teachthe4ps.com - For instructors of marketing.

We all teach price sensitivity (some of you may prefer the economics term price elasticity) when we cover Price.  In response to our depressed economy, most consumers have become much more price sensitive in the last few years.  One market segments has been almost immune to this trend — luxury shoppers.  This article in the The New York Times, “Even Marked Up, Luxury Goods Fly Off Shelves” (August 3, 2011) offers some great examples — Mercedes-Benz just had its best July in the last five years and “Neiman Marcus has sold out in almost every size of Christian Louboutin “Bianca” platform pumps, at $775 a pair” (right click my image and copy/paste to your slides).  The article also includes a chart that shows trends in U.S. luxury spending over the last few years.

This might be fun stuff to talk about you cover consumer behavior, the external market environment (economic environment – kind of a counter-example), pricing or price sensitivity.

Wal-Mart has long been positioned as the low-price leader.  Leveraging its supply chain and logistics system, competitors couldn’t match Wal-Mart’s cost structure.  Now at least some consumers perceptions are changing.  In this Wall Street Journal article, “Wal-Mart Loses Edge” (August 16, 2011, non-subscribers may need to click here) we read about recent consumer surveys that show the retailer losing its “lowest price” positioning.  In one survey of 1500 Wal-Mart shoppers, “86% no longer thought it had the lowest prices” while in another survey the number was 60%.  Whichever the number, this is a big problem for a retailer that has long enjoyed a well-deserved reputation for low prices.  While Wal-Mart’s perception of value fades, stores like Dollar Tree are seeing their perception of value rise.

While fewer consumers perceive Wal-Mart as the low price leader, what is the reality?  The article reports mixed objective evidence.  In comparisons with Target, with one study by Morgan Stanley showing that in Chicago Target is about even with Wal-Mart (though Wal-Mart was more than 20% lower priced than Safeway and Supervalu) and another study by Goldman Sachs showing Wal-Mart 6.2% lower than Target overall.

This case study could provide interesting fodder when you discuss positioning.  We define positioning in our books as “how consumers think about proposed or present brands in a market.”  You can remind students that perception is what counts among consumers.

You might recall that a few years ago Wal-Mart changed its tagline from “Always Low Prices – Always” to “Save Money.  Live Better.”  Wal-Mart wanted to appeal to a more upscale crowd and develop a greener image.  Perhaps this change de-emphasized the previous price positioning.  The new dual positioning may not be as clear to consumers — opening opportunities for dollar stores to take the lowest price mantel from Wal-Mart.

This opens the door to a good discussion with your students.  Asking them:  What should Wal-Mart do now?  Change its positioning?  Or try to re-gain the low price position?  Given its history and strengths, it seems clear to me that the retailer needs to regain the consumer perception of value.  Perhaps there is a need for more advertising?  Or should the store revisit the everyday low pricing model it has traditionally used — perhaps the hi-lo pricing models of some competitors have helped confuse the market and harmed Wal-Mart’s positioning.  Also posted at Learn the 4 Ps.

This infographic “The Sneaky Psychology of Advertising” (BuySellAds.com, June 20, 2011) provides some interesting examples of consumer and advertising research.  Several of the ideas originally appeared in academic outlets including the Journal of Consumer Research and Psychology Today.  You might find the results of some of the studies will make interesting examples to use when you teach consumer behavior or advertising.  Are some of these tactics unethical?  What do you think?

I also posted this at Learn the 4 Ps – I plan to take a look at student comments there before I teach advertising.  I think it will give me an idea about how students view advertising — you might like to do the same.  So come back to the student post in a few weeks to see if we have any action there.

Marketers have always been excited about the idea of turning consumers into powerful Promotion tools for their brands — but fostering word-of-mouth isn’t easy.  Now Facebook is hoping they have a strategy that makes it easy for consumers and marketers to work together to promote brands and products we “like” (as in pressing the “Like” button on Facebook).

No one is quite sure where this is going, but many consumers are already clicking the Facebook “Like” button on their favorite brands — or maybe mentioning in a post a recent  purchase of the brand.  Now it seems that Facebook will mention this ads targeting that customer’s friends.  So for example, if I “Like” a brand like Ikea on my Facebook page, an ad could appear on my friends pages that mentions “Joe (and perhaps more of their friends) Likes Ikea.”  In theory, knowing that Joe likes Ikea may make the store more appealing to my friends. This short article at Fast Company suggest that Facebook’s sponsored stories work – see “Facebook Sponsored Stories Performing 2 Times Better Than Standard Ads” (July 15, 2011).

