Bricks and Clicks

The internet has created a business environment where consumers expect businesses to have their store products available online. Whether these products are for sale or as an informational tool for the consumer, they are essential to providing a complete shopping experience. The benefits provided to the consumer by offering online shopping might also detract from traditional business margins. Online shopping has introduced the ability for consumers to competitively price every single widget, increasing the competitive environment for business. Lets take a look at a few businesses who have had to expand their boundaries to the online marketplace.

Traditionally when you think of local hardware stores, they ten to be convenient brick locations where you can pick up any essentials to complete your weekend project. Ace Hardware is a well known hardware store with a wide assortment of supplies that cover most any weekend project.
So how would an online store be helpful to Ace Hardware? It turns out that providing a large selection of products means that you cannot provide much depth to each category of product. Ace Hardware is using its online marketplace as a tool to offer its customers a wider selection of goods, all of which ship free to the store. Not only does this make the customer feel like they are saving money, but it also encourages a trip to the store which might result in a few impulse purchases. If the customer chooses to ship it directly to their house, Ace still makes the same profit as if the customer had bought it in the store.
Since Ace Hardware stores are owned by individuals (my Grandfather owned one), they encourage consumers to check the stores for availability before purchasing online. This helps to ensure the stores still receive foot traffic which is where Ace Hardware makes most of their money. Consumers are also more driven to go to the brick location knowing they won't have to pay shipping fees. In either scenario, online shopping is beneficial to Ace hardware Brick locations as it drives more customers in to pick up custom orders and increases awareness of their product depth available.

Costco is well known for their huge warehouse locations that offer floor to ceiling deals in bulk. What some people may not know is that they also have a website with just as many deals.


Being a corporate owned store, Costco is focused on large volumes of sales to generate max revenue. This means that their online marketplace is just as important as their brick locations. Everything in their store, including food items, can be purchased online with shipping built into the price. Costco has also fused these two locations, not only allowing returns of online purchases to warehouse locations, but you can even upload pictures online and have them printed at your local store. There is not much conflict between these two mediums because most shoppers still prefer to patronize the warehouse location to do their weekly shopping and the online location for specialty shopping for items not found in the store on a regular basis. This integration of the online marketplace has allowed Costco to expand their sales potential while retaining brick location sales numbers.

DSW is what can be described as the Costco of Shoes. Row after row of designer shoes at bargain prices. Most consumers like to be able to put on a pair of shoes not only to see if they fit, but if they look and feel good. This hasn't stopped DSW from offering a large lineup of shoes on their online marketplace.



To overcome this problem of shoe selection and fit, DSW gives premium members free overnight shipping and exchanges in their stores to promote online shopping. While this might seem as a method that will cut deeply into profits, it actually opens their market to people who might have no intention to go to their physical store and inspire an impulse purchase. This is very evident with my fiance who routinely surfs their online store while watching TV. Would she have done this if there was no marketplace? Most likely not. The online marketplace is no hinderance to the DSW brick locations. It still offers the needs of most consumers to physically try on shoes while the online location panders to the obsessive woman culture of shoe shopping.

Online shopping, as in these examples, has proven to be a great benefit to most retailers. As long as they retain competitive prices and benefits to the consumer, brand loyalty will carry over to the online marketplace. This is enhanced if the brick locations honor returns from online purchases that might not be possible by online specific shopping. All of this must be considered when entering into the vastly competitive realm of the online marketplace.

Pricing Scavenger Hunt

Pricing is a very important aspect to the marketing of any product. A price that is too high or too low can be fatal to the future of the product or the company. Marketers use pricing to lure in new customers, retain current customers, and to promote products. Lets take a look at some product pricing strategies in use today

Marketers use penetration pricing when they need a new product to capture a large share of the market. By setting initial price lower than their competitors, they can draw customers away from competing products and gain market entry. An example of this penetration pricing is the Kia Soul.

With a starting price of $13,300, the Kia Soul has been very successful at attracting a lot of attention from buyers. While some might question the reliability of such a low priced car, this is a perfect entry level vehicle for younger consumers and is priced to attract them into dealerships. Of course after upgrades and other expenses the real price may be much higher, this initial low price has been successful at generating a great deal of attention which will most assuredly lead to an increase in market share.

