Eileen Kwok's Blog

Nissan has recently announced that they are joining partnerships with NASA to develop and launch their own self driving car in 2016. This made me think about how fast the word is developing and how everything that’s being innovated is to make our lives easier and efficient. However, with such great power comes responsibility. As Alicia mentioned in her article, this poses a question on safety. While consumers might be mesmerized and anxious to get their hands on one of the first autonomous driving cars, they need to be sure that they can trust the brand before doing so. In order for a firm to develop customer loyalty they need to show them that their producing valuable products. Thus I advise Nissan to continue to develop and test their cars to ensure that they are completely user friendly before they release it on to the market. Because once consumers lose trust in a brand, it’s hard for the firm to gain it back. Take for example, McDonald’s, once consumers all over Japan have filed complaints about finding wires, etc inside their food, McDonald’s market sank with the shutting down of a several stores in Japan. McDonald’s is currently trying to regain its consumers by announcing a change in management and releasing of new dishes, consumers in Japan are still reluctant to purchase from this fast food chain.

If Nissan can successfully develop this car, I am sure it will be a big hit in the market, helping the firm develop an inelastic demand for this good. Thus I agree with Alicia’s point of view as she mentioned that she believes in its success “because of its bold move in developing and bringing a concept of life.”

Sources:

Alicia’s blog post

http://www.japantimes.co.jp/news/2015/04/03/business/corporate-business/nissan-launch-self-driving-car-japan-2016-ghosn-says/#.VhCIwxNVikq

Unlike its competitors Nike and Under Armour, Reebok chooses to differentiate its brand by targeting a more specific set of customers: one that does tough mudders, mixed martial arts, and cross fit. Unlike other brands like Lululemon whom create sporty clothing for a mature audience, Reebok wants to central its focus even more to a tough social fitness space.

The target customers claim that Reebok understands what tough fitness means for women and what they need for their lifestyle. Reebok has also in a sense rebranded itself by changing their logo to shift its emphasis from a general sportswear company to one that focuses on a specific athletic demographic.

I actually think it’s good for Reebok to brand itself as compared to its competitors when you think of the top sports brand, you think of Nike or Adidas. So by centralizing its focus, this firm would be a big hit towards the crossfit market since there are less companies who design clothing catered to those specific needs. By differentiating their brand, they’re able to charge higher prices as there are consumers willing to pay more for clothings that fit their specific requirements. Thus I agree with Reebok’s decision to shift its focus to save its business and attract a different set of customers.

http://www.businessinsider.com/reebok-wants-to-compete-with-nike-under-armour-and-lululemon-2015-11

Recently, the country’s largest group of doctors have voted at a meeting in Alabama that they want to prevent the advertising of drugs through TV commercials, and online ads as it influences patients to seek expensive treatments inflating the demand for drugs. While the UK and New Zealand allow drug companies to engage in direct to consumer advertising with consumers, other countries have banned this form of advertising.

While it’s argued that direct to consumer advertising is effective in providing accurate information to patients so they can be better informed about treatment options, others claim that ads can often be biased and misleading. I agree with this statement as campaigns tend to overexaggerate the result of their products setting high expectation for consumers which allow them to raise the cost of drugs. While this may help foster revenue for the firm, it is unethical to make false claims about a product and in the long run when consumers realize the lack in quality of the drugs it will hurt their business.

From the perspective of a student who wants to specialize in marketing in the future, when deciding how to advertise a product it’s important to consider what’s a good balance of providing true facts about the good while grabbing the consumer’s attention.

source:

http://www.businessinsider.com/doctors-want-to-ban-drug-ads-2015-11

Amazon are now offering one hour delivery services placing them at the top of the delivery chain. They are also offering a full grocery delivery service in the UK offering 50 to 60 different frozen and chilled food products. This helps them advance as a firm in terms of customer service as customers can benefit from fast delivery on any essentials they desire from coffee to latest technology devices. Its grocery service named “Amazon Fresh” is now available in three states in America and is planning to expand its business in the UK.

