Pricing

Today I will start from price-related promotions...As far as I know, some retailers in some countries use cash discount as price-related promotion. I am Sony fan and I use Sony for more than 6 years. For example, in Latvia if you buy Sony phone and pay the whole sum at once you will get a discount for 5-10% from the price. It is not a lot, but consumers are satisfied with that.

Also, Sony Corporation uses coupons as a discount. If you want to, but with Sony phone, you need to enter the code, and you will get a discount. Also consumer can get the discount if she/he buys the product on the internet the price will be lower than if product will be bought in the store.

On the official Sony website, it also can be found a lot of stocks. For example, now in Russian, official Sony website is an interesting offer, if consumer buys Sony Xperia phone he gets the MicroSD for 64GB. Furthermore, Sony provides free delivery if consumers order the phone on the internet. 

Discounts are based on a corporate decision or the store that runs a sales promotion on the Sony Discounts are offered sometimes during the peak seasons like Christmas, Sports seasons, and seasonal discounts are provided as well. When competition is heavily involved, such as around Black Friday, Christmas, etc., these promotional discounts are a "steal." 

What about pricing tactics!? Sony Corporation uses skimming pricing for Sony phones. It is easily to acknowledge when a new phone is released. New Sony phones are always with the high price, because it is new innovations and they want to get high profit from its product. They want to gain customers who will pay any price to get new product, and there are a lot of customers who are ready to buy new Sony phone for this high price. But after some time price become lower, because Sony produces new phones and they focus on this new product sale. Over time the price is lowered and customers who wasn’t satisfied with the high price, but wanted to buy a new Sony product can afford to do it.

Influence of marketing mix on the price.

Marketing mix has very big impact on the price. For example, product. If product I innovative than price will be higher. The level of price depends on quality of phone, on its characteristics, for instance memory, the bigger memory size the higher will be price for the same phone. So it is the same for Sony phones.

Promotions. Promotion if marketing mix has an impact on pricing decision, because promotions contribute the positioning of the brand on the market. So if Sony spend a lot of money to promote Sony phones, phones have higher position on the market and it means that price will be higher too. And it works in a back way too, less money spent on promotions à lower position à lower price.

Place. The location of Sony Corporation clients is very important for the company. The head office is located in Japan and the closer is their clients to Japan the lower transportation costs will be. Transportation costs affect the pricing decisions. If these costs will be high, then the costs of Sony phone will be higher too.

Physical evidence, people and process. The pricing decisions are influenced by these three elements of marketing mix. For example, decisions are made by the family members, which model of phone to buy. Family can choose expensive or cheap model of Sony phone; if they want to have phone with good quality and better characteristics they will buy more expensive phone if they can afford it, but if they want phone just with the basic functions, without some cool stuff they will buy the cheapest one. The pricing will vary because the type of consumers willing to buy phone will also be different.

There are two main strategies low cost or differentiation. In the low cost strategy, the company needs to know all about the prices and should understand how to work with this information right. A true winner is the company with the lowest cost in the market. If on the market are companies with the same product, the company which has lower price will win. But in differentiation company must totally understand its customer’s needs. Differentiation involves being perceived by the market place to understand better consumer’s needs.

The Sony is a combination of low cost and differentiation strategies, which is well in the market. It means that Sony Corporation actually understands their consumer needs and they know what kind of product their consumers need. Also Sony has a lot of competitors, like Samsung, and actually these two companies produce almost the same product, but to compare prices of Sony and Samsung prices of new products, Sony phones are cheaper and quality is better than Samsung. So for now when Sony and Samsung release a new innovation phone Sony phone is cheaper than Samsung.

The price elasticity of Sony phones...

“The price elasticity is the degree of responsiveness of the quantity demanded of a good to changes in price of a good. A product is known to be elastic if the consumers are sensitive towards to changes in price. Conversely, a product is inelastic when the consumers are not sensitive towards the changes in price.” Smartphones, is a luxury good, people cannot change phones every day, so Sony phones has an elastic demand.

