Why Smart Companies Do Dumb Things Essay Example | Topics and Well Written Essays - 750 words

Why Smart Companies Do Dumb Things - Essay Example The desire to stay ahead of Pepsi and to be able to meet the taste of what Pepsi produces made the strategy of New Coke compelling to the executives of Coca Cola. In the early 80’s coke lost its market share to its rival Pepsi by two share points which represented to about $960million sales of Coke production. Coke real marketing problem was its advertisement and not its product. With a change in the soft drink consumer market, coke was not able to match up with the thought process with its commercials ads. Coca Cola had lost generation of young people with its bland advertising style. Coke advertising had a stodgy look and feel in comparison to Pepsi. Coke did not have any relevant statement for the youth in the 80’s. It was being positioned as a beverage preferred by senior citizens in comparison to Pepsi ads which targeted the youths. As a result the company did not pay any attention in improving the advertising rather focused on the product as marketing problem. Coke advertising strategy was no longer matching with the youth culture. Coke had researched every number and projection before the launch of its New Coke and the figures were accurate but it mis-leaded the company as it allowed the company to chase the wrong problem. The problem was in advertisement strategy the executives thought it to be the product. The executive of Coke got carried away with fragile and funky numbers. It ignored the issue that impacted the quality of the numbers such as research design, problem definition, how to ask questions and the analytical skills which helped to interpret the meaning of the numbers. Numbers have always been accepted blithely and so did New Coke before its launch. New Coke marketing research lacked validity as it did not communicate to its consumer that its flagship brand would be replaced with new sweeter product and its research was one dimensional. It was based only in sip testing which took place at central locations and was

US Airways Group - At the Back of the Pack Essay

US Airways Group - At the Back of the Pack - Essay Example Ever since the industry was deregulated in 1978 intense competition and price gauging has made profitability increasingly difficult for the airline industry in general. After the stock market crash of 2008 and the economic recession that followed coupled with rising fuel costs were the direct cause of several airlines having to file for bankruptcy protection (Plunkett Research, 2010). The airline companies that survived the onslaught were presented with a volatile and fluctuating operating environment of rising fuel and energy costs, coupled with a decreased demand for passenger travel in general and negative impact on revenues mainly as a direct result of the economic downturn. The rising costs have cut the margins in the industry so much that current the average net margin in the airline industry is two percent. The period of 2008 and 2009 remained a very challenging period for all the airlines with most of them struggling to remain profitable. For 2010 with the slow economic recovery businesses as well as private travel has increased significantly in volume, so occupancy rates in general for the airline industry have been full. When airlines are able to fill the seats of their airplanes to full capacity the company is optimizing the productivity of the operation. When the latter occurs and companies have idle capacity issues airlines have to take drastic measures to fill those seats which includes price deductions to spur the demand for air travel. After the previous years of consecutive losses the airline industry in general returned to profitability. U.S. Airways just like any other domestic airline is subject to a complicated array of laws and regulations that limit their operations as well dramatically increasing their operating costs. With the advent of the Aviation and Transportation security Act of 2001 which mandated the standardization and federalization of airport security and mandated additional security procedures which increased operational costs tremendously airlines had to absorb the costs and imposed a per passenger tax on ticket sales in order to fund the additional security measures. The Federal Aviation A dministration is the federal agency responsible for regulating the airline industry operations, procedures and their operational safety, including aircraft maintenance. The FAA will regularly issue new directives and changes in maintenance schedules and procedures which create mandated operational costs that are also a factor in increasing airline operational expenses. Other proposals to address airport congestion in certain airports in the U.S. involve increasing pricing to take into account congestion or placing a tax on certain particularly congested airports. This could potentially affect the airline industry in the near future by further increasing the costs of passengers to travel if these changes or suggestions are placed into law (Datamonitor, 2010). Further regulations and government legislation concerning pollution, climate change and aircraft emissions also post a significant operational threat to the airline industry as a whole. In the list of Fortune 1,000 : Most admire d companies 2006, U.S. Airways Group was consistently ranked lowest in all the eight key attributes that were taken into account. U.S. Airways Group achieved an overall score of 3.25 placing it as the least admired airline out of all the major competitors. For this survey U.S. Airways was ranked last in the industry in four of the eight