All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

All Cases For Marketing Strategy, 8th Edition O. C. Ferrell (Author), Michael Hartline (Author), Bryan W. Hochstein (Author) Cases 1-21 Case 1

Tesla Races Ahead with Nontraditional Marketing Strategy*

Synopsis:

Tesla, the leader in electric vehicles, has managed to become one of the most valuable car makers in the United States without any traditional advertising and an Internet-focused downstream distribution strategy. Tesla also leads with an extensive corporate social responsibility strategy that includes focusing on the safety of both employees and consumers, supporting a diverse work environment, sourcing responsibly produced materials, and contributing to education.

Themes:

Ethics and social responsibility, sustainability, distribution strategy, promotion strategy, product strategy, pricing strategy, competitive advantage

Case Summary Tesla, an all-electric vehicle and energy generation products company, is widely admired for its industry-altering innovation built around its core vision of moving the world toward sustainable energy. Though Tesla got its start with electric vehicles (EVs) in 2003, the company has branched out to create a variety of renewable energy technologies from solar roof tiles to clean energy storage. Today, Tesla is the most valuable carmaker in the world. Remarkably, the automaker reached this status with a $0 advertising budget.

This case explores Tesla’s marketing mix including its product strategy, pricing strategy, distribution strategy, and promotion strategy. Tesla has a gift for attracting publicity due to its promotion tactics, such as its launch events, and headline-worthy achievements. Despite the company’s success, Tesla has attracted both skepticism and criticism from the public as well as investors, largely due to CEO Elon Musk’s outspoken nature, which has damaged the company’s reputation and stock price more than once. This case analyzes how Tesla established itself as a leader in EVs. Additionally, this case explores corporate social responsibility at Tesla. Tesla’s corporate social responsibility (CSR) strategy addresses stakeholders’ interests by monitoring and reporting on the company’s product and operational impact, emphasizing consumer safety and responsible sourcing, and focusing on its employees and building a strong organizational culture. *

Kelsey Reddick and Zachary Youngstrom prepared this case under the direction of O. C. Ferrell for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by management, © 2022.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Teaching Overview This case thoroughly outlines Tesla’s marketing mix. Students should be encouraged to update this information as needed and then conduct a comprehensive SWOT analysis for Tesla. The case also gives students an excellent overview of corporate social responsibility (CSR) at Tesla.

Students should have no trouble discussing these efforts and their implications for Tesla’s marketing strategy. After this is completed, students could use this case to develop a marketing strategy for maintaining the company’s position as a leader in EVs. Tesla has become profitable, achieving record sales numbers, and has gained resources to propel its global expansion.

Major SWOT Themes Innovation, competitive advantage, profitability, leadership, global business, corporate social responsibility, product strategy, pricing strategy, premium pricing, promotion strategy, new product introduction, advertising, publicity, distribution strategy, supply chain Problem/Decision Statement Despite the company’s success, Tesla has attracted both skepticism and criticism from the public as well as investors. Not all of Tesla’s publicity has been positive. Tesla’s history of leadership challenges has followed it in the media. Though many companies have benefited from having a celebrity CEO, Tesla has had to reign in CEO Elon Musk, who has been both an asset and a liability for the company. Additionally, Tesla now faces more competition than ever as mainstream automakers invest heavily in EVs. Musk believes that Tesla’s competition is not the small percentage of EVs being produced but rather the large number of gasoline-fueled vehicles saturating the market.

Discussion Questions 1. In what ways does Tesla address the interests of its stakeholders through its corporate social responsibility strategy?

Tesla’s corporate social responsibility (CSR) strategy addresses stakeholders’ interests by monitoring and reporting on the company’s product and operational impact, emphasizing consumer safety and responsible sourcing, and focusing on its employees and building a strong organizational culture.

Tesla believes that consumers should not have to compromise on price or performance when it comes to choosing sustainable products. To address this consumer interest, Tesla has introduced more affordable models of its environmentally friendly vehicles, which have resulted in millions of metric tons of emissions savings. Tesla has also prioritized consumer safety with advanced safety features and taking additional measures to give customers peace of mind.

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All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Tesla has also prioritized employee safety with its multiday training program and on-the-job training. Tesla’s goal is to have the safest car factory in the world. Tesla also fosters employee advocates by offering perks such as its employee stock purchase program. Many of its efforts simultaneously reduce carbon impact while providing valuable perks for employees. Additionally, Tesla supports workplace diversity in its recruitment and retention efforts with anti-discrimination and anti-sexual harassment training as well as unconscious bias training.

To address the interests of shareholders, Tesla has taken measures to increase profitability, even going as far as to implement layoffs in a move toward streamlining the company.

2. How would you describe Tesla’s marketing strategy?

Tesla’s marketing strategy is nontraditional. Tesla’s premium all-electric vehicles are its bread and butter, and yet, Tesla made the move to open source its patents to make them openly accessible. Though Tesla has now introduced more affordable models, relatively speaking, overall Tesla has a premium pricing strategy. Tesla does not use traditional advertising as part of its promotion strategy and has an Internet-focused downstream distribution strategy.

3. How does Tesla’s distribution strategy differ from other automakers?

Tesla has invested many resources into its upstream supply chain by focusing on its inhouse battery cell production and vehicle production at its Gigafactories. This is one of Tesla’s key competitive advantages. Downstream, Tesla has a unique retail distribution compared to competitors. The company sells online with no agency dealerships. Customers pick up their vehicles at a Tesla-owned regional distribution center. Interestingly, Tesla showrooms are strictly used for promotion, not purchases.

Case 2

Businesses Sink or Swim in the Face of COVID-19 Crisis*

*

Kelsey Reddick, Callie Kyzar, and Caleb Yarbrough prepared this case under the direction of O. C. Ferrell for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by management, © 2022.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Synopsis:

The COVID-19 (coronavirus) pandemic caused a major shift in the global economy, sending businesses of all sizes into bankruptcy, upending the supply chain, and altering consumer behavior. While some industries were well-suited to the new normal, others had to quickly adapt to stay afloat.

Themes:

Strategic philanthropy, crisis preparedness, marketing mix, advertising, consumer behavior, environmental threats, supply chain, global economy, corporate social responsibility

Case Summary The global economy was upended in 2020 as a result of the COVID-19 (coronavirus) pandemic.

The respiratory disease, identified in 2019, posed a serious public health risk because it spread easily from person to person, and there was little to no immunity against the new virus. For these reasons, international travel was limited, people across the globe were ordered to stay at home, nonessential businesses were closed, students attended school online, major events were canceled, and many people began to work remotely. This seismic shift was felt deeply and immediately as the virus hit the United States in early 2020.

This case explores COVID-19’s impact on business by analyzing changing consumer behavior, exploring struggling industries, and highlighting thriving industries. Additionally, we examine the importance of adjusting the marketing mix in the face of a new economy to remain competitive. This case discusses supply chain disruption, mission-based marketing and causerelated marketing, and crisis preparedness.

Teaching Overview This case examines the challenges businesses faced during the COVID-19 crisis. Students can select a company mentioned in the case (e.g., Walmart or Uber) or a company the student has researched and conduct a top-level SWOT analysis as it relates to the COVID-19 pandemic.

Alternatively, students can focus on general external opportunities and threats created by the pandemic. The case also discusses the new normal for businesses. Students should consider the pandemic’s long-term impacts on business and consumer behavior.

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All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Major SWOT Themes Consumer behavior, mission-based marketing, cause-related marketing, product strategy, pricing strategy, promotion strategy, advertising, publicity, distribution strategy, brick-andmortar, e-commerce, supply chain, crisis management, new technology, omnichannel Problem/Decision Statement Marketers must keep risk-mitigation strategies top of mind to better prepare them for the future. Crisis management calls for a quick response to assess potential damage and take action. There are risks associated with both making the wrong decision and failing to take action, creating a high degree of uncertainty. Even the most prepared companies may not handle a crisis perfectly, resulting in both success and failure outcomes. To adapt quickly with new tactical decisions, businesses must engage in ongoing scenario planning. It’s also effective to create an internal dialogue about crisis management strategy to identify blind spots and unintended consequences. Organizations should also proactively establish communication channel strategies to reach various stakeholders with relevant messages.

Discussion Questions 1. How did COVID-19 impact the global food supply chain?

A crippled supply chain and panic buying led to empty shelves in grocery stores. Though food was abundant, the global food supply chain became dislocated. Dairy farmers had to dump millions of gallons of milk every day because cows need to be milked multiple times a day, regardless of whether there is a need, which led to plants collecting more milk than they could process and store. Because of the complex nature of the supply chain, this milk was not easily redirected to consumers. Many farmers were left without buyers due to the closing of restaurants, hotels, and schools.

2. Identify prominent changes in consumer behaviors and preferences and how these events will change businesses in the future.

During the COVID-19 pandemic, many people left their homes only for essential needs (e.g., groceries, banking, gas, and medicine). Americans spent more on frozen food, snacks, household supplies, and home entertainment but less on apparel, travel, transportation, and out-of-home entertainment. Overall, consumers cut spending and started saving more of their money. Because of the desire to limit exposure to the virus, consumers visited grocery stores less but spent more per visit as shoppers stocked up.

Stockpiling and strain on grocery store inventory made consumers less brand sensitive.

During this time, many households tried online grocery shopping for the first time.

The impacts on consumer behavior have been long-lasting. The pandemic affected consumer perspectives on a variety of issues such as retail spending and transportation.

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All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Businesses of the future will need to invest in contactless payment options, delivery, ecommerce, supply chain mapping, and more.

3. How can businesses adapt quickly to crises with new tactical decisions?

To adapt quickly with new tactical decisions, businesses must engage in ongoing scenario planning. Creating a task force only after a crisis has been identified may be too little, too late. For instance, identifying areas of the supply chain (e.g., suppliers, parts, and products) that would be at risk during a disruption prior to a crisis could help organizations quickly secure additional inventory from existing suppliers or switch to new suppliers to secure the materials necessary to avoid stockouts.

Case 3 Gainsight Provides a Data-Driven Customer Relationship Platform to Retain Subscription Customers* Synopsis:

This case provides an overview of a growing company that has developed from a start-up into a maturing and sustainable firm by developing a new market.

Gainsight provides a customer relationship platform that utilizes a variety of customer data inputs to help employees called customer success managers to proactively develop and maintain value for customers across experience and outcome based relationships. The new market and new service/sales role have expanded based on market need and Gainsight’s leadership.

Themes:

Customer retention, customer value delivery, reduction of customer churn, market and category creation, start-up to growth phase, business operations, subscription SaaS model

Case Summary Gainsight, founded in 2009, provides software that helps businesses increase sales by maintaining and enhancing customer relationships. Gainsight entered the Software as a Service (SaaS) market to help firms retain customers. SaaS is a software distribution model where a third party, such as Gainsight, hosts applications and provides services directly to the firm’s customers that assist in business operations. CRM has the largest market share of the SaaS market. Gainsight has developed a SaaS business model to provide a platform and infrastructure for firms to use in customer management. The firm has more than 600 employees and has been ranked as one of the fastest growing firms in the United States.

