MKTG 411 - Final Assignment

Dell and Toyota both have a similar approach in selling products: a direct-to-consumer, order-based strategy. However, whereas Toyota uses the order-based strategy to test-market the new hybrid Prius, Dell utilizes this direct business model almost exclusively. As stated in the Toyota Prius Group Team Post, Toyota direct-markets to what it believes to be the most likely Prius consumers (budget-conscious, environment-friendly, etc.), while Dell direct-markets to the entire spectrum of consumers, concentrating on its universally-appealing principles of low cost, product customization, and fast delivery.

I can only assume that the made-to-order strategy has resulted in cost savings for the low-volume production of the Prius. However, Toyota may return to its traditional approach (mass-manufacturing vehicles coupled with dealership-based placement) due to the high demand for the Prius. As a side note, it will be interesting to see whether the return to distributing directly to dealer networks will affect the demand for the Prius; I suspect that the shortage of Prius vehicles is one reason why they are so "hot" right now.

Dell and Amazon.com are both "click-only" operations that operate without any brick-and-mortar stores (Kotler, pp.82-84). They are both "consumer-centric" companies that strive to provide customers with a wide variety of products at affordable prices. The difference, though, is that Amazon.com places a premium on catering to its customers, often at the expense of its profitability. Amazon.com recently introduced Amazon Prime, the company's "first ever membership program, which provides 'all-you-can-eat' express shipping.” Amazon.com CEO Jeff Bezos admits that the promotion program (Kotler, p.514) will be very expensive in the short term, but hopes that it will pay off in the long run. Dell, on the other hand, delivers great customer value through product customization and never loses sight of the bottom line.

* As an aside, after doing a cursory search on Amazon Prime, I found that some blogs applaud the efforts in “componentizing their business to a degree where shipping stops being a cost center and becomes instead a competitive differentiator,” while others have criticized Amazon.com for its logistics, or lack thereof, in implementing this program. *

Comments on Classmates' Blogs

1. My comment in Curt's blog regarding Northwest and its Less for the Same strategy.

2. My comment in Brett's blog regarding McDonald's and their Healthier Lifestyle campaign.

3. My comment in Linda's blog regarding the alcohol beverage market.

4. My comment in David's blog regarding Dynamic Pricing.

5. My comment in Brett's blog regarding The Power of Marketing to Children.

6. My comment on Rambabu's blog regarding Moblogging.

MKTG/Tech Post #2 - Moblogging!

I found this article, Software Lets Bloggers Post via Cellphone in the Technology section of the NY Times. Apparently, some companies have begun developing software that allows people to read and write blogs on cellular phones. A company called Intercasting Corporation has become the first mobile blog company to enter a partnership with a major cellular phone provider - Verizon Wireless. According to the article, the service is called RABBLE and has been available since June 1 for download on Verizon handsets for $2.99 a month and about 1,000 people have signed on for RABBLE in the past two weeks.

I'm not quite sure how this service works. I quickly scanned the Intercasting Corporation blog and found that one of the developers of the service has clarified that RABBLE is "the first mobile blogging community ever" and it differs from posting to a blog on the web from your phone. When I have more time, I'll read more of the blog to see what the service is all about.

RABBLE could have been great for this marketing class. How great would it be to have access to my blog all the time. It would have been so convenient to post on my blog or comment on other people's blogs when I had downtime - traveling, waiting for appointments, etc. The article brings up a good point about how traditonally, blogs force us to think and compose at our desks. People that keep personal blogs have a difficult time writing entries when they are traveling because sometimes computer/internet access isn't so readily available.

The article mentions that a subscriber uses RABBLE for his business; he uses it to post photos of the daily specials at CheeseBoard Pizza in Berkeley, CA, so that other customers can look up the blog and decide whether to visit the restaurant that day. I wonder how RABBLE has affected his business and if more businesses in the future will soon adapt RABBLE as another way to communicate with the consumer.

*edit*

I just found out that my classmate, Rambabu has blogged on the same topic. Find it here.

Team Post #3 - Final Dell Group Post

Three words will describe Dell’s position in the marketplace: inexpensive, custom and quick. An succinct, yet in-depth, look at Dell's marketing strategies found here (in Maggie's blog).

IMHO, I think, as the premier low-cost provider of PC's, combined with its lean infrastructure, Dell will be hard to beat by the established competitors out there.

