Comparing Marketing Strategies: Goods, Services, Pricing, and Sales - Prof. Henry Clifford, Study notes of Principles of Marketing

Download Comparing Marketing Strategies: Goods, Services, Pricing, and Sales - Prof. Henry Clifford and more Study notes Principles of Marketing in PDF only on Docsity! Chapter 2 – Strategic Planning for Competitive Advantage I. The Nature of Strategic Planning i. Strategic Planning: Managerial process of creating and maintaining a fit between the organization’s objectives and resources and evolving market opportunities ii. Goal is long-run profitability and growth, requires long-term commitment of resources b. What is a Marketing Plan? i. Planning: Process of anticipating future events and determining strategies to achieve organizational objectives in the future ii. Marketing Planning: Designing activities relating to marketing objectives and the changing marketing environment iii. Marketing Plan: A written document that acts as a guidebook of marketing activities for the marketing manager c. Why Write a Marketing Plan? i. Provides the basis by which actual and expected performance can be compared ii. Provides clearly stated activities that help employees and managers understand and work toward common goals iii. Allows marketing manager to enter the marketplace with an awareness of possibilities and problems d. Marketing Plan Elements i. Defining the business mission and objectives, performing a situation analysis, delineating a target market, establishing components of the marketing mix II. Defining the Business Mission i. Mission Statement: Statement of the firm’s business based on a careful analysis of benefits sought by present and potential customers and an analysis of existing and anticipated environmental conditions ii. Marketing Myopia: Defining a business in terms of goods and services rather than in terms of the benefits that customers seek 1. If Wrigley defined its mission as being a gum manufacturer iii. Strategic Business Unit: Subgroup of a single business or collection of related businesses within the larger organization III. Setting Marketing Plan Objectives i. Marketing Objective: Statement of what is to be accomplished through marketing activities ii. Should be realistic, measurable, and time specific iii. Can communicate marketing management philosophies and provide direction for lower-level marketing managers iv. Serve as motivators by creating something for employees to strive for IV. Conduction a Situation Analysis i. SWOT Analysis: Identifying internal strengths and weaknesses, and external opportunities and threats ii. Environmental Scanning: Collection and interpretation of information about forces, events, and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan V. Competitive Advantage i. Competitive Advantage: Set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition b. Cost Competitive Advantage i. Cost Competitive Advantage: Being the low-cost competitor in an industry while maintaining satisfactory profit margins ii. Allows a firm to deliver superior customer value iii. Ways to reduce costs 1. Experience Curve: Costs decline at a predictable rate as experience with a product increases 2. Efficient labor, no-frills goods and services, government subsidies, product design, reengineering, product innovations, new methods of service delivery c. Product/Service Differentiation Competitive Advantage i. Product/Service Differentiation Competitive Advantage: Provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competition’s ii. Brand names, strong dealer network, product reliability, image, or service d. Niche Competitive Advantage i. Niche Competitive Advantage: Advantage achieved when a firm seeks to target and effectively serve a small segment of the market e. Building Sustainable Competitive Advantage i. Sustainable Competitive Advantage: An advantage that cannot be copied by the competition ii. Successful firm will stake out a position unique in some manner from its rivals VI. Strategic Directions a. Strategic Alternatives i. Market Penetration: Marketing strategy that tries to increase market share among existing customers ii. Market Development: Marketing strategy that entails attracting new customers to existing products iii. Product Development: Marketing strategy that entails the creation of new products for the current customers iv. Diversification: Strategy of increasing sales by introducing new products into new markets b. Portfolio Matrix i. Portfolio Matrix: Tool for allocating resources among products or strategic business units on the basis of relative market share and market growth rate ii. Measure of market share used in the portfolio approach is relative market share, the ratio between the company’s share and the share of the largest competitors iii. Star: In the portfolio matrix, a business unit that is a fast-growing market leader iv. Cash Cow: A business unit that usually generates more cash than it needs to maintain its market share v. Problem Child: Business unit that shows rapid growth but poor profit margins vi. Dog: Business unit that has low growth potential and a small market share vii. After figuring out which SBU it is, there are four basic