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Influence of prospect payments on pricing OR should you charge more for your iPhone app?

While discussing the issue of how consumers get converted from prospects to customers in one of the MBA classes and later on in the Marketing Research class, a thought occurred in my mind. Should (and do) companies take into account and adjust the pricing of their specific offering according to the customer propensity to purchase on a specific eco-system?

As I read somewhere long ago, Amazon did that till 2001 using cookies but had to stop that practice. However, if a small scale supplier does it, will it actually be noticeable? How ethical would that be?
Let me take an example. We all know that Apple consumers generally pay more for every mainline and peripheral product in comparison to their PC counterparts. I do not wish to dwell on the functionality comparison and such other issues but in reality when you are prepared to pay more for within a particular eco-system, can it be exploited by others who also provide services within that eco-system?
Think about an app provider who supplies his apps to consumers on two competing mobile eco-systems of Apple app-store and Android marketplace. In this case, keeping in mind the propensity to pay higher amount of money from the Apple consumers, should the app provider charge more money for the app than on Android marketplace?

Like many consumers, who hardly compare prices (I know some of us do but most don’t), supermarkets exploit this window of opportunity like anything and supply products at different prices. If that is feasible between two supermarkets, can it not be taken into account by mobile eco-systems? So, should app suppliers take into account the prospect payment psychology in pricing their apps?

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We are happy to announce a special issue of ‘Asia Pacific Journal of Marketing and Logistics’ on ‘Emerging Trends for Marketing in Asia’ guest edited by Prof. Kim-Shyan Fam, Prof. Ernest de Run and me.

Asia is a continent of paradoxes. It has some of the fastest growing economies of the world, the largest populace, and some of the wealthiest as well as the poorest societies in the world. It also possesses rich web of cultural complexities. Since the days of the Silk Route, Asia has always fascinated historians, merchants, philosophers and rulers from other parts of the world. Recently however, increasing household income, higher education and an expanding mid-to-high income class with smaller families, globalization, westernization influences and plus the loosening of regulations on foreign direct and indirect investments by most Asian governments have spurred the influx of global businesses into the Asian market. This creates an interesting situation in Asia in the realm of business. Contradiction abounds, from that of a traditional business marketing effort such as relationship marketing to the specialized mass marketing of mega businesses.

Given this growing attractiveness of the Asian region, we invite submission to a special issue of the Asia Pacific Journal of Marketing & Logistics focusing on Emerging Trends for Marketing in Asia. We encourage papers both theoretical and empirical using either qualitative or quantitative methodology.

We welcome the submission of papers that address the Special Issue theme as well as all functional areas of marketing. Authors may consider any of the subject areas listed below, but need not limit their options to these areas. If you are uncertain whether your paper fits the Special Issue theme or not, please contact the guest editors:

• Agricultural Marketing
• B2B, CRM and Relationship Marketing
• Branding for Services
• Consumer Marketing
• Country of Origin effects in International Marketing
• Cross-Cultural Marketing
• E-Marketing
• Environmental Marketing
• Market Orientation
• Marketing in Transition Economies
• Marketing Innovations
• Marketing of Education
• Mobile Marketing
• Marketing Communications
• Marketing Strategy
• Retail Marketing
• Sales and Sales Management
• Sales Promotion and Sponsorships
• Service Quality Excellence
• Services Marketing
• Social Marketing
• Strategic Marketing Management
• Supply Chain Management

Accepted papers will be published in Volume 24 Issue #2, 2012. Papers must conform to the Asia Pacific Journal of Marketing & Logistics requirements. Please send your submissions by email to either one of the guest editors by March 01, 2011.

APJML: Download the PDF version of call for paper.

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Recently I was listening to the book ‘Drive’ by Daniel Pink wherein the author discusses how the present day motivational philosophy of focused on rewards and punishment falls short in today’s environment. While listening to the book one of the interesting concepts I came across was the idea of ‘performance goals’ vs. ‘learning goals’.

Performance goals are fairly easy to set-up but they do not motivate most people. They are related to extrinsic motivation and social prestige. For example, a sales executive who sets him/herself a daunting sales target to show is very much a performance goal. Carol Dweck, a well-known name in the area of motivation suggest that the people pursuing performance goals want to look intelligent and smart in the presence of those significant others.