By Amazon providing this service, it’s going to pose a challenge for supermarkets in the UK, as it’s more time-saving and efficient to order groceries off of Amazon instead of going to the supermarket to make your purchase. On the contrary, Amazon itself is also faced with tough competition as the UK has their own variety of online grocery services like Tesco, Sainsbury’s, etc compared to America. What is saving the sales in normal grocery stores is the lower cost and the greater variety of goods that they offer, but as Amazon plans to sell wine and more higher end groceries online next year, other stores might expect a fall in their sales.

source:

http://www.theguardian.com/business/2015/sep/29/amazon-one-hour-delivery-service-prime-now-food-grocery

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Japan has underwent seven recessions in the past 20 years with an averaged growth of 0.8 percent per quarter, while China has continued to grow becoming the world’s second largest economy. Especially with the working population shrinking, Japan currently faces a crisis in its economy. With financially supporting a family becoming increasingly difficult with increasing prices, settling down and having kids are becoming less attractive to females. Thus with the fertility rates remaining low this means less consumption which will affect the slumping economy negatively. The government has tried to tackle this issue by paying for lip services that are involved in empowering woman but such effects can only be recognized in the long run. Thus the government has attempted an expansionary fiscal policy through increasing government spending in order to close the recessionary gap and move economy towards a full employment level of output however in order to promote a long run economic growth, I suggest Japan to adapt to a interventionist supply side policy in order to increase the productive capacity of the country. While this policy would require spending initially stimulating the demand if Japan can wellcraft this policy this should create an enduring expansion in the long run supply. Coming from Japan, I am deeply concerned for Japan’s economy because what the government decides to implement directly affects me.

source:

http://www.bloomberg.com/news/articles/2015-11-16/economic-contractions-are-becoming-awfully-common-in-japan

Recently, I came across an article in Forbes that discuss what firms are doing to help those that were affected by the terrorist attack in Paris. The article went into depth explaining how Airbnb are encouraging people to accommodate their place for low costs, skype dropping their call fees in France, and Virgin Mobile waiving international long distance calls. While this is supportive of the victims that were affected, and are even expected from well known industries, this has got me thinking of whether there are alternative motives to their actions.

I’m not suggesting that firms are not deeply in remorse and merely want to help those that are affected by the incident but knowing that providing free services leads to a loss in their revenue, is there brand recognition rewarded for their actions? Showing to others what these firms are doing to support the attack could possibly serve as a marketing strategy. Because consumers feel better about purchasing from firms that are caring towards world issues letting others know what they are doing to support the victims not only get people to recognize the firm but catches their attention. While these firms are in line with ethics in business it could also blindedly market their brand.

Source:

http://www.forbes.com/sites/emilycanal/2015/11/16/how-businesses-are-helping-after-paris-terrorist-attacks/

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While the one for one business model is prosperous in terms of marketing, as consumers are more likely to purchase from a brand that “supports” and provides aid for an unprivileged environment for the purpose of self contentment and emotional attachment, it does little to help eradicate the issue of poverty.

I am opposed to the one for one business model because giving away free products does nothing to address the causes of poverty and work toward a long term solution. For example, “Toms” buy one, give away one for free, system isn’t going to lessen those that are battling poverty because it doesn’t provide the infrastructure to create wealth. As a social entrepreneur, Blake Mycoskie should discover strategies that actually work towards lessening those in poverty while sustaining its business such as developing manufacturing plants close to donation locations as it provides employment in the industry and decreases the cost of shipping for the firm.

Toms system is more of a business strategy to make consumers feel good about themselves and their purchase. Because in reality the children that Toms “helped” by giving up free shoes are still susceptible to harmful diseases due to the location and environment they’re put in.

The one for one business model is currently becoming a trend in social entrepreneurship which would harm other firms who are currently following the same business model thus similar brands should work towards differentiating its products and invest in research to discover strategies it can use in its sales to create a meaningful impact in countries that suffer from poverty while educating society the severity of the issue.