Churn rate is the rate customers fail to renew a subscription to a service and, if not managed well, is a problem for SaaS companies. This case explores how Gainsight addressed a market need with its CRM software and the creation of the customer success manager (CSM) role. *

Bryan W. Hochstein, Assistant Professor of Marketing, University of Alabama, prepared this case for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by management, © 2022.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Teaching Overview Gainsight saw the need to reduce customer churn and responded by creating a new marketing job category (customer success manager) and the Gainsight customer success platform. This case discusses the challenges Gainsight faced, how the company effectively addressed the changing environment, and the values behind the growing company. Students should conduct a comprehensive SWOT analysis for Gainsight. After this is completed, students could use this case to develop a marketing strategy for maintaining the company’s position as a thriving industry leader in customer success.

Major SWOT Themes New product introduction, customer retention, churn rate, marketing roles, customer success management, customer health, software as a service, market disruption, subscription model pricing, organizational values, start-ups, event marketing Problem/Decision Statement Current-day Gainsight is a company still in transition. As the customer success market has become accepted and is growing, Gainsight has been in a near constant growth phase. In this phase of business development, profitability is sacrificed for growth of market share, client base, and product development. However, eventually, to become a long-term business success, profits are required to finance operations (after start-up funding ends). Gainsight is at the point of transitioning from a rapid-growth start-up into a sustainable market leader. Currently, Gainsight is working through the common challenges and opportunities of a growing company that seeks to maintain its soul, while also providing value for its stakeholders.

Discussion Questions 4. Describe how Gainsight’s strong customer success management results in reduced churn.

Gainsight’s customer success platform addresses the churn problem through selling firm investment in customers to help develop success with products and recurring value that help to retain customers. The role of customer success manager (CSM) was created, and Gainsight developed software to help those in this new job. Gainsight’s product is designed to report on customer health to help the CSM proactively engage customers, address customer issues, and resolve problems.

5. Why do you think CSM roles are growing so rapidly?

The CSM position is expected to continue to grow with business customers turning to more subscription-based services such as delivery of goods, maintenance programs, and operations of supply inventory management. Sellers have identified that recurring-

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All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

revenue businesses depend greatly on the value available to the customer, their ability to realize the value, and ultimately their ongoing satisfaction with using a product. CSMs make sure all of these things happen, so CSMs are becoming critical in this line of business.

6. Explain the pros and cons of a “freemium” service model.

Many customers respond to “freemium” offers that provide a short-term subscription for free. This can be an effective means of attracting new subscribers. However, few of those who sign up with a freemium offer actually continue with the paid service. When consumers keep the service, they become subscribers, but when they don’t, they become churned customers. In B2B SaaS firms, the problems are similar, and the plague of churned clients has led to a new philosophy of client retention and a focus on helping customers to be successful by continually seeing the value in using products. The question was how to best meet this new requirement.

Case 4 Apple Bites Back* Synopsis:

Few companies have been able to master the arts of product innovation, a “cool” brand image, and customer evangelism like Apple. After nearly collapsing under a cloud of bankruptcy in the mid-1990s, the company was revived through product innovation, a masterful marketing program, and an entrepreneurial corporate culture. This case reviews Apple’s history, remarkable comeback, and battle to stay on top with an eye toward the marketing strategies that created the company’s success. The case also examines many of the challenges faced by a company that continually pushes the boundaries of marketing practice to stay on top of the consumer electronics and computer industries.

Themes:

Product innovation, marketing program, prestige pricing, competition, changing technology, differentiation, customer loyalty, foreign sourcing, intellectual property, privacy issues, corporate culture, sustainability

Case Summary Apple is one of the world’s most valuable companies—more valuable than Microsoft, Alphabet, and Amazon—and has a cult-like status among tech enthusiasts. Some believe Apple’s success stems from a combination of several factors, including the leadership qualities of former CEO Steve Jobs, a corporate culture of enthusiasm and innovation, and the revolutionary products for which Apple has become known. While every organization has to acquire resources and develop a business strategy to pursue its objectives, Apple has excelled in its management.

*

Jennifer Sawayda, Callie Kyzar, and Harper Baird prepared this case under the direction of O. C. Ferrell for classroom discussion rather than to illustrate effective or ineffective handling of an administrative situation, © 2022.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

This case reviews the history of Apple, Apple’s products, the company’s marketing strategies, and its corporate culture. The case also examines challenges the company has faced related to competition, customer privacy, price fixing, intellectual property, supply chain management, and sustainability.

Teaching Overview Over the last decade, Apple has excelled at keeping pace with the quickly evolving industry of computers and consumer electronics. This case discusses Apple’s comeback, its marketing mix, and the challenges it has faced. Using this information, students should conduct a comprehensive SWOT analysis. After this is completed, students could use this case to develop a marketing strategy for maintaining the company’s position as a leader in tech.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Major SWOT Themes Product innovation, management, word-of-mouth, prestige pricing, competition, technology, market share, customer loyalty, supply chain, intellectual property, privacy issues, corporate culture, sustainability Problem/Decision Statement Apple has created a cult following of consumers who are intensely loyal to Apple products.

However, the company will face many challenges in the future. Not only has it been criticized for violations in its supply chain, but it has also been questioned about why it offshores most of its production. As concerns over outsourcing continue, Apple may experience increasing pressure from stakeholders to create more manufacturing opportunities in the United States.

Additionally, though Apple holds the top spot in many categories, rivals are striving to catch up.

Discussion Questions 7. How has Apple developed extreme loyalty among consumers that has resulted in an almost cult-like following?

Apple supports “evangelism” of its products, even employing a chief evangelist to spread awareness about Apple and spur demand. Successful evangelists spread enthusiasm about a company among consumers. These consumers in turn convince other people about the value of the product. Through product evangelism, Apple created a “Mac cult” of loyal customers eager to share their enthusiasm about the company with others. Apple’s promotion strategy has led to a perception that Apple products are part of a consumer’s identity.

8. Describe the role of Apple stores as an important part of its marketing strategy.

Apple stores have enhanced the brand and changed Apple’s distribution strategies.

Originally created to give Apple more control over product displays and customer experiences, the Apple store model was a huge success and grew faster than any other retailer in history. Apple stores differentiate themselves significantly from other retailers. Apple stores are a place where customers can both shop and play. Customer service is also important to the Apple store image. The design of the stores is intended to be more community-inspired rather than retail-focused and encourages hands-on interaction.

9. What will Apple need to do to maintain product innovation and customer loyalty?

Apple’s corporate culture of innovation and loyalty has created a company that massively impacts the marketing strategies of consumer electronics firms and other industries. Apple will need to maintain its ability to produce iconic products that

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All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

consumers desire. Apple’s customers, though loyal, do have product problems and service concerns that require the company to make tough choices. Additionally, Apple must remain committed to its fast-paced, innovative, and collaborative environment to continue to attract dedicated, enthusiastic employees who are willing to spread the word about Apple.

Case 5 Uber: The Opportunities and Challenges of Market Disruption*

Synopsis:

By seamlessly connecting consumers and drivers through its smartphone app, Uber has changed the ride-sharing landscape for consumers and the traditional taxi and limousine industries. The company has experienced incredible success but not without a fair amount of criticism and backlash. Uber faces a number of challenges including internal struggles, legal and regulatory challenges, and global issues. Many countries and some states in the United States are making legal changes to push Uber to reclassify its drivers from independent contractors to employees. Additionally, major cities have moved to regulate Uber, while some foreign countries have banned Uber’s services. Uber will have to adapt its marketing strategy to address both domestic and international challenges.

Themes:

Marketing strategy, mobile marketing, branding, legal/regulatory environment, risk assessment, pricing issues, customer safety, market expansion, global marketing

Case Summary Uber Technologies, Inc. (Uber) is a multinational tech company that provides ride-sharing services by facilitating a connection between independent contractors (drivers) and riders with the use of an app. Uber has expanded its operations to 900 cities in more than 70 countries around the world, upending the taxi industry. The company has experienced resounding success and is looking toward continued expansion.

This case looks at Uber’s history and its marketing mix, exploring the company’s products, including Uber, Uber Eats, Uber Freight, and Uber Health. The case also dives into internal struggles, legal and regulatory challenges, and global issues the tech company has faced.

Teaching Overview Uber has experienced incredible success but not without facing a number of challenges. Some argue that Uber drivers should be classified as employees rather than independent contractors.

Others accuse Uber of not vetting their drivers, creating potentially unsafe situations. Some *

Noushin Laila Ansari, Lecia Weber, Sederick Hood, Christian Otto, Jennifer Sawayda, Jordan Burkes, and Kelsey Reddick developed this case under the direction of O. C. Ferrell and Linda Ferrell, © 2022. This case was prepared for classroom discussion rather than to illustrate effective or ineffective handling of an administrative situation.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

major cities are banning ride-sharing services such as Uber because of these concerns.

Additionally, Uber has faced various lawsuits. To be successful Uber must address these issues in its marketing strategy so it can reduce resistance as it expands into other cities.

This case explores the challenges Uber has faced. Using this information, students should conduct a comprehensive SWOT analysis. After this is completed, students could use this case to develop a marketing strategy for upholding the trust of customers, expanding globally, and achieving long-term market success.

Major SWOT Themes Legal/regulatory environment, pricing strategy, customer safety, global business, mobile marketing, strategic partnerships, buzz marketing, ethics, corporate responsibility Problem/Decision Statement The long-term viability of Uber depends on managing future risks in five key areas: drivers, products, customer base, technology, and customer satisfaction. Uber faces a number of marketing challenges including regulatory and legal issues both inside and outside of the United States. Uber may need to adapt its business model in response to legal challenges and focus more on core product offerings to reach profitability.

Discussion Questions 10. What are the strengths and weaknesses of the apps and firms that offer ride-sharing services?

Student responses may vary. Encourage students to pull from personal experience with various apps and firms that offer ride-sharing services.

Overall, consumers like ride-sharing apps because they are convenient and easy to use.

Riders use the app to find nearby drivers, and the app provides the estimated fare before the ride is even booked. Ride-sharing companies do not maintain automobile inventory for drivers, such as a fleet of taxicabs or limousines. Instead, each driver-forhire supplies their own automobile, gas, and insurance.

11. Describe the threats that Uber has to overcome to be successful.

Uber faces a number of marketing challenges including regulatory and legal issues both inside and outside of the United States. Laws that protect consumers specifically target taxi services, whereas Uber defines its services as “ride-sharing” and Uber as an agent of individual contractors. However, many courts do not view its services in the same way and are forcing Uber to comply with licensing laws or stop business in certain areas.

With recent laws mandating employee classification, Uber may need to adapt its

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All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

business model. Uber must also ensure independent contractors obey relevant country laws to uphold the trust of their customers and achieve long-term market success.

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All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

12. What are Uber’s weaknesses?

It can be argued that Uber’s corporate culture has been a major weakness for the company. Uber has faced many internal struggles and ethics issues, including a criminal investigation by the U.S. Department of Justice and an investigation into anticompetitive behavior by the FBI. Additionally, the company has faced millions of dollars of losses due to the cost of promotions and various expenses. Ride-sharing companies need to be at the forefront of innovation to stay ahead of the competition.

