Comm 296 Sibin Fan

In Yanjie He’s Blog “Starbuck’s pricing strategy in recession” (https://blogs.ubc.ca/hyj1216/). The writer shows Starbucks announced its new pricing strategy in 2009 which lowered the price for its lower-end products and raised price for its higher-end products. The writer thinks that the company should not greedy all customers, and they can focus on the groups which have high use rates and high loyalty. I agree with her ideas.

Besides the Starbucks does not have obvious advantages on winning low-end market’s shares from MacDonald and other competitors, Starbucks may lose some high-end customers if it offers the lower price products. “A brand’s price and image are often closely linked. A price change, especially a drop in price, can adversely affect how consumers view the brand.” (Armstrong) Therefore, Starbucks should be cared if they want to put low priced products in the market. Take Thinkpad (a laptop brand) as an example, there were only three series (T, X, & R) in 2004.  However, Lenovo wants to capture the lower-end markets. As a result, the company has offered SL, E and L series which charges lower price in the market since 2008. Although the company also offers the New W series which is offered for high-end consumers, Thinkpad is losing the high-end consumers which were captured by them.

During the economic crisis, Starbucks can do following options except offering lower priced products: (1) Increased the perceived value of its products (2) Improve the quality of the products. (3) In some price-sensitive region, the company can low slightly the prices. (4) If the company still wants to capture the lower-end markets, it can create a fighter brand without affecting the image of Starbucks. (5) The company can work with local community in order to raise its society effect. Those actions can help the company build a long term relationship with customers and society.

             Let’s talk about the Singapore Airlines (SIA) again. Yesterday, I read an article “Singapore Airlines shows off Scoot low cost brand” written by Ben Sandilands on the Crikey website (http://blogs.crikey.com.au/planetalking/2011/11/01/singapore-airlines-shows-off-scoot-low-cost-brand/). Singapore Airlines showed off the logo and livery of its new brand “Scoot” on Nov 1^st. The flights of Scoot Airlines will start operating from 2012.

            In the past decades, SIA’s market share has being taken by its competitors, such as Air Asia and Jet star. Those competitors offer lower price than SIA for customers. Recent economic events have caused a fundamental shift in consumer attitudes toward price and quality (Armstrong). Although SIA is a Five Star airline because of its outstanding customer service, most customers prefer lower-priced air tickets.

              Responding to competitors’ price war, I think Singapore Airlines takes two effective actions. First, the company increases the perceived value of its service, and it stills offer the best service for customers. Today, the company is still one of the six “Five-Star Airline” which is the highest award for airline companies. Besides raising the perceived value for its brand “Singapore Airlines”, the company is planning to operate a “fighter brand”-“Scoot” which offers lower price air tickets for customers. In order to be different from SIA’s another “fighter brand” Tiger air ways which focuses on short haul routes, the Scoot will offer the long haul routes. In the future, North Asian or North American residents may take Scoot from their countries to Australia and New Zealand via Singapore with lower price.

             I think the multibrand strategy used by SIA in order to gain market share back is good. However, multibrand strategy would be able to result in increased amount of cost for maintaining different brands. For example, SIA will have four brands including Silk Air, Tiger Airways, and Scoot next year.  Each of them may get small market share, and maintenance cost may be high.

I have read the post written by Jiayao Guo (https://blogs.ubc.ca/guojiayao/) about “Yao Ming and NBA”.  This post touches me because I like Houston Rocket, and I have been watching NBA games since Yao Ming joined Rocket.  From my perspective, NBA’s marketing growth rate in China will slow down in a short run. After he retired, many fans felt disappointed. However, not only do they like Yao, but also they like Rocket and other NBA teams.  They will go on supporting the teams they like as long as the teams can play wonderful games for them.

