Read the case study given below and answer the questions at the end of the case.
Brand ambassador : employing real customers to get the word around.
People love talking about things that make them happy - including their favorite products and brands. For example, if you really like an airline - they fly with flair and get you there at a reasonable price or you just love your recently acquired Sony camera - it is too good to keep the knowledge of the experience to yourself. In the old days, you would have chatted up these brands with a few friends and family members, but these days technology allows you to spread the word about products and brands experiences to thousands of other consumers.
In response, Marketers are now working to harness the new found communications power of their everyday customers by turning them into influential brand ambassadors. Companies like
Sony, Microsoft and McDonald's are now developing a new breed of brand ambassador programs that organize and multiply consumer to consumer interactions about their brands.
These programs employ everyday consumers who are passionate about their products to act as part
PR agents and part sales reps.
MS-61 3 http://gyansagar.co.in Marketers select their brand ambassadors very carefully, based on customers' devotion to a brand and the size of their social circles. Once selected, the ambassadors are trained with real brand knowledge to go along with their passion for the brand. The ambassadors then tap into friends, family groups and wider audience through personal conversations, blogs, and online social media.
For the ambassadop, rewards include product samples, gifts, discounts and token cash payments. Perhaps most important to many brand enthusiasts, they get inside access to company's information about new products and services about to be launched.
Brand ambassador programs leverage the power of peer to peer communication.
Consumers hear about products and brand experiences from others just like themselves - people they trust - rather than from commercial marketing sources.
Sony used brand ambassadors to jumpstart the launch of its new GPS camera, a high tech device that draws on satellite tracking technology to let you record the exact location of every picture you take and later map them out using
Google maps. Sony selected customer ambassadors who like to travel, take pictures and
MS-61 4 P.T.O. http://gyansagar.co.in use online communications. "this is a product with emerging technology and we really need to let consumers see people using it' says Sony's director of digital imaging.
Out of 2000 or more online applicants, Sony picked only 25 brand ambassadors. The ambassadors were given a free camera and other equipment along with lessons on how to use them.
They were encouraged to show the camera to friends, associates, and anyone else who asked; handout discount coupons and blog weekly about their travel and picture taking adventures on a dedicated Sony micro site.
College campuses are traditional fertile ground for ambassadors. Marketing companies identify and manage college student ambassadors for diverse products and services.
The brand ambassador approach has its critics. For example, some view the practice as underhanded or deceptive, most firms advise their ambassadors to openly reveal that they are representatives. Others worry that brand ambassadors may be perceived as pressure agents who promote products because they get free stuff - or worse, as annoying interfering people best avoided.
The best ambassadors, however, it has been found, are people who are seen as friendly, everyday brand loyalists for love to talk to people about their own experiences.
MS-61 5 P.T.O. http://gyansagar.co.in Questions :
(a) Based on your own understanding of reference groups, how effective would brand ambassadors be as reference groups for relatively expensive, infrequently bought products and services ? How would your answer change if the product in question was detergent or cooking oil ?
(b) In your view, in the Indian marketing context, is the concept of brand ambassadors likely to succeed ? Justify your answer.
(c) Comment upon Sony's strategy of using brand ambassadors to launch its cameras.
What can be the possible dangers of using this approach ?

