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PRINCIPLES OF MARKETING MKT 301 Fall 2019
Course Description:
Marketing is a very exciting and dynamic subject. We are surrounded by it everyday from politics to
toothpaste. Its impact on our lifestyles is unavoidable. MKT 301 stresses the fundamental marketing
concepts. Spec...

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MKT 301: Principles of Marketing – UMass Boston Summary of major assignments Fall 2019

Assignment 1 After reading the case of Mary Kay Inc.: Building a brand in India (textbook p. 199-202), please answer the questions below. 1. Is Mary Kay an international firm, a multinational firm, or a transnational firm based on its marketing strategy? Why? From the statistics on Mary Kay market, we know that the company has its products in more than 35 markets, with the U.S., China, Russia, and Mexico being its four largest markets (Kerin, 2017, p.200). Despite its large global presence, its marketing approach, as shown in the case of brand-building strategy and supply chain management in India, characterizes the Mary Kay as a transnational company. First, the company cannot be characterized to be a multinational company, because its products and brand names do not change in different markets like in India. Kerin (2017) pointed out that: “Mary Kay, India, imported products into India from China, Korea, and the United States” (p.201-202). Secondly, Mary Kay is not an international enterprise, because the company changed the way it markets when entering new market like Asia-Pacific. This is illustrated by the company’s success in China, which “has been attributed to the company’s message of female empowerment and femininity, which resonated in China”. Furthermore, the company learned to adjust its product lines and message to be necessary in other Asia-Pacific markets (Kerin, 2017, p.200). By maintaining its products, brand names, while adapting when cultures differ, we can conclude that Mary Kay is a transnational firm. 2. What global market-entry strategy did Mary Kay use when it entered India? Before entering the Indian market, we learned that the senior management at Mary Kay concluded the socioeconomic situation in India of 2007 resembles that of China in 1995. With consecutive modernization in India, the company believed it can expand in India based on the need to be good-looking, well-groomed, and stylish (Kerin, 2017, p.201). For this reason, its initial launch was set to be in Delhi, which is pointed out to be not only the nation’s capital, but alongside Mumbai, was among the wealthiest metropolitan areas in India in term of capita income (Kerin, 2017, p.201). Mary Kay, India’s sales force and brand building also reflects the company’s strategy to capitalize on the expanding middle class of the country that are getting wealthier. This MKT 301 | 1

is summed up by Kerin (2017): “Following an initial emphasis on offering highquality, high-value products, Mary Kay introduced more technologically advanced products that commanded higher price points” (p.201) 3. Is Mary Kay a global brand? Why or why not? Mary Kay can be considered a global brand primarily because its products and brand name remains consistent from market to market. Observing the advertisement “Think about pink” by Mary Kay, we can see that they market their brand to be “America’s bestselling brand. Now in India” (Kerin, 2017, p.202). The supply chain model in India also shows that the imported products remain the same as those sold in China, Korea, and the U.S. However, as global brand is defined in the slides to deliver the same customers’ benefits and consistent advertising across multiple countries, the main counterargument to the previous statement is that Mary Kay’s messages and brand building clearly varied between countries. We see that Mary Kay utilizes different social values in China to rebrand their products accordingly in this market, while establishes a different set of guidelines for product mix and pricing in India (Kerin, 2017, p.201).

Part 2. Please choose a firm (international, multinational or a transnational) you want to discuss. 1. Is the company you choose an international firm, a multinational firm, or a transnational firm based on its marketing strategy? Why? The company I chose to work on is PepsiCo, which originated in the US and whose history can be traced back to 1898, when its founder, Caleb Bradham used Pepsi-Cola as a pharmaceutical treatment (About the Company, n.d.). Since then, the company has grown to produce a diverse range of food and beverage products and penetrated the market in almost every region of the world (Product Information, n.d.). PepsiCo has the defined characteristics of a multinational company, since it offered unique products and multidomestic marketing approaches in countries where it operates. For instance, the range of food and products differed in name between PepsiCo Beverages North America (PBNA) and PepsiCo, UK and Ireland. Whereas the North American market refers to a chip brand as “Lay’s”, it is known as “Walkers” in the UK and Ireland (Product Information, n.d.). In the product information summary of PepsiCo, it is also pointed out that the company developed make alternations to its products or develop new options to satisfy the specific preferences of customers from different countries: “Our full range of food and beverages are designed to bring a smile to anyone’s face, anytime, MKT 301 | 2

anywhere. They are available in over 200 countries and territories and tailored to meet the tastes and preferences of our local consumers” (Product Information, n.d.).

