CB IB3CLCK43 Finalproject CHAP18 G05 PDF

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UNIVERSITY OF ECONOMICS HO CHI MINH CITYINTERNATIONAL BUSINESS-MARKETING.....•••.....Subject: Consumer BehaviorFINAL PROJECTCHAP 18 – AMERICAN GIRL BRANDSInstructor: Minh Tien DINH, PhClass: DH43IBCGroup: 05Ho Chi Minh City, May 17th, 2020TABLE OF CONTENTSOverview.......................................

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY INTERNATIONAL BUSINESS-MARKETING ..…•••…..

Subject: Consumer Behavior

FINAL PROJECT CHAP 18 – AMERICAN GIRL BRANDS Instructor: Minh Tien DINH, Ph.D Class: DH43IBC03 Group: 05

Ho Chi Minh City, May 17th, 2020

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TABLE OF CONTENTS Overview............................................................................................................................ 3 Summary of main points....................................................................................................3 1.1 Background of American Girl Brands.......................................................................3 1.2 The story of the American Girl Brands.....................................................................5 1.3 The American Girls Collection.................................................................................5 1.4 The strategy of the American Girl Brands.................................................................7 1.5 Some success of American Girl Brands....................................................................8 Basic theories related to the case........................................................................................9 2.1 The Wheel of Consumer Analysis: Pricing Strategy Issues.......................................9 2.2 Conceptual Issues in Pricing...................................................................................11 Question 1........................................................................................................................14 Question 2........................................................................................................................18 Question 3........................................................................................................................24 Question 4........................................................................................................................33 Conclusion.......................................................................................................................42 Question and Answer.......................................................................................................43 References........................................................................................................................45

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Overview American Girl Brands, which is a wholly owned subsidiary of the world’s leading toy company- Mattel Inc., was originally the Pleasant Company before being purchased by Mattel. In 2008, its product line included 9 different character dolls or doll combinations and accessories which are sold online and in company-owned stores in Chicago, New York, Los Angeles, Atlanta, Dallas, Boston, and Minneapolis. Among these product lines, the most prominent is a line of historical dolls pertained to plucky heroines such as Samantha Parkington or Addy Walker. Such dolls were the darlings of 7- to 12-year-olds and each represents an era of American history as well as deals with real world problems. For the pricing strategy, American Girl Brands set relatively high price for each doll and its accessories compared to others sold in the mass market because of its educational values about American historical figures apart from enjoyable purposes. In this essay, our group starts with the summary of the case’s main points and build a critical theory framework related to this case with aim to answer main questions. As a result, our group draw salutary lessons in some important relationships among consumer affect, cognition, behavior, and the environment as they relate to the price variable of the marketing mix. These lessons can aid marketers in devising effective pricing strategy for each consumer segment. Summary of main points 1.1 Background of American Girl Brands

American Girl Brands is a wholly owned subsidiary of Mattel Inc., the world’s leading toy company. Before being purchased by Mattel in 1998, it had been the Pleasant Company which is headquartered in Middleton, Wisconsin. In early 2004, Pleasant Company decided to highlight its brand by officially changing name to American Girl, Inc.

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Its product line in 2008 included 9 different character dolls. Their products are sold by two main channels including online and through stores in Chicago, New York, Los Angeles, Atlanta, Dallas, Boston and Minneapolis. Today, there are currently 18 American Girl stores in US, two in Canada and two in United Arab Emirates. ❖ Company Perspectives: "We give girls chocolate cake with vitamins. Our books are exciting, our magazine is fun, and the dolls and accessories are pretty. But more important, they give young girls a sense of self and an understanding of where they came from and who they are today." Pleasant T. Rowland

Their products are sold online at website: https://www.americangirl.com/

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...and in company-owned stores 1.2 The story of the American Girl Brands The story of the American Girl started in 1986 by Pleasant Rowland who was inspired to create her own brand after her trip to Colonial Williamsburg to buy for her two kids lovely new dolls. However, all the Barbies had the same image of wearing spiked heels, driving pink Corvettes and looking as if they belonged in strip joints which brought her uncreative perceptions towards this industry. Rowland was advised not to sell a mass market doll for over $40 as some of them was even sold less than $10. Believing boomer parents would pay more for educational products which a metoo doll could not satisfy this condition, Rowland came up with an idea to create a doll emphasizing traditional American values that children could both play and learn. 1.3 The American Girls Collection At the starting point, the company’s main product was historical fiction series books and high quality 18-inch dolls representing each of the three heroines in the series book. Specifically, The American Girls Collection is a line of historical dolls that are the darlings of 7- to 12-year-olds, which includes some plucky heroines such as:

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Samantha Parkington fights for women’s suffrage;

Addy Walker escapes from slavery;

Kirsten Larson builds a life on the frontier; and so on. Through the time, American Girl expanded its collection over time, adding characters from different eras and walk of life. The table below shows some

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outstanding years of American Girl Brand.

1986 Launch historical line of 18-inch dolls with books and accessories. 11 characters and stories that had spanned over 200 years, from 1764 to 1974. Bringing lessons about America's history and the role of women and girls in country shaping.

