Advertising vs Promotion

Advertising

• longer term effect on the brand
• long term strategy to build and protect the brand
  

Promotion

• greater impact on immediate sales figures
• move lots of volume, stimulate short-term sales
• quick fix to make the numbers
  

Advertising expenditure to sales promotion ratio (Prof. Shravan Rungta)-
US and Europe is 30: 70 (developed countries)
China and India is reverse 70: 30 (developing)

• It seems as the retailer’s power increases and competition becomes tougher, there is a shift toward higher sales promotion as companies are forced to focus on short-term gains rather than long-term profits.
• Promotions supposedly reward “loyal” buyers, but also encourage consumers to be “unfaithful” to other brands
  

Bundling

Product bundling- is a marketing strategy that involves offering several products for sale as one combined product (a.k.a. package deal)
• Most suitable for high volume, high margin products- esp. “informational products”
• May be seen as unfair use of market power because it limits the choices available to the customer ->product tying

Pure Bundling	Mixed Bundling
- Entire bundle or nothing	- Choice between entire bundle or one of the separate parts of the bundle

Tying- the practice of making the sale of one good (the tying good) to the de facto or de jure customer conditional on the purchase of a second distinctive good (the tied good)
Tying and the law:
• It is often illegal when the products are not naturally related
• Can be considered anti-competitive practice
** consumers are harmed by being forced to buy an undesired good (the tied good) in order to purchase a good they actually want (the tying good), and so would prefer that the goods be sold separately
• U.S.- most states have laws against tying and the U.S. Department of Justice enforces federal laws against tying through its Antitrust Division
• E.U.- Antitrust laws against mixed bundling and tying. They require less proof of customer detriment than in the U.S.

Market Research Out in the Open

After returning from my spring break cruise, I received an email from Norwegian with a request to complete their post-cruise survey. When I navigated to the page, I was alerted that FirmX had been hired by Norwegian to conduct market research to improve customer experience on their ships. This was the first time that I have ever noticed deliberate exposure that market research was being conducted. I’m not sure why the company did this. It may have been Norwegian’s attempt to get honest responses from returning cruisers. I am interested if this disclaimer has any effect on the results of the survey.

Wholesaler Market Impact

Sysco actually has a Pittsburgh operational site. As the nation’s leader in foodservice distribution industry, the market leader is more than likely supplying all of our favorite Pittsburgh dining stops with food, recipes, and related products. Sysco is a full service wholesaler who offers three different product lines to their retail customers (restaurants). SuperValu is not only a grocery and pharmacy supply chain wholesaler, but also competes in the retail market with stores across the U.S. The company prides itself as an expert in supply chain and guarantees customers satisfaction in the logistics department. Although both full-serviced wholesalers claim to be “leaders” in the industry, they are essentially competitors. Both provide grocery distribution services to retail supermarkets all over the country.

The Power of Pricing

Three levels of pricing (according to “The Power of Pricing” published in McKinsey Quarterly):
1. Industry price
2. Product/market strategy level
3. Transaction level

Hofbrauhaus has arrived!

. . . “It’s wunderbar!” The famous brewery that originated in Munich, Germany has made its way to Pittsburgh. We are one of only 4 sites in the states privileged to house this hot, new establishment. Traditionally, the Hofbrauhaus in Munich was one of the beer halls used by the Nazis to hold various functions. It has since become a world-renowned attraction that every local and tourist has visited.

I got a chance to undertake the HB experience and I must say it is definitely something to see! The brewery only serves their home-brewed beers and they had 4 on tap to choose from. Everything is about the beer! They are made according to the original recipes that have been passed down though German ancestry for over 400 years. And you probably won’t leave sober. You can choose to have a 0.5 or 1 whole liter of draft, or if you are even more heroic, go for the “boot.” Everything about Hofbrauhaus is just like in the movie Beerfest—and I thought my dreams would never come true. Although you won’t see any non-beer drinkers, there is alternative alcohol to choose from. The “shotskis” are second best.

The beer hall is where everything is happenin’. The lively German band is playing while people dance on the benches and tables. The band is also very good at encouraging guests to drink. . .so beware! The servers look like they came out of a Bavarian magazine—all dressed in traditional attaire. To top off a fun night of drinkin, you can rely on the food to satisfy any craving! The extensive menu features classic Bavarian entrees, appetizers, and more. . .and every bite I tasted was delicious!


I can’t hide my excitement about Hofbrauhaus coming to the South Side Works. However, I did have a discussion with my boyfriend as to why they chose to build one in our city versus another.
My theory was:
1. South Side Works is an up-and-coming location that is an extension of the bar-intensive East Carson Street
2. High end retail stores make it an approachable place (rather safe too)
3. Cities like NYC wouldn’t want a free-standing monstrous restaurant in the middle of a crowded, fast-moving, shopping district (space issues)
4. Other places may have markets that feature even higher end dining (to serve the high class population) and wouldn’t want to be disturbed by the crazy entertainment and drunk people stumbling out OR they are lower class areas where the brewery would never survive.

I came across a blog that featured an interview with a member of Hofbrauhaus Pittsburgh’s franchising team. This was his answer to my curiosity:
Why did you decide to build there?
“It’s got a lot going on around it. It’s a first-class development, great tenants: Cheesecake Factory, McCormick & Schmick's, Ann Taylor. That’s where we wanted to be. We’re in walking distance of eight universities, too, and we sell beer, you know.”


Makes sense! Pittsburgh’s SSW has perfect market conditions.