Month: March 2011

Last year around this time, there were two serious crises: Toyota’s recall and Tiger Woods’ infidelity. Both crises shocked the world, and both failed to manage crisis in terms of public relations. In my opinion, however, marketers could learn how to improve public relations from Toyota and Tiger’s mistakes.

1. Respond quickly.

It takes a week for Tiger Woods to respond to his affair (well,we should take into account the fact that he was in the hospital after the crash). The more time people had tp wait, the more suspicious they would be.In their recall crisis,  Toyota failed to respond immediately too. A late response usually means that the firm should make greater effort to deal with more difficult issues later on.

2. Clarity matters

At first, Woods refused  to clarify the incident by stressing the importance of privacy:” But for me, the virtue of privacy is one that must be protected in matters that are intimate and within one’s own family. Personal sins should not require press releases and problems within a family shouldn’t have to mean public confessions.” Yes, privacy should be protected, but Woods also should have given an open, candid explanation of what’s going on.

3. Meet the public’s expectations

Toyota’s first press conference after the recall is criticized for not meeting people’s expectations: There is no detailed, factual information, no presence of the president, and no ” deep bow” as Japanese enterprises ususally do in making apologies. Therefore, customers’ anxiety was not relieved.

In a word, public relation is important because when a crisis occurs, consumers not only focus on the crisis itself but also pay attention to how the firm deals with the crisis. Sometimes, it is easier to forgive the firm for doing something wrong than dealing with their problems inappropriately.

In 2010, the world cup was hosted in South Africa. It was the first world cup that took place in the Africa continent. Yes, south africans are excited when they knew their country would be the host for 2010 world cup. But how did the world cup turn out? Nay…Not so great for Africans, since only 2 % of tickets are bought by Africans.

Well, the low sales were not caused by African people’s lack of passions for football. Most of African people loved that sport. Also, the income was not the big issue here because South Africa’s GDP per capita is greater than $ 10,000. The world cup ticket is definitely affordable.

So, who is to be blamed for this situation?  For me, the answer seems to be the inefficient distribution channel for tickets.

There are two ways of getting tickets in general: 1. You have to register in FIFA.com or 2. you can apply for a ticket over the counter First National Bank branches. It appeared to be a great way to sell tickets since an internet channel could enable people all over the world to purchase tickets.

Yes, all over the world, except Africa.

(This aint right!)

The two distribution channels are insufficient in Africa because most countries in Africa are limited in Internet access. Also, bank accounts are not popular in Africa. The truth is that the old way to distribute tickets is most sufficient for African people.

Although our textbook is a huge fan of Internet channel, we need to take into account the accessbility before we make the decision!

Predatory pricing is considered to be one of the most horrible weapon in pricing strategy. Once a firm uses this pricing strategy, its competitors’ sales are expected to stagnate. Meanwhile, the firm’s own profitability might also suffer if the low price can not even cover the manufacturing cost. Although predatory pricing usually leads to a lose-lose situation, it is always adopted by existing  large companies in a certain industry. In their perspective, a temporary loss is worthwhile so long as new entrants are kept out the market.

Which brand of microwave oven do you use? If you ask this question in China, most of people will refer to Galanz. For me, this is the only type of microwave oven in my retrieval set. Galanz is one of the first companies to produce microwave oven in China, and it is notorious for adopting predatory pricing strategy each time a new company is ready to enter the microwave oven market. By doing so, it successfully ruled out almost every single competitors in the industry, and enhanced its leader position.

But years later, Galanz decided to enter the air conditioner market. Although the predatory pricing strategy was powerful when Galanz was the leader in the industry, would it still be powerful when Galanz is the entrant into a new market?

From my observation, the answer is clearly no. Ever since it entered the air conditioner market, Galanz continued to use aggressive predatory pricing. A famous example is ” if you buy an air conditioner for 2680 Yuan, you can get a 2880 yuan watch for free”. Even though this promotion is judged to be legal, it did not work out very well. The main reason is that all existing companies are using consumer-oriented pricing, and focused on quality.

Therefore, my conclusion is simple: you may have an edge by using predatory pricing if you are the leader in this industry. For an entrant, however, using predatory pricing is suicidal!

The strategy of co-branding is widely used in the business world. As a consumer, I am always interested in observing how the “chemistry” between two brands turn out. I have to admit that if the “chemistry” really works out, both firms benefit greatly from this “marriage”.

First of all, co-branding helps provide better value for consumers, therefore increases consumer satisfaction.  Who would believe that shoes and MP3 will become complement? But that’s the way Nike + iPod works! Traditionally, shoes are for running and MP3 players are used to play music. While maintaining these basic functions, Nike + Ipod sports kit measures distance of running and gives runners a sense of achievement when they finally see the real numbers. As a result, consumers have a great benefit and will be more loyal and satisfied.

Also, co-branding helps one firm to establish itself among specific segments. For example, when Crocs chose to target their children consumer segements, the firm decided to co-brand with Disney. In this way, Crocs enhanced its brand image and therefore was more accepted by children consumers.

Lastly, co-branding could be designed to influence consumers’ attitude. In 1984, Nike announced that it would co-brand with Michael Jordan, which marked the birth of Air Jordan. Two decades later, it proves that this co-branding strategy turns out to be a huge success. In this way, Nike influenced consumer’s affective attitude and took advantage of Michael Jordan’s stardom.

To conclude, I would say that co-branding is not without risk. One potential disadvantage resulting from co-branding would be the brand dilution. Therefore, firms should always keep an eye on its brand value while maintaining trust with their co-branding partners. A successful co-branding definitely makes amazing happen!