Erick Yao's Blog

“Groupon is a deal-of-the-day website that is localized to major geographic markets in the United States and Canada.” (Wikipedia). It sends out daily emails to subscribers informing them about deals in their geographical region.

I subscribed to Groupon in July 2010 and unsubscribed in August 2010 because I thought that deals posted on that website were too good to be real. It, however, turns out that Google, a multinational public corporation, tries to buy Groupon for 6 billion dollars (published last week in THE GLOBE AND MAIL). As described in the article, Groupon was created in 2008 and became one of the fastest growing companies in history. I just found out in a marketing blog that Yahoo was also interested in buying Groupon earlier this year.

Groupon succeeded because of several reasons. First, it was able to take advantage of internet and its fast way of communicating information in order to capture customers’ attention with the best and most recent deals in the city. Secondly, Groupon links stores or companies to consumers and allows firm to use direct marketing at a very low cost. The traditional way of direct marketing is to send a coupon to customers in their mail box. This method can be effective but it has several disadvantages: it is costly; and it can sometimes target consumers who are not interested in those products. On the other hand, by receiving via email customers can simply delete the email from their inbox without going through the trouble of recycling. Because of those advantages, more and more firms post their deals on Groupon and as a result more and more individuals subscribe to this website hoping to get the best deal possible.

I was reading Derek Li’s blog and found some interesting points regarding the GM’s ad. In class, Tamar has shown us the characteristic of advertising which included information, persuasion, and reminder. I am going to remind you, blog readers, of the video introduced by GM and posted on UBC blog by Derek.

In those types of ad, where the company is trying to position itself, persuasion is one of the main criteria. Throughout the ad, GM has shown many examples in which people have failed because of various reasons. GM related all those examples to its own failure in order to prove that it is not the only person/company that “fell down”. Because the audience is better able to accept certain facts if they have personally experienced it, I believe that this persuasion strategy is very effective. Along with persuasion, GM also included the reminder aspect in its ad. Indeed, after 100 years of operations, customers will have to be reminded about the existence of GM; as our teacher would say: “Hey Folks, we are still out there!” Also, while watching the ad, I personally think that GM was trying to differentiate itself from other car companies by admitting its failure and emphasizing its rapid recovery. Today, a lot of organizations are still not ready to admit something, and would rather blame external factors to protect their images.  Finally, GM released the ad during thanksgiving and sent out a message to the government, consumers, and taxpayer in general to thank them for their support (directly or indirectly) which appealed to consumers’ compassion. With all that combined, GM successfully created an emotional video that could potentially attract new or lost customers.

I am posting this blog in response to Catherine Hsu’s blog.

She discussed several important issues about printing disturbing pictures on cigarettes’ packages. I totally agree with the fact that it is not really ethical to add those images to the packages. Also, I do not think that this will be very effective for several reasons. With all the information that we have today about the danger of smoking, no one should smoke because of its deadly consequences. People have had anti-smoking campaigns in order to promote non-smoking habits and many have tried to prevent smoking ages by going to schools and educating teenagers. Government have also tried to regulate the amount of tobacco inhaled by the population by imposing a tobacco tax on every cigarette purchased. Furthermore, most public places, such as restaurants or malls, have “no smoking” signs which have slowly limited cigarette consumption as it could be quite a hassle to get up and go outside to smoke.

Although we have noticed a drastic decrease in tobacco consumption over the past years, some people still ignore the consequences and keep cigarettes in their mouths. Because current smokers have been exposed to all types of anti-smoking ads, I believe that they have seen worst and more shocking pictures than those presented by Catherine. This is why I do not think that those pictures will have a strong impact on current smokers.

Ignoring the ethical issues, I, however, think that those types of pictures can be effective in developing countries such as China or Indonesia, where the general population is not yet aware of the effects of smoking. For example, in the following video, a baby started to smoke when he was only 3 years old and is currently having 40 cigarettes a day. It is evident that those people need more education regarding smoking and need more exposure on the consequences of cigarettes.

