Bottoms Up

For my blog post this week I decided to focus on a company called Canadean Ltd. Canadean Ltd provides analysis and opinion to help companies in the Alcoholic Drinks business better understand trends and changes in the environment, assist in formulation of strategy, as well as position them to better seize new opportunities.

Canadean currently provides many services and have recently listed a new service as a part of their offering, "Fortified Wine in Emerging Asia to 2015". This report is a result of extensive market research and is an essential tool for companies active throughout the Alcoholic Drinks value chain, as well as, for new players who are considering entrance into the market. This is a significant new market for Canadean to participate in and should provide a steady flow of revenue moving forward. Some of the basic features of this report are:

• An overview of the Fortified Wine market in Emerging Asia
• Ability to analyze trends through the utilization of historical industry data
• Knowledge of the market with key figures on consumption value and segmentation by category for the historic period

I thought that Canadean would be an interesting company to look at this week because they are essentially providing market research to companies through their day-to-day operations and the addition of the Fortified Wine market in Emerging Asia to their offering should only help their profitability moving forward.

http://www.sunherald.com/2012/02/24/3774746/research-and-markets-fortified.html

Let The Games Begin

This week of class in M510 was one of the more laid back ones we've had to date. That being said, the excitement that was built up over what is to come in the upcoming weeks gave me and my classmates plenty to think about. We formally got introduced to our simulation and the ball is now in each of our respective teams' court to set objectives and goals for our experience.

I don't know about all of you out there but this simulation gives me a chance to pair my experiences with simulations as a kid with real world implications. I know I cannot be the only one who played the sims or any of the tycoon computer games whether it be dinosaur, roller coaster, or zoo amongst others as a child. In these games we had the freedom to choose what we wanted things to look like, how they operated, and what others thought of our designs (to some degree). Our simulation presents us with the same opportunities with the only thing changing being the material. It is still age appropriate but instead of dinosaurs and zoos it is a brand and a business (the things that are on the forefront of our minds). The thing I enjoy most about simulations is that they foster creativity and allows us as students to break free from the rubrics and other constraints in our day-to-day lives. No one project will look the same and the value taken away from the project is in direct relation with how much time you invest in your teams simulation. One last thing I enjoy about simulations I have done in the past is that they get you to think and challenge you more than any book problem ever could. The thought process utilized in these simulations follows the train of thought that is necessary for success as we look to start and grow our own careers. This is the biggest reason, to me, as to why this simulation will be beneficial to us all.

So even though this week was a bit on the lighter side in terms of learning there was still plenty to think about while garnering a lot of excitement from both myself and my peers as for what is to come. It will be interesting to see in the end what all of the teams come up with and how we all react in this competitive environment. There will be learning done in some way, shape, or form at every point along the way and that's the greatest part. Let the games begin!

Price Isn't Everything

This week in class we discussed pricing and its importance in the marketing mix. The key to designing a successful pricing strategy is that it simultaneously creates a consumer incentive to buy while also creating a firm's incentive to sell their product. The firm's that capture the most value in the marketing mix are in a position to charge premiums for their products based on the consumer perceived value. As we know from our studies the highest priced product doesn't necessarily bring in the most profits and firm's are constantly fighting a pricing battle between the objective value of their product and the consumer perceived value of the product.

Price is a variable that is constantly being manipulated and has a strong impact on the bottom line for firm's. For example take a situation in which a firm cuts prices by 5% while generating a 10% increase in demand. On the surface the price cut looks like a bad thing due to decreased margins but the increased demand could have the potential for greater profitability. This seems to be simple economics at work but the issue of price is indeed a more complex issue due to the competitive nature of businesses today amongst other things. Another reason price is such a big deal is due to the multiplier effect. A 5 cent price increase might not appear to be a big deal but if a firm's annual sales volume is in the millions the residual effect could be in the hundreds of thousands to millions of added revenue (again this is dependent on the size of the firm's annual sales volume).

There is no doubt that price strongly effects the bottom lines of firms but I also feel that it is an overused promotion method. In my opinion, it is better for a firm to be cost-effective and compete based on reduced COGS rather than constantly focusing on increasing the very arbitrary consumer perceived value (which allows for a premium price). Don't get me wrong and think that I don't believe that price matters because it does. I simply feel that some managers have a narrowed perspective and focus too much on price when there are so many other factors that can be manipulated to increase the overall profitability of a firm.

Product Lifecycle

What makes a product successful? You have a perfect idea but how do you go about showing customers the value in it? Products generally don't have an infinite life and like everything else have a defined lifecycle. This week in class we delved deeper into the innovation and lifecycle behind products.

In class we discussed five qualities that are generally seen as indicators of success for a product. They are as follows:

• Relative Advantage
• Compatibility with Existing Values and Practices
• Simplicity and Ease of Use
• Trialability
• Observable Results

This knowledge is important for groups to focus on and can help identify weaknesses that need to be addressed and provide opportunities to improve a product or behavior.

Another important part of increasing exposure to a product or innovation is peer to peer conversation. Peer networks are an effective and pivotal variable that needs to be understood in order to best position your product for success. I have personally made decisions about whether to try a given product or service based on word of mouth and other general conversations I've had with my peers.

One final key to understanding the product lifecycle is to understand the different user segments. The segments we discussed in class were innovators, early adopters, early majority, late majority, and laggards. Innovators have the highest propensity to adopt a new product or trend followed by early adopters and the early majority. Laggards have the highest propensity to resist a new product/trend followed by the late majority. I would classify myself as part of the early majority. I tend to think practically about my decisions and won't act unless I have evidence of benefits provided. I also view myself as a cost sensitive, risk averse consumer who doesn't enjoy the complexity that some companies convey when advertising a product. I simply want to see how I will benefit from the use of the product.

Understanding the product lifecycle and the factors that contribute to the success of an innovation is essential to increasing the life of a product and our discussions in class this past week have done nothing but reaffirm my pre-existing beliefs..