Why could it work?  Because Facebook users are trusting people.  There is evidence that social networks foster trust.  You can read more about it in another Fast Company article, “Digital Oxytocin:  How Trust Keeps Facebook, Twitter Humming” (July 18, 2011).

These short articles epitomize one of the original motivations for Teach the 4 Ps – how can we keep our customers up-to-date when books only publish every few years.  So many new things are happening in marketing — so the blog is designed, in part, to help you stay current.  Also posted at Learn the 4 Ps.

Many U.S. grocer stores use multi-unit price promotions — for example, 4 12-packs of any Coca Cola product for $12.  This article, “At Stores, Making 5 for $5 a Bigger Draw Than 1 for $1” (New York Times, July 17, 2011) describes the practice with a variety of good examples and some interviews with managers.  While most stores allow consumers to buy fewer items at the fractional price (one 12 pack of Coke for $3 in the previous example), the promotions typically encourage consumers to stock up.  So it provides an example of how marketers can influence consumer behavior.

I also found it interesting how much retailers monitor and tweak the strategy — looking very closely at which combinations bump sales the most.  That provides a different type of example of marketing research and consumer behavior — and of course this example can also be used in pricing or sales promotion.

P&G has long been a trend-setter and leader in consumer packaged goods marketing.  They were one of the first to increase point-of-purchase (in-store) advertising and have made many bold moves on the social media front.  We have highlighted some of these in previous posts on Teach the 4 Ps (see Sit or Squat phone app and the Old Spice “Man Your Man Could Smell Like” viral video campaign).  The video below is a segment from an interview with P&G CEO Bob McDonald which includes a look at where P&G sees marketing going in the future. In the process, McDonald reveals that Old Spice is now the #1 body wash and deodorant following the “Man Your Man Could Smell Like” campaign.

I think most of us enjoy showing our students how understanding consumer behavior can help marketers develop marketing strategies.  In “How Online Companies Get You to Share More and Spend More,” (Wired, June 20, 2011), Duke University marketing professor Dan Ariely offers some great examples of how companies take advantage of  our behavioral biases (trick us?).  These can easily be transferred from the article to your PowerPoint slides (right click on an image in the article – then copy and paste into PowerPoint) or just bring the site up in class.  Examples in the article come from Amazon, Facebook, Groupon and more.  Also posted at Learn the 4 Ps.

We all know how difficult it can be to change consumer behavior.  Try selling razors in India, where only half of men shave at home (the other half shave at barbers — and then not everyday).  Is this a threat or an opportunity? P&G India saw this as an opportunity — hundreds of thousands of men who were not using its product.

So last year P&G launched its “Women Against Lazy Stubble” campaign — see TV commercial below for one of the early ads. The campaign reflects subtle changes in P&G’s marketing strategy under new CEO Bob McDonald which is described in “Why Procter & Gamble Needs To Shave More Indians” (Bloomberg Businessweek, June 9, 2011).

The article and television ad (you can find more ads in the campaign by searching YouTube) could make a great example to use in a number of different class sessions.  For example, you could start a class session on consumer behavior by giving your students shaving data from the article and then ask how P&G could encourage more Indian men to shave at home.  The case might also work to show how consumer behavior differs around the world — or in international marketing or advertising and promotion.

We recognize that many instructors prefer not to use alcoholic products as in-class examples (and we keep them out of our books).  So we leave it up to you whether to use these creative examples in class.

The beer industry has recently come out with some very interesting packaging innovations.  This article, “Brewers Hope Consumers Will Judge a Beer By Its Cover” (AdvertisingAge, May 16, 2011 – I think that non-subscribers will be able to link to this article).  You can read about Coors Light bottles tell you when they are cold — and Miller Lite’s vortex bottles and nine other examples.  The article offers some brief critiques, suggesting “Why It Works” and “Why It Doesn’t” which might be useful discussion starters in class.  I could see a discussion of selected packaging innovations with a discussion about the appeal to target markets and consistency with positioning.

The examples could obviously be used when discussing product and packaging — but you could them as examples of differentiation.

Stanley Bing’s experience provides an example of how at least some customers might react to extreme relationship-building efforts of many companies today.  Bing describes being overwhelmed with the frequency and type of post-sale contact he received following his recent purchase of a Toyota RAV4.  Interesting food for thought in “Toyota, I love you.  Goodbye” (The Bing Blog, May 4, 2011).  This might add to a discussion of CRM, lifetime customer value, customer service, or consumer behavior.