Tesco/Homeplus and Unique Promotional Approach

Tesco is clearly innovating in the communications realm. Instead of augmenting the rest of the marketing mix, I would say that their promotional strategy is the most prominent piece of the mix. The use of out-of-home advertising space in a convenient, unexpected location draws the attention of the consumers. The convenience factor the promotional strategy generates allows Tesco to charge premium prices and also places them in the top-of-mind consideration set for traditional grocery shopping as well. I would even say that the communications strategy augments the product offering. While the products aren't different from a traditional grocery store (other than a more limited selection) the added convenience and home delivery sets the product offering apart and provides a point of differentiation from other competitors. Clearly this communications strategy is unique and has been very successful for the company placing them #1 in the online Korean grocery segment and #2 in the traditional grocery market. I'm not sure that the grocery market "pie" is growing as fast as Tesco's rise so a significant portion of this growth is likely stolen market share from other competitors, which is great news for the company.

Tesco/Homeplus Products and Price

Traditionally Tesco is a grocery company, but I would say that they are selling more than just groceries. They are selling convenience which translates into their promotion style and also their home delivery services. The company has expanded the mainstream grocery concept into a more robust product that differentiates themselves from their main competitor E-Mart.

Tesco uses place in a unique and effective way. The out-of-home advertising space used to put a "grocery store" in unexpected places is genius. While I don't have any information about pricing, I would guess that Tesco charges a premium for the convenience of shopping while waiting for the subway and also for the delivery costs they incur when getting the products to the homes of Korean customers. These premiums might allow for higher margins than traditional grocery items and probably help the companies bottom line.

Tesco/Homeplus Target Market

Tesco has decided to really go after a difficult target market. They want to attract busy Koreans who don't usually look forward to grocery shopping once per week. The video mentions that Koreans are some of the hardest working people in the world. Tesco's challenge is that they have fewer stores in comparison to the top grocery chain E-Mart which means their locations might not be as convenient for as many people as E-Mart.

To overcome this challenge, Tesco brought the stores to the people in a unique way. They allowed Koreans to use time that is normally unproductively spent waiting for a subway train to do grocery shopping. This allowed the population to be even more efficient and squeeze more activity into a day. This strategy hinges on the tech savvy nature of the Korean public. Since Korea, similar to many other Asian countries, has a population that has great individual technology resources it was safe to assume that a large enough segment of the Korean population uses smart phones.

The target audience in this example is also one that lives in a city with large public transportation systems used by commuters that are likely to have enough money to pay a premium for the home delivery service. Since transportation of grocery items in a city can often be challenging, Tesco has solved an additional problem for the consumer; they no longer have to transport their grocery items, instead they are delivered to them. Brilliant!

Tesco/Homeplus and the Korean Grocery Market

A friend sent me this interesting video about Tesco (now Homeplus) in the Korean grocery market space. This is an excellent example of all pieces of the marketing mix (product, price, place and promotion) coming together to create an effective campaign that resonates with the appropriate target market.

In this case, Tesco has taken the grocery store into non-traditional grocery store environments to help busy people purchase food items in a more efficient way. This is a brilliant use of place. The promotion aspect is key because Tesco has chosen to use traditional out-of-home advertising space to put up a grocery store in a subway. People waiting for the next available train can shop using their smart phones and QR codes and receive a grocery delivery at home shortly after. In this case, the promotional strategy reaches the targeted market and merges place and promotion into one seamless creative message. This is a totally new way to do point of purchase advertising.

As far as price, while I don't have any information on price, I am willing to guess that premium prices are charged due to the convenience factor as well as product shipping costs to the final destination. Because Tesco isn't directly competing with any other grocery stores in this type of campaign there aren't really any similar alternatives on a subway platform to drive down prices through price competition. The results of the campaign lead me to believe that the products are prices appropriately as Tesco/Homeplus has gained a lot of market share.

The products are probably very carefully chosen as ad space costs money and you would need to present people with the correct assortment of grocery products based on the space available. Seems that the successful results convey that Tesco picked the correct mix of products.

