Pricing & Experiments

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I find it interesting that there are so many Coca- Cola related studies to turn to.  It seems that through good and bad economic times, internal company mistakes and Coke vendor mistakes, Coke has been able to weather the storms and maintain its premier beverage status.  I used to think that Coke was so often referenced in my undergraduate studies because we (as a University) were so close to Atlanta,GA – I suppose I was wrong!  The articles we have discussed about the European Coke fiasco and the Coke pricing “experiment” mentioned in the pricing article are all very interesting.  The demand for Coke simply will not disappear because of a pricing or a scare, it may decrease for a time but I don’t think it will disappear.  I do not feel that Pepsi is a replacement for Coke (and although it was discussed as such in Economics class, I disagree).  In the article, Pepsi seemed to use the Coke automated machine trial as leverage towards their customers, but I am sure that Pepsi is doing something similar in a less obvious (or less talked about) way.

I also thought the writings about the airline industry were quite interesting – however, how do we really know what the “going price” for an airline ticket is?  True, we do set prices as the consumer based on when we purchase our tickets and through what outlet – however when I went to look at ATPCO to see what the published fares are, I had to purchase the information if I was going to get this info. So for now, I do not know!

In my Experience…

My experience with pricing at my former employer seemed to be based on an annual number “we had to hit” and then the sales person “calculates” the monthly number from that (in my situation, the annual number was just divided by 12).  The problem here was that we couldn’t possibly hit that number each month, some months would be low and some would be high (strictly because projects don’t begin and end on a monthly basis, many take several months to complete).  This caused a great deal of frustration amongst the packaging project managers because there was a great deal of un-needed stress added to the job at each months end.

In the not so distant past, artwork for a single label could earn as much as $20,000 for Diageo, a the largest client at Matthews.  This quickly changed once our 3-year contract was up.  In order to secure another 3 year contract, the average price for a label was now less than $900 due to the desire to keep the contract.  At this point, it seems that our beloved account was no longer the cash cow for our company.  The “contract” was often quite a mess and had many discrepancies causing a lot of confusion.  Pricing for the artwork was not consistent with the actual cost that would be incurred by Production Artist & Quality Control checking time that would be used.  For awhile, additional revisions were not taken into consideration either.  There was a large amount of work that would go through our system upwards of 5 times due to the client changing their mind.  This was not just occurring on the Diageo account, however, it also happened with several other client contracts – ‘do more for less’ seemed to be the theme.

Although artwork is a relatively intangible service, Matthews prices their printing plates at a premium.  We are able to calculate the materials, size, and time needed for each set of plates in order to come to a price.  The running joke and the real cash cow for Matthews seemed to be shipping costs.  With a special contract from FedEx, we were able to set a high price for shipping and that was probably the only cost that was full recuperated.  While the competition dictated our pricing to an extent, we were also guaranteed for a time period due to a contract.

Diageo’s perceived value was skewed; while many saw us as a valuable partner, some felt just the opposite.  It was much harder to have an approved estimate through those who were against using us to do the artwork because they did not see our value – only a contracted supplier that they had to use.  For those that recognized that we were willing and able to do just about anything, money was no object – we were approved to charge high prices for overtime and asked to do many design iterations at whatever we needed to charge to get the work done.  Ideally, you want the entire corporation to be on your team in this regard.

The best way that Matthews thought to improve profit (or create profit) without raising prices was to minimize mistakes.  There were several Six Sigma projects going on throughout various departments.  With regards to the artwork revisions, we found that internally, we were spending a lot of time revising spelling errors in the legend that we create (and does not affect the customer’s artwork, but of course these errors do not go unnoticed by the customer).  The ideal solution for this was to automate the process so that data was pulled directly from the job ticket into the legend.  To date, that has not happened.

Somebody Call 9-1-1! Emergency Preparedness Strategies

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Today, it seems like you have to be prepared for everything; natural disasters, chemical emergencies, psychotic gunmen, terrorist attacks, the list goes on and on… but how many of us really have an Emergency plan? How many companies have one of these plans?  I am sure that prior to 9/11/2001, many New Yorkers and New York based companies did not have any such plan, yet they probably all do now.

I cannot think of any specific plans that my company had, aside from the semi-frequent fire drills and safety meetings that were held 1x per month from January – April.  Although we had some capability to work off-site as project managers, it was extremely time consuming and relatively inefficient.  The project management can be done off-site, but the production artists cannot.  Without face to face interaction, it is quite difficult to convey ideas and give specific detail.  In one instance, a mudslide occurred and knocked out power to the entire building. Information was not readily prepared or provided to employees.  Many came from many miles away into work only to find out that they couldn’t do so.   At another time, the building did not have any running water.  We were told to use the bathrooms at a hotel a couple miles away if we needed to use the lavatory.  To me, this is not ideal for handing any emergency.  It made me think even harder about my company when classmates mentioned how high-tech their company computer systems were and how they were able to work off-site with ease or that other companies had clearly defined emergency plans that were conveyed to all employees.

