Week 11

We have made it to the end of the semester. We have worked through many marketing concepts and how important marketing is to a business. We have complete the Pharmasim simulation which put those concepts to the test. In our last blog post we have been asked to take a look at marketing from the "macro" perspective. Marketing is more than just advertising, promotions and sales. Marketing encompass all aspects of a business and is a key factor to the success of any businesses.

There are 3 basic principles that a business needs to understand to be successful. First, the purpose of a business is to create a customer. Without customers there is no purpose of the business. Second, there are two basic functions of a business, marketing and innovations. Marketing and innovation create the customers and product results, all other aspects of the business are just costs. Third, marketing encompasses all aspects of the business.

Working in the construction industry we do not have a traditional marketing plan like other companies might. The majority of our marketing comes from interactions with clients, architects, engineers and building managers. Creating a customer starts with good relationships with architects and building managers. Architects and building managers suggest us to potential customers who are looking for a general contractor. Estimating the project correctly and having the right fees get us the customers. I would explain to my boss that without these important connections and a good estimating department we will not create any new customers.

Next, marketing and innovation produce results and all other aspects are costs. The results are produced during the construction phase of the project. During the project, it is important that the project manager and superintendent market the importance of the project to the subcontractors. Making sure we stay on schedule and within costs keeps our customers happy. There are various aspects of innovation during the project that can help us speed up the job or tackle obstacles. Innovation can be simple changes in the way we run our plumbing line to minimize material and labor costs to redesigning aspects of the project to save install time. Marketing and innovation during the project helps us be successful.

Last, marketing encompasses all aspects of the businesses. As seen in the two previous examples we need to continuously market ourselves to our customers and the project to our subs to be successful. From the first point of contact with a prospective customers to the receipt of the certificate of occupancy. We need to continuously use marketing throughout a project to be successful.

I have learned a lot about marketing through this class and how important is it to a businesses. I did not think about marketing at all within my own job until this class. I can definitely take what I have learned in class and apply it to my job in construction.

Week 10

As we continue to advance through the Pharmasim simulation it is time to look back on what we have done. This simulation has put us in the position to be marketing managers for Allstar Brands and work through the marketing management process. This process is long and detailed. It starts with having to analyze a wide variety of data from past years to help determine what your plans will be for the next couple of years. This is data about the market, customers, competitors and products. In Pharmasim, to have enough data to complete this analysis you need to buy all of the reports. Completing this analysis separately then your teammates allows you to analyze the data how you see it. Then you can compare and contrast with your teammates. I noticed that we came up with similar results after the analysis and had similar ideas on our strategy for the next periods. Completing the competitive analysis really helped me complete my understanding of our position in Pharmasim. It allowed us to determine a better pricing strategy and help lower costs. Since the situation analysis required us to purcase almost all of the reports we had data about everything. We were able to review ourselves as a company, our products and the competitors. We were also able to review data about the market's customers. The reported symptoms,  brand perception and purchasing decisions reports helped us understand how the customers picked a product and how we can better address our target market.

In each period of Pharamsim there has been a special decision to make. The decisions can affect how you implement your strategy in that period. The first special decision we had to make was about creating Facebook and Twitter accounts. Creating these social media accounts allowed for us to gain instant and free feedback from consumers about our product. These social media sites led to another special decision we had to make. We were receiving negative comments on the sites and needed to determine how to handle them. We decided get legal advice on how to handle these comments. It was suggested to us to turn off the comments until we have a written policy governing the use of the forum by both customers and employees. One of the most interesting decisions had to do with special advertising. We had the options to place our product in a movie, advertise on a race car or run an ad contests for consumers. We decided to run the ad contests as it got consumers involved.  We had a good response to this decision as there were a number of good entries submitted to the ad contest, and the videos are generating a lot of interest on the web site.

 The most important decision we have made in Pharamsim was to raise our price. With the low price in the early rounds we were generating a lot of unit sales but we did not have a great bottom line. Once we raised our prices we saw a rise in revenue, gross margin and net income. When we were selling Allround at the low price we were operating over capacity by 17%. This increase our costs of goods sold tremendously and hurt our gross margin and net income. With the higher price, unit sales decreased and so did gross margin. This allowed for a better bottom line. Pharmasim has been a good tool in teaching us about the marketing management process. It is really important to understand all of the market data to create a plan for your future.