In my corporate, academic and consulting life I have seen most executives setting this type of goals. However, sometimes these goals become so outrageous that they become ‘stretch goals’. One of the glaring example of this was observed at Lucent in the year 2000. Richard McGinn, the former CEO of Lucent, prided himself in imposing audacious goals on his managers, believing that such ‘stretching’ will lead to phenomenal results. However, the managers realised that such goals could never be achieved without crossing the line. In this regards, one of the lucent managers filed a complaint against the CEO and the company, charging that the company had set unreachable goals that caused him and his team to mislead the public. Whenever, I talk to sales people, I hear this muted complaint all the time. Most of them don’t complain and go ahead with the task (even if they know that they are not going to achieve the target). However, I find them deflated and not motivated which is completely against what a goal is supposed to do. The goal is supposed to motivate people to achieve it.

Since 1960, there has been strong debate in the world of motivation researchers regarding the value intrinsic motivation and one of the resultant ideas is ‘learning goals’. Carol Dweck suggests that learning goals are about increasing your overall competence. They reflect a desire among the people to learn new skills, master new tasks and understand new phenomenon. Extent research suggests that setting unrealistic performance goals at times leads people to engage in unacceptable or illegal behaviour. On the other hand, leanings goals are likely to induce enthusiasm and excitement, which can help people become more effective in discovering radical, out-of-box ideas of action plans. This can be the difference between mediocrity and competitive edge.

In 2006, Prof. Gerard Seijts and Prof. Gary Latham, ran some experiments to see what kind of impact performance and learning goals had on overall performance. They used the Cellular Industry Business Game (CIBG), which is based on the US cellular telephony industry and requires 13 rounds of decision making. Half the participants were assigned performance goals and the other half was assigned learning goals. The results are astonishing.

1.       Participants who were assigned high learning goals outperformed their performance goal counterparts. The market share obtained by the learning goals participants was almost twice as high as those with a performance outcome goal.

2.       This was the results of a specific change scene in the behaviour of the two groups. Participants with the learning goals actually spent time on acquiring the knowledge to perform the task effectively and to analyse the relevant market information available.

3.       Those focusing on learning goals were convinced that they could master the situation and so there was significant increase in their self-efficacy. The effort of performance goal participants was highly unsystematic and haphazard.

4.       One of the most striking finding was that those with a learning goal had a higher commitment to their goal than those with a performance goal.

These findings clearly tell us what we should follow. However, the question is do we really follow learning goals?

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A year ago, when it was launched, it was one of the most hyped products (service) from Google. It was hailed as the next generation of communication and the big G was promoting it as everyone will move away from regular email and will use Google Wave.

Today, it was announced that Google “doesn’t plan to continue developing Wave as a standalone product, but will maintain the site at least through the end of the year and extend the technology for use in other Google projects.”

Last December, after using it for a while, I wrote a blog post, ‘Will Google Wave really become successful?‘

One of the major faults I noted was that the service was “not engaging enough”.

One of the visitors on the post said “It’s like an Instant Messenger merged with email, but what’s new?” Another user stated “MSN does chat better, SKYPE calls better, GMAIL/Yahoo email better. So, where is Google Wave? Nowhere.”

What the above comments show is that the product didn’t have a clear positioning in consumer minds. I guess it was a positioning problem from Google’s end too. They were unclear as to what exactly was this service positioned in the overall package of Google’s services.

Integration is the name of the game in today’s technology marketplace. However, the integration needs a clear positioning. In one of his presentations at Google itself, Seth Godin discussed this issue in details, that it’s not engineering innovation, it’s how your consumers perceive your product to be, is what matters. I keep on saying that ‘success is the most successful recipe for failure’ and I guess the success of Gmail and Gtalk brought this for big G.

Many companies prior have also failed in their line extension and integration efforts. For example, in mid 1980s, Xerox diversified into financial services industry by buying insurance companies and investment banks with one of the logic being, insurance will be a good extension service which will integrate itself with the sale of the costly photo copier. However, in about 5 years time the realisation hit fair and square with Xerox losing billions of dollars overall. By the mid 90s Xerox left the financial services portfolio and re-positioned itself as a document company. The whole diversification idea by integrating an ill-positioned product and service mix boomeranged.

