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Management Analysis Of JCPenney Do My History Assignment

Management Analysis of JCPenney

One of America’s iconic department store fixtures is J.C. Penney which has provided American consumers with a wide range of family clothing and other merchandise for more than a century. In recent years, though, JCPenney has been experiencing some difficult times as its core market continues to be eroded by competitors and an aging business model. This paper provides a review of the relevant literature to develop a description and history of the company, its recent financial performance and to identify some of the managerial decisions that were made in response to changes in its market or competitive environment by JCPenney in recent years. A summary of the research and important findings concerning these issues are presented in the conclusion.

Description and History of the Company

According to JCPenney’s promotional literature, “More than a century ago, James Cash Penney founded his company on the principle of the Golden Rule: treat others the way you’d like to be treated — Fair and Square. His legacy continues to this day, as J.C. Penney Company, Inc. boldly transforms the retail experience across 1,100 stores and to become America’s favorite store” (About us, 2013, para. 1). In fact, JCPenney has been a long-time dedicated partner with American communities. In this regard, a former JCPenney Chairman, W.R. Howell (1999) emphasized that, “This philosophy was established with James Cash Penney’s first store, aptly — and purposely — named The Golden Rule. The Penney Idea, established with the emporium named for its founder, was set in 1913” (p. 26). The “Golden Rule” historically followed by JCPenney is as follows:

To serve the public as nearly as we can to its complete satisfaction;

To expect for the services we render a fair remuneration, and not all the profit the traffic will bear;

To do all in our power to pack the customer’s dollar full of value, quality and satisfaction;

To continue to train ourselves and our associates so that the service we give will be more and more intelligently performed;

To improve constantly the human factor in our business;

To reward men and women in our organization through participation in what the business produces; and,

To test our every policy method and act in this wise: ‘Does it square with what is right and just?’ (Howell, 1999, p. 26).

Today, through its subsidiary, J.C. Penney Corporation, Inc., J.C. Penney Company, Inc. (hereinafter alternatively “the company”) sells a wide range of merchandise from a chain of department stores (Company profile, 2013). The company sells family apparel and footwear, accessories, beauty products, fine and fashion jewelry, and various home furnishings (Company profile, 2013). In addition, the company provides various services, such as styling salon, optical, portrait photography, and custom decorating (Company profile, 2013). As of February 2, 2013, it operated 1,104 department stores in 49 states and Puerto Rico employing about 116,000 full-time workers. The company also sells its products through its Internet Website, Founded in 1902, the company is headquartered in Plano, Texas (Company profile, 2013).

Financial Performance

The company has experienced some rocky periods in recent years, due in large part to its ongoing transformation to become “America’s favorite store” by increasing its specialty store presence as well as other initiatives designed to overcome its sluggish financial performance. In fact, compared to the company’s two major competitors, Kohl’s and Macy’s, JCPenney’s financial performance is poor, and has even returned to its post-September 11, 2001 levels as shown in Figure 1 below.

Figure 1 J.C. Penney’s historic stock performance vs. competitors: 1980 to date

Source: Yahoo! Finance (2013) at






Sources of Risk or Uncertainty in JCPenney’s Operations

The company’s most recent annual report cautions that further losses may be experienced during the transformation initiative intended to propel JCPenney into the leading department store chain in the country. For instance, under “Total Net Sales,” the company’s annual report notes that, “In 2012, we completed the first year of our multi-year transformation strategy to become America’s favorite store. We underwent tremendous change as we began shifting our business model from a promotional department store to a specialty department store” (Form 10-Q, 2012, p. 4). The first year of the company’s transformation was described as “a difficult year” based on a decrease in comparable store sales of more than 25% in 2012; likewise, the company’s online sales (which are included in the comparable store sales figures) also declined a staggering 33.0%, to $1,023 million (Form 10-Q, 2012). In addition, the company reports that, “Total net sales decreased 24.8% to $12,985 million compared with $17,260 million in 2011. The decrease in total net sales includes the impact of our exit from our catalog outlet businesses in October 2011” (Form 10-Q, 2012, p. 4).

Effect of Government Regulations on JCPenney’s Domestic and International Operations

The company’s operations are currently limited to the United States and Puerto Rico; however, the company’s online operations have a global scope. Therefore, the company’s operations in 49 states and Puerto Rico are subject to U.S. government regulations while its international operations by virtue of its online sales are subject to controlling legislation in the jurisdictions involved (Fletcher 2003).

Description of the Inputs that are Used in JCPenney’s Production Function

The company’s sourcing for merchandise sold in its retail stores and online sales declined a full 4.7% in 2012 from 2011, down from 36.0% to just 31.3% in 2012 (Form 10-Q, 2013).

Introduction of New Products in Existing Markets or Creation of New Markets over Time

The dismal performance of the company has been offset, at least somewhat, by the introduction of marketing campaigns and new product brands (Loeb, 2013). The company’s most recent annual report notes that, “Private brands, including exclusive brands found only at JCPenney, comprised approximately 53% of total merchandise sales for 2012, compared to 55% in 2011 (Form 10-Q, 2012, p. 4). In addition, Loeb cites some positive signs in new market creation: “There are a few initiatives that could help sales from being even worse in 2013. The J.C.Penney credit card is now also a loyalty card, and that may entice some customers to shop. Strong jewelry promotions at key times (Valentine’s Day, Easter, Mother’s Day, etc.) may bring some response given jewelry has always been a good business for J.C. Penney” (para. 3). Likewise, Loeb reports that the company’s management has committed to opening a number of new specialty shops early in 2013 and still more stores later in the year. According to Loeb, “Among the brands opening shops [are] Pantone Universe, Martha Stewart, Michael Graves, Bodum and others” (para. 3).

Have the Prices of JCPenney’s Products Increased or Declined Over Time?

A sampling of the company’s mall and off-mall stores for 2012 shows a decrease in sales compared to 2011 (Form 10-Q, 2012). The company’s most recent annual report points out that lower prices have not driven increased sales as much as expected. According to the company’s Form 10-Q, “Although we sold more items at our everyday prices at a higher average unit retail during 2012, the increase in clearance merchandise sold at a lower average unit retail and the increase in clearance merchandise sold as a percentage of total sales more than offset that benefit” (2012, p. 4).

Effect of Demand Elasticity for JCPenney’s Products and Pricing Decisions

Typically, basic necessities such as family clothing show relative inelasticity of demand and these products do not sell significantly more or less with corresponding changes in prices (Elasticity of demand, 2012).

Profitability Analysis

The company’s most recent annual report (March 20, 2013) indicated that JCPenney’s is experiencing a challenging period in its corporate history. According to the 2013 annual report, “We underwent tremendous change as we began shifting our business model from a promotional department store to a specialty department store. 2012 was a difficult year and our sales and operating performance declined significantly” (Form 10-Q, 2013, p. 3): Other salient highlights from the annual report concerning the company’s recent profitability included the following:

1. For 2012, sales were $12,985 million, a decrease of 24.8% as compared to 2011.

2. Excluding sales of $163 million for the 53rd week in 2012, total net sales decreased 25.7%.

3. Comparable store sales decreased 25.2% for 2012.

4. Net loss from continuing operations for 2012 was $985 million (or $4.49 per share), compared to a net loss from continuing operations of $152 million (or $0.70 per share), for 2011 as well as net income from continuing operations of $378 million (or $1.59 per share) for 2010.

5. For 2012, gross margin as a percentage of sales was 31.3% compared to 36.0% in 2011 (Form 10-Q, 2013, p. 3).

The diminished gross margin as a percentage of sales was attributed by the company to elevated clearance merchandise sales levels and other markdowns that were taken during 2012, an initiative that was intended to clear discontinued inventory in preparation for new product and brands being introduced as part of the company’s transformation to become “America’s favorite store” (Form 10-Q, 2013, p. 3). Moreover, the company has reported a significant decrease in sales well into 2013, and many analysts expect things to get worse for the company before they get any better — if they ever do (Loeb, 2013). According to Loeb, “In all my years, I have never seen a loss of momentum of these proportions. It is clear to me J.C.Penney lost its core customer during the transformation” (2013, para. 1). Even seemingly mundane things are being allowed to slip at many of the company’s stores as a result of recent layoffs to save money, with dirty restrooms, broken elevators and shoddy management being reported (Loeb, 2013).

