Answer Questions
1)Table 1 shows correlations of clothing retailer positioning questions to the two dimensions of a positioning map. Based on the correlations, name the two dimensions. Show the process and discuss your reasoning.
Organizations make use of positioning map to help them identify a perfect position in the market with respect to their products or services. Positioning is a good way to let the organizations understand where they stand in the eyes of customers. Perceptions of customers are very important in defining the positioning of products and services. Positioning maps reveal where and how certain brands are placed in the market so that a new firm can decide its position in the map while considering its quality, pricing, usage and other features. There are basically two choices every firm has to explore while positioning itself in the map. Firstly, it has to define a position where it could serve to fill a gap which exists somehow in the market or it could also place itself on the map in such a way that it could act as a competitor for several of the brands present in the map. The positioning map is multidimensional mostly, however, for the purpose of simplicity and understanding, we could also view it the two-dimensional way. In the two-dimensional map, one of the attributes against which the brand is being identified is plotted against the x-axis whereas the other is plotted against the y-axis. Depending upon the customer’s perception and the accuracy of data available, the product or service is positioned on the map. In the given table, we can see that the correlations of clothing positioning questions to the two dimensions of a positioning map. Based on the correlations, we can name the two dimensions as brand performance and the convenient design of store to make shopping a convenient and enjoyable experience for the customers. There are several of clothing stores which are not designed in the customer friendly way- in fact, the theme supports the store label which is not customer centric at all. When a store is present at a favorable location and there is ample parking space for vehicles, more customers would prefer it. The prices are kept affordable so as to pull in more customers to increase market share without making any compromise on quality. The customer service has to be exceptional so as to generate brand equity. We will plot a positioning map for the clothing store by taking brand performance on x-axis and store design on the y-axis. There will be four quadrants on the positioning map. Considering the values from the table, we can say that the customers perceive the clothing brand as a high-performance brand which is successful in attracting more people to visit its stores. So we can say that the brand can position in the first quadrant which is on the top right side of the positioning map so as to reveal its true position against competitors.
2) Most car brands running on gas rather than electricity are in the mature stage of the product life cycle. Discuss the best marketing strategy for them to increase their profits.
Every product introduced into the market comes with a life cycle. Whenever a new technology is incorporated into a product, the new version is accepted more by its customers and its market share increases. The product jumps from introduction stage to the growth phase. In the car industry, innovations are going on at a continuous basis which means one or more features are being modified by some form of technology. Ever since the introduction of solar cars and car which run on electricity, the profitability of gas cars has suffered which means people are switching from gas cars to advanced cars. This trend has placed gas cars in the mature phase of their life cycle. During the mature stage, the product has reached its peak and the time for its downfall begins. The questions ask us to suggest ways to improve the life cycle of gas cars. We can make use of several ways to make the customers switch from electric cars to gas cars although the task is challenging because those who are in favor of conserving the environment are rushing towards adopting electric cars. However, if gas cars manufacturers make the most of the technology and reduce the emission of harmful gases in the atmosphere and label the cars as environment-friendly, then it is certain that the market share of gas cars can be increased. Moreover, if the features and specifications of gas cars are improved to a greater degree by making use of automated systems and enhanced GPS, the life cycle of gas cars can be improved as they move down from maturity to growth phase. Moreover, by making use of advertisement and promotional efforts by car manufacturers, the sales of gas cars can improve. Making use of the right promotional measures such as social media marketing, brand ambassadors, strong advertisements, affordable pricing and print media while keeping the characteristics of the target market, the life cycle of gas cars can be improved.
3) Select any one industry or product category (but not a brand) and draw a graph showing its revenues over many years (not a few years but ideally since the birth of it) and discuss the current stage in the product life cycle and its likely stage in ten years.
For the purpose of answering the given question, we have chosen the videogame industry. The videogame industry has always been successful in gaining ample share from the market due to its innovative structure. As soon as the game manufacturing companies see that the share of the existing game will decrease, they come up with latest technological approaches and incorporate them into gaming. Xbox was introduced a decade ago and the sales have still not declined because it keeps on upgrading its features in a way that customers find the game station more attractive than before (Govindan, 54). Same is the case with play station. New games have always joined the gaming industry due to which it is flourishing and still enjoying profits from the growth stage of the product life cycle. Before a game enters into its maturity phase, a new and improved version or an entirely new game is chipped into the industry so as to ensure that revenues go on escalating.
Unlike laptops, smartphones, and tablets, whose life cycle is based on a maximum of five years time, the life cycle of the gaming industry is much longer and can last for more than ten years(Matthews, 33). We can see from the graph that the revenues of video games are increasing every year. Previously, there were few game users but now game users are increasing and the old ones are also exhibiting loyalty due to which sales revenues are continuing to intensify.
4) Find any newspaper or magazine article (not any other source) which reports that a brand has successful or unsuccessful brand extension. Describe what happened and analyze why it happened. Report the source.
