Instructor Solution Manual For M Marketing 8th Edition by Dhruv Grewal and Michael Levy Chapter(1-1

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Instructor Solution Manual For M Marketing 8th Edition Dhruv Grewal and Michael Levy Chapter 1-19

Chapter 1 overview of marketing Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview In this chapter, the goal is to provide an overview of marketing and encourage students to think about the specific aspects of the marketing mix.

Brief Chapter Outline What Is Marketing?

The Importance of Marketing over Time How Does Marketing Create Value, and How Do Firms Become More Value Driven?

Learning Objectives LO1-1

Define the role of marketing.

Marketing is the activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Marketing strives to create value in many ways. If marketers are to succeed, their customers must believe that the firm’s products and services are valuable; that is, they are worth more to the customers than they cost. Another important and closely related marketing role is to capture value of a product or service based on potential buyers’ beliefs about its value. Marketers also enhance the value of products and services through various forms of communication, such as advertising and personal selling. Through communications, marketers educate and inform customers about the benefits of their products and services and thereby increase their perceived value. Marketers facilitate the delivery of value by making sure the right products and services are available when, where, and in the quantities their customers want. Better marketers are not concerned about just one transaction with their customers. They recognize the value of loyal customers and strive to develop long-term relationships with them.

LO1-2

Detail the evolution of marketing over time.

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Marketing has evolved from a production or sales-oriented approach, in which firms told people what they could and should buy, to a market- and value- oriented perspective. In this more recent view, firms look to their markets to tell them what they need to product and provide, in a way that creates value for them and their customers.

LO1-3

Describe how marketers create value for a product or service.

Value stems from at least four main activities that value-driven marketers undertake and are reinforced throughout the book:  Adding value, such that they leverage various elements of marketing and work to build relationships with partners and customers to ensure that they introduce their product, service, or idea to the marketplace at just the place and time that customers want it.  Marketing analytics, which companies use to gather vast amounts of information about customers and competitors, then analyze it and share it across their own organization and with partner firms.  Social and mobile marketing, to take advantage of new technologies and connect with customers using the latest social media channels.  Ethical and societal dilemmas, such that firms engage in conscious marketing that takes into account the benefits and costs of their actions for all stakeholders.

Extended Chapter Outline I. What Is Marketing? (PPT 1-5) A.

Marketing Is About Satisfying Customer Needs and Wants (PPT 1-6)

B.

Marketing Entails an Exchange Adding Value 1.1: Creating a New Transportation Market: The Lime Line of Rental Scooters Lime’s rise in popularity for those who want an environmentally conscious way of ride-sharing. Business was strong until the COVID 19 outbreak, but survived and began to rebound in October 2020. However, the company has liabilities grounded in the improper use and storage of the scooters. ―Juicers‖ track the scooters to make sure they are properly stored and maintained. To encourage a sense of community, while also addressing safety concerns, Lime’s blog features videos teaching safety precautions and encouraging riders to share their experienced through social media. The company is partnering with third party providers to find other winter month transportation for their patrons.

C. 1-10)

D.

Marketing Creates Value through Product, Price, Place, and Promotion Decisions (PPT

1.

Product: Creating Value (PPT 1-11)

2.

Price: Capturing Value (PPT 1-12)

3.

Place: Delivering the Value Proposition (PPT 1-13)

4.

Promotion: Communicating the Value Proposition (PPT 1-14)

Marketing Can Be Performed by Individuals and Organizations (PPT 1-15)

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Marketing Affects Various Stakeholders (PPT 1-16) ethical & societal dilemma: It’s a Cinch: By Aggregation Local Offerings, Cinch Market Aims to Make it Easy to Shop Local highlights how Brooklyn based Cinch Market gives shoppers the ability to shop locally rather than having to resort to Amazon when they need to purchase online and need quick delivery. A Clinch Market employee visits local stores, gathers the items the shopper wants, and has them delivered to the shopper’s home. The company operates on the following principles: community over profit, taking good care of each other, and we are better together.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 1-17)

1. What is the definition of marketing?

Answer: Marketing is the activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large

2. Marketing is about satisfying _____ and _____.

Answer: Marketing is about satisfying needs and wants.

3. What are the four components of the marketing mix?

Answer: The four components of the marketing mix are product, place, price, and promotion.

4. Who can perform marketing?

Answer: Both individuals and organizations can perform marketing as marketing can entail B2C, B2B, and C2C.

II.

The Importance of Marketing Over Time (PPT 1-18)

A.

Production-Oriented Era

B.

Sales-Oriented Era

C.

Market-Oriented Era

D.

Value-Based Marketing Era (PPT 1-19 and PPT 1-20) Adding Value 1.2: A Lipstick Option for those Who Dream of a Hermes discusses Hermes philosophy of creating value through the high quality of its expensive products. It focuses primarily on the quality and unique textures of the company’s new lipstick, the first product if its cosmetic line. The price ranges from $67 - $72 for the initial tube and $42 for a refill. This is unlikely to be very profitable, but the company focuses more on reputation and providing quality products.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 1-21) ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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What are the various eras of marketing?

Answer: The eras of marketing include the production era, sales era, market era, and valuebased era.

III. 22)

How Does Marketing Create Value, and How Do Firms Become More Value Driven? (PPT 1-

A.

Adding Value

B.

Marketing Analytics (PPT 1-24)

C.

Social and Mobile Marketing (PPT 1-25) Marketing Analytics: Scan Your Face, Drive Away in Less Than a Minute: Using Biometrics at Hertz Rental Locations discusses Hertz rental company partnership with Clear, a biometrics service provider, to recognize loyal customers through a quick scan.

This allows weary travelers to obtain their rental cars in just about 30 seconds. Its success in Atlanta lead Hertz to announce plans to introduce it in other busy hubs, Including the Los Angeles and JFK International Airports.

Social and Mobile Marketing: Marketing Your TikToc Account by . . . Sleeping? highlights a new trend on attracting followers on TikToc by sleeping. These users leave their cameras open while sleeping and earn coins. Some report earning as much as $10 - $50 a session.

D.

Ethical and Societal Dilemma (PPT-26)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PP 1-27)

1. Does providing a good value mean selling at a low price?

Answer: Value-based marketing isn’t just about low price; it is also about creating strong products and services.

2. How are marketers connecting with customers using social and mobile media?

Answer: Marketers are steadily embracing new technologies, such as social and mobile media, to allow them to connect better with their customers and thereby serve their needs Ethical and Societal Dilemma 1.2: After Axing Straws, Starbucks Still Faces Criticism for Single-Use Plastic because it is replacing the plastic straws it is phasing out with polypropylene lids that cannot be recycled in the United States. China, the leading market for polypropylene recycling has recently banned further imports leaving only countries with limited abilities as an outlet. Starbucks will likely need to reevaluate its practices to find ways it can make more meaningful changes.

.

Additional Resources

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Place is one of the most difficult concepts for students because it is largely invisible to them as consumers. They touch hard goods, experience services, view and hear promotions, and pay for what they buy, but it can seem that products almost appear magically. One recent trend among environmentally conscious consumers is to seek out products produced within a 100-mile radius of their hometowns. Buying these products reduces costs and detrimental environmental effects by reducing emissions associated with transportation and storage. Students should visit local grocery markets, identify goods, and investigate how far the products traveled (and by what means) to reach the store’s shelves.

From this experience, a rich discussion of both distribution decisions and marketing’s impact on society can evolve.

To make the eras of marketing clear to students, divide the class into groups with each group assigned to a specific era. Ask the students to identify a business that adheres to their assigned era in terms of its business philosophy and approach. They should present the business to the class with evidence of the business’s philosophy. Each brief presentation should include an assessment of whether the orientation is appropriate to the business given its competitive environment, target audience, and positioning strategy and if not, what orientation would be best.

Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Application Exercise

Type

Zipcar: Creating Value in the Marketplace The Marketing Mix: Travel Goods and Services

Case Analysis Click & Drag Keyboard Navigable Video Case Video Case Video Case Video Case Case Analysis Video Case Video Case

The Marketing Mix: Travel Goods and Services Jeans Value: The Bottled Water Industry Delivering Value at Red Mango Dunkin’ Donuts: Delivering on the Brand Promise From Beans to Pralines: The Global Chocolate Market Making a Market: Vosges Haut-Chocolat ISeeIt Video Case: Value Creation Through the Marketing Mix KIND Bars for a Kinder World Marketing at The Gluten Free Bar (GFB) A Flood of Water Consumption Choices

Case Analysis Video Case Case Analysis

Learning Objectives 0101 02 03 X X X X X X X X X X X X

X X X X X X

X X X

X X

X

X X

ZipCar: Creating Value in the Marketplace 

Activity Type: Case Analysis



Learning Objectives: 01-01, 01-02, 01-03



Difficulty: Medium



Activity Summary: This case describes Zipcar’s operations, focusing on how it creates value.

Students answer questions relating the case to chapter concepts.

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Activity 

Introduction: Nearly a decade ago, the founders of Zipcar decided to bring the car-sharing experience to the United States. Since then, Zipcar has developed the gold standard by offering its members 24/7 access to thousands of cars around the world and creating a revolution in the way many people think about alternate transportation.



Concept Review: Understanding the marketplace, and especially consumers’ needs and wants, is fundamental to marketing success. Marketing focuses on creating value for customers, clients, partners, and society at large.

Follow-up Activity

Zipcar has a special program targeted at universities. Ask the students the following questions:  How might students’ wants and needs differ from those of Zipcar customers in general? 

What kind of marketing (B2C, B2B, C2C) is Zipcar engaging in when it works with universities to get Zipcar locations approved on campus?



How can Zipcar create value for university administrators, such that they would be interested in having Zipcar locations on campus?

After discussing these points, visit the Zipcar website and look at the ―for universities‖ tab. Note the two columns addressing how Zipcar creates value for two different audiences: university administrators and students.

The Marketing Mix: Travel Goods and Services 

Activity Type: Click & Drag



Learning Objectives: 01-01



Difficulty: Medium



Activity Summary: The student is presented with eight marketing activities performed by two travel companies—one that manufactures products, and one that offers services. Students are asked to classify the activities according to both the marketing mix element and the product type (goods or services) it represents.

Activity



Introduction: Two travel-oriented companies—one a producer of goods, the other a service provider—have different marketing mixes. In this activity, you categorize a set of statements about each company's marketing activities according to the four Ps (product, price, place, and promotion).



Concept Review: Marketing traditionally has been divided into a set of four interrelated decisions known as the marketing mix, or four Ps: product, price, place, and promotion.

A sentence of explanation is offered for each of the rectangles to the left when the student rolls the mouse pointer over it.

Follow-Up Activity 

In small groups, have students select a company/brand from which they buy products or services.

Then, have them fill in examples of marketing activities that fit into each of the four Ps.

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The Marketing Mix: Travel Goods and Services - Alternative 

Activity Type: Keyboard Navigable Version of the Drag and Drop Above



Learning Objectives: 01-01



Difficulty: Medium



Activity Summary: The student is presented with eight marketing activities performed by two travel companies—one that manufactures products, and one that offers services. Students are asked to classify the activities according to both the marketing mix element and the product type (goods or services) it represents.

Activity



Introduction: Two travel-oriented companies—one a producer of goods, the other a service provider—have different marketing mixes. In this activity, you categorize a set of statements about each company's marketing activities according to the four Ps (product, price, place, and promotion).



Concept Review: Marketing traditionally has been divided into a set of four interrelated decisions known as the marketing mix, or four Ps: product, price, place, and promotion.

A sentence of explanation is offered for each of the rectangles to the left when the student rolls the mouse pointer over it.

Follow-Up Activity 

In small groups, have students select a company/brand from which they buy products or services.

Then, have them fill in examples of marketing activities that fit into each of the four Ps.

Jeans 

Activity Type: Video Case



Learning Objectives: 01-01, 01-02



Difficulty: Medium



Activity Summary: This video case discusses the market for blue jeans, with its wide price range and many different sets of customer needs and wants. After the video ends, students are asked questions about the video and related course concepts.

Activity 

Introduction: Marketing involves satisfying the needs and wants of consumers. However, not all consumers have the same needs and wants. The marketing of blue jeans is a good example of how marketers develop a different marketing mix to suit the needs of different consumers.



Concept Review: First invented in the United States, blue jeans represent everything American. How blue jeans went from their humble beginnings to the height of high fashion is a marketing success story. There are dozens of brands, ranging from the $10 pair to the $1,000 pair, with numerous offerings between the two extremes to meet the needs of every type of consumer. Marketers must

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understand what consumers value in order to manage the marketing mix to deliver the right set of benefits to different consumers. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

In groups or individually, ask students to: 1. List all the brands of jeans they can think of, from basic discount brands to the hip designer brands.

2. Use the Internet to find typical prices for a pair of jeans in each brand.

3. Enter the prices into a spreadsheet and generate a scattergram of the prices. (You can use options to have each point labeled by its brand name.)

Then discuss: How could this scattergram be useful to marketers of each brand? Possible answers:  It shows the overall price range so a brand can tell if its price is unusually high or low. 

It MIGHT indicate which brands are competing head-to-head (the ones whose dots on the scattergram are closest together), though it’s important to note that pricing is only one dimension on which brands can be similar or different. They may be targeting different age or size ranges, or aiming to establish different brand images.

Value: The Bottled Water Industry 

Activity Type: Video Case



Learning Objectives: 01-01, 01-02



Difficulty: Medium



Activity Summary: This video case traces the evolution of the bottled water industry. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Bottled water companies create value for customers even though they sell a natural resource that is free and abundant. Water was first positioned as a premium product that indicated status and sophistication. Since then, soft drink companies with large distribution networks, such as PepsiCo and Coca-Cola, have marketed bottled water at lower prices.



Concept Review: The American Marketing Association states that marketing is ―an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.‖ Although marketing is a multi-faceted function, its fundamental purpose is to create value by developing a variety of offerings, including goods, services, and ideas, to satisfy customer needs.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

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Hold a group discussion—or a structured debate, with students assigned to argue a particular position— on the ethics of the bottled water industry. Some potential sources: I.  

Summary of the issues from environmental and clean water advocacy groups:

http://www.nrdc.org/water/drinking/qbw.asp - Natural Resources Defense Council. Addresses both water safety and environmental impact http://thewaterproject.org/bottled_water_wasteful - from The Water Project II. How bottled water brands are trying to address concerns:



 



http://www.prnewswire.com/news-releases/pepsicos-aquafina-launches-the-eco-fina-bottletm-thelightest-weight-bottle-in-the-market-61940397.html - a press release from Pepsi about the Aquafina Eco-Fina® bottle. http://www.dasani.com/dasani-water/index.html - twist - discusses Dasani’s recycling initiatives. http://www.evian.com/en-us - Evian’s website contains several sections addressing concerns (―Evian and your health‖ discusses water quality; ―Evian and the environment‖ discusses various initiatives related to environmental protection). Also, show one of the Evian Babies ads, which relate to its ―Live Young‖ slogan. https://www.youtube.com/watch?v=hE3HdcdZAxQ is probably Evian’s best-known ad, featuring the Roller Babies. How might this ad, with its use of babies, help to combat the view of bottled water as an unhealthy and environmentally undesirable product? http://blogs.ei.columbia.edu/2009/08/11/―ethical‖-bottled-water-companies - Discusses strategies of Ethos water and others selling ―ethical‖ bottled water.

Delivering Value at Red Mango 

Activity Type: Video Case



Learning Objectives: 01-01, 01-02



Difficulty: Medium



Activity Summary: This video reviews Red Mango’s marketing mix and its approaches to value creation. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Founder Dan Kim opened the first U.S.- based Red Mango in Los Angeles in 2007. He quickly expanded, and there are currently more than 200 locations in 27 states, plus a few locations outside the U.S. Red Mango has successfully combined a healthy product (frozen yogurt) with cool, fun shops to hang out in. Red Mango uses 100% all natural, non-fat or low-fat kosher, and gluten-free frozen yogurt fortified with probiotics. It has expanded its menu to include fresh fruit smoothies, parfaits, and probiotic iced teas. Red Mango was named the number one smoothie and frozen yogurt chain in America in Zagat’s 2011 National Chain Restaurants Survey. The following video illustrates how Red Mango delivers superior value to customers.



Concept Review: Marketing strives to create value in many ways. If marketers are to succeed, their customers must believe that the firm’s products and services are valuable—that is, they are worth more than they cost. Value represents the relationship of benefits to costs. Marketers deliver value through the marketing mix (the 4 Ps): product, price, place, and promotion. Firms become value driven by sharing information, balancing customer benefits and costs, concentrating on building longterm relations with loyal customers, and creating connections with customers by using social and mobile media. To achieve this, marketers must understand customers' needs and wants. Successful

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marketing also requires thoughtful planning, with an emphasis on the ethical implications of any of those decisions on society in general. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Dunkin’ Donuts: Delivering on the Brand Promise 

Activity Type: Video Case



Learning Objectives: 01-01, 01-02



Difficulty: Medium



Activity Summary: This video case discusses the overall strategy Dunkin’ Donuts uses to build its brand and create value for customers. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Dunkin’ Donuts has been known for its donuts for over 60 years, but the company has increased its focus on coffee, responding to the growing popularity of coffee drinks in the United States. Dunkin’ Donuts has developed a strategy using the four Ps to help to differentiate it from its many competitors. The company seeks to offer great products at a reasonable price, available at convenient locations. Their goal is to ―get you running in the morning and keep you running all day.‖



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity



Discuss how Dunkin’ Donuts uses its strategy to differentiate itself from its major competitors in the Coffee and Breakfast marketplace. Some points to consider: o Dunkin’ Donuts focuses on good value at a reasonable price, mixing coffee and food. o Starbucks focuses more on quality to justify its high price, and has a stronger focus on coffee drinks, with food available but not a primary focus. o McDonald’s offers food at all times of the day in addition to its McCafé offerings. It has thousands of locations, and keeps a strong focus on low price and fast service.

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From Beans to Pralines: The Global Chocolate Market 

Activity Type: Case Analysis



Learning Objectives: 01-01, 01-02, 01-03



Difficulty: Medium



Activity Summary: Students read a case reviewing strategies adopted by different chocolate brands, and then answer questions requiring them to apply the six core aspects of marketing to what they have read.

Activity



Introduction: The worldwide chocolate market is huge, with cocoa bean growers spanning three continents, processors located all over the world, and multiple chocolate brands serving the preferences of different consumers. This activity is important because it gives you a solid ―big picture‖ view of the scope of marketing via the chocolate industry.

Follow-Up Activity

Students might enjoy learning about Dr. Dan Ariely’s ―Hershey Kiss Experiment,‖ in which students were offered a Lindt truffle or a Hershey kiss. When the truffle cost 26 cents and the kiss cost 1 cent, equal numbers of students chose each; when the truffle cost 25 cents and the kiss was free, the vast majority chose the kiss. It illustrates the power of ―FREE!‖, and is discussed further in this article: http://danariely.com/2009/08/10/the-nuances-of-the-free-experiment/.

Making a Market: Vosges Haut-Chocolat 

Activity Type: Video Case



Learning Objectives: 01-01, 01-02



Difficulty: Medium



Activity Summary: This video case presents a marketing mix for a small brand that seeks to differentiate itself through luxury and innovation. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Vosges Haut-Chocolat is a chocolate brand seeking to make consumption of their chocolate a luxury experience which has grown along with the market for high-end chocolate. The video discusses how Vosges has created a cohesive marketing strategy focused on luxury and innovation. This activity is important because successful marketing requires an understanding of the full range of marketing activities, and of the importance of ensuring that all these activities serve a common strategy. The goal of this exercise is to test your understanding of the basic concepts of marketing.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

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Follow-Up Activity 

Compare Vosges to Godiva, which is probably the best-known luxury chocolate brand in the USA. What advantages does Godiva have over Vosges? How can Vosges compete successfully with Godiva (both in terms of its current activities and other things it might do)? Points to consider: o Godiva has far more brand recognition, more of its own stores, and a wider distribution network. o Vosges has its innovative flavors; in addition, the very fact that it is not as well-known might allow the brand to create a more exclusive, super-premium image.

iSeeIt Video Case: Value Creation Through the Marketing Mix 

Activity Type: Video Case



Learning Objectives: 01-01



Difficulty: Easy



Activity Summary: The iSeeIt video cases available for most chapters introduce key concepts through examples that are familiar to students from their own lives. This short activity uses different consumer preferences for coffee shops to illustrate how marketing creates value.

Activity



Introduction: Value is when a customer receives more than they give up, such as when a customer pays for a product or service. The definition of value often shifts based upon what each customer is looking for in the product or service they are purchasing. Take for instance the Hernandez family and their search for the perfect cup of coffee. Mom, Dad and Gabbie each place value on different aspects of the coffee drinking experience. Gabbie looks for a unique experience, often provided by independent coffee shops, and is willing to pay more for that experience. Mom, on the other hand, wants the consistency and convenience provided by chains, while Dad is not interested in anything fancy but is simply looking for a cheap cup of coffee. Before organizations can effectively market their coffee to this family with such diverse needs, they need to understand where each consumer places value and meet their needs using the marketing mix.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Discuss some of the places around your university where people can go for a cup of coffee. How do they differ in the value they offer?

KIND Bars for a Kinder World 

Activity Type: Case Analysis



Learning Objectives: 01-01, 01-02, 01-03



Difficulty: Medium



Activity Summary: Students read a case reviewing how KIND Bars plans and recognizes the implications of its marketing decisions and how they affect society. Student will demonstrate their understanding how marketing is defined, its role in creating value, and why it is important.

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Activity Introduction: KIND (www.kindsnacks.com) stands out for its largely successful efforts to apply

nearly every aspect of good marketing presented in this chapter. This activity is important because organizations must understand what marketing really means. To be successful good marketing needs to be planned with a recognition of how the implications of those decisions affect society.

Included in this planning is how the product or service will be conceived or designed, how much it should cost, where and how it will be promoted, and how it will get to the consumer. Ultimately, marketing involves an exchange in which both parties should be satisfied at the conclusion of the transaction.

Follow-Up Activity Students might enjoy learning about how the Kind Foundation partnered with the Harvard Graduate School of Education’s Making Caring Common project to get secondary education students involved in the way they treat each other in and away from school. https://www.kindsnacks.com/foundation/kindschoolschallenge.html Points to consider when reviewing this challenge are how this creates value for KIND and its customers as well as how KIND is creating a better world through this type of activity. What are other ideas KIND can use to make a Kinder World.

Marketing at The Gluten Free Bar (GFB) 

Activity Type: Video Case



Learning Objectives: 01-01, 01-02, 01-03



Difficulty: Easy, Medium



Activity Summary: Students watch a video that addresses how the marketplace is divided into groups of potential customers who are important to Gluten Free Bar (GFB) for different reasons.

Activity

Introduction: Marketing creates value in organizations. This video shows that marketing is a core part of everyone’s life regardless of the time of day. From early morning until late at night buyers and sellers trade things of value so that each is better off. Understanding the needs and wants is essential to marketing success. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity Discuss the criteria for segmenting a market. Depending on the size of the city or town in which your school is located, have students think of products that can successfully be marketed in your location and others that might not. If the city is large, consider products that succeed there but might not in a smaller town. If school is in a small college town, consider products that are available in larger areas but not yours. Lead the students in a discussion of why those products can succeed or why they can’t based on the criteria required for segmenting a market.

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A Flood of Water Consumption Choices 

Activity Type: Case Analysis



Learning Objectives: 01-01



Difficulty: Medium



Activity Summary: Students read a case about how the consumption of water has changed and then answer questions about the case.

Activity



Introduction: This activity is important because organizations must understand the role of marketing fits with customers and companies. Understanding the marketplace, and especially consumer needs and wants, is fundamental to marketing success. Good marketing needs to be planned with a recognition of how the implications of those decisions affect society. Marketing traditionally has been divided into a set of four interrelated controllable decisions and consequent actions known as the marketing mix, or four Ps: product, price, place, and promotion. Ultimately, marketing involves an exchange in which both parties should be satisfied after the transaction.

The goal of this exercise is to demonstrate your understanding of the role that marketing plays in creating value and why it is important.

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Chapter 2 developing marketing strategies and a marketing plan

Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview In this chapter, the goal is to introduce students to an overview of the marketing plan, the concept of customer value, and the utility of the SWOT matrix. It is important to teach students that the importance of the marketing plan is to communicate the value proposition to consumers and to provide direction on how that will be achieved.