There is an information that people wouldn’t buy phone if the price would increase by 50%. After the questionnaire the result of price elasticity of demand was higher than 1, what indicates that smartphones have an elastic demand.  Literally consumers are sensitive to the price changes. And they wouldn’t buy Sony phone if the price would be higher, the phone isn’t the first needs thing.

Here we can see the number of quantity of Sony phone sales per unit(million).

Year	2012	2013
Average price of phone	300 euro	350 euro
Sales per unit(milliona)	7.9	10.8

·         The percentage change in price of Sony phones = (350-300)/300*100 =16.67%

·         The percentage changed in quantity of sales per unit = (10.8-7.9)/7.9*100 = 36.7%

·         Price elasticity of demand = 36.7%/16.67% = 2.2%

These calculations are the proove that Sony phones has an elastic demand. As we can see elasticity of demand is higher than one, it means that Sony phones have an elastic demand.

The manufacturer can influence the consumer price by eliminating wholesalers. If they would do so, they would lower consumer price, but also if they would remove the wholesalers they will then have to do the services offered by the wholesalers. Of course, wholesalers can be eliminated, but there still will be functions which perform wholesalers.  If Sony Corporation will remove wholesalers other channel member would have to perform services which wholesalers provides and it can be problematically for them and also for customers, because they will still pay for this services which can be in bad quality, because retailers (for example) cannot provide services what provides wholesalers, it is not part of their work and they are not good in this area. Also manufacturer then should hire more personnel and costumers might stop paying for the product, because prices would reflect the costs of less efficient members. It is the way how manufacturer can influence the consumer price. But in my opinion, it is not the best way to remove one channel member and give its work to another channel member.

Services Marketing; Modifying the marketing mix for business markets, services and international marketing

The first question is about services which is offered by the manufacturer and about extended marketing mix.

Services offered by the manufacterer of Sony phones is after-sales services. It is consumer service, and it provides guarantees that phone will be fixed if there is some manufacterer deffects. Also after-sales services provides some cards, coupons, tutorials, some gifts, periodical surveys or holiday announcement etc. And some of them are used by the Sony manufacturer.

The extended marketing mix for the Sony consists of 7P’s. Sony Corporation provides a lot of products: audio, video, TV, games, playstation, semiconductors and Sony phones as well. About the price factor, price of Sony products differs depending on the quality and characteristics. For the Sony phones, prices vary between 200 and 700 euros, and it really helps people to choose the phone with the price what they can afford, and phones will be with good quality regardless to the phone price. The next ‘P’ of extended marketing mix is place. Sony Corporation has their own website, where consumers can view all Sony products as well as prices included. Also Sony Corporation has distributors and wholesalers which are located around the world. Sony design their marketing plans based on their distribution channel.The ‘P’ of promotion. The company offers Sony Card, what can be used as a reward cards which allows to earn redeemable points when consumers purchase Sony products. Sony phones have a promotion everywhere; newspapers, internet, television, magazines and also in movies. The next ‘P’ is process. Sony employs an umbrella branding strategy by placing the product name along with corporate name. This strategy leads the product to assume its own identity and positioning, but also draws strength of the corporate brand. The goal is to bolster consumer confidence in the product. Sony has used this strategy to launch new products. The ‘P’ of physical evidence provides the modernity of phones, design and also phones are up to date. So Sony corporation provides the website where all this helpful information can be found. And the last ‘P’ is people. Sony Corporation targets teenagers. Sony phones are more useful for the teenagers. I think that for teenagers it is easier to understand all functions offered by Sony phones. 

Here are a lot of services what Sony could use. But which services could be interesting to use for Sony!?

A lot of people complain about the after-sale services. They said that Sony mobile service is very poor and work takes a lot of time. For example, if phone has some defects and they send it to the mobile service it took two months to fix this defect. It’s not about which service could be interesting to have, it is more important to develop services what don’t work good. In my opinion, Sony should improve their after-sales services. It would be better to improve services what is used now than starting using new services. And then, when consumers are satisfied with these services, Sony can start using new services. It is only one complain about the after-sales service. Besides, they can also make their customer services faster by having collaboration with the distributors. Therefore, distributors could also help Sony when customers are in need.