Week 8 Goals

This week I will watch the two videos on supply chain and integrated marketing communications as well as read the two chapters in the marketing text. Hopefully these two subjects will help me tie together the entire chain of information covered so far in the course. I look forward to learning more about how to translate the marketing mix into an efficient and effective communications strategy for consumers.

Success or Failure in Product Market Extensions

I would say that many current companies still make the same mistakes that we see in the Cleopatra case. Often management becomes so confident in their product and skill that they do not do the necessary research required to be reasonably certain that the extension into a new market will work.

The Cleopatra Case reminded me of another market extension failure that occurred during the early 90s. I have a family member that happened to be part of the team that opened Euro Disneyland outside of Paris. He has nothing positive to say about the process and from the beginning he was skeptical that the Disney magic could work in the European market like it does in the US and Japan. He was right.

Disney failed to acknowledge several key issues when it desired to enter into the European market. First, the company generalized that all of Europe has the same culture and social preferences. In fact, Europe is an incredibly diverse section of the world. Even though it is relatively compact, by marketing to the entire European population, they were diluting the strength of the message and not really defining the market specifically enough to resonate strongly with the appropriate group of people. The old saying is that if you have something for everyone then you have nothing for anyone. The offering and marketing needed to be more specific.

Also, the entrance and launch team for Euro Disney didn't incorporate enough local talent. The launch was done mostly by Americans with their views of what Europeans want instead of developed by Europeans for Europeans. The company failed to acknowledge that the theme park culture is not as established in France or greater Europe and decided to market directly to children like it does in the US. In the US, this strategy is successful because adults often attach childhood memories to Disney, the same is not the case in Europe, as the vacation entertainment aspect of the Disney brand has not been developed over generations.

While it is true that US Disney theme parks enjoy a very large segment of international visitors, this is due to the fact that Disney is part of the American experience. When taking a trip internationally, many people want to experience what they think defines unique aspects of the country they are visiting. Disney is synonymous with the US just like the cowboy is. This is why international travelers visit in such large numbers. The same is the case for the US National Parks. Over Christmas break, I went to 5 national parks in Utah. There were far more foreign visitors than Americans. The international travelers wanted to experience the quintessential American West, part of the legend of Western movies. The "American West" is part of the international image of the US and drives lots of the leisure traveler visits in a similar way to US Disney Theme Parks.

The actual location of Euro Disney was also a problem. It is located about 30 minutes outside of Paris. With the strong cache of the Paris as a tourist destination, Disney put itself in direct competition with one of the most desired vacation spots in the world. Often consumers were more interested in exploring the historic and cultural significance of Paris on a trip rather than spending time and money at a new "American" commercial business in Europe. Disney works in Orlando and Anaheim because it is part of the American culture. Disney in Europe doesn't have the same feeling. It is often seen as an imposter to the native culture. Also, the initial price points for staying at a in-park hotel was the same as staying at a high end hotel in Paris. In comparison, the value proposition was not there. Most would prefer to stay in the city and visit the theme park for one day, if any.

Ultimately, Disney made some management changes, refocused their efforts on a smaller niche by changing the name to Disneyland Paris and adjusted their marketing, price points and in park offerings to better meet the needs of the local population. These changes did help turn the project around, but it still remains a losing venture for them. This example illustrates that its not just large home product companies that make missteps when extending into new regions. While the Euro Disneyland example is also several years old, it highlights that companies make the same type of mistakes every day and it is important to really analyze a market before entering it. Having the right management team in place is crucial to the overall success of any company.

Cleopatra at a Cross Roads

Since the case doesn't present a conclusion to what the Colgate-Palmolive company did in the aftermath of the Cleopatra launch, I will make the conclusion that the launch was not a success. If the next step decision was up to me, I would acknowledge that there were missteps in launching Cleopatra in Canada. You can only make a first impression once and unfortunately, by not analyzing the needs and wants of the Canadian skin care soap market, the company wasted an opportunity for success. Jeff Bezos mentioned in the video that launched this course that you should have the courage to push through criticism, but if you did make a wrong choice you need to face that fact and remedy it.