1992 American Girl magazine was introduced. Be the very first comapny to offer contemporary that affirms self-esteem, celebrates achievements and fosters creativity in today's girls. The award-winning magazine ranks among the top ten children’s magazines in the nation and is the largest magazine dedicated exclusively to girls. 1995 The company debuted a contemporary 18-inch doll line that has since evolved into Truly Me™. The line encourages a girl to express, explore, and discover who she is and to find the confidence to be her true self. Introduce Bitty Baby™ - a line of huggable baby dolls to teach younger girls with age range from 3-6 imporatant life skills like caring and nurturing.

2001 Introduced Girl of the Year™, that gave voice to a diverse range of personalities and backgrounds through inspiring characters that offered girls a broader worldview and helped teach acceptance.

2016 Launch WellieWishers™, a line of 14 ½-inch character dolls, early chapter 8 books, and accessories for girls with age range from 5-7 teaching kindness and empathy. TheAmerican WellieWishers stories are further brought an original Most recently, Girl has launched its 2020 "Girltooflife thevia Year," Joss Kendrick, animated series. a surfer, cheerleader, and environmental activist who wears a hearing aid. 1.4 The strategy of the American Girl Brands Rowland’s strategy at that time hit on online platform with order form through email selling via catalogue believing word of mouth would be enough in terms of sales.

In 1998, the company built the first American Girl Place in Chicago, dolls can get beauty treatment and look for new outfit through America Girl Collection and it also offers space for children and parents joining and spending time together. Rowland also took care of her customers by some ways such as opening a “hospital” for broken dolls. Here, they are dressed in hospital gowns and wristbands, then toy owners can view x-rays, eye charts and other medical equipment.

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Each of the dolls represents an era of American history which parents could buy historically accurate accessories, clothing outfits and furniture for the dolls along with outfits for their children. The 18-inch dolls with a book cost $90 and with accessories, including $65 dresses for the doll’s owner, the total can exceed $1,000. 1.5 Some success of American Girl Brands On the first Christmas season, Pleasant Company sold $1.7 million worth of products. Christmas orders piled up so fast one year that company vice presidents had to pack boxes in the warehouse to get products shipped in time. In the second year, sales reached $7.5 million. A Time magazine complemented company's success: "The genius behind American Girl's high-end products is that moms feel good about dropping a lot of cash on low-tech, wholesome American." By 1991, sales had grown to $77 million thanks to word of mouth. In 1993 Pleasant Company was listed among Advertising Age's Marketing 100, the "'best and brightest' marketers in America." demonstrating the company's early and impressive success thanks to Rowland and her creative and brand new vision. Working Woman put Rowland on its list of the top 50 women business owners for six years in a row, from 1993 to 1998. Obviously, the advent of play and learn products have attracted pleasant attentions of parents helping American Girl Brand’s operating income increase 2% to $98.5 million in 2007. Basic theories related to the case 2.1 The Wheel of Consumer Analysis: Pricing Strategy Issues In this case, we will concentrate on some important relationships among consumer affect and cognitive, consumer behavior and consumer environment because they involve in the price factor in marketing mix. As you can see from the figure below, these three factors have a reciprocal system which illustrates the relationship between them. By analyzing these factors and their relationship, we can get the final result of pricing strategy.

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Exhibit 2.1 The wheel of consumer analysis: Pricing Strategy Issues

Exhibit 2.2 Conceptual Model of Cognitive Processing of Price information

 Price Environment In the environment, price is usually a sign, a tag, a few symbols on a package or a few words spoken on TV, radio or by a salesperson in a store or on the phone. The price variable may also include an external reference price. An external reference price is an explicit comparison of the stated price with another price in ads, catalog listings, price guides, shopping tags and store displays or sales presentations. External reference price is used to enhance the attractiveness of the stated price. In this case, a stated price of an American doll at $90 may be compared with a stated price of a doll at retail stores at less than $40 (through industry sources).

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 Price Affect and Cognition As we learned, information about prices is often attended to and comprehended, and the resulting meanings may influence consumer behavior. In some case, consumers may make a variety of price comparisons among brands and evaluate the trade-offs among the various types of consumer costs and values.  Price Perceptions Price perceptions concern how price information is comprehended by consumers and made meaningful to them. It can be understood as information processing which has been advocated by Jacob Jacoby and Jerry Olson. As you can see from the Exhibit 2.2, it reveals an adaption of this approach. First of all, it is recognized that price information is received through sense of seeing and hearing. Then, these information has been comprehended and interpreted. Next, consumers may make a comparison of prices and integration with other information. After that, consumers will create an attitude information towards prices and products. In this case, after having price information from through seeing and hearing, consumers carry out a process of handling information and making a comparison related to price and value/ services they received. Finally, they are willing to pay $90 for an American doll.  Price Behavior Depending on the consumer, the product, and its availability in various stores and other channels, and other elements of the situation, price can affect a variety of consumer behaviors. Two types of behaviors are particularly relevant to the price variable: fund access and transactions. In this case, it can be understood that price behavior is the way consumers accepts a price of $90 to buy an American doll instead of buying a doll at retail stores. As a result, they have purchased an American doll. 2.2 Conceptual Issues in Pricing In some ways, price can be understood as the most unusual element in marketing mix. Firstly, price is the only one related to revenues. Secondly, although

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price may seem tangible and concrete, it is perhaps more intangible and abstract than other elements of the marketing mix. Obviously, price decision is perhaps the most significant among the decisions of the marketing mix for a branded product. From a consumer’s point of view, price is usually defined as what the consumer must give up to purchase a product or service. Research typically views price only in terms of dollar amount asked or paid for an item or a service. Exhibit 2.3 offers a general model of the nature of marketing exchanges and highlights the role of price in this process.