Brief Chapter Outline What Is a Marketing Strategy?

The Marketing Plan Growth Strategies

Learning Objectives LO2-1

Define a marketing strategy.

A marketing strategy identifies (1) a firm’s target markets(s), (2) a related marketing mix (its four Ps), and (3) the bases on which the firm plans to build a sustainable competitive advantage. Firms use four macro strategies to build their sustainable competitive advantage. Customer excellence focuses on retaining loyal customers and excellent customer service. Operational excellence is achieved through efficient operations, excellent supply chain, and human resource management. Product excellence entails having products with high perceived value and effective branding and positioning. Finally, locational excellence entails having a good physical location and Internet presence.

LO2-2

Describe the elements of a marketing plan.

A marketing plan is composed of an analysis of the current marketing situation, opportunities and threats for the firm, marketing objectives and strategy specified in terms of the four Ps, action programs, and appropriate financial statements. A marketing plan represents the output of a three-phase process: planning, implementation, and control. The planning phase requires that managers define the firm’s mission and vision and assess the firm’s current situation. It helps answer the questions, ―What business are we in now, and what do we intend to be in the future?‖ In the second phase, implementation, the firm specifies, in more operational terms, how it plans to implement its mission and vision. Specifically, to which customer groups does it wish to direct its marketing efforts, and how does it use its marketing mix to provide good value? Finally, in the control phase, the firm must evaluate its performance using

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appropriate metrics to determine what worked, what didn’t, and how performance can be improved in the future.

LO2-3

Analyze a marketing situation using SWOT analyses.

SWOT stands for strengths, weaknesses, opportunities, and threats. A SWOT analysis occurs during the second step in the strategic planning process, the situation analysis. By analyzing what the firm is good at (its strengths), where it could improve (its weaknesses), where in the marketplace it might excel (its opportunities), and what is happening in the marketplace that could harm the firm (its threats), managers can assess their firm’s situation accurately and plan its strategy accordingly.

LO2-4

Describe how a firm chooses which consumer group(s) to pursue with its marketing efforts.

Once a firm identifies different marketing opportunities, it must determine which to pursue. To accomplish this task, marketers go through a segmentation, targeting, and positioning (STP) process. Firms segment various markets by dividing the total market into those groups of customers with different needs, wants, or characteristics who therefore might appreciate products or services geared especially toward them. After identifying the different segments, the firm goes after, or targets, certain groups on the basis of the firm’s perceived ability to satisfy the needs of those groups better than competitors and do so profitably. To complete the STP process, firms position their products or services according to the marketing mix variables so that target customers have a clear, distinctive, and desirable understanding of what the product or service does or represents relative to competing products or services.

LO2-5

Outline the implementation of the marketing mix as a means to increase customer value.

The marketing mix consists of the four Ps—product, price, promotion, and place—and each P contributes to customer value. To provide value, the firm must offer a mix of products and services at prices their target markets will view as indicating good value. Thus, firms make trade-offs between the first two Ps, product and price, to give customers the best value. The third P, promotion, informs customers and helps them form a positive image about the firm and its products and services. The last P, place, adds value by getting the appropriate products and services to customers when they want them and in the quantities they need.

LO2-6

Summarize portfolio analysis and its use to evaluate marketing performance.

Portfolio analysis is a management tool used to evaluate the firm’s various products and businesses—its ―portfolio‖—and allocate resources according to which products are expected to be the most profitable for the firm in the future. A popular portfolio analysis tool developed by the Boston Consulting Group classifies all products into four categories. The first, stars, are in high-growth markets, and have high market shares. The second, cash cows, are in low-growth markets, but have high market share. These products generate excess resources that can be spun off to products that need them. The third category, question marks, are in high-growth markets, but have relatively low market shares. These products often utilize the excess resources generated by the cash cows. The final category, dogs, are in low-growth markets and have relatively low market shares. These products are often phased out.

LO2-7 Describe how firms grow their business.

Firms use four basic growth strategies: market penetration, market development, product development, and diversification. A market penetration strategy directs the firm’s efforts toward existing customers and uses the present marketing mix. In other words, it attempts to get current customers to buy more. In a market development strategy, the firm uses its current marketing mix to appeal to new market segments, as might occur in international expansion. A product development growth strategy involves offering a new product or service to the firm’s current target market. Finally, a diversification strategy takes place when a firm introduces a new product or service to a new customer segment. Sometimes a diversification strategy relates to the firm’s current business, such as when a women’s clothing manufacturer starts

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making and selling men’s clothes, but a riskier strategy is when a firm diversifies into a completely unrelated business.

Extended Chapter Outline IV. What Is a Marketing Strategy? (PPT 2-5) A. Customer Excellence (PPT 2-7) 1. Retaining Loyal Customers 2. Providing Outstanding Customer Service

B. Operational Excellence (PPT 2-8) C. Product Excellence (PPT 2-9) D. Locational Excellence (PPT 2-10) E. Multiple Sources of Advantage (PPT 2-11)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 2-12) 1. What are the various components of a marketing strategy?

Answer: A marketing strategy includes a firm’s target market(s), a related marketing mix, and the bases upon which the firm plans to build a sustainable competitive advantage.

2. List the four macro strategies that can help a firm develop a sustainable competitive advantage.

Answer: The four macro strategies that can help a firm develop a sustainable competitive advantage include customer excellence, operational excellence, product excellence, and locational excellence.

V. The Marketing Plan (PPT 2-13) A. Step 1: Define the Business Mission and Objectives (PPT 2-14) B. Step 2. Conduct a Situation Analysis (PPT 2-15, 2-16, 2-17)) Ethical & Societal Dilemma: Exchanging a Bottle of Pepsi for a Can of Water? Finding Packaging Solutions to Environmental Commitments discusses how Pepsi plans to ensure all its packaging material is recyclable, compostable, or biodegradable by 2025, including canning water instead of bottling it. The various solutionsreflect the varied branding methods that Pepsi applies to each brand. Whether these mores are sufficient remains a debate.

Adding Value 2.1: Won’t You Visit Your Neighbor? Staycations and Travel Services in the Pandemic highlights alternatives to vacation that people took during the 2020 summer and pandemic. Not only did short accessible trips appeal to people who were hesitant to get on planes, but the pandemic-related impacts on children’s schooling meant that it was increasingly possible for families to trael even diring the traditional school year.

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C. Step 3: Identify and Evaluate Opportunities Using STP (Segmentation, Targeting, and Positioning) (PPT 2-18) 1. Segmentation (PPT 2-19) 2. Targeting 3. Positioning (PPT 2-20) D. Step 4: Implement Marketing Mix and Allocate Resources (PPT 2-21) 1. Product and Value Creation Products (PPT 2-22) 2. Price and Value Capture (PPT 2-23) Adding Value 2.2: Repositioning Old Spice describes how Old Spice repositioned itself from a conventional brand to one with a wide appeal while taking risks to leverage opportunities in the men’s personal care market.

3. Place and Value Delivery (PPT 2-24) 4. Promotion and Value Communication (PPT 2-25) Social & Mobile Marketing: Making Technology Personal: How Wayfair is Leveraging High-Tech Tools to Connect with Consumers Discusses how Wayfair, one for the first furniture e-commerce sites, is using cutting edge technology to provide its customers value and personalized assistance in making their residences into true homes.

E. Step 5: Evaluate Performance Using Marketing Metrics. (PPT 2-26) Marketing Analytics: Making a First Impression in Less than the First Second: New Evidence about Mobile Marketing highlights two studies that used eye-tracking technology analyze mobile advertising. The first showed that people see and react to mobile advertising in less than one half a second so advertisers need to optimize their advertising for mobile channels. The second revealed that grocery shoppers who use their phones while shopping spend more time in the store. As a result, grocers don’t need to worry about the distractions of the mobile phones. Ultimately, instead of determining whether viewers prefer a 30-second or 15-second advertisement, mobile and social marketers may need to find out how to develop less than 1 second advertisements.

1. Who Is Accountable for Performance? (PPT 2-27) 2. Performance Objectives, Marketing Analytics, and Metrics (PPT 2-27) 3. Financial Performance Metrics (PPT 2-27) 4. Portfolio Analysis (PPT 2-27, 2-28, 2-29) Stars Cash Cows Questions Marks Dogs

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F. Strategic Planning Is Not Sequential.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 2-30) 1. What are the five steps in creating a marketing plan?

Answer: The five steps in creating a marketing plan are defining a business mission and objectives, evaluating a situation analysis, identifying opportunities, implementing a marketing mix, and evaluating performance using marketing metrics.

2. What tool helps a marketer conduct a situation analysis?

Answer: A SWOT analysis helps a marketer conduct a situation analysis.

3. What is STP? Answer: STP is Segmentation, Targeting, and Positioning.

4. What do the four quadrants of the portfolio analysis represent?

Answer: Stars, Cash Cows, Question Marks, Dogs.

VI. Growth Strategies (PPT 2-31) G. Market Penetration (PPT 2-32) H. Market Development (PPT 2-33) I.

Product Development (PPT 2-34)

J. Diversification (PPT 2-35)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 2-36) 1. What are the four growth strategies?

Answer: Market penetration strategy, market development strategy, product development strategy, and diversification strategy.

2. What type of strategy is growing the business from existing customers?

Answer: The type of strategy that grows a business from existing customers is market penetration strategy.

3. Which strategy is the riskiest?

Answer: The diversification strategy is the riskiest, because unrelated diversifications do not capitalize on either core strengths associated with markets or with products.

Additional Resources The utility of the marketing plan must be conveyed throughout the course. Teach students that the marketing plan is a subset of the business plan that forms the foundational strategy of business.

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Students come to realize the importance of the marketing plan when the instructor frequently makes connections to its purpose not only on the day the concept is taught but also throughout the course.

Customer value is a difficult concept for students to grasp. Instructors may want to ask students to write down something they find of value and what aspects lead to creating that value. The instructor can then ask what they would trade for that value. It is important that instructors communicate that value is more than monetary worth and can’t easily be measured. As a result, marketers must conduct target market research in order to create the value proposition of their marketing strategy.

The SWOT matrix may be easily demonstrated by dividing your class into groups and having each group contribute one item to each of the four quadrants using the college they are attending (common ground for all students) or a major chain food (such as McDonald’s) so that all students are familiar with the strengths, weaknesses, opportunities, and threats that may apply. Students can work as a group and then each group may put their items on the whiteboard to form a collective classroom SWOT. Instructors should then make the link that the opportunities and strengths should filter into the marketing message delivered in advertising campaigns and other marketing tools. Online tip: Instructors may want to divide their class by last name A-E Strengths, F-J Weaknesses, and so forth to answer a discussion board question using the same concept. Students could then complete an individual SWOT as an assignment.

Another option would be to use the same concepts and integrate it as an online team assignment where each team forms their respective completed SWOT.

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type Click & Drag

Learning Objectives 0202 03 04 05 06 X

Matching

X

01 Disney and the Strategic Marketing Planning Process Disney and the Strategic Marketing Planning Process Staples: Implementing the Marketing Mix Home Shopping Network SWOT Analysis - Domino’s Pizza SWOT Analysis - Domino’s Pizza The Netflix Rollercoaster: How a Strategy Can Fail Spirit Airlines: Home of the Bare Fare SWOT Analysis: Ford Motor Company & Fiat Chrysler Automobiles SWOT Analysis: Ford Motor Company & Fiat Chrysler Automobiles The Coffee Wars iSeeit! Video Case: Marketing Strategy and the Marketing Plan Marketing Strategy at Wham-O iSeeit! Video Case: Identifying Four Basic Growth Strategies iSeeit! Video Case: Developing Sustainable Competitive Advantage Marketing Plan-- Part 1: Marketing Plan Prep Mission and Objectives Part I Marketing Plan-- Part 1: Marketing Plan Prep Mission and Objectives Part II Marketing Plan—Part 2: SWOT Analysis Marketing Plan—Part 3: Identifying Opportunities Marketing Plan--Part 4: Activity: Implementing the Marketing Mix – Product, Price, Place, Promotion Marketing Plan--Part 5: Evaluating Performance Using Marketing Metrics

Video Case Video Case Click & Drag Multiple Choice Case Analysis Video Case Click & Drag

X

X

X

X

X

X X X

X

X

X

X

X

X X

X X X

Video Case Video Case

X X

X X

Matching Case Analysis Video Case

07

X X

X

X X

X

X X X X X X X

Disney and the Strategic Marketing Planning Process 

Activity Type: Click & Drag



Learning Objectives: 02-02



Difficulty: Medium

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

th

Activity Summary: Students view a short case describing the Walt Disney Company’s use of technology to improve the customer experience in their parks, and are asked to match excerpts from the case description to the appropriate step in the strategic marketing planning process.

Activity



Introduction: Firms like Disney plan their marketing strategies to adjust to changes in the environment, the competition, and their customers. Effective marketing doesn’t just happen.



Concept Review: The strategic marketing planning process represents a set of steps a marketer goes through to develop and implement a strategic marketing plan. The three major phases of the process are planning, implementation, and control.

Follow-Up Activity

Assign and discuss the following article: ―At Disney Parks, a Bracelet Meant to Build Loyalty (and Sales),‖

by Brooke Barnes, New York Times, published 1/7/2013: http://www.nytimes.com/2013/01/07/business/media/at-disney-parks-a-bracelet-meant-to-build-loyaltyand-sales.html?_r=0 This article describes the ―MyMagic+‖ bracelet that is one key element of Disney’s technology upgrade program. In addition to improving the customer experience, discuss how it also benefits Disney by providing customer information that can be used both to understand customer behavior in the parks (a form of marketing research) and also to improve service to individual customers (as part of a customer relationship management program).

Disney and the Strategic Marketing Planning Process – Alternate 

Activity Type: Matching Alternate to Drag and Drop Above



Learning Objectives: 02-02



Difficulty: Medium



Activity Summary: Students view a short case describing the Walt Disney Company’s use of technology to improve the customer experience in their parks and are asked to match excerpts from the case description to the appropriate step in the strategic marketing planning process.

Activity



Introduction: Firms like Disney plan their marketing strategies to adjust to changes in the environment, the competition, and their customers. Effective marketing doesn’t just happen.



Concept Review: The strategic marketing planning process represents a set of steps a marketer goes through to develop and implement a strategic marketing plan. The three major phases of the process are planning, implementation, and control.

Follow-Up Activity

Assign and discuss the following article: ―At Disney Parks, a Bracelet Meant to Build Loyalty (and Sales),‖

by Brooke Barnes, New York Times, published 1/7/2013: http://www.nytimes.com/2013/01/07/business/media/at-disney-parks-a-bracelet-meant-to-build-loyaltyand-sales.html?_r=0 This article describes the ―MyMagic+‖ bracelet that is one key element of Disney’s technology upgrade program. In addition to improving the customer experience, discuss how it also benefits Disney by

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providing customer information that can be used both to understand customer behavior in the parks (a form of marketing research) and also to improve service to individual customers (as part of a customer relationship management program).

Staples: Implementing the Marketing Mix 

Activity Type: Video Case



Learning Objectives: 02-05



Difficulty: Medium



Activity Summary: This video case discusses the ―Easy‖ retail strategy adopted by Staples, with examples of each of the four Ps in action. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: The 4 Ps—product, price, promotion, and place—are functions retailers use to create value for their customers. Staples, Inc. successfully integrates the 4 Ps with its ―easy‖ brand promise.

Its ability to execute the 4 Ps seamlessly within the parameters of this brand promise helps to make Staples successful.



Concept Review: The marketing mix consists of the four Ps—product, price, promotion, and place— and each P contributes to customer value. To provide value, the firm must offer a mix of goods and services at fair prices in the eyes of its target market. Firms make trade-offs between product and price, help customers to form a positive image about the firm and its products, and get the appropriate goods and services to customers when they want them and in the quantities they need.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities



Discuss how the Staples ―Easy‖ brand promise helps the company to compete with online-only sellers of office supplies like Amazon.com. Example: The Staples branded products help Staples to stock lower-priced products; making products like paper and toner easily available at the front of conveniently located stores with plenty of parking offers convenience.



Choose a successful restaurant chain (Chipotle or Chick-fil-A would be good selections in the U.S. as they tend to be popular with students) and ask for examples of each of the four Ps in the chain’s strategy.

Home Shopping Network



Activity Type: Video Case



Learning Objectives: 02-01, 02-04, 02-05



Difficulty: Medium



Activity Summary: This video case focuses on changes HSN made to its strategy starting in 2006 to better understand and serve its target market. After the video ends, students are asked questions about the video and related course concepts.

Activity

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

Introduction: HSN (Home Shopping Network) is a $2.8 billion multichannel retailer, using television, e-commerce, m-commerce, catalogs, and brick and mortar stores. They have recently launched apps for all major smartphones. HSN currently reaches 90 million homes, 24 hours a day, 7 days a week, 365 days a year. Managing their marketing efforts and staying on top of the competition requires careful and ongoing strategic planning and implementation.



Concept Review: A marketing strategy is the actions a firm intends to implement to appeal to potential customers. A successful strategy identifies (1) a firm’s target markets; (2) a related marketing mix—its 4 Ps; and (3) the basis on which the firm plans to build a sustainable competitive advantage. HSN (Home Shopping Network) is one example of a firm that has very successfully implemented its strategy using multichannel marketing efforts. Understanding how HSN has implemented a successful marketing strategy helps us identify the different components of that strategy. HSN continually monitors opportunities and threats and reevaluates their strategies in response to these.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities



Students can research some of HSN’s recent initiatives to see how the company is currently using lifestyle programming to attract attention to its products. As of this writing, there are two initiatives that are very much consistent with HSN’s lifestyle strategy: o A multi-film agreement with Disney to hold shopping events promoting films of interest to HSN’s target market: http://www.hollywoodreporter.com/news/disney-strikes-multi-film-partnership694720 o



HSN’s ―Live in Concert‖ series, featuring various artists in conjunction with sales of their music.

Suppose that HSN decided to launch a second channel with men who are sports fans as the target market. How would its strategy be different from the current HSN channel’s strategy?

SWOT Analysis: Domino’s Pizza 

Activity Type: Click & Drag



Learning Objectives: 02-03



Difficulty: Medium



Activity Summary: This activity presents information about Domino’s franchise stores possibly staying open 24 hours. Eight factors are presented related to this proposed change, and students are asked to classify them using the SWOT analysis framework.

Activity



Introduction: Recently, a Domino’s pizza franchise in southwest Ohio made the strategic decision to stay open 24 hours a day. The manager, Steve Martin, made this decision about a month ago in response to increased demand for Domino’s pizza. Other Domino’s franchise owners are now considering adopting a similar strategy. In this activity, you will categorize a set of statements regarding activities in the internal and external environments as they relate to Domino’s pizza, and a potential initiative of staying open 24 hours a day. These statements will identify either a Strength, Weakness, Opportunity, or Threat.



Concept Review: Developing a marketing plan consists of five steps. The second step in the process, after developing a mission statement, is to conduct a situation analysis, using the SWOT

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framework. This tool allows firms to assess both the internal environment (strengths and weaknesses) and the external environment (opportunities and threats).

SWOT Analysis: Domino’s Pizza - Alternate 

Activity Type: Multiple Choice Alternative to the Above Activity



Learning Objectives: 02-03



Difficulty: Medium



Activity Summary: This activity presents information about Domino’s franchise stores possibly staying open 24 hours. Eight factors are presented related to this proposed change, and students are asked to classify them using the SWOT analysis framework.

Activity



Introduction: Recently, a Domino’s pizza franchise in southwest Ohio made the strategic decision to stay open 24 hours a day. The manager, Steve Martin, made this decision about a month ago in response to increased demand for Domino’s pizza. Other Domino’s franchise owners are now considering adopting a similar strategy. In this activity, you will categorize a set of statements regarding activities in the internal and external environments as they relate to Domino’s pizza, and a potential initiative of staying open 24 hours a day. These statements will identify either a Strength, Weakness, Opportunity, or Threat.



Concept Review: Developing a marketing plan consists of five steps. The second step in the process, after developing a mission statement, is to conduct a situation analysis, using the SWOT framework. This tool allows firms to assess both the internal environment (strengths and weaknesses) and the external environment (opportunities and threats).

The Netflix Rollercoaster: How a Strategy Can Fail



Activity Type: Case Analysis



Learning Objectives: 02-01, 02-02, 02-05, 02-06, 02-07



Difficulty: Medium



Activity Summary: This case deals with Netflix’s 2011 decision to split its service into DVD rental and streaming subscriptions, resulting in a significant price increase for current customers. Students answer questions relating the case to chapter concepts.

Activity



Introduction: The letter arrived in millions of e-mail boxes simultaneously in November of 2010.

Reed Hastings, the CEO of Netflix, announced in excited tones the latest innovation by the company that had revolutionized the movie rental industry. But the response was not quite what he, or Netflix shareholders, had expected. Since that time, Netflix has recovered and gone on to renewed success and new challenges; however, the series of events, before and after, offers a clear lesson in how a failure to sufficiently plan for marketing strategy changes can backfire on even the most successful of companies.



Concept Review: A marketing strategy identifies (1) a firm's target market(s), (2) a related marketing mix—its four Ps, and (3) the bases on which a firm plans to build a sustainable competitive advantage. Firms develop marketing plans to formalize their marketing strategies. One important element in formulating a marketing plan is to do a situation analysis, also known as a SWOT analysis.

Following the analysis, firms need to segment their market, target which segments they will serve, and develop a position that communicates a clear understanding of the market offering. They should

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then implement the marketing mix; the four Ps. Finally, they should use various marketing metrics to evaluate the results of their strategies. There are also four growth strategies firms can implement to increase their market share.

Follow-Up Activity Netflix recovered quickly from its misstep; it’s worth reviewing what has happened since the end of the case write-up, and then discussing the challenges Netflix faces in the future. Students could be asked to research this topic themselves, or you can use these articles:  ―How Netflix Reinvented Itself,‖ by Peter Cohan, Forbes, 4/23/13. http://www.forbes.com/sites/petercohan/2013/04/23/how-netflix-reinvented-itself/ 

―Netflix Ends Huge Year with Price Shift and Executive Raises,‖ by Nick Summers, Business Week, 12/31/2013. http://www.businessweek.com/articles/2013-12-31/netflix-ends-huge-year-with-priceshift-and-executive-raises Spirit Airlines: Home of the Bare Fare



Activity Type: Video Case



Learning Objectives: 02-01, 02-03, 02-04, 02-05, 02-07



Difficulty: Medium



Activity Summary: This video case explains the marketing strategy pursued by Spirit Airlines. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Spirit Airlines competes as an ultra-low-cost carrier (ULCC), and does so by ―unbundling‖ extra services from its basic fare. As a result, things that other airlines include in their prices (for example, carry-on bags) cost extra on a Spirit flight. This approach allows Spirit Airlines to keep prices low, attracting a different type of customer who values price above comfort and amenities.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity



Review a section of the Spirit Airlines website to learn more about their strategy and how the website reflects it. Two suggestions based on the website as it exists when I’m writing this: o

https://www.spirit.com/OptionalServices - shows the extras they charge for

o

http://marketing.spirit.com/how-to-fly-spirit-airlines/en/ - ―Spirit 101,‖ where they explain their approach to pricing SWOT Analysis: Ford Motor Company & Fiat Chrysler Automobiles



Activity Type: Click & Drag



Learning Objectives: 02-03



Difficulty: Medium

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Activity Summary: This activity presents information about Ford Motor Company, focusing on Fseries trucks, and on Fiat Chrysler’s array of brands. Students are asked to classify the information provided about each firm using the SWOT analysis framework.

Activity



Introduction: SWOT stands for strengths, weaknesses, opportunities, and threats. SWOT analysis evaluates what a firm is good at, where it could improve, where in the marketplace it might excel, and what events in the marketplace could potentially harm the firm. This activity is important because it demonstrates how integral SWOT analysis is to the strategic planning process.

SWOT Analysis: Ford Motor Company & Fiat Chrysler Automobiles - Alternate



Activity Type: Multiple Choice Alternate to Above Click and Drag



Learning Objectives: 02-03



Difficulty: Medium



Activity Summary: This activity presents information about Ford Motor Company, focusing on Fseries trucks, and on Fiat Chrysler’s array of brands. Students are asked to classify the information provided about each firm using the SWOT analysis framework.