The other day, while getting my haircut, I thought about the Canadian’s growing service sector and its impact on future generations. As a result of high demand for services, most people today work for in the service sector. With the advancing technology, some tangible goods are no longer purchased in the stores but instead downloaded from online sources. The good example is music and DVDs that used to be only available in Disks. Consequently, some CD companies are going out of business (the HMV store in Oakridge).  Because the DVD player is a perfect complement for DISKs, it will soon be driven out of business due to the low demand for it. Another example of pure service is artists singing in concerts. What do you get from a concert? (besides losing several thousand cilias which could cause some hearing disabilities) Nothing! (in terms of tangible goods). Also, people today are willing to pay really high price to see two persons fight. In the summer of 2010, Vancouver hosted a UFC fight and tickets were sold out even before they were released to the general public. I would also categorize casino in the service sector as it only provided entertainment to customers. Although those kind of entertainments were already available in the past, only privileged families would have attended Chinese/Italian operas whereas today anyone can “afford” a concert ticket. I also think that with the growing service industry, more and more consumers will be reluctant to leave their houses because most goods will be directly delivered to their houses. Online education also exists and is becoming more popular because of multiple reasons such as time saving (commute time), cost saving, etc… Some friend even told me that, aside from food, they purchase everything online.

BMW is one of the most popular car brands in the world. This German car positions in the luxury side of the industry as it sets its price above average. Indeed, the cheapest sedan costs around $40,000 and the most expensive models are over $100,000. Over the years, BMW has built a strong brand and is, today, known as a reliable and expensive car. This car company targets consumers with high income, people who like to have a special status in society, and people who like speed. With this in mind, BMW uses high quality material and closely inspect their car after manufacture in order to ensure consumer satisfaction after purchase. Although BMW is now seen as a common car in Vancouver streets, it is still considered to be a luxury car to most people compared to its direct and indirect competitors.

On the other hand, most people would consider Honda to be cheap and reliable. It is relatively fuel efficient and a lot cheaper compared to BMW as the least expensive model can be purchased at $15,000. The Japanese brand targets low income consumer who want to save on gas and only need a car for its transportation purpose. Because of its reliability, general consumers would rank it as a cheap and good quality car.

Hyundai has long been an inexpensive and low quality car in the eyes of consumers. Because of its reputation, people would hesitate when buying a Hyundai due to its safety issues and lack of options. It is, however, trying to position itself as a high quality and cheap brand over the past years by trying to integrate options and improving the look of its cars in general.

Aston Martin or Lamborghini are companies that are profit oriented. Although I am uncertain about the  manufacturing cost, I am assuming that they earn a large margin on each car sold. The price of those cars can range anywhere from $200,000 to $400,000. Because of such high prices, it is evident that not everyone can afford it. Those companies rely on this rarity to create value which is directly associated with its price and product.

Car companies try to differentiate themselves from competitors by appealing to different consumers. People with higher income would generally prefer a “better” car while lower income customers would want a cheaper car that possesses minimum safety standards. Additionally, some companies have developed into the “green” market and developed hybrids while others ignored the consequences of pollution in order to preserve speed. Ironically, the most expensive cars are not those that provide greater benefits to the environment but those that pollute the most. In today’s society, where everyone thinks of sustainability, I believe that consumers will soon prioritize eco-friendly cars over fast cars.

Last year, Apple came out with a “tablet PC” called Ipad. It can be used to watch movies and read books in a bigger screen. Other than that, the Ipad is nothing else but a huge Ipod.  In doing so, Apple has developed a competitive advantage as no one in the industry has ever manufactured such products.  The IPad (9.56X7.47X0.5 inch) has a 1GHz Apple processor, several sensors (light and speed), built-in speakers, microphone, and up to 64 GB of flash drive memory.  It can be used to read ibooks, watch movies, play games, listen to music, or surf on internet.

Blackberry is soon launching its own version of the tablet: the Playbook. The Playbook is slightly smaller and lighter (7.6X5.1X0.4 inches). The Playbook is slightly better in terms of technology with its 2 integrated cameras and internal RAM. It, however, lacks a main component that customers are looking for: the giant pool of applications that Apple possesses.

Samsung also came out with its own version of tablet: the Galaxy Tab or the APad (Android Pad). This Galaxy Tab is almost similar to Blackberry’s Playbook and Apple’s Ipad. The only main hardware/software differences is that it has a GPS, Swype (typing without lifting fingers”  and use an android operating system. Another important factor that consumer look at before buying the Galaxy Tab is its price. The little device costs $100, which is relatively cheap compared to Apple’s Ipad ($499) and Blackberry’s Playbook (NA).

All those companies seem to target the same market segment by creating those products: people who find it convenient to have a gadget lighter and better looking than a laptop which would facilitate its transportation to/from school/work. Because of all its limitations, I find it less practical than a regular laptop. Its virtual keyboard considerably lowers productivity as it will be slower to type on a touchscreen.  Microsoft word/ excel documents or internet articles that require adobe flash cannot be opened.

What do they have in common? … They are all VERY expensive!!