Another pricing strategy is odd pricing. The perception of the consumer is that anything odd priced is at bargain prices. The most obvious example of this that consumers see on a daily basis is gas prices.


Not only are gas prices always an odd number, they are actually 1/10 of a cent from being even! This is the ultimate in odd pricing, so much so that consumers aren't even aware of it most of the time.


This pricing method is highly effective in marketing prices to the consumer. Given a gas price of $2.57 and 9/10 or $2.58, consumers will be attracted to the odd price with a perceived sense of discount pricing.



Gas stations are very effective at employing this method and it can be at gas stations all around the country.




The act of setting a very high initial price is the act of skimming. Companies are able to do this if they have the only product in a category and the consumers are willing to pay a premium for it. They will eventually lower the price as other competitors enter the market, but take the high margins while they can. A great example of price skimming is television technology.




Anybody who wants to be on the cutting edge of television technology should expect to pay a large premium over the standard technology. There always seem to be a newer, greater than before technology available too. This shows the success that companies have in reaching the techno junkies who crave the newest technology and are willing to pay the extra price that companies charge. An example of this in use today is the new 3d technology being employed Samsung. Their 55" 3d TV is listed on their website for $6,999.99, a a large amount higher than their standard 55" television.


A marketing technique where a product is priced for very little profit in order to attract consumers to high profit products is known as a loss leader strategy. A new example of this made prevalent by the internet is music. With albums and songs being openly traded, legally or illegally, online, music artists can longer rely on their music sales as a form of income. Artists now must hook the consumer with free or relatively inexpensive prices for their music and attract them to their concerts where they might pay high prices for tickets and memorabilia. An example of this is www.artistdirect.com, part of the 'rogue network' of artists who are offering free content to gain exposure and fan base. This appears to have been successfully employed by artists who earn the respect and following of fans by not looking to be driven by sales and profit.

The multiple unit pricing strategy is a method of offering a discount for buying multiple products for one low price. This is most effectively employed on a daily basis at any local grocery store.
Take this advertisement for Fry's in Cave Creek as an example.




This whole page page was dedicated to multiple unit pricing. It is very effective at grabbing the consumers attention and it screams bargain.

This specific example is being well used to show that not only are these products a great deal, but it also seems as if the whole store is on sale!

With multiple product categories that might encompass the a large percentage of a shopping list, this advertisement does a very good job at drawing in the consumer to the store, but will also more than likely make them go to every aisle in search of deals and end up doing all of their grocery shopping at that store.




These have all been examples of product pricing techniques for specific products. There are some companies, however, that use pricing as a positioning strategy. These companies either want consumers to look at them as the high end, high quality manufacturer, or the company they go to if they just need to get a product at a bargain. To make a comparison, we will look at two watch companies, Breitling and Timex.

Touted as an 'instrument for professionals,' Breitling has positioned themselves a high end watch manufacturer of the highest quality and precision. Their prices are suited accordingly. Take a look at this Breitling Blackbird priced at around $5,000.



This price point has effectively positioned them as a high end luxury watch in the same market as Rolex. They are found in jewelery stores and other high end retailers where you would expect to find high value products. You would not expect the next watch to be in the same display case competing for market share.







This is the Timex Expedition, a $60 watch found in every Walmart and Target. Timex has positioned themselves as the everyday watch with affordable pricing and durable products. People know that when they buy a Timex, they are buying a watch that will look decent, be inexpensive, and work well. This position is reflected in their price. You would not expect to pay thousands of dollars for a Timex.

Breitling and Timex are two examples of how companies can effectively position themselves using pricing.

Global Marketing

The globalization of the world's economies has left companies no other choice but to address each market individually. These efforts are necessary to meet the customers expectations in each individual market while also trying to maintain a unified company image. To understand consumer behavior, companies must look at the consumer decision making process, social structure, culture, and other factors that vary between countries. Take this first example of the globalized approach from McDonald's in America and in Japan.


As you can see, the differences in the home page are drastically different.

American McDonald's Homepage

• Simple design that focuses on their food
• Describe their products as being delicious, famous, and having a rich history
• Small, simple selection of tabs that are easily located
• Small color selection of red, black and some gold

Japanese McDonald's Homepage

• Design incorporates many different themes that include food, pop stars, and children
• Foods are described as being juicy or tasty
• Home page not only has a scrolling tab feature but every tab has a subset of tabs and related news articles and page links
• The main page is composed of various colors, layouts, and graphics.

