Why I Am Loyal to Some Products or Service Offerings and Not to Others?

 Why I Am Loyal to Some Products or Service Offerings and Not to Others?

I have been loyal to Nespresso's coffee products for almost 3 years. I think the main reason why I loyal to a product is that it is a sufficient quality product with an affordable price and great brand image. Therefore, I can save my browsing time by making deals with the same brand over and over again. If I transfer my coffee consumption to other brands, I must spend a lot of time doing research and probably fail several times to get the right product.

iPhone is another example of I loyal to a product and starts with iPhone 4. Again, It's a sufficient quality product with an affordable price and great brand image. So, I don't have to make decisions on so many brands of smartphones. Moreover, if I love the iOS system, iPhone is the only option. With the Android operating system, there are still so many brands for me to make the decision. Therefore, simplifying the decision-making steps is the key to induce more sales.

Mac and Windows is also an example of why I loyal to some product or service offerings and not to others. I was a Windows 98 user until Windows 7 was released. Transferring the operating system is a big thing for me because I have to change my habit, give up some apps that only run on Windows, and adapt the whole new interface. However, when a product is no longer a sufficient quality product with an affordable price and great brand image, I have to go for sure. Although there are so many products with Windows, I am tired to search among different computer manufacturers. The same idea, if I search for a Mac, Apple's products are the only choice. 

How Does My Relationship with These Products Change Over Time? 

My relationship with Nespresso is not as good as I think since its machine does not satisfy my need. I was trying to practice latte art before, so I purchased the Creatista Plus after watching its intro on Youtube. However, I find it is not a good idea after I do deeper research on it. Now, it is struggling inside my heart. Buying another new machine means an additional expenditure, additional effort, and more time spending on finding a greater product. On the other hand, my relationship with iPhone and Mac is good so far. They satisfy my needs and even stronger by upgrading their systems frequently over time. 

In conclusion, I think there is no such relationship that can exist forever without putting any effort into it. Companies must effectively manage their relationships with customers over time. Trust is hard to build but easy to lose, and every devil was once an angel.

In the past, I have been dissatisfied with the Nespresso products to which I am loyal. As I mentioned above, the Creatista Plus did not satisfy my need. However, I do not transfer to any other companies yet because I am waiting for a cue to do it, such as the machine is broken or anything I don't wanna endure anymore. 

Pricing Objectives, Profit-Oriented or Sales-Oriented, Penetration and Skimming Pricing Strategy

 Introduction

Many people in Taiwan can wait in a long line for free fried chicken or Starbucks' buy one get one free, even if it takes hours. But do you know how do profit-seeking companies generate profits if they frequently offer free goods and services for special deals? Does a $0 price tag equals a free lunch? Is free products or services a good pricing strategy? Put on a price tag for products and services is essential for every profit-seeking company. However, their customers must feel they are getting enough value for the price paid. For instance, a Big Mac® combo meal can be very different while put on different price tags such as $5.99 or $12. Here is the major concept we are going to learn, the pricing objectives. It is the goals that give directions to the overall pricing processes and the crucial step in pricing. Each pricing objective requires a specific strategy to achieve different goals.

Pricing Objectives, Profit-Oriented or Sales-Oriented

Profit-oriented pricing is based on profit maximization or a target return on investment to guarantee each sale is making money. However, it does not means companies should simply add up their raw materials and production labor expenses. Other crucial costs such as advertising costs, commissions, and freight. In short, all other costs in getting the product to be purchased are counts.

Sales-Oriented, on the other hand, generally focuses on maximizing sales to generate as much revenue as possible, regardless of the profits. Here's an interesting part, revenues are not the same as profits. A company can sell 1,000 espresso coffee machines for $1,000,000 in revenue, but with zero profit. That happens sometimes when companies are struggling financially, so they have to generate cash quickly.

In summary, I think both of the two have their own pros and cons. For instance, if Nespresso decides to lower the prices of its machines to make them more affordable, the profits and revenues will be shrinking in a short period. However, when more and more people are using its machines, Nespresso is targeting more coffee capsule sales since more capsule sales mean more revenues and profits. Therefore, based on what kind of return and outcome that a company is trying to achieve, the pricing objectives are very different. In the Expresso's case, if the machine is too expensive, it also influences its capsule sales. However, too cheap to own an espresso machine will make the company cost too much to get future income. 