Every brand understands that in order to maximize its revenues and maintain its position at the global level, it has to undergo extension. Brand extension is considered acceptable by the customers only when they see a strong fit between the initial brand image and the extension. Sometimes, the extensions are related but in many cases, unrelated extensions can also bring in more profits for the organization. For instance, we know that Virgin group has been successful in gaining more revenues since its establishment- we would certainly give credit to brand extension. Virgin came into being as a small record shop which then extended its portfolio by making a name in the gaming industry, telecommunication, video shops and most significantly, airline business. A customer of Virgin group is quite impressed at how the founder of Virgin has successfully looked after the growth and development of each of its extensions. The founder believes in the ideology that it is not wise to keep all eggs in one basket rather diversifying the company’s portfolio by undergoing brand extensions can certainly bring in more profits as well as increase brand strength and customer loyalty. Virgin introduced its fizzy drinks to compete with Cola but could not succeed. Despite such failures, Virgin has not lost revenues and compromised on brand reputation. The founder believes in taking risks and considers the brand extension as a daring step by Virgin (Lennox, 27). So is the case with Easy Group. Easy Group has also considered the brand extension as its route to success. Pizza restaurant, hotels, gymnasiums and grocery stores have successfully improved the brand image and customer base for Easy Group.
5) Find any newspaper or magazine article (not any other source) which reports that a brand has experienced revenue increase, not decrease when its price increased. Describe what happened and analyze why it happened. Report the source.
It is a common understanding that brands which are priced low are able to attract more customers. This is because during and after the economic recession, people have become watchful when spending money. Consumers would always opt for those brands which offer quality, meet their needs and most importantly, fall within the range of their budget. The number of consumers who are not price sensitive is not much. So whenever a brand wishes to increase its sales, it lowers its prices so as to attract more customers while result in more revenues. However , in the case of luxury brands, customers are always willing to pay more. This is because luxury brands are supposed to be expensive and if a luxury brand is available at low price, consumers would raise doubts about its quality and integrity. Lafley, Alan G., and Roger L. Martin described that Olay is an expensive skincare brand but it is still affordable by the mass market. The company decided to increase the price of Olay product from 12.99 dollars to 15.99 dollars and they were surprised to notice that the sales increased. When the price was further increased to 18.99 dollars, the brand was perceived as prestigious and the mass market could not afford it easily. The company was astonished when they saw that consumers exhibited loyalty patterns towards the brand and feel valued when associated with Olay so they kept purchasing the brand. The sales in that specific year rose up to a double-digit margin.
6) Find any newspaper or magazine article (not any other source) which reports a V-effect of the ad (that is, when ad spending decreased, the sales increased). Describe what happened and analyze why it happened. Report the source.
It is generally accepted that when the advertisement is increased, the sales would increase. This is because spending too much money on the advertisement is seen as a great way to generate product awareness and pull more customers. Companies which do not carry out promotional campaigns should never expect to succeed. However, this does not apply in all cases. Spending less on advertisements can also bring more revenues for a brand because when spent wisely, the ROI increases. If the ROI comes out to be positive even with low spending on promotional campaigns, then it means that spending too much on an advertisement would not make sense(Vasquez 20). The presence of brands on social media is necessary so as to ensure that low-cost advertisement brings in more revenues.
7) Draw a line graph which shows customer satisfaction score of any one company over last 20 years. Draw a line graph which shows the stock price of the company; Draw a scatter plot (xy plot) in which x is the customer satisfaction score and y is the stock price. Discuss the relationship between the customer satisfaction and the stock price.
The company we have chosen for making line graph is Apple. Since Apple’s phone came first in 2004 so we have taken 2004 as the starting year till 2015. The x-axis reveals the customer satisfaction index as available from the data on the mentioned website link. The y-axis is the stock price in millions. The line represents that the stock price of Apple is continuing to increase in relation and the customer’s satisfaction and loyalty is continuing to increase.
Reference
Govindan, Range. "Video Game Console Life Cycle: Buying Your Next One" Apartment Therapy. Apartment Therapy, 20 July 2011. Web. 10 May 2016.
Lafley, Alan G., and Roger L. Martin. Playing to win: How strategy really works. Harvard Business Press, 2013.
Lennox, Alasdair. "http://www.theguardian.com/media-network/media-network-blog/2014/oct/23/virgin-success-brand-extension-easygroup" The Guardian. The Guardian, 23 Oct 2014. Web. 10 May 2016.
Matthews, Matt. "NPD For July 2007: The Gamasutra Analysis" Gamasutra. Gamasutra, 27 August 2007. Web. 10 May 2016.
Vasquez, Jose. "Why So Many Small Businesses Don’t Spend Enough on Marketing" Huffington Post. Huffington Post, 5 Nov 2015. Web. 10 May 2016.
