. Additionally, it offers nice examples of leading companies employing various digital marketing strategies.
- Published: January 24, 2014
As we explain in the Personal Selling tutorial, selling is a form of promotion in which one party “uses skills and techniques for building personal relationships with another party … that results in both parties obtaining value.” While we present this as a definition of selling, the fact is, this definition applies to any situation in which Party A seeks to get Party B to see the value in something Party A is offering.
Of course, most people equate this situation to a seller trying to persuade a prospect to buy a good or service. Yet, in marketing the need to be persuasive is not exclusively about selling something in exchange for money. Convincing someone to make a decision applies to many marketing (and business) situations that are outside of the sales area. For example, it may be an advertising manager attempting to convince a client to accept a new direction for their next advertising campaign or a retail store manager attempting to convince an employee to restock store shelves using a more efficient method or a not-for-profit marketing manager attempting to convince a group of volunteers to stay at an event for more time then they committed.
No matter what the situation, the “skills and techniques” required to get to the end goal of convincing another party to do something almost always requires the use of methods of persuasion. So what does it take to be persuasive? Certainly the steps involved in selling outlined in The Selling Process tutorial are a good place to start but for more specific examples check out this story in Time. The article provides seven attributes that are commonly found by those who are considered persuasive. What seems most noteworthy here is that persuasive people exhibit all these attributes, not just a few. As might be expected, most of the skills discussed revolve around effective communication and also being able to understand human behavior. Fortunately, all the skills mentioned can be learned, practiced and refined by almost anyone.
- Published: January 21, 2014
If the average business person was asked to describe, in few words, what marketing is all about, it is highly likely that terms such as customer, advertising and selling would be contained in their description. Of course, each of these terms is easily associated with what marketers do to get customers to make a purchase decision.
However, it is just as likely their description would not contain any reference to any issue related to what is involved in delivering products to customers, such as ordering systems, shipping options and warehousing. Yet, product movement is a crucial component in the process of getting products to customers and, as a result, a key variable in customer satisfaction. While product movement is far from being the most glamorous part of marketing, for many product marketers and retailers, it may be as important as any other decision.
Appreciating the importance of product movement leads us to this story from Internet Retailer. The story provides a very nice background on the technologies used to deliver products to customers as quickly as possible. In particular, the story focuses on high-tech warehousing technologies that enable online retailers to ship products nearly as fast as they receive the order. Called “fulfillment” technology by those in the business, the types of technologies utilized and the amount of money invested by companies can be quite impressive.
While warehousing may not be the most visible part of a successful marketing strategy, for product manufacturers and retailers an efficient system for moving product is necessary in order to get the right product, to the right customer and at the right cost, and to do so as quickly as possible.