Notwithstanding the efforts by the company to turn this situation around, Loeb projects another 22% decline in the company’s sales the first quarter of this fiscal year which ended in April. According to Loeb, “The company has a difficult comparison with last year when there were many clearance sale events as goods bought under the previous management were sold off. This year, however, there is less intensity of merchandise and fewer bargains” (2013, para. 2). With respect to the short-term outlook for the company, Loeb cautions that, “1Q will probably be the worst quarter of 2013. While the drop in sales may slow, I do not see a bottoming yet” (2013, para. 3).

Description of the Competitive Environment in which JCPenney’s Operates

As indicated above, the company is losing ground to competitors such as Macy’s and Kohl’s, but it has managed to do some things right. For instance, to its credit, the company has managed to leverage its Web presence into an integrated marketing network where some of its competitors have failed. For instance, Turner (2004) suggests that other department store chains such as Kmart delivered a different brand image on their Web sites compared to their other marketing initiatives, a strategy that left consumers confused and uncertain about Kmart’s products and services. According to Turner, “Companies that tried a different presence on and offline made a huge mistake. JCPenney’s approach made more sense and Kmart could have and should have mimicked what JCPenney did, which was using its web site to be another customer touchpoint, but integrating it with the rest of its operations” (p. 136).

Indeed, with more than 1,100 department stores in 49 states and Puerto Rico, the near ubiquity of the company makes its Web site even more effective by allowing customers to shop online, make their purchases and then physically visit a store, where they are likely to engage in further shopping. As Turner points out, “The JCPenney Web site had the same merchandise, which could be shipped home or picked up at the store, giving customers another reason to come in and do some more shopping. Not only does an in-store pickup save shipping costs, he says, but you get them in the store again” (p. 136).

Despite the complete integration of the corporate Web site with its network of brick-and-mortar stores, the company is still in a downward spiral — and it recently cost JCPenney’s new CEO, Ron Johnson, his job. According to Tuttle (2013), “In early 2012, Johnson announced a major overhaul of the way JC Penney does business, with a new ‘fair and square’ everyday low pricing scheme to replace the ‘fake prices’ used commonly in the past” (para. 2). Despite the apparent viability of this new corporate strategy, customers are not always looking for everyday low prices and want special deals and values. In this regard, Tuttle emphasizes that, “Shoppers aren’t purely logical creatures. They’re often drawn to stores not by the promise of fair pricing, but by the lure of hunting for deals via coupons and price markdowns” (2013, para. 2). This strategy was the straw that broke this CEO’s back and his recent termination has not spelled the end of the company’s competitive woes. On a positive final note, though, the company is a longtime sponsor of the National Girls and Women in Sports Day in the United States (Verner, 2009).


The research showed that JCPenney was founded in 1902 and is headquartered in Plano, Texas. The research also showed that as of the beginning of 2013, the company operated more than 1,100 department stores in 49 states and Puerto Rico and employs around 116,000 full-time workers. In addition, the company sells its products through its Internet Website, Despite more than a century of marketing experience in the United States market, the research was also consistent in showing that JCPenney has lost its way and continues to fumble for solutions to its myriad problems. In the final analysis, the attempted transformation of the company into “America’s favorite store” may well end up transforming the company right out of business.


About us. (2013). JC Penney. Retrieved from

Company profile. (2013). Yahoo! Finance. Retrieved from


Elasticity of demand. (2012). Retrieved from http://www.

Fletcher, I.F. (2003). Insolvency in private international Law: National and international approaches. Oxford: Oxford University Press.

Form 10-Q for J.C. Penney Co., Inc. (2013, March 20). Yahoo! Finance. Retrieved from

Howell, W.R. (1999). Penney’s Golden Rule. The Exceptional Parent, 26(9), 26.

Loeb, W. (2013, February 28). J.C.Penney’s comeback is a farce so far, and it could get worse.

Forbes. Retrieved from


Turner, M.L. (2003). Kmart’s ten deadly sins: How incompetence tainted an American icon.

Hoboken, NJ: Wiley.

Tuttle, B. (2013, April 9). The 5 big mistakes that led to Ron Johnson’s ouster at JC Penney.

Time Business. Retrieved from

Verner, M.E. (2009, September). Seeking women donors for National Girls and Women in Sports Day. JOPERD — The Journal of Physical Education, Recreation & Dance, 69(7),

Management Style of Brian Driscoll history assignment ideas: history assignment ideas

Management Style of Brian Driscoll

The blame for the demise of Hostess has been squarely put at the union’s feet and their contracts. After conducting a close examination on the company, I have realized that free labor would have led to the death of Hostess; the striking employees only enhanced the inevitable. In this situation, people on the right track have pointed fingers at greedy unions. However, we must acknowledge that the two sides must reach a realistic agreement in a collective bargaining setting. Unions reflect the demands and wishes of employees and are natural to engage in negotiations in order for their demands to be fulfilled. Companies must communicate accurate company data with the union and companies should provide clear answers when they cannot meet the demands of employees. A positive relationship with workforce cannot be built by asking employees to give significant amounts of benefits back and pay while boosting the salaries of executives twice in a span of ten years (Longenecker, 2006).

The demands raised by employees of Hostess were just but normal; just as many employees in facing similar situations in their workplace, these workers had to hold on to what was at their disposal. The blame cannot be put on the unions or workers for the years of failed ideas and inept management at Hostess. Nevertheless, these employees and their unions have lost their jobs: they are carrying the heavy load occasioned by the blame. Brian Driscoll, the former CEO of the company tripled his salary despite the knowledge that the company was geared towards bankruptcy. It is reported that various top managers received massive pay increases with some of them doubling their salaries. Currently, the incumbent CEO has put the blame on the union for fostering the demise of the company. It is evident that the new CEO is partial because he is quick in blaming the union and fails to see and talk about the part where former CEO tripled his salary and doubled salaries of other top managers; all these happened even after knowing that Hostess was operating on life support (Grossbauer, 2010).

After an announcement by the company to go out of business because of labor strikes causing limited distribution of company products and minimized production, conservatives pinned the blame. The conservatives’ union bosses were allegedly celebrating because they had destroyed the most enduring American brand and were not amused. Despite the fact that the union comprised of employees of the company who were laid off, the claim remained. Today, over 18,000 workers are not employed because of labor leaders and their followers are short sighted and greedy thus have decided to kill their own jobs instead of making concessions, which would enhance the survival of the company (Longenecker, 2006). Parasites are known for murdering their hosts away from the eyes of the public. Consistent poor management and crony capitalism have driven Hostess into a grave, but the price is laid on the heads of employees. These employees engaged in creating great products that citizens love, would love to see the success of the company. They have always remained committed in their stand against industry competition to the bottom of the company. In the end, these workers together with their communities have to suffer from needless layoff tragedies (Stout, 2008).

The company has been struggling to maintain their market share because consumers’ appetites are increasingly shifting from junk foods, increased competition, and the company’s bankruptcy. Recently, the debts of Hostess were cleared by two funds, Monarch and Silver Point who engage in purchasing discounted corporate debts hoping to turn businesses around. While the company attained an agreement with the leading union, it failed to create an agreement with striking Grain Miller’s Union, Tobacco employees and Confectionary workers. The unions reported that the management of Hostess had unreasonable demands (Grossbauer, 2010).