strategies 1. Build, hold, harvest (focus on getting short term profits), divest VII. Describing the Target Market 3. Gap between the service quality specifications and the service that is actually provided 4. Gap between what the company provides and what the customer is told it provides 5. Gap between the service that the customers receive and the service they want IV. Marketing Mixes for Services a. Product (Service) Strategy i. Two broad categories of things get processed in service organizations: people and objects ii. People processing is when service is directed at a customer (health care) iii. Possession procession is when the service is directed at the customer’s possessions (lawn care) iv. Mental stimulus processing refers to service directed at people’s minds (education) v. Information processing is when services use technology or brainpower directed at customer’s assets (insurance, consulting) vi. Core Service: Most basic benefit the consumer is buying vii. Supplementary Service: Group of services that support or enhance the core service product viii. Mass Customization: Strategy that uses technology to deliver customized services on a mass basis (Dell) ix. Customized services are more flexible and respond to individual customer needs b. Place (Distribution) Strategy i. Key factor is convenience ii. Intensity of distribution should met, but not exceed, the target market’s needs and preferences 1. Too many makes an inconvenience, too much makes costs too high iii. Next question is to provide services directly or indirectly c. Promotion Strategy i. Stress tangible cues (concrete symbol of the service offering, ie turndown service) ii. Use personal information source (someone consumers are familiar with or someone they know or can relate to personally) iii. Create a strong organizational image (Manage the evidence and the appearance of the service and the tangible items associated with a service) iv. Engage in post purchase communication d. Price Strategy i. Should price be based on completion of the service, or the time it takes to do it? ii. Revenue-oriented pricing focuses on maximizing the surplus of income over costs iii. Operations-oriented pricing seeks to match supply and demand by varying prices iv. Patronage-oriented pricing tries to maximize the number of customers using the service V. Relationship Marketing in Services i. Many services involve ongoing interaction between the service organization and the customer ii. Develop strong loyalty by creating satisfied customers who will buy additional services from the firm and are unlikely to switch to a competitor iii. Most cost effective to hang on to customers than to recruit new ones VI. Internal Marketing in Service Firms i. Internal Marketing: Treating employees as customers and developing systems and benefits that satisfy their needs VII. Global Issues in Service Marketing i. Service firms must first determine the nature of their core product, then the marketing mix should be designed to take into account each country’s cultural, technological, and political environment VIII. Nonprofit Organization Marketing i. Nonprofit Organization: Organization that exists to achieve some goal other than the usual business goals of profit, market share, or return on investment b. What is Nonprofit Organization Marketing? i. Nonprofit Organization Marketing: The effort by nonprofit organizations to bring about mutually satisfying exchanges with target markets ii. Need to identify customers, specify objectives, develop and manage programs and services, decide on prices to charge, schedule events and programs, make their availability known through brochures/signs/advertisements c. Unique Aspects of Nonprofit Organization Marketing Strategies i. Objectives: Focus is on generating enough funds to over expenses ii. READ PAGES 167 – 169 iii. Public Service Announcement: Announcement that promotes a program of a federal, state, or local government or of a non-profit organization Chapter 13 - Retailing I. The Role of Retailing i. Retailing: All the activities directly related to the sale of goods and services to the ultimate consumer for personal, nonbusiness use ii. Retailers ring up over $4 trillion in sales annually II. Classification of Retail Operations i. Retail establishment can be classified according to ownership, level of service, product assortment, price b. Ownership i. Independent Retailers: Owned by a single person, partnership and not operated as part of a larger retail institution ii. Chain Stores: Owned and operated as a group by a single organization iii. Franchise: The right to operate a business or to sell a product 1. More independent ownership than chain c. Level of Service i. Full-service to self-service d. Product Assortment i. Specialty stores have the most concentrated product assortments, narrow product lines in considerable depths ii. Full-line discounters carry broad assortments with limited depth e. Price i. Gross Margin: Amount of money the retailer makes as a percentage of sales after the cost of good sold is subtracted III. Major Types of Retail Operations i. Retailers are experimenting with alternative formats that make it harder to classify them b. Department Store