The Cause of Inflation

After finishing my junior year and almost finishing my minor in economics I never really wondered were inflation really comes from. After taking a class on "Theory of the Firm and Market Policy" and another class on "Money and Banking" I was taught about influences on inflation such as the interest rate, the money supply, government policy, and many other features of the economy that can effect inflation. During the process of reading The Wealth of Nations I came across the actual cause of inflation. The actual cause of inflation is the dearness of goods within a society. Dearness can also be looked at like demand. The key to causing inflation is that the market goods as a whole become more dear or in higher demand to the people of that society. If only a type of good or a specific product becomes in higher demand such as in trends it will only cause a price increase for that good but not inflation.

In my opinion economics can never be fully understood until you understand psychology. The psychology behind inflation is what I like to call the "want problem" The "want problem" is the more wealth (which is the amount of goods commanded by an individual) a person gains the more wealth they want.
The United States is a good example of inflation. The United States is typically in a slow constant inflation. The people of the USA continually become wealthier and want more luxuries or goods that they don't need. Look at the so called standard of televisions. I know and have seen people of poor class (around $25,000 annual income) who have bought a flat screen television with all the bells and whistles (size, HD, and etc.). Now these individuals still had a smaller less extravagant television that worked great before their new purchase but made the purchase to "keep up with the Jones" whether they know it consciously or not. The example with the USA and televisions can be compared to many other items such as cars, phones, electronics, and the list goes on.

As you can see the amount of luxury goods Americans consume continues to grow not on new technology and new goods but it is the amount of luxury items that each American is consuming.

As I stated before there are many other factors that can affect the inflation rate or even cause deflation but the derivation of inflation comes from the dearness of goods within a society's market.

Logistics

As an Operation Manager at a concrete restroom manufacturing company I deal with distribution and logistics daily. The company uses a Business-to-Business distribution channel when ordering our materials for the manufacturing process. The majority of the materials the company buys have been produced by the original manufacture and then shipped to a local store. The company I work for then has a weekly inventory pick-up where we purchase the processed parts and materials from the local stores. Some of our materials such as concrete are bought right from the original manufacture.
On the other hand once the materials are used to manufacture our concrete restrooms and there is a final product it must be deliver to the customer. All of our products are too big and heavy to be shipped any other way besides semi trucks. When running logistics it is important to make sure that we setup a date that the customer would like the product. Once that date is set the company has to make sure that there will be a crane on the job site to off load the restroom and a semi truck to take the product from our company’s manufacturing site to the customer’s job site.
The concrete restroom business requires a Business-to-Business Channel of Distribution for the manufacturing process but it also requires a Typical Consumer Channel of Distribution to ship the products to our customers.

Price the Product-Debate

In our marketing 360 class people have been asking, "How do you price a product?" Dr. Featherman always responds with market research. I do believe market research is important but what exactly is market research? Market research can include anything from what customers want and think to what other competitors are doing in the market. After working the past 8 months or so in trying to sell a corporation I have seen what is really important in selling anything. The one most important key to selling a product is pricing the product relative to the competition. When trying to sell this company potential investors always ask, "Who are your competitors?"
No matter what you are selling there is going to be a product that sells to that exact target market that you are selling to. Many students ask, "What if the product is new and different from anything out there, then how do you price it?" The answer is there is always a similar product. For example when the automobile was first invented who were the customers? The first customers were customers who needed or wanted transportation. The customer who already had a wagon or buggy was the most likely to buy that first car as an adopter of the new product.
Now to the pricing. The cost to produce the product is the first aspect you should look at. You will need to sell the product for more than the cost to produce it including overhead costs. Once you figure out the breakeven point and you know you must sell it for more than that, you then need to look at your competition and figure out what is "better" about your product. Is your product cheaper, better quality, easier to use, more efficient, or etc.; whatever it is you must have an advantage of why customers want your product. Once you know your competitors you can price your product accordingly. If you have a better quality for example you should price your product higher than the competition but not so high that it can't compete. An example is if you are selling running shoes and your direct competitor is Nike, you shouldn't sell the shoe for $300 unless you personally can justify $300 for a pair of shoes. A good selling price would be from $65 to $150 depending on the type of advantage such as cheaper price vs. higher quality and performance.
Now you see it is important to first cover cost and then focus on competing. If you look at these two variables you should have a good price range for you customers.

Automobiles and the Service

What is a service but an intangible product. One of the most advertised services today is car maintenance. Many brands offer a warranty for so many miles or time whichever comes first. These companies such as Audi or Chevrolet offer a free maintenance of check up on the car for the first year for example. Really you aren't buying an object but you are really buying a sense of security that your car is of good quality. Other automobile makers such as Rolls Royce offer a warranty such as a drive train warranty or a basic warranty that the car will have no defects. This service is just a motivation or added value so that consumers are more willing to buy their car!