The company is facing a crisis rooted on a decade of operational and financial mismanagement that led to two bankruptcies, lost market share, monumental debts, and decline in sales. Company investors are trying to resolve the latest bankruptcy after taking over the company through attacks towards the most valued assets of the company’ the employees (Longenecker, 2006). The falling corporate cookie is engaged in a battle of limited resources leading to generous pension funds for employees. During this time, the company had over $2 billion pension liabilities that had not been funded. This is not what business schools are teaching. Although compensation-benchmarking strategies are being used in the corporate world, research offers little evidence whether such hefty compensation leads to improved delivery and production. Many people think that if CEOs and top executives are paid more, it leads to positive results; this is not true in the real world. This has been the case for the U.S. airline sector, which has been experiencing one bankruptcy after the other while salaries of executive s kept increasing (Stout, 2008).

These are a few examples of horror stories, which strike people’s nerves because the trend is on the increase in America. It is the belief of the media that they should idolize such CEOs, despite the fact that many common people are facing the after math of these dead business deals. There have been cases where top executives have engaged in selling their companies after predicting that their personal taxes are poised to increase. Many people have lost their jobs so that top executives can secure percentage points on taxes, which rarely happen. Corporations are not encouraged to engage in such obscene salary scenarios and the public must develop opinions to make this practice less acceptable. Investors demanding more rights to vote are still emphasizing on high pay (Grossbauer, 2010).

Changes in the current business practice must occur since one percent of people live under a set of policies and put the blame for corporate problems on the rest of the employees. This is because employees keep on trying while top executives keep on taking what employees produce. People are tired of hearing about the CEO of Hostess who keeps blaming the demise of the company on the unions. In this case, if the company was to triple the salary of the CEO and double top executives’ salaries despite being aware that the company was on the path to bankruptcy, the problems causing the demise goes beyond the unions. The unions have argued that they have witnessed concessions meant for capital investment, new equipment, plant development and product development being diverted to hefty bonuses and pays for top executives, high priced salaries for consultants and attorney, as well as payouts to investors (Longenecker, 2006).

Reports indicate that the company might have manipulated salaries of top executives as efforts geared towards sidestepping bankruptcy compensation provision. Evidently, the company will have converted chunks of salaries for top executives from performance-based to fixed salaries. This might have been an effort to sidestep on rules designed to make sure that bankrupt companies do not entice workers to keep working because they are promised cash (Longenecker, 2006).


Grossbauer, S. (2010). Managing foodservice operations: a systems approach for healthcare and institutions. Dubuque, Iowa: Kendall/Hunt Pub. Co

Longenecker, J.G. (2006). Small business management: An entrepreneurial emphasis. Mason,

OH: Thomson/South-Western.

Stout, R. (2008). Under the Andes. Auckland: Floating Press.

Consumers Connectivity With Brands help me with my history homework

consumers’ connectivity with the brands that has changed to fundamentally new ways in the today’s time. The paper has discussed how the new and digital age has created an impact on the perceptions of the consumers due to which their ways of connecting to the brand has changed as the world has penetrated into the epoch of technological advancements. How the new media is playing an important role for the marketers and brand in connecting to the customers has been under discussion.

Consumer Relationship with Brand

Brands are considerably one of the vital and imperative assets for the companies and business, and the brand management is one of the core areas of focus for the marketers. In order to manage the brand carefully and vigilantly, marketers have to largely focus on creating a large and a loyal customer database. However, the changes in the technology and media have provided with new ways for the brands connecting to the customers. The traditional ways and means of engaging with the customers has changed with the passage of time (Batey, 2008).

As the world has evolved into the epoch of twenty first century, the technological advancements and innovations have captured almost every facet of human life. In this regard, it has also come to notice that experts nowadays claim that “Consumers today connect with brands in fundamentally new ways.” (Harvard Business Review, 2013) From a personal thought, I totally agree to this statement.

The media channels and the World Wide Web has become the most dominant aspect that makes the consumers connect with brand in fundamentally new ways. This is particularly due to the reason that number of internet users from all over the world is considerably increasing and are incessantly actively being in touch with one another through the social media in diverse areas of interest. As a consequence of it, these media channels have gone beyond the control of both manufacturers and retailer, who used to be the direct source of connecting to the consumers in earlier times. This also conveys the message that the older and conventional ways of designing the marketing strategies need to be transformed that can be in harmony with the brand relationships to the consumers (Harvard Business Review, 2013).

Experts and marketers have brought the fact to the forefront that the purchase is not the end of the relationship for the customers, indeed, they seek to create and continue an on-going relationship with the brand. This is one of the eminent reasons due to which the connection of customers with the brand has changed as they wish to enjoy, advocate and have a bond with the brand during their on-going association with the brand (Middleton, 2012). In addition, the customers prefer to have more and more information related to the brand experience before they can make a purchase, thus, they are more likely to experiment on the new media. This shift in the change of customers’ perception brought the digital marketing to surface. Therefore, the brands can only meet up the expectations of the customers in case if they gain customer insights instead of only having their focus on increasing sales volume (Middleton, 2012).

Experience sharing with friends on a single platform is one of the widespread elements that empower the general people to connect with a particular brand. Besides, it has been observed that the experience sharing, comparisons and reviews of brands are considered more important than brands speaking about themselves. This is because the ultimate perception of the consumers still remains the same that they wish to have an apparent and obvious brand promise and offering, and this can be measured from the new media by experience sharing (Solis, 2011).

As the world has advanced into the digital era, companies and marketers have profoundly noticed the fact that consumers are more heavily relying on digital interactions. This means that after making or experiencing a purchase, the consumers often engages with the brand through social media. In fact, core focal point of the marketers have always been building brand awareness through their marketing strategies, however, considering the changes in the nature of the consumers touch points, marketers strongly argue that consumers are connecting with brands in fundamentally new ways (Solis, 2011).

This statement can be well explained from the example that someone else’s suggestion and advocacy has become the essential and leading element when making a purchase in many categories. This elucidates the fact that how significant the social media networking has become in a life of a common person. Considering this fact, the consumer’s decision journey has been explained in four stages: consider (means the selection of brand), evaluate (means to have input from peers and reviewers), buy and enjoy and have a bonding. The new media provides the opportunity to the customer to evaluate as well as advocate the brand simultaneously based on their and other’s experiences with the brand (Fuggetta, 2012).

The new four stages of consumer’s decision journey have explicated the reality that customers are more focused on experimenting with the social media. Therefore, brands should leverage the platform of social media so that they can have a clear customer promise through communication, which would aid them in building and gaining trust by continuous improvements through constant interaction that would ultimately lead them to innovation beyond expectations (Fuggetta, 2012).

A very good example in this regard is of Virgin Atlantic, who is in constant touch with their customers as they include travel tips from crew members on its Face book page. This is not the only aspect, as they are frequently in touch with their customers on Twitter specifically in rapidly changing situations. Moreover, to improve their brand and have a better relationship with their customers, they also offer a taxi-sharing system. Furthermore, a company website is also available where customers have the opportunity to exchange information, stories, and can even advice to the company for the better options (Barwise & Meehan, 2010).

With the digital age, the consumers are more interested to have an open and clear interaction with the brands that they are consuming. However, one cannot also ignore the fact that many of the brands have easily understood the new needs and demands of the consumers with respect to the open communication. Indeed, the thing that attracted the marketers in the online space is the targeted message that is delivered to the consumers, which also leads to consumer engagement. The targeted messages about the brand serve the needs of the brand as the customers are always in search of brand information before having an experience with it (Mathur, 2012).

Search marketing (SEM) is currently measured as one of the top lead generation methodologies by various brand categories such as automotives and durables. Nevertheless, the new media and the internet are playing a vital role, as the customers are able to find the exact information that is needed through the platform, and has contributed to the ways customers connected with the brands (Mathur, 2012).

More and more brands are nowadays taking the advantage of the new media to stay connected to their consumers. Few examples in this regard include Bayer that has created a Facebook page so that they can promote and advertise their medicines especially designed for women. Moreover, the company has also launched an online blood glucose monitoring system that is particularly catering the young people, who are suffering from diabetes (Ray, 2010).