There is no sense in trying to revive the Cleopatra soap when it is already being pulled from the shelves. Retailers are unlikely to get back on board. Also, the target customers who tried the brand and didn't like it are probably unlikely to try it again. Some consumers who were originally exposed to the Cleopatra brand and didn't try it might be unwilling to accept the same soap with a repositioning strategy. More advertising impressions of the current Cleopatra campaign might not lift trial rates without a stronger call to action and that trial opportunity might have already passed for a large segment of the target market especially noting the volume of media that started the campaign.

If the company is committed to penetrating this market with a new product offering, then some tweaks need to be made to the soap formulation. They also need to do more research on what type of promotional program would be successful for their targeted customers (i.e. a "pure" message, cleaner & fresher packaging and advertising look, appropriate price point, bundling, etc.) With this additional information, Colgate-Palmolive would be able to tailor their new offering to mesh with the needs, wants and expectations of consumers and then relaunch into this space. It might also be best to change the name of the product and start fresh. Of course, this plan would take quite a bit of internal coalition building and selling to senior leadership. A well thought out marketing plan with high levels of detail and market analysis might be one way to start down the relaunch path with senior management.

Organizational Issues in the Cleopatra Case

First off, the members of the "Global Marketing Group" seem to have a tactic looking for a strategy, rather than a strategy looking for tactics to support it. Instead of evaluating the needs of various prime markets or target groups across the world, selecting those who might have the strongest potential and then developing a marketing strategy including product, price, place and promotion to fit that niche, the company took an existing product and tried to jam it into other markets unaltered.

One issue is that the success of Cleopatra in France was well known throughout the company and management had a natural inclination to want to spread that success to other markets. I would venture to guess that the entry of Cleopatra in France was a well thought out and developed product launch. The same diligence needed to be applied to the Canadian market.

It is easy for people to jump on the bandwagon when senior management are sold on an idea. Depending on the culture of a firm, it might actually be very difficult for lower level employees to voice their concerns as it might be perceived as disloyal or questioning the judgement of those who are in charge. If no one in Colgate-Palmolive management encouraged the role of a Devil's Advocate, concerns might not be voiced to an appropriate level. Thus, groupthink, poor reasoning and a lack of product analysis might have been systemic to the culture of the company when expanding products into new markets.

Steve Boyd, the Group Product Manager for Canada, and Bill Graham, Divisional Vice President for Marketing Canada, seemed eager to show the leadership in New York that Canada could be just as successful for the star Cleopatra product. It seems like both Bill and Steve were hungry for a big win and recognition from corporate. Stan House, Assistant Product Manager, seems to be unwilling to critically think about the success or failure of this product independently. He might be motivated by a desire to look supportive of the boss or his faith in the judgement of Steve. But either way, he has jumped on the "perfect market for Cleopatra" bus. Ken Johnson seems to be the skeptic of the group. The case doesn't describe the professional relationship among the players and it is difficult to tell if Ken is genuinely concerned about Cleopatra being the wrong product, if he is always resistant to change or if he feels discounted because other senior management doesn't agree with his Canadian "national" brand idea. No matter what the reason, Ken's thoughts about Cleopatra being a wrong fit for Canada needed to be thoroughly considered.

Another interesting point is that all of the key people mentioned in the case are headquartered out of the Toronto office and might not be familiar with the uniqueness of the French-Canadian culture as compared to France. The French generalization seems pretty myopic for people who represent and market products across the country. Since there was a major sales office in Quebec, the Canadian management team might have been well advised to seek input and assistance from people who were successful selling in Quebec. They might have been able to steer the team in a more appropriate direction for entry into this market. As a manager it is never safe to assume that you know it all. There is great information that can be learned from people at lower levels of an organization. Sometimes the best insights come from people who are doing the lowest level work every day. This reminds me of that new show, Undercover Boss. On the show, senior management is exposed to aspects of their company that they don't often see. Taking the time to ask for input from all employees can really help a business in the long run. The larger a company is, the more detached its leadership seems to become from those employees at the bottom of the ladder.

Cleopatra and Market Research

Initially reading this case, I got the feeling that the company almost saw the success of Cleopatra in France as all of the market research they needed to be assured that it would work in Quebec. Steve Boyd and Stan House seemed so sold on the idea, that even in the face of contrary information they might have moved forward.