What Factors Do Organizations Consider When Making Pricing Decisions? 

As we all learned from the demand and supply model in Economic, demand, and supply are the factors that influence the equilibrium prices. Base on the model, consumers are on the demand factors whereas enterprises are on the supply side. Generally, companies tend to supply more when the price is upper or the demand is higher. Therefore, the demand for a product or service is the foundation of firms making their pricing decisions. 

However, demand is not the only thing that should be considered. If the demands are the necessary products such as food, water, or electricity, governments often regulate them by law. In addition, competitors also playing a crucial role in this equilibrium game. For instance, KFC and McDonald's are very similar fast-food restaurants. They closely monitoring each other's menu, learn from each other and compete with each other. Typically, the costs of a product are the first thing we think about. But remember, don't make it become the ONLY thing you considered before you release a product. 

Penetration and Skimming Pricing Strategy

Penetration pricing strategy is used to quickly gain market share by setting a relatively lower price to induce customers. It is commonly used by new entrants. For instance, a Taiwan coffeehouse chain LOUISA entered the coffeehouse business by setting more affordable prices of its coffee drinks compare to its major competitor Starbucks in 2006. Now, LOUISA opens more than 500 coffeehouses in Taiwan and exceeds the number of Starbucks stores.

Skimming pricing strategy, however, is a product pricing strategy by charging relatively higher initial prices. For instance, as the costs reduction, Tesla cuts the price of its Model 3 from $46,990 to $45,990. As the demand of the first customers is satisfied and more electric car manufacturers enter the market, Tesla now lowers the price to attract another, the more price-sensitive segment of the consumers.

Reference

Tanner, J. & Raymond, M.A. (2015). Principles of Marketing. University of Minnesota Open Textbook Library. Licensed under a Creative Commons by-nc-sa.

public relations, sales promotion and professional selling. How these three concepts are related? Which of the three is more important?

 The topics of Unit 7 are public relations, sales promotion, and professional selling. Although these three concepts are in different chapters, they are related and influence each other. Recall that public relations are the activities of managing the release of information between an individual or an organization and the public in order to affect public perception. Sales promotion is one of the elements of the promotional mix such as advertising, personal selling, and direct marketing. In professional selling, we learned mostly about what salespeople do and what roles do they play(such as create value, gathering information, and managing relationships).

Generally, all these three activities are trying to find the demands, satisfy the needs, and build stronger connections. Professional selling is not just about the salesperson or the products and services. It’s about the customers and fulfilling their needs, helping them make the world a better place. Public relations can help the world know what organizations are doing for upgrading our future. For instance, loyalty programs are designed to get repeat business. Not only it benefits businesses but also helps people by saving time for searching their needs. 

I find it is hard to choose which of the three concepts is more important because they influence each other in some way. For instance, bad public relations lead to bad sales no matter how hard you work on the sales promotions. You can purchase similar products from different companies with different reputations. The key is that the next time you want to buy the product, you will search the companies you like first. 

Consider it from the reverse, if we put all the effort into public relations since we consider it as the most important one. It like putting a new engine inside an old car's body. The car can move for sure, but it cannot handle the powerful engine. Although I know Lamborghini and Ferrari are excellent, I need the final steps to help me give up the other option such as a better price, lovely salespeople, a loyalty program, or any other factors. That is no doubt that great public relations efforts can help enterprises build rapport with their customers and supplement their sales efforts. However, sales promotions and professional selling are still great or even necessary tools enterprises should consider.

Reference

Tanner, J. & Raymond, M.A. (2015). Principles of Marketing. University of Minnesota Open Textbook Library. Licensed under a Creative Commons by-nc-sa. 

Salespeople play three primary roles? How does each type of salespeople create value? Do ethics get in the way of success in sales?

Introduction

Did you ever think why we still need salespeople in the modern age of advanced technology? One of the possible reasons might be it is human. However, salespeople often mean more costs for companies since they have to pay for their services. Although the pros and cons of salespeople are varied in different fields, they still represent a type of strategy that companies use to increase their sales. Typically, salespeople must create value for what they are selling, managing relationships, and gathering information. For these three roles, companies are willing to pay for what they do since it is a win-win strategy. 

