Chapter 14 Marketing Channels and Retailing

Over the weekend I visited the Best Buy in my neighborhood. The store was in a shopping mall and surrounded by other retailers. The first thing I noticed was the sign on the store. It was illuminated in bright yellow. Best Buy is a retail chain that specializes in electronics. Recently the company's CEO Hubert Joly said that Best Buy is now an online retailer first, but the brick and mortar stores are still important. Best Buy has been seeing a steady double digit increases in its online sales, but a steady decrease in the brick and mortar store sales. Joly said that they wanted to be the go to electronics retailer for the millennial generation the same way they had been for the baby boomers.

When I entered the store I was surprised by how many different sections there were.
For example the audio section was broken up into different subsections, categorizing each so that products would be easier to find. There were also sections for items from a specific manufacture like Beats By Dre, Apple and Samsung. The portable audio subsection was then broken down further to two categories, small form factor speakers and headphones. And even to the headphone section had signs on the shelves showing where the over ear, on ear, in ear and mobile device compatible headphones were. Best Buy did a very good job figuring out the layout of the store. It helped customers find exactly where the products they were looking for would be. What was not good was the fact that they were out of stock on the headphone I wanted and as I looked around the show case I saw that they were out of stock on a lot of the items that were listed. This might have something to do with the fact that half of Best Buy's in store sales are ordered by customers online and shipped to that specific store for pick up. 


Best Buy has recently started to develop a new data mining software called Athena that will give you suggestions based on what your browser history shows you have been searching for. They also switched out their search engine on the website to one that offers better results for customer searches. If you follow the money, it is clear where Best Buy is focusing their efforts. But the pivot to online retailing might be hurting the quality of shopping at the physical location. As a customer I didn't feel that the service was what it should be. Not once was I approached an asked if I needed help. When I asked a sales associated about the out of stock product I was directed to a computer where I could order it from the website and ship it to my house or the store.

Chapter 6 Consumer Decision Making

A Porsche 911 is one of the iconic car brands from the sixties that is still on sale today. For some customers the purchase of the car is very sentimental, maybe a childhood dream car. For others it can be bought solely for status, to impress friends at the country club. The Porsche has the ability to be a jack of all trades when it comes to satisfying what a customer expects what the car to do for them.

Firstly any customer looking to buy a 911 that searches the non marketing controlled sources like EVO or Car and Driver, will be berated with car of the year awards and accolades. And they will all echo what Ferry Porsche said, “The 911 is the only car you could drive on an African safari or at Le Mans, to the theater or through New York City traffic.”

Buying a sports car is not something most people do lightly. It will require extensive decision making and a lot of involvement on their part. A perspective buyer will think about what the car says about him. Buying a rosso corsa (racing red) Ferrari might come off as a bit outlandish to others, but a white 911 gives you the brand recognition and head turning looks without putting people off. Its an unassuming cool. That is the type of social visibility the Porsche offers.

The 911 permeates cultures all over the world. It crosses languages barriers, and reaches through to all social classes. The car is usually restricted because of the cost to the middle and upper class. A test was conducted using a 911 where it was concluded that driving the car can actually increase the amount of testosterone that the driver produces. It goes to show that driving the car can actually make you feel better.

There are many reasons for buying a 911. It could be the status symbol, or the performance. The way it makes you feel or the fulfillment of a childhood dream. But something buyers will over look is the way a 911 makes others feel. The emotion it evokes in people young and old. Inspiring a young child to dream or making someone remember their dreams as a young child. Ultimately the sports car is an emotional purchase and the 911 is one of the most emotional
sports cars on sale today.

Chapter 5 Developing a Global Vision

Porsche's first production car was entirely hand built but they found this process to be inefficient, too expensive and time consuming for what they wanted to be, a volume production car company. Since then Porsche has used a capital intensive method of production. choosing to focus on technologically advanced methods of production rather than a Labor intensive model. Porsche was one of the early iterators of technologies like the double clutch transmission and carbon ceramic brakes. They were also one of the first to use materials like silicon carbide in their cars. Porsche has been building the 911 at their factory in Stuttgart, Germany since 1964.

Porsche is a multinational company that sells the 911 all over the world. Even though the 911 is sold in different countries with different cultures, it is marketed and sold the same way. This means the marketing and promotional strategies you would see in America would be the same thing you would see in the United Arab Emirates. Porsche has shown substantial interests in China as a new market for their cars. They have been spending a lot in promotion and on setting up dealerships to make the car more available. They are currently working on entering the markets in 15 different countries, mostly in Africa as part of their growth strategy.

Porsche uses the one product one message strategy for the Porsche 911. It is marketed as the practical sports car and attention is drawn to the heritage and the racing prestige, with their 16 wins at the 24 Hours of Le Mans race in France. The most for any car manufacture in history. Porsche built about 30,000 911s in 2013 most of which will be exported to other countries.

Porsche has licensed out the digital versions of their cars to Electronic Arts to be in video games like Need For Speed and a sub licensing agreement to Turn 10 Studios for the Forza Motorsport racing simulator. This is used as a promotional tool for Porsche as it creates fans for the cars and shows them the performance that the car is capable of. It also creates potential future customers for Porsche and gives the fans who are not fortunate enough to buy the car a chance to enjoy them as well.

Chapter 4 The Marketing Enviroment

Porsche exhibited environmental management when they designed the 911. The car is small, it has backseats, it has great visibility and it is known for its reliability. They built the car with a purpose. From the beginning the car was designed to be very practical. It could be used everyday but was sporty enough to compete with a Ferrari. This set the bench mark for competitors in the price range of the Porsche. The Porsche was reliable, the interior felt luxurious while still being ergonomic, and it was practical enough that buyers could use the car everyday. Sports car manufactures did not have an answer for the 911 in 1963 and many of them still don't have an answer today. Porsche fundamentally changed what the market expects a sports car that costs a hundred thousand dollars to do.

In 1998 Porsche switched from air cooled to water cooled engines. One of the reasons they made this change was because the water cooled engines had a lower maintenance cost than the previous air cooled engines. Also the cars gained even more reliability due to better cooling from the new system. Porsche also changed the body shell of the 911 in 1998 to reduce the amount of drag the car had which improved performance and improved fuel efficiency.

The 911 has seen its demographic remain largely unchanged since its introduction. It has always been a desirable car and has found favor among a mostly male audience. It usually goes from the bedroom wall in a tween or teen's bedroom to their garage when they grow up. Because the Porsche has been around for fifty years, it has had a product life cycle that stretched to customers from before the baby boomers all the way to Generation Y.

During the 2008 recession the 911 saw interest from customers who usually, would have been buying more expensive cars from manufactures like Ferrari and Lamborghini. People who wanted the same performance and brand recognition but without the high costs. This prompted them to created special editions like the 997 Sport Classic

and the 997 Speedster that offered a more premium and exclusive feel than the standard 911 for buyers looking to spend a little more. Porsche also stimulated their sales by showing more focus on the Asian and Latin American markets.