I think it is incredible that the little research they conducted before the product launch wasn't even in the target market. Toronto isn't in Quebec; it is in Ontario. Since there are strong cultural differences between different regions of Canada, any research that was conducted outside of the target market would probably not be indicative of actual results of the product launch. The case doesn't mention the size of the original test samples in Toronto, but depending on the size they might not have been statistically significant samples. Also, the results from the two sessions seemed to be qualitative not quantitative in nature. While qualitative information is definitely valuable, it needs to be paired with quantitative information for a more complete picture.

"Seeming" to like the soap and concept is not enough information to base a launch on. The case does not mention if the product was presented in context with final packaging, pricing and in comparison to other Canadian soap offerings. Even though 64% indicated that they would by the soap as soon as it was available, this might not be true when presented with reasonable alternatives.

Recently, the Colorado Springs community went through a branding process spearheaded and paid for by the CVB but incorporating as many other organizations and citizens as possible. The process took many months and final deliverables included a brand strategy that had many pieces and parts. You can see the full strategy presentation including explanations using the first link on this page. One piece of the final product delivered from the branding company was a logo execution. The back story is that there were originally 3 totally different logo concepts (some that matched the brand strategy better than others). These 3 were tested and the logo presented in the link above was by far the winner as tested by a professional research company out of Oklahoma. While I had my own thoughts and opinions about the final logo before it was released, the ultimate decision did not rest with me. (Although, it was the best of the 3). As soon as the logo was released, it was immediately panned by the local design community. One local designer made the comment in our open "townhall" style meeting with the most vocal designers that people can articulate which one is best from the options presented but when a good, more artistically sound assortment is presented they might have picked something different. I think this story mimics the research in this case. The test samples for Cleopatra weren't presented with a full picture of the product and its placement within the competitive set. (Sidenote: This is a quick oversimplification of the "logo saga." Other political and group/committee dynamics were at play. We are currently working on getting a completely new logo execution. Fingers crossed that it is better than the first! The backlash certainly wasn't fun last time. I guess that's one of those marketing scars you mentioned at the beginning of the course :) )

If Colgate-Palmolive had taken the time to do the necessary research before launch they may have been able to take a good product and market it appropriately in the new market which has different needs and strong price sensitivity. They might have also concluded that they needed to adjust the formulation to better resonate with the Quebec consumers. While it is positive that the company decided to do some post launch research, lots of the heartache and failure might have been avoided with appropriate research from the start.

Cleopatra Soap Missteps: Product and Pricing

I think the main underlying theme of this case is that what works for one market doesn't necessarily work for others. It's hard to believe that a huge, established, successful company like Colgate-Palmolive would make such a misstep. Just because Quebec and France are both French speaking regions does not mean that consumers have the same preferences or needs, wishes and wants. I wouldn't dream of saying that the US is the same as Australia, the UK, Ireland or South Africa. In fact, regions within the same country don't even consistently react the same way to products.

As far as the product, it seems like by positioning Cleopatra against Dove they needed to offer a product that had similar characteristics that have been proven to resonate with the Skin Care soap market. In this case, Dove has been successful using a strategy that relies on purity with low additives and little sent. Since skin care soaps are used as facial soap, more research needed to be done on how the Quebec market reacted to ingredients. My guess is that less is more, which would be very different to how the French market reacted. Also, if researched showed that the "pure" factor was important, the packaging, advertising and other placement needed to reflect that fact. Many more modern brands that focus on this "pure" market choose to use cleaner more simplified designs and placement strategies. The common color palate seems to be muted and centered on white. A gold shiny box probably wouldn't naturally resonate with this market. Since that shiny gold box held in the scent, maybe revised packaging might have lessened the intensity of the fragrance.