Examples of Government inefficiencies that come to my mind are FEMA and the Hurricane Katrina disaster and all of the complaining that occurred after that. Aside from natural disasters, most people are familiar with the SARS scare – the CDC communicated information out, but in my situation, I only really heard about it on the news & never really saw any information.

The University of Pittsburgh (and probably most Universities today) have a great way of communicating information out to students and employees – text and voice messages that are sent out to everyone.

While doing some internet research, I came upon a website called “Ready.gov” – the site gives ideas for emergency kits and how to be prepared.  A skill that many people may not be familiar with.  It also provides suggestions to research potential disasters in your area and to have an emergency destination or relative to go to in case of an emergency.  I always think about heading straight home to my parents, but 600 miles is quite a trek to make in an emergency situation!  I honestly fall into the category of people without a plan.

My Information Systems class had some great lectures about discussing technology security breaches – these ranged from cases to actual news situations.  It seems to me that the ideal situation always involves having a plan.  The company comes across as being prepared and trustworthy, even if a hacker breaks into a system – the back-up plan, clear and honest communications, and additional security measures allow the customer to feel slightly more at ease.

We really need to do a better job of expecting the unexpected in today’s society.  Something that may seem like a relatively small security or health breach can always develop into something much greater than expected.  In my opinion, if you make a plan for several scenarios, you will be better prepared for the unexpected as those plans will probably be applicable to the unexpected situation.

Thoughts on Employer Branding…

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As I feel that I’ve had a decent amount of experience with being involved with a company that has tried multiple times to re-brand itself, I have several thoughts on this topic.  When you think of “cool” places to work, you think of a place that has a lot of employee appreciation and benefits; a cool space to work in, great co-workers and interesting work.

I intend to explore the following questions as they pertain to my former employer, Matthews International (Brand Solutions division):

How do you brand yourself as an employer?

My company had 3 or 4 different logos in the 4+ years that I spent there.  In my opinion, constantly presenting different logos to re-brand yourself represents more of an identity crisis than a point of creativity… especially if your targeted business is ‘Brand Solutions’ and to provide these to other companies.  Matthews advertises themselves as a “great place to work” – anyone who steps foot inside the building should question this.  When going for an advertising feel, you probably want to have up-to-date matching furniture, not crappy condition mauve colored desks, chairs with tobacco stains and holes, dim lighting, mis-matched computer set-ups and a project management area without any dividing walls and constant buzz of phone conversations usually with several PM’s covering one of their ears to attempt to listen to their clients desires.  You want to attract talented, capable individuals, but don’t your employees deserve the best working conditions? Wouldn’t they be more inclined to put in more productive hours and overtime if their workspace was less dismal? And let’s not even discuss the bathrooms… tiles falling off the wall, rusted sinks, leaking toilets…sinks that spout out brown water when turned on…

Matthews was preparing to make a move to a more creative space downtown, however, at this point – no move has been made.  These conditions are not going to attract talent unless that person is in desperate need of an immediate job.

Another way that a company should go about branding itself is through their website.  In today’s techno-age, so many people go to a website to learn about a company that they are interested in doing business with or applying to for employment. One example that I have recently encountered is the following for an Interior Design Firm.  The old webpage does not give you much of a feeling of design knowledge or capabilities – it lacks color and liveliness.  While it looks professional, it has more of the appearance of a type-written letter rather than a website, thus making it seem out of date.  As in Interior Design firm, you definitely want your clients to know that you are capable of keeping up with the latest trends as well as classic styles.  A website is the perfect place to “advertise” this.  The new website really encourages the potential customer that they know what they are doing; it is organized with the background that exudes Interior Design. I think the new design will really entice new clients. Here are the old & new examples:

Old Homepage

New Homepage

Is it about recruiting the people who fit your brand?

In the span of 6 months, 5 people quit because they were overwhelmed with the disorganization of work and the poor treatment of employees.  There was really no training and these new employees were just tossed into the rat race.  Matthews was able to sell them in to accept the position, however these people all left after an average of 1 year on the job.  This should have been a red-flag to the management, however operations continued as normal until just before my tenure ended.  Not to mention that one employee was asked to transfer accounts, trained on the account and then they re-hired someone who accepted a position with a competitor, leaving the otherwise dedicated employee in her same miserable position (she quit within 2 weeks of this occurrence)

I think that the new management has taken some steps to assure that they are changing their brand perception and have all intentions of bettering the working conditions.  To this point, it has been difficult for Matthews to find people to fit their ‘brand’ because their brand is undefined due to the past and workspace.