Activity



Introduction: SWOT stands for strengths, weaknesses, opportunities, and threats. SWOT analysis evaluates what a firm is good at, where it could improve, where in the marketplace it might excel, and what events in the marketplace could potentially harm the firm. This activity is important because it demonstrates how integral SWOT analysis is to the strategic planning process.

The Coffee Wars



Activity Type: Case Analysis



Learning Objectives: 02-01, 02-03, 02-07



Difficulty: Medium



Activity Summary: This case compares and contrasts the marketing strategies Starbucks and Dunkin’ Donuts in the coffee market. After reading the case, students answer questions applying chapter concepts to the case information.

Activity



Introduction: Starbucks and Dunkin’ Donuts are the two largest competitors in the coffee and breakfast retail market. Their approaches to competing in this market are described in the case. This activity is important because a strong marketing strategy—one that helps to build a sustainable competitive advantage—is the basis for all marketing activities.

Follow-Up Activity

Look at the Dunkin’ Donuts and Starbucks websites in class. Consider their active promotions; are they consistent with the strategies discussed in the case?

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iSeeit! Video Case: Marketing Strategy and the Marketing Plan 

Activity Type: Video Case



Learning Objectives: 02-02, 02-03, 2-04, 2-06



Difficulty: Easy



Activity Summary: This video case views marketing strategy from the perspective of the owner of an independent coffee shop, as she considers working through the different phases of a marketing plan for her shop.

Activity



Introduction: Strategic marketing is an approach where an organization effectively leverages its resources to reach its target market. The marketing plan is how organizations operationalize their strategies by planning how to reach their markets, implementing their marketing activities, and measuring marketing performance. Take for instance the Coffee Collective and how it has successfully marketed its unique coffee experience. Martha, the owner, knows that the 4 P’s are only one key aspect of effective marketing—the implementation phase. She realizes that before she can implement a marketing strategy, she must first understand the environment in which her coffee shop exists. She also understands the importance of evaluating marketing effectiveness as the final component of the marketing plan. Success, after all, is more than selling just one cup of coffee and can be measured using a range of outcomes from revenue to customer loyalty.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Marketing Strategy at Wham-O



Activity Type: Video Case



Learning Objectives: 02-03



Difficulty: Easy



Activity Summary: This video case views marketing strategy from the perspective of Wham-O, a company that has changed ownership many times over the years.

Activity



Introduction: Firms must be able to plan their marketing strategies to react to changes in the environment, the competition, and their customers by creating a marketing plan. An essential part of this plan is conducting a situation analysis using a SWOT analysis that assesses both the internal environment with regard to its strengths and weaknesses and the external environment in terms of its opportunities and threats. Changes in lifestyle since the company’s inception is a concern of its current owner.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Identifying Four Basic Growth Strategies



Activity Type: Video Case

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

Learning Objectives: 02-01, 02-07



Difficulty: Medium

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Activity Summary: This video case illustrates how a marketer considers the most effective strategy for ensuring the firm’s competitive advantage and growth.

Activity Introduction: Strategic planning is the process of thoughtfully defining a firm’s objectives and developing an approach for achieving those objectives. Strategic planning is one of the more essential tasks that marketers undertake. A goal of strategic planning is to ensure the growth of a firm. This activity is important because a company’s growth strategy can follow various paths based on the product and industry, and each must represent the relationship between products and markets. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Sustainable Competitive Advantage



Activity Type: Video Case



Learning Objectives: 02-01



Difficulty: Medium

Activity Summary: This video case illustrates how a firm manages to sustain its competitive advantage in a saturated dessert truck market using each of the four key elements of excellence.

Activity Introduction: A sustainable competitive advantage can be achieved when a firm produces a product

that exhibits characteristics that are rare, valuable, and hard to imitate. To develop a sustainable competitive advantage, firms need to ensure they fulfill the four key elements of excellence: customer, operational, product, and locational. This activity is important because firms face a lot of competition, and in order to survive, they must develop and sustain a reputation for value and excellence that they can maintain over time. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Marketing Plan--Part 1: Marketing Plan Prep Mission and Objectives Part I



Activity Type: Essay



Learning Objectives: 02-02



Difficulty: Medium



Activity Summary: The student answer questions about mission statements and objectives.

Activity



Introduction: A well-thought-out marketing plan will contain both the foundational mission statement and supporting objectives. The purpose of the mission statement is to express the

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business’s overarching vision—what is its purpose and what are its goals? Objectives should outline the measurable and attainable subsets of the mission. 

Why This Matters: A well-written mission statement serves individuals and businesses as a foundation for their overall business vision and strategy. When companies reorganize or go through some type of strategic planning, the mission statement provides the positive vision. Objectives outline general steps or goals for achieving, monitoring, and outlining the mission. This process helps the business establish its ―why‖ for starting/changing its business and provide the navigational compass for major business decisions.



Your Task: In addition to your assigned reading on mission statements and objectives, review the following sample case. As you review all materials, consider the mission statement’s construction on how the objectives relate to accomplishing the mission. After reviewing the sample case, review the practice case to answer the mission statement and objectives questions.

Marketing Plan--Part 1: Marketing Plan Prep Mission and Objectives Part II



Activity Type: Essay



Learning Objectives: 02-02



Difficulty: Medium



Activity Summary: The student answer questions about mission statements and objectives.

Activity



Introduction: A well-thought-out marketing plan will contain both the foundational mission statement and supporting objectives. The purpose of the mission statement is to express the business’s overarching vision—what is its purpose and what are its goals? Objectives should outline the measurable and attainable subsets of the mission.



Why This Matters: A well-written mission statement serves individuals and businesses as a foundation for their overall business vision and strategy. When companies reorganize or go through some type of strategic planning, the mission statement provides the positive vision. Objectives outline general steps or goals for achieving, monitoring, and outlining the mission. This process helps the business establish its ―why‖ for starting/changing its business and provide the navigational compass for major business decisions.



Your Task: In addition to your assigned reading on mission statements and objectives, review the following sample case. As you review all materials, consider the mission statement’s construction on how the objectives relate to accomplishing the mission. After reviewing the sample case, review the practice case to answer the mission statement and objectives questions.

Marketing Plan--Part 2: SWOT Analysis



Activity Type: Essay



Learning Objectives: 02-03



Difficulty: Medium



Activity Summary: The student creates a SWOT analysis.

Activity

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

Introduction: SWOT is an acronym which stands for Strengths, Weaknesses, Opportunities, and Threats. Companies conduct a SWOT analysis as a critical strategic step in developing a Marketing Plan. SWOT analysis may be completed for an individual, a product or company.



Why This Matters: A SWOT Analysis helps individuals and businesses discover their own unique qualities and gain insight on what differentiates them from competitors.



Your Task: In addition to your assigned reading on SWOT Analysis, review the following Sample Case and SWOT Analysis. As you review all the materials, consider how each of the SWOT categories relate. After reviewing the Sample Case and SWOT Analysis, review the Practice Case as preparation for generating your own SWOT Analysis. Respond to each category (Strength, Weakness, Opportunity, Threat) with three to five bullet points that outline potential impacts on the success of your business.

th

Marketing Plan--Part 3: Identifying Opportunities 

Activity Type: Essay



Learning Objectives: 02-04



Difficulty: Medium



Activity Summary: The student identifies opportunities through STP. Activity



Introduction: Understanding the Segmentation, Targeting and Positioning (STP) approach to your marketing plan is a critical step for developing successful reaching the right buyers with the right products and ultimately, continuing to have a successful business. To help make the overall marketing process more manageable, it’s useful to divide large target markets into smaller ―segmented‖ groups. These segmented groups allow the marketing efforts to have a more unique appeal when positioning specific products toward these segmented targets.



Why This Matters: The STP process helps you to identify your most suited customers for your marketing efforts and then focus on or develop products that are customized for that segment. As a result, your products and customers are uniquely matched and your marketing campaign is even more personalized to your customers’ wants and interests, ultimately creating a more successful campaign and selling more products or services.



Your Task: In addition to your assigned reading, review the following sample case. After reviewing the sample case, read the practice case and answer the three questions following the scenario.

Marketing Plan--Part 4: Activity: Implementing the Marketing Mix – Product, Price, Place, Promotion



Activity Type: Essay



Learning Objectives: 02-05



Difficulty: Medium



Activity Summary: The student identifies opportunities through the Marketing Mix. Activity



Introduction: Customers have more access to information, reviews, competitive products than ever before. A good marketing plan frequently uses the process of reviewing some form of the four Ps—

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product, place, price, promotion (four Cs) to enhance the marketing mix. Considering each aspect of the four Ps will help you better define your options and ultimately make better marketing decisions.

Understanding the four Ps helps business owners and entrepreneurs really speak to the right audience with the right message to solve the right problem and reach them in the right way. 

Why This Matters: Consider an analogy of shopping for the perfect outfit for a major interview at a company that you really want to work with. Do you want to wear your own favorite outfit because you like it, or do you look for an outfit that captures the company’s values and style and also expresses your strong points? Your best customers are looking for that ―outfit‖ (product) to express their values and style in a unique way. You owe it your customers to design the outfit that truly fits them in your special style.

Many experts define marketing as the activities involved in creating an exchange. Specifically, the process of building relationships is what determines whether that buyers/client will trust you, your company and your product enough to find value from interacting with you. Understanding how each component of the four Ps will inform you on the best method for developing and improving the relationship you have with your current and future clients.



Your Task: In addition to your assigned reading, review the following Sample Case. After reviewing the Sample Case, read the Practice Case and answer the questions. Answer the questions following the scenario.

Marketing Plan--Part 5: Evaluating Performance Using Marketing Metrics 

Activity Type: Essay



Learning Objectives: 02-06



Difficulty: Medium



Activity Summary: The student reviews the metrics that determine the overall success of the marketing plan.

Activity



Introduction: One aspect of the overall marketing plan that is frequently overlooked or minimized is the evaluation. Without that piece it is difficult to determine how successful the campaign has been.

Knowing the R.O.I. on a campaign helps businesses make more fiscally informed decisions on where to put their marketing efforts.



Why This Matters: When companies spend money on marketing campaigns, it may be viewed as nonessential funds—or even sometimes frivolous spending. Setting up performance metrics allows the marketing team to monitor and evaluate the outcomes of the marketing plan. It’s also important to be able to measure what’s really happening with the marketing plan to know when/if to make modifications as well as determine future spending in each of the measured areas. With budgets becoming increasingly tight, it is imperative to use metrics that demonstrate the benefits or return on the investments of marketing dollars.



Your Task: In addition to your assigned reading on marketing performance evaluation, review the following case. As you review all the materials, reflect on what the metrics may indicate to the overall success of the campaign, the company and for the marketing department. After reviewing the case, answer the questions that follow.

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Chapter 3 DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE Tools for Instructors        

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline with Teaching Tips PowerPoint Slides Quick Quiz Additional Resources Connect Application Exercises

Chapter Overview This chapter explores how social and mobile marketing have revolutionized how companies communicate with, listen to, and learn from their customers. Listening and analysis—or social media monitoring—is key, enabling companies to identify salient customer input and trends.

Brief Chapter Outline The 4E Framework for Digital Marketing Online Marketing The Wheel of Social Media Engagement Going Mobile and Social How Do Firms Engage Their Customers?

Influencer Marketing

Learning Objectives LO 3-1

Describe the 4E framework of digital marketing.

The 4E framework recognizes that marketers must: excite customers with relevant offers; educate them about the offering; help them experience products, whether directly or indirectly; and give them an opportunity to engage.

LO3-2

Examine the seven critical elements of online marketing.

Online marketing now has a long history and is fairly established with marketing activities in various electronic channels, such as websites and blogs. There are numerous types of blogs, ranging from corporate, professional, and micro.

LO3-3

Understand the drivers of social media engagement.

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The Wheel of Social Media Engagement highlights five factors that focus on the uniqueness of social media in driving engagement. The five spokes of the wheel are the information effect, connected effect, network effect, dynamic effect, and timeliness effect).

LO 3-4

Understand various motivations for using mobile applications.

As mobile users increase in number and diversity, the applications developed to appeal to them are spreading as well. Although there are well over a million apps, they meet seven basic customer motivations: for ―me time,‖ and to socialize, shop, accomplish, prepare, discover, and self-express. By meeting a multiple of these motivations, companies can attract large numbers of customers. When choosing how to charge for apps, firms have four options: ad-supported, freemium, paid apps, and paid apps with in-app purchases.

LO 3-5

Recognize and use the components of a social media strategy.

Firms engage with customers through social and mobile media using a three-step process. First, they listen to the customer using techniques like sentiment analysis. Second, they analyze the data collected in the first step using metrics like the bounce rate, click paths, and conversion rates. Finally, they use this information to develop tactics to engage their customers in a way very similar to the process described in Chapter 18.

LO 3-6 Understand the central factors in picking an influencer partner.

Influencer marketing is a marketing strategy that uses opinion leaders, popular on social media, to drive marketing messages to a targeted audience. Firms can assess how well these people can influence their target markets by considering the 4Rs: relevance, reach, response, and return. Relevance assesses how well the influencer links with the brand and its message. Reach refers to the percentage of a target population exposed to a specific marketing communication at least once. Response refers to the extent to shich those exposed to a specific marketing communication at lease once. Response refers to the extent to which those exposed to the influencer’s message respond in a way that is favorable to the firm.

Finally, return measures the financial impact that the influencer’s message. Has on the firm. There are several types of influencers: celebrity, micro, blog, social media, and specialized. The appropriateness of using each type is dependent on the target market and the objective of the message being conveyed.

Unfortunately, influencer marketing is fraught with serious ethical considerations including fraudulent influencers seeking to falsely represent their reach and relevance, posts that aren’t clearly laveled as advertising, and promotions or posts that are not sincere.

Extended Chapter Outline VII. The 4E Framework for Digital Marketing (PPT 3-5) A. Excite the Customer (PPT 3-6) B. Educate the Customer (PPT 3-7) C. Experience the Product or Service (PPT 3-8) D. Engage the Customer (PPT 3-9)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 3-10) 1. What are the 4Es?

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Answer: Excite the Customer, Educate the Customer, Experience the Product or Service, and Engage the Customer.

2. What social media elements work best for each of the 4Es? Answer: Best social media elements: Excite the Customer—social networks like Facebook and Google + Educate the Customer—blogs and blogging tools (e.g., WordPress and Twitter), HubSpot (all-inone marketing software), YouTube, and Google + Experience the Product or Service—YouTube, blogs, and retailer’s website Engage the Customer—blogging and microblogging VIII. Online Marketing The 7C online marketing framework (PPT 3-11) 1.

Core goals (PPT 3-12)

2.

Context elements (PPT 3-13)

3.

Content (PPT 3-14)

4.

Community (PPT 3-15)

5.

Communication (PPT 3-16)

6.

Commerce (PPT 3-17)

7.

Connection (PPT 3-18)

Progress Check: Several questions are offered for students to check their understanding of goals for using online channels. (PPT 3-19) 1. Describe the components of the 7C online marketing framework.

Answer: Core goals: to engage users by encouraging them to spend time viewing and interacting with its content is the general goal, but companies may have more specific goals such as engage them in commerce or educating them Context elements: design and navigation elements that are aligned with the target market(s) Content: information through text, graphic, video, and audio that is relevant to the target market and creates excitement that leads to more engagement Community: actively allow customers to interact, socialize, share information, and create a sense of community through postings, examples include blogs, microblogs, corporate blogs, and professional blogs Communication: provide a mechanism for customers to communicate with the company and a platform for two-way communication Commerce: offer a range of options for consistently and constantly for making purchases such as websites, mobile apps, and in store Connection: engage customers and provide a call-to-action for actions including buying, posting, reviewing, commenting, or sharing 2. Differentiate between organic and paid search.

Answer: Organic search happens when a user enters a keyword into a search engine and a ranking list appears that is based on the relevance of the key term. Paid searches result when companies use search engine marketing and pay to appear higher on the list than they would

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naturally. In that case users see paid supporters on the list before the results that generate naturally in an organic search.

IX. The Wheel of Social Media Engagement (PPT 3-20) A. The Information Effect (PPT 3-21) Marketing Analytics 3.1: Are Algorithms Discriminatory? Questions about How Facebook Targets Advertising discusses the algorithms Facebook and other digital platforms use to target appropriate customers for advertisers. However, those algorithms make discrimination possible when advertisers want to exclude certain populations. Some such cases are when a housing provider wants to exclude certain ethnicities or disabled persons from seeing their ads. In some cases, the discrimination is less intentional andmore a function of target marketing.

B. The Connected Effect (PPT 3-22) Adding Value 3.1: Something for Everyone: Shopping through Facebook Shops explains how Facebook has to balance the needs of small businesses that maintain pages and advertise on Facebook and ensuring customers see ads and postings from sellers in which they are interested. While doing this, Facebook needs to make certain it earns sufficient revenue to continue operations. The Facebook Shops allows users to purchase from small businesses while remaining on the site, while keeping its small business customers happy.

C. The Network Effect (PPT 3-23) D. The Dynamic Effect (PPT 3-24) E. The Timeliness Effect (PPT 3-25) Social & Mobile Marketing 3.1: New Concert Streaming and Sponsoring Opportunities: The Example of BeApp and Coke explains how BeApp, an alternative to general streaming platforms, offers opportunities for listeners to interact with performances. Coca-Cola sponsored the new app’s 60 day trial in exchange for the ability to name the 60 day concert series on the app.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 3-26) 1. What are the five drivers of social media engagement described in the Wheel of Social Media Engagement?

Answer: the information effect, the connected effect, the network effect, the dynamic effect, and the timeliness effect X. Going Mobile and Social (PPT 3-27) A. App Pricing Models

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Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT-28) 1. What are the seven types of customer motivations for using mobile apps?

Answer: need for me time, need to socialize, need to shop, need to accomplish, need to prepare, need to discover, and need to self-express 2. What are the four options to price mobile apps?

Answer: ad-supported apps, freemium apps, paid apps, and paid apps with in-app purchases 3. What are some of the most popular types of mobile applications?

Answer: navigation, productivity, books, education, news, entertainment, music, newsstand, social networking, and games XI. How Do Firms Engage Their Customers? (PPT 3-29) A. Listen (PPT 3-30) B. Analyze (PPT 3-31) C. Do (PPT 3-33) 1.

2.

3.

4.

5.

Identify strategy goals Identify target audience Develop the budget Develop the campaign: Experiment and engage Monitor and change

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 3- 34) 1.

What are the components of a digital marketing strategy?

Answer: Listening to what customers have to say.

Analyzing the information available through various touchpoints.

Implementing social media tactics to excite customers.

VI.

Influencer Marketing (PPT 3-35) A. Assessing the Efficacy of Influencers (PPT 3-36) B. Types of Influencers (PPT 3-38) C. Ethical Considerations for Influencer Marketing (PPT 3-39)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 3-40) 1.

How should firms choose and assess the efficacy of influencers?

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Answer: Firms should consider the 4Rs, relevance, reach, response, and return, when choosing and assessing the efficacy of influencers.

Quick Quiz Through its Facebook page, a major restaurant chain is offering its customers a Groupon coupon for 50 percent off the purchase of a meal. In doing so, the restaurant is focusing on which aspect of the 4E framework? a. b. c. d. e.

educating enlightening experiencing employing exciting

Answer: (e) exciting To get customers excited about a social media–related offer, the offer must be: a. b. c. d. e.

innovative and substantial. timely and aimed at a broad-based audience. relevant and aimed at a target audience. isolated and trendy. general and unique.

Answer: (c) relevant and aimed at a target audience.

Additional Resources Students will be familiar with the latest software and hardware. This will generate a good deal of interest.

It is important to teach students that social media is becoming an integral component of any integrated marketing communications strategy. The text discusses how Mercedes-Benz and Billboard are utilizing LinkedIn and Twitter, respectively, to reach their target markets. Companies are also using bloggers and other social media ―influencers‖ to get the word out about products and services, as is the case with Disney and its Social Media Moms program.

The changing role of traditional media, sales promotions, and retail, coupled with the new media of social, mobile, and online, has led to a different way of thinking about the objectives of marketing communications using the 4E framework. It is important that instructors stress that the framework includes: Exciting customers with relevant offers, educating them about the offering, helping them Experience products, whether directly or indirectly, and giving them an opportunity to Engage with their social network.

Ninety-seven percent of consumers access social media through their computers, 37 percent access these media via their mobile phones, 3 percent through iPads, and 2 percent through e-readers. Students need to understand that these numbers are constantly changing. Importantly, of the more than 100 million people that have smartphones in the U.S., approximately half of them make purchases on these devices.

Connect Application Exercises

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This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

Dell: Successfully Using Social Media Types of Social Media Types of Social Media Healthymagination: How GE is Using Social Media Spirit Airlines: The Hate Thousand Miles Campaign Images, Sales, Brands: How Red Bill Uses Social Media

Case Analysis Click & Drag Matching

Social/Mobile/Online: SBC

Video Case

iSeeit! Video Case: Social Media Metrics

Video Case

iSeeit! Video Case: Creating Value through Digital Marketing

Video Case

X

iSeeit! Video Case: Social Traditional Media Advertising

Video Case

X

Media

vs.

Types of Influencers

01 X

Learning Objectives 0302 03 04 05 X X X X X X

Video Case

X

X

X

Video Case

X

X

X

Case Analysis

X

X X

X

X

X

X

X

X

X

X X

Matching

X X

Dell: Successfully Using Social Media 

Activity Type: Case Analysis



Learning Objectives: 03-01, 03-03, 03-05



Difficulty: Hard



Activity Summary: This case discusses Dell’s social media efforts, after which students answer questions applying chapter concepts to the case.

Activity



Introduction: From its start in 1984, Michael Dell had a vision to put customer relationships at the forefront of Dell's business model. He used a simple mantra: "Be direct." By the early 2000s, Dell had changed its interaction with customers by making a major commitment to social media. Dell was one of the first corporate social media adopters and is now a leader in the use of social media to transform company performance. With a corporate culture that fully embraces social media connectivity, Dell is leveraging powerful interactions with consumers to improve products and services, retain loyal customers, and increase revenues.



Concept Review: Through social media connections, marketers and customers share information of all forms—from their thoughts about products or images to uploaded pictures, music, and videos. The changes in social, mobile, and online technologies have transformed how marketers communicate with their customers. Marketers now think about the objectives of marketing communications using

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the 4E framework: excite customers, educate them, help them experience the product, and allow them to engage with their social network. Marketers rely on three general categories of social media: social networking sites, media-sharing sites, and thought-sharing sites. More recently, opportunities have arisen in the area of mobile marketing. To be successful in their social media strategies, marketers must engage their customers. Social media engagement is a three-step process that involves listening to what customers have to say, analyzing the information available through various touch points, and finally implementing (or doing) social media tactics to excite customers.

Follow-Up Activity Review Dell’s corporate social media site (http://www.dell.com/learn/us/en/uscorp1/corp-comm/dellsocial-media), and follow the links to some of the individual sites. Find examples of the 4Es in their various activities.

Types of Social Media 

Activity Type: Click & Drag



Learning Objectives: 03-03, 03-04



Difficulty: Medium



Activity Summary: In this activity, students match descriptions of social media needs to different social media tools.

Activity



Introduction: The term social media refers to content distributed through social interactions. These media use various firms that offer services or tools to help consumers and firms build connections.

Through these connections, marketers share information of all forms with their customers and can have customers connect and interact with each other. Since their infancy in the late 1990s, social media have now entered the entrepreneurial era. Now, companies work to find ways to earn profits from the ways that consumers use and enjoy social media. In the quickly changing realms of social, mobile, and online technologies, firms have been forced to change how they communicate with their customers. Marketers are becoming increasingly aware of the importance of using these technologies effectively to be successful in their marketing efforts. The following activity explores the different types of social media and their uses.



Concept Review: Three main categories of social media exist. First are social networking sites.

Facebook and LinkedIn are two well-known examples of these. Social networking sites are an excellent way for marketers to create excitement (the first E in the 4E framework of social media).

People use social networking sites differently based on their motives and habits. The second type of social media is media-sharing sites such as YouTube and Flickr. These sites enable users to share their own generated content (videos, photographs, etc.) with other users. They also allow marketers to illustrate how customers experience their products and services and encourage engagement with the firm. The third category of social media is thought-sharing sites, commonly known as blogs. There are different types of blogs, and they are particularly effective at educating and engaging users. An important trend is the number of people who access social media through their mobile devices. The mobile market is significant and growing. Mobile marketing is especially useful to generate excitement among users at the time of sale through mobile applications (i.e., apps).