The pricing strategy for Cleopatra seemed to be off base. The case acknowledges that the Canadian soap market was extremely price sensitive. While I can understand why Colgate-Palmolive wanted to maintain its pricing to avoid a race to the bottom and preserve margin, it seems quite bold that they would price an unproven product higher than Dove, the "Cadillac" of the skin care segment. The key to the success of Cleopatra seemed to be consumer trials, if the price was so high that consumers were unwilling to try the product and become familiar with it, the company might have priced themselves out of the market to start with. Also, by not providing multipacks at a slightly discounted bulk price, many consumers that only purchase in larger packs did not have the opportunity to try it out. Also, based on the advertising I have seen, looks like they might not have included a strong enough "call to action" in order to stimulate trials. In a region where "a soap is a soap is a soap" Cleopatra didn't provide enough of a value proposition to get people over the price hump.

Also, because the company chose to use a pull strategy, the retailers didn't have much incentive to push the Cleopatra product. This might have been a misstep in how the product was rolled out. By spending additional funds to establish stronger relationships with the retailers, the company might have earned more premium positioning and promotional opportunities.

Week 7 Goals

Based on the Cleo case that I read last week and the pricing considerations that will be presented by the course curriculum this week, I plan to dig deeper into my understanding of the many decisions that take part in product launches and introductions. I am hoping that the discussion in the live Breeze section will further enhance my understanding of the Cleo case and business problems that need to be addressed when putting a launch plan together. I think the real question is, does success in one market indicate success in another, similar yet different one?

Short Product Lifestyles and the Product Development Process

With the shortening of the product development lifestyle, many of the ideas discussed on page 102 of the text have been combined or drastically shortened. In order to keep up with the fast moving pace of consumerism, I don't think companies can afford to take many years or even months to bring a new product to market. Trends come and go so quickly. Businesses have to be flexible and rely on their business and product acumen to deduce the fickle preferences of consumers. Companies like Apple have made an art of knowing more about consumers and what they want/need more than the customers themselves. These deep insights allow Apple to be flexible and condense or eliminate many of the steps in the product development cycle.

As David Bell of Chrysler mentions in the video for this week, consumers can easily tell companies what they don't like, but they aren't as good at communicating exactly what they want. This is also mimicked by the story about spaghetti sauce. No focus group attendant ever said "what I want is a chunky sauce." Attentive and savvy marketers can distill customer statements into a product that really resonates. But, as soon as a company makes a breakthrough, other competitors are likely to follow and offer a similar product or services. This forces the original to continue to innovate.

While I agree that technology firms and products exhibit this accelerated product lifecycle, I think that it is exhibited by other trend driven industries like clothing and apparel. Also, companies that are successful in industries with high product turnover must purposely kill their own products. Otherwise, these firms won't be able to continue to resonate with consumers.

I think the emergence and prevalence of social media has accelerated product lifecycles even more. People that are early adopters and often trendsetters are likely to be involved with social media. This means that products rise and fall even more quickly than they have in the past.

In order to be attuned to the customer, companies have to be highly involved or at least aware of social media. Also, they need to continually conduct research in order to stay abreast of trends and offerings of other competitors. I don't think product lifecycles will be increasing anytime soon, if anything they will probably continue to decrease. Companies have to stay vigilant, flexible and creative to stay on top of their markets, especially in the technology space.

Typewriters - I Say Obsolete... Others Disagree

Oh the fabled sound of a typewriter. It is such a distinctive noise that was once a prominent in offices around the world. For many years, typewriters were used to more legibly write documents and fill out forms for both office and personal use. Secretaries were once judged on how quickly they could type and how proficient they were in their use of the machine.

With the rise of personal computers the mighty typewriter has become a piece of office place history. The computer has allowed people more editing functionality when typing documents. All kinds of fonts, colors, sizes and other design elements have been incorporated into the interface of computers. They also brought the spell check function to the masses, which so many of us rely on every day. The population has made the technological transition and expects these expanded capabilities.

Frankly, people don't miss having to retype or fix documents due to typing mistakes made on a typewriter, although the editing technology had improved over original models. Computers also came with so many more capabilities than just typing programs and that catalog of functionality continues to grow by the day. Modern technology is so much easier to use and computers are now common in the developed world and financially accessible to the majority of the US population. I wouldn't know where to go to actually purchase a typewriter.