Exhibit 2.3 The Pivotal Role of Price in Marketing Exchanges Exhibit 2.3 identifies four basic types of consumer costs: money, time, cognitive activity, and behavior effort. When paired with whatever value or utility the product offers, these costs are a convenient way to consider the meaning of price to the consumer. Although we do not argue that the consumer painstakingly calculates each of these costs for every purchase, we do believe they are frequently considered in the purchase of some products. As a result, we will apply different four basic types of consumer costs include money, time, cognitive activity and behavior effort, coupled with value to make a comparison of costs which customers have to pay when buying an American doll and buying a doll at retail store. Next, some information related to four basic kinds of consumer costs has been collected to help us understand more:

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❖ Money Money is defined as the dollar amount a consumer must spend to purchase product or service. Some research pointed out that the same amount may be perceived differently by different individuals and market segments, depending on income levels and other variables. Moreover, when considering money spent on product or service, customers always think that money is only related to the price of a particular product or services without considering other relevant costs such as travel cost, shipping cost, return shipping cost, etc. In this case, we will clarify more relevant costs related to “money” term. ❖ Time The time necessary to learn about a product or service and to travel to purchase it, as well as the time spent in a store, can be important costs to the consumer. Most customer are aware of buying directly at retail stores will be higher than buying via Internet because they have to spend time on travelling and roaming around stores to find out suitable one. Therefore, time savings may result only when retail stores are located closer to home and thus require less travel time or because less time is required in the store to locate the product and wait in line to pay for it. Moreover, Internet purchasing may save time for some consumers, but they must wait at least a few days for delivery of most products. In this case, our group will consider some issues related to time such as shopping time, travel time or even delivery time (in case of buying online) as a cost of purchasing. ❖ Cognitive Activity One frequently overlooked cost of making purchases is the cognitive activity involved. Thinking and deciding what to buy can be very hard work. For example, when all of the styles, sizes, colors, components and quality options are considered, one retail store will provide a variety of dolls and customers only consider a small fraction of them. In addition to all the cognitive work involved in comparing purchase alternatives, the process can be stressful. Some consumers find it very difficult and dislike making purchase (or other types of) decisions. To some, finding a parking space, shopping in crowded malls and stores, waiting in long checkout lines, and

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viewing anxietyproducing ads can be very unpleasant emotional experiences. Consumers who lack the skills to surf the Net efficiently can find shopping online stressful. Also, the perceived risks of shopping online, such as sending credit card numbers or uncertainty about product quality, can be distressing. Thus, the cognitive activity involved in purchasing can be a very important cost. ❖ Behavior effort Anyone who has spent several hours walking around in malls can attest to the fact that purchasing involves behavior effort. When large shopping malls were first developed, one of the problems they faced was that consumers had long walks from the parking lot and considerable distance to cover within the mall itself. Many consumers were not physically comfortable with this much effort, and some avoided malls or shopped in only a small number of the stores available. Primarily to overcome this problem, benches and chairs were placed in malls to give consumers places to rest while shopping. Shopping online is a welcome alternative for disabled people and others who have trouble walking long distances in stores and malls. However, returning unwanted or damaged merchandise ordered online is considered wasted time by most consumers. ❖ Value We have suggested that consumers can sometimes reduce one or more of these costs, but this usually requires an increase in at least one of the other costs. Purchases can be viewed in terms of which of the elements is considered a cost or a benefit and which is considered most critical for particular purchases. However, regardless of what cost tradeoffs are made, it seems that whatever is being purchased must be perceived to be of greater value to the consumer than merely the sum of the costs. In other words, the consumer perceives that the purchase offers benefits greater than the costs and is willing to exchange to receive these benefits. In this case, by integrating plucky heroines into dolls as well as each of the dolls represents an era of American history, American Girls Brand made their own differences or values. Such learn and play products attracted more attention from

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parents and their children. Gradually, they increase brand exposure and make a great contribution to the company’s operating income. In conclusion, in this case, our group will analyze four basic types of consumer costs: money, time, cognitive activity and behavior effort that are combined with value to make a comparison between buying an American doll and buying a doll at retail stores. From that, our group will draw a conclusion “which doll is really costly, an American doll or a doll at retail store?”. Question 1 Why do consumers pay $90 for a Pleasant Company doll when they can buy other dolls much more cheaply at retail stores? According to pivotal role of price in...