i. Department Store: Store housing several departments under one roof ii. Purchases generally made within each department rather than at central checkout area iii. Buyer: Department head who selects the merchandise for his or her department and may also be responsible for promotion and personnel c. Specialty Store i. Specialty Store: Retail store specializing in a given type of merchandise 1. Children’s clothes, baked goods, pet supplies ii. Carried deeper but narrower assortment of merchandise than a department store iii. Sales clerks are more attentive, knowledgeable iv. Customers usually consider price to be secondary v. New products are often introduced here d. Supermarkets i. Supermarkets: Large, departmentalized, self-service retailer that specializes in food and some nonfood items ii. Declining sales from competition from Wal-Mart, Sam’s Club iii. Supermarkets being replaced by superstores 1. Larger, have more nonfood items, various services iv. Scrambled Merchandising: Tendency to offer a wide variety of nontraditional goods and services under one roof Chapter 14 – Integrated Marketing Communications I. The Role of Promotion in the Marketing Mix i. Promotion: Communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response ii. Promotional Strategy: Plan for the optimal use of the elements of promotion: advertising, public relations, personal selling, and sales promotion iii. Competitive Advantage: One or more unique aspects of an organization that cause target consumers to patronize that firm rather than its competitors II. The Promotional Mix i. Promotional Mix: Combination of promotional tools – including advertising, public relations, personal selling, and sales promotions – used to reach the target market and fulfill the organization’s overall goals b. Advertising i. Advertising: Impersonal, one-way mass communication about a product or organization that is paid for by a marketer c. Public Relations i. Public Relations: Marketing function that evaluates public attitudes, identifies areas within the organization the public ma be interested in, and executes a program of action to earn public understanding and acceptance ii. Publicity: Public information about a company, product, service, or issue appearing in the mass media as a news item d. Sales Promotion i. Sales Promotion: Marketing activities – other than personal selling, advertising, and public relations – that stimulate consumer buying and dealer effectiveness 1. Free samples, coupons, giveaways e. Personal Selling i. Personal Selling: Purchase situation involving a personal paid-for communication between two people in an attempt to influence each other III. Marketing Communication i. Communication: Process by which we exchange or share meanings through a common set of symbols ii. Interpersonal Communication: Direct, face-to-face communication between two or more people iii. Mass Communication: Communication of a concept or message to large audiences b. The Communication Process and the Promotional Mix i. Most elements of the promotional mix are indirect, impersonal IV. The Goals and Tasks of Promotions a. Informing i. Seeks to convert an existing need into a want or to stimulate interest in a new product ii. Generally more prevalent during the early stages of the life cycle b. Persuading i. Designed to stimulate a purchase or action ii. Generally more prevalent during the growth stage iii. Message emphasizes the product’s real and perceived competitive advantages c. Reminding i. Used to keep the product and brand name in the public’s mind ii. Usually during the maturity stage V. Promotional Goals and the AIDA Concept i. AIDA Concept: Model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message; stands for attention, interest, desire, action ii. Attention 1. Advertiser must first gain the attention of the target market iii. Interest 1. Create interest in the product iv. Desire 1. Convince customers that the product is the best product out v. Action 1. Go out and buy the product VI. Factors Affecting the Promotional Mix a. Nature of the Product i. Business products are not suited to be mass advertised ii. Consumer goods that are not custom build do not require selling representative b. Stage in the Product Life Cycle i. Introduction – Sales Promotion works best ii. Growth – Personal Selling iii. Maturity – Sales Promotion iv. Decline – Personal Selling, sales promotion c. Target Market Characteristics i. Target market with widely scattered potential customers, highly informed buyers, brand-loyal repeat purchasers requires a promotional mix wit more advertising and sales promotion, less personal selling d. Type of Buying Decision i. Routine consumer decision is advertising and sales promotion ii. If decision is neither routine or complex, advertising is key iii. If decision is complex, personal selling and mass advertising e. Available Funds i. If no available money, firms may send out sales people who work on commission ii. Firms try to minimize cost per contact f. Push and Pull Strategies i. Push Strategy: Marketing strategy that uses aggressive personal selling and trade advertising to convince a wholesaler or a retailer to carry and sell particular merchandise