I think it is extremely important for a company to recruit people who fit their brand and company identity.  Employees that have more in common an better relationships are more apt to have better working relationships.  (Note: that common trait should NOT include being miserable at work!)

Is recruiting and retention also a marketing function?

This is quite difficult for me to say; Matthews did not have a Marketing department… well they had one guy who was freshly out of college with degree in Marketing.  So, I am not sure how much that says about said department…

If a marketing department is developing and promoting a company’s brand identity, they should absolutely be involved in the recruiting process and making determinations on how individuals would best fit into the company’s environment.

What benefits accrue to your company if you get the branding thing right?

The possibilities could be endless if the ‘branding thing’ is done right — happy, positive employees who gladly promote their company and are happy to go to work, talent, increased productivity, positive feedback with regards to your company, you may be able to pay less based on other perks if the employees are happy, fewer internal problems, less employee turnover…

Additional thoughts on Positioning…Ford Taurus

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While we were discussing positioning in class, one of the examples that popped into my head was Ford’s Taurus.  In my family, every car is a Ford (despite the Jeep Wrangler that has been around since I got my driver’s license — I think that was always a dream car for my Dad… but regardless) – my Dad has built a relationship with the dealer who supplies the company cars for his work and thus we

"jelly bean" Ford Taurus

always have a Ford something.  When my little brother totaled the 1999 Explorer (my baby), my Dad decided that it was time for my Mom to get a new car… and for her car to be passed down.  To my mom’s shock and probably disgust, my Dad asked her to test drive a

Taurus.  Before she did this, I was speaking with her on the phone and she said something to the effect of “Dad wants me to get a Ford Taurus…. I think he is having a midlife crisis and going to find a younger woman, and I’ll be left with a jelly bean car.”  Of course she was making ridiculous claims and knew those to be false, but the image of the Ford Taurus that she had in her mind was the Jelly Bean.  How wrong she was!!!

When Positioning was discussed in class, I thought about the Ford Taurus and how my Mom had that ‘jelly bean’ shape in her mind… and that the general opinion of Taurus was ‘meh’ – it existed but wasn’t something desirable to drive… and how far it has come.

2011 Ford Taurus

In my opinion, Ford has done an excellent job with re-positioning their brand and proving themselves to be able to provide a quality automobile with all of the latest technology.  It also speaks volumes that they were able to maintain steady business without a bail out through the recession.

Once my mom test-drove a Taurus and they presented her with all of the options (air conditioned and heated leather seats, massage seats, Sync technology, automatic sensors for headlights – and auto sensors to turn on brights, blind spot sensors, in dash dvd player, satellite radio, back up camera, sun roof/moon roof… the list goes on and on…) she couldn’t stop talking about her awesome new car.  Taurus was no longer a jelly bean shaped “meh” car… it has arrived in its own class of luxury.  Ford has continued to change the minds of consumers regarding their brand.  Their technology is second to none as Ford continues to surprise consumers.

 

adding value to your customer…

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While listening to tonight’s lecture, I couldn’t help but think about my Dad & the Family Business – Wunderlich Fibre Box.  While I have always looked up to my Dad, some aspects of his business mindedness have never been obvious until now. There were several times in high school when my Dad presented my sister and I with the opportunity to earn some money, so of course we jumped all over it.  I never thought about the stuff we did in high school to get paid was some additional service that he was offering to his customer to get their business.  I can specifically remember slaving for hours upon hours in the garage forming a display box and then shoving these plastic hooks into the slots in the carton.  The work would typically go to a fulfillment house, however, because the quantity needed was relatively low (several hundred), my Dad knew that he could pay us to get this done and help his customer avoid this additional fulfillment step.  Great Thinking!

Adopting Innovations…

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Figure 20.7 Adopter Categorization

Initially, I thought that this exercise would be quite simple and there was no doubt in my mind that I was an early adopter on many things, however, as I tried to think of what types of things I adopted “early,”  my brain somewhat failed me.  The first thing to pop into my head was the iPhone.  While I had a BlackBerry for awhile, and relatively early on, I was probably part of the early majority.  Sure I had mine before my siblings – but that comparison is rather moot considering that they are younger than me and my Dad still purchases their phones for them.  I also did not want to leave Verizon for  at&t simply for an iPhone – especially since I am quite happy with Verizon and 99% of my friend and family network falls within the same carrier.  I was an early adopter for the Verizon iPhone, but not the iPhone as a whole (and I still don’t have an iPad… but that is probably due to lack of necessity and lack of personal funds.

