Month: November 2010

There should be a considerable amount of competition in the retail banking industry. The big 6 (TD, BMO, CIBC, Royal, National, Scotia) in Canada, plus others (such as HSBC and credit unions) offer very similar services. The Canadian Marketing Blog goes into some detail on how Banks should use marketing.

Angel Chan’s blog talks about how TD has extended hours. This strategy helps TD target the working class segment. This could be their target market. When working class people get off work, some of the banks are already closed. TD is open later, so those customers that need to do their banking are more likely to choose TD. For us UBC students, TD has a green machine outside Angus, and in the basement of the sub. TD seems to focus on convenience for their target market. People running their own businesses might find TD’s weekend hours to be better for them too, since they might not have time to go run around during the week. Yes, this only looks at the retail banking side, but TD Waterhouse seems to be just as good, if not better, than the other big banks discount brokerages.
Something like Coast Capital will say that they give everyone their best rate without hassles and bargaining, but the issue is that they don’t have the network that the big banks have. They have less locations. Their debit system is less usable. TD usually gives better rates to their good customers. BMO actually gave my dad a better rate than me for the same amount (GIC). Once they found out I was the son of my dad, they offered me a slightly better rate. This probably makes the customer feel more special, unlike at Coast Capital where everyone is treated the same. Coast Capital’s target market probably includes those that are looking at posted rates and trying to get the best posted rates. Yes, they have a free account, but the convenience of other banks is not comparable to Coast Capital unless you happen to work around the corner from one of their locations.

Lululemon Blog

Juanita Ng’s Blog

These blogs brought up an interesting thought. Tamar said something about getting the baby shoes on Oprah, but not being mentioned. Lululemon is probably going to have a massive spike in sales over the next few weeks, especially leading up to Christmas. Oprah has so much marketing power. People listen to her advice. But why? In general, some people are just listened to. Some people are generally ignored. I’m not really sure what differentiates the two, but Oprah has become one of the most influential people in the world. Yes, some things that she mentions are probably good products, but the costs of these products are pretty high (ie the $50 candle). Will Lululemon exceed expectations this quarter because of the Oprah effect? Good chance if you ask me. Our marketing group is doing Lululemon, and we realized Lululemon relies on word-of-mouth advertising and doesn’t really run commercials or the typical advertising. Oprah talking about your product as one of her favorite things is word-of-mouth advertising on steroids.

The power of Oprah

I read another comm 296 blog and felt I needed to respond to a few things

Erick’s Blog

Cars are really just a mode of transportation. However, the consumer could look at it as buying status or “looks”. As a mode of transportation, Hyundai probably provides pretty good value. The new Sonata looks pretty good. Analysts argue that the Genesis is comparable to some of the luxury German models.

So why do some people have to spend, as Erick puts it, $200 000 – $400 000 on a Aston Martin or Lamborghini? Could be someone trying to show off their new found wealth. Humble people won’t usually do that though. A while back I read that some Chinese billionaire said that she didn’t even know what model car she was driving, and that she wouldn’t pay more for first class airfare compared to business class because business class was good enough. So, there are different types of consumers. Some people want to show off their wealth by buying the most expensive goods available. Modest, humble people will stop at a certain point, even though they could easily afford more. I think Warren Buffet still lives in Omaha. I read that people who need to buy expensive, black cars tend to have lower confidence. Is buying confidence worth (valued at) $200 000- $400 000? To some people it might be.  Not that all Aston Martin owners are buying confidence. Is it still buying status if all of your neighbours have similar cars? Erick says that BMWs are common in the Vancouver area. True, in some parts. If all of the neighbours have the same car, does that give you “status”? I argue that it doesn’t.

If everyone has the same product, none of them are buying status over their neighbours. If you buy a BMW and live in a suburb of Prince George, that BMW might be the only one for miles. Then, in my opinion, that would be buying status. Some people are naturally confident, and status is earned, not bought. Buffet might be an example of that. Yes, safety and such matters when car shopping, but going over the top really isn’t needed. Remember, the best things in life are free (well, in monetary terms, not including time and energy).

