Month: September 2010

From the television to the local grocery market, products of the same nature are everywhere; the only difference to tell them apart are the brands. For a carbonated sweet softdrink, there are Coca-Cola and Pepsi. Statistics show that in North America, Coca-Cola has a market share of about 43% which Pepsi lagging behind at 38%. Although both competitors essentially offer the same product, what constitutes for a varied opinion of consumer choices of coke? The answer simply lies in the brand that came first.

The Coca-Cola Company introduced the product in 1886 while Pepsi entered suit with a similar product in 1903. Therefore, ever since the introduction of coke by the Coca-Cola company, consumers have already identified the product with the name brand. Today, when one refers to coke, the brand Coca-Cola immediately comes to mind. According to Ries and Trout, a product’s first impression in a consumer’s mind can significantly dictate the future success and popularity of a product. In consumers’ eyes, the first brand to concoct a unique product will have the “best” quality and reputation. Consequently, market shares for the premier brand most often take the lead than other secondary names.

Nevertheless, the two competing brands, Coca-Cola and Pepsi continue to battle for market shares to this day. Their marketing techniques are often unethical because each brand will put down the other to boost its own superiority. Several years ago, Pepsi’s marketing team made a quirky and funny commercial to battle against Coca-Cola. Although creative, Pepsi’s commercial is unethical and was eventually banned. Presently, as Coca-Cola and Pepsi compete from head to head, Coca-Cola will indeed take the lead in consumer choice because it was the first brand to open the coke market.

Originality is value.

In 2009, Wal-Mart declared war on Amazon.com, a “price war” that is. Specifically, Walmart will markdown hardcover books down to only $9 on its online store. Amazon.com, a well-known online supermart for discount books is shocked to find that Wal-mart has entered its market territory and is attempting to lure away their consumers with unbelievably low prices. 

Additionally, the duel between Wal-Mart and Amazon.com has a domino effect on smaller independent book stores, independent authors and even large retailers like Barnes & Nobles who also suffered dropping stock prices. In this “price war”, Wal-Mart is essentially the bully using its advantage of massive buying power of consumers to battle its competitors. Wal-Mart’s declaration to markdown its books is simply an enticement for consumers to visit the online stores and essentially browse on other discounted but profitable products.

In this situation, the leading winner is undoubtedly Wal-Mart because its revenues come not only from its online inventory but also its land stores. Amazon.com simply cannot compete with Wal-Mart’s expansive consumer power which is why it is crucial for Amazon.com to withdrawl from this nonsense. Similar to the price cuts between Lieber and Vancouver Light, a price war is not worth the fight when it means risking the loss of one’s profits and business. The next move for Amazon.com is to focus on the sales of other independent sellers that cannot accept Wal-Mart’s non-profitable prices. Most importantly, Amazon.com should continue to uphold its reputation as a book powerhouse, rather than low prices to win the hearts of faithful book readers.

Source:

Huffington Post

Garment workers in Cambodia initiated a week-long strike to fight for higher wages. Although many of the country’s unions had agreed on a recent 50 percent raise from $61 dollars since July, Cambodian workers continue to push for a $93 monthly wage this month. The workers’ push for more money is alarming.

If a corporation, say Walmart, is willing to raise the wages of Cambodian workers, the demand for even higher wages with continue due to inflation. As a result, Walmart will need to increase their product prices in order to compensate for their expenses. In our economic recession, consumers will buy fewer products; therefore, sales will inevitably fall. When demand is low, workers will be laid off or worse yet, companies may chose to relocate their factories in other countries.

Should corporations increase labour wages in foreign countries?

Yes, I believe that corporations are socially responsible for ensuring that their labourers are paid reasonably adequate and treated fairly. Nevertheless, business must keep in mind that increased variable costs also mean higher prices and less profitable business. Moreover, workers need to know when they will be on the brink of unemployment.

Sources:

BBC News

Manila Bulletin Publishing Corporation

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