Types of Social Media – Keyboard Navigable Alternate Version



Activity Type: Matching Alternative for Click and Drag Above



Learning Objectives: 03-03, 03-04

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

Difficulty: Medium



Activity Summary: In this activity, students match descriptions of social media needs to different social media tools.

th

Activity 

Introduction: The term social media refers to content distributed through social interactions. These media use various firms that offer services or tools to help consumers and firms build connections.

Through these connections, marketers share information of all forms with their customers and can have customers connect and interact with each other. Since their infancy in the late 1990s, social media have now entered the entrepreneurial era. Now, companies work to find ways to earn profits from the ways that consumers use and enjoy social media. In the quickly changing realms of social, mobile, and online technologies, firms have been forced to change how they communicate with their customers. Marketers are becoming increasingly aware of the importance of using these technologies effectively to be successful in their marketing efforts. The following activity explores the different types of social media and their uses.



Concept Review: Three main categories of social media exist. First are social networking sites.

Facebook and LinkedIn are two well-known examples of these. Social networking sites are an excellent way for marketers to create excitement (the first E in the 4E framework of social media).

People use social networking sites differently based on their motives and habits. The second type of social media is media-sharing sites such as YouTube and Flickr. These sites enable users to share their own generated content (videos, photographs, etc.) with other users. They also allow marketers to illustrate how customers experience their products and services and encourage engagement with the firm. The third category of social media is thought-sharing sites, commonly known as blogs. There are different types of blogs, and they are particularly effective at educating and engaging users. An important trend is the number of people who access social media through their mobile devices. The mobile market is significant and growing. Mobile marketing is especially useful to generate excitement among users at the time of sale through mobile applications (i.e., apps).

Healthyimagination: How GE Is Using Social Media



Activity Type: Video Case



Learning Objectives: 3-01, 3-03, 3-05



Difficulty: Medium



Activity Summary: This video case explores GE’s social media strategy for its health-related products. Questions related to the case are embedded in the video. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Consumers today want to make healthier choices but do not always know how. The amount of available information is overwhelming. To help consumers manage their health and make better decisions, GE launched the social media campaign called Healthymagination.

Healthymagination uses different types of social media to allow GE, consumers, patients, and doctors to gather, share, and discuss healthy ideas. Watch the following video to see how GE is using social media to help people connect and become healthier together.



Concept Review: Social media have given marketers new opportunities to excite consumers, educate them, help them experience their market offering, and ultimately engage them. Different types of social media allow marketers and customers to connect with each other in a two-way dialogue. Social media also give customers the ability to build connections with and influence each other. A social media campaign is a three-step process. First, firms use social media to interact with

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and listen to customers. Then firms use various metrics and tools to analyze the data. And last, this information is used to develop tactics to further engage customers. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Visit the GE Healthymagination website (http://www.healthymagination.com/). Evaluate the content; how engaging is it, and how could GE make it more engaging? How can potential customers learn about the site?

Spirit Airlines: The Hate Thousand Miles Campaign 

Activity Type: Video Case



Learning Objectives: 3-01, 3-03, 3-05



Difficulty: Medium



Activity Summary: In an unusual move, Spirit Airlines acknowledged that many consumers hate air travel, both on Spirit and on other airlines, and encouraged them to ―share the hate.‖ This video case explores Spirit’s campaign. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Spirit’s ultra-low-cost carrier pricing model isn’t for everyone, and the airline knows that. One weakness of its strategy is that its pricing model is unfamiliar to U.S. air travelers, which can lead to unpleasant surprises when consumers must pay fees in addition to the basic fare. To address this issue, Spirit created the ―Hate Thousand Miles‖ social media campaign, awarding customers 8,000 miles in Spirit’s frequent flyer program in return for sharing what they hate about air travel, whether on Spirit or on other airlines.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity



In small groups, have students discuss: How, besides the ―State of Hate‖ report, could Spirit use the collected data to grow the company? o

The video mentions that when consumers create a frequent flyer account with Spirit in order to receive the 8,000 miles, Spirit obtains personal information that can be used to encourage those consumers to fly with Spirit, or to use Spirit more often. In addition, the company is learning something about what its own customers, as well as those of other airlines, dislike about air travel, which might help in future decision making. Finally, Spirit could choose to follow up on some individual complaints from its own customers, which could win back customers or even help to build some loyalty.

Images, Sales, Brands: How Red Bull Uses Social Media



Activity Type: Case Analysis



Learning Objectives: 03-01, 03-03, 03-04, 03-05



Difficulty: Medium

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Activity Summary: After reading a case describing social media tactics used by Red Bull, students answer questions requiring them to apply frameworks from the chapter to analyze Red Bull’s social media strategy.

Activity



Introduction: Red Bull uses social media in several ways that help to enhance its exciting, edgy brand image. This activity is important because all marketers must be able to identify opportunities to leverage social media effectively as part of a marketing plan.

Social/Mobile/Online: SBC



Activity Type: Video Case



Learning Objectives: 03-02, 03-03, 03-05



Difficulty: Hard



Activity Summary: Students view a video describing SBC’s social media program, which is focused on serving particular niches of cycling enthusiasts. Following the video, students are asked questions applying chapter concepts to SBC’s program.

Activity



Introduction: Specialized Bicycle Components, Inc. (SBC) caters to the cycling enthusiast. The company uses social media in a variety of ways, seeking to engage riders interested in various aspects of biking. This video explains SBC’s philosophy for social media use and offers several examples. This activity is important because effective use of social media is crucial in today’s world, allowing a brand to express its image and values, and allowing interaction with customers. The goal of this exercise is to test your understanding of social media frameworks by applying them to the SBC examples.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Students may be unfamiliar with the term ―microsite‖ used in the video. Visit SBC’s website and look at the ―Stories‖ section; this is what the SBC social media manager is talking about. Note how stories are provided about various professional cyclists, along with engaging photos. Discuss the value provided by this kind of information, which isn’t specific to SBC. iSeeit! Video Case: Social Media Metrics 

Activity Type: Video Case



Learning Objectives: 3-03, 3-05



Difficulty: Medium



Activity Summary: This video case emphasizes the importance of using metrics to evaluate social media offerings.

Activity

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

Introduction: Social media represents a unique blending of technology and social interaction to create personal value for users of these platforms. This growing medium represents a challenging online environment that businesses can use to make meaningful connections with customers. But in order to be effective, organizations must use the availability of analytics and performance information to keep customers engaged. Take for instance the student organizations Green Team and Young Explorers. As they both try to learn about students' interests through page views, click paths and conversation rates, the data the clubs are collecting needs to be analyzed so they can create tactics that create value for potential club members such as Gabbie. While Green Team is very savvy in its social media techniques, it is not as successful as the Young Explorers. Instead of focusing on the channels used, Young Explorers uses collected data to create a campaign that engages, connects, and keeps potential members clicking.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

iSeeit! Video Case: Creating Value through Digital Marketing 

Activity Type: Video Case



Learning Objectives: 3-01, 3-02, 3-05



Difficulty: Medium

Activity Summary: This video case illustrates different forms of digital marketing that firms can use to deliver their marketing message.

Activity



Introduction: Digital marketing is online marketing that can deliver content immediately to consumers through digital channels, devices, and platforms. This activity is important because it is an effective method for building or promoting a company’s marketing message.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

iSeeit! Video Case: Social Media vs. Traditional Media Advertising 

Activity Type: Video Case



Learning Objectives: 3-01, 3-03, 3-05



Difficulty: Medium



Activity Summary: This video case illustrates the advantages of social media versus traditional media advertising.

Activity 

Introduction: Marketers have always used media to communicate messages. Traditional mass media such as newspaper and TV ads are static, not easily changeable, and provide one-way communication. Conversely, social media offer customizable, targeted, and two-way communication.

This activity is important because when deciding which form of media to use, marketers need to

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consider which media will allow them to achieve their marketing goals and reach their target audience most effectively. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Types of Influencers 

Activity Type: Matching



Learning Objectives: 3-06



Difficulty: Medium



Activity Summary: In this activity, students match descriptions of influencers to the statements.

Activity 

Introduction: Influencer marketing is a marketing strategy that uses opinion leaders, popular on social media, to drive marketing messages to a targeted audience. Firms hire (or encourage) these well-known names to promote brand messages to their networks of followers. This activity is important because some estimates suggest that around 75 percent of marketers have turned to influencer marketing, and they anticipate doing even more of it in the future.



Concept Review: Influencers are not all the same; they can be classified according to their role and expertise, number of followers, or preferred channel. There are several types of influencers, campaigns that marketers likely should pursue with each type, and a general range of the costs of hiring them. The goal of this activity is to demonstrate your understanding of the different types of social media influencers.

chapter 4 conscious marketing, corporate social responsibility, and ethics Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview In this chapter, the goal is to introduce students to ethics and social responsibility. The text introduces the Stakeholder Analysis Matrix and the Ethical Decision Metrics I and II as tools to reaching good ethical decisions.

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Brief Chapter Outline Conscious Marketing Marketing's Greater Purpose: Corporate Social Responsibility as an Element of Conscious Marketing The Stakeholders of Conscious Marketing Integrating Conscious Marketing Throughout the Firm: Leadership and Culture Marketing Ethics as A Conscious Marketing Principle

Learning Objectives LO 4-1

Define conscious marketing.

Conscious marketing involves a sense of purpose for the firm that is more than simply making a profit by selling products and services. It consists of four main principles: a greater purpose, consideration of stakeholders, conscious leadership and culture, and ethics.

LO4-2

Describe what constitutes marketing’s greater purpose.

Marketers must recognize that the purpose of business is more than making profits. The actual purpose might vary, such as providing necessary products, ensuring employment opportunities, or achieving greener production methods, but in all of these cases, the engagement improves the inputs as well as the outcomes of marketing actions.

LO4-3

Differentiate between conscious marketing and corporate social responsibility.

Although CSR is an important element of conscious marketing, they are different from one another. CSR implies a focus on the triple bottom-line of good performance according to economic, environmental, and social criteria. Thus, good CSR can support and help promote conscious marketing. But conscious marketing goes beyond just CSR to refer to the overall meaning and purpose of the company and its marketing.

LO4-4

Describe the ways in which conscious marketing helps various stakeholders.

To describe the ways, we first have to identify the various stakeholders of a company—namely, customers, employees, the marketplace, society, and the environment:  Customers: When companies exhibit conscious marketing principles, customers know that they can trust the firms to provide healthy, ethically acceptable products and services. Many customers also feel better about buying from a company that engages in responsible practices, which provides them with the additional value of feeling good about buying from that company.  Employees: A firm committed to conscious marketing treats its employees with decency and respect. For many employees, working for an irresponsible firm would be antithetical to their own morals and values.  Marketplace: An industry improves its practices and avoids scandals when it ensures that the participating firms act responsibly and appropriately in all areas.  Society: This stakeholder is local, national, or global communities who benefit when conscious marketers give thought to how their practices might influence values or connections, such as providing aid to underprivileged communities.  Environmental Sustainability. The benefits of conscious marketing might include cleaner air and water as well as healthier product options.

LO4-5

Explain how conscious leadership can produce a conscious culture in the firm.

Conscious marketing should be integrated into the very foundation of the firm by its leaders, such as in the firm's mission statement. Then top management must follow through and commit to supporting CSR, ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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a strong ethical climate in the organization, and conscious marketing principles. When considering their strategy, conscious marketing firms ask not only ―can we implement a certain policy?‖ but also ―should we do it?‖ If any action is not ethical or socially responsible, the conscious firm will make changes to its marketing strategy.

LO4-6

Describe how ethics constitute an integral part of a firm’s conscious marketing strategy.

Being a part of an ethically responsible firm should be important to every employee, but it is particularly important to marketers because they interact most directly with customers and suppliers and make decisions about how their products impact society and the environment. Thus, marketing issues present a multitude of ethical questions and opportunities to handle.

LO4-7

Identify the four steps in ethical decision making.

First, firms can include ethics and social responsibility in their corporate mission. Second, they should institute policies and procedures to ensure that everyone working for the firm is acting in an ethically responsible manner. Third, firms can model their ethical policies after a well-established code of ethics like the one provided by the American Marketing Association. Fourth, when making ethically sensitive decisions, firms can utilize a metric such as the ethical decision-making metric in Exhibit 4.6.

Extended Chapter Outline XII. Conscious Marketing (PPT 4-4) 1. Recognition of marketing’s greater purpose.

2. Consideration of stakeholders and their interdependence.

Adding Value 4.1: Rainbow Washing or a Sincere Effort: A Temporary Packaging Redesign by Skittles highlights how Skittles changed its packaging in some locations in support of LGBTQ’s assertion that only one rainbow matters. I addition to making its packaging white packaging and adding gray tones. The company also donated $1 for each Pride Pack sold to GLAAD, a LGBTQ advocacy group.

3. The presence of conscious leadership, creating a corporate culture.

4. The understanding that decisions are ethically based.

XIII. Marketing's Greater Purpose: Corporate Social Responsibility as an Element of Conscious Marketing (PPT 4-5, 4-6, 4-7)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 4-8) 1. What are the criteria for being a conscious marketer?

Answer: Conscious marketers exhibit the following principles: recognition of marketing’s greater purpose, consideration of stakeholders and their interdependence, the presence of conscious leadership, creating a corporate culture, and the understanding that decisions are ethically based.

2. Is Walmart a conscious marketer or is it a practitioner of CSR? Answer: Walmart has been widely criticized as the worst-paying company in the United States.

Yet it also engages in extensive CSR programs across the triple bottom line. It has committed to reducing its carbon footprint (environmental performance), donates more than $1 billion in cash and in-kind items to charitable causes per year (social performance), and still earns strong profits

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(economic performance). Most students will consider Walmart a practitioner of CSR and not a conscious marketer.

XIV.

The Stakeholders of Conscious Marketing (PPT 4-9)

A. Employees (PPT 4-10) B. Customers (PPT 4-11) C. Marketplace (PPT 4-12) ethical & societal dilemma: To What Extent Is YouTube Responsible for Protecting Children from Targeting? discusses the fact that YouTube has terms that no one under the age of 13 can use the site. However, those users under that age can either lie about their age or simply not read the agreement terms. This opens them to advertising that is not allowed by law without parent consent. With this in mind, data is being collected on these children for target advertising. Do your students think it is YouTube’s responsibility to police this more closely? How can YouTube gain better control over the situation?

Adding Value 4.2: Untouched and Empowering, New Aerie Campaign Showcases Real Women discusses how Aerie, a loungewear and intimates retailer, has been hitting the right notes with its consumers. Using untouched pictures of real women wearing its products highlights the company’s message: All bodies are beautiful, and the brand is designed to be worn by all. The company held a casting call on social media. Many women whose individuality could be featured and celebrated responded to the call,

D. Society (PPT 4-13) E. Environment (PPT 4-14) Ethical & Societal Dilemma: A Cultural and Ethical Battle over a Live-Action Heroine: Controversy in the Credits for Mulan highlights the mistake Disney made in the re-make of Mulan. While the company sought to maintain its ethical and conscious positioning. It made the mistake of shooting the background of an area known for significant oppression, then thanking the area in the credits.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 4-15) 1. What is the difference between conscious marketing and corporate social responsibility?

Answer: Although CSR is an important element of conscious marketing, it is not the same thing.

Becoming a conscious marketing organization is a complex effort, and for some firms, it may prove virtually impossible to achieve.

CORPORATE SOCIAL RESPONSIBILITY Independent of corporate purpose or culture

CONSCIOUS MARKETING Incorporates higher purpose and a caring culture

Reflects a mechanistic view of business

Takes a holistic, ecosystem view of

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business as a complex adaptive system Often grafted onto traditional business model, usually as a separate department or part of PR

Social responsibility is at the core of the business through the higher purpose and viewing the community and the environment as stakeholders

Sees limited overlap between the business and society, and between business and the planet

Recognizes that business is a subset of society, and that society is a subset of the planet

2. Provide a specific example of a conscious marketing firm that considers the needs of each of its stakeholders.

Answer: Examples include elements of employees, customers, the marketplace, and society.

Adding Value 4.2: Are Growth and Conscious Marketing Contradictory? The Challenge for Patagonia describes the conscious marketing issues faced by Patagonia.

What are the challenges Patagonia has created for itself with the mission statement, ―Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis‖?

XV. Integrating Conscious Marketing Throughout the Firm: Leadership and Culture (PPT 4-16) A. Planning Phase (PPT 4-17, 4-18) B. Implementation Phase (PPT 4-19)

C. Control Phase (PPT 4-20)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 4-21) 1. What ethical questions should a marketing manager consider at each stage of the marketing plan?

Answer: In the planning phase, an ethical issue might be whether to include a commitment to ethics in its mission. In the implementation phase, an ethical issue might be whether the firm should proceed with marketing a product in a certain manner. In the control phase, an ethical issue might be whether the firm is prepared for handling a potential ethical lapse.

Social & Mobile Marketing: Do Users Know What They Are Sharing with Facebook, and Do They Care? discusses how much information Facebook collects and shares about its users including information from Instagram and WhatsApp. In addition, the conduct experiments with its users without the individuals being aware they are being manipulated. This information is sold to advertisers to better target their market.

XVI.

Marketing Ethics as a Conscious Marketing Principle (PPT 4-22)

A. The Nature of Ethical and Unethical Marketing Decisions B. Ethics and Corporate Social Responsibility (PPT-4-23) C. A Framework for Ethical Decision Making (PPT 4-24) ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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1.

2.

3.

4.

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Step 1: Identify Issues (PPT 4-25) Step 2: Gather Information and Identify Stakeholders (PPT 4-26) Step 3: Brainstorm and Evaluate Alternatives (PPT 4-27) Step 4: Choose a Course of Action (PPT 4-28)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 4-31) 1. Identify the stages in the ethical decision-making framework.

Answer: The four stages in the ethical decision-making framework are: identify issues; gather information and identify stakeholders; brainstorm and evaluate alternatives; and choose a course of action.

Additional Resources The text introduces the Stakeholder Analysis Matrix and the Ethical Decision Metrics I and II as tools to reaching good ethical decisions. Ethics is difficult to teach because it is based on one’s beliefs and culture. Consequently, instructors should keep in mind that much debate and excitement can occur in the classroom when discussing topics in this chapter.

Most students aren’t aware of the American Marketing Association Code of Ethics. Instructors should fully address this, which can be done by asking students to give an example of how the AMA ethical values (honesty, responsibility, fairness, respect, openness, and citizenship) are used in marketing. Another exercise may be for students to identify an advertisement or a marketing situation that did not adhere to the AMA Code of Ethics and the subsequent outcome. Usually, that outcome is detrimental to the companies, which demonstrates the effectiveness of following the AMA Code of Ethics. Online tip: Have students make up story problems that are based on ethical marketing dilemmas. Then have other students in the online class respond to them.

Social responsibility should be addressed. Students often think that social responsibility is a legal requirement when it is not. Start students off with this topic by asking if social responsibility is a legal requirement. The discussion should turn to examples of social responsibility and why it is important (from the marketing viewpoint) for the organization to be involved in social responsibility.

Online Tip: Have students write up social responsibility problems (from the stakeholder’s viewpoint) in a post and have their peers reply back as to what they would do in the situation.

Slide 6 in the Instructor PowerPoints for this chapter has a video that BP produced after the Deepwater Horizon incident in the Gulf of Mexico (https://www.youtube.com/watch?v=V6m-VJy8Toc). Do students think this video has authenticity, or is it propaganda?

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

Newman’s Own Organics: Ethics and Social Responsibility Understanding How CSR Differs from Conscious Marketing Understanding How CSR Differs from Conscious Marketing Is There an App for Good Parenting?

Zipcar: Conscious Marketing Integrating Conscious Marketing iSeeit! Video Case: Ethical Marketing and Organization Mission Daily Table Conscious Marketing at The Gluten Free (GFB)

Video Case

Learning Objectives 0401 02 03 04 05 X

Click & Drag

X

Multiple Choice

X

Case Analysis Video Case Matching Video Case

X

Case Analysis

X

Video Case

X

X

X X

X X

06

07

X X

X

X X

X X

X

X

Newman’s Own Organics: Ethics and Corporate Social Responsibility 

Activity Type: Video Case



Learning Objectives: 04-03



Difficulty: Medium



Activity Summary: The case describes the ethical climate and corporate social responsibility program at Newman’s Own Organics. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: In 1993, Newman's Own Organics was started as a division of the already established company Newman's Own, a successful brand of packaged goods founded by veteran actor and philanthropist Paul Newman. Part of its mission is to generate income for Paul Newman's charitable activities; another is to encourage more organic agriculture.



Concept Review: The process of creating a strong ethical climate within a marketing firm includes having values that guide decision making and behavior. Everyone within the firm must share the same understanding of these values. Further, they must be able to translate the values into business actions and to discuss them in a consistent language. Top management must commit to establishing an ethical climate, but all employees must carry out this commitment because the roots of ethical conflict are often the competing values of individuals.

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Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Review the Newman’s Own Organics website (http://www.newmansownorganics.com/index.php) and Facebook page (linked to the website home page). If you had visited the site without viewing the video, how much of the Newman’s Own Organics social responsibility message would you have been able to understand? Should Newman’s Own change their site to make some messages ―louder‖?

Understanding How CSR Differs from Conscious Marketing 

Activity Type: Click & Drag



Learning Objectives: 04-03



Difficulty: Hard



Activity Summary: Students read descriptions of different firm actions and must classify them as examples of CSR or conscious marketing.

Activity



Introduction: A firm that engages in conscious marketing is recognizing that it has a purpose higher than making a profit. Corporate social responsibility (CSR) is an element of conscious marketing and generally refers to a firm’s understanding that it has responsibilities to society. This exercise is important because it will help you understand that because of the complexities of conscious marketing, not all socially responsible firms are able to engage in conscious-marketing efforts.

Understanding How CSR Differs from Conscious Marketing – Keyboard Navigable Alternative Version



Activity Type: Multiple Choice Alternate to Click & Drag Above



Learning Objectives: 04-03



Difficulty: Hard



Activity Summary: Students read descriptions of different firm actions and must classify them as examples of CSR or conscious marketing.

Activity



Introduction: A firm that engages in conscious marketing is recognizing that it has a purpose higher than making a profit. Corporate social responsibility (CSR) is an element of conscious marketing and generally refers to a firm’s understanding that it has responsibilities to society. This exercise is important because it will help you understand that because of the complexities of conscious marketing, not all socially responsible firms are able to engage in conscious-marketing efforts.

Is There an App for Good Parenting? 

Activity Type: Case Analysis



Learning Objectives: 04-01, 04-04, 04-06, 04-07

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

Difficulty: Medium



Activity Summary: This case discusses the issue of screen time for babies and toddlers, exploring both current research on its impact and products intended for use by very young children. After reading the case, students answer questions applying marketing ethics frameworks to the issue.

th

Activity 

Introduction: Do the risks of ―screen time‖ for small children outweigh the potential benefits? That is what this case considers. This activity is important because ethical dilemmas arise every day in business decision making, and managers (especially marketers) must consider all aspects of a situation in order to make the best decisions.

Zipcar: Conscious Marketing



Activity Type: Video Case



Learning Objectives: 04-03, 04-04, 04-05, 04-06



Difficulty: Medium



Activity Summary: Zipcar sees its corporate mission as more than just making a profit: the company seeks to make the world better through its core operations. The video case explores Zipcar’s conscious marketing program. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Conscious marketing is built into the DNA at Zipcar. The company feels that it forges deeper relationships with customers, creating a ―community of Zipsters,‖ through these efforts. The video case describes some of these initiatives. This activity is important because consumers increasingly seek to forge relationships with brands that share the consumer’s core values. The goal of this exercise is to test your understanding of frameworks of ethical, socially responsible, and conscious marketing by applying them to the Zipcar example.



Video: After the video ends, students are asked questions about the video and related course concepts. iSeeit! Video Case: Ethical Marketing and Organization Mission



Activity Type: Video Case



Learning Objectives: 04-02, 04-03



Difficulty: Easy



Activity Summary: This iSeeIt video case considers two job offers a student receives from organizations with very different ethical climates, using these differences to explore concepts related to ethical marketing.

