comments on another blog

I am critiquing Julie Phan's "Starbucks Expanding into China" blog. It was a very interesting topic and I agreed with her thoughts. She talks about how the Chinese culture is very much set on tea, and with Starbucks coming in trying to change the taste of Chinese people- it will be a huge task for them. Without knowing too much about this topic, it was interesting to learn this and see her perspective on this current issue. I like how she found a topic that she was interested in and really spilled her thoughts out and how it relates to consumers. Also, Julie picks a side that is not what Starbucks is currently doing, and I think this is always good to be challenging what's happening and see it from a different point of view. For example, she says: "I honestly thought that Starbucks should try to appeal more towards the China culture because it would be more of a gradual change that would get the Chinese people's attention. Starbucks decided to take the other route and want to change the taste of Chinese consumers all together. This is a big risk, seeing as how China's 1.3 billion people do not care for coffee, according to the article I read. " And I completely agree with her viewpoint.

Coincidently enough, I am just beginning a group project on Starbucks in one of my management classes. We are taking a look into companies that may be having some sort of problems and giving recommendatios on what they should do to turn it around. I just interviewed someone at the Starbucks on campus (Texas Union) yesterday, and it seems like Starbucks' strong points are the culture and atmosphere that they create within the store. So piggybacking off what Julie said about how "People don't only go there for the great tasting coffee, but they also come there for the experience." is completely true. Customers feel good and like they're drinking high quality, brand named coffee when they sit there and sip on their grande iced caramel macchiato with nonfat milk and a shot of something in it (which did you know Starbucks' macchiato is different from another coffee shop's macchiato? they just call it this, but in other coffee shops you'll find it under "latte").

So if that's their strength- what are their weaknesses? From my interview and research online, I've found that they have been opening up too many stores- you can almost find one on every major street corner now, similar to a gas station. The "specialty" of Starbucks that they once tried so hard to create is being shot down with the abundance of stores around the city. In Julie's blog she talks about how they are moving some of their business to China- and in my opinion, this is really going to be a hard task for Starbucks. Especially if their strength is in the experience they create at the store, I really don't think it will transfer as well into the Chinese culture. Also, stores like Mcdonalds and gas stations have cheap alternatives for a customer's coffee fix. You can run through the drive through line really quickly and be gone onto your next location at one of these locations. Starbucks has many competitors meaning many different acts that needs to be taken strategically on their part, and if they are hoping to be successful in the coming years- I think it's important for them to focus on what they're doing well on right now or change their strategy abroad. I realize that it is important to be global in this day and age, but it's also important to not spread yourself thin and start to fall in different areas opposed to focusing on what you can do well- and constantly challenging this area.

extended outline- consumer's brand loyalty in this recession

Concerns: Is there too much information packed into the first part of the body? I assume I will find more information for the 2nd and 3rd parts of the body as I do more research, but I have a feeling there will be much more information for the 1st part regardless.

I. Introduction

a. Thesis- In times of economic uncertainly, consumers become even more interested in obtaining value-for-money in their everyday shopping and private labels know this, and so customers' brand loyalty are continually being tested each time they enter the grocery store.

i. Private labels vs. Brand names
ii. Rewards Programs
iii. My Insight

II. Body

a. Consumer's attitudes, beliefs and motivations behind private label versus famous brand purchases.

i. Consumer trends have shown an increasing interest in private labels.
a. Private label sales grew 10.2% in 2008, while brand name sales increased only 2.6%. For example, one consumer says “the only difference is the label on the package”.
b. Any worries that consumers have about the economy only serve to strengthen private label spend because store brands are seen as an important way of achieving value for money.
c. Marketing fatigue potentially enhances the appeal and relevance of private label brands, especially as advertising is a key defense tactic for famous brands. Across the 15 countries surveyed by Datamonitor in August 2008, 47% of respondents 'strongly agreed' with the statement, there is too much advertising today.

ii. Another factor that is interesting is that sometimes when you have a whole bunch of different brands out there and not a lot of differentiation among some of them or not a lot of knowledge about them, people get frustrated and confused and end up just picking the private label
a. We studied this in the pod cast about choices. Sometimes, choices are not the best thing for companies.

iii. Furthermore, seeking to combat stiffer competition from cheaper store brands- big-name food manufacturers, including Kraft Foods and General Mills are joining forces with retailers to promote their brands alongside private-label goods.
a. In the past, big food companies didn’t worry too much about cheaper store brands encroaching on their turf, because consumers were more loyal to name brands and generally believed better quality justified their higher prices. But now, retailers have improved their store brands and have mimicked the innovations that brand names have introduced (such as cheese with extra calcium).

b. Rewards Programs- Brands better keep members by instilling reward programs.

i. A new study from Colloquy finds that customers who participate in loyalty-building efforts are 70% more likely to actively recommend a product, service, or brand than the general population.
a. Examples: MyCokeRewards and the Best Buy Reward Zone

c. My Insight

i. “Branding is so much about psychology it’s almost frightening”.

a. For example, the Miss Clairol feeling was the girl next door but just a little prettier and L’Oreal made women feel sophisticated and worth it (hence the tag line “because you’re worth it”).

b. If brand names want to keep their profits and popularity high, they need to figure out what consumers want to feel when they buy a product- the psychology that is attached to their product, and then how to position it.

III. Conclusion

a. In times of economic uncertainly, consumers become even more interested in obtaining value-for-money in their everyday shopping and private labels know this, and so customers' brand loyalty are continually being tested each time they enter the grocery store.

b. Topics covered
i. Private labels vs. Brand names
ii. Rewards Programs
iii. My Insight

c. Companies, private labels or brand names, need to rely on product innovations and value marketing to drive growth behind its brands.

WALMART & RFID technology

In class we learned how Walmart is implementing the use of Radio Frequency Identification (RFID) technology. The improvements in sensitivity, range and durability, have enabled widespread RFID use in the logistical planning and operation of supply chain processes in the manufacturing, distribution and retail industries, and helped move its adoption into services such as security and access control, tracking, and monitoring/management. A RFID tag is consisted of a microchip and an antenna packaged into many forms, such as a label, or imbedded in between the cardboard layers in a carton. Information about the product that the tag is stuck on can be recorded when the tag passes through a RFID reader before you walk out of the Walmart store. This is linked to a computer system that updates the location status of the associated product.

This means that Walmart can very quickly, gather information about the customer, the types of groceries or products he/she is buying and further, maybe even come up with some assumptions based on this information. Walmart not only acquires efficiencies and cost reductions (for example, in inventory management) but they are able to gain customer insights about what they are buying more of, how often, what other products complement well with it, what type of customers are buying what specific types of products, etc.

Along with RFID tags are not only great efficiencies but also like we learned in class, there can be privacy concerns. When we gather lots of information from consumers, what we do and who sees this information can get us in trouble. So, Walmart just needs to make sure they are monitoring this and has control over gathered information. Walmart's RFID mandate has enormous strategic implications, not just for their direct suppliers, but the suppliers own operations and vendors in turn. The ripple effect of the mandate will cause RFID costs to drop in general, opening the door for RFID applicability to smaller companies and industries that to this point haven't been able to cost justify using RFID.

It will also enable new applications such as RFID-enabled personal safety and security. These kinds of applications in turn become particularly attractive when combined with GPS technologies to enable comprehensive tracking whether in a building or on the road. Once costs drop enough, and if privacy concerns are able to be overcome, using RFID at the individual consumer product level will open the door to a new generation of retail efficiencies. These may lead to more discovered customer insights, and companies can invest and discover what customers really need when it comes to safety and security.