Product Lines and Chevy

What is a product line and how can it help a business? A product line is the group of products that a company or division of a company sales. The purpose of a product line is to have many similar products that appeal to a wide variety of customers. A great example of a product line is the Chevy division of General Motors. They have small cars that appeal to the "green" people such as the Aveo or the Cobalt. They have sporty cars for the "thrill seekers" such as the Corvette or the Camero. They have the Malibu or the Impala for the "family." Chevy also has other categories such as trucks, SUVs, crossovers, and vans which hit other groups of people.
A product line can help you business by bringing in a wide variety of customers. I personally would never buy a small car such as an Aveo but I would buy an Impala. In this example of Chevy you can see that someone who is looking for a car with more space can still buy a car from the same place as a person looking for a small car. With a large product line a business can basically make anyone a customer. A company can use an "Upward Line Stretch," "Downward Line Stretch," "Contract," or "Fill Out." An upward line stretch is where a company adds a more expensive product, a downward line stretch is where a company adds a less expensive product, a contraction is where a company drops a product from the product line, and a filling out is where a company adds a similar product to the already existing product line. Looking back at Chevy a smaller car might be considered a downward stretch where as a Corvette might be considered an upward stretch. The Malibu and the Impala might be similar enough that they would be considered a filling out. On the other hand cars such as the Monte Carlo or the Nova have been dropped and so this would be a contraction. Many products are dropped because they either don't sell enough of them or a new and improved product has been added to take its place.
That is what a product line is and how it can help a business.

Innovation and Apple

When I first think of innovation I think Steve Jobs. Who is Steve Jobs and how does he have to do with marketing product innovation. Steve Jobs is the Co-founder and CEO of Apple since 1976. Steve is the mastermind behind Apple who has innovated great products for the company such as the iPod and the iPhone. The iPod was a great product innovation because it is small, holds large volumes of music, and some of them can even shoot video. The only way innovative products are created are by innovative people.
The real question in my mind about the innovation of Apple is, "Is Apple dead in the water?" After Steve Jobs took an absence of leave for medical reasons Apple came out with no new innovative products or product updates. Since Steve Jobs came back new products such as the iPad and the video camera feature on the iPod have been developed. If Apple can't find another person with the power to lead Apple, Apple will have no future against technology giant Microsoft. With Steve Jobs Apple has hit an all time high market share of 10% while Microsoft holds 88.7%. My main point is that innovation is the key to a successful business especially in the technology industry. In my opinion Apple has little hope for a successful future.

Shapen the Focus

Have you ever thought about jeans and the different target markets that the many jean companies cover? There are many brands such as Levi, Apple Bottom, Seven, Diesel, Gap, True Religion, Carhartt, Dickie, Fubu, BKE, Abercrombie and many more. I am just looking at the "demographics" of the demographic age. I mean to break up who buy jeans by demographics but only for the demographic of Generation Y (age).
There are distinct groups such as gangsters (ethnic), red necks (income, occupation, or family structure), emo's (education or occupation), skater punks (education or occupation), and the popular white kids (ethnic or income.
The gangsters where brands such as Fubu, Apple Bottom and Rocawear. These brands have jeans that have big logos and flashy stitching all over them. They appeal to the gangster people who want to look mean.
Next you have the red neck kids who wear outdoor jeans that are made for blue collar working men such as Carhartt, Dickie, and Wrangler. These jeans are made to fit well and are durable for blue collar jobs. The people who like these jeans are all about being a tough, outdoor type of a person.
The emo group of people like tight fitting jeans such as Levi's. These jeans are supposed to be skin tight to make them look really skinny. The emo people want to look like punk rockers such as Blink 182 and Hawthorn Heights.
The skater punks have their own skateboard companies that make them jeans such as DC, Hurley, and Billabong. These jeans are supposed to be slightly baggy but comfortable to wear while skateboarding.
Finally you have the popular white kids who buy expensive and exclusive brands such as Seven, Diesel, and True Religion. These people want nice looking jeans with the special small logo stitch on the jeans so other people will know that they buy expensive jeans. This group of people even claims that the jeans have a magical fit and that's why they spend 100's of dollars on them.
After looking at jeans I realized that there are a lot of companies out there with very specific target markets. Looking at the jean companies I realized that there are even brands with a wider target market such as BKE and Gap who are worn by skaters, emo's, and popular white kids. Now I am not a jean expert so I don't know if it is better to have a more focused market or not but jeans are a pretty big industry!

B2B and My Job

When I think about business to business I think of suppliers. I work at a manufacturing company where I work with suppliers. Many of these suppliers only sell to other businesses. When Park and Restroom Structures started it used “The Business Buying Decision Process.” 1. The company recognized the problem that we needed specific parts to build our concrete restrooms. 2. The company searched for companies that sold precast concrete products that met our specifications. 3. The company then sorted through the list of suppliers and considered price, quality, and the amount of different products they could sell us so that the company would make fewer trips to pick up parts. 4. The company selected the suppliers that were best suited for our needs. 5. The company evaluated the suppliers and over time the company continually received bids from other suppliers that wanted our business and the company changed a few of the suppliers due to better deals that came in the future.