But I think that it would be interesting for Sony to start using personal phone call, because it ca help them to understand what actually consumers don’t like and what they do like, their clients would be happy to help Sony to improve phones. Also would be interesting to use birthday email or gift. It would be very nice to get a present from the company of phones what you use. It would be great to know that this company remember about their clients. I think these two services would be very interesting.

Intangibility, variability, inseparability and perishability of services which uses Sony Corporation.

Intangibility: Sony phones are more tangible product. Of course it can’t be tasted or smelled, but consumers can touch it and discovered. For example, tangible attributes of service that can be viewed prior to purchase are design, also if consumers came to the store they can touch and see how the phone looks like, if they look for the phone in the internet, Sony phone is more intangible product, because it cannot be perceived so good, like it can be perceived in real life.

Variability: actually services are provided by people who sale Sony phones, and also who produce them. Quality of Sony phone services depends on these people. And variability of Sony phones is high. For example, people who sale Sony phones provide services. Also distributors do a lot of work to provide good quality services. In my opinion, for this characteristic of service extended marketing mix could be the answer, because variability is the quality of services depends on WHO provides them, WHERE, WHEN and HOW. All these questions are related to 7P’s.

Inseparability:  Sony phones are separable products. It can be produced at the same time as they are consumed. Sony producers produce new phones at the same time when the other Sony phones are consumed. And also they can develop phones, and fix some problems at the same time as these phones are consumed.

Perishability: For Sony, to make a forecast on how many phone can be sold is quite difficult because it has to base on the income of customers as well as their desire for the product. For example, 10 years ago Sony was a leader on the market, but now demand of Sony phones decrease. There are a lot of competitors such as Samsung, Apple, and Microsoft, so demand may be very time-sensitive. But it is for a long time, not like a restaurant; there perishability is very high, and demand can change every day, but for Sony phones perishability changes for a long time(months). And services can be stored for later sale.

The quality of the service for the Sony phones could enhance the consumer’s quality perception by providing more credible information about the phones. For example, give more information for the upcoming phones, give more information how these phones are produced, because for some Sony fans this information can be useful and they can collect all information about the phones and choose which one will be more useful and better for them. I think that providing more information for the product is always good not only for consumer, but also for producer. And one more example of how the quality of service could enhance the client quality perception is including the service which provides testing of new phone for some time (few days, a week). I think it’s a good opportunity to give chance to understand how phone works, what is changed there, to reveal all characteristics. So Sony Corporation can produce some phones what consumers can use like a tester. It can be a good idea to do so, especially when they release a new phone, which wasn’t use by the costumers. But with this ‘tester’ they can get the feedbacks and change something, and after changing disadvantages sales will go up.

Let’s say that I export Sony phones in a country I never exported to before. What promotional strategies could I  follow in relation to the product issues and promotion!? I think if I would export Sony phone to a country, where I never exported to before I would follow the second strategy – “adapt promotion only”. In my opinion, it is the best way how to export Sony phones and be successful in a country where Sony phones weren’t exported before. Sony phones are just phones, of course company provides not only phones, but if we talk about this product of Sony Corporation this strategy is more suitable. It provides similar product – phones, so they don’t need to change the product, but they need to change the promotion. This approach may be necessary because of language, cultural difference, different perception of advertisement. Generally, the strategy of adapting only promotion infuses advertising with the culture of the people who will be exposed to the marketing communications activity. Often, promotion combines thinking globally and acting locally. 

There are 7P in marketing extended mix, but how 'P' of people is linked to Sony phones!?