Create Value

Generally, salespeople create value by understanding the needs of their customers and then create solutions to meet those needs. So, how do salespeople create value for what they are selling? Do ever think why you need a teacher to help with your learning? You can learn almost everything online through the internet, but how you feel if you have a Spanish teacher correcting your pronunciation? That sounds like very old school, but the point is the interaction between you and a teacher. Salespeople are the same idea. They serve and interact with customers and business owners to get what they need by benefiting both sides. 

However, salespeople aren’t the most appropriate channels for companies in all situations when companies are trying to sell at a very low cost may make retail stores or online selling more attractive. For instance, instead of hiring more service agents, Standard Chartered Bank in Taiwan created a “chat with Stacy” feature, the ability to engage in dialog helps customers better understand their customers and their needs and then create valuable solutions for them. 

Salespeople can be categorized by the customers they work with, by the size of their customers, or by their activities. Here we are using activities as the basis to categorize four basic types of salespeople. They are missionary salespeople, trade salespeople, prospectors, and account managers. 

A missionary sale such as Rainforest Alliance is a form of personal sales in which the salesperson provides information to an individual who will influence the purchase decision. By partnering with brand affiliates, a company empowers individuals to get the word out about their products, driving sales in exchange for a commission. However, nearly anyone can participate the affiliate partnerships, but no sales background is required.

A trade salesperson such as Amway salespeople help retailers promote and sell products to consumers. They are someone who provides retailers assistance with merchandising and selling products to consumers.

The prospector is a salesperson who is trying to find prospects or potential customers. This type of salesperson is responsible for identifying and acquiring new customers for enterprises. If some potential customers have needs but lack information about where to look for, the prospectors often knock on them and drive their success by prospecting. Mortage salespeople often put most of their efforts on potential customers who need some cash on hand to purchase something they want to pay in installments.

Account managers are responsible for satisfying clients' needs and persuading them to become loyal clients. After a prospector finds new clients, it is a good time to turn them over to an account manager for building long-term relationships. For instance, auto insurance companies are trying to keep their existing clients because the more existing clients they keep the more income auto insurance companies can get for them.

Managing Relationships

People are emotional animals after all. Relationships mean stronger connections between you and your clients, so they tend to believe that you are doing good for them. If you like or believe in your high school teacher, then he(or she) has a better chance when persuading you to purchase a specific textbook. However, everyone's time is limited, they have to decide which client is worth the shot.

Gathering Information

If you a soldier on a battlefield, you know what weapons your enemies are using. Salespeople do their jobs mostly outside the firm and in the field. Therefore, they get first-hand news about what competitors are doing. Like playing chess, what your competitor is moving is counts. They influence your next move and even who is going to win. However, after getting the information, you still have to send it to the right guy, the right decision-makers.

Do Ethics Get in The Way of Success in Sales? 

I think that depends on what do you mean by "success in sales" and how you definite your "success". As I mentioned above, relationships mean stronger connections between you and your clients. Therefore, I think being integrity is always the best choice, and fostering an ethical culture on your sales team or salespeople is necessary. For your clients, it means your products and services can be trusted. Likewise, you will purchase items from the companies you trust when you are a consumer. Companies with higher ethical standards experience greater customer loyalty, satisfaction, referrals, and lead to greater long-term profits. 

However, oftentimes, the most dangerous and common situation in selling is focusing on immediate profits and short-term sales goals. With a narrow perspective, salespeople tend to make deals that bad for the long-term benefits. It hurts both the enterprises and the customers, and both of the two are losers. Enterprises lose their customers and the customers fail to get great deals. Moreover, salespeople tend to make promises that almost impossible to deliver. 

Reference

Tanner, J. & Raymond, M.A. (2015). Principles of Marketing. University of Minnesota Open Textbook Library. Licensed under a Creative Commons by-nc-sa.