Is it because the cost of manufacturing those products are high?

No, it is simply because their internal values are worth this price. Those companies have been able to create value related to their products.

This is rather interesting: the higher the price of those goods, the more consumers are willing to purchase them. If Louis Vouiton was to decrease the selling price of its handbags, its yearly revenue will drastically decrease because of a decrease in sales. In normal situation, one would expect that a decrease in price will lead to an increase in sales. In this particular case, customers are only willing to buy an expensive product. Why? Because they directly associate value with price. Owning a Gucci differentiates them from the rest of the population because not everyone is able to purchase such luxury goods. The product has given them a status difference in society.

I personally think that this type of marketing strategy is excellent to target higher class consumers. With all lower needs satisfied, rich consumers will naturally seek to boost their self esteem and conspicuous consumption can help them.

Several centuries ago, a lot of people would have said “How can we survive without food?”

Several decades ago, a lot of people would have said “How can we survive without electricity?”

Today, a lot of people would say “How can we survive without INTERNET?”

What is online? …

A better question would be: What is NOT online?

DVDs and CDs that we used to buy 10 years ago are now available online

Newspapers are posted online everyday

All songs (or most of them) can be found online; one of the most popular video site being YOUTUBE

Talking to friends can be done with MSN messenger

Articles and published work are located in online databases

Many companies provide online billing

The list goes on…

As our marketing teacher Tamar has added: the advantage of viewing all those online is that “… IT’S FREE!”

Many employers noticed the increasing trend of individuals using the internet and, as a result, taken advantage of it by recruiting online. Consequently, job sites such as monster.ca or craigslist.com have emerged facilitating both the employer and the employee. As opposed to the old days when people still looked for employment opportunities in the newspaper, most of today’s employees now look for jobs online. In addition to specific sites, many employers also tried to advertise and recruit via social networking sites such as FACEBOOK. Those social networking sites are sites that are the most daily visited sites and with the number of people using it, an ad posted for an hour on FACEBOOK can be very effective.

I recently read a blog in which the author posted some statistics. These stats revealed that more than half of the U.S. population use internet, or more specifically watch videos. I don’t know how reliable those stats are but they don’t surprise me at all.

The Following video has more than 300 million views:

Posting ads online can be useful to target younger consumers and those who are familiar with technology. More and more companies are aware of that and adjusting to it by creating company websites or posting commercials online (eg. YOUTUBE). This can, however, be a not a very effective strategy for companies selling products to seniors, who might not know how to use a computer.

Whether this commercial is ethical or not, it has certainly made a lot of people laugh. I personally think that abnormal and original commercials are the most effective. As depicted in the video above, a couple desperately tries to kill each other for a common purpose: drive the TOYOTA to work. This is rather humorous because, realistically, no one will ever try to assassinate his/her partner for the simple pleasure of driving a RAV4. The message that the car company is trying to get across is that people are willing to do anything to drive a Toyota, or more specifically, a RAV4. Toyota is trying to build a brand and differentiate itself from other car company (points of differentiation).

Unfortunately, Toyota has experienced many safety issues during past years. The commercial above can no longer be used because, according to the Maslow’s hierarchy of needs, customers/consumers will not care about the options that the car offers or its appearance (esteem) if they do not feel safe while driving the car (safety). The safety need is not satisfied; consumers will choose another car company that offers both safety and esteem. After problems started to appear, Toyota, however, completely changed its marketing strategy by focusing on safety.

As seen in recent Toyota commercials, the company is trying to change customers’ attitudes towards this product by using statistics or videos demonstrating various safety measures. Multiple simulations were posted online and shown to public. In doing so, Toyota wishes to restore its previous reputation as a car company and, more importantly, regain its customers’ trust.

Last year, while seating in my Psychology class, I learned something rather interesting about marketing. A research has been conducted to test the behaviour of a randomly selected audience.  A commercial was shown to the audience and, occasionally, random words such as “Coke” or “Lemonade” popped out for a fraction of seconds. Later on, subjects were asked whether they have seen those words, and most of them have reported that they did not.  Following the commercial, they were asked to complete multiple irrelevant activities such as reading, playing chess, etc. for an hour. Water and coke were placed in front of them. Results revealed that people exposed to words such as “Coke” during the commercial are more likely to drink coke when they are thirsty. I have probably missed a lot of details including other factors that determined this behavior but the conclusion that I wanted to make was that some companies can market their products in ways that consumers would not even be aware of. This marketing strategy can be effective but scary in a way, which can potentially bring up ethical issues.