GlaxoSmithKline is another example that has adopted the new media to stay connected to their customers by creating awareness films on YouTube website for various diseases like restless-legs syndrome. The new-age social media websites are a strong medium of open communication with the customers (Ray, 2010).

Another aspect that has been highlighted by brands and marketers is that the customers’ connectivity to the brand is based on the entire experience of the purchase. Therefore, the employee recognition is another significant component to consider, which can facilitate in strengthening and intensifying the relationship of the customer with the brand. This is relatively due to the reason that employee recognition begets to promising behaviors with discretionary efforts developing an emotional as well as social connection between the customers and the brand (Baker, 2004).

One of the negative aspects of consumer connectivity with brands in fundamentally new ways that has come to the surface exhibits that the new and different trend of consumers’ connection with the brands increasingly making companies today increasingly feel under attack from the dissatisfied customers and are being the reason of threat for them. The social-networking such as blogs, tweets, text messages and so forth weapons in this regard are imposing large-scale damage to the company’s reputation and are resulting in more and more dissatisfy customers, because the companies are not able to meet the requirements of the customers in responding them (Okonkwo, 2010).

Due to this reason many of the brands are uncertain and reluctant to adopt the new media as their marketing strategies that can openly connect them to their consumers. However, considering the value and worth of the new media in the today’s time, it has been examined that brands are more and more focusing on how to build better relationships with the customers over the new media that has become the key aspect of connectivity with the customers (Okonkwo, 2010).

To put the entire thesis study in a nutshell, it can be well stated that the technological advancements and the age of internet has completely capsized the ways of consumers’ connection with the brands. Indeed, the new media has outmoded the traditional ways and strategies of marketing and connecting to customers, and has thus transformed the economics of marketing. The customers’ decision journey has drastically shifted in the recent years, which has comprehensively altered not only the purchasing patterns of the customers but also how they connect to the brands.


Baker, S. (2004). New Consumer Marketing: Managing a Living Demand System. USA: John Wiley & Sons.

Barwise, P. & Meehan, S. (2010). The One Thing You Must Get Right When Building a Brand. Harvard Business Review — The Magazine. Retrieved from

Batey, M. (2008). Brand meaning. USA: Routledge.

Fuggetta, R. (2012). Brand Advocates: Turning Enthusiastic Customers into a Powerful Marketing Force. USA: John Wiley & Sons.

Harvard Business Review. (2013). HBR’s 10 Must Reads on Strategic Marketing. First Edition. USA: Harvard Business Press.

Mathur, K. (2012). Brands and their digital buzz. The Financial Express. Retrieved from

Middleton, D. (2012). Marketing in the Participation Age: A Guide to Motivating People to Join, Share, Take Part, Connect, and Engage. USA: John Wiley & Sons.

Okonkwo, U. (2010). Luxury Online: Styles, Strategies, Systems. China: Palgrave Macmilla.

Ray, T. (2010). Social Media — an evolving new-age powerful communication tool for the Pharmaceutical Industry, both global and local. PILMAN — A Tapan Ray Website on Healthcare. Retrieved from

Solis, B. (2011). Engage!, Revised and Updated: The Complete Guide for Brands and Businesses to Build, Cultivate, and Measure Success in the New Web. USA: John Wiley & Sons.

Emotional Drivers of Consumer Toward Swarovskis Brand do my history homework: do my history homework

Emotional Drivers Swarovski

The motives behind consumer decisions to purchase luxury brands like Swarovski have been studied in a number of researches. The general findings of these studies have been that these motives are largely emotional, and that they are evolving as the composition of the luxury market segment changes. De Mooij (2005) defines emotion as an “interaction between cognition and physiology.” The characteristics of emotion that or of greater concern to luxury brand managers are that emotions are learned and that they vary from culture to culture.

The mode of expression of emotion also varies by culture. In capitalistic societies, consumption has evolved into a unique mode of expression of self-satisfaction, self-esteem and self-pleasures. These buying motives shape the perceptions of various brands among consumers, along with brand loyalty and brand image. De Mooij (2005, p. 116) explains luxury brand buying motives in terms of collectivism/individualism and masculinity/feminism. Conformance may be the dominant buying motive in collectivistic societies such as the emerging Asian markets of China, Russia and India. Hence, the buying motive here may be the expression of status or social class.

This is an important point for Swarovski if it wants to enter the large markets for luxury goods in these countries. On the other hand, in individualistic societies, uniqueness is valued and so self-expression or self-pleasure may be an important buying motive for luxury brand consumers.

Kapferer (2008, p. 107) has also attempted to identify the buying motives for luxury brands on an individual level by segmenting the luxury consumer market into four categories. According to the degree of separation and the increasing magnitude of the distance with the general market that does not purchase luxury goods, these consumers are motivated primarily by the beauty and the high quality of the luxury product. Thus, for a Swarovski consumer falling into the first category, the buying motive is likely to be the superior quality and the elegance of the Swarovski crystal chandelier.

In the second category, Kapferer (2008, p. 107) places consumers who seek creativity and novelty. They are primarily motivated by the aesthetic and creative attributes of the Swarovski product. They may purchase a radically new design and may be the pioneers among the consumers. The third category of consumers is motivated by the timelessness and the reputation that the brand has earned over the years. These consumers are often termed as old money in common terms. The fourth category of consumers is perhaps motivated least by the functional aspects of the brand and is primarily interested in the scarcity or rarity of the brand. They may be wealthy collectors for whom the product may be a work of art or a valuable specimen.

Chevalier & Mazzalovo (2008, p. 172) help to further elaborate on the buying motives of individual luxury consumers. The buying motives are based on the characteristics of the recently wealthy classes such as the corporate executives and owners of Internet companies. They are motivated by a desire to seek self-improvement and self-elevation. They also seek to develop a distinct identity and stand out from the crowd. They are creative and are attracted towards novelty and a fusion of diverse ideas and styles. They are inspired by aesthetic beauty and seek to improve their appearance and their social status. The purchase of respected luxury brands is one way of signifying to the society and to their reference groups their rise in social status.

Luxury brands like Swarovski are seen to attract the attention of this segment because the brand has been able to successfully reach out to the desire of this segment to assert its individuality by providing designs that are trendy yet elegant. Chevalier & Mazzalovo (2008, p. 173) also make note of the prevalence of older buying motives such as the high price of the product or its rarity. However, these are not perceived to be as dominant as they once used to be and the luxury brands have adapted to this change successfully.

Kapferer (2012, p. 67) also identifies some of the distinctions between fashion, premium and luxury brands. He states that consumer demand for fashion brands is motivated by a desire to imitate and conform. In addition, fashion brands are transient and changes frequently. On the other hand, luxury brands are timeless and go beyond simply high quality and technological sophistication. Demand for them is motivated by a desire to elevate oneself in the social group and to reflect personal taste.

Along with the cultural and individual level buying motives identified above, Patrick & Hagtvedt (2009, p. 270) also distinguish between the buying motives of old money and new money. They recognize the social and economic factors as those that motivate the established wealthy classes to purchase luxury brands such as Swarovski. On the other hand, those who have come into money recently, also known as the nouveau riche, are primarily motivated by personal factors such as hedonism, the influence from others in the in-group, the desire to seek approval from the reference group, and so on (Patrick & Hagtvedt 2009, p. 271).

These motivations shape the perceptions and attitudes of these consumers towards the brand. These include perceptions of and attitudes towards the brand image, brand uniqueness, perceived extended self, and perceived aspirational value. These perceptions combine to shape the perception of overall brand quality and the subsequent decision to purchase the product. The consumers of the luxury brand Swarovski are likely to be motivated by a combination of these motives, with the implication that the Swarovski brand may need to develop emotional branding and an integrated marketing communication strategy to arouse the buying motives of these consumers.