I say all this, but I need to admit a sad fact. Until about 3 months ago, my office, staffed by a total of 15 people, housed 3 typewriters. And, they were all used relatively frequently. Our former administrative assistant actually used hers to type addresses onto envelopes. With her departure, I was able to convince others to let two of the typewriters go. Unfortunately, we still have 1 left. Our CFO likes to use it to fill in forms. The constant sound reminds me of how slow our office is to adopt new technology and move forward. Personally, I think the noble typewriter should be used more frequently as a musical instrument than a communications device. It is truly obsolete.

The Typewriter with the Strauss Festival Orchestra Vienna

Product Levels

In pretty much every product category there are various levels that are differentiated by quality, brand equity, service quality, promotional strategies, etc. This is incredibly evident in the apparel business. Gap Inc. is a good example of various "levels" of product within a company and product segment.

Gap, Inc. has had 3 main product lines for a long time. Old Navy, Gap and Banana Republic all cater to different pieces of the consumer apparel market. Old Navy is described as "great fashion, family value." This company has a very strong discount, high volume focus and often offers merchandise at steep loss-leading prices. The amount of people that flock to Old Navy stores early on a Saturday morning once per year to buy 10 pairs of $1 flip flops is amazing. What's even more impressive is how many other items they purchase as a result of their visit that they weren't planning on buying. Old Navy clothing and stores are characterized by a more casual and comfortable feel. Stores are minimalistic and don't offer a high level of customer attention.

The Gap is described as "Iconic, Inventive, American" and offers classic, simple, higher quality clothing at a moderate price point for consumers. The styles are often not as trendy and resonate with a young, but more traditional market segment, often younger mothers. Success in this segment has led to expansions in GapKids, BabyGap and GapMaternity lines. The Gap is targeted towards people who are willing to spend more money than Old Navy level products for a higher quality item but don't want to spend an ton of money on more elite clothing lines.

Banana Republic represents a higher level of apparel for Gap Inc. This company is described as "accessible luxury" and presents consumers with more expensive fabrics and sophisticated designs that resonate with those consumers who desire a more elite shopping and clothing experience. Banana Republic also offers more traditional business attire which often comes with a higher price point. Stores have a higher ratio of sales people per customers. They are also characterized by a more intimate feel in more upscale shopping areas, quite different from the industrial/warehouse look of Old Navy stores.

While athletic apparel can be found at The Gap and Old Navy stores, Gap Inc. recently acquired Athleta to expand its offerings in the women's athletic apparel market. It will be interesting to see how Gap Inc. positions this company in comparison to its other businesses as well as larger athletic apparel focused companies.

These different levels of apparel offerings mimic what is seen in the apparel industry as a whole. There are lower price point products such as clothing sold through Walmart and of course there are brands that are much more strongly rooted in the luxury apparel and accessory markets. The important point is that each clothing line and/or company specifically targets a distinct segment with appropriate products, service levels and promotional strategies to resonate with and meet the needs of customers. The entire marketing mix is important to reinforce the desired message at various product levels. Product, price, place and promotion are all key to realize the end goals of a company.

Goals for Week 6

This week, I plan on watching the provided videos and reading the required materials to further expand my knowledge on product development and planning. Product is a key part of the marketing mix and a company should really emphasize the product development process so that you can meet the needs of consumers with an appropriate product. By completing the individual ideation project and reviewing the Cleo Case I should be able to critically think about the "product" question in a variety of situations. The focus is on inventing on behalf of the consumer and that should be pretty evident this week.

Fitness Businesses and the Segmentation Approach

Because it is January at the gym, breaking down the different focuses by fitness companies is top-of-mind. While there are many independent gyms that are successful in local communities around the country, larger chains or franchises all have a specific fitness market segment that they focus on.

The Curves gym company has been quite successful by catering their gyms and workouts to women who normally have more weight to lose than the average gym population. The company's goal is to provide women a comfortable and supportive environment in which they can workout. There are no weight machines used by people to build muscle, instead women workout using hydraulic resistance and sustained cardiovascular movement (normally walking in place). Also, most Curves workouts are structured around a 30-minute time frame which allows women to workout without making a large time commitment. The company says their unofficial motto is "no makeup, no men and no mirrors." This sums up their segment focus pretty well.