Case 6 Social Responsibility Is the Key Ingredient at New Belgium Brewing*

Synopsis:

From its roots in a Fort Collins, Colorado, basement, New Belgium Brewing has always aimed for business goals loftier than profitability. The company’s tremendous growth to become the nation’s fourth-largest craft brewer and 11th-largest overall has been guided by a steadfast branding strategy based on customer intimacy, social responsibility, and whimsy. The company’s products, especially Fat Tire Amber Ale, appeal to beer connoisseurs who appreciate New Belgium’s focus on sustainability as much as the company’s world-class brews.

Despite its growth and success, New Belgium has managed to stay true to its core values and brand authenticity—the keys to its marketing advantage in the highly competitive craft brewing industry.

Themes:

Customer intimacy, competitive advantage, social responsibility, sustainability, branding strategy, product strategy, distribution strategy, marketing implementation, customer relationships

Case Summary Although large companies are frequently cited as examples of ethical and socially responsible firms, it is often businesses that start small that stand to have the greatest impact. These businesses create jobs and provide goods and services for customers in smaller markets that larger corporations often are not interested in serving. Moreover, they also contribute money, resources, and volunteer time to local causes. By serving these markets, small businesses are not only being socially responsible but are also seizing on a lucrative opportunity to sell goods and services to underserved consumers.

One such small business is the New Belgium Brewing Company (NBB), based in Fort Collins, Colorado. This case explores NBB’s history and its commitment to social responsibility, including its impact on the environment, society, and NBB employees. *

O. C. Ferrell, Jennifer Sawayda, and Kelsey Reddick prepared this case for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management, ©2022. We appreciate the input and assistance of Greg Owsley, formerly of New Belgium Brewing, in developing this case. All sources used for this case were obtained through publicly available material and the New Belgium Brewing website.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Teaching Overview This case focuses on the positive impact that a company can make on its community. This is important and distinctive within the industry because many people feel the production and promotion of alcohol are immoral and naturally contradict the desirable traits of business and society. Although many students will not have tried these products, some may be familiar with the brand. New Belgium should stand as an example of how a business can refute negative prejudices by exemplifying the ways in which a business can be environmentally and socially responsible.

Major SWOT Themes Social responsibility, employee stakeholders, sustainability, small business, competitive advantage, mergers and acquisitions, competition, brand loyalty Problem/Decision Statement Although NBB has made great strides in creating a socially responsible brand image, its work is never done. It must continually reexamine its ethical, social, and environmental responsibilities, especially as they move forward from being acquired by Little Lion World Beverage.

How should New Belgium respond to competitive threats from microbreweries and domestic producers who enter the market? Will NBB be able to increase its market share?

Discussion Questions 13. What are the challenges associated with combining the need for growth with the need to maintain customer intimacy and social responsibility?

NBB management acknowledges that as their annual sales increase, so do the challenges of keeping the brand both humane and culturally authentic. It has always been a challenge for NBB to grow while keeping true to its core beliefs. However, to serve customers’ demands for NBB brews, the company must continue expanding. New Belgium has taken great efforts to ensure that it doesn’t compete against large domestic brewers. Instead, NBB focuses on its image of producing high-quality and handcrafted brews worthy of a premium price. Further, NBB focuses on meeting the needs of its customers by building personal relationships. The company’s continued use of local events and local philanthropy help to support this goal.

14. Do you agree that New Belgium’s focus on social responsibility provides a key competitive advantage for the company? Why or why not?

The company has such a strong focus on social responsibility that it permeates everything that they do. Their values are deeply embedded in the company. It is also

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All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

forward-thinking of New Belgium to be environmentally responsible because it is less wasteful, could help the company to adjust to stricter environmental legislation in the future, and because having a green image has become a competitive advantage for many companies. Its socially and environmentally responsible image undoubtedly has gained New Belgium a competitive advantage in the growing craft beer industry.

15. Some segments of society contend that companies that sell alcoholic beverages and tobacco products cannot be socially responsible organizations because of the nature of their primary products. Do you believe that New Belgium’s actions and initiatives are indicative of a socially responsible corporation? Why or why not?

This question challenges students to consider whether a company can be socially responsible when its primary product has the potential for abuse or irresponsible use.

There is no correct response. Many students will argue that NBB is a model corporate citizen because of its social initiatives and efforts to minimize its negative impact on the environment. These students will likely concur that NBB does not promote excessive beer consumption, but rather advertises it as part of a healthy lifestyle where alcohol is enjoyed in moderation. Other students may feel that, no matter how strong NBB’s social responsibility initiatives are, it is still selling a product that is widely abused. However, these students will likely be in the minority. Few people will likely object to or find fault with the firm’s efforts to demonstrate ethical and socially responsible conduct.

Case 7 Bayer Grows with Monsanto Acquisition*

Synopsis:

This case focuses on Monsanto’s acquisition by Bayer, a German pharmaceutical, agricultural, and chemical giant, and Bayer’s desire to balance the many significant benefits that its products bring to society (and the company’s resulting profits) with the interests of a variety of stakeholders. The case examines Monsanto’s history as it shifted from a chemical company to one focused on biotechnology. It then examines Monsanto’s focus on developing genetically modified seeds, including stakeholder concerns regarding the safety and environmental effects of these seeds. Next, we discuss key ethical concerns, including patent issues and legal issues. The case concludes by examining the challenges and opportunities that Bayer may face in the future.

Themes:

Ethics and social responsibility, sustainability, product strategy, product liability, corporate affairs, stakeholder relationships, product labeling, government regulation, legal environment, global marketing

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Kelsey Reddick, Jennifer Sawayda, Danielle Jolley, Jordan Burkes, Caleb Yarbrough, and Annalisa LaRue prepared this case under the direction of O. C. Ferrell and Linda Ferrell, © 2022. It was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Case Summary Monsanto Company was the world’s largest seed company, with sales of $14.6 billion in 2017 before it was acquired by Bayer, a German multinational pharmaceutical and life sciences company. It specialized in biotechnology, or the genetic manipulation of organisms. Monsanto scientists spent decades modifying crops, often by inserting new genes or adapting existing genes within plant seeds, to meet certain objectives such as higher yield or insect resistance.

Monsanto developed genetically engineered seeds of plants that can survive weeks of drought, ward off weeds, and kill invasive insects. Monsanto’s genetically modified (GM) seeds increased the quantity and availability of crops, helping farmers worldwide increase food production and revenues.

Before being acquired by Bayer, 90 percent of the world’s GM seeds were sold by Monsanto or companies that use Monsanto genes. Monsanto met its share of criticism from sources as diverse as governments, farmers, activists, and advocacy groups. Monsanto supporters said the company created solutions to world hunger by generating higher crop yields and hardier plants.

Critics accused the multinational giant of attempting to take over the world’s food supply and destroying biodiversity. The announcement that Bayer AG acquired Monsanto for $63 billion intensified these concerns because the acquisition meant one company would command over one-fourth of the world’s seeds and pesticides market. Since biotechnology is relatively new, critics also express concerns about the possibility of negative health and environmental effects from biotech food. The acquisition was not easy for Bayer, which inherited a string of lawsuits related to Monsanto’s Roundup herbicide, resulting in millions of dollars spent on litigation and damage payments.

The case examines Monsanto’s history as it shifted from a chemical company to one focused on biotechnology. It then examines Monsanto’s focus on developing genetically modified seeds, including stakeholder concerns regarding the safety and environmental effects of these seeds.

Next, we discuss key ethical concerns, including patent issues and legal issues. The case concludes by examining the challenges and opportunities that Bayer may face in the future.

Teaching Overview This case deals with the ethical implications involved in producing and selling a product with unknown health and environmental side effects. Monsanto claimed that its products were safe, even beneficial for society. A major issue in this case pertains to the debate over whether genetically modified products are safe both for the environment and for human consumption.

This case also examines patent issues and legal issues that Bayer faces.

Major SWOT Themes Mergers and acquisitions, ethics, social responsibility, product liability, product labeling, government regulation, legal environment, global marketing

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Problem/Decision Statement Bayer faces challenges inherited from Monsanto that it must address, including lingering concerns over the safety and the environmental impact of its products. Bayer’s failure to recognize the liability behind Roundup as a red flag has put Bayer in an uphill battle as lawsuits continue. Yet despite the onslaught of criticism from Monsanto detractors, Bayer has numerous opportunities to thrive in the future. The company is currently working on new innovations that could increase its competitive edge as well as benefit farmers worldwide. For instance, Bayer has identified a new compound that could be effective against Roundup-resistant “superweeds.” Bayer is in a race with competitors to develop new weed killers, a race it needs to win to protect its $5 billion herbicide business.

Bayer is trying to portray itself as a socially responsible company dedicated to improving agriculture. However, Bayer will have to fight to shed Monsanto’s reputation and continue working with stakeholders to promote its technological innovations and eliminate fears concerning its industry.

Discussion Questions 16. Did Monsanto maintain an ethical culture that effectively responded to various stakeholders? Does Bayer?

Students may argue that Monsanto’s past lapses put them in a precarious position. For example, the company covered up environmental pollution for nearly 40 years. In this case, actions speak louder than words. Unfortunately, Monsanto’s actions did not give stakeholders a basis for trust.

Monsanto was acquired by a company with extensive corporate responsibility initiatives. Bayer’s mission is “science for a better life” with a goal to achieve “health for all, hunger for none.” The company is also committed to philanthropic giving, strategic partnerships, and employee engagement. Bayer has been recognized for its diversity efforts. For example, through its Making Science Make Sense initiative, Bayer supports women and minorities in STEM (science, technology, engineering, and math) fields through scholarships and fellowships, investments in STEM education, public awareness and education campaigns, employee volunteerism, and more. Bayer also supports supplier diversity and employee diversity and inclusion.

17. Compare the benefits of growing GM seeds for crops with the potential negative consequences of using them.

Genetically engineered seeds can survive weeks of drought, ward off weeds, and kill invasive insects. Monsanto’s genetically modified (GM) seeds increased the quantity and availability of crops, helping farmers worldwide increase food production and revenues.

However, as this case shows, there are potential negative consequences of using GM seeds. Opponents believe influencing the gene pools of the plants we eat could result in

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negative health consequences. Others worry about the health effects on beneficial insects and plants, fearing that pollinating GM plants could affect nearby insects and non-GM plants.

18. How should Bayer manage the potential harm to plant and animal life from using products such as Roundup?

Student responses will vary, but many will suggest a proactive rather than reactive response. Bayer is facing tens of thousands of claims that Roundup causes cancer.

Interestingly enough, the product remains on the shelf. Most companies discontinue, alter, or add warning labels to their products that have them facing mass litigation. The U.S. Environmental Protection Agency has stated that glyphosate doesn’t cause cancer, therefore, states can’t require and Bayer can’t put cancer warnings on Roundup and other glyphosate-based herbicides. Bayer also can’t remove the chemical because it is the main weed-killing ingredient. Bayer has chosen not to take the product out of the market because it’s the main source of revenue from the Monsanto acquisition. Bayer instead has invested tens of millions of dollars in additional consumer marketing and uses the EPA’s points to justify keeping the product on shelves.

Case 8 Netflix Fights to Stay Ahead of a Rapidly Changing Market*

Synopsis:

Netflix, the world’s largest subscription streaming platform, faces more competition than ever. As the streaming war heats up, Netflix’s survival depends on its ability to adapt and identify new opportunities in digital entertainment in a rapidly changing market. Netflix has long benefited from its first-mover advantage; however, the success of newer streaming services such as Disney+ pose a threat to Netflix’s long-term success. The problem is that the future changes rapidly in this industry.