Read the case given below and answer the questions given at the end of the case :
A PRODUCT FAILURE AT SATURN
Saturn has always attempted to create committed customers. Saturn a division of General Motors, advertises around the theme :
A different kind of company
A different kind of car.
Though Saturn cars costs only 10 to 14 thousand USD (Rs. 5 lakhs to Rs. 7 lakhs), the firm attempts to provide its customers the same level of service and consideration typically associated with expensive luxury cars. Its stated objective is to be “the friendliest, best-liked car company in the world”. The company states :
“We’re going to do more than what the customer expects, and in the long run, it will enhance our image”.
Saturn’s attempt to build an image of a high- quality car built by skilled, caring workers and sold in helpful, non pressure dealerships, had received two small tests in its first two years. In one, it had to recall and replace 1,836 cars that had received improper coolant. In another, it had to repair 1,480 cars with faulty seat-back recliners. In the second case, the firm made a TV commercial showing a Saturn representative flying to location to fix the car of a resident who had purchased it in the first year of its launch.
However, in 1998 Saturn began receiving reports of a wire short-circuiting and causing a fire. Thirty-four fires (no injuries) were reported. Saturn faced a dilemma. A recall would involve 350,000 cars and a direct expense of as much as
$ 55 million dollars. Any negative publicity associated with the recall could seriously depress sales. Saturn had yet to break even and General Motors was under serious financial pressure.
Saturn managers decided to deal with the problem in a manner consistent with its company objective described early. It quickly notified all purchasers of the affected cars and asked them to contact their dealers to have the defective wire replaced at no charge. The dealerships extended their operating hours, hired extra personnel, arranged door-to-door pickup and delivery, provided free car washes, and often provided barbecues or other festivities. All the repaired cars had a courtesy card placed inside that said :
We’d like to thank you for allowing us to make this correction today. We know an event like this will test our relationship, so we want to repeat to you our basic promise – that everyone at Saturn is fully committed to making you as happy a
Saturn owner as we can. According to Steve Shannon, Saturn’s Director of consumer marketing, the decision to handle the recall in this manner was simple :
The measure of whether we are a different kind of company is how we handle the bad times as well as the good. We’re trying to minimize the inconvenience and show that we stand behind the cars, so that our owners don’t lose faith in us or the cars.
How have consumers responded to the recall ? Ms. K. learned of the recall from friends who had heard of it on news reports before she received her letter from Saturn. She took her car to the dealer who served her coffee and doughnuts during the 24-minute repair. Her response.
I expected this would be my first bad experience with Saturn. But it was so positive, I trust them even more than when I purchased the car :
Questions :
(a) Describe the evaluative process followed by the consumers and outcome that Ms.K went through.
(b) Evaluate the manner by which Saturn handled the recall. What options did it have ?
(c) How will publicity about the recall affect Saturn’s image among non-owners ?
5. Study the case given below and answer the questions given at the end.
BPL has launched the digital camera VPC-G200EX at Rs. 39,000. lt does not require conventional films as it can store images in its memory. A niche segment of PC users, journalists, multimedia agencies, architects, doctors and professionals are the primary segments for the product. The benefits of the product include viewing pictures on a built-in LCD screen, and the voice memo (6 seconds) that could be added to every picture. Web page designers could have pictures on the Internet through their personal computers. These images could also be retouched or modified using appropriate software. Photo albums can be created on floppies. The product may compete with scanners which could scan conventional photographs into a computer. BPL has positioned the product as 'future of photography'. The product is available in 25 showrooms of BPL- Phillips, a competing brand, has also launched digital cameras.

Questions :

(a) Who, in your view, would be the most appropriate target consumers for the product and why ?
(b) Outline suitable promotion and positioning strategies for the product.

Read the case given below carefully and answer the questions at the end of the case.

Amex Card

American Express Co launched its charge card in 1958 expecting to free the consumer's wallet from the large number of credit cards contained therein. The first card was purple cardboard model. Today there are over 34 million plastic American Express cards in use around the world, mostly green but also the more recent gold, platinum and Optima additions which offer credit lines and extended payment schedules. The cards have achieved tremendous success, being accepted at almost 3 million establishments in 130 countries. American Express as become one of the best known brand names among consumer businesses.

American Express' strategy has been to focus strictly on upscale spenders in top-line establishments. However, as its cardholders level off, a new tack has been to get current customers to use their cards more frequently, even for mauncane occasions. It is welcome at over 1800 Cineplex movie theaters and has been tested at McDonald's. Not only are above-average salaried cardholders welcome, but also college students, who have potential for greater earnings.

The American Express card has carefully built its image over a period of time by stressing five factors affecting its prestige: higher price, high quality, limited supply, higher qualifications and exclusive reference groups. The card has been prices far higher than alternative bank cards. Even silver or gold so-called 'prestige' or premium bank cards can often by obtained for no fee. Thus, because the American Express card is priced higher than most other cards around the world it connotes much prestige. However, the challenge is to be expensive enough to be profitable and perceived as exclusive, but low enough to be attainable by appropriate segments. While American Express claims its interest rates are lower than other cards, some feel that consumers don't understand percentage rate comparisons, but instead, respond more directly to fees. Another side of the pricing issue is the fee charged business who accept the card. This 'merchant discount', or the amount American Express keeps from the charges business submit, is believed to run from 1-25 percent to 1-5 percent higher than other bank cards. This difference can be a significant amount for low-margin or struggling businesses.