The Role of Emotional Brand Engagement

The role of emotions in branding and purchase decisions by the consumer is highlighted in a study by Williamson (2002). He was among the more notable researchers who, in the beginning of the twenty-first century emphasized the importance of emotions in marketing research. This was an important development because during the 1990s, the emphasis in advertising and marketing was on sensory appeal, which Williamson (2002, p. 198) identifies as a lower-order state than emotion. He asserts that emotions also play an important role in purchasing decisions along with rational thinking.

He describes behaviours that may not be necessarily rational, e.g. instinctive, reflexive and repetitive behaviors. He also emphasizes that emotions may be distinguished on the basis of how they are experienced. Hence, he divides emotions into first, second and third order emotions on the basis of their primal, subconscious and conscious nature (pp. 196-198). His study also helps to distinguish emotions as a more complex and higher state compared with feelings. Emotions are described as having driving force and the power to affect individuals’ moods and hence their decisions.

Okonkwo (2007, p. 87) substantiates the distinction between feelings and emotion made by Williamson (2002) when he discusses the ways in which a brand appeals to the emotion in trying to engage the consumer with the brand. Okonkwo states that the luxury brands make emotional appeals in addition to the sensory appeals to taste, smell and touch. He states that luxury brands stress the “aura and appeal” of the brand in trying to reach out to the consumer and engage their imagination. The Swarovski brand is also presented by the company as embodying “precision craftsmanship” (Swarovski 2010, p. 5) and “the highest level of quality” (Swarovski 2010, p. 13). Along with these functional aspects, the brand also embodies imaginative and subjective ideas such as “mysterious” and “captivating” (Swarovski 2010, p. 5). Okonkwo (2007, p. 87) states that such factors present a compelling and engaging message of the brand image and create a sense of “longing” in the minds of the consumer. This is because consumers believe that the brands they use reflect their personalities and so desire to achieve the sense of fulfillment of expression of the self. The aura and appeal are stored in the “memory bank” (Okonkwo 2007, p. 87) of the consumer and they seek the brand on their next visit to the retailer.

The crucial role played by emotion in consumer decision making has also been explored by other researchers. Heath (2009) has taken important steps in explaining how emotion and cognition interact when making purchase decisions. This can help to shed some light on how consumers make decisions over the Swarovski brand. The luxury market is driven by prestige value over the functional value. Therefore, rational cognitive thinking appears to be less important than subjective valuation of the brand.

Heath (2009) describes this as engagement as opposed to attention (p. 62). He states that when making consumer purchase decisions, the emotive content of the brand communication has a stronger effect on the purchase decision than the cognitive content. In fact, he goes further to propose that the purchase decision is made on the basis of the sub-conscious emotive content and the cognitive content or rational processing of information is simply a means of reinforcing the decision or counter arguing against it (p. 67). This is also supported by the findings of Williamson (2002) discussed earlier where the ability of emotion originating in the subconscious to influence people’s moods and decisions has been highlighted.

The purchase decisions of Swarovski consumers may be motivated by a combination of “extrinsic” as well as “intrinsic aspirations” (Truong 2010, p. 664). These have been identified by Truong (2010) as growth, relatedness and community feeling on the one hand and wealth, image and popularity on the other. According to the research, consumers make purchase decisions of luxury brands on the basis of whether it increases their image in the public and denotes a desired social class, the level of excellence of the product and the amount of personal satisfaction derived from the product. Truong (2010) finds equal importance of both intrinsic (growth, belonging, etc.) as well as (wealth, status-consciousness, etc.) in the purchase decisions for luxury goods.

However, extrinsic aspirations are found to be more closely related to conspicuous consumption because such behavior conveys the status of the consumer in public. On the other hand, intrinsic aspirations affect quality search and self-pleasure to a greater extent because the consumer is not motivated by others’ perception about his or her purchase decision. Since the luxury purchases are also based on affordability, people may be motivated by both extrinsic as well as intrinsic aspirations to make expensive purchases. Therefore, consumers may prefer Swarovski because of its high quality or for its value as a status symbol, depending on their aspirations.

Jackson (2009) explains that the strength of brand loyalty is determined by the ability of the brand to position itself as a set of emotional experiences rather than as a set of utility providing functional attributes. In addition, he is of the opinion that brands do not need to have a distinct identity in the shape of a brand name and a logo alone, but they also need to have a unique and distinct brand personality. This is where the relationship between the brand and the self-concept of the consumer proposed by Malar et al. (2011) reflects the statement by Jackson (2009). In the light of these two explanations, it can be said that the motivation behind the purchase decisions of Swarovski consumers is that the brand has a personality shaped by its emotional attributes that appeal to the actual as well as ideal self-concept of the consumers. In effect, what Jackson says is that the brand to be successful needs to focus on the experience that can be enjoyed by the consumer in addition to its basic attributes of product, place and form utility. This experience reinforces the self-concept of the consumer and enables him or her to develop increased brand loyalty. In the case of Swarovski, the brand personality likely evokes reinforcement of high quality, elegance or prestige and high status to the consumers.

In addition to an identifiable brand personality, consumer purchase decisions are also affected by brand cues and brand image. Shukla (2011) investigates the effect of brand cues and interpersonal informational exchanges on the purchase decisions of consumers from diverse cultural backgrounds such as the United Kingdom and India. He reveals that the motivations and dynamics of the purchase decision vary from culture to culture.

This has important implications for Swarovski because it may decide to enter culturally diverse markets such as India or China then it would need to adapt its brand cues according to the national cultural variables and extrinsic and intrinsic aspirations of the emerging markets. According to Shukla, the brand cues have a greater effect on the purchase decisions of consumers in the United Kingdom whereas consumers in India also consider interpersonal exchange of information about the brand before making a decision. This may be explained by stating that conspicuous consumption is an important aspiration for many Indian consumers, keeping in mind the recent economic prosperity experienced by the nation, whereas consumers in the United Kingdom may be motivated by quality search and self-pleasure in addition to conspicuous consumption because of a mature economy.

On the basis of the earlier studies on emotion, further research on the subject shows that individuals purchase particular brands because they feel that it helps them to express their actual self (Malar et al. 2011). While the role of the ideal self in emotion-motivated purchase may also be discussed, research by Malar et al. (2011) shows that the effect of the actual self-concept (a realistic understanding of the cognitive and affective aspects of an individual’s personality) is stronger than the ideal self-concept. Their study shows that the expression of the self-concept is moderated by the level of involvement with the product, the level of self-esteem and “public self-consciousness” (Malar et al. 2011, p. 2).

On this basis, it may be explained that the consumers of luxury brands like Swarovski are motivated by emotional forces that drive them to express their actual self-concept through the brand personality of Swarovski, which conveys elegance, art and sophistication. It may be said that the consumers are motivated by high self-esteem and may want to express their economic and social status through purchases of luxury brands like Swarovski. They may be experiencing what Malar et al. (2011) identify as “emotional brand attachment” (p. 2).

The high emotive content of the brand personality and brand image of the Swarovski brand is evident in the way the company describes its brand in the official publications. The Swarovski Sustainability report 2010 (Swarovski, 2010) presents the view of the management about the reasons for the popularity and success of the brand. The best functional quality of the Swarovski brand is claimed to be its “precision craftsmanship” (p. 5) and “highest level of quality” (p. 13). In the rest of the report, the description is biased in favor of the emotive content of the brand personality.

The Swarovski brand is described in terms such as “mysterious, original and captivating” (p. 5), as one that “sparks one’s fantasy” (p. 9), and one that brings “joys to the senses” and is “inspirational” (p. 15). The most important promise of the brand is to “bring dazzle and excitement to the owner” (p. 15). These descriptions show that the brand is positioned as a luxury brand because it focuses on the emotive aspects of the brand rather than its functional aspects. These serve to attract the imagination of the consumer so that they may associate the brand image with their self-concept and aspirations. The brand seems to match their lifestyle and sense of fashion.