Themes:

Changing technology, changing consumer preferences, competition, competitive advantage, product strategy, product life cycle, services marketing, pricing strategy, distribution strategy, nonstore retailing, customer relationships, value, implementation, customer churn

Case Summary Technology has played a leading role in the evolution of the entertainment industry. Several of the major movie production companies have now opted to bypass the theater experience and instead promote a selection of their movies directly to the home viewing audience via streaming platforms such as Netflix and Hulu. Through increasing disintermediation (bypassing *

Kelsey Reddick, Jacqueline Trent, and Jennifer Sawayda prepared this case under the direction of Michael Hartline and O. C. Ferrell, © 2022. This case was developed for classroom discussion, rather than to illustrate either effective or ineffective handling of an administrative situation.

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theaters), movie studios stand to increase profit margins dramatically. Today there are more streaming competitors than ever.

This case looks at Netflix’s history including its early strategy, distribution strategy, evolving business model, and global growth strategy. We also take a close look at competitors in the streaming entertainment market including Amazon Prime Video, Hulu, Disney+, and Apple TV+.

Teaching Overview Many students will be familiar with, and possibly customers of, the key players in the industry.

The case analysis and discussion can revolve around the specific strategic actions that Netflix should follow in this rapidly evolving industry. Ask students to consider the key differentiators for each competitor in the streaming entertainment market.

Major SWOT Themes Technology and innovation, market disruption, competition, services marketing, pricing strategy, distribution strategy, value, customer churn, competitive advantage, first-mover advantage Problem/Decision Statement As Netflix looks toward the future, the streaming wars will continue to present a challenge.

Netflix must contend with streaming competitors (e.g., Amazon Prime Video and Disney+) in addition to live TV streaming services (e.g., Sling TV and YouTube TV) and traditional cable providers (e.g., Xfinity and Frontier). However, Netflix continues to maintain its competitive edge with a significant market share in streaming, not to mention its extensive back catalog and collection of high-quality original content. Netflix has demonstrated time and time again its willingness to embrace market opportunities. Netflix will also have to foster various content provider relationships and proactively search for newer, better opportunities. The heart of this challenge is simple in concept but difficult to execute in practice: Will Netflix remain innovative enough to maintain its top spot in such a highly saturated market?

Discussion Questions 19. What role will Disney+ play in the development of Netflix’s strategic plans? How threatening is Disney+ to Netflix’s future?

Student responses will vary. Disney+’s immediate success demonstrates that consumers are willing to adopt new streaming platforms. It also suggests that Netflix does not meet all consumer needs. Netflix may try to be more nimble in developing strategic plans to allow for rapid innovation. We also might see Netflix being more reactive instead of proactive as the competition ramps up. Unlike Netflix, which took years to expand internationally, Disney had the advantage of already having extensive knowledge of international marketing and an established reputation in the entertainment industry

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worldwide. This may push Netflix to focus more on global expansion and international marketing.

20. What new opportunities do you see in the streaming business or the entertainment industry as a whole?

Student responses will vary. Ask students to consider the unique values and benefits offered by each major streaming platform. Students should also attempt to identify unmet customer needs or points of friction in the customer purchase decision journey.

21. Do you think Netflix will remain the dominant force in both streaming and movie rentals? Why or why not?

This depends on how far downstream the content providers want to take their operations. Currently, movie studios—especially smaller studios—do not have the infrastructure to distribute movies to the end consumer. The studios have always relied on third-party distributors to complete this task (cable and satellite operators, streaming companies). Through alliances with Netflix, the studios do not have to make major resource allocations for the development of distribution channels. Netflix’s access to customers has allowed it to develop an extensive database that can be used by movie studios for promotion and other purposes. This, in addition to distribution, is the major value-added component Netflix offers to content providers.

Students may also note that Netflix does not offer streaming rentals like cable ondemand services or Amazon Prime Video. Students may consider this to be a weakness for the company.

Case 9 From the Outside In: Corporate Social Responsibility at Patagonia*

Synopsis:

Patagonia, an outdoor apparel company, has integrated its core beliefs and values into its products and corporate social responsibility initiatives. The company has long-embraced a progressive corporate culture, prioritizing worklife balance for its employees and supporting ethical conduct throughout its supply chain. This case explores Patagonia’s core values, leadership and management style, environmental initiatives, and corporate social responsibility.

Themes:

Leadership, corporate social responsibility, sustainability, product strategy, advertising

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This case was prepared by Mark Zekoff, Sarah Sawayda, Callie Kyzar, and Kelsey Reddick for and under the direction of O.C. Ferrell and Linda Ferrell, © 2022. It was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. All sources used for this case were obtained through publicly available material.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Case Summary How can businesses make a difference in a world of decreasing resources? Patagonia, a privately held outdoor clothing company based in Ventura, California, is working toward finding an answer to that question. Patagonia’s clothing has been developed and marketed toward a variety of outdoor sports, travel, and everyday wear. The company has integrated core beliefs and values into every product and is known for its innovative designs, exceptional quality, and environmental ingenuity. High integrity and commitment to the environment have regularly placed Patagonia on the Ethisphere Institute’s “World’s Most Ethical Companies” list.

This case looks at Patagonia’s history, core values, and management. The case also looks at Patagonia’s environmental initiatives and its commitment to social responsibility.

Teaching Overview Patagonia has a strong reputation for promoting corporate social responsibility. Students should consider how Patagonia has positively impacted the environment and other businesses, such as its supply chain partners. Students should also consider competitors, such as The North Face, which have been more hesitant to take a stance on social and environmental issues.

Students should also consider the challenges associated with being a socially responsible company.

Major SWOT Themes Corporate social responsibility, sustainability, ethics, corporate culture, management, leadership, innovation, strategic partnerships Problem/Decision Statement Patagonia shows no signs of slowing down and neither does Yvon Chouinard. The company remains dedicated to advancing environmental awareness among businesses—even if it entails partnering with some unlikely companies. Patagonia realizes that to create lasting change, it must not only improve its sustainability operations but also assist in helping other businesses learn how to reduce their impact on the environment. By 2025, Patagonia hopes to be carbon neutral and would like to be carbon positive in the future. Patagonia is even moving beyond apparel to address sustainability in the food industry. Under its subsidiary Patagonia Provisions, the company aims to improve the food chain with the same principles that it applies to its clothing business.

Chouinard continues to see himself as an innovator rather than just an inventor. Under his influence and the influence of company leaders, Patagonia seeks to make a difference and create a revolution in how businesses view sustainability. Rather than taking from the environment, the goal for Patagonia is to educate consumers and businesses about how they can help to preserve it. Patagonia demonstrates how strong corporate values and ethical

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leadership can create a company that is both successful and a role model for those who desire to make a positive difference.

Discussion Questions 22. How has Patagonia been able to promote corporate social responsibility among other businesses?

The company remains dedicated to advancing environmental awareness among businesses—even if it entails partnering with some unlikely companies. For instance, Patagonia partnered with Walmart and Adidas to form the Sustainable Apparel Coalition. Patagonia realizes that to create lasting change, it must not only improve its sustainability operations but also assist in helping other businesses learn how to reduce their impact on the environment. In addition, Patagonia cofounded the Conservation Alliance to encourage businesses in the outdoor industry to contribute to environmental organizations that protect and restore nature and wildlife.

23. Do you think it is beneficial for Patagonia to branch out into ventures other than apparel?

Student responses will vary. Patagonia’s core strength lies in its core values, its supply chain, and its strategic partnerships. These can be leveraged to support new ventures.

Patagonia is moving beyond apparel to address sustainability in the food industry.

Under its subsidiary Patagonia Provisions, the company aims to improve the food chain with the same principles that it applies to its clothing business.

24. Does Patagonia—a privately held, debt-free company—have an advantage over public companies with shareholders by being socially responsible?

Public companies are responsible to stockholders while privately held companies such as Patagonia have more freedom. Students may argue, however, that being socially responsible is no longer a competitive advantage, but rather a minimum requirement for companies.

Case 10 Google Searches for Solution to Privacy Issues*

Synopsis:

Google processes billions of searches each day. In addition to its search engine, Google has a broad product mix from advertising and e-mail to web browsing and web analytics. Being one of the largest tech companies in the world, however, means that Google’s business practices are constantly monitored. This

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This material was developed by Kelsey Reddick, Tri Nix, and Jennifer Sawayda under the direction of O. C. Ferrell and Linda Ferrell, © 2022. This case is intended for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by management. All sources for this case were obtained through publicly available material.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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case highlights Google’s top products, the company’s social responsibility initiatives, and issues relating to privacy, censorship, and regulation.

Themes:

Competition, market segmentation, product mix, global marketing, corporate governance, sustainability, regulation, social responsibility

Case Summary Google’s ease of use and superior search results have propelled the search engine to its number-one status. Google holds an impressive 90 percent of the global market share of mobile, web, and in-app searches. Each day, more than 5.5 billion searches are processed by Google. As the search engine gained popularity, it began expanding into several different ventures, including web analytics, advertising, and digital book publishing. It has spent billions to acquire hundreds of companies in a variety of industries, from robotics to smart home devices to intangibles such as voice recognition technologies.

This case analyzes Google’s efforts to be a good corporate citizen and the privacy issues the company has faced. The analysis starts by providing background on Google, its technology, and its initiatives. Google’s efforts to be a socially responsible company are discussed. We then discuss the criticisms levied against Google, including its initial attempts to break into the censored Chinese market, its tracking of users, and changes to its privacy policies. We examine how Google has sometimes clashed with government authorities. Finally, we review some of the legal methods that have been proposed to regulate Internet data collection practices and Google’s response to the proposals.

Teaching Overview How companies collect, store, and use customer data is a hot ethical topic. Students should consider how they want companies to go about data collection and what information they want to protect the most. Google has also been at the center of many antitrust cases. Discuss the difference between being competitive and being anti-competition.

Major SWOT Themes Legal/regulatory environment, data privacy, customer safety, social responsibility, ethics, competition, market share, technology Problem/Decision Statement Google has faced challenges in privacy, many of which continue to this day. Google is forced to draw a fine line between using user information to generate revenue and violating user privacy.

Because Google can offer targeted advertising to advertisers through its collection of information, the company can provide quality Internet services to its users for free. At the same

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time, Google has committed questionable actions that seem to infringe on user rights and has encountered resistance from governmental authorities on many privacy-related initiatives.

With the threat of new regulation, Google lobbies to prevent legislation from being passed that proves unfavorable to the company. Because Google depends on tracking and similar activities to maintain profitability, it has a large stake in the privacy issue. However, rather than seeing this solely as a liability, Google might instead choose to improve its privacy practices and increase transparency in its operations. Google has the responsibility to ensure stakeholder rights are respected. Although Google has made great strides in social responsibility, both the company and society know there is room for improvement. Google’s size, reputation, and history give it a unique opportunity to positively impact how companies interact on the Internet.

Discussion Questions 25. Has Google implemented a strategy that serves all stakeholders?

Student responses may vary. Students should consider all key stakeholders.