Activity



Introduction: Ethics serve an increasingly important role in guiding the marketing activities of today’s organizations. From corporate social responsibility to the internal ethics of employees, how an organization acts and completes operating activities have become important considerations for stakeholders at all levels. This can be seen from an employee perspective as Justin weighs two very different job opportunities at Hope Springs and Big Box Co. On one hand, Hope Springs truly cares about its employees, its customers, and the world in general, as it is highly focused on both employee

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ethics and corporate social responsibility. On the other hand, Big Box Co. is one of the largest employers in retail and is very active when it comes to corporate social responsibility. However, the company takes an external approach and has a limited focus on employee ethics. In addition, customer driven websites offer reviews that are less than flattering. While both organizations focus on profits, how they get there and what they do with revenue is vastly different. 

Video: After the video ends, students are asked questions about the video and related course concepts.

Daily Table



Activity Type: Case Analysis



Learning Objectives: 04-01, 04-02, 04-04



Difficulty: Medium



Activity Summary: This case discusses the growing social trends surrounding organic food and healthy eating. With the higher prices associated with these foods, conscious marketing is taken into consideration because of lower-income families.

Activity

Introduction: This activity is important because conscious marketing requires a sense of purpose

that is higher than the company earning profits. This higher calling is a core component of conscious marketing. The question of making a profit or protecting customers, employees, and the broader needs of society and the environment creates a dilemma for marketers. A balance must be struck by the firm’s leadership between the trade-offs among different stakeholders. Conscious marketing ultimately depends on ethics and corporate social responsibility.

Conscious Marketing at The Gluten Free Bar (GFB) 

Activity Type: Video Case



Learning Objectives: 04-01. 04-03, 04-04, 04-05



Difficulty: Medium/Hard



Activity Summary: This video highlights The Gluten Free Bar’s company philosophy that they have a sense of purpose that is higher than simply making a profit by selling products and services ultimately showcasing how it implements conscious marketing.

Activity

Introduction: This activity is important because companies are often confronted with the question of

which is more important: making a profit or protecting customers, employees, and the needs of society and the environment. Over time, many companies and society as a whole have come to agree that firms have social responsibilities that they must meet. 

Video: After the video ends, students are asked questions about the video and related course concepts.

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analyzing the marketing environment Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview This chapter discusses the marketing environment, which includes the immediate environment and the macroenvironment, with consumers always at the center.

Brief Chapter Outline A Marketing Environment Analysis Framework The Immediate Environment Macroenvironmental Factors

Learning Objectives LO5-1

Outline how customers, the company, competitors, and corporate partners affect marketing strategy.

Everything a firm does should revolve around the customer; without the customer, nothing gets sold.

Firms must discover their customers’ wants and needs and then be able to provide a valuable product or service that will satisfy those wants or needs. If there were only one firm and many customers, a marketer’s life would be a piece of cake. But because this situation rarely occurs, firms must monitor their competitors to discover how they might be appealing to their customers. If a firm does not monitor its competitors, the firm’s customers might soon belong to its competitors. Though life certainly would be easier without competitors, it would be difficult, if not impossible, without corporate partners. Good marketing firms or departments work closely with suppliers, marketing research firms, consultants, and transportation firms to coordinate the extensive process of discovering what customers want and finally getting it to them when and where they want it. Each of these activities—discovering customer needs, studying competitors’ actions, and working with corporate partners—helps add value to firms’ products and services.

LO5-2

Explain why marketers must consider their macroenvironment when they make decisions.

What are the chances that a fast-food hamburger restaurant would be successful in a predominantly Hindu neighborhood? Not good. Marketers must be sensitive to such cultural issues to be successful, and they must also consider customer demographics—age, income, market size, education, gender, and ethnicity—to identify specific customer target groups. In any society, major social trends influence the way people live. In no other time in history has technology moved so rapidly and had such a pervasive influence on the way we live. Not only do marketers help identify and develop technologies for practical, everyday uses, but technological advances help marketers provide consumers with more products and services more quickly and efficiently. The general state of the economy influences how people spend

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their discretionary income. When the economy is healthy, marketing success comes relatively easily. But when the economy gets bumpy, only well-honed marketing skills can yield long-term successes.

Naturally, all firms must abide by the law, and many legal issues affect marketing directly. These laws pertain to competitive practices and protecting consumers from unfair or dangerous products.

LO5-3

Identify various social trends that impact marketing.

Social trends have a tremendous impact on what consumers purchase and consume. Understanding these trends—health and wellness, green marketing, and privacy issues—can help marketers serve their customers better.

LO5-4

Examine the technological advances that are influencing marketers

Technological advances in products and services continue to change the way we live, from more ―thoughtful‖ coffeemakers to potential for self-driving cars and trucks in the not-so-distant future. At the cutting edge of these technologies is artificial intelligence, which relies on computers to perform humanlike tasks. A more physical technology is found in robotics, which are machines that can perform human tasks, like a machine that can ―roll around‖ a store checking for out-of-stock merchandise, or one that takes your food order at a restaurant. Finally, the Internet of Things refers to products, such as home appliances that work more efficiently and are more able to perform more tasks by being connected to the Internet. How these and other technologically advanced products and services will diffuse into the marketplace is certainly not clear. What is clear, however, is that technology will continue to play an increasingly important part in the products and services we use every day.

Extended Chapter Outline XVII.

A Marketing Environment Analysis Framework (PPT 5-4)

XVIII.

The Immediate Environment (PPT 5-5)

A. Company Capabilities (PPT 5-6) B. Competitors (PPT 5-7) C. Corporate Partners (PPT 5-8) D. Physical Environment (PPT 5-9) E. Energy Trends Ethical & Societal Dilemma: Microplastics in the Pool: The Unique Environmental Harms of Swimwear and Efforts to Address Them discusses the environmental impact of swimwear and the measures companies are taking to minimize it.

F. Greener Practices and Greener Consumers

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 5-11) 1. What are the components of the immediate environment?

Answer: The components of the immediate environment are the company’s capabilities, competitors, competitive intelligence, and the company’s corporate partners. ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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th

Macroenvironmental Factors (PPT 5-12)

A. Culture (PPT 5-13) 1. Country Culture 2. Regional Culture B. Demographics (PPT 5-14) 1. Generational Cohorts (PPT 5-15) Adding Value 5.1: The Latest Insights into Gen Z provides an overview of the importance of digital media to Gen Z. Because this generational cohort is so reliant on technology, they miss forming the typical communities and rely on brands to do that for them.

2.

3.

4.

5.

Income (PPT 5-16) Education (PPT 5-17) Gender (PPT 5-18) Ethnicity (PPT 5-19)

C. Social Trends (PPT 5-20) 1. Sustainability (PPT 5-21) Ethical & Societal Dilemma 5.2: Targeting Diversity: Target’s Commitment to Change discusses the company’s measures to address diversity, representation, and responsibility issues throughout its corporation. Few other retailers made their promises to improve matters as explicit, quantifiable, or transparent as target did. If it fails to reach its specific and explicit commitments, it may become the target of protests. If it succeeds, Target has the potential for setting the standard for the retail industry.

2. Health and Wellness Concerns (PPT 5-22) .

3. Efficient Utilization and Distribution of Food (PPT 5-23)

D. Technological Advances (PPT 5-24) 1. Artificial Intelligence Marketing Analytics 5.1: Vending Drinks, Gathering Big Data: How Coca-Cola Relies on Cutting-edge Analytics to Develop New Drink Flavors discusses how Coca-Cola uses AI in its Freestyle machine to adjust its strategies and develop now products.

2. Robotics 3. Internet of Things 4. Privacy Concerns

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E. Economic Situation (PPT 5-25) F. Political/Legal Environment (PPT 5-26, 5-27, and 5-28) G. Responding to the Environment (PPT5-29)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 5-30) 1. What are the six key macroenvironmental factors?

Answer: The six key macroenvironmental factors are culture, demographics, social issues, technological advances, economic situation, and political/regulatory environment.

2. Differentiate between country culture and regional culture.

Answer: Country culture includes artifacts, behavior, dress, physical settings, ceremonies, and so on but also includes subtle aspects of culture. Regional culture applies to a region’s references to product categories. In marketing, the only thing that changes in country culture is language, but firms face challenges developing promotional materials that transcend regional boundaries.

3. What are some important social trends shaping consumer values and shopping behavior?

Answer: The green movement, privacy concerns, and health and wellness concerns are some important social trends currently shaping consumer values.

Additional Resources Perhaps the most challenging aspect of this chapter is for students to truly understand the relationships between the areas of the marketing environment. Since Exhibit 5.1 (Understanding the Marketing Environment) appears to be self-explanatory, students tend to gloss over it in the reading since they understand most of the vocabulary in the figure. Instructors may want to lead a group assignment in which groups need to create a marketing situation that demonstrates the impact of the factors (instructors can assign one per team, such as ―social‖ to team 1, ―economic‖ to team 2, and so on. The group also needs to go one-step further in assessing that factor’s effect on the competition, corporate partners, the company, and ultimately the consumer. The instructor also may elect to have teams come up with one example of each of the factors (though this may be time consuming). Students will tend to shy away from a marketing example so the instructor should emphasize it needs to be a clear marketing example.

Once those examples are shared (perhaps put on the whiteboard or transferred to the transparency of the figure), class discussion should follow addressing the impact of the environmental factors on the marketing strategy and how it may even impact the SWOT. Online Tip: This exercise is easily transferred to either an online team assignment or separate posts with each of the external factors becoming one of the post topics (divide the class by last name alphabetically to answer some of the posts or have students contribute one example to each of the posts/external factors).

Slide 13 in the Instructor PowerPoints for this chapter contains a link to a video on Millennials and the experience economy (https://www.youtube.com/watch?feature=player_embedded&v=YFN2vcBuGyQ).

What do students think of the idea that Millennials spend their money on ―experiences‖? How is this different from previous generations?

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Slide 21 in the Instructor PowerPoints for this chapter contains a link to a video on Facebook’s mobile privacy features (https://www.youtube.com/watch?v=5CJg3lq7MHc). How concerned are students about their privacy online? Do they think Facebook does enough to protect the privacy of its users?

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

The Marketing Mix: Sporting Goods and Services The Marketing Mix: Sporting Goods and Services Dole Analyzes the Environment McDonald’s: Analyzing the Marketing Environment Ford: A New Car for a New Generation Seventh Generation: Responding to the Marketing Environment adidas: Boost Technology and the Marketing Environment iSeeit! Video Case: Macroenvironmental Scanning The Rise of the Electric Car Understanding the Marketing Environment at Anki

Click & Drag Matching Video Case Video Case Video Case Case Analysis

Learning Objectives 0501 02 03 04 X X X X X X X X X X X X X X

Video Case

X

Video Case Case Analysis Video Case

X X

X

X

X X

X

X

The Marketing Mix: Sporting Goods and Services 

Activity Type: Click & Drag



Learning Objectives: 5-02, 5-03



Difficulty: Medium



Activity Summary: Students are asked to classify five different groups according to the type of demographic variable it represents.

Activity



Introduction: Demographics indicate the characteristics of human population and segments, especially those used to identify consumer markets. Demographic characteristics can include age, gender, race, income, education, religion, and ethnicity. Marketers who are armed with demographic information can tailor their promotional strategy to appeal to those demographic segments.

Categorize the following statements according to the attributes and trends that resulted from each demographic characteristic.



Concept Review: In addition to understanding their customers, the company itself, their competition, and their corporate partners in their immediate environment, marketers must also understand the macroenvironmental factors that operate in the external environment. The primary components of the macroenvironment are culture, demographics, social issues, technologic advances, economic situation, and political/regulatory environment.

Follow-Up Activity

Suppose that you are a small manufacturer of athletic shoes. Choose one of the demographic groups identified in the activity and create a simple marketing mix for that group: a product (or product line), a

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price level, the type of store (or website) where the product should be sold, and some ideas about how to promote the products.

The Marketing Mix: Sporting Goods and Services – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to Click & Drag Above



Learning Objectives: 5-02, 5-03



Difficulty: Medium



Activity Summary: Students are asked to classify five different groups according to the type of demographic variable it represents.

Activity



Introduction: Demographics indicate the characteristics of human population and segments, especially those used to identify consumer markets. Demographic characteristics can include age, gender, race, income, education, religion, and ethnicity. Marketers who are armed with demographic information can tailor their promotional strategy to appeal to those demographic segments.

Categorize the following statements according to the attributes and trends that resulted from each demographic characteristic.



Concept Review: In addition to understanding their customers, the company itself, their competition, and their corporate partners in their immediate environment, marketers must also understand the macroenvironmental factors that operate in the external environment. The primary components of the macroenvironment are culture, demographics, social issues, technologic advances, economic situation, and political/regulatory environment.

Follow-Up Activity

Suppose that you are a small manufacturer of athletic shoes. Choose one of the demographic groups identified in the activity and create a simple marketing mix for that group: a product (or product line), a price level, the type of store (or website) where the product should be sold, and some ideas about how to promote the products.

Dole Analyzes the Environment 

Activity Type: Video Case



Learning Objectives: 5-02, 5-04



Difficulty: Medium



Activity Summary: This video explores how Dole has used what it learns by monitoring the macroenvironment to identify product opportunities. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: As the world's largest producer and marketer of fruits and vegetables, Dole is constantly analyzing the environment to make sure its marketing messages are on target.



Concept Review: One of the goals of value-based marketing is for the firm to provide consumers greater value than that offered by competitors. This provision requires that the firm look at the entire business process from a consumer's point of view. Consumers' needs and wants, as well as their

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ability to purchase, are affected by a host of factors that evolve over time. Firms use a variety of tools to keep track of their competitors' activities and communicate with their corporate partners.

Furthermore, they monitor their macroenvironment to determine how different factors influence consumers and what type of response will achieve the best results. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Divide the students into small groups. Ask each group to choose a specific social trend and then identify some companies for which this trend creates opportunities. The examples in the textbook are off limits!

McDonald’s: Analyzing the Marketing Environment 

Activity Type: Video Case



Learning Objectives: 5-02, 5-04



Difficulty: Medium



Activity Summary: Discusses how McDonald’s has responded to concerns about nutrition and safety of its food. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: McDonald's has become more aware of recent changes in its customers' wants with regard to fast food, and the company has adapted its marketing mix accordingly. By paying close attention to customer needs and continuously monitoring the business environment, McDonald's can identify potential opportunities.



Concept Review: Consumers may be influenced by the actions of the focal company, the company's competitors, and the corporate partners that work with the firm to provide goods and services to consumers. The firm is also influenced by the macroenvironment, which includes various cultural and demographic influences as well as social, technological, economic, and political/regulatory factors.

Firms should monitor the macroenvironment to determine the ways in which these factors influence consumers and to develop appropriate responses. Sometimes, with careful attention to the environment, a firm can even anticipate trends and reap large rewards.

Ford: A New Car For a New Generation



Activity Type: Video Case



Learning Objectives: 05-02, 05-03, 05-04



Difficulty: Medium



Activity Summary: Discusses how Ford has responded to macroenvironmental trends in the marketing of the Ford Fiesta. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Marketers use many factors to examine the environment when developing a new product. In this video, you see how Ford created a new customer base for a comeback vehicle and how the product was recreated, or repositioned, to fit Ford's target market.

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

Concept Review: By paying close attention to customer needs and continuously monitoring the business environment in which the company operates, marketers identify potential opportunities that provide greater value to consumers. In addition to understanding their customers, companies must understand macroenvironmental factors that operate in the external environment, namely the culture, demographics, social issues, technological advances, economic situation, and political/regulatory environment (CDSTEP).



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities

Either review the following articles with the class, or assign them for out-of-class reading:  http://www.forbes.com/sites/dalebuss/2013/08/22/thanks-to-fiesta-ford-leads-retail-growth-withmillennials/ 

http://www.jeffbullas.com/2010/02/18/the-7-secrets-to-fords-social-media-marketing-success/ (You may have to click past a splash page or other ad)

Discuss with the students what makes a big company like Ford successful (or not) in appealing to Generation Y. You may want to start by asking them specifically about Ford and the Fiesta: Do they know people who own them, what are their attitudes, and so on.

Seventh Generation: Responding to the Marketing Environment 

Activity Type: Case Analysis



Learning Objectives: 05-01, 05-02, 05-04



Difficulty: Hard



Activity Summary: Students answer questions applying the marketing strategy of Seventh Generation, a ―green‖ consumer products company, to chapter concepts.

Activity



Introduction: Taking an Iroquois directive—"In our every deliberation, we must consider the impact of our decisions on the next seven generations"—the consumer product company Seventh Generation has applied a distinctly modern sensibility to derive a long-term approach to the marketing environment. Although its mission statement might be focused on future generations, Seventh Generation has successfully appealed to current consumer demand for sustainable, environmentally safe, green products. As its story illustrates, in a constantly changing marketing environment, success depends on identifying opportunities and then responding quickly, accurately, and sensitively to consumers.



Concept Review: Consumer demands and expectations are constantly changing, and marketers must pay close attention to customer needs and the business environment. Consumers are at the center of the marketing environment; everything a firm does should revolve around the customer. But many factors in the marketing environment have great impact on what consumers purchase and consume. The immediate consumer environment includes competitors, corporate partners, competitive intelligence and the company's capabilities. There are also factors that operate in the external macroenvironment: culture, demographics, social trends, technological advances, the general economy, and the political/regulatory environment. Marketers must monitor these constantly changing factors and respond with tactics and marketing strategies to capitalize on opportunities.

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Follow-Up Activity Explore ―greenwashing‖ in a class discussion. Three possible ways to do this:  Show the video in http://thegreenwashingblog.com/2014/02/25/marketing-and-greenwashing/ - a fiveminute video discussing the question ―When does marketing become greenwashing?‖ It gets a little bit dry but would work well for a more advanced class. 

Show the video embedded in this blog entry: http://thegreenwashingblog.com/2014/03/11/videogreenwashing-public-service-announcement/. In this video, three ads with implied or overt greenwashing are dissected (and, frankly, ridiculed). It’s silly, but raises questions about how much consumers really think about these questionable ―green‖ claims.



Discuss whether or not the students think consumers really care about ―green.‖ If buying green products really matters to consumers, what behaviors would they expect to see (willingness to pay more, going to extra effort to find these products, researching green products)? adidas: Boost Technology and the Marketing Environment



Activity Type: Video Case



Learning Objectives: 05-01, 05-02, 05-04



Difficulty: Medium



Activity Summary: This video case describes an advanced technology adidas developed in a partnership with a corporate partner to respond to trends in consumer preferences. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Adidas has developed Boost technology to improve performance of its running shoes, offering superior cushioning. Adidas developed this innovation to respond to trends in the marketing environment, and also to leverage its own capabilities and those of its partners.



Concept Review: o Culture: The set of values, guiding beliefs, understandings, and ways of doing things shared by members of a society. o Demographics: Information about the characteristics of human populations and segments. o Foreign currency fluctuations: Changes in the value of a country's currency relative to the currency of another country. o Macroenvironmental factors: Aspects of the external environment that affect a company's business, such as the culture, demographics, social issues, technological advances, economic situation, and political/regulatory environment. o Immediate environment: Aspects of the environment that affect a company’s business, such as its capabilities, its competitors, and its corporate partners.

Follow-Up Activities



Ask if any students are serious runners; if so, what kind of shoe (both features and brand) do they prefer and why? Have their preferences changed over time?



Ask students to read some professional reviews of Boost products and report back—how innovative do the experts consider this technology to be? (Note: adidas now has multiple Boost product lines: Ultra Boost, Energy Boost, and Pure Boost.) iSeeit! Video Case: Macroenvironmental Scanning

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

Activity Type: Video Case



Learning Objectives: 05-02



Difficulty: Easy



Activity Summary: This video case explores the different categories of macroenvironmental factors from the perspective of Hope Springs, a bottled water company focusing on sustainability and environmental protection.

Activity



Introduction: Changes in the marketing environment are a source of opportunities and threats that need to be continuously monitored. Through the scanning of macroenvironmental forces, organizations can quickly identify trends and changes in the business climate that could significantly impact their marketing strategies. Take for instance Hope Springs and how Julie, its marketing executive, must consider how the external business environment impacts everything Hope Springs does as a business. Social and demographic trends, or how society and consumers are changing, have influenced the company's decision to be sustainability focused. Similarly, Hope Springs’ understanding of political and legal issues in countries where it supports clean water initiatives has helped define where to focus its sustainability efforts. Technology, which allowed Hope Springs to develop an innovative bottle design, also provides an opportunity for consumers to find the nearest bottle filling station. All of these external environments, along with an understanding of the competitive landscape, are important considerations in the ongoing marketing activities of Hope Springs.



Video: After the video ends, students are asked questions about the video and related course concepts.

The Rise of the Electric Car 

Activity Type: Case Analysis



Learning Objectives: 05-01, 05-02, 05-03, 05-04



Difficulty: Easy/Medium



Activity Summary: Students demonstrate their understanding of the marketing environmental analysis framework through questions they answer at this case about electric cars.

Activity

Introduction: Over time marketers will discover changes in customer demand and expectations.

Companies need to modify their product and service offerings to match these changes. The consumer is the centerpiece of the marketing environment. Consumers may be influenced directly by the immediate environment, and the company is influenced by the macroenvironment, which indirectly impacts consumers. adidas: Boost Technology and the Marketing Environment 

Activity Type: Video Case



Learning Objectives: 05-02, 05-03, 05-05, 05-06



Difficulty: Easy/Medium



Activity Summary: After watching the Anki video, students will demonstrate their understanding the marketing environment and how it influences consumers’ desires by answering a series of questions.

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Activity 

Introduction: A good marketer can identify potential opportunities by playing close attention to customer needs and continuously monitoring the business environment. The immediate environment can influence consumers. This video demonstrates how such factors influence consumers and how they firms should respond to them.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

chapter 6 consumer behavior Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview This chapter focuses on the consumer buying decision and describes the cognitive process that consumers experience when evaluating that purchasing decision. It also focuses on the dynamics of what influences the consumer buying decision.

Brief Chapter Outline The Consumer Decision Process Factors Influencing the Consumer Decision Process Involvement and Consumer Buying Decisions

Learning Objectives LO 6-1

Articulate the steps in the consumer buying process.

The consumer buying process consists of five main steps: First, during need recognition, consumers simply realize they have an unsatisfied need or want that they hope to address. Second, they begin to search for information to determine how to satisfy that need. Third, during the alternative evaluation stage, they assess the various options available to them to determine which the best is for their purposes.

Fourth, the purchase stage involves obtaining and using the product. Finally, consumers enter the postpurchase stage, during which they determine whether they are satisfied or dissatisfied with their choice.

LO 6-2

Describe the difference between functional and psychological needs.

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Functional needs pertain to the performance of a product or service. Psychological needs pertain to the personal gratification consumers associate with a product and/or service.

LO 6-3

Describe factors that affect information search.

The information search that people undertake varies depending on both external and internal factors.

Among the former, the type of product or service dictates whether people can make an easy, quick decision or instead must undertake significant research to find the best purchase option. A person’s perceptions of the benefits versus the costs of the search also determine how much effort they undertake.

These perceptions often relate closely to their perception of the risk involved in their purchase. Finally, people’s locus of control, whether external or internal, strongly influences their information search actions.

LO 6-4

Discuss postpurchase outcomes.

Marketers hope that after their purchase, consumers are satisfied and pleased with their purchase, which can lead to customer loyalty, a positive postpurchase outcome. However, consumers also may suffer postpurchase dissonance, or buyer’s remorse.

LO 6-5

List the factors that affect the consumer decision process.

The elements of the marketing mix (product, place, promotion, and price) have significant effects, of course. In addition, social factors, such as family and culture, influence not only what a consumer buys but also how a consumer goes about making a purchase decision. The psychological factors that influence purchase decisions include motives, attitudes, perceptions, learning, and lifestyle. Finally, the specific factors that mark the purchase situation, like the store setting or even the time of day, can alter people’s decision process.

LO 6-6

Describe how involvement influences the consumer decision process.

More involved consumers, who are more interested or invested in the product or service they are considering, tend to engage in extended problem solving. They gather lots of information, scrutinize it carefully, and then make their decisions with caution, to minimize any risk they may confront. In contrast, less involved consumers often engage in limited problem solving, undertake impulse purchases, or rely on habit to make their purchase decisions.