2. What global market-entry strategy did the company when it entered other countries (you can mention specific country)? (2point) Myanmar (Burma) has recently gone through a series of rapid political and economic reforms. This market is among the few nations where the presence of PepsiCo’s products is absent from. To provide an overall context, Myanmar’s transition from military rule to a more democratic system, with its first election in 2015, has created an opportunity to free market to take place and provide an untapped market for foreign countries, companies, organizations, to invest in Myanmar (Wilson, 2017). Due to political and economic stability not yet to be established, PepsiCo’s approach to enter Myanmar is primarily through the government and investments in the country’s development. According to the PepsiCo’s press release (n.d.), the three main benefits of letting the PepsiCo operate in Myanmar are the reduction of rural poverty thanks to jobs created by PepsiCo’s projects, the development of business skills among the population of Myanmar thanks to new job opportunities, and the growth of the agricultural sector thanks to the food and beverages PepsiCo produces. PepsiCo, facing an undeveloped market, markets the its operations in Myanmar to the nation’s government as the force of development and employment that would help bring about the economic growth the country needs.

3. Is the company a global brand? Why or why not? (1point) Apart from the differences in products’ names, PepsiCo is universally recognized by almost every market in the world. With consistency in offering food and beverages, alongside and global code of conduct that applies to every employees of PepsiCo across the world, the company is undisputedly a global brand.

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References

About the Company. (n.d.). Retrieved from https://www.pepsico.com/about/about-thecompany. Kerin, R. A., & Hartley, S. W. (2017). Marketing. New York, NY: McGraw-Hill Education.. Press Release. (n.d.). Retrieved from https://www.pepsico.com/news/press-release/pepsicosupports-economic-development-in-myanmar. Product Information. (n.d.). Retrieved from https://www.pepsico.com/brands/productinformation. Wilson, T., Poole, Y., Wilson, J., & Warden, T. (2017, June 19). Myanmar Political Reform: A Slow But Steady Transformation. Retrieved from http://www.internationalaffairs.org.au/australianoutlook/myanmars-political-reform-slow/.

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Assignment 2 1. How has an understanding of consumer behavior helped Groupon grow from 400 subscribers in Chicago in 2008 to 200 million subscribers in 48 countries today? (4point) Initially known as The Point, a website where people can sign up to join collective activity such as furnishing a school, Groupon has embraced commercialization and transformed into a platform where people can try new things, discover new places and deals at a discounted price. By delivering local and national discount deals to its users, Groupon has grown from 400 subscribers to a staggering 60 million in 40 countries. The success of Groupon has root in its cooperation with local businesses to let local merchants connect to online users and increase their sales. More notably, Groupon’s rapid growth has been greatly attributed by the company’s understanding of consumer behavior. Explaining in the interview, Julie Mossler – Groupon’s PR and Marketing Managerexplained that the company is aware how consumers only want to engage with Groupon when they want to do so. Therefore, Groupon not only sent out daily deals through e-mails but also focuses on mobile phone platform development. Furthermore, Groupon uses pricing as an activation point that make users subscribe to Groupon and come back again and again. Then, Mossler pointed out what customers are more concerned about are the unique experiences and quality merchants offered by Groupon. Commitment is also a vital factor contributing to consumers’ purchasing decision. Andrew Mason – founder and CEO of Groupon- articulated that price dropping can incentivize clients to purchase deal and take part in activity which might otherwise be overwhelming for them, such as skydiving. Not only that Mason affirmed This would drive online users into taking real actions, he consolidated that pricing sill continues to be the hook that encourages purchase decision. Last, “collective buying power” not only meets the social needs of customers to participate in activities with friends, this Groupon’s policy also immensely increases the number of new users. Collective buying power is explained to be the guaranteed discount of a deal when enough sign-ups are reached. This ensured that Groupon’s customers can get the maximum discount whilst local businesses can get the highest volume of clients. As the narrators informed, collective buying greatly encouraged users to share Groupon to their friends, who will help the deal reached its minimum sign-ups to be activated.

2a. What is the Groupon Promise As the two main factors in the success of Groupon, the company promised local MKT 301 | 5