Emotional brand engagement is extremely necessary in the luxury product segment because consumers constantly need reassurance of their aspirations and the ability of the brand to satisfy those aspirations. As stated by Rosenbaum-Elliott (2011, p. 35), brands may be classified into functional and symbolic categories. Functional brands offer functionality as the primary value while symbolic brands focus more on subjective appeals than functional appeals.

Swarovski also falls into the category of symbolic brands because it is perceived as a status symbol. The success of the Swarovski brand is evidence of the strong emotional brand engagement consumers have with the brand. According to Rosenbaum-Elliott (2011, p. 35), consumers develop trust or “emotional involvement” with a brand after they are convinced that it offers a certain standard that can be predicted and that it will deliver the promised and expected benefits with no risk of failure. In the case of Swarovski, consumers expect the brand to deliver a set of functional and symbolic benefits, which determine the satisfaction of their extrinsic and intrinsic aspirations (Truong 2010, p. 664). Therefore, emotional brand engagement becomes a necessary means of attracting brand loyalty towards the Swarovski brand.

The Role of Brand Storytelling

Storytelling is an effective part of brand engagement and marketing because storytelling has an innate appeal to human beings in all cultures. According to Woodside (2010), storytelling helps people to release their pent up emotions and anxieties. In effect, it helps them to achieve catharsis by vicariously placing themselves in the positions of the characters of the story. They also bring pleasure to the listeners because stories can help people to confirm their perceptions about their selves. In this way, stories help people to reinforce their self-concepts.

Woodside (2010) also discusses the usefulness of storytelling as a branding tool. The aspects of storytelling that make it an effective tool for branding are the stories create awareness, comprehension and empathy (p. 532). In addition, because of their empathic quality, they also aid in memory so that people can remember the people, places and the events in the story. These indices (p. 533) ought to be relatable and desirable so that the consumers can become engaged with the brand emotionally. The psychological archetypes preferred by the target consumer segment can be incorporated as the characters in the brand story and may realize the aspirations embodied in the brand image to establish the connection between the consumer and the brand.

Woodside, Sood & Miller (2008) present a unique perspective on brand storytelling when they discuss the ways in which consumers may participate in storytelling using brands to reinforce their self-concept and the desire to conform to a psychological archetype. They discuss that brands can contribute towards helping their consumers attain such psychological satisfaction by stressing the brand image in their marketing communications. Brands that are successfully able to do so enjoy greater brand loyalty among their target market consumers because the brands help the consumers to realize their ideal self. In the light of the discussion of Malar et al. (2011), it can be said that the brand image helps the consumers to realize their ideal self-concept and that such behavior is motivated by extrinsic aspirations of creating a certain public image and intrinsic aspirations of attaining psychological closure. Woodside, Sood & Miller (2008) also present a list of the psychological archetypes created and reinforced by various brands. Out of these, Swarovski may be said to embody the Enigma archetype, which communicates qualities of mystery as well as the Siren (power of attraction) and the Loyalist (trust) (Woodside, Sood & Miller 2008, p. 114).

Fog et al. (2010) also stress the importance of effective storytelling to the long-term success of the brand. Effective storytelling supports the long-term strategy of the brand and helps to engage the target consumer segment. They place storytelling in a broader framework of the overall marketing and communication function of an organization. They state the concept of a “core story” (p. 81) in that it guides not just a particular product brand but the entire corporate brand. This implies that brand storytelling can be understood as a hierarchy where different forms of storytelling may be used to achieve communication objectives.

Fog et al. (2010) state that brand storytelling may be used to support the strategy of the corporate brand as well as individual product brands. In the case of Swarovski, it may be seen that the storytelling focuses on the corporate brand probably because of the greater need for assurance felt by the consumers. They may need the psychological closure and reassurance of knowing that the brand they identify with represents the highest levels of quality in all aspects of the company and the products. This points towards a high need for realization of the intrinsic satisfaction of self-pleasure identified by Truong (2010).

In effective brand storytelling, whether at the corporate or the product level, it is of utmost importance to develop a focus so that the consumers remain engaged to the story and the brand. The most common and effective way of doing this is by creating a central character that is “relatable, important, different, and motivating” (Herskovitz & Crystal, 2010). This description of the central concept may be related to the concept of the “psychological archetype” discussed by Woodside, Sood & Miller (2008). The concept of the central character proposed by Herskovitz & Crystal (2010) may be understood as a general description of the qualities of the central character in a brand story while the “psychological archetype” may be developed according to the identified aspirations of the target consumer segment. In the words of Herskovitz & Crystal (2010), this central character embodies the “brand persona” and provides a focal point for the narrative. Because the central character is more vivid than the location or the object, it is more effective at engaging the consumer. It makes the brand story more compelling and capable of establishing an emotional connection with the consumer. They also stress that the brand persona should be “integrative” in that it should appeal to both left-brained and right-brained sensitivities of the consumer.

Martin (2010) goes a step further than Fog et al. (2010) in describing the organization or classification of storytelling in the marketing or branding function. Martin (2010, p. 11) classifies brands into corporate, product and service categories, thus implying that storytelling can be used in a variety of situations to create an emotional bond with the consumer.

Martin’s work also includes a clear and illuminating definition of a brand by the American Marketing Association. In the definition, the American Marketing Association includes a story as a component or form of a brand. The brand is supposed to achieve its effect through a combination of sensory, emotional and rational modes and appeals. This coincides with the distinction between the emotive and cognitive content of brand communication made by Heath (2010). The definition also uses the term “touch points” to refer to what Woodside (2010) has called “indices” in his analysis of an effective brand story. These touch points may be a relatable and memorable person, object or place. Martin (2010, p. 12) states the purpose of the brand storytelling is to arouse a craving and a desire for the brand. It should also inspire trust in the brand so that the consumer may be able to justify the expense of a luxury brand.

The brand story is, in fact, a part of the brand itself and is no longer restricted only to the job of creating good public relations for the company (Kotler & Pfoertsch 2006, p. 105). According to Kotler & Pfoertsch (2006, p. 103), the importance of a brand story has increased to an extent that it embodies an essence of the brand. At the corporate branding level, an effective and interesting brand story can help develop positive attitudes towards the company, which has a positive effect on all the brands of that company. This should take the form of “some kind of legend” (Kotler & Pfoertsch 2006, p. 103). Such a legend is typically centered on an inspiring personality or a significant event that led to the creation of the company or the brand.

The story embodies values that are shared by the brand and the target consumers. A good brand story has sufficient motivating power, and embodies the heritage and history of the brand. In this way, it emphasizes the tradition of the brand and creates a sense of continuity and permanence in the minds of the consumer. For luxury brands, stability and timelessness are highly desired values. Hence, a good brand story reflecting the history of the brand is important for the success of a luxury brand like Swarovski. In fact, the Swarovski Sustainability Report 2010 includes such a brand story describing the history and achievements of the company since 1982. This gives a sense of reassurance to the consumers of the luxury brand (pp. 10-11). However, Kotler & Pfoertsch (2006, p. 105) warn that a brand story has to be true in order to be believable. In the desire to create an unforgettable story, one should avoid the temptation to exaggerate challenges and achievements, and fabricate events.

The importance of effective brand storytelling to the success of a brand and its acceptance by the target market is explained by Koll, von Wallpach & Kreuzer (2010). In their study on the characteristics of effective and successful brand stories, they trace the path through which brand stories facilitate consumers to act in ways that meet the branding and marketing objectives of the company. They describe a route through which consumer perceptions about a brand create positive or negative attitudes about the particular brand. This creates in them a readiness to respond in a certain characteristic way to the brand when they come across it in the media or in a retail outlet. This response is automatic and may be formed by experience or through education. In this way attitudes shape the behavior and actions of consumers towards a brand. This may include the decision to purchase or not to purchase the brand, which might be the strongest determinant of the success of the brand. Therefore, brands need to have effective brand stories so that they may educate consumers about the positive characteristics of their brand, i.e. The cognitive and emotive characteristics to create positive perceptions and stimulate actual purchases.