Extended Chapter Outline XX. The Consumer Decision Process (PPT 6-4) A. Need Recognition (PPT 6-5) Functional Needs Psychological Needs B. Search for Information (PPT 6-6) Internal Search for Information External Search for Information Factors Affecting Consumers’ Search Processes (PPT 6-7) The Perceived Benefits versus Perceived Costs of Search (PPT 6-7) The Locus of Control (PPT 6-8) Actual or Perceived Risk (PPT 6-9)

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Marketing Analytics 6.1: The Best Behavioral Predictor? What People Buy on Amazon describes how Amazon’s advertising goes beyond focusing on a specific search instance to promoting offerings to people who might be interested, even if they aren’t searching for that item. Consumers readily and freely provide the information advertisers need through previous search sessions. Previously, Amazon performed all the targeting operations, but a self-service version allows small companies to leverage the powerful tool too.

Ethical & Social Dilemma 6.1: Is Fashion a Statement? Marketing Clothing as Political Protest provides an example of talking politics through fashion. The days of avoiding discussing politics, even in more formal situations are gone. Companies are designing fashion that make statements. Sometimes the statements are neutral, while others might promote causes.

C. Evaluation of Alternatives (PPT 6-11) Attribute Sets (PPT 6-11) Compensatory (PPT 6-12) Adding Value 6.1: How La Croix Has entered Consumers’ Evoked Set Using Social Media That Highlights Its Determinant Attributes describes how National Beverage, owner of La Croix is using social media to stress determinant attributes for Millennials.

The result has been massive expansion of the brand’s profit and popularity.

Noncompensatory Choice Architecture (PPT 6-13) Ethical & Social Dilemma 6.2: The Gems and Skins Might be Virtual, but the Money is Real: In-Game Purchases, Kids, and Content highlights the social and ethical implications of in-game purchases, especially when children are involved. Even the ―free‖ games usually require a credit card. Parents can find themselves facing large credit card bills. Most of the games have parental control options so the parent can monitor the child’s activities. Some companies, such as Google, allow children to opt out of parental control when the child turns 13.

D. Purchase and Consumption (PPT 6-14) E. Postpurchase (PPT 5-15) Customer Satisfaction (PPT 6-16) Postpurchase Cognitive Dissonance (PPT 6-17) Customer Loyalty (PPT 6-18) Undesirable Consumer Behavior (PPT 6-19)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 6-20) 1. Name the five stages in the consumer decision process.

Answer: Need Recognition, Information Search, Alternative Evaluation, Purchase, Postpurchase

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2. What is the difference between a need and a want?

Answer: Wants are goods or services that are not necessarily needed but are desired.

3. Distinguish between functional and psychological needs.

Answer: Functional needs pertain to the performance of a product or service. Psychological needs pertain to the personal gratification consumers associate with a product and/or service.

4. What are the various types of perceived risk?

Answer: Performance, financial, social, physiological, and psychological.

5. What are the differences between compensatory and noncompensatory decision rules?

Answer: A compensatory decision rule assumes that the consumer, when evaluating alternatives, trades off one characteristic against another. On the other hand, in a non-compensatory decision rule, consumers choose a product or service on the basis of one or a subset of its characteristics, regardless of the values of its other attributes.

6. How do firms enhance postpurchase satisfaction and reduce cognitive dissonance?

Answer: Marketers can take several steps to ensure postpurchase satisfaction: Build realistic expectations, demonstrate correct product use, stand behind the product or service, encourage customer feedback, and periodically make contact with customers and thank them for their support.

XXI.

Factors Influencing the Consumer Decision Process (PPT 6-21)

A. Psychological Factors Motives (PPT 6-22) Attitudes (PPT 6-23) Perceptions (PPT 6-24) Learning and Memory (PPT 6-25) Lifestyle (PPT 6-26) B. Social Factors Family (PPT 6-27) Reference Groups (PPT 6-28) Culture (PPT 6-29) C. Situational Factors (PPT 6-30) Purchase Situation (PPT 6-32) Sensory Situation (PPT 6-31) Adding Value 6.2: Meeting Consumers’ Demands for Healthy While Also Fulfilling Their Cravings for Salty discusses how companies, such Hershey Company and Campbell Soup Company, are meeting consumers’ demands for healthier products through acquisitions of companies that sell more savory products.

Temporal State (PPT 6-33)

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 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 6-34) 1. What are some examples of specific needs suggested by Maslow’s hierarchy of needs?

Answer: Maslow categorized five groups of needs, namely, physiological (e.g., food, water, shelter), safety (e.g., secure employment, health), love (e.g., friendship, family), esteem (e.g., confidence, respect), and self-actualization (people engage in personal growth activities and attempt to meet their intellectual, aesthetic, creative, and other such needs).

2. Which social factors likely have the most influence on (a) the purchase of a new outfit for a job interview and (b) the choice of a college to attend?

Answer: (a) The reference group would likely have the most influence.

Answer: (b) The family group would likely have the most influence.

3. What situational factors do firms use to influence consumer decision behavior?

Answer: Firms use the purchase situation and sensory situation such as visuals, sound, smells, touch, and taste to influence consumer decision behavior.

XXII.

Involvement and Consumer Buying Decisions (PPT 6-35)

A. Extended Problem Solving (PPT 6-36)

B. Limited Problem Solving (PPT 6-36)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 6-37) 1. How do low- versus high-involvement consumers process the information in an advertisement?

Answer: A high-involvement consumer will scrutinize all the information provided (e.g., gas savings, eco-friendly) and process the key elements of the message more deeply. In contrast, a low-involvement consumer will likely process the same advertisement or information in a less thorough or superficial manner. Such a consumer is likely to pay less attention to the key elements of the message and focus on heuristic elements, such as brand name, price, and the presence of a celebrity endorser to form his or her impressions. These impressions are likely to be more superficial in nature.

2. What is the difference between extended versus limited problem solving?

Answer: Extended problem solving is when the customer perceives that the purchase decision entails a lot of risk. Limited problem solving occurs during a purchase decision that calls for, at most, a moderate amount of effort and time. Customers engage in this type of buying process when they have had some prior experience with the product or service and the perceived risk is moderate. Limited problem solving usually relies on past experience more than on external information.

Additional Resources

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This chapter is often one that is glossed over by students since they are familiar with making buying decisions and they know most of the terminology in the chapter. However, what the student finds difficult is connecting the process of the consumer buying decision with marketing strategy. Instructors should emphasize the marketing strategies that can be developed to make the buying decision more likely. To do that, marketers need to know how their target market makes that buying decision.

An exercise instructors may want to use is to have students write down the steps in the consumer buying decision process using a recent purchase experience they have made. Then the students can switch papers with the assignment of developing the marketing strategy for the buying process.

(Example: If I know people make their buying decision on purchasing diapers based on Internet coupon availability, as a marketer I would make sure I supplied an Internet coupon to my target market and communicated that to them.) This exercise gets students thinking about why they need to learn about the consumer buying decision (to form marketing strategy). Online Tip: This can be easily transferred to the online forum using the discussion board tools of the platform. Students can post their buying decision steps of a recent purchase. Other learners can respond by developing the marketing strategy.

Slide 3 of the Instructor PowerPoints for this chapter contains a link to an ad from Nike’s Snow Day campaign. Nike began advertising on the Weather Channel app. What other apps do consumers use that may present an opportunity for a partnership?

Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type 01

The Camp Car in the U.S. Market The Perfect Haircut: Consumers’ Search Process The Perfect Haircut: Consumers’ Search Process Video Streaming Service: The Consumer Decision Process Video Streaming Service: The Consumer Decision Process Helping Consumers Decide: Yelp Weight Watchers, Jenny Craig, and Slim-Fast iSeeit! Video Case: Consumer Decision Process Battle of the Titans Amazon Echo VS. Google Home (And Don’t Forget About Apple) The Impact of Social Influencers on Consumer Behavior iSeeit! Video Case: Consumer Decision-Making Process Marketing Analytics Toolkit--Consumer Decision Rules: Evaluating Airlines Marketing Analytics Toolkit--Consumer Decision

Learning Objectives 0602 03 04 05 06 X X X X X

Case Analysis Click & Drag Matching Click & Drag

X

Matching

X

Video Case Case Analysis Video Case

X X X

X X

X X X

X

X X

Case Analysis

X

X

X

X

X

Video Case Video Case

X

X X

Worksheet

X

Worksheet

X

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Rules: Evaluating Cruise Lines Marketing Analytics Toolkit--Consumer Decision Rules: Evaluating Car Modes

Worksheet

th

X

The Camp Car in the U.S. Market 

Activity Type: Case Analysis



Learning Objectives: 06-03, 06-05, 06-06



Difficulty: Hard



Activity Summary: This case discusses a hypothetical product called the ―camp car,‖ which is somewhat like a Smart Car. Students are asked questions relating the case to course concepts.

Activity



Introduction: In this activity, you'll be reviewing the features and popularity of a fictional ultracompact car, the camp car. This car is already the rage in Europe and is now making its way across the pond to the U.S. market. This case discusses why the camp car has been so popular in Europe as well as what challenges the company faced in adapting to the unique consumer behavior of U.S. auto buyers. Review the case and answer the questions as instructed.



Concept Review: The consumer decision process can be influenced by several factors, including psychological factors (internal influences such as motives, attitudes, perception, and learning), social factors (such as family, reference groups, and culture), and situational factors (such as the purchase situation, the store environment, and the time of day).

Follow-Up Activity

Internet research challenge: Ask students to find recent data on the most popular car models (note: models, not brands) in Europe vs. the U.S. Then compare the cars, visiting websites for some of the models. To what extent do the features of the popular cars support what the case says about the differences between American and European drivers? Remind the students that they should consider good Internet research practices, including credibility of the source and currency of the information.

Here are some websites that, as of this writing, have current data: 

http://www.best-selling-cars.com/ - This is a blog written by a freelance writer in Switzerland, so his credibility over the subject matter isn’t well established; however, the wealth of data he has on his site at least suggests that he’s invested in the accuracy of the information provided.



http://focus2move.com/ - An automotive consulting company’s website The Perfect Haircut: Consumers’ Search Process



Activity Type: Click & Drag



Learning Objectives: 06-03



Difficulty: Medium



Activity Summary: Different risk factors in the consumer decision process, and their impact on information search, are applied to a scenario of two consumers choosing a place to get a haircut.

Students click and drag factors into the appropriate categories.

Activity

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

Introduction: Two consumers are searching for new hair salons and have very different belief systems and needs that affect the way they search for information. Categorize the following statements according to the factors that affect consumers' search processes.



Concept Review: The second step in the consumer decision process, after a consumer recognizes a need, is to search for information about various options that exist to satisfy that need. The length and intensity of the search are based on the degree of perceived risk associated with purchasing the product or service.

The student will need to mouse over each of the ten boxes presented in order to understand the ten items. The statements that appear identify the individual (Joleen or Ginger) and give more insight into the consumer’s thought process.

Follow-Up Activity Ask the students to work in small groups to choose a product category in which many different types of consumers make purchases (some suggestions: shoes, jeans, or a meal in a restaurant). Then describe two very different purchasing scenarios, as in the haircut example above. For each scenario, identify the key risk factors that will affect the amount of information search.

The Perfect Haircut: Consumers’ Search Process – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to Click & Drag Above



Learning Objectives: 06-03



Difficulty: Medium



Activity Summary: Different risk factors in the consumer decision process, and their impact on information search, are applied to a scenario of two consumers choosing a place to get a haircut.

Students click and drag factors into the appropriate categories.

Activity



Introduction: Two consumers are searching for new hair salons and have very different belief systems and needs that affect the way they search for information. Categorize the following statements according to the factors that affect consumers' search processes.



Concept Review: The second step in the consumer decision process, after a consumer recognizes a need, is to search for information about various options that exist to satisfy that need. The length and intensity of the search are based on the degree of perceived risk associated with purchasing the product or service.

The student will need to mouse over each of the ten boxes presented in order to understand the ten items. The statements that appear identify the individual (Joleen or Ginger) and give more insight into the consumer’s thought process.

Follow-Up Activity Ask the students to work in small groups to choose a product category in which many different types of consumers make purchases (some suggestions: shoes, jeans, or a meal in a restaurant). Then describe two very different purchasing scenarios, as in the haircut example above. For each scenario, identify the key risk factors that will affect the amount of information search.

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Video Streaming Service: The Consumer Decision Process 

Activity Type: Click & Drag



Learning Objectives: 06-01



Difficulty: Medium



Activity Summary: The steps of the consumer decision process are explored in the context of a hypothetical choice of a video streaming service.

Activity



Introduction: Eva Carlyn is a college student making a decision about a video streaming service. As part of her decision-making process she asks herself, "Which alternative gives me the best overall value—the best selection and convenience at the lowest price?" and, "Which alternative is more likely to attract friends over to watch movies?" Read about Eva's process and then assemble the decisionmaking model as instructed.



Concept Review: To understand consumer behavior, we must learn why people buy products.

Generally, a consumer chooses a good or service because she or he perceives it to be the best value; that is, the ratio of benefits to costs is higher for that good or service than for any other. The consumer decision process model represents the steps that consumers go through before, during, and after making purchases.

First, the student is asked to read a short case about a video streaming purchase decision. Then, the student categorizes each example according to the step of the consumer decision process it represents.

Follow-Up Activity Writing prompt: Ask each student to identify two recent purchases—one that was a simple choice, and another that was more complex. Then, the student should write a short essay describing each purchase situation, and classifying what happened according to the step of the consumer decision process that each action or thought process represented.

Video Streaming Service: The Consumer Decision Process – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to Click & Drag Above



Learning Objectives: 06-01



Difficulty: Medium



Activity Summary: The steps of the consumer decision process are explored in the context of a hypothetical choice of a video streaming service.

Activity



Introduction: Eva Carlyn is a college student making a decision about a video streaming service. As part of her decision-making process she asks herself, "Which alternative gives me the best overall value—the best selection and convenience at the lowest price?" and, "Which alternative is more likely to attract friends over to watch movies?" Read about Eva's process and then assemble the decisionmaking model as instructed.



Concept Review: To understand consumer behavior, we must learn why people buy products.

Generally, a consumer chooses a good or service because she or he perceives it to be the best

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value; that is, the ratio of benefits to costs is higher for that good or service than for any other. The consumer decision process model represents the steps that consumers go through before, during, and after making purchases.

First, the student is asked to read a short case about a video streaming purchase decision. Then, the student categorizes each example according to the step of the consumer decision process it represents.

Follow-Up Activity Writing prompt: Ask each student to identify two recent purchases—one that was a simple choice, and another that was more complex. Then, the student should write a short essay describing each purchase situation and classifying what happened according to the step of the consumer decision process that each action or thought process represented.

Helping Consumers Decide: Yelp 

Activity Type: Video Case



Learning Objectives: 06-01, 06-02, 06-03



Difficulty: Medium



Activity Summary: This video case discusses Yelp, where consumers can review local businesses, and relates it to different factors that impact the consumer decision process. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Founded in 2004, Yelp is a website/service that connects consumers with many types of local businesses. These businesses range from restaurants to dentists to beauty salons. The site has grown tremendously and its international community of users call themselves Yelpers. In January of 2011, Yelp had more than 45 million unique visitors. Yelpers have written over 15 million local reviews. All of these word-of-mouth reviews are locally indexed, the starting point for Yelp searches.

Yelp has grown to be a valuable resource to aid consumer decision making.



Concept Review: Many consumer decisions require searching for and evaluating information. There are psychological factors that affect the search process such as past experience, locus of control, and perceived risk. When consumers evaluate alternatives, they often use decision rules regarding determinant attributes. After evaluation, consumers are typically ready to buy. There are also a number of factors that influence the overall decision process. In this activity, you will be examining these factors as they relate to Yelp.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

For class discussion or writing prompt: One problem with online review sites is the writing of ―shill‖ reviews. For example, a hotel owner or employee might post reviews of his/her own hotel, or might offer customers an incentive (such as a discount) to post five-star reviews regardless of the customer’s true opinion.

But even omitting false reviews, there are still challenges in using online reviews to aid in decision making. For almost any product or service, you can find a wide range of opinions, from wildly positive to just as wildly negative.

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How do you decide which reviews are the best predictors of how you will feel about the product or service? What cues cause you to trust or mistrust a review? How do you identify your online ―reference group‖ among those reviewers: the ones who are most likely to share your wants, needs, and attitudes?

Weight Watchers, Jenny Craig, and SlimFast 

Activity Type: Case Analysis



Learning Objectives: 06-01, 06-02, 06-03, 06-04, 06-05



Difficulty: Hard



Activity Summary: A short case compares and contrasts the products and services offered by Weight Watchers, Jenny Craig, and SlimFast. Students are asked questions relating the case material to course concepts.

Activity



Introduction: The weight loss industry, worth over $60 billion in 2010, is growing steadily because lifestyles and food choices keep working against people's desire to lose weight. Many Americans spend their days sitting in front of a computer and their evenings sitting in front of a television.

Restaurant meals, prepared foods, and high-fat/high-sugar snacks have replaced home-cooked meals, whole grains, and fresh produce. Exercise is limited to clicking a mouse or turning an ignition key. Three recognized diet-aid behemoths, Weight Watchers, Jenny Craig, and SlimFast, share a substantial piece of the pie of this highly lucrative market.



Concept Review: It is vital that marketers study consumer behavior to understand why people buy specific products or services and not others. Generally, people buy one product or service instead of another because they perceive it to be the better value for them; that is, the ratio of benefits to costs is highest for the product or service they purchase. But buyer behavior is far more complex than that, and the best value is not always chosen. The consumer decision-making process model represents the steps that consumers go through before, during, and after making purchases. In this decision process, consumers use decision rules that are a set of criteria used consciously or subconsciously to quickly and efficiently select from among several alternatives. Marketers need to consider that the consumer decision process is influenced by several factors: social, psychological, situational, and the marketing mix itself. In general, consumers make two types of buying decisions, depending on their level of involvement: extended problem solving; and limited problem solving, which includes impulse buying and habitual decision making. iSeeit! Video Case: Consumer Decision Process



Activity Type: Video Case



Learning Objectives: 06-01, 06-03, 06-05



Difficulty: Medium



Activity Summary: This video case explores the consumer decision process, using the selection of a flight home for the holidays as the context.

Activity



Introduction: Behind the act of making a purchase lies a complex and important decision-making process. Buyers typically pass through a five-stage process where they must decide between a set of possible options to meet their needs. Take for instance Gabbie and her need to fly home to see her parents during the holiday season. With her limited budget and even less experience, she relied on her parents, her boyfriend and the Internet as sources of information to help guide her decision. Upon

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finding a series of alternatives which met her budgetary and personal requirements, she decided to purchase a flight with Jet Green. While she enjoyed her flight, the airline lost Justin’s luggage, which left her with a somewhat negative opinion of an otherwise satisfying experience. While this negative opinion may impact Gabbie’s immediate evaluation of the experience, her future purchasing needs along with motivation, personality, and perception will also influence potential travel purchases with Jet Green. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Battle of the Titans Amazon Echo VS. Google Home (And Don’t Forget About Apple)



Activity Type: Case Analysis



Learning Objectives: 06-01, 06-02, 06-03, 06-04, 06-05



Difficulty: Easy/Medium/Hard



Activity Summary: This case discusses the complexity of the consumer decision making process as it relates to in ―smart‖ home devices. Students will demonstrate their understanding of the process through question asked at the end of the case.

Activity

Introduction: Consumers are complex and cannot always explain their choices. This factor makes

the job of marketing managers very challenging regarding explaining consumers’ behavior.

Marketers have developed strategies for dealing with consumer behavior. The consumer decision process model represents the steps that consumers go through before, during, and after making purchases The Impact of Social Influencers on Consumer Behavior 

Activity Type: Video Case



Learning Objectives: 06-05



Difficulty: Medium



Activity Summary: This video case discusses some of the influential factors the impact consumers in the decision-making process. Students will demonstrate their understanding of these factors through the questions that follow the video.

Activity

Introduction: Psychological factors that are internal to the consumer, social factors that are external

to the consumer, the marketing mix, and specific purchase situations influence the consumer decision making process. Each generation has felt a growing distrust of the information that comes directly from brands. Marketers are challenged to find new ways to expose consumers to the company's brand value, including social media.

iSeeit! Video Case: Consumer Decision-Making Process 

Activity Type: Video Case



Learning Objectives: 06-01



Difficulty: Medium

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

Activity Summary: This video case demonstrates how an individual implements the steps of the consumer decision-making process when making a purchase.



Introduction: Understanding the process people use to make purchasing decisions and how this

process functions in different settings is one of the more interesting and useful aspects of marketing. This activity is important because marketers can delve into customer buying behaviors if they have a better understanding of the consumer decision-making process. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Marketing Analytics Toolkit--Consumer Decision Rules: Evaluating Airlines 

Activity Type: Worksheet



Learning Objectives: 06-05



Difficulty: Hard



Activity Summary: Students evaluate airline brands using both compensatory and noncompensatory consumer decision rules.

Activity



Introduction: People use various consumer decision rules to select a product or service from among several alternatives.



Concept Review: In compensatory decision making, consumers trade off one product characteristic against another; positive characteristics compensate for negative ones.

In noncompensatory decision making, consumers choose a product based on only one characteristic, regardless of the value of the others. (As a consumer, you’ll need to weigh various criteria—based on your opinions, observation, and experience—in order to make a well-informed purchasing decision.)

Marketing Analytics Toolkit--Consumer Decision Rules: Evaluating Cruise Lines 

Activity Type: Worksheet



Learning Objectives: 06-05



Difficulty: Hard



Activity Summary: Students evaluate cruise lines using both compensatory and noncompensatory consumer decision rules.

Activity



Introduction: People use various consumer decision rules to select a product or service from among several alternatives.



Concept Review: In compensatory decision making, consumers trade off one product characteristic against another; positive characteristics compensate for negative ones.

In noncompensatory decision making, consumers choose a product based on only one characteristic, regardless of the value of the others. (As a consumer, you’ll need to weigh various criteria—based on your opinions, observation, and experience—in order to make a well-informed purchasing decision.)

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Marketing Analytics Toolkit--Consumer Decision Rules: Evaluating Car Models 

Activity Type: Worksheet



Learning Objectives: 06-05



Difficulty: Hard



Activity Summary: Students evaluate car models using both compensatory and noncompensatory consumer decision rules.

Activity



Introduction: People use various consumer decision rules to select a product or service from among several alternatives.



Concept Review: In compensatory decision making, consumers trade off one product characteristic against another; positive characteristics compensate for negative ones.

In noncompensatory decision making, consumers choose a product based on only one characteristic, regardless of the value of the others. (As a consumer, you’ll need to weigh various criteria—based on your opinions, observation, and experience—in order to make a well-informed purchasing decision.)

chapter 7 business-to-business marketing Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview This chapter exposes students to business-to-business markets, the buying process for B2B, and factors affecting the buying process unique to B2B transactions. Students also learn the various buying center roles.

Brief Chapter Outline B2B Markets The Business-to-Business Buying Process The Buying Center The Buying Situation Learning Objectives

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LO7-1 Describe the ways in which business-to-business (B2B) firms segment their markets.

All firms want to divide the market into groups of customers with different needs, wants, or characteristics who therefore might appreciate products or services geared especially toward them. On a broad level, B2B firms divide the market into four types: manufacturers or service providers, resellers, institutions, and government. Manufacturers and service providers purchase materials to make their products and components and offer expertise to help run their businesses, such as computer and telephone systems.

Resellers are primarily wholesalers, distributors, or retailers that sell the unchanged products. Institutions include nonprofit organizations such as hospitals, schools, or churches. Finally, governments purchase all types of goods and services; in the United States, defense is among the largest expenditures.

LO7-2 List the steps in the B2B buying process.

Similar to the B2C buying process, the B2B process consists of several stages: need recognition; product specification; the RFP process; proposal analysis, vendor negotiation, and selection; order specification; and vendor performance assessment using metrics. The B2B process tends to be more formalized and structured than the customer buying process.

LO7-3 Identify the roles within the buying center.

The initiator first suggests the purchase. The influencer affects important people’s perceptions and final decisions. The decider ultimately determines at least some of the buying decision—whether, what, how, or where to buy. The buyer handles the details of the actual purchase. The user consumes or employs the product or service. The gatekeeper controls information and access to decision makers and influencers. In B2B situations, it is likely that several people, organized into a buying center, will be involved in making the purchase decision. The vendor must understand the relationships among the participants of the buying center to be effective. A firm’s organizational culture can also influence the decision process. For instance, if a firm is trying to sell to a young, high-tech computer component manufacturer, it might be well advised to send salespeople who are fluent in technology-speak and can easily relate to the customer.

LO7-4 Describe the different types of organizational cultures.