Consumer Behavior

In class we talked about consumer behavior and how company's use blogs to sell their products. I was searching for information on product blogs when I came across a blog called Sleek Hair. My "perception" at first was this is not a blog...it is a web site where you buy products. After taking a closer look I noticed that it is a blog for the company on their own web site. I looked at the comments and noticed that every comment was about how great their products are. I then looked to see who had been writing these blogs. I found out that every blog was written by "SleekHair Professional HairCare Products." The company was the one posting about it's products and to top it off no one else is allowed to post! There is nowhere on the page where you can comment back. This company must assume that their consumers are oblivious and just buy whatever the company tells them they need. This company must be an amateur at marketing.
My second blog I looked at was www.Coca-ColaConversation.com. This blog is a blog dedicated to Coca Cola. The first thing I noticed about this blog was that the company posts the blog topics but there are consumers who comment on the posts. All the comments are good comments so it makes me wonder if Coca Cola pays people to post good comments. I then realized that this blog wasn't about how good Coca Cola is, it's about Coca Cola collectibles. Overall the site was much better than the Sleekhair blog; it made me interested in reading all about Coca Cola and actually made me thirsty thinking about their products. Coca Cola seems to respect their customers and understand their consumers behavior.

Marketing Research

The fall semester of 2009 I took a sociology class and we watched a video on marketing. In the video they talked to the pop company Sprite. In the early 1990's Sprite was struggling with selling their pop. Sprite decided that they needed to do "Marketing Research." Sprite chose to do "custom research" in the form of a "focus group." Sprite found out that there product was boring to teenagers and that teenagers were tired of "marketing strategies" which pushed teens to buy a product. Sprite responded with the ad you see at the top left. Sprite figured out that if they would tell the truth and not push their product too hard that teens would buy their pop. Along with this marketing Sprite also realized that the rap/hip-hop industry is what teens followed. In response to that Sprite started using hip-hop stars to advertise their pop. Sprite even went as far as throwing a party with some famous rappers and paid teens to come and have fun. Sprite filmed the party and broadcasted in on TV. This new "marketing plan" was successful and put Sprite back in the competitive world of beverages.

Welcome to the World of Marketing

"Welcome to the World of Marketing" is a great introduction chapter to the marketing around us and how marketing is everywhere all the time. I realized after reading this chapter that once a company gets HUGE there is no specific market, the world is their market. The two companies that came to my mind of this world marketing are McDonalds and Nike. I will only talk about Nike but these same concepts can be applied to McDonalds.
Nike has a large focus on "mass market." A mass market is where a company focuses on every possible customer in a market regardless of their special needs. Nike offers shoes of many different designs and types but Nike’s focus is on selling Nike as a brand. A specific ad might be advertising the new Nike Jordan basketball shoe but when people see the ad with the slogan, "Just Do It" Nike is really selling the idea that Nike shoes are made for everyone, to do what they want to do.
Nike's ads play on consumer emotions. When you see a printed ad or a video (such as the one attached)the ad makes you feel that the shoes make the athlete good. Since that shoe can make them good you want to buy those shoes so that you can become good. Nike holds a "market position" were Nike is the best shoe in the consumers mind because professionals wear that shoe that you want so badly.
There are even Nike customers who have "consumer addiction." I know students that will only wear Nike shoes and other people that collect Nike shoes and then resell them a few years down the road because some consumers will pay hundreds of dollars if not thousands of dollars on those retro shoes.
Overall Nike has a great "market mix." Nike shoes are a popular "product," the shoes are "priced" competitively with other shoes, the shoes are available at almost every mall and are offered online at hundreds of websites ("place"), and the "promotion" is seen everywhere from magazine ads to TV. ads to giant billboard signs. The marketing mix for Nike is very well put together and focuses on worldwide marketing.
This chapter has really opened my eyes to the marketing around us and how much this marketing is worth to a company.

Marketing 360: Catch the Buzz

After reading chapter one of my marketing book on promotional strategy and integrated marketing communication I thought about my favorite place to shop...William Sonoma. Whenever I need a cooking or baking product I hop online and look for what I need at William Sonoma.
The reason I am a loyal customer to them is because I like the quality of their products they offer. After reading all about "Promotion" (one of the 4 P's of marketing) I realized that they utilize Buzz Appeals in the form of Word of Mouth. When I am looking for that new product that I just have to have, I go onto their website and find two or three different brands of that product.
Next I look at the "Average Customer Rating" and then read a page or two of the "Summary of Customer Ratings & Reviews". Which ever product looks the best, has the best product review and the best price is what I buy. By looking at the product's image, reviews, and price I am really looking for the best "Value."
The reason that I say they use "Word of Mouth" is because all of the "Summary of Customer Ratings & Reviews" are posted by customers that have actually bought that product and either recommend it or don't recommend it. William Sonoma is using their customers to sell their products to more customers.
Looking at my buying from a marketing stand point the promotional strategy of using customers to sell other customers is very smart and helps the company gain trust with their customers. That is my perspective and interpretation of chapter 1 applied to my life.