The Role of Integrated Marketing Communications

Integrated marketing communications are necessary to carry the brand story successfully. It is not sufficient for the brand story to be credible and engaging unless it creates synergy in combination with other components of the marketing program. Along with the content of the brand story, the media is equally important. The branding strategy of the brand should be aligned with the overall marketing and communication strategy of the company.

Lu (2011) explains the strategy that luxury brands should adopt when branding their products for the Chinese consumers. Lu (2011) states that it is important to identify the real aspirations of the target consumers. The segment of the population that is attracted towards luxury brands is the lower-middle class and has high “extrinsic aspirations.” He also explains that the luxury brand story should embody the qualities of a product that is expensive, scarce, of excellent quality, carries sufficient aesthetic and emotional content and is essentially, not a necessity. In addition, the brand story needs to be integrated with the medium of narration. For instance, mass media or even high-end fashion magazines may not be as effective as communicating a brand story as sponsoring a cultural event and allowing visitors to experience the brand story in person.

Hoffmann & Coste-Maniere (2011) also emphasize on the important role played by an integrated marketing communications strategy in driving the motivations behind consumers of luxury brands. They identify a number of motives that can be addressed successfully via a comprehensive integrated marketing campaign.

Some of these motives are similar to those discussed in previous studies. They identify that consumers are experiencing new motives to purchase luxury brands such as Swarovski. Some of these motives include the desire to impress others (extrinsic aspirations), self-pleasure and self-gift giving (pointing to an important social trend that emphasizes self-gratification and is typical of the Generation Y or Millennial generation) along with the desire to experience high quality products.

An integrated marketing campaign that delights the senses and provides satisfaction of the above mentioned emotional desires achieves the realization of the brand strategy. Such an integrated marketing campaign includes advertising activities, a public relations campaign, and event sponsorships; developing wider product ranges and creating new market segments for the brand. Hoffmann & Coste-Maniere (2011) believe that such an integrated marketing communications strategy is crucial for the success of luxury brands in emerging economies.

The components of an integrated marketing communications program for luxury fashion brands have also been discussed by Fionda & Moore (2008). They emphasize that a “consistent and coherent approach” (p. 360) is necessary to realize the luxury brand proposition. This is the reason why consumers prefer the Swarovski brand and have a high level of brand loyalty towards it.

Developing a unified and integrated communications approach is also necessary because the luxury segment has grown rapidly since the late 1990s all over the world. The information economy developed with the rise of the dot-com industry has created young billionaires overnight who believe in consumption more than saving. Luxury brands that are successful with this segment are expanding their geographic reach and are aligning their marketing strategy, product and design philosophy, pricing strategy, communication strategy and distribution strategies (p. 355). They are also pursuing direct marketing, sponsorships, fashion shows, celebrity endorsements, advertising and public relations to connect with the consumers on a more personal level than ordinary consumer brands. This is the reason behind the success of the Swarovski brand. It does not reflect the old world aloofness and impersonality while maintaining exclusivity and aspirational value.

The most important source of competitive advantage that a company or a product can have is its brand value. It is the key competitive advantage (Keller 2008, p. 290) for a product because it is intangible and inimitable. Keller (2008) recommends that an integrated marketing communication program for a luxury brand should align the brand elements into the marketing program so that a unified message is communicated to the consumers and that the marketing message can be shaded appropriately by the brand image.

In this way, the corporate and the product level branding can be achieved through a unified strategy. The integrated marketing campaign for a luxury brand like Swarovski must reflect the values of the brand and should emphasize the brand characteristics most desired by the consumers. These include an aspirational, premium image, premium pricing, aspirational marketing through valued secondary associations with a celebrity or high-profile individual, and a distribution strategy that makes use of selective channels to balance availability and accessibility with exclusivity (Keller 2008, p. 291). Swarovski combines all these elements effectively in its marketing campaign. It avoids mass media advertising but its marketing message reaches the consumers through specialty business and travel publications and event sponsorships.

The literature review presented above shows that luxury brand buying motives such as those held by Swarovski consumers are primarily emotional. These motives have evolved down the generations as the number of millionaire and billionaires around the world continues to increase as their average age continues to decline. This has resulted in the need for luxury brand managers to address the buying motives of the established wealthy classes as well as those who are rapidly moving up the social and economic ladder.

The Swarovski brand is well-established in the minds of the consumers as a prestigious brand that combines artistic creativity with scientific progress and precision. The brand also has a long heritage that goes back to more than a hundred years. These attributes have found resonance with the buying motives of consumers. The research also shows that emotional branding, branded storytelling and integrated marketing communications can play a strong role in enabling the luxury Swarovski brand to grow by creating new segments and expanding its consumer base.


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Pharmaceutical Drug Costs 8 pages advanced higher history essay help


Pharmaceutical Drug Costs

In today’s competitive pharmaceutical drug market there are more and more factors that are influencing brick and mortar pharmacies in their endeavor to stay viable. One area in which pharmacies are competing hard is that of generic drugs. “Generic medicines account for 69% of all prescriptions dispensed in the United States, yet only 16% of all dollars spent on prescriptions. Generic pharmaceutical products are used to fill nearly 2.6 billion prescriptions every year” (Facts at a Glance, 2012). It is these drugs that pharmacies are using to lure people in the door in hopes that they buy other products besides their drugs.

Several of the nation’s largest retailers and pharmacies now offer discounted pricing on a large range of generic equivalents and brand name prescription drugs. Drug discount cards, retail drug discount programs, and other programs may offer substantial savings from retail prices (Retail Discount Drug Programs, 012). One of the last pharmacies to jump on this trend is that of CVS. Enrollment into the CVS/pharmacy Health Savings Pass is easy and costs only $15 annually, per person. Whether one has limited prescription insurance or no coverage at all, they can sign up today for the CVS/pharmacy Health Savings Pass and start saving right away. This is not an insurance plan, but a prescription savings pass that allows a person to save on the medications that they and their family need. Plus, they will receive 10% off MinuteClinic services that are located inside certain CVS/pharmacy stores. A Health Savings Pass allows customers to:

“Pay only $11.99 for a 90-day supply of over 400 generic prescriptions.

10% off at MinuteClinic on any regular priced health service or screening

Save 10% off on your annual flu shot

Save $10 on 50 count TRUEtest strips (limit 2 per month)

Save at any of our more than 7,000 CVS/pharmacy locations nationwide” (CVS/pharmacy Health Savings Pass, 2012).

The current issue that CVS is having is that they are not making any money on this program because they have to discount their generic drugs so deeply. Their hope is that just getting people in the store will create store loyalty and people will buy other products while they are also getting their prescriptions filled. The issue that needs to be addressed is twofold. First they need to work on getting as many people as possible signed up for their discount prescription program. And then they need to figure out how to get those people to come into their store so that they can buy things other than prescriptions. CVS needs a good marketing plan in order to make these things happen.

In order for a company to stay competitive they must know where they are currently, where they want to be in the future and have a plan on how to get there. Research and analysis are critical because they lead a company to identify their product’s target audience, as well as its strengths, weaknesses, threats and, most importantly, opportunities. Knowing the threats and opportunities that a product faces helps one more realistically set sales goals and objectives. Knowing ones opportunities, target audience, and sales goals will give them the information they need to set their marketing goals to take advantage of the opportunities and meet the sales goals. Knowing ones marketing objectives will give a company the information they need to set their positioning, pricing, distribution, and other marketing strategies. Having these strategies in place will give a company the road map to set up the tactical elements of their marketing plan, such as advertising, promotions, branding, and packaging. All of these things have to be tailored to a company’s market in order for them to be successful (Buttell, 2009).