ii. Pull Strategy: Marketing strategy that stimulates consumer demand to obtain product distribution VII. Integrated Marketing Communications i. Message reaching the consumer should be the same regardless of its source ii. Integrated Marketing Communications: Careful coordination of all promotional messages for a product or a service to assure the consistency of messages at every contact point where a company meets the consumer iii. Concept growing b/c of proliferation of media choices, fragmented mass marketing, lower advertising spending in favor of promotional techniques that generate immediate sales Chapter 15 – Advertising and Public Relations I. The Effects of Advertising a. Advertising and Market Share i. Advertising Response Function: Phenomenon in which spending for advertising and sales promotion increases sales or market share up to a certain level but then produces diminishing returns ii. Established brands only need to remind customers of their existence b. The Effects of Advertising on Consumers i. Advertising cannot change consumers’ deeply rooted values and attitudes, can transform someone’s negative attitude toward a product into a positive one ii. Reinforces positive attitudes toward brands II. Major Types of Advertising i. Institutional Advertising Form of advertising designed to enhance a company’s image rather than promote a product ii. Product Advertising: Form of advertising that touts the benefits of a specific good or service b. Institutional Advertising i. Advocacy Advertising: Form of advertising in which an organization expresses its views on controversial issues or responds to media attacks c. Product Advertising i. Pioneering Advertising: Form of advertising designed to stiulate primary demand for a new product or product category ii. Competitive Advertising: Form of advertising designed to influence demand for a specific brand iii. Comparative Advertising: Form of advertising that compares two or more specifically named or shown competing brands on one or more specific attributes III. Creative Decisions in Advertising i. Advertising Campaign: Series of related advertisements focusing on a common theme, slogan, and set of advertising appeals ii. Advertising Objective: Specific communication task that a campaign should accomplish for a specified target audience during a specified period b. Identifying the Product Benefits i. Sell the benefits of the product, not its attributes ii. Benefit is what consumers will receive or achieve by using the product c. Developing and Evaluating Advertising Appeals i. Advertising Appeals: Reason for a person to buy a product ii. Profit, health, love or romance, fear, admiration, convenience, fun and pleasure, vanity and egotism, environmental consciousness iii. Unique Selling Proposition: Desirable, exclusive and believable advertising appeal selected as the theme for a campaign 1. Slogans d. Executing the Message i. Ad should immediately draw audience’s attention, motivate purchase ii. Humorous ads better for low risk low involvement routine purchases 1. Cigarettes, candy, jeans e. Postcampaign Evaluation Chapter 16 – Sales Promotion and Personal Selling I. Sales Promotion i. Marketing communication activities, other than advertising, personal selling, and public relations, in which a short-term incentive motivates consumers or member of the distribution channel to purchase a good or service immediately, either by lowering the price or by adding value ii. Consumer Sales Promotion: Promotion activities aimed at the ultimate customer iii. Trade Sales Promotion: Sales promotion activities targeting a marketing channel member, such as a wholesaler or retailer b. The Objectives of Sales Promotion i. Goal: Immediate purchase ii. Can use frequent buyer programs that reward customers for repeat purchases II. Tools for Consumer Sales promotions a. Coupons and Rebates i. Coupon: Certificate that entitles consumers to an immediate price reduction when they buy the product 1. Promote new-product use, likely to stimulate purchases 2. Marketers are shortening the coupon redemption time, making coupons redeemable for many brands 3. Starting using in-store, internet coupons ii. Rebate: Cash refund given fro the purchase of a product during a specified period 1. Allow manufacturers to offer price cuts, can build customer database 2. Most consumers don’t collect their rebates b. Premiums i. Premium: Extra item offered to the consumer, usually in exchange for some proof of purchase of the promoted product 1. Happy Meal comes with a toy c. Loyalty Marketing Programs i. Loyalty Marketing Program: Promotional program designed to build long- term, mutually beneficial relationships between a company and its key customers 1. Frequent flier miles from airlines 2. Consumer loyalty is on the declines d. Contests and Sweepstakes i. Contests are promotions in which participants use some skill or ability to compete for prizes Sweepstakes depend on chance, free participation e. Sampling i. Sampling: Allows the consumer the opportunity to try a product or service for free ii. Allows for specific targeting of the market f. Point-of-Purchase Promotion i. Point-of-Purchase Display: Promotional display set up at