Ask students if they have ever used a Google product (e.g., Google search, Gmail, Google Drive, etc.). Then ask them to consider what data Google has collected on them (e.g., web activity, passwords, files, photos, etc.). Ask them if they feel Google has implemented a strategy that serves them.

Next, encourage students to research Google in the news. Are there any pending lawsuits against Google for its business practices?

26. How can Google respect privacy and still maintain its profitability?

While students may not have the answer, they will likely all agree that Google has the responsibility to ensure stakeholder rights are respected. The legal battles Google has faced and will continue to face are costly to Google’s wallet and its reputation.

Responses may include greater transparency and putting power in the hands of the consumer to manage privacy settings. Students may discuss how Google’s efforts to respect privacy will serve to raise industry standards to make the Internet safer for all.

Ask students to research Google’s latest efforts to protect user privacy (e.g., data minimization, federated learning, anonymization, enhanced safe browsing, etc.).

27. How will increasing global regulation of privacy affect Google’s operations?

Google has learned that activities that are legal in one country might not be legal in another. Many countries have stronger privacy protections than the United States. For example, the European Union (EU) has the General Data Protection Regulation (GDPR).

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Google has already faced fines as a result of GDPR and has had to clean up its activity as a result. Google will have to make changes to its operations as standards and requirements change globally.

Case 11 IndyCar: Seeking a Return to Motorsports’ Fast Lane*

Synopsis:

Auto racing has experienced a steady decline for more than a decade. After years of damaging competition, the Indy Racing League and Champ Car (CART) reunified, leading to new sponsors, new business opportunities, and a new television contract. Despite the resurgence, the league remains a distant competitor to NASCAR in terms of popularity in the motorsports market. IndyCar must address this issue and several other concerns in order to strengthen its standing in the American motorsports market and build connections with new fans and sponsors.

Themes:

Competition, market segmentation, product and branding strategy, sports and event marketing, sponsorship, global marketing, corporate governance, marketing implementation

Case Summary Many racing observers believe that open-wheel racing could have been as popular as NASCAR is today. In the 1980s and early 1990s, it was CART that enjoyed greater popularity and television ratings. The split in open-wheel racing that led to the formation of the IRL was a setback to open-wheel racing in general. The split resulted in a dilution of competition quality, sponsor dollars, and fan support. Even after reunifying and rebranding, however, IndyCar lags behind.

Teaching Overview While open-wheel racing experienced a period of decline for quite some time, it seems the sport has found new growth with new sponsors, restructuring, and a new owner. Formula 1 racing still appears to be very popular around the world, and IndyCar is a distant second to NASCAR in terms of popularity in the United States. This case offers students the opportunity to develop and analyze strategic alternatives to IndyCar’s weaknesses relative to NASCAR. A concept that can be emphasized in this case is positioning. Competition for the attention of auto racing fans is intense as NASCAR is more popular than IndyCar in the United States.

Formula 1 is a formidable competitor in global markets. IndyCar must find a way to appeal to fans.

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This material was developed by Kelsey Reddick, Tri Nix, and Jennifer Sawayda under the direction of O. C. Ferrell and Linda Ferrell, © 2022. This case is intended for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by management. All sources for this case were obtained through publicly available material.

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Other issues in this case pertain to the product and distribution elements of IndyCar’s marketing strategy. Is the shift toward more road/street courses a way to differentiate from NASCAR, or will it alienate fans further that prefer oval track racing? Is the decision to hold races outside the United States appropriate, or should IndyCar look to expand to domestic markets it currently does not serve?

Major SWOT Themes Competition, distribution, sponsorships, promotion, leadership, marketing implementation, global marketing Problem/Decision Statement IndyCar is optimistic about its future, especially as ratings and viewership have risen in recent years. The league must continue to strengthen its standing in the American motorsports market. While NASCAR focuses on the North American market, especially concentrated in the southeast, IndyCar is trying to become more global, which is supported by its international drivers. There is no doubt that these international drivers, if properly promoted, will develop a great deal of interest and support from race fans in their countries. An important challenge is to determine how global IndyCar should be and how to overcome some of the obstacles for international races that are sometimes canceled due to financial resource issues. Another marketing decision is how to deploy resources to promote this sport. With the two major openwheel leagues reunified, IndyCar must reconnect with more fans and sponsors as well as build new relationships. And, it must ensure the safety of its greatest marketing asset—the IndyCar drivers.

Discussion Questions 28. Identify the external factors that have impacted and continue to impact IndyCar and its marketing efforts. Which factors appear to be IndyCar’s greatest opportunities and threats?

Students should realize that an internal split that formed the IRL is responsible for many of the negative external factors. Rather than being able to capitalize on the growth of motorsports, the IRL was forced to deal with market dilution. Fan preference for oval tracks and midwestern U.S. markets has also been a lingering problem. However, IndyCar’s greatest threat is easily the competition it faces from NASCAR and Formula 1.

NASCAR dominates the U.S. racing market, and Formula 1 is the leader in open-wheel racing globally. Despite these threats, IndyCar’s greatest opportunities may lie outside the United States.

29. What advantages does IndyCar possess over NASCAR? How should these advantages be used by IndyCar to compete with NASCAR?

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Students may argue that IndyCar possesses few advantages compared to NASCAR. However, the league’s major advantage is the recognition of the Indianapolis 500 as the premier auto-racing event in the United States, if not the world. The festival concept is another strength IndyCar could leverage to add value to fans’ experience at races. Also, the mix of course types offered is a strength that could be potentially used to IndyCar’s advantage.

30. What can IndyCar learn from NASCAR’s success? Are there elements of NASCAR’s marketing strategy that IndyCar could adopt?

Student responses to this question will depend on their knowledge of NASCAR and its marketing success. However, even novice students will recognize that NASCAR is a master of promotion and branding. One key to NASCAR’s success has been the ability of the association to brand individual driver personalities, racing teams, and cars. Driver personalities, in particular, are a major reason for NASCAR’s incredible fan support and loyalty. IndyCar began to have individual personalities emerge, particularly Danica Patrick, before her departure from the league. Overall, IndyCar has done little to create distinct driver personalities that are recognizable beyond the league’s hardcore fans.

Students might suggest promotion strategies that would help in this area.

Case 12 Mattel Gives Its Marketing Strategy a Makeover*

Synopsis:

As a global leader in toy manufacturing and marketing, Mattel faces a number of potential threats to its ongoing operations. Like most firms that market products for children, Mattel is ever mindful of its social and ethical obligations and the target on its corporate back. This case summarizes many of the challenges that Mattel has faced over the past decade, including tough competition, changing consumer preferences and lifestyles, lawsuits, product liability issues, global sourcing, and declining sales. Mattel’s social responsibility imperative is discussed along with the company’s reactions to its challenges and its prospects for the future.

Themes:

Environmental threats, competition, social responsibility, marketing ethics, product/branding strategy, intellectual property, global marketing, product liability, global manufacturing/sourcing, marketing control

Case Summary Mattel, Inc. is a global leader in designing and manufacturing toys and family products. Well known for brands such as Barbie, American Girl, Fisher-Price, and Hot Wheels, the company *

This case was prepared by Debbie Thorne, O. C. Ferrell, Jennifer Sawayda, and Kelsey Reddick. Copyright © 2022.

This case is meant for classroom discussion and is not meant to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. All sources used for this case were obtained through publicly available materials.

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boasts nearly $4.5 billion in annual revenue. Headquartered in El Segundo, California, Mattel is the second-largest toymaker in the world behind Lego Group. Like all major companies, Mattel has weathered its share of storms. The company has faced a series of difficult and potentially crippling challenges, including the lawsuits with MGA regarding ownership of the Bratz dolls.

Due to toy recalls, some analysts suggested that the company’s reputation was battered beyond repair. Mattel, however, has refused to go quietly. This case looks at leadership, Mattel’s core products, privacy issues, legal and ethical issues, product liability issues, lawsuits, and more.

Teaching Overview Mattel must develop a strategy to maintain its position and enhance its already well-known and trusted brands. Most students will be familiar with Mattel’s products. This case will interest students as it allows them to relate personal experiences and memories from childhood with the company that likely was behind many of them. Information is provided about a variety of marketing topics, which allows you to focus on the issues you deem most important.

How have the numerous changes in marketing strategy impacted Mattel’s bottom line, effectiveness, or culture? How do you determine whether (and to what degree) to alter products before entering foreign markets? What are the benefits and drawbacks of relying heavily on one customer or product line? How do ethics and social responsibility affect marketing strategy? How should a company handle widely publicized product recalls? How does legal activity affect marketing strategy?

Major SWOT Themes Brand recognition, leadership, competition, consumer preferences, social responsibility, marketing ethics, product/branding strategy, intellectual property, global marketing, product liability, global manufacturing/sourcing Problem/Decision Statement Today, Mattel faces many market opportunities and threats, including the rate at which children are growing up and leaving toys, the role of technology in consumer products, and purchasing power and consumer needs in global markets. The continuing lifestyle shift of American youth is of particular concern for Mattel. The phenomenal success of gaming systems, portable media devices, smartphones, and social networking sites among today’s youth is a testament to this shift. Children and teens are also more active in extracurricular activities (i.e., sports, music, and volunteerism) than ever before. Consequently, these young consumers have less time to spend with traditional toys.

Discussion Questions 31. Do manufacturers of products for children have special obligations to consumers and society? If so, what are these responsibilities?

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Mattel has a differential advantage in the area of responsibility to consumers and society. Mattel is meeting these responsibilities and is a source of internal strength.

Mattel not only encourages but also insists on its manufacturers’ ethical and legal conduct. The company has a written code of conduct—global manufacturing principles—that is distributed to each manufacturer, as well as other principles relating to safety and wages in adherence to all local laws. Mattel does not appear to have any major weaknesses in the area of responsibilities to consumers and society. Because Mattel primarily markets children’s products, it has a special level of integrity and accountability to maintain.

32. How effective has Mattel been at encouraging ethical and legal conduct by its manufacturers? What changes and additions would you make to the company’s global manufacturing principles?

Students should be encouraged to explore the Mattel website to learn more about the company’s manufacturing principles. Although Mattel was clearly lax about these issues before the recalls occurred, the company seems to have improved since that time.

Students should be encouraged to think about the inherent difficulties in managing operations on the other side of the world. Also, since the principles were created in 1997, much has changed in the world. Students should think about issues that could affect manufacturing principles in the future.

33. How can Mattel adjust its product mix to accommodate the continuing lifestyle shift of American youth?

Mattel has great growth potential with technology-based toys, especially in international markets, despite changing demographic and socioeconomic trends.

However, as Mattel saw with its canceled Aristotle device, Internet-based toys must be handled carefully due to privacy concerns. Additionally, continuing to pursue diversity as it has with Barbie Fashionistas and Creatable World could prove to be a winning tactic.

Case 13 Starbucks Perfects Its Blend*

*

This case was prepared by Jennifer Sawayda, Michelle Urban, Sarah Sawayda, Tri Nix, and Kelsey Reddick for and under the direction of O. C. Ferrell and Linda Ferrell, © 2022. It was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management.