‘P’ of people for Sony phones is linked from the perspective of personnel like that: as I wrote in previous answers phones are sold to the retailers (small or big stores) and there work personnel which can help consumers. The personnel who helps consumer to understand the information about the phone and also describe functions and prices of the phone, is very important is qualitied service. Personnel help customers and if customers are satisfied it tells about the good quality service and that also present the product. In that case, Sony phones are in a good view. Perception of the product is better if personnel is good in their work, and knows all information about the product. So ability to deliver good quality service is very important in product sale, and these services can provide personnel of stores, where consumers can buy Sony phones.

Channel players and physical distribution

This week task was to understand channel players and physical distribution. I choose 2 shops with my product and tried to understand theory from University in real life.

Now a bit about presentation of product, atmosphere (color, music, shop design, personnel). Where product is located and more about the product... It is not so difficult to see that Sony phones are presented very well in shops and not only in shops. We can see a lot of advertisement for Sony phones. Now when Sony Corporation released new series of phones “Sony Xperia XZ”, advertisement is everywhere. When you come into the phone stores you see big advertisement about this new phone right away. In these stores is information about phones. The information about Sony phones is like: fast phone, with good quality camera, also people can choose phone with price what is suitable for them, it is some kind of presentation. And also if consumer need more information about phone, s/he can ask more information, and personal will help and will tell all the information about this product.

It how it was with me, when I wanted to buy Sony Xperia XZ. Personal knew all information, and I think it is very important for personnel to know product from all sides. So they can present not only Sony or other brand phones, but also their store from the good side.

I was in two stores: MediaMarkt and KPN. Both stores are with good atmosphere and good music. Colors and design of these two stores are completely different, but both stores are very good equipped. MediaMarkt is bigger than KPN, but it also provides more kinds of products, personnel’s clothing is very official; red shirt and black pants. These clothes are good combined with color of this store, which shows strict rules in personnel work and it creates a good impression about this store.

KPN is designed is green colors, which isn’t worse than in MediaMarkt. Personnel are clothed in comfortable for them clothes, but the T-shirt is with KPN logo. To compare these two stores MediaMarkt personnel is more official, but also prices there are more expensive than in KPN.

In big and well-known stores all brands of phones have their own shelve with different phone models. If store is like KPN, which provides basically phones and is not too big, it is clear that phones will have their own shelve. But in this store Sony phones are located almost in the back of this store, near the cash register. Also in this store are more than 1 cash register, which means that all shelves are located near them. Sony phones have its own shelve and customers can see different Sony phone models, with different characteristics and different prices.

In MediaMarkt Sony phones are located with the other brands, somewhere in the back of store. Also Sony have their own shelve, but there is not so big choice of Sony brand phones, because MediaMarkt specialized not only on phones. Whole market is divided by parts with different kind of products and this location for phones is pretty good. It is easy to find and also it is located close to all accessories for these phones.

Phones are products which always located somewhere where consumers can see it. In these two shops all brands are located close to each other, also consumers can touch phones and discover it, and see how it looks like in real life. In both shops value of brands is big. There are cheap, expensive, good quality phones. Generally, in both shops phones complies to consumer wants, that means that consumers can choose phone what will complies to their needs, wants and also opportunities.

In my opinion, it is difficult to find own-label offerings for phones. Actually, all well-known brands are with their own name, like Sony, IPhone, Samsung. Those are well-known companies and they don’t hide their name by other company name. These companies are so big that they don’t need to do so.

  

Compare to the other phones company Sony has the smallest amount of phones in MediaMarkt. For example, Samsung has large amount of their phones, and these are different models. To compare, there are presented only 4 models of Sony phones, but Samsung - 24. Also Sony phones have to share one shelve with LG phones, but Samsung has their own two shelves. Situation in KPN is just a little bit different.

KPN is much smaller than MediaMarkt, but phones supply is bigger. But supply of Sony phones there also is small. There are only 5 presented Sony phones models, it is very small amount of phones compare to Samsung, which has 2 shelves and more than 20 different phone models.

Share of space of Sony phones isn’t big, Sony actually don’t have their own shelve, they share one shelve with other phone brands, mostly with Samsung.