the retailer’s location to build traffic, advertise the product, or induce impulse buying 1. Shelf-talkers (signed attached to store shelves), shelf extenders (attachments that extend shelves so products stand out), ads on grocery carts and bags, floor-stand displays g. Online Sales Promotion i. Effective, cost-efficient ii. Online coupons have higher redemption rates than traditional coupons III. Tools for Trade Sales Promotion i. Trade Allowance: Price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers ii. Push Money: Money offered to channel intermediaries to encourage them to push products – that is, to encourage other members of the channel to sell the products iii. Also use training, free merchandise, store demonstrations, business meetings/conventions/trade shows IV. Personal Selling i. Direct communication between a sales representative and one or more prospective buyers in an attempt to influence each other in a purchase situation ii. Becomes more important as the number of potential customers decreases, as the complexity of the product increase, and as the value of the product grows V. Relationship Selling i. Relationship Selling: Sales practice that involves building, maintaining, and enhancing interactions with customers in order to develop long-term satisfaction through mutually beneficial partnerships ii. Sales people tend to become partners, consultants, problem solvers for the customers iii. Strive to build long-term relationships with key accounts iv. More typical with selling situations for industrial-type goods such as heavy machinery or computer systems., services such as airlines and insurance VI. Steps in the Selling Process i. Sales Process: Set of steps a salesperson goes through in a particular organization to sell a particular product or service ii. Seven basic steps in the personal selling process b. Generating Leads i. Lead Generation/Prospecting: Identification of those firms and people most likely to buy the seller’s offerings ii. Can be obtained by advertising, trade shows, direct-mail and telemarketing iii. Referral: Recommendation to a salesperson from a customer or business associate 1. Highly qualified leaders, higher closing rates, shorter sales cycles iv. Networking: Process of finding out about potential clients from friends, business contacts, coworkers, acquaintances, and fellow members in professional and civic organizations 1. Led to development of national networking clubs v. Cold Calling: Form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects’ needs or financial status c. Qualifying Leads i. When prospect shows interest in learning more about the product ii. Lead Qualification: Determination of a sales prospect’s (1) recognized need, (2) buying power, and (3) receptivity and accessibility iii. Telemarketing often finds those who are prequalified d. Approaching the Customer and Probing Needs i. Preapproach: Process that describes the “homework” that ust be done by a salesperson before he or she contacts a prospect ii. Salesperson needs to develop mutual trust during the approach iii. Needs Assessment: Determination of the customer’s specific needs and wants and the range of options the customer has for satisfying the iv. Creating a customer profile during the approach helps salespeople optimize their time and resources v. Customer and sales data can be stored in a database for easy access among sales team members e. Developing and Proposing Solutions i. Sales Proposal: Formal written document or professional presentation that outlines how the salesperson’s product or service will meet or excess the prospect’s needs ii. Sales Presentation: Formal meeting in which the salesperson presents a sales proposal to a prospective buyer f. Handling Objectives i. Objections to the product should not be taken personally as confrontations or insults ii. Can often use weaknesses to close the sale, expose weakness in competitor’s product g. Closing the Sale i. Requires courage and skill ii. Negotiation: Process during which both the salesperson and the prospect offer special concession in an attempt to arrive at a sales agreement iii. Avoid using price as a negotiation tool, emphasize value h. Following Up i. Follow-Up: Final step in the selling process, in which the salesperson ensures that delivery schedules are met, that the goods or services perform as promised and that the buyers’ employees are properly trained to use the products ii. More and more important as customers become increasingly less loyal i. The Impact of Technology on Personal Selling i. Cell phones, e-mail, laptops allow salespeople to be more accessible ii. Shopping bots are programs that search the web for the best price for a particular item e. Promotion Strategy i. Price is often used as a promotional toll to increase consumer interest f. Demands of Large Customers i. Large customers often make specific pricing demands that the suppliers must agree to ii. Want suppliers to guarantee profit margins, insist on cash rebates if their margins aren’t met g. The Relationship of Price to Quality i. People tend to assume that higher prices indicate higher quality ii. Prestige Pricing: Charging a high price to help promote a high-quality