Extra Credit #2 - My Blog in a Search Engine

Click on this and you'll see that my blog comes up as the third result on the second page when you enter my name in the Google search engine. My blog comes up as the second result on the first page if you enter "melody lai mktg."

Nice.

Topic Post #3 - The "Safer" Cigarette

The World Health Organization's projection is that 500 million people now alive will eventually die from smoking-related diseases. How would you then market a new kind of cigarette with a filter that, compared with a typical cigarette, reduces the intake of a variety of cancer-causing toxins by 40 to 75 percent, not knowing whether or not it will increase cigarette consumption? In the article, Incendiary Device, it says that "according to a number of scientists and tobacco policy makers, PREP's (Potentially Reduced-Exposure Product) are the single most ethically agonizing and professionally issue they have ever encountered." The people behind FACT, a cigarette that contains a filter (called FILLIGENT) that substantially reduces the intake of cancer-causing toxins, are vehemently against tobacco and believe that there is no safe level of consumption. Yet, they believe that the benefits of an improved filter outweigh the dangers. So this is their plan right now: The brand owner of FACT will only do minimal marketing. FILLIGENT itself, will have no marketing campaign, no marketing budget; its owners will concentrate on PR by openly talking about FILLIGENT with the media. They also plan to have a web site to make raw laboratory data available. Their ultimate goal is noble enough - they want cigarette manufacturers to license FILLIGENT's technology and insert FILLIGENT filters in their cigarettes without calling attention to the reduced-risk potential.

I was quite taken by this subject matter because of the ethical implications in introducing a PREP to the market. When you, the marketer, whole-heartedly believe that cigarettes hurt the consumers in the long run (pleasing products, Kotler, p.651) how do you market a cigarette filter that has shown to significantly reduce exposure to toxic substances? I believe that FILLIGENT has adapted a good, not to mention socially responsible (Kotler, P.649) strategy. The head of the company makes FILLIGENT, Melissa Mowbray-d'Arbela, has done extensive research on the science behind cigarettes, opened up dialogue with numerous anti-smoking policymakers, and is pushing to get tobacco companies to license and use FILLIGENT without bringing it to the attention of the consumer that anything in the cigarette has changed. And if should FILLIGENT be successful and profitable, the company behind it will give a significant portion of its profits to antitobacco efforts. She understands the fact that there is no safe cigarette and no safe level of consumption, yet believes that introducing the PREP, FILLIGENT outweighs the dangers and will be beneficial to society. For FILLIGENT to be considered successful from a societal marketing standpoint, it's important that cigarette companies containing FILLIGENT not make any health claims or else it might encourage cigarette-smoking, which is a consideration that public health officials have been agonizing about. After being being subjected to years of deception (Light and Ultra Light cigarettes which are not in the least, safer) and concealment by Big Tobacco, it's refreshing that a tobacco company has taken an elightened marketing (Kotler, pp.647-652) approach.

Topic Post #2 - Exxon and Their Position on Global Warming

My thoughts on the article, Digging In, by Jeffrey Ball, from The Wall Street Journal, published on June 14, 2005.

*I would have put a link to the article in this entry but you need to be subscribed member of the Wall Street Journal to access it. If you'd like to read the actual article, email me and I'll forward it to you.*

This article talks about how the CEO of Exxon-Mobil, Lee Raymond, refuses to accept research findings that say fossil fuels are the main cause of global warming and has been funding research to prove that putting a cap on emissions is not justified. While its competitors, BP and Shell, have invested a lot of money in researching alternatives to fossil fuels, Exxon-Mobil has decided that it's not in their best interest to develop alternatives and instead, has been trying to find ways to improve the energy efficiency of its refineries, to primarily cut costs. This approach, in part, has made them the most profitable oil company in the world.