I think it’s a little bit weird, if Sony wants to sell their phones, Sony should have own shelve where phone will be easily noticeable for consumers. To sell more phones there should be a wish to create right behavior; to encourage consumers into the brand. t would be logical to give a disproportionally greater share of prime shelf space.

Product design and packaging must allow for efficient stacking, storage and transport; decisions to differentiate products by size, color and style must take into account the additional demands that will be placed on warehousing and shipping facilities.

How we know transportation is the process of moving a product from where it is made to where it is purchased and used. Official manufacterer of Sony phones is Japan, but they also have research offices in UK, China, USA and Sweden. Sony company sell their phones everywhere around the world, and to do so they transport their phones to these countries. Actually, wholesalers buy phones and after resell them to retailers. It is the system of transportation, from one to another member of channel. Also Sony company guarantee to pay transportation costs if in phone will be some problems, some defects what were done by producers of phone.

Sony packaging always looks like that; the upper cover of a box has a text with the name of model, on its front side the company name, and also the text of "XPERIA". The internal box in which is a smartphone with all accompanying picking has the bright side, sides painted in the same style as corporate wall-paper. Inside the box is standard set of paper information, charger and headphones. Packaging for Sony phones became more original. For example, last few models have package which attract customers; it can be transferred into platform for phone, which can be very useful. Packaging needs to be attractive for customers, because first perception about the product, what customers buy unpackaged, is package of this product.

Communication. Sony phones can be distributed by communication. For example, telecommunication. The advertisement about new Sony phones is everywhere, TV, internet, on the street. All these advertisements are some kind of communication. To sell new phone communication is important. For example, after customer bought Sony phone, company needs to know customer’s feedback about the product. Actually, company needs to do some research to analyze what became better or worse in new phone, according to customer’s opinions to prevent the same problems in future models.

Communication, transportation and packaging is very important. All these together with phone make finished product what can be sold to customers.  

Marketing channels

Today I will talk about marketing channels. And first question for today will be an overview of distribution channel for Sony phone, which looks like this:

And second will be channels in terms of complexity and distance.

Channels in terms of complexity: marketing channels have a lot of functions, and these functions are complicated themselves. There are a lot of more complicated channels then channel what is used for Sony phone. The channel is more complicated if there are more participants, like more wholesalers, also if there are agents or brokers. All these have an impact on complexity.

Channels in term of distance. Geography is very important factor. If better distance between producer and markets, the less expensive is distribution. Sony phones are developed at one place, but have a lot of places around the world, where Sony phones are sold. It means that they need to spend more money for distribution in countries what is far away. Sony phones are sold to wholesalers, and after to retailers. So to sell phones company have to overcome the distance (for instance, export and import) and pay more. Eventually channels provide some distance overcome, and this is the way how channels can be termed in term of distance.

Here.. Description of function what are fulfilled through channel members.

Ø  Producer: producers buy raw materials, finished items to produce Sony phones and after sell them to wholesalers.

Ø  Wholesaler: it is a person or firm that buys big quantity of goods from producers. And after resell them to retailers. So there are firms which buy Sony phones to resell them to the retailers to sell it to consumer.

Ø  Retailer: A retailer is an entity that sells goods or commodities directly to consumers, through various distribution channels with the goal of earning a profit. Eventually, retailers resell Sony phones to final consumers.

Ø  Consumer: people who buys products and use it.

How can image of Sony phones be influenced!?

The image of Sony phones can be influenced very easily. For instance, people buy phones in such a big stores, which are popular and have a good reputation, like KPN or MediaMarkt. Also these stores often provide an opportunity to buy phones in the internet. It indicates the size of these stores, and often these stores have good reputation and a lot of clients. All these facts have an impact on consumers. Better reputation – better attitude and perception of the product.

But if wholesales will sell products to small stores, which has bad reputation, in will have bad influence on consumers. On psychology level they will think that these phones aren’t good, also quality of phones aren’t good and eventually they will not buy it.

