Case Study 6 Consumer Behavior

 
Please Follow the example case and complete the following case study.  Please note that all sections must be complete.  The key issues section is critical.  Look for the terms and concepts that we have learned and apply them to the case.  Do not define the key issues.  What in the case makes them the key issue? 
Grading Rubric:

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Case Summary 2 points
Key issues 10 points
Personal Analysis 3 points
Case Questions 9 points
Conclusion 2 points

Please follow this format below…
 
WEEKLY CASE INSTRUCTIONS
This assignment is due by midnight on Sunday, at the end of each week. No late assignments will be accepted without advance permission from the instructor.
On every case assignment you must meet the minimum standards for depth and organization. Any case analysis that is under 500 words (not counting title and references) will receive a zero. Each case also must have a minimum of 3 outside references, not counting the textbook.
Below is a Sample Case Analysis.  This sample gives you a clear example of how the required case analysis format should be delivered. Follow this format in your analysis.
Do not use the Key Marketing Issues used in the sample case. Each case will have its own set of Key Marketing Issues which you will choose based on the details of the case content and the class reading. Follow this format on all 8 case analyzes.
Sample Case Assignment Analysis Format
MRKT 5000 Online Course
(Instructional notes in red)
(Your name here)
Can Pepsi make Pepsi One the One? (This is a case from a previous edition of the Marketing text – not currently in your text book. This is only a sample analysis to demonstrate analysis format only)
CASE SUMMARY:
Pepsi One is an innovative product launched in the market by PepsiCo to keep the image of innovation, fast movement, and competitiveness.  The case includes the steps of a new-product development process.  Emphasizing the launch of the product and the ways that Pepsi One is getting more familiar to the target market.   Pepsi One is becoming a successful product by getting more market share from the main competitor Coca-Cola.
(Each case to be analyzed will be read from the text, with specific questions assigned)
KEY MARKETING ISSUES

Line extension – Development of a product that is closely related to existing products in the line but meets different customer needs.  Pepsi One is a product that tries to differentiate itself from the normal diet products, to reach different target markets.

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Product modification – Change in one or more characteristics of a product. Pepsi changed the sweetener to acesulfane potassium (ace K) to create the Pepsi One.
Aesthetic modification – Changes to the sensory appeal of a product.   Pepsi tried to appeal as a not a new diet drink but a new way of tasting a soda.
New-product development process – A seven-phase process for introducing products: Idea generation, Screening, Concept testing, Business analysis, Product development, Test marketing, Commercialization.  The PepsiCo performed all phases of new-product development in order to ensure the product would succeed in the market.
Product differentiation – Creating and designing products so that customers perceive them as different from competing products.  Pepsi One tries to differentiate itself being the only low calorie drinks that taste exactly as a regular drink (Pepsi).
Product design – How a product is conceived, planned, and produced. 
Styling – The physical appearance of a product.   Pepsi One omits the word “diet” and even the word Pepsi, is secondary to the thick, black lettering of the word “One”.
Product positioning – Creating and maintaining a certain concept of a product in customers’ minds.  Through advertising the company tried to keep the idea of the product in customer’s minds.