Beyond these visual differences in the home page, the Japanese McDonald's had a slightly different menu that included hot dogs and corn as a replacement for fries. The Japanese McDonald's website is very more interactive including links to cartoons, downloadable games for children, and a news update for every category of McDonald's interest. The Japanese McDonald's even has the young woman 'Alice,' winner of the contest to be the voice of McDonald's.

All of these differences seem to be appropriate for each market. McDonald's is continually trying to become more sophisticated in the American market and reaching out to adults while they still advertise heavily to children and teens in Japan. This shows the different market segments and target marketing performed by McDonald's in each market in an effort to build new customer relationships and maintain current ones.

Another market that has become recently accessible to large American retailers is China. This country not only presents a problem for a company in identifying the needs and wants of the people, but also must be very vigilant to the Chinese government. A mistake by a company who has not done their research about the corporate environment in China could very well find themselves no longer allowed to operate in the region. Companies must also ensure that they meet other internet regulations so their online content is not censored.This next example will look at the world's largest retailer's homepage in America compared to that of their Chinese page.


The Walmart's American homepage is typical of what you would expect as an American consumer looking at a retailer's homepage. A big "free shipping" entices the shopper to click on college supplies while the rest of the website is full of links to other shopping areas. It is apparent by this website that the American demand is for retailers to provide online shopping at good prices so the consumer does not have to leave their home. The American Walmart site has catered to the American market demands by incorporating this format and only includes other company information in small links at the bottom of the page.

The Chinese Walmart website is quite different than the American Site. You won't find any links that go to an online shopping center. Instead, the website is geared heavily toward informing the consumer of the positive social and economic impacts and responsibilities that Walmart holds itself responsible for in China. Most of the tabs redirect you to pages that are intended to inform the reader of Walmarts commitments to China and its people.

This approach is very different than its American marketing mix because Walmart is not only trying to build a new brand with people but also showing that it cares for the people. This is particularly effective in China because it is a manufacturing intense country where employers are more concerned with increased profit than their effect on the environment and worker's welfare. This societal marketing approach will assuredly hit home with the Chinese people as they identify the increased benefits of having a Walmart in their community.

Walmart's China website maintained it's traditional company colors and symbols, keeping brand recognition congruent in diverse markets. They included color sale advertisements that you would see in the American mail system and websites. Importantly, Walmart also carries their own brand name products as they do in America, even including the same labeling in English. These brands are more advertised on their Chinese product fliers than their American, most likely preying on the desire of the Chinese to buy American products.

The last comparison of international website will be that of Sony

The Sony Greece homepage was very straightforward. It highlighted their new products while providing easy navigation to the rest of their product lineup. Online shopping was easily accessible along with any other information you were looking for. The interesting thing about international Sony websites in Europe is that they were all exactly the same. No country got any special treatment in regards to design or product promotion. This might be an attempt by Sony to cover a multitude of countries in a close density without bias towards one or another. Sony uses a central shipping hub in the European Union so keeping all product lines similar is likely important. Sony's Greece and European homepage is very direct in marketing to its customers, knowing that consumers want the online shopping experience to be as easy, fast, and natural.



The Sony American Homepage is much different than its European pages. Reminiscent of the McDonald's website, Sony has incorporated a simple but elegant design that showcases one if it's products. Also highlighted on the homepage are new movies and video games being released. This is important in reaching the American consumer who generally are very interested in pop culture and technology. Both the American and Greek website had the same products, it is probable that the European electronics were made for different voltages, something a company must consider when selling electrical devices outside the United States. The American Sony website included tabs at the top to navigate to other areas of their products, just more subdued than the European site.

These three retailer's websites go a long way to show what companies now face when it comes to a global market place. With many different market segments, companies must be more vigilant than ever to ensure they are capturing the desire of consumers in all markets. This takes a dedication to note every small detail of cultural significance and detail that might otherwise be ignored to remain competitive in the modern marketplace.