Take Italian Series A as an example.  Twenty years ago, AC Milan was the best soccer team in the world, and they had many superstars, such as Maldini and Van Basten. Its competitors, such as Inter, Napoli and Juventus, also have excellent players. Many people watched Italian series A because their favorite players were playing in this league.  On Aug 6^th, 2011, AC Milan and Inter Milan played a match in Beijing for Italian Super Cup. At least 80,000 fans watched this match in the stadium.  Although Italian series A is still popular, Italian clubs are not as strong as they are 20 years ago because many excellent players have transferred to Spain and England since the scandal in 2006. Fans, who have been watching soccer games for many years, still watch Italian Series A. In contrast, people who just start to watch soccer games are attracted by Barcelona, Real Madrid, Manchester United, or Chelsea because of the super stars, and Italian Series A has little attractiveness for them.

Superstar KAKA who played for AC Milan from 2003 to 2009. He transferred to the Spanish  club Real Madrid in summer 2009.

People usually develop their likings towards players before they fall for the teams.  Later, they usually become loyal fans (customers) for the teams where the super stars play. NBA does not need to worry about Yao’s retirement if it still has attractiveness for new audiences (customers).

        Three years ago, I read a piece of news that Singapore Airlines (SIA) updated their A340-500’s cabinet. The new cabinet has only 100 Business Class seats. The traditional Air Bus A 340-500 usually can take about 200-300 passengers once. For example, an A340-500 in the Emirates has 258 seats which include: 12 seats for First Class, 24 seats for Business Class, and 204 seats for economic class. Why does the A340-500 have only 100 Business Class seats? I think the manager take this strategy for several reasons.

 First, many Airlines develop the strategy of cost leadership, such as Southwest Airlines, Westjet, and Air Asia. Those companies are getting more and more market share. Airlines cannot offer both high-level service and low ticket price for their passengers because it will reduce the profit for the companies. Singapore Airlines has 5 A340-500 planes, and all of them fly between Singapore and New York without stopping. Those two cities are global economic centers, and many managers need to fly between those two cities. Most of them desire to get to destination quickly and receive high-level customer service. They have low price demand of elasticity.

Also, the price of business class seat is usually twice as much as that of economic class. Due to the economic crisis, some people with lower income may give up some travel plans, or buy some cheaper tickets with stopping. Those people have high price demand of elasticity. Some flights may have some idle seats. As a result, Singapore Airlines may give up the market of Economic Class, and focus on the Business Class.

    Although business class seats may bring a large amount of profits for SIA, company cannot ignore the substitute for communication. More and more people have been using e-business to communicate with each other, which means they do not need to travel from one place to another to attend a meeting.

My name is Sibin Fan, and you can call me James. I come from China.I have been in Vancouver for 2 years. This summer, I came back to china and enjoyed a wonderful summer vacation with my family and friends. I like playing soccer, and my favorite soccer team is AC Milan. Today, I feel very sad because Milan lose the match.

I take Comm 296 for several reasons. Comm 296 is a core course I need to take.  From this course, we can learn different strategies developed by companies. For example, Apple develops customer-oriented strategy, so they get success and they are very successful.  Lenovo owns two brands: Ideapad and Thinkpad, and the price of Ideapad is usually lower than that of Thinkpad. From this course, we can know why Lenovo develops this strategy.  Besides learning from the strategies that have been developed, we also have opportunities to think about new strategies for companies in this course. Marketing affects our daily lives. Not only do companies need to attract new customers’ attention, but also they need to keep their loyal customers.  Take my story as an example, I bought an ipod touch in 2009. I had not been using any Apple’s products before.  However, when I visited an apple store, I was attracted by their products and customer service.  This spring, I visited the store, and purchased an IPAD.  Marketing is also similar to our daily lives. That is, we need to keep the friendship with our friends.

I like airline companies’ ads because their ads portrait attendants with sweet smile, caring attitudes, together with beautiful music, and breathtaking scenes. In addition, most of those ads are customers’ oriented. Here are some links to some airlines’ ads:

(1) Air Canada Commercial           Air Canda commercial    

Customer can be attrated by Air Canada’s service and the beautiful music

(2)Cathay Pacific                          Cathay Pacific commercial        

comfortable seats make passengers feel more comfortable.

(3) Singapore Airlines             Singapore Airlines commercial

In this one minute’s ad, a Singapore Girl travels many countries, including French, USA, India and  China.   The background music is very smooth and beautiful.

From the videos, we can see that those companies emphasize on their passenger service rather than their companies’ power.                 

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