(These are the issues in this particular case – each case will have a different set of Key Issues)
Personal Case Analysis
I learned that Pepsi One was a product created by a modification of an existent product “Pepsi Diet”.  The product modification was the sweetener used.   A new taste of cola was added to the appeal for a low calorie soft drink.  By trying to differentiate Pepsi One from a classic Diet product, PepsiCo shows its innovative style and gain market share from Coca-Cola.
CASE QUESTIONS
1-    Is Pepsi One a new product, a modified product, or a line extension?  Explain your answer.
Pepsi One is a new product, line extension and a modified product.  Pepsi changed the sweetener to acesulfane potassium (ace K) to create the Pepsi One and tried to be unique by being a low calorie soft drink, which tastes a regular soft drink.
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2-    In what way is Pepsi One positioned?
Pepsi One was positioned by including characteristics that target market most desires.  Understanding the diet aspect of Pepsi One helped attract an unusual market segment for a diet drink:  cola-loving males in their 20s and 30s. The product is not made to compete head to head with Diet Pepsi.
3-    Over the years, PepsiCo has had a number of product failures.  Evaluate PepsiCo management’s decision to introduce Pepsi One?
PepsiCo was launched just after test indicated consumers liked its taste as much as its creators did.  In extensive home-use tests, almost 70 percent of Pepsi One tasters reported they would purchase the product again.  To differentiate Pepsi One from the horde of diet soft drinks, PepsiCo focused on the product’s taste, which is almost indistinguishable from the taste of sugared soft drinks.
CONCLUSIONS
The company that wants to be competitive needs to be innovative and always introduce new products in the market.  PepsiCo used line extension of its Diet products to create Pepsi One.  Pepsi One is a product modification as well, which was consisted of in changing the sweetener to acesulfane potassium (ace K).  This aesthetic modification provided the product differentiation that appealed to customers as product with low calorie that tastes as a regular soft drink.  The different product design that included change on the styling never seen before, helped to position the product among the cola-loving males in there 20s and 30s.  By being innovative Pepsi One is guaranteeing its position on the soft drinks market, taking some market share from its big rival “Coca-cola.”
Works Cited
(Each analysis must include a minimum of three outside references, not counting the text or references from the case subject directly)
Bramhall, Joe, “Pepsi Inc”, Hoovers, http://www.hoovers.com/xm-holdings/–ID_60656–/free-co-factsheet.xhtml
“Choosing a soft drink”, Soda pop.com Click & Learn:  http://www.pepsicity.com/rpsm/edOid/105548/rpem/ccd/lookLearn.do
Deitz, Corey, “Learn the Difference to Make the Best Choice For Yourself”, Your Guide to softdrinks, December 29, 2005, Pepsi and Coke Comparison Chart 
http://pop.about.com/od/satelliteradio/a/blsatcomparecht.htm
Company Profile, “Pepsi, Inc”, February 10, 2006, NAMC Newswire, http://www.newswire.com/companyprofiles/xmsr.html
Insight from Standard & Poor’s, S&P Boosts Pepsi to Strong Buy, BusinessWeek online, February 9, 2006, http://www.businessweek.com/investor/content/feb2006/pi20060209_35961.htm?chan=tc
(Make sure your name is at the top of the paper)
(Remember that any paper with less the 500 words of content – not counting the words from the questions and references – will receive a zero)
CASE STUDY
NEVER STAY HERE! THE POWER OF NEGATIVE ONLINE REVIEWS
If you book a hotel for your next vacation, you will likely view ratings from online opinion leader TripAdvisor. As the world’s largest travel site, TripAdvisor has integrated their review system with over 500 major travel partners including online ­booking site Kayak and leading hotel chains Wyndham, Best Western, and Four Seasons. According to Tom Vanderbilt, the site has over 200 million reviews of hotels, restaurants, and attractions in 45 countries—890,000 of the reviews are for ­hotels— and 115 comments are added every minute.
How important are online reviews? Vanderbilt reflected on the curious power of TripAdvisor whose reviews seem to demonstrate “the abiding urge to share and the faith that sharing will make someone else’s experience, or quite possibly everyone’s experience, that much better.” He also cites a Cornell University study done by the Center for Hospitality Research that points out that it was 2010 when social media really took over the travel industry. This was the first year in which “guest experience mentioned in customer reviews” became the factor that surveyed consumers reported had most influenced their hotel choice. TripAdvisor has now introduced Facebook integration, so that consumers can see what their Facebook friends have said in their TripAdvisor reviews before other unconnected consumers’ comments.
Boston-based Cone Communications’ research revealed that 89 percent of consumers say they find online channels to be trustworthy sources for product and service reviews. In addition, Cone’s research showed that four out of five ­consumers have changed their minds about a recommended purchase based solely on negative information they found online.
Since online reviews are important, the challenge to marketers is how to manage the reviews, especially the dreaded negative reviews. Everyone knows all reviews cannot be positive, but there are ones that strike a chord of fear for hospitality companies: bed bugs, dirty sheets, discourteous front desk staff, and so on. The question for every hotel is how do we respond to negative reviews?
There are several options for handling negative reviews. Obviously, the first option is to do nothing at all, and many hotels go this route. The small hotel owner is incredibly busy, so following and responding to online reviews may fall low on his or her list of daily priorities. Perhaps these owners are not social media savvy or they are unaware of social media monitoring tools that will make tracking and responding to comments easier. Some of the more sophisticated monitoring tools are ­expensive, beginning at $800 a month.
Still, most marketers agree that listening and responding to negative reviews is the best strategy. Vanderbilt was told by the head of TripAdvisor’s global product division that hotel owners now think of TripAdvisor as a marketing platform and even a form of focus group, “embracing the feedback, even if it’s negative.” He mentions a recent TripAdvisor study that found owners who are willing to respond to online comments are more likely to get booking inquiries.
Several hotel chains, including Red Roof Inns, require local managers to respond to every negative online review. The responses themselves can be tricky; what do you say? It’s clear that the overall goal of the response is to satisfy the reviewer and to change the public perception of your property. If the reviewer appears incorrect, how can the hotel politely attempt to correct the information without insulting the reviewer or creating an online argument?
If a reviewer has a truly bad experience, many hotels consider the guest deserving of a discount or free night at the hotel. But hotels must be careful not to publicly promote this reward or less ethical reviewers might intentionally write bad reviews in the hopes of getting free nights at the hotel.
TripAdvisor has features to help hotels with some of these obstacles. The hotel can send a private message via the TripAdvisor message system offering a coupon to the customer. If the hotel feels a review is incorrect, there is an opportunity to report the review as inappropriate to TripAdvisor in the hopes of removal or correction.
Some businesses have gone more extreme in their reactions to negative reviews. There are a few reports of hotels fining their customers as much as $500 for a bad review. The customer is warned in the fine print of the contract and hotels are deducting the fee from the credit card used at check-in. Some small businesses have even sued customers for defamation in their online reviews.
Online reviews are important for business survival and revenue growth. One study revealed that a one-star increase in a Yelp rating can lead to as much as a nine percent increase in revenue. Another Cornell University study found that for every increased point in reputation rating (TripAdvisor’s 1-5 scale), hotels can increase prices by 11 percent and not lose business.
DISCUSSION QUESTIONS

How comfortable should consumers be in letting the reviews of others influence where and how they travel? What are the pros and cons?
What steps do you recommend a hotel take when dealing with a negative online review? Try to find one example of a hotel that has done a good job of responding to a negative review.

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