In stark contract to Curves, gyms like 24 Hour Fitness, offer a more traditional gym format with treadmills, weight machines and personal trainers available on site. In particular, 24 Hour Fitness caters to a gym going crowd that needs the flexibility offered by a facility that is open at all times of day. They often have minimal decor and few extra perks which allows the company to charge lower membership fees than other high-end fitness clubs. As 24 Hour Fitness does not provide a focus on women, these type of gyms see a predominantly male client base.

Luxury gyms like Lifetime Fitness provide many more amenities at a higher price point. The local Lifetime Fitness here includes a daycare center, cafe, salon, spa as well as other gym amenities. This gym focuses on more of a family atmosphere with children swimming lessons, summer and winter break camps, children tennis lessons and breakfast with Santa events. Each parent can drop off their kids at the daycare for up to 2 hours per day while they work out. The gym also offers a wide array of classes including yoga, pilates, spinning and mixed martial arts. The addition of televisions to all cardio machines also adds to the enhanced offerings of this gym. Lifetime describes themselves as a lifestyle company instead of a pure gym. These extra offerings come with an increased price and also evens out the split of men and women in the gym.

CrossFit gyms are completely different from all of the other types I have discussed. CrossFit is a fitness program that is used by many military and paramilitary personnel. These gyms have minimal cardio machines and use a varied series of pushing, pulling, squating, lifting and running to achieve fitness in a broad way. There is a CrossFit gym steps from my office which is little more than a huge garage with a wide variety of ropes, tires, free weights and other non-traditional elements that vary muscle interaction on a daily basis. People who choose to participate in CrossFit gyms like very high intensity workouts with a no-frills atmosphere. CrossFit is known for building incredible strength and bulk along with fitness. Most CrossFitters are men.

Positioning a Firm

I think positioning is defining a company's niche in a market. A position needs to be distinctive and defendable. There are lots of things that feed into positioning. The nature of products and services provided by a company can define the type of customer a firm is going after. For instance, Forever 21, the clothing store, offers fashion forward products at a cheap price. The quality isn't very high and the clothes and accessories aren't likely to last long. This type of product selection positions the company in the tween and 18-24 female apparel space. The product fulfills a purchaser's need to move between styles quickly as trends change. In this case, the product is very central in the positioning of the company.

The company's voice is also important for positioning. Continuing with the example used above, Forever 21 would need to use a communications style that speaks to a younger, female demographic. Also, in advertising efforts, both traditional and new media, the company would need to channel a younger voice and visual impact that resonates with the target market.

A firm's position is a uniting theme that draws all of the different marketing efforts together so that the message and product delivered to the end consumer originates from a common goal. With the positioning statement, a company can be more focused, strategic and efficient with its resources.

One key factor in positioning is that the firm needs to occupy a space in the market that is differentiated from other competitors. When developing this positioning, a firm should consider if the differences between its company and others is a difference that can be easily mimicked or if the positioning represents something that is truly different and can be maintained overtime. Some companies derive their differentiation from a creative and open culture that fosters innovation and other define themselves through the strategic pursuit of a particular segment. Whatever a company uses as its point of differentiation it needs to be something that isn't easily copied by others.

As highlighted by the article, the positioning for a firm needs to be well thought out and well articulated.

Primary Targeting Considerations

A firm needs to put careful thought into which segments it chooses to target. There are likely to be segments that have not been focused on by other competitors, but it is important to determine if gaps in the market are due to considerations that cannot be overcome. For instance, a segment might be so price sensitive that it is not possible to make a profit at such a low price point no matter what volume can be achieved. Other segments might be so expensive to market to (whether through product development, advertising costs, etc) that the company cannot break even. Barriers to entry might be such that in order to break into a specific market segment.  For instance, if a company wanted to get into oil production in developing countries, the governmental, political and environmental considerations would be so great that it would not be a likely success. The same could be said for hypertension pharmaceuticals, a new entry into the blood pressure market would most likely face extreme regulatory oversight and fierce competition from established pharmaceutical companies.