All sources used for this case were obtained through publicly available material.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Synopsis:

Starbucks, the largest coffeehouse company in the world, has experienced immense success since its first store opened in 1971. Looking to the future, Starbucks is refining its distribution and product strategies to deliver convenience in addition to tasty food and beverages. The company has doubled down on innovation and become more agile in developing, testing, and releasing new products and systems.

Themes:

Product strategy, distribution strategy, environmental threats, competition, social responsibility, marketing ethics, branding strategy, global marketing, innovation, analysis of the customer environment, brand loyalty

Case Summary The first Starbucks store opened in Seattle’s Pike Place Market in 1971 serving fresh-roasted whole bean coffees. When Howard Schultz joined Starbucks in 1982 as director of retail operations and marketing, the company began selling coffee to restaurants and espresso bars.

The company serves more than 100 million customers per week and is the largest coffeehouse company in the world.

This case looks at Starbucks’ distribution strategy, its product strategy, its use of technology, its culture, and its social responsibility efforts. Additionally, this case looks at successes and challenges the coffeehouse company has faced.

Teaching Overview Starbucks has expanded across the United States and around the world, now operating more than 30,000 stores in 80 markets. Most students will be familiar with the Starbucks brand though they may not be familiar with the company’s history or its marketing strategy. Starbucks has made many changes over the last decade, including refining its distribution and product strategies and investing in innovation and product development.

Major SWOT Themes Product development, innovation, technology, competition, social responsibility, branding strategy, global marketing, brand loyalty Problem/Decision Statement The future looks bright for Starbucks. The company continues to expand globally. With new roasteries, the innovation lab, and implementing IoT, the company hopes that its innovation will continue to spread the brand name and the distribution of its coffee globally. Starbucks’ CEO, Johnson, a former tech executive, is pushing to address scale and complexity using technology to move into the future. With the rise of connected IoT devices, Starbucks has invested heavily in technology, particularly AI. The challenges the company experienced and

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will continue to experience in the future have convinced the firm to focus on its strengths and emphasize community involvement, outreach work, and its overall image and offerings.

Discussion Questions 34. How has Starbucks gained a competitive advantage with a core product that is a commodity?

Starbucks has successfully identified market trends and changing consumer preferences and adapted. As competition in specialty coffee drinks increased, Starbucks recognized the need to expand its brand in the eyes of consumers. With brand expansion in mind, the company began to adopt more products. In addition to coffee, Starbucks stores sell coffee accessories, teas, muffins, water, grab-and-go products, upscale food items, and wine and beer in select locations. Starbucks has worked to develop more healthconscious drinks to cater to customers’ changing preferences. Additionally, Starbucks has seen steady growth in cold brew beverages, which resonates with younger audiences.

35. What are the strategic opportunities and threats facing Starbucks in the future?

Students will identify a variety of opportunities and threats. Opportunities may involve changing consumer preferences or emerging technology. Threats may include economic factors, competition, and consumer expectations for sustainability. For example, despite Starbucks’ efforts to be more environmentally conscious, questions remain about other ecological issues, such as the company’s cup waste. To stay ahead, Starbucks will have to continue to innovate and meet the demands of sustainability-minded consumers.

36. Do you think Starbucks has grown because of its mission to put people ahead of profits or because of innovative ideas like online ordering and global roasteries?

Student responses will vary based on their impression of and personal experience with the company. Student should discuss what they think makes Starbucks successful and why.

Case 14 Zappos Finds the Perfect Fit*

Synopsis:

This case examines Zappos’s unique marketing strategy and corporate culture, both of which focus on delivering happiness to the company’s varied stakeholders. Despite a few stumbles along the way, Zappos has been a role model of success since its founding in 1999. The company’s charismatic CEO, Tony Hsieh, created a corporate culture that put its customers and employees

*

Harper Baird, Bernadette Gallegos, Beau Shelton, Jennifer Sawayda, Kelsey Reddick, and Jordan Burkes developed this case under the direction of O. C. Ferrell and Linda Ferrell, © 2022. It is intended for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by management. All sources used for this case were obtained through publicly available materials.

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ahead of financial success. The company was purchased by Amazon in 2010 but was allowed to run as an independent company. The case looks at Zappos’s business model and how it influences the company’s relationships with customers, employees, the environment, and its communities. The case also discusses some of the challenges the company faces and how it plans to move into the future.

Themes:

Marketing strategy, ecommerce, branding, long-term customer relationships, customer satisfaction, corporate culture, employee relations, social responsibility, customer loyalty, corporate reputation

Case Summary Can a company focused on happiness be successful? Zappos, an online retailer, proves that it can. The case discusses Zappos’s unique management style of focusing on employee happiness as the key to the firm’s success. The care that Zappos shows to its employees, customers, and other stakeholders has earned it praise for its ethics as well as its fun work environment.

Zappos remains committed to serving its customers and employees.

Teaching Overview Although many students will know of Zappos as a shoe retailer, this case is not about shoes or even retailing per se. Students should see Zappos as a culture and a way of doing business. The question is whether this culture and the Zappos way can be applied to other industries and product lines. This is also a case about leadership and how Zappos can ensure the sustainability of its culture.

Major SWOT Themes Leadership, social responsibility, brand loyalty, customer satisfaction, corporate culture, ecommerce, corporate reputation Problem/Decision Statement How can Zappos continue to leverage its unique culture and business model by expanding into different businesses? Zappos remains committed to serving its customers and employees. So far, the company has retained its unique culture and continues to expand into new product categories.

Discussion Questions 37. How would you define Zappos’s target market, and how would you describe its strategy to serve this market?

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Zappos serves a consumer that is more concerned with style and brand than it is with value. The company also serves the Internet generation—consumers who like to shop online and appreciate that Zappos makes shopping easy for them. Students can also argue that the average Zappos customer is not tech-savvy but shops with Zappos because of its superior customer service. Ask student how many of them have shopped Zappos.

Prompt students to suggest words that might fit the Zappos culture. Happiness may be the top pick.

38. Has Zappos’s emphasis on customer satisfaction contributed to its profitability? Explain.

The short answer is “yes.” Zappos emphasizes customer and employee satisfaction to a fault. That, and its “happiness” branding, is the mantra of the firm. Naturally, this leads to higher prices than competing firms. Students will note, however, that Zappos is not selling “frugality” or “value.” Students should also recognize that customer satisfaction is generally associated with higher profitability.

39. Has Zappos developed long-term customer relationships that provide a competitive advantage in the purchase of shoes and other products?

While this is not addressed in the case, most students will suggest that Zappos is effective at developing long-term customer relationships. This is most closely tied to the high degree of customer service offered by the company. Some students will argue that most consumers will not think of Zappos because they prefer to try on shoes and clothing before purchase. For these customers, Zappos must stimulate trial before it can think about keeping a customer for life.

Case 15

Gillette’s Razor-Sharp Innovation May Not Be Enough*

*

Michael D. Hartline, Florida State University, prepared this case for classroom discussion rather than to illustrate effective or ineffective handling of an administrative situation, © 2022. Editorial assistance was provided by Crawford Rummel, Kelsey Reddick, Jennifer Sawayda, Leanne Davis, Brent Scherz, Matthew Cagiolosi, Daniel Breiding, Nicole Dyche, Colin Roddy, and Ryan Wach.

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Synopsis:

Gillette ruled the razor market for years, but stiffening competition has made a dent in Gillette’s worldwide market share. Though Gillette has long held a reputation for its product innovation, the company struggled to catch up to competitors with disruptive distribution strategies. Additionally, the razor industry is shrinking as the U.S. population ages and consumer preferences shift.

Gillette must decide how to put the razor wars behind it and maintain or increase its share of the global razor market.

Themes:

Product leadership, product innovation, pricing strategy, distribution strategy, integrated marketing communication, segmentation, competition, sports marketing, global marketing, strategic focus

Case Summary Gillette has always prided itself on providing the best shaving care products for men and women. Through the years, Gillette strived to stay on the cutting edge of shaving technology in a market that thrived on product innovation. This focus led to a game of one-upmanship with Schick as each company introduced three-bladed (Gillette’s Mach3), four-bladed (Schick’s Quattro), and five-bladed (Gillette’s Fusion) razors in rapid succession. Now, under the ownership and guidance of Procter & Gamble, Gillette faces a saturated U.S. market thanks to competition from subscription-based services such as Dollar Shave Club and affordable brands such as Harry’s, which are eating into Gillette’s profits.

Teaching Overview This case can be used for a variety of classroom discussions. First, the case demonstrates how a firm can grow through both diversification and innovation. A second approach, and the theme of the case, is related to the use of product innovation as a means of maintaining market dominance. The case discusses the history of the razor wars between Gillette and Schick. Many experts believe that product innovation has come to an end in this market. If this is true, Gillette will need to find new ways to stay on top. The challenge for Gillette is to push the envelope without creating innovations that are seen as trivial.

Major SWOT Themes Product development, innovation, brand loyalty, distribution strategy, segmentation, competition, mature markets Problem/Decision Statement Gillette needs a plan for continued domination in the razors and blades market. This plan might need to forgo the traditional emphasis on product innovation and instead focus on continued innovation in the company’s marketing program. Gillette must also find a way to convince consumers that its premium pricing is truly worth it.

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Discussion Questions 40. Evaluate product innovation at Gillette throughout its history. Has Gillette been a victim of its own success? Has product innovation in the wet-shaving market come to an end?

Explain.

Though Gillette is certainly in an enviable position, the company has become a victim of its own success. Students should be encouraged to debate whether innovation in this market has come to an end. There are signs that this may be the case. Dollar Shave Club, for example, uses the concept of product innovation in its commercials to poke fun at the competition, asking why multiple blades and technology are needed to get a clean shave.

41. What do you make of the razor wars, first between Gillette and Schick, and now with Dollar Shave Club and Harry’s? Does Gillette face a serious threat from competitive inroads? Explain.

The razor wars have certainly been good for all companies in terms of product innovation, sales, and notoriety. However, the battle may have hastened the end of meaningful product innovation in the industry. Even if meaningful innovation could be developed, one must question whether the added costs (and higher retail prices) would make the new product viable in the market. It is doubtful that consumers would be willing to pay still higher prices for only marginally better shaving performance. This is the reason that Gillette faces a considerable threat from online shaving clubs. Students may also note the rise in popularity of beards among men and thus the rise in beard grooming products.

42. What actions would you recommend over the next five years that could help Gillette maintain its worldwide dominance in the shaving market? What specific marketing program decisions would you recommend?

Students should be encouraged to develop a long-term plan for the company. Some students will argue that global expansion and the pursuit of the youth market are good strategies. The question of whether Gillette should worry about pricing is an interesting one. Even a fractional percentage in market share represents billions of dollars in this market. In this sense, Gillette should be concerned about any part of its strategy that allows competitors to steal market share. The key for Gillette, however, is to develop untapped markets rather than to continue battling the competition for current customers.

Case 16 TOMS Kicks the One for One Model to the Curb* *

This case was prepared by Lexie Olszewski, Jennifer Sawayda, Sarah Sawayda, and Kelsey Reddick for and under the direction of O. C. Ferrell and Linda Ferrell, © 2022. It was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. All sources used for this case were obtained through publicly available material.