Firm culture consists of unspoken guidelines that employees share through various work situations. They generally can be classified as autocratic, in which one person makes most decisions; democratic, where the majority rules; consultative, in which one person makes decisions based on the input of others; or consensus, which requires all members of the team to reach collective agreement.

LO7-5 Detail different buying situations.

The buying process depends to a great extent on the situation. If a firm is purchasing a product or service for the first time (i.e., new buy), the process is much more involved than if it is engaging in a straight rebuy of the same item again. A modified rebuy falls somewhere in the middle, such that the buyer wants essentially the same thing but with slightly different terms or features.

Extended Chapter Outline B2B Markets (PPT 7-4) Manufacturers and Service Providers (PPT 7-5) Ethical & Societal Dilemma 7.1: Marketing Human Resources: The Growing Market for Outsourced Workers details how outsourcing jobs is transforming the way client companies perform their tasks, the way the economy is structured, and the ways workers get paid.

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Resellers (PPT 7-6) Institutions (PPT 7-7) Government (PPT 7-8)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 7-9) 1. What are the various B2B markets?

Answer: Manufacturers/Service Providers, Resellers, Institutions, Government The Business-to-Business Buying Process (PPT 7-10)

A. Stage 1: Need Recognition (PPT 7-11)

B. Stage 2: Product Specification (PPT 7-12)

C. Stage 3: RFP Process (PPT 7-13)

Social & Mobile Marketing 7.1: Stimulating Need Recognition When Selling Directly to Consumers Necessitates Strategic Advertising Campaigns highlights how direct-to-consumer (DTC) companies stimulate need recognition through social media. The growth of DTC selling has been so great that it is affecting digital marketing realms as well as traditional advertising markets.

D. Stage 4: Proposal Analysis, Vendor Negotiation, and Selection (PPT 7-14)

Stage 5: Order Specification (PPT 7-15) Stage 6: Vendor Performance Assessment Using Metrics (PPT 7-16)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 7-17) 1. Identify the stages in the B2B buying process.

Answer: The five stages in the B2B buying process include need recognition; product specification; RFP process; proposal analysis, vendor negotiation, and supplier selection; order specification; and vendor/performance assessment using metrics.

2. How do you perform a vendor analysis?

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Answer: In a vendor analysis, a buying team develops a list of issues that it believes are important to consider in the evaluation of the vendor. They then assign each issue an importance score. Then the team assigns numbers that reflect its judgments about how well the vendor performs. The team then combines the importance of each issue and determines the company’s overall performance with that score.

The Buying Center (PPT 7-18) The Initiator—Your Doctor (PPT 7-18) The Influencer—The Medical Device Supplier, the Pharmacy (PPT 7-18) The Decider—The Hospital (PPT 7-18) The Buyer (PPT 7-18) The User—The Patient (PPT 7-18) The Gatekeeper—The Insurance Company (PPT 7-18) Organizational Culture (PPT 7-20)

Building B2B Relationships (PPT 7-21) Adding Value 7.1: Establishing a Platform for Marketing Brands: The Wistia Way discusses Wista Channels, a video marketing firm, helping companies and brands develop their own content and hosts the resulting video. The platform is similar to YouTube but gives the brands substantial control over how their brand content will be presented.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 7-22) 1. What are the six buying roles?

Answer: The six buying roles are the initiator, the influencer, the decider, the buyer, the user, and the gatekeeper.

2. What are the types of cultures that exist in buying centers?

Answer: autocratic, democratic, consultative, and consensus The Buying Situation (PPT 7-23, PPT 7-24, PPT 7-25, PPT 7-26, and PPT 7-27)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 7-28) 1. How do new buy, straight rebuy, and modified rebuy differ?

Answer: A new buy is a situation in which a customer purchases a good or service for the first time; therefore, it is likely to be a more involved buying decision. In a rebuy, a buyer simply buys additional units of products that had previously been purchased. In a modified rebuy, the buyer decides to change some specifications in buying a product similar to one they bought in the past, such as the price, quality level, options, and so forth.

Additional Resources

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While students are quite familiar with business-to-consumer markets, most are unfamiliar with business-to-business markets. Students may find it difficult to understand the buying process. Students may have not heard the term ―RFP‖ and may not know how detailed order specifications are and how they serve as a benchmark for RFP award. Instructors should spend some time fully reviewing the segmentation categories.

An in-class exercise is to divide the class into groups and assign them a business (pet shop, a fast-food franchise, computer manufacturer, DVD store).

Have each group outline what would be included in each step of the business-to-business buying process. Students can outline a few product specifications and write a brief RFP. They can also list what they would seek in obtaining a supplier and use critical thinking skills to develop two or three vendor/performance assessment points. Each group then could present their business-tobusiness buying process to the class for discussion.

Online Tip: Use this exercise in a team setting where teams are assigned a business and have them post their business-to-business buying process to the class on a public forum (post or docShare). Have the other teams comment.

Instructors may want to go online to: http://www.census.gov/eos/www/naics/ and demonstrate how this classification system is used as benchmarks when evaluating other businesses as potential buying clients.

An in-class activity that students might find fun would be to divide the class into groups and have them prepare a skit that demonstrates the various Buying Center roles. Students should include all six roles in the skit that is presented to the class. Ask the ―audience‖ to keep track on a piece of paper who played the various roles. Have students jot down some marketing strategies that may work in influencing the people in these various roles. This will provide active learning as the students learn to recognize the various roles as their fellow students present their respective group skits.

Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

The Buying Center

Click & Drag

The Buying Center B2B Customers B2B Customers Toyota and the B2B Buying Process Toyota and the B2B Buying Process B2B Relationships: Ford and Firestone B2B - Featuring Dole B2B - GE Healthcare Staples: The Big Box Retailer That’s Really a B2B Powerhouse

Matching Click & Drag Multiple Choice Click & Drag Matching Case Analysis Video Case Video Case Case Analysis

Learning Objectives 0701 02 03 04 05 X X X X

X X X

X X X X X

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X X X

X X

X

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iSeeit! Video Case: B2B Buying Process iSeeit! Video Case: Buyer-Seller Relationship A True Platform for Wellers: How Alibaba is Trying to Take Over the World Marketing Analytics Toolkit--Return B2B Vendor Analysis: Quality Software Vendors Marketing Analytics Toolkit--Return B2B Vendor Analysis: Fast-Paced Travel Marketing Analytics Toolkit--Return B2B Vendor Analysis: Wedding Bells

Video Case Video Case Case Analysis

X X X

th

X X

X

X

Worksheet

X

Worksheet

X

Worksheet

X

X

The Buying Center 

Activity Type: Click & Drag



Learning Objectives: 07-03



Difficulty: Medium



Activity Summary: The student classifies buying center roles in the context of a medical services example.

Activity



Introduction: Jared Harless shattered his elbow in a snowboarding accident and decided to visit a doctor at Smith Union Hospital for treatment.



Concept Review: In most large organizations, several people are responsible for the buying decisions. These buying center participants can include employees who have a formal role in purchasing decisions (i.e., the purchasing or procurement department), members of the design team for a new product, top managers, and employees who will be using the item being purchased. These employees are likely to play different roles in the buying process. Vendors must understand these roles and adapt the marketing process appropriately for different individuals and for the buying center as a whole.

When the student moves his/her mouse over each of the ten rectangles presented, more information is provided.

Follow-Up Activity Buying center roles can to some extent be applied to consumer decisions made by more than one person. For example, suppose that in a family of four (two parents, two kids), the parents are purchasing a car for their eighteen-year-old son to drive to college. Discuss the ―buying center‖ for this purchase— what role(s) will the various family members most likely fill?

There are multiple correct answers, of course, depending on how the family makes decisions. The initiator might be either the college-bound student or the parents. The college student will be the user. In most cases, one or both parents will be the decider, though some parents might allow the child to choose.

The parents will fill the buyer role. The college-bound child (and possibly the younger child as well) will certainly be an influencer even if he is not the decider. One or both parents might serve as a gatekeeper, limiting the budget or brands of cars that can be considered.

The Buying Center – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to Click & Drag Above

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

Learning Objectives: 07-03



Difficulty: Medium



Activity Summary: The student classifies buying center roles in the context of a medical services example.

th

Activity 

Introduction: Jared Harless shattered his elbow in a snowboarding accident and decided to visit a doctor at Smith Union Hospital for treatment.



Concept Review: In most large organizations, several people are responsible for the buying decisions. These buying center participants can include employees who have a formal role in purchasing decisions (i.e., the purchasing or procurement department), members of the design team for a new product, top managers, and employees who will be using the item being purchased. These employees are likely to play different roles in the buying process. Vendors must understand these roles and adapt the marketing process appropriately for different individuals and for the buying center as a whole.

When the student moves his/her mouse over each of the ten rectangles presented, more information is provided.

Follow-Up Activity Buying center roles can to some extent be applied to consumer decisions made by more than one person. For example, suppose that in a family of four (two parents, two kids), the parents are purchasing a car for their eighteen-year-old son to drive to college. Discuss the ―buying center‖ for this purchase— what role(s) will the various family members most likely fill?

There are multiple correct answers, of course, depending on how the family makes decisions. The initiator might be either the college-bound student or the parents. The college student will be the user. In most cases, one or both parents will be the decider, though some parents might allow the child to choose.

The parents will fill the buyer role. The college-bound child (and possibly the younger child as well) will certainly be an influencer even if he is not the decider. One or both parents might serve as a gatekeeper, limiting the budget or brands of cars that can be considered.

B2B Customers 

Activity Type: Click & Drag



Learning Objectives: 07-01



Difficulty: Medium



Activity Summary: The student is presented with 12 examples of B2B customers and asked to classify them as manufacturers, resellers, institutions, or government.

Activity



Introduction: B2B markets differ from B2C markets in that business customers are making purchase decisions for their organization rather than for personal consumption. B2B customers purchase goods for use in production of their own products or to resell to other customers.

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Concept Review: Business-to-business (B2B) marketing involves the process of buying and selling goods or services to be used in the production of other goods or services. In B2B marketing, there are multiple markets that firms can buy or sell to. Just like in B2C marketing, B2B marketers focus their efforts on meeting the needs of their customers and creating value for those customers.

Follow-Up Activity

Discuss: How would you expect the process of marketing and selling to these different categories of customers to differ? For example:    

Manufacturers will purchase from many, many suppliers of smaller parts and raw materials, and must deal with issues related to derived demand, as explained in the text.

Resellers, since they are purchasing products for resale, may be more concerned about the difference between their cost and the price at which they can sell products than with their actual cost.

Institutions often have limited budgets and may, in the case of nonprofits, hope for discounts or donations.

Government organizations are likely to have lots of red tape and regulations governing purchasing.

B2B Customers – Keyboard Navigable Alternate Version



Activity Type: Multiple Choice Alternate to Click & Drag Above



Learning Objectives: 07-01



Difficulty: Medium



Activity Summary: The student is presented with 12 examples of B2B customers and asked to classify them as manufacturers, resellers, institutions, or government.

Activity



Introduction: B2B markets differ from B2C markets in that business customers are making purchase decisions for their organization rather than for personal consumption. B2B customers purchase goods for use in production of their own products or to resell to other customers.



Concept Review: Business-to-business (B2B) marketing involves the process of buying and selling goods or services to be used in the production of other goods or services. In B2B marketing, there are multiple markets that firms can buy or sell to. Just like in B2C marketing, B2B marketers focus their efforts on meeting the needs of their customers and creating value for those customers.

Follow-Up Activity

Discuss: How would you expect the process of marketing and selling to these different categories of customers to differ? For example: 

Manufacturers will purchase from many, many suppliers of smaller parts and raw materials, and must deal with issues related to derived demand, as explained in the text.  Resellers, since they are purchasing products for resale, may be more concerned about the difference between their cost and the price at which they can sell products than with their actual cost.  Institutions often have limited budgets and may, in the case of nonprofits, hope for discounts or donations.

Government organizations are likely to have lots of red tape and regulations governing purchasing.

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Toyota and the B2B Buying Process 

Activity Type: Click & Drag



Learning Objectives: 07-02



Difficulty: Hard



Activity Summary: Students organize a set of activities to be performed by Toyota when choosing a tire vendor, ordering them according to the steps of the B2B buying process.

Activity



Introduction: The buying team at Toyota has recently selected an alternative supplier for off-road tires, after identifying a need to increase performance. Read about Toyota's purchasing experience and then assemble the business-to-business buying process timeline as instructed.



Concept Review: The business-to-business (B2B) buying process parallels the consumer decision process, though it differs in many ways. Both start with need recognition, but the information search and alternative evaluation steps are more formal and structured in the business buying process.

Typically, business buyers specify their needs in writing and ask potential suppliers to submit formal proposals, whereas consumer buying decisions are frequently unplanned or impulsive. In consumer buying situations, customers evaluate their purchase decision and sometimes experience postpurchase dissonance, without formal performance evaluations of the vendor as would occur in a business setting.

Students are provided with descriptions of six different activities Toyota might perform when choosing a vendor for tires, and are asked to associate each with the correct step of the B2B buying process.

Follow-Up Activity In small groups, have students describe activities at each step of the consumer decision process for a consumer purchasing replacement tires for his/her car. Then compare the two processes. Where are they most similar? Where are they most different?

Toyota and the B2B Buying Process – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 07-02



Difficulty: Hard



Activity Summary: Students organize a set of activities to be performed by Toyota when choosing a tire vendor, ordering them according to the steps of the B2B buying process.

Activity



Introduction: The buying team at Toyota has recently selected an alternative supplier for off-road tires, after identifying a need to increase performance. Read about Toyota's purchasing experience and then assemble the business-to-business buying process timeline as instructed.



Concept Review: The business-to-business (B2B) buying process parallels the consumer decision process, though it differs in many ways. Both start with need recognition, but the information search and alternative evaluation steps are more formal and structured in the business buying process.

Typically, business buyers specify their needs in writing and ask potential suppliers to submit formal

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proposals, whereas consumer buying decisions are frequently unplanned or impulsive. In consumer buying situations, customers evaluate their purchase decision and sometimes experience postpurchase dissonance, without formal performance evaluations of the vendor as would occur in a business setting.

Students are provided with descriptions of six different activities Toyota might perform when choosing a vendor for tires and are asked to associate each with the correct step of the B2B buying process.

Follow-Up Activity In small groups, have students describe activities at each step of the consumer decision process for a consumer purchasing replacement tires for his/her car. Then compare the two processes. Where are they most similar? Where are they most different?

B2B Relationships: Ford and Firestone 

Activity Type: Case Analysis



Learning Objectives: 07-01, 07-02



Difficulty: Hard



Activity Summary: Students read a short case about the relationship between Ford and Firestone, and answer questions applying chapter concepts to the case.

Activity



Introduction: Ford and Firestone had a B2B relationship that dated back 100 years. In 2000, Bridgestone/Firestone recalled almost 6.5 million tires, predominantly original equipment on Ford Explorers. The ensuing backlash had negative implications for both companies.



Concept Review: Business-to-business (B2B) marketing refers to the process of buying and selling goods or services to be used in the production of other goods or services. Just like business-toconsumer (B2C) transactions, B2B firms focus on serving customer needs, building customer relationships, and creating customer value. In the B2B context, demand is often derived through the supply chain by consumers’ changing needs and behaviors. B2B relationships are strongly affected on the consumer's belief about the organizations.

B2B: Featuring Dole



Activity Type: Video Case



Learning Objectives: 07-02, 07-05



Difficulty: Medium



Activity Summary: This video case explains how Dole manages its B2B buying process. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Dole is the world's largest producer of fruits and vegetables. The Dole label is seen on both fresh and packaged produce around the world. For Dole to manage such large-scale operations, it must contract with vendors from many countries, forging B2B relationships on a global scale.

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

Concept Review: The business-to-business (B2B) buying process looks similar to the consumer process: It starts with need recognition and ends with an evaluation of the product's performance. But it is different, primarily because of its formality. For instance, in the second stage, product specification, the buying group spells out specific requirements for the products it wants to purchase.

Then, in the RFP process (the third stage), the buying firm announces its need and solicits formal proposals. In the fourth stage, buyers analyze the various proposals and negotiate a deal. Unlike the consumer process, the fifth stage (in which the firm places the order) is formal and spells out every detail of the sales contract. Finally, in the sixth stage, buyers assess vendor performance.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

GE Healthcare: Innovative B2B Marketing



Activity Type: Video Case



Learning Objectives: 07-01, 07-03, 07-04



Difficulty: Medium



Activity Summary: This video case discusses the B2B marketing efforts of General Electric’s Healthcare unit. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Most people know GE for its consumer products, ranging from light bulbs to appliances. But GE also engages in business-to-business (B2B) marketing. For example, GE sells jet engines to Boeing and lighting systems to museums. One very successful GE division is GE Healthcare, which sells a wide variety of products and services to hospitals and other health care providers. GE is known for innovation, and GE Healthcare is no exception to this. As the following video illustrates, GE Healthcare has very successfully innovated in its B2B marketing efforts.



Concept Review: Business-to-business (B2B) marketing refers to the process of buying and selling goods or services to be used in the production of other goods and services, for consumption by the buying organization, and/or resale by wholesalers and retailers. B2B markets include manufacturers and service providers, institutions, resellers, and governments. The B2B buying process is typically more formalized and structured than the B2C process. In large organizations, several people are usually involved in purchase decisions. These stakeholders can fill six roles in the buying center: initiator, influencer, decider, buyer, user, and gatekeeper. The organizational culture can also affect how the buying decision is made. Finally, technology is affecting the B2B marketing and B2B relationships as social media, blogs, and other methods are changing the way buyers and sellers interact.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities

Suppose that a small company that provides secretarial services to other small businesses needs to buy or lease a copier. In small groups, have the students identify individuals in the company who would probably fill various roles in the buying center for that decision.

Staples: The Big Box Retailer That’s Really a B2B Powerhouse 

Activity Type: Case Analysis

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

Learning Objectives: 07-01, 07-02, 07-03, 07-04, 07-05



Difficulty: Medium



Activity Summary: Students read a case discussing the importance of B2B marketing at Staples, and then answer questions applying chapter concepts to the case.

th

Activity 

Introduction: Most of us think of Staples as a retail chain selling office supplies to consumers; however, as the case explains, the company also caters to business customers. This activity is important because so much of the marketing activity in the business would take place in a B2B context.

Follow-up Activity

Visit the Staples Advantage website (http://www.staplesadvantage.com/) and learn more about the programs Staples offers for its business customers. iSeeit! Video Case: B2B Buying Process 

Activity Type: Video Case



Learning Objectives: 07-02, 07-03, 07-05



Difficulty: Easy



Activity Summary: This video case walks through a B2B purchasing example Activity



Introduction: Organizations who purchase goods and services are significantly different from individuals and understanding these organizational buying behaviors is an important consideration of effective business marketing. The differences between business marketing and consumer marketing directly relate to the process that organizational buyers must go through. Take Hope Springs for example and its need to purchase 500 new tablet computers. When Brian, the purchasing manager, is tasked to identify the right vendor from which to purchase the tablets, he must go through an extensive process that is substantially different than the B2C buying process. From issuing a request for proposal (RFP) to evaluating each proposal with upper management, Brian must work with members of the buying center to execute this purchase. Even after the purchase is made by accounts payable, Brian must follow a detailed post-purchase process to evaluate the vendor’s performance and ensure the vendor has met expectations.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Buyer-Seller Relationship



Activity Type: Video Case



Learning Objectives: 07-02, 07-03, 07-05



Difficulty: Easy



Activity Summary: This video case demonstrates how firms can effectively transition from B2C to B2B marketing.

Activity

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

Introduction: Business-to-business (B2B) marketers face many of the same challenges that business-to-consumer (B2C) marketers do. Both work to connect or build relationships with their customers. This activity is important because unlike in B2C marketing, where marketing is targeted at individual consumers, in B2B marketing, marketing is targeted at professional purchasers or buyers— employees of companies who make purchase decisions in the best interest of their organizations.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

A True Platform for Sellers: How Alibaba is Trying to Take Over the World



Activity Type: Case Analysis



Learning Objectives: 07-01, 07-02, 7-05



Difficulty: Hard



Activity Summary: Students read a short case about Alibaba and how it functions in the B2B market, and answer questions applying chapter concepts to the case.

Activity



Introduction: This activity is important because the B2B buying process parallels the B2C process and differs from it in several ways. Both start with need recognition, but the information search and alternative evaluation steps are more formal and structured in the B2B process. Typically, B2B buyers specify their needs in writing and ask potential suppliers to submit formal proposals. The final decision rests with a committee, as is the case for most B2B buying decisions, which often demand a great deal of consideration. Finally, formal performance evaluations of the vendor and the products sold generally do not occur in the B2C setting as they do in the B2B setting.

The goal of this exercise is to demonstrate your understanding of the B2B buying process and why it is important.

Marketing Analytics Toolkit--Return B2B Vendor Analysis: Quality Software Vendors 

Activity Type: Worksheet



Learning Objectives: 07-02



Difficulty: Hard



Activity Summary: Students evaluate software vendors using the vendor analysis process outlined in the textbook.

Activity



Introduction: Just as in the consumer buying process, companies assess vendor performance to determine how to make future buying decisions.



Concept Review: In a B2B setting, this analysis is more objective and formal, often entailing key and specific metrics/issues that could affect the company’s overall performance. But not all issues are of equal weight to the company. Even though they are important, some are more important than others.

Marketing Analytics Toolkit--Return B2B Vendor Analysis: Fast-Paced Travel 

Activity Type: Worksheet

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

Learning Objectives: 07-02



Difficulty: Hard



Activity Summary: Students evaluate travel agencies using the vendor analysis process outlined in the textbook.

th

Activity 

Introduction: Just as in the consumer buying process, companies assess vendor performance to determine how to make future buying decisions.



Concept Review: In a B2B setting, this analysis is more objective and formal, often entailing key and specific metrics/issues that could affect the company’s overall performance. But not all issues are of equal weight to the company. Even though they are important, some are more important than others.

Marketing Analytics Toolkit--Return B2B Vendor Analysis: Wedding Bells 

Activity Type: Worksheet



Learning Objectives: 07-02



Difficulty: Hard



Activity Summary: Students evaluate catering companies using the vendor analysis process outlined in the textbook.

Activity



Introduction: Just as in the consumer buying process, companies assess vendor performance to determine how to make future buying decisions.



Concept Review: In a B2B setting, this analysis is more objective and formal, often entailing key and specific metrics/issues that could affect the company’s overall performance. But not all issues are of equal weight to the company. Even though they are important, some are more important than others.

chapter 8 global marketing Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

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Chapter Overview In this chapter, students are exposed to global product development, distribution, and marketing strategy.

Students evaluate the similarities and differences between a domestic marketing strategy and a global marketing strategy. Ethical consideration and cultural diversity are addressed as they impact the marketing message.

Brief Chapter Outline Assessing Global Markets Choosing a Global Entry Strategy Choosing a Global Marketing Strategy

Learning Objectives LO8-1

Describe the components of a country market assessment.

First, firms must assess the general economic environment. For instance, countries with a trade surplus, strong domestic and national products, growing populations, and income growth generally are relatively more favorable prospects. Second, firms should assess a country’s infrastructure. To be successful in a particular country, the firm must have access to adequate transportation, distribution channels, and communications. Third, firms must determine whether the proposed country has a political and legal environment that favors business. Fourth, firms should be cognizant of the cultural and sociological differences between their home and host countries and adapt to those differences to ensure successful business relationships.

LO8-2

Understand the marketing opportunities in BRIC countries.

Technology, particularly in the communication field, has facilitated the growth of global markets. Firms can communicate with their suppliers and customers instantaneously, easily take advantage of production efficiencies in other countries, and bring together parts and finished goods from all over the globe. Four countries that provide tremendous marketing opportunities are the BRIC nations—Brazil, Russia, India, and China. These countries have large populations that are increasingly interested in the latest goods and services.

LO8-3

Identify the various market entry strategies.

Firms have several options for entering a new country, each with a different level of risk and involvement.

Direct investment is the riskiest but potentially the most lucrative. Firms that engage in a joint venture with other firms already operating in the host country share the risk and obtain knowledge about the market and how to do business there. A strategic alliance is similar to a joint venture, but the relationship is not as formal. A less risky method of entering a new market is franchising, in which, as in domestic franchise agreements, the franchisor allows the franchisee to operate a business using its name and strategy in return for a fee. The least risky method of entering another country is simply exporting.