With regard to environmental sustainability (Kotler, p.642), it seems as if Exxon is developing strategies to produce profits for the company without much thought in sustaining the environment. They want to find ways to adapt and improve on fossil fuels, but are not developing alternate sources of energy to replace them. As mentioned in the article, there is enough research out there about fossil fuel emissions' effect on global warming to warrant interest in alternate sources of energy, but Exxon insists on being stubborn and believe that there isn't enough solid evidence that fossil fuel emissions cause global warming. They also believe that developing alternate sources of energy is a waste of time. It seems to me that their sustainability vision is seriously flawed; they're only concerned with profits. To their credit, according to the article, they've publicly announced that they've spent $100 million for research into what they call breakthrough "mega-technologies," which includes capturing carbon dioxide after it's emitted and burying it deep underground. However, this seems to be some kind of PR ploy since $100 million represents less than two days of Exxon's earnings. When gauging Exxon's efforts using the environmental sustainability grid (Kotler, p.643) Exxon is doing very little in their progress toward environmental sustainability, which I believe will eventually lead to their downfall. They are doing some pollution prevention by improving the efficiency of fossil fuels and putting some effort in developing new environmental technology but all in all, they lack the sustainability vision of their competitors. As a consumer, I would rather buy gas from a company that understands the social responsibility to develop alternate sources of energy than one that refuses to believe the negative impact its product has on the environment.

Extra Credit #1 - More on Infomercials (Referencing Xinkai's Blog Entry)

Proactiv Solution and "Branded Entertainment"

In his blog, Xinkai mentions that he believes that "infomercials probably won't recede from marketing platform soon." I agree. Brett had mentioned in class how infomercials are a great way to market products to the elderly and since the prime market in the future will be the senior citizen group, I believe that infomercials will become an even more popular means of advertising. Not only are infomercials more sophisticated now, but they've even begun to have celebrities on them. Have you ever seen the infomercials/commercials for Proactiv Solution with Jessica Simpson? I just read an NY Times Magazine article that talks about how P. Diddy has joined Jessica Simpson, along with Alicia Keys and Vanessa Williams, in a 30-minute infomercial to promote Proactiv Solution. So instead of being considered a lowly format of advertising, infomercials are becoming more hip and credible by signing on celebrities, which will surely appeal to the younger audience. As the article mentions, having celebrities promote products on infomercials is convincing to us, the audience, because as we know, celebrities don't need the publicity nor the money, which leads us to think that they must really believe in the product to take the time to promote it in an infomercial. Hey, if four big-name celebrities say they use Proactiv and it really works, why shouldn't we give it a try?!

Topic Post #1 - Big Pharma In Trouble

A few weeks ago, I posted the article, Despite Vow, Drug Makers Still Withhold Data in my blog. This article talks about some drug companies' reluctance to provide more information about their research on new medicines. As a result, doctors and patients lack critical information about important drugs, which can potentially lead to dangerous situations. I had originally wanted to use this article as my presentation piece but I've decided to go with another article (concerning a very controversial product and how to market it) instead. Anyway, a couple days ago, I came across this article - Lucrative Drug, Danger Signals and the F.D.A.. This time, Johnson & Johnson (J&J) has been exposed for not disclosing the drug, Propulsid's long, largely hidden, record of trouble. Apparently, even though J&J had evidence of harmful side effects from usage of the drug, they continued to market the very lucrative drug anyway. According to the article, "Johnson & Johnson agreed last year to pay up to $90 million to settle lawsuits that eventually involved claims that 300 people died and as many as 16,000 were injured from taking Propulsid."

For a company, whose credo clearly states, "we believe our first responsibility is to the doctors, nurses, and patients, to mothers, fathers, and all others, who use our products and services," it surprises me that J&J didn't pull Propulsid much sooner. The FDA and Johnson & Johnson negotiated for five years before the company pulled Propulsid. By then, the federal government had reports of 80 heart-related deaths and 341 injuries among patients taking Propulsid. Even now, J&J continues to defend the safety of Propulsid (they claim that the only reason why they've pulled the drug is because despite their warnings, doctors have been prescribing it inappropriately) and even said that the marketing of the pill was appropriate. Well, according to internal company documents, J&J helped finance programs that encouraged the drug's pediatric use even though Propulsid was never proved effective in children.

The FDA has been getting a lot of heat for not monitoring and regulating pharmaceuticals effectively once they are on the market. There are a bunch of drugs out there, including Vioxx and Celebrex, that are not disclosing negative clinical trial results. I assume that consumerists (Kotler, pp.640-642) will be pushing Big Pharma to appropriately and adequately label and disclose all clinical trial results for their new drugs so that consumers can be aware of the potential dangers of using their products. The FDA needs to do a better job of putting pressure on Big Pharma to be more transparent with the public regarding the research they've conducted on their new drugs. Doctors and their patients need to have as much information about pharmaceuticals as possible in order to make wise decisions in using meds, especially new ones; in some cases, it can be a matter of life and death.