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Synopsis:

TOMS, a for-profit known for its shoes, pioneered the one for one business model. For every product purchased, TOMS donated a pair of shoes to a child in need. Over time, TOMS attempted to stay relevant by creating new product lines. However, despite the introduction of eyewear, coffee, and bags, footwear product innovation held the company back instead of moving it forward. Now, the company is evolving its mission.

Themes:

Ethics, marketing strategy, social responsibility, product strategy, product innovation, sociocultural trends, supply chain

Case Summary TOMS is a for-profit business with a large philanthropic component. The company was started after entrepreneur Blake Mycoskie witnessed the poverty among villagers in Argentina, poverty so extreme that the villagers could not even afford a pair of shoes. Mycoskie returned to the United States with 200 Argentinian shoes and a mission. He would start an organization that would provide a pair of shoes for an Argentinian child in need for every pair of shoes purchased from his business. TOMS quickly became popular.

TOMS’s founder, Mycoskie, developed a revolutionary business model that has evolved in recent years. From its founding to its operational approach, the TOMS organization has been able to carry out its central mission. Its unique corporate culture is a necessity for the successful operation of TOMS, as well as the firm’s marketing strategy. TOMS’s business model has impacted today’s society as well as other business organizations as it has addressed changing attitudes toward social issues. TOMS faces various criticisms and risks and has reinvented its famous One for One model as it charts its course for the future. These topics, from the founding of TOMS to its future as a business, are discussed in the following sections.

Teaching Overview This case provides an interesting look at a philanthropic for-profit business. TOMS pioneered the one for one business model but is now changing its model. The continual evolution of the giving model stands to keep the brand relevant to its existing customers while attracting new customers. Students should consider the implications this has for other prominent companies who have adopted the one for one model.

Major SWOT Themes Social responsibility, product strategy, product innovation, sociocultural trends, supply chain, social entrepreneurship

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Problem/Decision Statement Mycoskie revolutionized social entrepreneurship by introducing his One for One movement.

Many questioned whether or not the One for One business model was sustainable, so the recent evolution of its giving model indicates that there is an even bigger question at hand: “How can TOMS continue to adapt to be sustainable for the future?”

Discussion Questions 43. What are strengths and weaknesses for TOMS in its strategy going forward?

Student responses will vary. The evolution of the giving model stands to keep the brand relevant to its existing customers while attracting new customers. TOMS can capitalize on hot social issues that resonated with consumers such as shoe giving, safe water, ending gun violence, homelessness, mental health, or equality. However, some students may argue that this dilutes TOMS’s social mission. Its new plan to contribute at least one-third of net annual profits to a giving fund that will be used for shoes and grants is less straight-forward than the one for one model.

44. How has TOMS positioned its products in a highly competitive market?

TOMS customers find value in the shoes TOMS sells as well as the philanthropic component of the purchase. While many organizations try to incorporate social entrepreneurship into their business operations, TOMS took the concept of philanthropy one step further by blending a for-profit business with a philanthropic component in what they termed the One for One model. For every product purchased, TOMS donates products or resources to help those in need. The cost of providing the products to those in need is already built into the products’ sales price, turning the customer into the benefactor.

45. Given the adjustments to the TOMS business model, is the One for One movement business model appropriate for any other businesses?

Student responses will vary. Ask students to back up their opinion with examples of other businesses following the one for one business model. With a little digging, students will find there are actually few true one-for-one businesses.

Case 17 Herbalife Manages Risks for Long-Term Success*

Synopsis:

Herbalife Nutrition Ltd., a nutritional health company, is one of the top direct selling companies in the world. However, despite Herbalife’s long-term success,

*

This case was developed by O. C. Ferrell, Auburn University; Bryan Hochstein, University of Alabama; and Linda Ferrell, Auburn University, © 2022. It was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. All sources used for this case were obtained through publicly available material.

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there have been concerns over its direct-selling business model. This case provides insight into the opportunities for success and the need to manage risks associated with direct marketing using a multilevel compensation system.

Specifically, we explore the involvement of the regulatory and political system in addressing charges of misconduct in the context of William Ackman and Pershing Square Capital Management’s attack on Herbalife and how Herbalife managed this conflict. The investigation into the operations of Herbalife improved the understanding of how direct selling can be an effective business model that provides benefits to all stakeholders.

Themes:

Nontraditional channels, direct selling, multilevel marketing, product strategy, customer engagement, social responsibility, marketing strategy, self-regulation

Case Summary Herbalife is a leading nutritional health company that has had a successful and sustainable business model over the last 40 years. However, despite Herbalife’s long-term success, there have been concerns over its direct-selling business model. A difference between Herbalife and most companies is that its products are not sold in retail stores; rather, consumers interact with independent sellers to order products. Herbalife is a publicly traded company headquartered in Los Angeles, California, that has loyal customers and also many critics.

Herbalife, like many multilevel marketing companies, has been accused of being a pyramid scheme. In 2012, prominent hedge fund manager and billionaire investor William Ackman announced that he and his company, Pershing Square Capital Management, had spent a year studying Herbalife and concluded it was an elaborate pyramid scheme. Ackman’s allegations launched an unprecedented storm of controversy for Herbalife.

Teaching Overview The objective of this case is to provide insight into the opportunities for success and the need to manage risks associated with direct marketing using a multilevel compensation system. The involvement of the regulatory and political system in addressing charges of misconduct and the efficacy of the direct selling business model is examined in the context of William Ackman and Pershing Square Capital Management’s attack on Herbalife. How Herbalife managed this conflict including the negative publicity by news media demonstrates the importance of understanding, documenting, and successfully defending the operations of a business. The investigation into the operations of Herbalife opens the door to an improved understanding of how direct selling can be an effective business model that provides benefits to all stakeholders.

Major SWOT Themes Legal and regulatory threats, self-regulation, direct selling, multilevel marketing, product strategy, customer engagement, social responsibility

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Problem/Decision Statement Despite Herbalife’s investigation and resulting restructuring, the company has emerged strong and well-positioned to continue its success by aligning core competencies of its products and business model with changing consumer preferences and needs.

Herbalife will face the same challenges other members of the retail industry must address in the future. Internet sales are now 10 percent of retail sales and Amazon has more than 50 percent of the online retail market. Herbalife may be positioned better to face this competition because it does not have the overhead of expensive retail stores. The need for assistance and consultation in buying nutritional products provides the opportunity for person-to-person interaction.

Discussion Questions 46. Describe the differences between a legitimate direct selling business model and a pyramid scheme.

Multilevel marketing is when direct sellers earn income from their own sales of products as well as commissions from sales made by those they have recruited to sell the product. In most cases, multilevel marketing companies are legitimate because they sell products to consumers and do not require direct sellers to recruit others in order to earn a profit. Thus, properly monitored and managed multilevel direct selling models are not pyramid schemes, as they offer companies a sustainable way to directly sell their products through a hardworking salesforce of individuals that believe in the products they sell.

The four defining characteristics of a pyramid scheme are laid out by the Koscot Test, which is used to determine whether a business is a pyramid scheme. These characteristics are (1) people pay the company to participate; (2) in return, they gain the right to sell a product or service; (3) they are compensated for recruiting others; and (4) this compensation is unrelated to whether or not any of the product or service is actually sold. In other words, participants in pyramid schemes have little or no incentive to sell products, but rather have the incentive to aggressively recruit others into the scheme. The key is where the real profit is earned; if it is not by actual product sales but by sales of new contractorships, it is likely a pyramid scheme.

47. Evaluate how Herbalife managed its public relations risks.

Herbalife responded to Ackman’s attack in force, including hiring a lobbying team and launching one of the largest marketing campaigns in its history to bolster and reemphasize its brand. Over the length of the dispute, Herbalife spent multiple millions of dollars supporting its position.

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Many students will suggest that Herbalife’s public relations efforts were worth the expense. Investor Carl Icahn, a supporter of Herbalife throughout the controversy, stated, “I think it’s ironic, but factual, that as a result of the propaganda against the company that it now has a much better idea of who their customers are and it opens the door for Herbalife to greatly benefit.”

48. Why has Herbalife continued to be successful after the attack by Ackman and an FTC investigation?

Herbalife learned several lessons throughout the investigation and has improved business practices as a result of the FTC settlement. The investigation confirmed that Herbalife has maintained a 40-year sustainable business model. Additionally, Herbalife continues to adapt to changes in consumer preferences and consumer megatrends.

Case 18 Walmart Dominates with World-Class Supply Chain*

Synopsis:

Walmart, the world’s largest retailer, has a competitive advantage with its robust supply chain and everyday low prices. However, e-commerce giant Amazon poses a major threat. Walmart must closely evaluate its marketing program and enhance its distribution strategy to address changing consumer shopping habits and preferences.

Themes:

Ethics, sustainability, distribution strategy, supply chain management, pricing strategy, competitive advantage, value-based pricing (EDLP)

Case Summary Walmart is an icon of American business. With net sales of more than $514 billion and more than 2.2 million employees, the world’s largest retailer must protect its leading retail position.

The company’s stated mission is to help people save money and live better. This case begins by briefly examining the growth of Walmart. Next, it discusses the company’s pricing and distribution strategies as well as what the company is doing to fend off competition from Amazon. Additionally, we address the ethics issues including accusations of discrimination, leadership misconduct, bribery, and unsafe working conditions. We discuss how Walmart has dealt with these concerns, as well as some of the company’s endeavors in sustainability and social responsibility. The analysis concludes by examining what Walmart is doing to increase its competitive advantage.

Teaching Overview *

This case was prepared by Kelsey Reddick, Jennifer Sawayda, Sarah Sawayda, and Michelle Urban under the direction of O. C. Ferrell and Linda Ferrell, © 2022. It was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. All sources used for this case were obtained through publicly available material and the Walmart website.

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Most students will be familiar with Walmart, and many will have personal experience with the company. This case provides students with the opportunity to understand why Walmart is so successful and learn about its pricing and distribution strategies. This case also looks at several of the ethics issues Walmart has faced. Students can conduct a comprehensive SWOT analysis for Walmart. Students should consider ways that Walmart can maintain its position as the world’s largest retailer.

Major SWOT Themes Competition, ethics, pricing strategy, value-based pricing (EDLP), distribution strategy, supply chain management, e-commerce, competitive advantage, strategic partnerships Problem/Decision Statement Walmart, with its robust supply chain and everyday low prices, must not only defend its top spot as the world’s largest retailer but also fight to improve its e-commerce performance.

Discussion Questions 49. Do you think Walmart will be able to catch up to Amazon in online sales?

Student responses will vary. Students should be encouraged to discuss each retailer’s competitive advantages. For example, some students may believe that Amazon will be successful in taking a larger portion of grocery business while others will suggest Walmart+ elevates Walmart’s online offering.

50. Describe the advantages and disadvantages of being a supplier for Walmart.

Some critics believe that pressure to achieve Walmart’s standards will shift more of the cost burden onto suppliers. When a supplier does not meet Walmart’s demands, the company may cease to carry that supplier’s product or, often, will be able to find another willing supplier of the product at the desired price. Walmart’s power over suppliers stems from the company’s size and the volume of products they require. Many companies depend on Walmart for much of their business. This type of relationship allows Walmart to significantly influence terms with its vendors.

Despite these criticisms, there are corresponding benefits to being a Walmart supplier.