The quality issue is closely connected to the pricing question, as people reflect on value received for the price paid. AmEx has pursued a high-quality image based on ordering more and better services than other cards. It provides over 1,400 travel service offices throughout the world. Executives do not apologize for the high cost of the card because they feel the quality is superior. According to one executive, AmEx customers want the best product, not the cheapest product. Although it may sound like a cliché, Management truly insists that the company strive to deliver the highest possible level of service. The service emphasis extends from the chief executive down through the organization. The company has a system for quantifying quality that measures how long it takes operators to answer service center phones (7 seconds) and how long it takes customers reporting lost cards to receive replacements by mail (48 hours). In addition, AmEx spends heavily to research card member's perceptions of the service they receive.

While AmEx seeks widespread ownership of its card, it must be perceived as not suitable for everyone if it is to maintain its prestige. As AmEx broadens its card's appeal it asks alienating those who are attracted by its upscale image. Such a move has the potential of endangering the card's niche. While helping its profitability, the move may damage its image in the failure.

Will the card be able to retain its 'snob appeal' when the person who uses it to charge a purchase at an exclusive store knows that across town it is being used to buy petrol at a grimy self-service station? Executives claim that the card is a badge of distinction and it doesn't matter where or how the card is used. Others feel that the move to broaden its usage can help profits but hurt the American Express image.

Advertising for American Express has reinforced the desire exclusive image of the card but also broadened it somewhat through successive campaigns. Ads also stress service and try to minimize concern about qualifications by encouraging prospectus to apply even offering an 800 number to facilitate the process. Effective advertising has made the brand extremely recognizable. During the 1970's AmEx ran the 'Do you Know Me?' campaign which presented interesting and well-known famous-named people who were not recognizable but were accorded importance when they used the American Express Card. The promise was that the ordinary user would also be accorded prestige when they used the card. In the long-running 'Membership Has Its Privileges' campaign, cardholders are showing enjoying the man, benefits of the card's services. In all of these campaign, consumers are encouraged to think of being members of an exclusive club, not with 34 million participants.

Perhaps the brightest area for credit card growth is the foreign market, although AmEx lags far being its compotators in Japan and Europe. The eventual foreign target market consists of 100 million or more people. One problem slowing expansion will be the merchant discount which some merchants say differs by 4 percent from the charged by bank cards. Another element which may restrict the growth of American Express in foreign markets is the company name. Politically the name could be a negative factor in some markets. In France, Germany and Britain, the card market is mature therefore, competing against well established cards has been challenging for AmEx. In the Japanese market the card has been able to grow rapidly as a niche player, appealing to users designer-abel affinity. However, the AmEx upscale image is being toned down somewhat as evidence by applications forms that are found even in the back seats of Tokyo taxis.

The ultimate competator for AmEx is not another credit card, but cash. It is estimated that today only 15 percent of the items that could conceivable be charged, are.

American Express has been able to gain success by effectively discerning what its present and potential card members want, and by carefully refining and test marketing new ideas. Te company has learned just what card 'enhancements' (such as automatic car insurance) are really important to customers and don't cost to much to make available. The company maintains a profile of 450 attribute and purchasing patterns on all cardholders that is updated weekly. AmEx segments card owners by lifestyle and income, and then aims services appropriately for each group, such as extra travel insurance for senior citizens concerned with security or a special magazine for students. AmEx then piles its customer database with bill stuffers or catalogs to sell other items to receptive buyers. By carefully targeting direct marketing efforts to cardholders only for products and services that are relevant to them, the company tries to avoid harming the client relationship.

Questions:

a. Would you consider the purchase of a card like American Express card a low involvement or a high involvement decision? Give reason for your answer

b. How is the concept of social class relevant to marketing of American Express card?

c. How has American Express used the concept of social class in marketing its credit cards?