Towards the end of class Proffessor Spotts talked about a class that WNE is offering that combines engineering and marketing. I look this class my senior year at WNEC, the first year it was offered. It was one of the most interesting class I took in my 4 years there and I learned alot. When I took the class there were a handful of teams that developed a product from scratch and created a company around it. There were other teams that worked a intrapreneur. My team worked with Smith and Wesson developing a new style handcuff. We went through the process of determining the size of our market, who the customers would be, what the existing products are and what could be improved. We determined that a new, lightweight handcuff would help reduce the total weight of the belt that police officers wear. We replaced the steel with aluminum and developed a new connection system for the 2 sides of the handcuffs. As the engineers in our group worked on the product side, the management team developed the business/marketing plan for the product. We determined the market size, who the customers were, who are competitors were and what our competitive advantage was. We did not take the ideas past the classroom but other teams in class thought about getting patents. This was one of the best classes I took while at WNEC.

Week 9

This week we read an article about marketing metrics, "Managing the Marketing Metrics Portfolio". The article reviews different metrics that can be used to measure the efficiency of your marketing plan. Every company has a different mission and a different strategy, the metrics used must be in line with your mission and strategy. A company must understand their position in the market before determining their metrics. For example, a start up company will have different metrics than a mature company. The start up will need to adjust their metrics after a couple of years as their strategy will have changed. We can apply the concepts in the article to the Pharmasim simulation we are currently working on. In Pharmasim, it is important to understand who your customers are and what your position is in the market. Allround is the market leader is over the counter cold medicines so using market share as a metric would make sense. After working on the marketing plan for Pharmasim my team has decided to implement a premium pricing strategy. With this strategy in place we will not look at units sales for our metrics but instead use gross margin. We were operating over capacity which increased out costs of goods sold and hurt our gross margin. Another team might use different metrics to determine their efficiency.

Managing the Allstar Brands company in Pharmasim has been an interesting experience so far. As a team, Justin and I are working well together. The first few periods did not yield the results we were expecting. The biggest problem we had was that we did not have a defined pricing strategy at the beginning of the simulation and kept our price low. This resulted in high unit sales but our net income was not impressive at all. The high number of unit sales caused us to run over capacity and raised our costs of goods sold. After completing the situation analysis and marketing plan we have determine a better strategy for the upcoming periods. Justin and I realized what issues we were having and are on the same page about the decision we need to make in the future periods. We are hoping that this new strategy will help us improve on our metrics.

This week we were also asked to review the blogs of three other classmates. I decided to review Marty's blog first. I have been reading his blog every once in a while and like how he related class to working for Vermont Yankee. Some industries, like Marty's and mine working in construction do not always have a strong connection to Marketing. Justin also does a great job connecting college football to marketing. I liked Marty's blog because it is very detailed. He does a great job of connecting the various class assigned articles and outside articles to the class topics. Next I reviewed Andrew's blog. I liked that Andrew uses outside examples, especially the example of the car dealership with a niche market and their strategy. Andrew's blog was easy to read. Last, I review Ahmed's blog. Ahmed uses pictures and charts that relate to his posts that help explain what is going on. I thought that Ahmed's blog flowed very nicely through each of his posts and was quite detailed.

I thing I though of this wee while working on the marketing plan was distribution channels. Working in construction we do not have a product that goes through various distribution channels. However, we do have different channels that our submital process needs to go through. For various parts of the project we are required to submit cut sheets or shop drawing to the architect or engineer. The process starts with the subcontractor who is required to submit the cut sheets or shop drawings to us. These are then reviewed by the superintendents and project managers. The next phase is submitting them to the architect/engineer for review. The submitals are either returned as approved, rejected or more information needed. If a submital is approved the part is order and if its reject a new submital is required. These submitals need to through various channels before they are brought on site and installed.

Week 8 - Marketing Stategy

This week we read about Drucker's ideas on marketing strategy. One of his ideas about strategy was that it is the customer who ultimately determines marketing decisions and what a business is because they are the ones who pay for the goods or services. I agree with Drucker's suggestion because a business needs to understand their customers to be successful. If a business understands their customers to will adjust their marketing strategy and pricing strategy to fit their customers needs. A business that does not make decisions based on their customer's needs has less of a chance of being successful. Working in the construction industry I come across different customers with different needs. We do a variety of work and based on the customers needs we adjust out strategy. We have superintendents with different experiences and knowledge of the industry who might be better suited for one project of the other. We adjust our strategy based on the customers needs just as Drucker suggested.

Another one of Drucker's suggestions was about predicting the future. He said that the purpose of a strategic analysis was not to predict the future. If the strategic analysis, an analysis of historical data, is not used to predict the future what is it for? Drucker said that its purpose was to give direction to determine the strategy to reach their goals. Past purchasing habits can be used in conjunction with know economical information to help predict the future. There are 5 certainties that can help a strategist predict the future. Those are:

1) The birthrate in the developing world
2) Shifts in the distribution of disposable income
3) New definition of performance in an organization
4) Global competitiveness
5) The growing incongruence between economic globalization and political splintering.