The Structure of The Logistics Process in Taiwan

The Structure of The Logistics Process in Taiwan

The new generation of logistics war has started in Taiwan. The demand for efficient logistics has become an all-time high. Traditional logistics companies cannot fully satisfy such high demands. E-commerce in Taiwan such as PChome and momo have built their own warehousing and truck fleets to race against time. Moreover, the foodpanda and UberEats in Taiwan have joined the war for the food delivery market, as they know the demand has been unsatisfied due to the development of information technology. PChome and momo highly relied on the cooperation of logistics partners in the past, but now they have started to build their own logistics processing centers. The logistics battle has been transferred from the labor-intensive and enclosing traditional thinking to the competition for talents and a new type of retail. Regardless of evolution, what remains the same is that the logistics industry will always race against time.

Here are the steps for suppliers to cooperate with PChome24h:

1. Suppliers sign agreements with PChome and pay for the marketing and fulfillment services. 
2. Suppliers send their products to PChome's warehouses nearby.
3. PChome checks and confirms the received amounts of products with suppliers.
4. Products have now listed on PChome24h.com and available for purchases.
5. Consumers purchase some products and pay for them.
6. PChome confirms with banks and third parties for this payment.
7. Payment confirmed and orders pass to its fulfillment centers
8. PChome fulfillment centers start to pick and move these specific items into boxes.
9. Products are now in the boxes and get in the trucks stand by them. (As I mentioned above, those trucks are from third-party logistics firms and some of them are from firms owned by PChome.)
10. Products are on the trucks and heading to consumers.
11. Consumers get what they ordered earlier.

However, not everyone is feeling good at what they actually get. Therefore, some reverse logistics are unavoidable. According to the return policy of PChome, here are the steps for returning a product.

1. Consumers request returns on the PChome24h.com returning page.
2. PChome receives the message and notifies the logistics firms.
3. Logistics firms carry the returning products from consumers to suppliers.
4. Suppliers confirm the completeness of the products and send the messages to PChome. If the products cannot be returned because of some serious damage, the suppliers will report and reject the return.
5. After receiving the yes or no messages from suppliers, PChome notifies the consumers of the results.
6. PChome does the return of payments.

An additional suggestion for reducing the returns is that PChome should manage its website and teaches their suppliers how to provide more information of their products to reduce their returning rates and increase their profits.

Outsourcing and Offshoring, Just-In-Time and Vendor-Managed Inventories, Marketing

Introduction

Today, the idea behind the term value chain and supply chain is that the supply chain partners can do more for you rather than just perform basic functions. For instance, in Taiwan, PChome24h.com cooperates with the great partner T-Cat to do the transportations for it, in order to achieve the 24h-delivery. The customers not only enjoy the products they buy, but also enjoy the fast delivery, and reduce their waiting time. Besides, each partner should help you create more value for customers.

Outsourcing and Offshoring

Both offshoring and outsourcing reduce costs but in very different ways. Companies like Amazon or Walmart negotiate contracts with third parties to perform specific functions such as transportations and POS(Point of Sale) systems by outsourcing to other companies. By doing that, they can reduce the costs since they don't have to put too much money on them like open a new company to do this business. Always remember that it is vital to find a partner you can trust and specializes in the task at hand. Offshoring, on the other hand, sends internal jobs to be performed in another country. An example of offshoring is for a United States based company like Tesla to produce their electric cars in Asia and Europe to locally supply its products.

How Can Just-In-Time and Vendor-Managed Inventories Add Value to Products for Customers?

Most companies desire to lower their cost on their inventories. However, to lower the amount of inventory and still maintain the stock they need to satisfy their customers is a hard choice. An example of a company that uses just-in-time inventory systems is Toyota. In Toyota, "Just-in-Time" means making only what and when it is needed. It efficiently eliminates waste and improved productivity. In addition, companies with just-in-time inventory systems keep very little inventory on hand so they can reduce the cost of inventory.

Some companies do this approach by contract with their suppliers to ship and manage their inventory as they need it. This is vendor-managed inventory. Amazon's fulfillment centers manage the inventories for its business partners who sell products on Amazon.com. Apple also utilizes a vendor-managed system and carries very few component parts. Its chips suppliers carry them. This helps keep Apple’s in-inventory levels low. And by keeping track of its customers and what they are ordering, Apple has a better understanding of what they might order in the future. So Apple can order the right chips at the right time within the right amounts. Apple also purchases components and materials from various suppliers, then gets them shipped to the assembling plant in China. From there, products are shipped directly to consumers who bought from Apple's Online Store.

What Place Does Reverse Logistics Have in A Company’s Supply Chain? 