Essentially, there are a lot of facts can influence image of product, but in my opinion the most important for people are quality of the product and also very important is where these products will be sold and how these products will be advertised. If Sony will be sold in big stores which people know and with good advertisement, it will be good image of company and subsequently of phones.

And the last information for today.. About strategies...

All companies have their own strategy and there are a lot of kind of strategies what can be used. For example, strategy of coverage of consumers. Sony company can choose their clients; it means can target clients who will buy Sony phones. Also they can do segmentation analysis and after company can choose place where phones will buy more, where demand will be higher, also they can define critical number of retailers. It will lead to higher profit for the company. And finally they can pick up wholesalers who will work for the retailers. One more strategy is assortment strategy. In my opinion, Sony company uses attractiveness strategy, because they have wide, and deep assortment, like for example: phones, players, TV, PlayStation. Also market strategy has three tips of distribution and distribution what has been chosen for Sony is “Selective distribution”. Sony isn’t a product which people want to buy every day, because phones aren’t first needs product, so it cannot be intensive distribution. “Durable goods such as electrical appliances and exclusive fragrances usually fall into this category.” For Sony phone consumers spend time searching information about the product; visiting retail outlets to compare designs, styles, prices and other features.

Targeting and positioning

Hey again. Today I will talk about targeting and positioning. Let's start.

No brand positioning should ever be done without doing some research first. The reason is simple: it is likely that where and how you think your brand should be positioned is quite different from what consumers want, expect, and will accept. I created a short questionnaire with which I can measure the consumer perceptions of my product.

1.    How satisfied are you with Sony phone?

Very dissatisfied	Dissatisfied	Neutral	Satisfied	Very satisfied
1	2	3	4	5

2.    Overall quality of Sony phone?

3.    Sony phones fulfilled your needs?

Yes

No

4.    Would you recommend Sony phone to your friends/family?

No
Maybe
Yes
Already did it

5.    Compare to the other phone companies, what do you like more in Sony phones?

Camera

Sound

Design

Operating system

Other

6.    Do you intend to use Sony phone for a long time?

7.    Sony phone complies to promised quality?

Yes 

No

Comment____

8.    What is the important part of Sony phone for you?

Camera

Sound

Design

Operating system

Other

9.    Are you satisfied with Sony phone price?

10.  Compare to previous products, Sony Corporation changed their phones, some basic characteristics. Do you like these changes? And if you like, what actually do you like?

11.  Do you have any complaints about Sony phone?

Yes (what you don’t like)

No

After I created this short questionnaire I executed three face to face interviews with three my friends. One of them used Sony phone, but now uses IPhone, second one uses old model of Sony phone and the third one uses new Sony model. All three friends said that they are very satisfied with Sony phone, because Sony phone fulfills their needs. Also when I asked about overall quality of Sony phone, they gave a grade 6-8, because last Sony models are very strong, with good characteristics. Comparing to other phone companies, Sony phone is long-term using phone. Besides, cameras and sound are much better, and design is very interesting and differs from the other phone companies.

What about intending to use this phone for a long time. Those, who has Sony now, said that they would use it for a long time and the next phone would be Sony. One of friends said that if there wouldn’t be iPhone he would use Sony company phone, because Sony is good quality phone which complies to promised quality.

The next question was answered almost equally. The important qualities for them are cameras. It allows to take good quality pictures. Sound, display, ability to use phone for a long time and also design. About the price there were two opinions. The first was that price could be a bit lower. The second opinion was that Sony phones prices fluctuate according to the phone model what allows to buy Sony phone from different classes.

Also for question 10, there were two main opinions. First was that there are some new characteristics what are disliked, but second opinion was that Sony changes characteristics to the good side; camera, sound, design, processor become better. Eventually there aren’t a lot of complaints. I received only one complaints from person who has old Sony model. And complaint was “The only complaint - Sony should allow users of older phone models to download upgrades of Android system, otherwise the phone becomes "slow"”. But in spite of some disadvantages, all of them would recommend Sony phone for their friends and family.

And according to these answers positioning map for my products looks like that:

That's all for today:)) See you next week