Erick’s comments on the Service industry are also interesting.

Yes, the  service sector provides the most jobs. Yes, nothing tangible is exchanged. But almost everything these days isn’t tangible. E-books are not physical products. Using Netflix doesn’t give you anything tangible. Itunes doesn’t sell tangible products. I would argue that people will still leave their houses to buy products. Yes, HMV is being phased out, just like Blockbusters.

Nobody wants to stay home everyday, all day. Who buys their food online? Can you convince your hair cutter to come to your house to cut your hair? People will still go out to buy and consume. People still like to have the experience of going out and doing things. If you go bowling, I would consider that to be a service, since you don’t leave with anything physical. So, I disagree with the idea of people being reluctant to leave their homes. People want to go out, maybe try on their clothes before they buy it.

I read a great article in the Vancouver Sun this past week. I immediately clipped it for my Comm 296 blog, but I lost it somewhere. Probably got recycled with all the other papers this week. Luckily, I found it on their site.

http://www.vancouversun.com/Companies+making+products+smaller+their+prices/3791708/story.html

This is really a good way to lower production costs and not make demand fall off a cliff.  By not increasing prices, consumers do not think that they are over paying for the product. The perceived value is the same as it was before. The product is basically marketed and advertised the same way as before.  However, the actual value that the consumer gets is lower. If I pay $5 for 500 grams of cereal, then it switches and I pay $5 for 450 grams of cereal, I am getting less “value”. But really, the companies need to lower costs to make similar margins that they made before. Maybe this means that food price inflation is appearing to be lower than it actually is. Some people will say this is sneaky marketing, but really, most people are probably better off with this pricing system. Is more chocolate, candy, bacon, other high fructose/high saturated/trans fats better “value” for you? I guess it depends on how you look at it.

Also wanted to point out that Geothermal stocks are finally starting to show some life, if you remember my “Green Energy” blog entry. It turns out someone actually read my blog and left a comment there, probably dealing with the electric cars. Pretty cool. I really didn’t think people outside of comm 296 would come across my blog, so this was a welcome surprise.

Gordon Campbell is stepping down. The way that the Liberals implemented the HST led to people hating Gordon Campbell. I have to say, I did not follow all of the political stuff in the past. I do remember his drunk driving thing in Hawaii though. Marketing for political reasons is all about how people (voters) view politicians. What do people remember? Everything bad. The drunk driving, the sale of BC Rail, and HST. Buyer’s (Voter’s) remorse. It’s funny how things work. All of those signs out there supporting politicians…the commercials…the attack ads… If you think about it, building party support is really building a brand. But the Liberals are more than just a brand. People may vote as if political parties are brands, but there are consequences when people vote without knowing anything other than seeing some attack ads and a couple of signs. Gateman was right: Not everyone’s vote should be equal. HST looks bad up front, but when you look at the long term, broad overview, HST isn’t so bad. Yes, some sectors (restaurants and legal services for example) are hurt. But when you compare these additional costs to the consumer with the various tax rebates and lower income tax, HST isn’t nearly as bad as Carole James and the NDP are saying it is. (By the way, did Carole James pass Econ? Raising minimum wage = higher unemployment, price floors). Then she says something about “what about the environment?”, yet she attacks the carbon tax as if the Liberals banned cars. I don’t think politicians are in the value-based marketing phase yet. What value can the NDP actually offer?  Such a joke, I hope the Liberals stay in power, or even the Green party. NDP might (meaning likely will) run us into the ground. But, due to recent marketing of the HST and the negative media towards the Liberals, there is a good chance that people will base their decisions on the latest ad or the last thing they remember about politics. Few will remember that Campbell actually improved the economy compared to the NDP.