Reverse logistics stands for all operations related to the reuse of products and materials. More precisely, reverse logistics is the process of moving goods from their final destination for proper disposal. When a manufacturer’s product moves through the supply chain network and reaches the distributor or customer, any process or management after the sale of the product involves reverse logistics. The product would travel in reverse through the supply chain network to retain any use from the defective product. 

Reverse logistics presents one of the biggest operational challenges in E-Commerce freight logistics due to the cost of processing returns. Effective reverse logistics should have direct benefits such as improved customer satisfaction, decreased resource, reductions in storage, and distribution costs. When a return occurs, the returned product will be collected and sent to the distribution center. Meanwhile, the relevant information will be transferred to the return processing center.

The traditional logistics when products are required, they will be shipped to the distribution center and then shipped to the retail stores. It heading only from sellers to buyers. However, reverse logistics is very different. Shippers in response to actions by consumers, even though they do not initiate reverse logistics activity.

Reference

Just-in-time - philosophy of complete elimination of waste. (n.d.). Retrieved March 06, 2021, from http://www.toyota.com.cn/company/vision_philosophy/toyota_production_system/just-in-time.html

Lu, C. (n.d.). Apple supply chain - the best supply chain in the world. Retrieved March 06, 2021, from https://www.tradegecko.com/blog/supply-chain-management/apple-the-best-supply-chain-in-the-world

One-to-One Marketing

Introduction

One-to-One Marketing is a customer relationship management and a tailored, personalized strategy. It is about interactions with customers and creates greater customer loyalty. Although it may take some effort to do it, it generates better returns. Moreover, one loyal customer can lead more customers to follow. In the modern world, we get better opportunities to learn from people's experiences. For instance, there are more and more unboxing videos on YouTube, so customers can watch them before they actually make their decisions. 

The Steps Companies Need To Take To Engage in One-To-One Marketing with Their Customers

Identify The Targeting Customers

Obviously, you have to identify your customers first. If you don't who are they and how they make their purchasing decisions, you cannot win this marketing game for sure. Imagine it as a destination you are looking for, then you can think about how to get there. But if you don't know where you should go, you will get lost in the marking sea. Therefore, enterprises must be able to locate and contact at least a substantial portion of their customers. The goal of one-to-one marketing is to deliver a personalized experience. And generate customer loyalty. To do that, companies need to know their customers better enough.

Differentiating The Customers

Once you have identified your customers, the second step is to differentiate them. This step helps you to focus your efforts and put your limited resources into it to gain the most advantage with the most valuable customers. Differentiation will also help you decide on the appropriate strategy. Moreover, it also refers to how you differentiate yourself from your competition and how you differentiate yourself in your customer’s mind. And, enterprises have to find their profitable positions that bests allows them to serve the markets.

Interacting with Customers

Now, the challenge is to interact with the customers you have identified and differentiated. Simply speaking, our major purposes are improving both cost-efficiency and effectiveness. New social media have provided real-time interactions, but how to make customers love your business is the key to win. Some useful tips such as empathy, conscientiousness, transparency, and emotion are all you should think about. Remember, go where your customers are.

Customizing Enterprises' Behaviors

The final step is to customize your enterprises' behaviors. For instance, if you are interviewing for work in Tesla, what should you answer questions like "Tell me about yourself?" or "What's your interest?". Different individuals like different answers, so do enterprises. Therefore, companies must adopt some aspect of their behavior to meet that customer’s individually expressed needs. 

Conclusions

Identifying and differentiating customers, the first two steps, are largely analysis steps, whereas interacting with customers and customizing are action steps. If you can’t identify your individual customers, you definitely cannot differentiate them, much less adapting your behavior to address each one’s needs.

Reference

8, P. (2021, January 21). One to one marketing - what it is and why it's here to stay. Retrieved March 01, 2021, from https://www.zineone.com/one-to-one-marketing/

Is your company ready for one-to-one marketing? (2014, August 01). Retrieved March 01, 2021, from https://hbr.org/1999/01/is-your-company-ready-for-one-to-one-marketing

Tanner, J. & Raymond, M.A. (2015). Principles of Marketing. University of Minnesota Open Textbook Library. Licensed under a Creative Commons by-nc-sa.