Ethics and Social Responsibility

The fast food industry America is often pointed to as the primary contributor to America's ever growing obesity problem. This charge hasn't stopped them from introducing some rather unhealthy sandwiches, some of which have grown popular while others were tremendous flops. One of the most infamous of these flops is the Arch Deluxe

Marketed to the adult crowd as a hamburger with "sophisticated tastes," the Arch Deluxe was packed with over 560 calories and 32 grams of fat. While this alone could be considered a questionable practice, McDonald's proceeded to spend over 100 million dollars in marketing this product to the masses with television commercials, taste testings, and other advertisements.



This disregard for consumer health and the extravagant marketing campaign for an unhealthy product are obvious examples of a lack of ethical and social responsibility. Ultimately McDonald's targeted marketing failed as people rejected the higher priced unhealthy sandwich and the Arch Deluxe was soon retired. McDonald's has since changed their marketing mix to try and position themselves as a healthy place to eat, which has worked out much better for them.

More recently another product has gained wide spread success with a hugely popular product
Do I even need to tell you what this is?

Apple has taken over large amounts of market share in the MP3, personal computer, and phone markets and is now looking at taking over the tablet market with the iPad. Employing a marketing mix that targets 'cool' users with high priced products that can only be purchased in exclusive locations, Apple has created a new product, the iPad, with very few benefits over their similar products, but their marketing campaign would have you believe otherwise.






As seen outside the bookstore on the ASU campus. The iPad is both 'Magical' and 'Revolutionary'










The marketing of the iPad starts to become an ethical question when you consider at its debut the iPad was stricken with multiple problems, such as internet connection issues, that limited its performance. The marketing videos suggested that you would be getting the best tablet PC on the market that was the greatest at everything. This product was supposed to be magical and revolutionary. Users instead found themselves with an enlarged iPad Touch that immediately needed upgrades. Not only is the need for this product questionable, but it appears that Apple rushed this product out to maintain its position as the leading technological innovator of consumer electronics.

The success of Apples marketing campaign could be seen on the opening day of sales for the iPad as people waited in line for countless hours to spend $500 on the newest Apple product, quickly becoming the fastest product to reach one billion dollars in sales. These same people are now jamming the internet with complaints about their iPad and have been relegated to using their old Apple products to perform the same functions while Apple works out the kinks in their newest offering. The iPad presents an example in a somewhat unneeded product that might have been marketed in an unethical way, using past consumer relationships and flashy advertising to sell a product that does not quite live up to its billing.


The engineering of products to have a limited useful life has been around since the early 1900's as manufacturers became more cognizant of production costs and future revenue. Building a long lasting quality product is not only more expensive, but also reduces sales in future periods. The planned obsolescence of products is an obvious ethical dilemma arising from the fact that manufacturers are producing a sub standard product to increase profit. It is unfortunate for consumers that this practice is not only accepted but some companies openly advertise it. Take for instance the Gillette Fusion Razor.


Marketed to men as the smoothest, longest lasting razor, it includes a helpful indicator strip to notify the user when the blades are no longer at their sharpest. While this will probably help ensure that the user is always getting the best shave possible, it might not be completely necessary to change the blade.

This form of planned obsolescence is ethically irresponsible not only because this is a wasteful practice, but is also extremely expensive to the consumer. Gillette can do research in blade design to increase life or maybe advertise to their market on how to preserve the life of razor blades by performing some type of maintenance. Gillette can even tell the consumer to continue using the blade if the shaves are satisfactory. It is ethically irresponsible to advertise a product with planned obsolescence and not inform the customer of possible ways to mitigate this problem and endangers the customer relationship with the company.

The last three examples of possible ethical irresponsibility have been supply side related. These companies intentionally marketed to people and created a demand for their products. But what about demand side market failures? What has the market demanded from suppliers that created unethical advertising and products. The most recent and relevant example of this is housing.



As this graph indicates, increased demand for housing in the early 2000's by consumers caused house prices to soar. This demand market for housing resulted in mortgage products and financial services by banks and other companies that were highly unethical. Advertisements for easy credit could be seen everywhere and consumers happily signed up, sometimes taking loans against the equity in their home just a few months after moving in. This was a failure on the part of the consumers to fully appreciate what their financial capabilities were and a failure of companies to oblige to these demands. Eventually this behavior, among other things, led to the collapse of many financial institutions and possibly our current recession. Not only was it the fault of the consumer to demand irresponsible financial products, it was highly ethically and socially irresponsible for the supply side to advertise to and fulfill these demands.