Theses certainties, which are events that have already occurred and are know in the future, will not tell businesses what they need to do but can help them predict their future markets.

Pharmasim
This past week we finished making the decision for the first three periods of Pharmasim. We then developed our own strategic analysis of Allstar Brands. Completing the strategic analysis has been helpful to understand how our past decision affect our sales, market share, net income, etc. We have been asked to evaluate our performance against the performance of other teams in class. Pharmasim has various reports to complete the evaluation. Some of the reports that should be used include sales revenue, market share and profitability and unit sales.

Other Blogs
The firs blog I read was Alexis'. Her blog was interesting because she covers everything we do in class plus has other posts about marketing. One post that I really like was the two ads in one. I had not seen that advertisement before and its quite interesting. The ad shows 2 different images, one that kids can see and one that adults see based on your height. This is an interesting way of advertising to 2 different markets at once. Anther aspect of Alexis' blog that I enjoyed was her answering her own questions for the week. Its a great way to help yourself understand the material.

The next blog that I read was David's. I like David use of the Dilbert comic and its connection to the class and marketing. David has his weekly blog posts broken into separate posts. It was really easy to follow and read. David goes into great detail about each of the topic from class and talks a lot about the Pharmasim simulation. He also incorporate pictures into his blog to relate to his posts. One post that I like was the ranch dressing with the new formula. It interesting how something like that might not catch your attention everyday but when your learning about it in class is right there. It show that the decision we are making in Pharmasim are made by companies everyday.

The last blog I read was Christine's. I how Christine goes into great detail about Pharmasim, the first trail period and how they came to make their decisions in the first 3 periods of team work. Her team set their goals from the beginning and worked toward them. She also noted that the goals were flexible and might need to change after a couple of periods. Christine used interesting titles for each weeks posts instead of just titling it the week number. I liked in the pricing strategies post she related the strategies that we had been talking about to real life situations.

Its always interesting to read the blogs of other classmates to see how they are understanding the information from class and how they have worked on Pharmasim.

Week 7

Marketing Communication in Construction

This past week we talked about marketing communications.We reviewed different advertising and promotion strategies, customer relations and public relations. One item that caught my attention in the educational portal video was the relationship selling video. This also related to the lecture when we were talking about long term customer relations. Having good long term customer relationships in the construction industry is very important. Most of our work is repeat business, we would not receive these jobs if we did not have a good relationship with the customer. If we were to use a traditional sales model, we would not have any repeat business. We would price the job, get the job and complete the work. We would not help them through the process and offer additional services to help as they move in. We use a relationship selling strategy. It starts when a client, architect or engineer first contact us to budget a job. Once the budget is complete they might as for was to cut costs or proceed to finalized drawings. Once drawings have been completed we can proceed with estimating the job and propose a hard final price. After pricing is accepted we schedule to start the job. We use weekly meeting to stay in touch with the custom and keep on top of any changes that might come up. Once the job is completed we check on the customer once in a while to make sure they are satisfied. Many times there is additional work requested, things that they didn't know they needed until they moved in. Keeping a good long term relationship with our customers is very important.

Another topic we reviewed this week and it was our Try This! for the week was a push-pull strategy. This strategy relates to the products path down the supply chain from manufacturing to the consumer. A push strategy is when the company uses advertising/promotions to push the product through the supply chain. A pull strategy is when the company is filling a consumer need. Basically, the consumer requests the product and pulls it through the delivery channel. Working in the construction industry we do not use any push strategies. If we were to use a push strategy it would not help us get much work. We can not push ourselves onto potential customers like a company could do with an actual product. However, we do use a pull strategy. When a customer notices a need for improvements to their office space that requires some construction they would contact us. The customer has a need and pulls us in to fill it. For example, Company A has decided to lease and additional 3,000 sq.ft. to use as conference space. They would contact us to build the additional space to their specifications. As a construction company we use a pull strategy.

Working in the construction industry had made it hard to relate this class to my current job. We operate much differently then a company selling a product. I have noticed that there are theories or strategies in which we do follow. They are not strategies that we have laid out in a marketing plan like some companies but we do use them. It has been very interesting to learn about the strategies and relate them to my job.  

Week 6

There is always something interesting happening in the marketing world, whether its a new advertisement, product or store-wide sale or a new promotion. Since today is mothers day I noticed a lot of related items. There were sales at almost all of the department stores, people selling flowers at the gas station and I noticed many sales in my email. The emails were what caught my attention. There were sales from various companies adverting for discounts ranging from 10% off to 35% off. These emails show how companies use holidays to run sales and promotions to attract customers.