image iii. When consumers focused on prestige and/or durability, price was a strong indicator of perceived overall quality Chapter 18 – Setting the right price I. How to Set a Price on a Product a. Establish Pricing Goals i. Estimate total revenue at variety of prices, look at costs for each price b. Choose a Price Strategy i. Price Strategy: Basic, long-term pricing framework, which establishes the initial price for a product and the intended direction for price movements over the product life cycle ii. Changing the price level from premium to superpremium may require a change in the product iii. Price Skimming: Pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion iv. Works best when the market is willing to buy the product even though it carries an above average price v. Successful skimming strategy allows management to recover product development costs quickly vi. Penetration Pricing: Pricing policy whereby a firm charges a relatively low price for a product initially as a way to reach the mass market vii. Effective strategy in price-sensitive market viii. Typically discourages or blocks competition from entering a market II. The Legality and Ethics of Price Strategy a. Unfair Trade Practices i. Unfair Trade Practices: Laws that prohibit wholesalers and retailers from selling below cost b. Price Fixing i. Price Fixing: Agreement between two or more firms on the price they will charge for a product ii. Most cases focus on high prices charged to consumers c. Price Discrimination i. Robinson-Patman Act of 1936 outlawed this ii. Illegal for a seller to offer two buyers different supplementary services and for buyers to use their purchasing power to force sellers into granting discriminatory price or services d. Predatory Pricing i. Predatory Pricing: Practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market III. Tactics for Fine-Tuning the Base Price i. Base Price: General price level at which the company expects to sell the good or service ii. General price level correlated with the pricing policy: above the market (price skimming), at the market (status quo pricing) or below the market (penetration pricing) b. Discounts, Allowances, Rebates, and Value-Based Pricing i. Quantity Discount: Price reduction offered to buyers buying in multiple units or above a specified dollar amount ii. Cumulative Quantity Discount: Deduction from list price that applies to the buyer’s total purchases made during a specific period iii. Noncumulative Quantity Discount: Deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period iv. Cash Discount: Price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill v. Functional Discount: Discount to wholesalers and retailers for performing channel functions vi. Seasonal Discount: Price reduction for buying merchandise out of season vii. Promotional Allowance: Payment to a dealer for promoting the manufacturer’s products viii. Rebate: Cash refund given for the purchase of a product during a specific period ix. Value-Based Pricing: Setting the price at a level that seems to the consumer to be a good price compared to the prices of other options x. Can solve underpricing problem by linking information about price, cost, and demand within the same decision support system c. Geographic Pricing i. FOB Origin Pricing: Price tactic that requires the buyer to absorb the freight costs from the shipping point ii. Uniform Delivered Pricing: Price tactic in which the seller pays the actual freight charges and bills every purchaser an identical, flat freight charge iii. Zone Pricing: Modification of the uniform delivered pricing that divided the market into segments or zones and charges a flat freight rate to all customers in a given zone iv. Freight Absorption Pricing: Price tactic in which the seller pays all or part of the actual freight charges and does not pass them on to the buyer v. Basing-Point Pricing: Price tactic that charges freight from a given point, regardless of the city from which the goods are shipped d. Other Pricing Tactics i. Single-Price Tactic: Price tactic that offers all goods and services at the same price ii. Flexible Pricing: Price tactic in which different customers pay different prices for essentially the same merchandise bought in equal quantities iii. Professional services pricing usually time-based, but can be service-based iv. Price Lining: Practice of offering a product line with several items at specific price points v. Leader-Pricing: Price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store vi. Bait Pricing: Price tactic that tries to get consumer into a store through false or misleading price advertising and then uses high-pressure selling to persuade consumers to buy more expensive merchandise vii. Odd-Even Pricing: Price tactic that uses odd-numbered prices to connote bargains and even numbered prices imply quality viii. Price Bundling: Marketing two or more products in a single package for a special price ix. Unbundling: Reducing the bundle of services that comes with the basic product x. Two-Part Pricing: Price tactic that charges two separate amounts to consume a single good or service 1. Health clubs charge membership fee, flat fee to use equipment e. Consumer Penalties