The first thing that CVS needs to do is perform a situation analysis. A situational analysis, which examines the internal environment, the external environment, the current marketing mix and the continuing relevancy of current market targets (Gerson, 1998). A useful tool used in performing a situation analysis is what is known as the C’s of Marketing. The C’s of Marketing help companies center on key fundamentals that apply directly to marketing. Understanding these principles is vital in developing a successful marketing plan. The 5 C’s of Marketing can be summarized as:

Company – the product time line and experience in the market.

Collaborators – distributors, suppliers, and alliances. These are any companies that one works with on a day-to-day basis to help the company function.

Customers – this is the company’s market. It is important to understand the quantity a customer will purchase and even trends in consumer tastes so that a company can make sure that they have the products on hand that the customer wants.

Competitors — it is important to know both ones actual competitors as well as their potential competitors as well as those that directly or indirectly compete with them. It is vial to understand their products, positioning, market shares, strengths and weaknesses.

Climate – these are governmental policies and regulations that affect the market. It is also the economic environment around a company. This includes the business cycle, inflation rate, interest rates, and other macroeconomic issues. Society’s trends and fashions are found in the climate. The technological environment is creating new ways of satisfying needs like using technology to enhance the demand for existing products (Milne, 2011).

The next step that CVS needs to take is to do a PEST analysis. The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit. The PEST analysis headings are a framework for reviewing a situation, and can be used to review a strategy or position, direction of a company, a marketing proposition, or idea (Pest Market Analysis Tool, 2010).

The next step is for CVS to do a competitive analysis so that they can figure out where they stand in comparison to their competitors. The objective of the competitive analysis is to better position an organization to leverage their competitive edge. It is important for a company to know how their company differs from others, in what way does it stand out and is there a sustainable value that they can maintain and develop over time (Berry, 2012).

The competitive analysis process gives a company the opportunity to describe their major competitors in terms of the factors that most persuade revenues. This often includes a competitor’s:

size amount of market share comparative product quality expansion accessible capital and resources representation marketing strategy target markets and any characteristics considered important.

“Industry associations, industry publications, media coverage, information from the financial community, and their own marketing materials and websites may be good resources to identify these factors and rate the performance of each competitor. Access to competitive information will vary. Competitors that are publicly traded may have a significant amount of information available. Competitive information may be limited in situations where a competitor is privately held. If possible, one may want to take on the task of playing the role of a potential customer and gain information from that perspective” (Berry, 2012).

The last thing that CVS needs to do is evaluate their product offering. Company’s that are successful don’t market products, they market offerings. An offering includes the benefits or satisfaction that is provided to the target markets, both tangible and intangible. In order to successfully market a product, a company must first understand its benefits from the buyer’s point-of-view. This approach allows a company to see past the tangible product itself and consider what the consumer is actually buying and their reasoning behind buying it. Offerings should comprise a tangible product or service, plus any related services that go along with it. It should also include any intangible benefits that are present. Centering on the offering, rather than on the actual product or service itself, can be important for analyzing consumers’ options, in order to better recognize unmet needs and wants of the target markets, and to improve development of new products or services. “In a bigger sense, an organization’s offerings are a part of who they are as a business. The marketing plan should address what types of customers a company wants, what the consumers need, and how their offerings will meet those needs. It should also describe how the offering is communicated and what value it holds for the customer” (Berry, 2012).

Most companies sell more than one product. A multi-product advance frequently adds worth, leverages economies of scale and expertise, and augments the potential for revenue generation. Most retail stores offer several hundred products in order to meet the span of needs of their customers. The mutual offerings of a company are known as their offering mix. This offering mix can be categorized according to the breadth, extent, intensity, and steadiness of the products. These four dimensions are the tools for developing the company’s marketing strategy and deciding which product line to cultivate, preserve, yield, or get rid of. Strong products should be grown or maintained. Weak or unprofitable lines should be sold or discontinued as soon as possible. “Four basic factors are critical in the decision to manage individual product lines.

Consumer demand

Cost to produce

Gross margin

Total sales volume” (Berry, 2012).

Going through the process of developing a marketing plan will help CVS to figure out how they are going to draw people into their stores and sell them things beyond discounted generic drugs. A provides the market with a source of discounted drugs among other products. This market need is important today as many Americans are faced with the dilemma of using their limited income on food or meds. A pharmacy should seek to fulfill the following benefits that are important to their customers.

Selection: The pharmacy needs to offer a wide range of medication, both originals as well as generic alternatives.

Accessibility: Products should be distributed through their conveniently-located store front

Customer service: The pharmacy should recognize the value of having outstanding customer service. By exceeding all of the customer’s expectations, they are ensuring repeat customers and many referrals.

Pricing: The pharmacy’s prices have to be noticeably better than other local pharmacies (Pharmacy Marketing Plan, 2012).

CVS also needs to conduct some marketing research in order to ensure their success in the market. One method that they can use would be to conduct several focus groups in order to gain insight into the targeted customer’s mind and the processes of their decision making. These focus groups help to provide the pharmacy with a wealth of information. In addition they could hand out surveys to current customers. Having a carefully designed survey is paramount to ensuring that the data collected is accurate and applicable. The surveys can help provide insight into the barriers that people face when buying products from a pharmacy as compared to other retail shops. The last source of marketing research that CVS can do is an in-depth analysis of the pharmacy industry, focusing on consumer decision models within the industry. Cumulatively, all of this market research will help the store to lay out a plan on how to move forward in the market (Pharmacy Marketing Plan, 2012).

The keys to CVS’s success include: repeat customers, low overhead and operating costs and superior prices and service. In the drug store business the prescription department is the profit core and center of the business. The prescription department ranks as one of the most profitable sections in the pharmacy and has a significant influence on other department sales. The pharmacist should, therefore, concentrate on making this department the central

Focus of the drug store. Other merchandise may be carried based upon clients’ needs and what the drug store’s competition is offering (Drug Stores Business and Industry Profile, 2004).

A broad line of merchandise may be carried to appeal to a wide range of shoppers. “Some of the items generally carried by a drug store include: cosmetics/fragrances, cigarettes and cigars, small art and crafts items, hair care/skin care products, magazines/books, film/film developing, vitamins, greeting cards, batteries, disposable diapers, blank videotapes, oral hygiene products, contact lens solutions, diet aids, pet food, and candy. Some drug stores have added a cooler with beverages and snack foods” (Drug Stores Business and Industry Profile, 2004).

In order to be successful, the management of a drug store must know its competition, have a vision as to the markets that it can cultivate, promote a helpful atmosphere for both clients and employees, and strive for profitable accounts and customers. Management of a drug store should be able to gauge the approximate saturation point in a given market area. Markets should be developed where growth potential exists and where the firm has a price or some other advantage. Effective labor, supplies, and operating cost controls should be followed by the owners and employees. By combining reliable professional service and Responsive product offerings to meet customer health care needs, independent drug stores can expect to maintain a position of profitability. Those drug stores that can be flexible to meet changing customer attitudes will continue to fill a vital need within their community (Drug Stores Business and Industry Profile, 2004).

Potential customers must be attracted to the store and then enticed to buy the offered merchandise. Promotion in the drug store business is very important. The store front should be neat and appealing, while the inside should be clean, white, and “hospital-like” in appearance. Signs may indicate specials for the week. Generally, the prescription department should be elevated and in the rear of side of the store so customers pass other merchandise to get to the counter. The firm’s operating objective should be to develop a good reputation in the industry for quality pharmaceuticals and goods at a fair price (Drug Stores Business and Industry Profile, 2004).

CVS knows that they are never going to make any money on selling generic drugs. In order to offer their discount drug program they are having to sell generic drugs at such a deep discount that they are anything but profitable. In order to combat this they have to figure out a way to get more people in the door in hopes that hey not only buy other prescription medications there but also buy other products as well. It is on these other products that the store will be able to make money and be profitable. Having a good marketing plan in place will help CVS to do just that.

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