Sources:

http://www.fastcoexist.com/1679628/the-broken-buy-one-give-one-model-three-ways-to-save-toms-shoes

http://knowledge.wharton.upenn.edu/article/one-one-business-model-social-impact-avoiding-unintended-consequences/

http://archive.skoll.org/about/what-is-social-entrepreneurship/

Sugar. We always knew it was bad for us. But when the Food and Drug Administration announced that americans should eat and drink no more than 50 grams of sugar, lawmakers and consumers started turning against the consumption of sugar. Since then the American Beverage Association has invested millions into fighting laws to tax and label beverages that included sugar and it’s said that major firms like Coca-Cola has been investing money into misleading research. Before sugar, fat was being shed a negative light on. Headlines during the 1980s discussed how butter, oil, and meat were ruining our health influencing grocery stores to change their shelves with low fat alternatives.

Soda companies are taking notice on how influential research can be on their business thus they’re exploring ways to make up for their losses. For example, Pepsi and Coke are using a dual-pronged approach meaning, reframing their products to convince consumers that sweet beverages are okay to drink as well as investing outside of their traditional sweet beverage. In order for soda companies to continue to make profit, they need to provide consumers with evidence that their beverages aren’t as unhealthy as they seem, hence they should cut the calories they include in the drink. One strategy they approached was to decrease their size of their cans and doing this increased sales by 17%. Decreasing the size of the can, made consumers perceive that this meant they included less calories, making them give in to the temptation of a sugary drink.

source:

http://www.businessinsider.com/big-soda-is-fighting-science-on-sugar-2015-11

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Birchbox, Stitch Fix, these are some of the names of subscription services that was the trend back in 2013. This e-commerce subscription model consisted of paying a monthly fee for different products to be delivered to your doorstep.

However, recently these subscriptions face challenges for consumers as once you join the membership it’s tough to get out, resulting in recurring credit card fees after you’ve cancelled your order.

In my opinion, these subscription box services are a hit and miss depending on the consumers. These boxes come with a variety of different samples thus each month the products delivered to the consumer could be favourable or have the opposite effect.

This service quickly grew because consumers were constantly eager to try new products but after a short time period consumers stopped buying the products after they’ve got the chance to try them out.

These firms should adapt to differentiation in order for their products to appeal to customers to an extent that they would be willing to pay for a monthly subscription creating customer loyalty. Subscriptions are powerful, but it all depends on how firms decide to differentiate their brand. Providing products that can’t be purchased anywhere else or services with strong customer service such as “Netflix” will result in more subscriptions for the firm. As Birchbox stated, building stronger relationships with their consumers has the potential to be translated into increased revenue. Thus they should aim to interact more with their consumers to learn what kinds of product they want in their subscription, helping them create a close relationship with they buyers.

Sources:

http://www.businessinsider.com/the-pros-and-cons-of-subscription-models-2015-9

https://blog.compete.com/2014/03/31/subscription-services-ecommerce/

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Evernote, the note taking application started off worth one billion dollars however fast forward to three years, and the tables have turned.

What was once a firm with 30 million registered users with a total funding of $270 million is now cutting 47 employees and shutting down 3 out 10 of its global offices.

So what caused Evernote’s downfall in revenue?

Former employees believe that its the firms lack of focus on its growth and poor choice in prioritization. Instead of focusing on its core product that helped them attain their revenue in the first place, they spent more time on releasing new products and features. Evernote’s sole priority was making money and they were corrupted with the mindset that producing more new products would help them do so. However, my take on this is that if a firm tries to expand its company into producing different items, if wouldn’t differentiate from other firms. Instead, I feel that Evernote should focus on its core product and work towards enhancing its features to keep its customers.

Thus, Evernote should pursue a focus-differentiation strategy. In order for the firm to achieve long run growth they should focus on how they can differentiate their application from other rivalry such as Noteshelf and Simplenotes. Differentiating their application will allow them to pass higher costs to customers since close substitutes don’t exist.

Before Evernote drifts away from its top status it should prioritize their focus and cut back on investments to improve its cash flow to help maintain their reputation.

Sources:

http://www.businessinsider.com/evernote-is-in-deep-trouble-2015-10