There are many other positioning examples which boomeranged, including the video phone which was launched in mid 1970s and never caught the wave or similarly dishwashers and microwave ovens in Asian and Latin American markets. The consumer reluctance was a results of poor positioning more than anything else in these cases. And big G is no exception to this!!!

Google chief executive Eric Schmidt said it was hard to say why Wave did not strike a chord with a majority of users. “It’s a very clever product. You never know why it didn’t work.” He also said “Google will take what it has learned and apply it to something new”. I guess the biggest lesson learnt here is positioning than anything else.

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For those of you who are researching the Asian economies, this is an interesting chance to participate in the debate. The ‘Marketing in Asia Group’ (MAG) is organizing the 2011 MAG Scholar Conference in Christchurch, New Zealand.

MAG consists of more than 400 researchers from all over the world and this conference will be a good chance for others to get in touch as well as join the network.

I am chairing the track ‘cross-cultural marketing’ and if you are working on cross-cultural issues, will be more than happy to hear from you.

The call for papers is attached herewith.

2001 MAG Scholar Conference Call for Papers

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Recently, I was talking to one of my colleagues who was mis-sold his mobile phone contract. Interestingly enough, I stumbled across a research carried out by the Financial Services Authority (FSA) in the UK which suggested that more than 9% of all consumers were mis-sold products or services in recent past.

Mis-selling

Several questions emerged in my mind:
1. If mis-selling is so prevalent, what actions are we taking to avoid such things from happening?
2. How and what do we define as mis-selling?
3. If the salesperson (in retail setting where they are selling 100s of products) is unaware about certain attributes of the product or service, is it really mis-selling?
4. When you got aware that you were mis-sold, what actions did you take personally?
5. What factors affected your actions?
6. Was the total monetary impact important for your action (for example, if the mis-selling required you to pay a small amount to rectify the problem did you complain)?
7. What kind of complain did you do?
8. Did the supplier agree that you were mis-sold?
9. Did you think about the legal option? If so, did you take that option? If you did not take it, why not?

I would really be interested in knowing your stories of how you were mis-sold a product or service. Please share.

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Image by cdnbusiness via Flickr

Today, I went to London for a research visit and while sitting in the train for about 90 minutes I counted the number of handbags I could see and identify for fun. I was not scanning everywhere in the boggy but I was just looking at the people whom I can see directly and those who were passing down the isle. I counted 39 handbags in that period of time. The train stopped at only 3 stations in between and I had to change once, so, I guess there was not much movement but 39 still seems a hefty number.

My next objective was to identify which of these handbags could I identify and classify as luxury. Now, this is extremely subjective measure as I have relatively little knowledge of handbags however, I saw 9 LVMH and 5 Gucci handbags (so easy to identify). This is whopping 23% of all handbags I observed as LVMH and 13% of all handbags to be Gucci. By the way, I saw one Berkin handbag while walking near Canary Wharf.

If an LVMH of Gucci executive looked at it, I believe they will be extremely happy however, this made me worried. The penetration of these brands in mass market is amazing on the positive side. However, the question which arose in my mind was “if most people can have it, is it luxury?”

Would love to:

1. hear from you all about your own experiences of travel and spotting handbags too.

2. Moreover, I would really like to know how do you feel when someone else has got the same ‘luxury’ item you have got?

Waiting to hear from you all…

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Came across this fabulous poem by Taylor Mali on What do teachers make? The poet puts it in words so beautifully, I could not resist putting it on my website. Enjoy…

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As the Christmas vacation nears to its end and the new year beacons I had the privilege to observe, give and receive quite a few gifts. In my case though, I was mostly on the giving end of the pleasure.

While the wrapping paper was being bought and later removed from the gifts I had given or received, one question came up. Does packaging really matter? The first thing I did was to start looking at the literature available in the area and know what, there is hardly much available. A very ripe area for research indeed.

Have you thought about similar line of questioning? What is your thought about it? How would you react to a creative vs. non-creative packaging? Will it really affect your purchase decision? Why?

Lets debate.

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