Read the case study entitled "Dealer-Chic" and answer the following questions (these should be completed prior to class). (The case study "Dealer-chic" at the bottom)

The case link: https://trendwatching.com/trends/dealerchic/

1. The 'Dealer-Chic' trend encourages a very competitive price market - what are some risks of price competition?

2. Which pricing tactic are marketers using in the 'Dealer-Chic' trend? Give examples and explain the strategies?

3.Explain the two strategies for New Product Pricing. Give an example for each strategy and justify your examples.

November 2011 | As deal hunting has become an integral part of daily life for millions of consumers, it's time to dive into the drivers behind this trend and its long term impact on all B2C brands. And yes, countless examples are included ;-) This is a trend phenomenon, with looking at not just the many new and innovative ways in which brands are using promotions and offers, but how consumer attitudes to discounts and deals are changing. In fact, the avalanche of deals currently available to consumers are not just a short-term symptom of the financial crisis; DEALER-CHIC is here to stay: DEALER-CHIC | Consumers have always loved getting good deals or exclusive rewards, but rather than having to hide one's haggling, securing the best deal is now accepted, if not admired by one's fellow consumers. Deal hunting will continue to be an integral part of consumers' lives, as it's now about more than just saving money: it's the thrill, the pursuit, the control, and the perceived smartness, and thus a source of status too. Now, we're not saying that all of consumption will be dominated by discounted goods and services. However, for status-conscious consumers (read: all of them ;-), making the most of discounts and deals is no longer considered cumbersome or even embarrassing, but simply smart. In fact, DEALER-CHIC is yet another example of the longer-term shifts playing out in the consumer arena, where savvy consumers have more choice, higher expectations, and more control, while mature consumers have an ever-less reverential relationship to brands. So, here are just three reasons why DEALER-CHIC is set to get bigger and bigger in the coming years: 1. MORE FOR LESS: While many people in developed economies may have less money to spend right now, consumers everywhere will forever look to experience more. 2. THE MEDIUM IS THE MOTIVATION: Consumers are now being alerted to, using, reusing and sharing offers and deals via new (and therefore infinitely more exciting and attractive) technologies. 3. BEST OF THE BEST: With instant mobile or online access to not only deals but reviews as well, consumers can now be confident they're getting the best price for the best product or service. 1. MORE FOR LESS People want to experience more, even when they have less to spend. There's no overlooking the fact that many consumers in mature markets like Europe, Japan and Northern America are at the very least fearful of their financial futures, meaning that any kind of deal or discount is welcomed with open arms. But even those consumers who don't need to scrimp and save (including the middle classes in emerging markets), are still enthusiastically seeking out deals in almost every purchase, from everyday staples to one-off indulgences. Why? Because for consumers driven by collecting as many and as varied experiences as possible, every cent, yen or penny saved, means more to spend on new products, services and ultimately experiences. And of course, getting a good deal encourages exploration and experimentation by making it more tempting to try out new products or experiences. Consumers are embracing anything that unlocks new experiences at lower cost (such as trading in used possessions), and DEALERCHIC is yet another part of this phenomenon. Some MORE FOR LESS indicators: When asked about eight money saving strategies, buying items on sale (59%) or using coupons (48%) were the top two answers from consumers around the world. Coupons were most popular in China (67%), the US (66%) and Hong Kong (65%). While only just over a third of European (37%) and US (36%) consumers report shopping at value retailers to save money (Source: Nielsen, October 2011). 62% of US consumers rarely pay full price for clothing and 58% of UK consumers "don't like paying full price for anything" (Source: Mintel, September 2011). 81% of US consumers think it's fun to see how much money they can save by using coupons or their shopper loyalty card (Source: Deloitte 2010 American Pantry Survey, July 2010). Over 40% of coupon 'enthusiasts' had a household income of over USD 70,000 (Source: Neilsen, April 2010). In India, 10.4% of the online population accessed a deal site in June 2011, with the market leader Snapdeal.com tripling its audience from the past year (Source: comScore, July 2011). 2. THE MEDIUM IS THE MOTIVATION Deals are now a source of tech and online innovation, and thus smart, cool and fun to switched-on consumers. Let's look at 'classic' deals for a moment, especially paper coupons: they were fiddly, generic, required forward planning and needed to be publicly processed at the cash desk, none of which made them attractive to consumers. It didn't help that most savings were focused on getting 10 cents off a can of tuna, versus the many entertainment-heavy discounts to be had in 'Coupon World 2.0'. Now discounts and deals are increasingly innovative and attractive in where, when and how they are delivered and redeemed. They can be sourced online or via smartphones at the right moment. Deals can be hyper-personalized or shared with friends. They can be exclusive, convenient or fun. Even securing and redeeming them (when using a smartphone, for all to see), can be a source of accomplishment or status. All of this drives DEALER-CHIC: deals are now relevant, timely and interesting; using them is savvy, sophisticated and perfect for experience-hungry consumers. Some indicators: Online coupons account for only 1% of all coupons distributed, but 10% of those that are redeemed (Source: Catalina, April 2011). 79% of smartphone owners use their phones for shopping related activities, and of those nearly half (48%) use their phones to look for or use discounts and coupons (Source: Google & IPSOS, April 2011). 53% of Chinese and 47% of Korean smartphone owners have used mobile coupons to purchase products in-store. Comparative figures for other countries are: 22% US, 14% UK and Turkey, 13% Spain, 11% Germany, 10% France and 7% The Netherlands (Source: Google & IPSOS, July 2011). 67% of mobile users agree that location-based coupons on a mobile device are "convenient and useful", while 42% say they have already used a mobile coupon of some kind (Source: Prosper Mobile Insights, October 2011). 3. BEST OF THE BEST Why consumers can be increasingly confident they are getting the best price and the best product. DEALER-CHIC doesn't mean an endless race to the bottom, where promotions dictate where and when consumers buy. Not because consumers won't seek out deals and discounts (because they will), but because poor quality businesses will no longer simply be able to turn to promotions to attract customers, as consumers are able to instantly check reviews and ratings before they make a purchase. And a bad product or service will be a bad deal at any price ;-) Just one example: Launched in November 2010, SNIQUEaway is an invite-only travel deals website operated by US based Smarter Travel Media (owner of TripAdvisor). The limited-time-only deals, all feature four star or more properties that were given the highest ratings in TripAdvisor reviews, ensuring each deal is pre-vetted. INCOMPARABLE The counter-trend to DEALER-CHIC: desirable stuff that doesn't have to be discounted because there's no alternative for it. For every trend there's a counter trend, as no trend applies uniformly to all consumers or all brands. Yes, more brands than ever before will experiment with imaginative ways to offer deals and discounts (and some of them won't even seem like deals), and yes, consumers will be able to take advantage of promotions in almost every product category. But we'll also see the rise of INCOMPARABLE offerings: products and services that are of such high quality, so unique, so authentic, so personalized, or so immediate that consumers won't be able to (or even want to) look for reviews, price comparisons, discounts or deals.