By having to become more efficient and streamlined for Walmart, companies develop competitive advantages and can serve their other customers better as well.

51. How can Walmart’s physical stores serve as an advantage when competing in ecommerce?

Walmart’s established brick-and-mortar presence is a strength that Amazon has not matched yet. Omnichannel, which integrates all the places and ways consumers and

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retail firms manage the flow of communications and products, proved to be a winning strategy during the pandemic. For example, as online-only retailers faced inventory stockouts, brick-and-mortar retailers could tap into store inventory. If Walmart+ is executed well, Walmart’s omnichannel retailing could serve to elevate the offering above Amazon Prime.

Case 19 E-Commerce Soars with Shopify*

Synopsis:

Shopify, a Canadian e-commerce company, is used by more than 1 million businesses worldwide. Instead of marketing itself as an e-commerce platform, Shopify positions itself as an all-in-one service with a variety of tools to help business owners start, run, and grow a business. Shopify believes that investing in the planet, local communities, customers, and employees will bring the company long-term success.

Themes:

E-commerce, product strategy, supply chain management, product strategy, product mix, pricing strategy, distribution, competitive advantage, strategic partnerships, social responsibility

Case Summary Instead of marketing itself as an e-commerce platform, Shopify positions itself as an all-in-one service with a variety of tools to help business owners start, run, and grow a business. The company eliminates the need for many third-party tools and resources, such as e-mail marketing services and third-party logistics management, with its products. This case also explores Shopify’s pricing strategy, the competition it faces from other e-commerce platforms, and Shopify’s commitment to social responsibility. The company believes that investing in the planet, local communities, customers, and employees will bring the company long-term success.

Teaching Overview Students may have limited knowledge of Shopify and its competitors such as Magento, BigCommerce, WooCommerce, and Wix, but they have likely made a purchase from online merchants using these platforms. Shopify’s diverse product portfolio has positioned it against email marketing companies, 3PLs, banks, and even Amazon. Shopify’s ecosystem is its main competitive advantage. However, this attempt to be all things to its merchants could prove to be challenging.

Major SWOT Themes *

Kelsey Reddick, Crawford Rummel, and Carrie Holt prepared this case under the direction of O. C. Ferrell, © 2022.

It was prepared for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by management.

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Competition, product strategy, e-commerce, digital marketing, pricing strategy, competitive advantage, strategic partnerships Problem/Decision Statement Looking to the future, Shopify will have to protect its top spot as the number-one e-commerce platform. Shopify must find ways to build on this momentum long-term. Shopify must keep customer churn from free trials to a minimum while focusing on the long-term satisfaction of subscribed clients.

Discussion Questions 52. How is Shopify different from other e-commerce platforms?

Rather than offering a basic shopping cart solution or an open-source platform that requires coding knowledge, Shopify serves as a one-stop-shop for all e-commerce needs. Shopify focuses on satisfying multiple customer needs: the need for an online store, the need for customer support, the need for order fulfillment, the need for payment transaction tools, and more.

53. Describe Shopify’s product strategy.

Shopify has a wide product mix and has built a large ecosystem around its many à la carte services. Many e-commerce retailers use separate tools and services to run their business (e.g., web host, e-mail marketing platform, third-party logistics provider), but Shopify has solidified its lead over the competition by identifying common struggles ecommerce retailers face and creating tailored solutions within the Shopify ecosystem.

54. What are Shopify’s strengths? Weaknesses?

Shopify’s ecosystem is its main competitive advantage. Many clients are willing to pay a monthly premium for convenience, customer support, and easy-to-use features.

Additionally, Shopify allows merchants to create their own store on a domain they own.

Shopify’s extensive product mix is just one of many reasons the company stands out from its competition. While many Shopify products largely eliminate the need for thirdparty tools and services, the e-commerce platform still sees value in strategic partnerships. By working with other companies, such as Walmart, Facebook, and Pinterest, Shopify stands to add value for its merchants and attract new clients.

Some will consider the Shopify ecosystem to be a strength while others will consider it to be a weakness. For example, some developers prefer open-source platforms such as Magento or WooCommerce. Additionally, Shopify seems to offer fewer “out-of-the-box” perks than competitors such as BigCommerce. One concern about this pricing model is

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All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

that Shopify users could easily find themselves with a large bill by registering for too many à la carte applications to extend the functionality of their websites.

Case 20 | Mini Case Cutting Edge Quality at Cutco*

Synopsis:

This case provides an overview of Cutco, a company that has sold cutlery and accessories through direct sales for more than 70 years. The case explores Cutco’s direct selling distribution models and its foray into retail as well as the company’s commitment to quality and social responsibility.

Themes:

Direct selling, customer relationships, social responsibility, marketing strategy

Case Summary In 1949, Cutco began manufacturing knives in Olean, New York, when Alcoa Corp and Case Cutlery formed a joint venture to begin creating high-quality cutlery. Since then, the company has grown to become a nationally recognized brand known for its high-quality, American-made products. Cutco uses a single-level method of compensation, which means the sales representatives earn commission on the sales they make and are not compensated for creating a “downline” or sales organization of other sales representatives.

Teaching Overview This case provides a look at a single-level direct selling company rather than a multilevel direct selling company. College students make up the majority of Cutco’s sales force with more than 40,000 college students selling for Cutco each year, so many students will have firsthand experience with the company.

Major SWOT Themes Direct selling, single-level direct selling, customer relationships, social responsibility, promotion Problem/Decision Statement Cutco has high-quality products and a unique business model. It is a nationally recognized brand for cutlery that is synonymous with quality. Cutco continues to expand its product offerings and has begun complementing its direct sales distribution with retail and Internet sales. Even with its evolving marketing strategy, the high quality of its knives and its commitment to direct sales have remained constant since Cutco began in 1949.

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This case was prepared by O. C. Ferrell and Linda Ferrell, © 2022. It was prepared for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by management.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Discussion Questions 55. How has Cutco used quality to differentiate its products?

Quality is one of the highest priorities for Cutco. Cutco’s knife blades are made from a high carbon stainless steel, which goes through a 3-stage heat treatment process to ensure that blades can take a sharp edge, maximize their resistance to corrosion, and won’t snap under pressure. All knives have “full-tang construction,” which means that the blade’s metal extends all the way through the handle of the knife to create stability.

The handles are made from an acetal copolymer thermo-resin, which gives the handles high strength, toughness, and resistance to abrasion. Rivets that hold the handle together are made of a nickel-silver alloy that doesn’t expand or contract from heat.

This process creates a high-quality knife that is built to last. However, wear and tear are inevitable, so customers can get their knives serviced at any time. The company’s “Forever Guarantee” adds to its promise of quality.

56. How does Cutco add value to its products through the “Forever Guarantee”?

All Cutco knives come with a “Forever Guarantee” that allows customers to have their knives serviced for free, regardless of when the knives were purchased, so the knives can be passed from generation to generation. This is similar to a warranty. Offering good basic warranties or extended warranties for an additional charge can reduce risk, another nonmonetary cost.

57. Does the direct selling channel help position Cutco’s high-quality knives in the marketplace?

Student responses will vary depending on their personal experiences with and attitudes toward direct selling. Many students will suggest the direct selling model is a more personal approach to sales. Since 1949, Cutco has used a direct sales channel. Direct selling can be an effective business model that provides benefits to all stakeholders.

Person-to-person sales allow a company to build relationships with its customers. The sales force for Cutco typically starts by selling knives to their friends and family and then building a network of clients based on referrals rather than going door-to-door.

Case 21 | Mini Case The Cocoa Exchange Finds a Sweet Spot in the Supply Chain*

Synopsis:

The Cocoa Exchange, a subsidiary of Mars, Incorporated (makers of products such as M&M, Snickers, and Twix) sells exclusive and premium chocolate products directly to consumers through a commission-based sales force under four product lines: Pod & Bean, Dove Signature, Pure Dark, and VITALIZE. By

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This case was prepared by O. C. Ferrell and Linda Ferrell, © 2022. It was prepared for classroom discussion rather than to illustrate effective or ineffective handling of administrative, ethical, or legal decisions by management.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

leveraging supply chain efficiencies and utilizing direct marketing channels, The Cocoa Exchange creates incremental, non-cannibalizing growth for Mars.

Themes:

Direct selling, marketing channels, customer relationships, supply chain management, product strategy, sustainability, social responsibility

Case Summary In May of 2017, Mars, Incorporated, the world’s largest chocolate company, announced the launch of a stand-alone subsidiary called The Cocoa Exchange. While Mars focuses on massproducing products such as Snickers and M&M’S that are available in all distribution channels, The Cocoa Exchange sells exclusive and premium chocolate products directly to consumers through a commission-based sales force under four product lines: Pod & Bean, Dove Signature, Pure Dark, and VITALIZE. The Cocoa Exchange’s mission is to create incremental, noncannibalizing growth for Mars through niche products targeting individual consumers rather than the mass market. The company accomplishes this by creating supply chain efficiencies, thanks to its parent company, and using direct marketing channels with its direct selling business model.

Teaching Overview This case is interesting because of the complexity of the cocoa supply chain. The Cocoa Exchange also greatly benefits from its parent company’s established supply chain. Students should easily be able to identify The Cocoa Exchange’s strengths and weaknesses as well as external opportunities and threats.

Major SWOT Themes Direct selling, single-level direct selling, customer relationships, social responsibility, sustainability, supply chain management, promotion

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

All cases Test Bank for Marketing Strategy, 8th Edition by O. C. Ferrell, Michael Hartline, Bryan W. Hochstein

Problem/Decision Statement The Cocoa Exchange is a unique company designed to sell premium and exclusive products directly to customers. As a subsidiary of Mars, Incorporated, The Cocoa Exchange benefits from an established supply chain. The chocolate is then sold through its direct selling model where curators work off of commission to sell products directly to customers. The Cocoa Exchange also puts a strong emphasis on the sustainability of cocoa as well as social responsibility issues within the supply chain. The Cocoa Exchange helps to increase the supply of cocoa and improve sustainability.

Discussion Questions 58. How is The Cocoa Exchange different than its parent company?

While Mars focuses on mass-producing products such as Snickers and M&M’S that are available in all distribution channels, The Cocoa Exchange sells exclusive and premium chocolate products directly to consumers through a commission-based sales force under four product lines: Pod & Bean, Dove Signature, Pure Dark, and VITALIZE. The Cocoa Exchange’s goal is to make specialty chocolate products, such as Pod & Bean White Chocolate Raspberry Honey Mustard or Dove Signature Dark Chocolate Espresso Bites, that appeal to a more targeted slice of the market. Having less-intense market coverage adds to the exclusivity of the company’s premium products and contributes allure to the luxury brand.

59. What are the benefits of direct selling? How does this impact the supply chain?

In this case, direct selling encourages an entrepreneurial spirit in The Cocoa Exchange’s chocolate sellers, allows The Cocoa Exchange to find new customers, and helps the company to maintain a robust and efficient supply chain.

60. How are The Cocoa Exchange’s sustainability efforts impactful?

The Cocoa Exchange aims to improve conditions for farmers so that they can create a larger supply of cocoa. The company is striving to achieve this by committing to cocoa certification to ensure farms are run sustainably and investing in cocoa research to study how to raise productivity and improve farming communities.

© 2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.