The strength of competitive firms in the market place also needs to be taken into account. Strong and established competitors can often easily copy innovations (while addressing patent/copyright concerns) and use its financial resources, consumer loyalty and overall position in the market to squeeze out new entrants or competitors. Sometimes smaller more tightly defined segments can be more successful for new entrants as innovations and superior services at such a niche level are often not large concerns for big conglomerates.

While it is perfectly fine for a company to choose to pursue multiple market segments, it would be important to consider if there are any synergies that can be achieved across segments. If synergies are possible, market segments might be more attractive then they would have been on their own. For example, in The Fashion Channel case, there might be significant overlap in the type of programming that would be appropriate for Fashionistas as well as Planners & Shoppers. Both groups like to stay up to date on trends and enjoy shopping. While each segment would need separate thought and focus, by targeting multiple segments that have commonalities, a company can stretch its resources and expertise across segments that are worthwhile. In The Fashion Channel case, on its own, the Fashionista segment might be too expensive to pursue, but by also targeting the Planners & Shoppers, the channel might have more opportunity for growth in both viewership and advertising revenue.

Segmentation and Consumer Obsession

Segmentation is just the first step in consumer obsession. By properly segmenting people into groups with common characteristics, a company is better able to tailor its products or services and marketing efforts to meet the needs of that customer group.

I think that taking the stance that a company can meet the needs of every consumer is a death knell for that organization. Instead of focusing on doing the best for different segments by customizing offerings, the company is essentially not doing anything exceedingly well for anyone. This allows competitors to take market share and better serve customers with superior offerings.

I understand that the natural inclination is to market to the largest number of people in order capture as many customers as possible. But, if a company decides to focus on a smaller piece of the pie and serves that group really well, they might actually capture a larger volume of customers in the long run. The company will also be more likely to differentiate themselves from competitors. Customer loyalty and differentiation might also allow the company to charge higher prices for their products or services.

At work, I often come up against the segmentation question. With limited budget, help and resources we have to strategically choose which customer segments we pursue. Traditionally we have gone after mid-to-small size meeting planners, family travel and outdoor travel. We use further demographic factors to narrow down that scope further, (location, age, gender, etc). We also do some additional small niche marketing to groups like tour operators and sports event planners. Neither market costs an extreme amount to fully saturate from an advertising perspective.

It has been suggested numerous times by people in the community that we need to communicate that we have something for everyone in Colorado Springs. While this is true to some degree (we even have gambling within 45 minutes of downtown), this non-segmentation strategy would really hurt our tourism numbers. By saying we have something for everyone we are really saying we don't have a strong voice or anything that makes us unique. We wouldn't be playing to our strengths. While we do have gambling, we could never beat Las Vegas at that game. Without a strong, defined voice, other destinations would be able to easily capture some of our travelers with a stronger message that really resonates with the spirit of their destination.

Reflection on Segmentation, Targeting and Positioning HBS Article

I think this article really highlighted the importance of critically thinking about what market segments a company should pursue. Without a focused plan to go after those customers that can make the most impact company, assets will be spent inefficiently.

The article made an important point that many times we have a tendency to segment based on demographic factors without truly understanding the motivations behind the actions. The insight about over-the-counter painkillers and effectiveness versus less side effects was particularly interesting. While these two segments did end up corresponding to age demographics (young vs. old), the important insight is that people responded to product characteristics. This disproves that purchase behavior is generated age. This motivation can easily be translated into marketing and advertising and will most likely morph into more effective products and campaigns.

The article highlights the importance of targeting. Clearly there might be under served markets based on the segmentation analysis, but some of these markets might not be profitable to the company. Therefore you wouldn't want to pursue them.

The ultimate goal of a company is to convince consumers their product is the best product to meet their needs, budget and other considerations. Positioning is important in this pursuit. The article's emphasis on differentiation from competitors is important. If a company can't provide a unique value proposition to a consumer, then it will not be able to survive in the long term. It is also important that this value proposition can be defended in the long term. Otherwise, competitors will come into that space and squeeze the company's margins and profitability.

Week 4/5 Goals

For this week, I plan on reading the Segmentation, Targeting and Positioning article as well as completing the reading for this week's team case. I will also review Chapter 4 of the textbook which I covered in week 3.