This week we read in Cohen's book. The chapter was all about pricing and the different theories Drucker has about pricing. One of Drucker's theories is the myth of the irrational customers. This theory states that "if something fails to respond to what the theory predicts, it is not a demonstration if irrationality. Rather, something is wrong with the theory and has to be changed." I think that customers can be irrational, overpaying for products or making decisions based on price not quality. There is more to a decision making then just the price. The product or service needs to meet the customer's needs. In the construction industry pricing is very important. If our estimators can price a job lower than our competitors we usually get the job. But, in other instances we have priced a job $100,000 less than a competitor and did not get the job. We do not know why the customer made this decision but there must have been factors other then price involved. Drucker had his own views on how a product should be priced. He did not say that a product should be sold at X to make a profit of Y.  Instead, he believes that companies should price a product based on what the customer would pay. The cost of the product should be adjusted based on the price customers will pay.

Net marketing contribution is a measure of contribution to company profits after marketing and sales expenses are accounted for.The net marketing contribution formula is NMC = Market demand * Market share * Selling price * Consumer demand  * Margin% - Marketing expenses. Different pricing strategies will affect how a company views their NMC. Companies using a pricing strategy of profit oriented will analyze the entire NMC and look for higher contributions. Sales oriented companies will look for a high market share. Companies that are customer oriented will look at market demand and market share while competitor oriented companies will look at market share and selling price. Based on the company's pricing strategy the NMC will be different. The NMC is used to determine if the marketing strategy can cover the total costs associated with marketing, advertising and sales. 

This week we also talked about four different pricing strategies, everyday low pricing (the Walmart strategy), high/low pricing (department store strategy), new product (skimming and penetration) and status quo. Everyday low pricing is the strategy of Walmart and similar stores. They price products low every day, they do not offer too many sales. I do not think this strategy would work in Pharmasim. Price is not one of top factors customers look at when purchasing cold medicine. Next, high low pricing is the strategy is used by companies like Macy's or Lord and Taylor's. They have a variety of products in their stores, some priced high and some low. They usually base the price on the popularity and timing of the product. For example, a new line of shirts is released for the spring season, these items are priced high. When summer comes along and new products are in the store they offer sales and discounts on the spring line. Again, this strategy would not work in Pharmasim as customers purchase cold medicine as needed.

When bringing new products to the market there are two useful strategies. First is the skimming strategy. Second is the penetration strategy. Skimming is the process of pricing a new product high when it first enters the market and then lower the price overtime. This strategy could work in Pharmasim when bringing a new product to market. For example, if we introduced a new 4-hour cold medicine we could price it high at first and then lower the price in the next period. We could gain back some of the original expenses in the first period and then hopefully increase sales in the second period with a lower price. Next is the penetration strategy.  This strategy is the process of bringing a new product to the market where a competitors product is very similar. Using this strategy we would try to steal customers from our competition. I think this would be the best strategy to implement into Pharmasim. We could introduce a new product like a 4-hour cold medicine into the market. There is already competition for this product but we are trying to take customers from our competitors. Customers would be attracted to this new product because of the Allround brand name. Pricing can be a complicated process in any business and we be very important while playing Pharmasim.

Week 5 - PharmaSim

This week we were asked to look at 3 different possible brand extensions for Allround. The options were a children's 4 hour liquid, a 12 hour milti capsule and a 4 hour cough liquid. To determine which brand extension would be best for Allround I analyzed each of the three potetial markets and where Allround stood in those markets. First, the children's 4 hour liquid would only have 2 competitors. The cold market is expected to grow about 3.5% this period. Allround already has 37% share of this market. When looking at the cross section of young families and cold medicine Allround has 20.6% of the market. Only Coldcure, a 4 hour childen's liquid has a higher market share. I do not this a 4 hour children's liquid is the right product for us. Next, the 12 hour multi capsule would not have any competitors offering the same product. This cold medicine would compete direly with the 4 hour multi liquid and 4 hour cold capsule. Allround is currently the market leader in cold medicine with 23.3% of the market share. The brand formulation of the 12 hour multi capsule and Allround are very similar. I think this product would create too much cannibalization of Allround. Last, the 4 hour cough liquid would be competing with 2 other brands. Allround is already the leader in the cough market wit 35% share of the market. Allround is beating the specific cough medicine in their own category. The cough market does not look to be growing in the next period. Allround should not expand into the cough market. In period 4 I did not pick one of the line extensions. Allround had a good percentage of the market share in each category. Also, the products were all too closely related to the Allround product. Based on market growth and current competitors I think it would be better of invest in a allergy medicine.