Innovator: I am hesitant to invest my own money in something that I am unsure of.  I would be happy to try a product if it were offered to me.  I was happy to do a trial for a company looking for feedback on a new product when it was sent to me.  I tested the product out for a few weeks and filled out some information to provide back to the company. Although I decided that I really liked the product, I never came across it in the store.  I am typically an early adopter in shoes and relatively outrageous shoe designs.

Early Adopter: I think that I am an early adopter in cases where I have been heavily informed about a particular process or product and i am excited to use it.  Verizon’s iPhone being one and other things like new foods/cooking styles or restaurants.  More expensive luxury items are typically out of reach for me due to my “price sensitive” lifestyle.  Although, one day, I hope to be able to invest in these items.

Early Majority: At the present time, I probably fall into this category.  When purchasing my laptop, I wanted to read reviews and be able to determine what to purchase after having some information.  The laptop I chose was still new to the market, but had been tested as well.

Late Majority: While I wouldn’t say that I am in this category for “fashion” – I always like to get a discount and typically stick with what I know works for me on a consistent basis.  From time to time I will purchase something that has JUST come out, but I find that these “fresh” styles don’t always work for me, so I stay with a pretty standard look.

Laggards: I don’t exactly have an example on this one for myself, however I cannot help but think about my parents and their BIG step in getting REAL internet!  For years (probably an entire decade, actually), my parents dealt with dial- up.  Those horrible noises for AOL, all through my high school years when it seemed that my friends parents had all moved ahead with ethernet connections.  It simply wasn’t an option out where my parents lived.  Finally, they moved forward with a wireless card.  That’s right, 1 single wireless card which was mainly dominated by my brother.  Finally, it came to the point where this just would not work anymore (of course, after all 4 kids were out of the house and my Dad had some desire to do some work from home), and my parents upgraded to U-Verse.  (Oh, they also went from 1 TV where you had to smack the top to turn on, to 3 massive flat screen LCD TVs scattered throughout the house).  Although laggard seems like such a nasty sounding word, this seems to be perfect for the description of my parents move into modern day technology.    I am not sure whether the TV officially stopped working from too many smacks, or if the internet card and new cable was simply incompatible with the newer equipment, I am glad that the change has been made, though!

Brand Positioning: Captain Morgan

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Brand Positioning: Captain Morgan

POD (points of difference):  attributes or benefits consumer strongly associate with a brand – cannot find same attributes in another brand

Quality spiced rum, Spiced Flavor, go-to-dark rum for spiced flavor

When requesting a spiced rum, people often simply request “Captain and Coke” as their beverage of choice.

POP (points of parity):  associations not unique to brand – can be associated with other brands

In this instance, the point of parity is the type of liquor – Rum.  We discussed that when regular rum is requested (as in a directive for a purchase at a store), the standard go to would be a Bacardi White Rum [although the Captain Morgan brand does have a white rum, their marketing seemingly markets the Spiced variant the most strongly]

Recognizable rum brand.

Differentiate product: Recognized brand, quality spiced rum, spiced flavor, “THE Captain”

While we pointed out the above features as ways to differentiate the product, the Captain is definitely a defining feature of the brand.  Worldwide, many people recognize the Captain’s stance.

Product life cycle:

-          Calling All Captains

-          Re-vamping captain look – in my previous job, I worked on a large re-branding project for Captain Morgan.  The goal was to make him less cartoon-ish and give him a fresh, slightly updated style but the brand features had to be maintained in order to maintain brand recognition.

IN-CLASS EXERCISE:

The positioning statement that we came up with:

Captain Morgan is calling all those 21 years old and over fun seekers looking for a spiced rum adventure to enliven their crew members; Captain Morgan Spiced Rum, join the Captain and drink responsibly.

Market introduction stage

-          Ty ku sake, skinny girl margarita

Growth stage

-           Ciroc

Maturity stage

-          Jack Daniels

Saturation and decline stage

Hypnotiq,

When performing a laddering exercise, Captain Morgan will probably be one of the first rums mentioned.

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As I further research Captain Morgan Brand positioning, I find that the Captain is being used as an actual character in situations rather than simply the brand name and people emulating the brand character in the bar as they are consuming the beverage.  This reminds me of the Dos Equis videos where “The Most Interesting Man in the World” represents their brand.  Diageo uses The Captain as a leader in how to react in situations outside of simply drinking. I thought these were interesting.  Not only does it relate to the information given to me regarding Diageo’s desire to make Captain Morgan more human, less cartoon,bring a higher brand status, and certainly less “meathead” as AdWeek.com suggests.

When working with Diageo, we followed their Gate System.  Although the ideal time for my company to become involved was Gate 3, we were quickly working with the Diageo Innovations team at Gate 1 in order to help them present design ideas and concepts to senior stakeholders.  The cycle change and having us work further upstream with the Diageo team meant that our work may or may not continue after Gate 3 if it had been determined that the project would not continue.