businesses as well as customers benefits that keep them using the platform. On one hand, Groupon advertises and promises its customers daily new and fun experience with the best local business at a maximum discounted price. Mossler pointed out that the company can promises only the best local businesses by rigorous approval. As mentioned in the previous section, Groupon promises that the deal will be activated once the minimum amount of people signing up is reached. However the customer will not be charged unless the said deal is activated. Furthermore, if the clients do not get the experience they sought, Groupon can give the money back. Both policies that guaranteed customers their money back if requirements are not met ensured the feeling of safety when shopping with Groupon. In contrast, Groupon encouraged local businesses to join the platform by promising them unparallel marketing opportunities. By having the chance to connect to online users, businesses could significantly increase their sales. For instance, a Zumba fitness center reported that their members increased from approximately 20 before the first deal on Groupon to 550 afterwards. Mason solidified that Groupon let small businesses, which would otherwise not use online platforms, open their business to the internet. The company’s emphasis on connecting local businesses are also demonstrated by Groupon Now, the app that let businesses connect to customers nearby on the go. 2b. How does the Groupon Promise affect a consumer’s perceived risk and cognitive dissonance? In class, we learned when reading post-purchase behavior that cognitive dissonance is “the feeling of post-purchase psychological tension or anxiety”. This psychological phenomenon can be caused by dissatisfaction when customers make comparison between their purchase and alternatives whilst having high expectations. By ensuring customers their money back when either the deal has not been activated due a lack of sign-ups or when customers did not have a satisfactory experience, Groupon not only significantly lowers the risks associated customers with purchases on their platforms (and associated by businesses with their sales number), it dismantles the potential cognitive disorder a client might have if the deal they get did not meet their expectation. 3. Describe the five-stage purchase decision process for a typical Groupon user. Please see the below (next page) for the five-stage purchase decision process. Stage1: As Mossler and Mason articulated, whereas low pricing might act as an activation point for people to become Groupon’s Subscriber, what really encouraged Groupon’s users to seek deals and commit to their action is the guaranteed unique experience and quality merchandises by Groupon. We can deduct the first stage of purchase decision process – problem recognition- resulted in a need of customers to meet safety needs (low pricing and) as well as social needs (joining activities with friends, achieving. group coupon) Stage 2: Next, information search emphasizes on the values sought after by MKT 301 | 6

customers. Mossler pointed out in the interview that instead of solely focusing on aggressively marketing with no consideration to the context of the product being marketed, Groupon highlights the values of the discounted deals with its both its price dropping and fun experience guaranteed. This is the external search that is performed by the customers, beside words of mouth that are passed from one friend to the other to fulfill the minimum requirement for a deal to be activated/. Daily email and application such as Groupon Go might serve as a way for frequent customers to come back and try out new experience by Groupon. Stage 3: During the stage of alternative evaluation, in which customers compare the values of the same product provided by one company to the other, Mason affirmed that big players like Google might bring competition to the niche. Nevertheless, the daily deals which the CEO ensured to offer the most competitive price while attaining its new and unique nature. Stage 4: The purchase decision is of a Groupon’s customers is attributed by the pricing policy of the company and collective buying power. Not only that the pricing acts as the activation point and make the potential customers commit to the activity as both Mossler and Mason mentioned (when to buy), the customers can easily choose from which local merchant they wish to have their next experience (from whom to buy). Stage 5: As discussed in the previous segment, Groupon’s promise to its customer base, which ensured money back if either a deal could not be made over the lack of sign-ups or the experience is not satisfactory for the customers reduces the risk affiliated with shopping Groupon and any cognitive dissonance the paying customers might have after their purchases. This ensures satisfaction and evaluation of the product by the customer, as we have studied in class.

4. What are possible psychological and sociological influences on the Groupon consumer purchase decision process? There are many sociological and psychological factors that influence a potential customer to purchase a deal on Groupon. To start with psychological effects, Groupon tackles the need of an individual to try out new things to directly have new and unique experience as their foremost product. As mentioned in the video, the platform can connect users to local merchants who would otherwise not use internet as an approach to clients. From restaurants, museum visits and fitness lessons, Groupon offers the unique experience at an unparallel low price. With a money-back policy from the company, this ensures safety needs. Meanwhile, the collective buying power ensures the social needs for friends to potentially join an event together (this was the prime function of The Point, before it became Groupon). CEO Mason mentioned that the average group age of Groupon’s customers are from MKT 301 | 7

25 to 35, with an annual income of $60,000. Meanwhile, the women make up the majority of the customer base, as he further articulated that women tend to share with friends more. Indeed, the words about the platform passed from friend to friend was pointed out in the video to be what make up the collective buying power of Groupon. This concludes the sociological influences that affect Groupon’s customers. 5a. What challenges does Groupon face in the future? The challenges Groupon face has been pointed out by Mason to be the competition with bigger names like Google. Like the CEO of Groupon, I agreed that the company might face greater challenges from economy-sharing platforms such as AirBnbn and Booking.Com, which also incorporates local experience into their website and market them to their users. In short, Groupon might no longer hold a monopolistic position in the game and have to seek more beneficial policies to help its partnering businesses and attract more customers. 5b. What actions would you recommend related to each challenge? If I were the CEO of Groupon, I would implement market penetration as the market share of Groupon becomes smaller by every year. By focusing on the quality of the products whilst bettering care with existing and newly signed up customers, Groupon might stand out as a superior brand name when it comes to daily deals that offer locally unique experience. Last, I would implement policies that make Groupon and multinational company instead of an international company. Each country might have different cultures and ways of life. If Groupon is to succeed in all 40 countries, it is best to let the locals decide which marketing strategies would best foster the image of the companies whilst attracting – most effectively- new customers in that country to join the growing platform.

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