Monthly Archives: October 2013

10/13/13

The line extension trap: Things to keep in mind when introducing new products

Companies are always trying to improve their products to cater to consumers’ new tastes and needs.  So was Aston Martin. In 2011, it began to produce Cygnet, a type of small car which focuses on “economy” segment of car-buying market and aims to help urban and city people save fuels and space to park.

However, it’s not a surprise that Aston Martin has to end production of Cygnet small car this year, though the concept of “economy” cars is really a good idea. Here’s what I think:

Firstly, for Cygnet, which is basically a Toyota iQ model, yet with fancy Aston Martin badging design such as the signature gaping maw grille that will additionally cost consumers $34,000 more than a Toyota iQ, it actually loses its comparative advantage to its rival on the point of parity.

Secondly, it is true that loyal consumers would pay a lot for the luxury brands instead of for the actual products. However, Aston Martin’s failure to put its focus on the Aston Martin bling design rather than the innovation of “economy” cars clashes its brand positioning as luxury cars. The use of Toyota iQ’s basic model weakened Cygnet’s point of difference as an Aston Martin. After all, unlike Channel or Gucci, the most important value of a car is more of its function, rather than its interior design.

Sources:

BBC NEWS, Aston Martin to end production of Cygnet small car (2013 Oct. 9) http://www.bbc.co.uk/news/business-24455948

Akweli P. How the Aston Martin Cygnet Works (2011) http://auto.howstuffworks.com/aston-martin-cygnet.htm

 

 

 

10/7/13

Cultural difference is a main task for a company to enter a new market

China is considered as one of the world’s biggest markets with great potential, not only because of its large population, but also because of its rapid economic growth. So, for those world giant businesses, expanding their markets to China has always been one of the major tasks.

However, in e-commerce, even one of the giant companies eBay have withdrawn from Chinese market. Why? That is because those business models that can survive in China are totally different from the business models in foreign countries, especially the Consumer Relationships part.

For example,  the auction model in eBay stop people from talking, while the selling mode in Taobao encourages communication between consumers and merchants, which caters to Chinese customers’ nature of bargaining. In addition, in the auction model, the product which has been there for the longest time will sit on the top of the website, while in Taobao, it puts the newest products on the top.

In my point of view, in order to enter a new market, one of the most important things to consider is to understand the local culture and consumer behaviors. Different business models are required for a company to survive in different environments.

Source:

David W. E-commerce Bigger in China than United States (2013 Sep. 19) http://edition.cnn.com/2013/09/19/business/on-china-alibaba-e-commerce/index.html

 

 

10/6/13

Social Media: Find your own position and consolidate it

Nowadays, there are multiple ways for people to connect and share contents. Basically, the properties of these social media can be divided into two main categories. One caters more to the people who are interested in sharing contents about public events, whereas the other one creates an relatively more private environment for closed friends to connect. These two categories represent most users’ needs.

Twitter, which is popular due to its nature of simplicity for people to share their thoughts and recreations, or anything else they encounter, is now seeking to add new features such as music service in order to compete with up comers. However, “It’s pretty innately easy to figure out what to do with Snapchat or what to do with Pinterest, with Twitter, it’s not simple to figure out what to do with the service,” said Debra Aho Williamson, a principal analyst at eMarketer.

As Gene Munster says, “The future of social is not going to be a winner-takes-all scenario, no service can be all things to all people,” I think for every single networking medium, it’s actually more important to create its own distinctive positioning which makes it clear to people why they should use its medium rather than others’, hence, to establish consumer loyalty and attract more users.

Sources:

The New York Times, The Swarm of Rivals Seeking Share of Social Media Pie (2013 Oct 6)

 

10/5/13

The past, present and future of the Fast-food industry

Fast-food was created to cater to people’s need of convenient and efficient way to get meals since modern people tend to live fast-paced lives. For years, fast-food companies have been competing with each other through enhancing their service and offering new products to attract new customers and establish customer base.

Since the fast-food market is fairly saturated in most developed part of the world, the whole industry is now seeking growth through expanding its market to less developed countries as well. In recent years, more and more big fast-food companies begin to enter the African market because it presents great potentials with large population, growing economy and globalized similar needs.

However, it’s only a matter of time that fast-food industry will sometime be saturated in Africa as well. I feel that at this point, fast-food companies should not be satisfied with their present situation and usual strategy of changing flavor of their products. For the future of Fast-food companies, it would be more important to be the first to offer healthy and cheap products with good flavor since people now are more health conscious.  Like what’s happening in Burger King. It is now offering “low fat fries”. Low fat fries provide people with a healthier way to eat potatoes. As  Michelle Obama said that “If anyone can make our kids eat their vegetables, it’s all of you.” Developing healthy and tasty fast food is surely the future of fast food industry.

Sources:

Reuters “Burger King to offer low fat fries” (2013 September 24) http://www.iol.co.za/business/companies/burger-king-to-offer-lower-fat-fries-1.1581913#.UlBVXVJDuJs

Oliver J. & Tatiana N. “Fast-food giant want pizza the action in African” (2013 Oct 4) http://edition.cnn.com/2013/10/04/business/fast-food-giants-africa/index.html?hpt=ibu_c2