Tag Archives: global marketing

Is this a good deal?

Everyone loves a deal. Just showing a sign with “50% off!” can get shoppers racing to the store to rack up credit card points. But is that perceived ‘deal’ really a deal? Or is it a ploy? And, do shoppers always make the right choices when comparing pricing options? Oftentimes, shoppers do not make the lowest-cost choice, but instead fall prey to their own mathematical errors.

Answer this: Which is a better deal for a $6, 6-ounce product:

  • Option (a): 33% off the regular price, or
  • Option (b) 33% more product for the regular price?

At a quick glance, it appears the two deals are equivalent. But are they? No.

  • Option (a) $6 – 33% discount ($1.98) = $4.02, divided by 6 ounces = $0.67/ounce.
  • Option (b) 6 ounces plus 33% more volume (1.98 ounce) = 7.98 ounces, divided by $6 = $1.33/ounce.

In order for the two options to be truly equivalent, the price discount of 33% must be countered by a quantity increase of 50%.

This is a common scene for product discounts in stores. Generally, consumers prefer product bonuses instead of price discounts, even though these do not offer the same benefit.

Go ahead and try to make these calculations in your head! Then, carefully examine the promotions offered by retailers before making your final decision.

Which promotion would you use?

Group Activities and Discussion Questions:

  1. This activity is a good time to set students loose in stores on a field trip.
  2. Divide students into teams. Have each team walk through a local store to determine how prices are advertised and shown in stores. They can compare the shelf price with prices found in sales flyers (usually at store entrances).
  3. As they wander the store, have students find examples of products that are offering a discount, or offering an extra portion in the package. (They can use smart phones to take photos of the examples.)
  4. What pricing strategies are being use?
  5. Do they always make the lower-cost choice?
  6. Debrief the exercise.

Source:  McGinty, J. (3 August 2018). 50% off: Why that deal isn’t as good as you think. Wall Street Journal.

 

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IKEA Opens its First Store in India

IKEA has opened its first store in India. The store, located in Hyderabad, cost roughly $100 million to build and is an estimated 400,000 square feet. The company plans to have up to 25 stores in India by 2025.

India has a large and complex retail base. The country’s 1.3 billion people account for about $30 billion per year for furniture and household items. However, unlike the U.S., 95% of the goods are sold through small shops that offer specialty products or single-category stores. IKEA’s broad product mix and store operations had to be significantly revised for India. While the store layout is similar to other IKEAs, the displays are different, featuring hundreds of products priced at 100 rupees or less ($1.45 U.S.).

To research how India’s people live and shop, employees visited about 1,000 homes in different areas of India to understand consumers’ needs. Some differences: most Indians do not use knives to eat, women are shorter than Europeans, and children often sleep in the same room as their parents until they are school-age. In addition, India’s government requires foreign-owned, single-brand retailers to use local suppliers for 30% of the value of the goods sold in India.

IKEA, the Sweden-based multinational, now owns and operates 415 stores in 49 countries around the globe. With revenue in excess of $42 billion (U.S.), and an estimated 12,000 products, the company uses more than 1% of the world’s commercial-product wood.

It’s not always easy to change, but entering a new market requires research and revision.

Group Activities and Discussion Questions:

  1. Ask students about their experiences at IKEA. What works, doesn’t work?
  2. View the IKEA India website: https://www.ikea.com/in/en/
  3. A video of IKEA India store is available at: https://economictimes.indiatimes.com/industry/services/retail/ikea-says-namaste-to-indian-customers-as-it-throws-open-its-first-store-in-hyderabad/videoshow/65340339.cms
  4. Discuss how to build and use a SWOT analysis grid: strengths, weaknesses, opportunities, and threats.
  5. Divide students into teams. Have each team develop a SWOT for IKEA in India.
  6. What are the issues and risks?

Source:  Goel, V. (7 August 2018). Ikea opens first India store, tweaking products but not the vibe. New York Times.

 

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Armpit Advertising

Do you ride the subway or other public transportation? Do you notice the ads in the cars, or do you tune out everyone and everything, particularly the stinky armpits of fellow travelers on crowded trains? Well, in what might possibly be the weirdest place ever for an advertisement, a Japanese company is charging clients roughly $90 per hour to place advertisements on armpits. Yes, you read this correctly – armpit advertising is now a thing.

Wakino Ad Company (“Waki” is the Japanese word for “armpit”) is placing the ads on the underarms of both female and male models for beauty company Liberta, whose product mix includes armpit creams. Wakino is also running a national armpit beauty contest to promote the new areas of advertisements.

While the armpit ads might seem strange, people have long used spaces on their vehicles and bodies to promote products. There have been cases where advertisements have been placed on bald heads, faces, thighs, and other body areas. For armpit ads, the sponsors could be for hair removal, dermatology, lotions, creams, and who know what else.

Go ahead and raise your arm in public – you could get paid.

Group Activities and Discussion Questions:

  1. Poll students: Who takes public transportation? What ads do they notice?
  2. Discuss the various promotional tactics that can be used for marketing a product.
  3. Have students come up with tactics and list all the tactics on the white board (ex: billboards, print, direct mail, etc.).
  4. Now, introduce the armpit advertisements: https://youtu.be/P54A9L-VyFg
  5. Divide the students into teams. Have each team list what products could be advertised in armpits?
  6. What other body locations could host ads? What products or services would they feature?

Source: Ad Week, CNN, other news sources

 

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