LO8-4

Highlight the similarities and differences between a domestic marketing strategy and a global marketing strategy.

The essence of a global marketing strategy is no different from that of a domestic strategy. The firm starts by identifying its target markets, chooses specific markets to pursue, and crafts a strategy to meet the needs of those markets. However, additional issues make global expansion more problematic. For instance, should the product or service be altered to fit the new market better? Does the firm need to change the way it prices its products in different countries? What is the best way to get the product or

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service to the new customers? How should the firm publicize its product or service offering in various countries?

Extended Chapter Outline XXIII.

Assessing Global Markets (PPT 8-5)

A. Economic Analysis Using Metrics 1. Evaluating the General Economic Environment (PPT 8-6) 2. Evaluating Market Size and Population Growth Rate (PPT 8-7) 3. Evaluating Real Income (PPT 8-9) B. Analyzing Infrastructure and Technological Capabilities (PPT 8-10) C. Analyzing Governmental Actions (PPT 8-11) 1.

2.

3.

4.

Tariffs (PPT 8-12) Quotas (PPT 8-12) Exchange Control (PPT 8-13) Trade Agreements (PPT 8-14)

D. Analyzing Sociocultural Factors (PPT 8-15) Ethical & Societal Dilemma 8.1: Success and the Challenges: How Growing Diaper and Pad Consumption Has Left Personal Goods Firms with a Growing Problem provides an overview of the dilemma companies are facing in the consumer goods market in India. With massive growth, companies continue to seek to expand their reach in India. However, sanitary products, such as diapers and pads, come with environmental issues. As they pursue the growth, they also are likely to face increasing pressures to find a solution to deal with waste inherently produced by their products.

Ethical & Societal Dilemma 8.2: Dolce & Gabbana Faces Public Scrutiny in China discusses the lesson high-fashion designer Dolce & Gabbana learned after satirizing the Chinese dialect and dining customs when promoting the 2018 Shanghai runway event, ―The Great Show.‖ E. The Appeal of the BRIC Countries (PPT 8-18) 1. Brazil 2. Russia 3. India Social & Mobile Marketing 8.1: Selling through WhatsApp and Meesho: How Digital Tools Are Altering Sales Practices in India discusses how the spread of modern technology has revolutionized the daily practices of people living, working, and farming in rural India.

4. China

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 8-19) 1. What metrics can help analyze the economic environment of a country?

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Answer: Key metrics include gross domestic product, gross national income, purchasing power parity, and the human development index.

2. What types of governmental actions should we be concerned about as we evaluate a country?

Answer: We should be concerned about such governmental actions as tariffs, quotas, exchange controls, and trade agreement.

3. What are some important cultural dimensions?

Answer: They are power distance, uncertainty avoidance, individualism, masculinity, time orientation, and indulgence.

4. Why are each of the BRIC countries viewed as potential candidates for global expansion?

Answer: Brazil’s ability to weather, and even thrive during, the most recent economic storm has transformed it into a global contender. Russia has undergone multiple up- and downturns in its economy. However, its overall growth prospects appear promising, especially as a consumer market. With more than 1.1 billion people, or approximately 15 percent of the world’s population, together with expanding middle and upper classes, India is one of the world’s fastest growing markets. China’s leadership, while maintaining communist political ideals, has embraced marketoriented economic development, which has led to startlingly rapid gains.

XXIV.

Choosing a Global Entry Strategy (PPT 8-20)

A. Exporting (PPT 8-21) B. Franchising (PPT 8-22) C. Strategic Alliance (PPT 8-23) D. Joint Venture (PPT 8-24) E. Direct Investment (PPT 8-25)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 8-26) 1. Which entry strategy has the least risk and why?

Answer: Exporting requires the least financial risk but also allows for only a limited return to the exporting firm. It has no investment in people, capital equipment, buildings, or infrastructure.

2. Which entry strategy has the most risk and why?

Answer: Direct investment requires a firm to maintain 100 percent ownership of its plants, operation facilities, and offices in a foreign country, often through the formation of wholly owned subsidiaries. This entry strategy requires the highest level of investment and exposes the firm to significant risks, including the loss of its operating and/or initial investments. For example, a dramatic economic downturn caused by a natural disaster, war, political instability, or changes in the country’s laws can increase a foreign entrant’s risk considerably.

XXV.

Choosing a Global Marketing Strategy (PPT 8-27)

A. Target Market: Segmentation, Targeting, and Positioning

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1. Global Product or Service Strategies (PPT 8-28) Same Product or Service Similar Product or Service with Minor Adaptations Totally New Product or Service Adding Value 8.1: Like Pumpkin and Chocolate Sauce for your Fries? McDonald’s Might Be Able to Help with That discusses the fact that McDonald’s offers products internationally that it doesn’t in the United States. Successful testing of some of the products has led the company to offer in select U.S. markets. ―Flavors from Abroad‖ may become more common in the U.S. 2. Global Pricing Strategies (PPT 8-29) 3. Global Distribution Strategies (PPT 8-30) Adding Value 8.32: Domino’s Growth Plan: Expand Everywhere and Every Way? Discusses Domino’s efforts to grow international as demonstrated in its Alesea franchise serving Mexico, Columbia, and Spain. Mexico is particularly strong potential. Penetration in the country is only one-third that found in the United States. In addition, while other US based franchises are present in the market, the competition is fairly low. This commitment to the international market is further demonstrated by hiring its president of Domino’s Pizza International to lead the entire corporation.

4. Global Communication Strategies (PPT 8-31) Adding Value 8.3: Forget the Mall, Shoppers Are Buying Gucci at Airports provides an overview of shopping in airports with sales of $76 billion.

Adding Value 8.4: International Women’s Day as Inspiration for Marketing Messages highlights brands that have taken inspiration for the holiday to share marketing messages about their dedication to women’s rights and equality and their efforts to ensure advances for women across the globe.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 8-32) 1. What are the components of a global marketing strategy?

Answer: A global marketing strategy includes two components: determining the target markets to pursue and developing a marketing mix that will sustain a competitive advantage over time.

2. What are the three global product strategies?

Answer: The three potential global product strategies are: Sell the same product or service in both the home country market and the host country; sell a product or service similar to that sold in home country but include minor adaptations; and sell totally new products or services.

Additional Resources

Students will be re-introduced to business terms such as quota, various trade agreements, joint venture, GNP, GDP, etc. To review these terms before discussing the concepts in the chapter, the instructor may want to exercise a challenge similar to the Jeopardy game.

Divide students into four or five groups of equal size. The instructor writes down three-four terms from the chapter on four or five note cards. The group then takes the word and writes a story problem without the

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word in it. They can transfer the story problem to a transparency. One group presents each of their story problems while the other groups (with one person being the spokesperson for the group) try to determine the term. The group earns one point if they get the story problem correct. They also can lose a point if they get it wrong and the next spokesperson’s hand that goes up (acting like a buzzer) gets a chance to answer. Instructors can award the winning group with +2 points on a quiz or exam. This ―livens-up‖ content that is heavily laden with vocabulary.

Online Teaching Tip: This exercise can be transferred to a post situation with a term assigned to each student and fellow students guessing the term. If the instructor can solicit a real-time chat, the students can submit their story problems in advance of the session and the instructor can play the role of presenting the story problems for the class.

Students do not fully appreciate cultural diversity and location and its impact on the four Ps until they study a country and are assigned related questions to answer. Instructors may want to make this an assignment with students turning to the Web for research. Questions asked may be: What social customs may impact the way a product is marketed? Are there barriers to the distribution system? Is the product use in the country consistent with the home country or do they differ and why? Will language barriers present a problem?

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

Manager’s Hot Seat Kraft: Marketing Globally Global Entry Strategies Global Entry Strategy Country Market Assessment: Starbucks

Video Case Video Case Click & Drag Matching Click & Drag

Country Market Assessment: Starbucks Country Market Assessment: Under Armour Country Market Assessment: Under Armour The Globalization of the American Hamburger Global Marketing: Domino’s Abroad iSeeit! Video Case: Global Entry Strategies iSeeit! Video Case: Global Marketing Strategy Colonel Sanders Would Be Proud, KFC is a Global Brand

Matching Click & Drag Matching Case Analysis Video Case Video Case Video Case Case Analysis

Learning Objectives 0801 02 03 04 X X X X X X X X X X X X

X X X X X

X X

X

Manager’s Hot Seat 

Activity Type: Video Case



Learning Objectives: 08-01



Difficulty: Medium



Activity Summary: This video shows an unsuccessful sales negotiation involving two businesspeople—one from Japan and one from the U.S.—in which the failure can be attributed to cultural differences. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Michael Sokoloff has assumed responsibility for a new client during the last stage of a big deal, but he cannot for the life of him figure out why this Japanese businessperson won't let him close the deal. Watch as this real manager deals with this difficult situation.



Concept Review: Understanding another country's culture is crucial to the success of any global marketing initiative. Culture, or the set of values, guiding beliefs, understandings, and ways of doing things shared by members of a society, exists on two levels: visible artifacts (e.g., behavior, dress, symbols, physical settings, ceremonies) and underlying values (thought processes, beliefs, and assumptions). Visible artifacts are easy to recognize, but businesses often find it more difficult recognizing the underlying values of a culture and appropriately adapting their marketing strategies to them.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

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Follow-Up Activities Ask students how the company should have handled the situation differently—for example, keeping Roger involved in order to make an orderly transition (this would be a good idea even in a situation involving a U.S. customer). It would have been wise for the first meeting between the Japanese businessman and the new account representative to have taken place in a social setting (with Roger there as well)—a lunch or dinner, for example.

Kraft: Marketing Globally 

Activity Type: Video Case



Learning Objectives: 08-04



Difficulty: Medium



Activity Summary: Reviews Kraft’s global marketing strategy for the Oreo brand, addressing issues related to each of the Four Ps. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: At 95 years old, Kraft's Oreo cookie is the most popular cookie in the world, enjoyed in more than 100 countries spread across every continent. The Oreo cookie is truly a global product— but although the Oreo adapts to meet the needs of various countries, it's still an Oreo.



Concept Review: Globalization refers to the processes by which goods, services, capital, people, information, and ideas flow across national borders. Global markets are the result of several fundamental changes, such as reduction or elimination of trade barriers by country governments, the decreasing concerns of distance and time with regard to moving products and ideas across countries, the standardization of laws across borders, and globally integrated production processes. Each of these fundamental changes has paved the way for marketing to flourish in other countries.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Oreo has faced some challenges recently in maintaining its strong brand position in China. Assign this article, and ask students to summarize the changes it describes to Kraft’s marketing mix for the Oreo in China: http://blogs.wsj.com/chinarealtime/2014/02/13/why-chinas-falling-out-of-love-with-the-oreo/ Global Entry Strategies 

Activity Type: Click & Drag



Learning Objectives: 08-03



Difficulty: Medium



Activity Summary: Students are provided with five potential market entry approaches for a coffee business and asked to match them with the market entry strategy they represent.

Activity

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

Introduction: A U.S. national coffee chain called Bean is reviewing the various strategies it could use to enter its first international market in South America. The company is aware that different foreign market entry strategies offer different levels of control and profit potential, but its executives are primarily concerned with the risks involved in each strategy. Read about Bean's various options and then assemble the foreign market entry risk assessment as instructed.



Concept Review: A firm can choose from several approaches when entering a foreign market. The specific strategy chosen will vary according to the level of risk the firm is willing to assume. Many firms follow a progression in which they begin with a less risky strategy to enter their first foreign market and move to increasingly risky strategies—which usually offer greater profit potential—as they gain confidence in their abilities.

Follow-Up Activity

Ask students which of the options they think would make the most sense (and why) for:  A large company like Starbucks 

A medium-sized company like Peet’s Coffee and Tea



A small-to-medium coffee bean roasting company that sells beans to other coffee companies but does not run its own stores.

Global Entry Strategies – Keyboard Navigable Alternate Version



Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 08-03



Difficulty: Medium



Activity Summary: Students are provided with five potential market entry approaches for a coffee business and asked to match them with the market entry strategy they represent.

Activity



Introduction: A U.S. national coffee chain called Bean is reviewing the various strategies it could use to enter its first international market in South America. The company is aware that different foreign market entry strategies offer different levels of control and profit potential, but its executives are primarily concerned with the risks involved in each strategy. Read about Bean's various options and then assemble the foreign market entry risk assessment as instructed.



Concept Review: A firm can choose from several approaches when entering a foreign market. The specific strategy chosen will vary according to the level of risk the firm is willing to assume. Many firms follow a progression in which they begin with a less risky strategy to enter their first foreign market and move to increasingly risky strategies—which usually offer greater profit potential—as they gain confidence in their abilities.

Follow-Up Activity

Ask students which of the options they think would make the most sense (and why) for:  A large company like Starbucks 

A medium-sized company like Peet’s Coffee and Tea

A small-to-medium coffee bean roasting company that sells beans to other coffee companies but does not run its own stores.

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Country Market Assessment: Starbucks 

Activity Type: Click & Drag



Learning Objectives: 08-01



Difficulty: Medium



Activity Summary: Students are presented with types of issues Starbucks might consider when evaluating a market for expansion, and asked to classify them according to the four categories of factors used to assess global markets. NOTE: This activity is very similar to the Under Armour click and drag activity, also in this chapter.

Activity



Introduction: Starbucks Corporation (Starbucks) roasts and retails specialty coffee in stores operating in over 50 countries. The company's strength in strategy and the ability to provide honest quality service has allowed it to enter many markets successfully. However, Starbucks' entry into global markets has not always been successful.



Concept Review: Firms must assess the viability of various potential foreign markets before choosing to enter. Four sets of criteria are necessary to assess a country's market. They are economic analysis, infrastructure and technological analysis, government actions or inactions, and sociocultural analysis. Information about these four areas offers marketers a more complete picture of a country's potential as a viable market for products and services.

Follow-Up Activity

For one or more of the BRIC countries discussed in the text, identify potential issues in these four categories that might make the country a less attractive market for Starbucks.

Country Market Assessment: Starbucks – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 08-01



Difficulty: Medium



Activity Summary: Students are presented with types of issues Starbucks might consider when evaluating a market for expansion and asked to classify them according to the four categories of factors used to assess global markets. NOTE: This activity is very similar to the Under Armour click and drag activity, also in this chapter.

Activity



Introduction: Starbucks Corporation (Starbucks) roasts and retails specialty coffee in stores operating in over 50 countries. The company's strength in strategy and the ability to provide honest quality service has allowed it to enter many markets successfully. However, Starbucks' entry into global markets has not always been successful.



Concept Review: Firms must assess the viability of various potential foreign markets before choosing to enter. Four sets of criteria are necessary to assess a country's market. They are economic analysis, infrastructure and technological analysis, government actions or inactions, and sociocultural analysis. Information about these four areas offers marketers a more complete picture of a country's potential as a viable market for products and services.

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Follow-Up Activity For one or more of the BRIC countries discussed in the text, identify potential issues in these four categories that might make the country a less attractive market for Starbucks.

Country Market Assessment: Under Armour 

Activity Type: Click & Drag



Learning Objectives: 08-01



Difficulty: Medium



Activity Summary: Students are presented with types of issues Under Armour might consider when evaluating a market for expansion, and asked to classify them according to the four categories of factors used to assess global markets. NOTE: This activity is very similar to the Starbucks click and drag activity, also in this chapter.

Activity



Introduction: Under Armour is at the forefront of its industry producing performance apparel for men, women, and youth. The company provides products from everyday wear to just about any sport activity in virtually all climates and conditions and has made itself known over the past 10 years by putting quality first for its customers. Headquartered in Baltimore, Maryland, Under Armour continues to grow as a strong competitor in the industry, with offices located in many areas of the world, including Denver, Colorado; Toronto, Canada; Hong Kong, China; and London, England. You will be reviewing some of the steps Under Armour makes when it begins to enter a foreign market.



Concept Review: Firms must assess the viability of various potential foreign markets before choosing to enter. Four sets of criteria are necessary to assess a country's market. They are economic analysis, infrastructure and technological analysis, government actions or inactions, and sociocultural analysis. Information about these four areas offers marketers a more complete picture of a country's potential as a viable market for products and services.

Follow-Up Activity

For one or more of the BRIC countries discussed in the text, identify potential issues in these four categories that might make the country a less attractive market for Starbucks.

Country Market Assessment: Under Armour Apparel – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 08-01



Difficulty: Medium



Activity Summary: Students are presented with types of issues Under Armour might consider when evaluating a market for expansion and asked to classify them according to the four categories of factors used to assess global markets. NOTE: This activity is very similar to the Starbucks click and drag activity, also in this chapter.

Activity



Introduction: Under Armour is at the forefront of its industry producing performance apparel for men, women, and youth. The company provides products from everyday wear to just about any sport

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activity in virtually all climates and conditions and has made itself known over the past 10 years by putting quality first for its customers. Headquartered in Baltimore, Maryland, Under Armour continues to grow as a strong competitor in the industry, with offices located in many areas of the world, including Denver, Colorado; Toronto, Canada; Hong Kong, China; and London, England. You will be reviewing some of the steps Under Armour makes when it begins to enter a foreign market. 

Concept Review: Firms must assess the viability of various potential foreign markets before choosing to enter. Four sets of criteria are necessary to assess a country's market. They are economic analysis, infrastructure and technological analysis, government actions or inactions, and sociocultural analysis. Information about these four areas offers marketers a more complete picture of a country's potential as a viable market for products and services.

Follow-Up Activity

For one or more of the BRIC countries discussed in the text, identify potential issues in these four categories that might make the country a less attractive market for Starbucks.

The Globalization of the American Hamburger 

Activity Type: Case Analysis



Learning Objectives: 08-01, 08-03, 08-04



Difficulty: Medium



Activity Summary: Students read a case exploring the way McDonald’s approaches global expansion. Then they answer questions applying chapter concepts to the case.

Activity



Introduction: When companies expand to other countries, they must decide how to adapt their marketing strategy to suit the environment in each market. This activity is important because in our increasingly global business climate, marketers must be able to identify and evaluate different approaches to global marketing.

Global Marketing: Domino’s Abroad



Activity Type: Video Case



Learning Objectives: 08-01, 08-03, 08-04



Difficulty: Medium



Activity Summary: Domino’s Pizza earns over half its revenue from sales outside the USA. This video case explores the ways in which Domino’s adapts its marketing strategy in various markets.

After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Domino’s Pizza is the world’s largest pizza delivery chain, with stores in over 80 countries worldwide and over half its sales outside the US. In order to satisfy consumer preferences in that many markets, Domino’s must understand its global customers and adjust its marketing mix to meet local needs. The video describes Domino’s marketing efforts in several countries. This activity is important because marketers must understand how to approach global markets in order to successfully expand outside the home market. The goal of this exercise is to test your understanding of global market assessments, global entry strategies, and global marketing strategies.

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Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Global Entry Strategies



Activity Type: Video Case



Learning Objectives: 08-03



Difficulty: Easy



Activity Summary: This video case reviews different global entry strategies from the perspective of a coffee company.

Activity



Introduction: When expanding into a global marketplace, companies must select a means of market entry. The decision between exporting, franchising, a strategic alliance, a joint venture and direct investment is based upon an organization's interest in maintaining marketing control and how much of a financial investment it is willing to make. This holds true for 5 Bucks and Joe to Go, both of which are coffee retailers that want to enter emerging urban markets in India. 5 Bucks prefers to maintain greater control afforded by a joint venture and is willing to take on greater financial risk. Joe to Go, on the other hand, is not as willing to take on high levels of financial risk and is willing to rely on its franchisees to effectively market and brand Joe to Go in India. Both options require their local partners to adjust offerings to meet the needs of the local population while maintaining product, look, and experience similarities across global locations.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Global Marketing Strategy



Activity Type: Video Case



Learning Objectives: 08-01, 08-02



Difficulty: Easy



Activity Summary: This video case illustrates whether companies should engage in global marketing, and why.

Activity



Introduction: Global marketing is a marketing strategy that consciously addresses customers, markets, and competition throughout the world to sell more products in more markets. This activity is important because an increasingly globalized world opens up new opportunities for marketers to likewise develop and maintain a global vision.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Colonel Sanders Would Be Proud: KFC is a Global Brand



Activity Type: Case Analysis



Learning Objectives: 08-01, 08-02, 08-04



Difficulty: Medium

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Activity Summary: Students read a case about how KFC is implementing its global marketing strategy and then answer questions about the case.

Activity

Introduction: When companies expand to other countries, they must decide how to adapt their marketing strategy to suit the environment in each market. This activity is important because in our increasingly global business climate, marketers must be able to identify and evaluate different approaches to global marketing. A global marketing strategy includes two components: determining the target markets to pursue and developing a marketing mix that will sustain a competitive advantage over time.

The goal of this exercise is to consider the various global marketing strategy issues involved in the context of global expansion by companies.

chapter 9 segmentation, targeting, and positioning Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview This chapter addresses segmentation strategy—undifferentiated, differentiated, concentrated, and micromarketing. The student will learn critical thinking skills to determine the best method of segmenting a market. Segment attractiveness is explored as well as positioning.

Brief Chapter Outline The Segmentation, Targeting, and Positioning Process

Learning Objectives LO9-1

Outline the different methods of segmenting a market.

There is really no one ―best‖ method to segment a market. Firms choose from various methods on the basis of the type of product/service they offer and their goals for the segmentation strategy. For instance, if the firm wants to identify its customers easily, demographic or geographic segmentation likely will work best. But if it is trying to dig deeper into why customers might buy its offering, then psychographic, geodemographic, benefits, or behavioral segmentation (occasion and loyalty) work best. Typically, a combination of several segmentation methods is most effective. ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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th

Describe how firms determine whether a segment is attractive and therefore worth pursuing.

Marketers use several criteria to assess a segment’s attractiveness. First, the customer should be identifiable—companies must know what types of people are in the market so they can direct their efforts appropriately. Second, the market must be substantial enough to be worth pursuing. If relatively few people appear in a segment, it is probably not cost effective to direct special marketing mix efforts toward them. Third, the market must be reachable—the firm must be able to reach the segment through effective communications and distribution. Fourth, the firm must be responsive to the needs of customers in a segment. It must be able to deliver a product or service that the segment will embrace. Finally, the segment must be profitable, both in the near term and over the lifetime of the customer.

LO9-3 Articulate the differences concentrated, or micromarketing.

among

targeting

strategies:

undifferentiated,

differentiated,

Firms use a targeting strategy after they have identified its segments. An undifferentiated strategy uses no targeting at all and works only for products or services that most consumers consider to be commodities. The difference between a differentiated and a concentrated strategy is that the differentiated approach targets multiple segments, whereas the concentrated targets only one. Larger firms with multiple product/service offerings generally use a differentiated strategy; smaller firms or those with a limited product/service offering often use a concentrated strategy. Firms that employ a micromarketing, or one-to-one, marketing strategy tailor their product/service offering to each customer— that is, it is custom-made. In the past, micromarketing was reserved primarily for artisans, tailors, or other craftspeople who would make items exactly as the customer wanted. Recently, however, larger manufacturers and retailers have begun experimenting with custom-made merchandise as well. Service providers, in contrast, are largely accustomed to customizing their offering.

LO9-4

Determine the value proposition.

A firm’s value proposition communicates the customer benefits to be received from a product or service and thereby provides reasons for wanting to purchase it. It consists of the attributes of a product or service that are desired by the target market but not available from competitors. Firms could attempt to offer attributes that are important to its customers, whether or not they are offered by competitors. For attributes that are not important to its customers, it should either educate its customers about the importance of those attributes, deemphasize them, or not offer those product or service attributes.

LO9-5

Define positioning, and describe how firms do it.

Positioning is the P in the STP (segmentation, targeting, and positioning) process. It refers to how customers think about a product, service, or brand in the market relative to competitors’ offerings. Firms position their products and services according to several criteria. Some focus on their offering’s value— customers get a lot for what the product or service costs. Others determine the most important attributes for customers and position their offering on the basis of those attributes. Symbols can also be used for positioning, though few products or services are associated with symbols that are compelling enough to drive people to buy. Finally, one of the most common positioning methods relies on the favorable comparison of the firm’s offering with the products or services marketed by competitors. When developing a positioning strategy and a perceptual map, firms go through six steps. First, they determine consumers’ perceptions and evaluations of the product or service in relation to competitors. Second, they identify the market’s ideal points and market sizes for those products or services. Third, they identify competitors’ positions. Fourth, they determine consumer preferences. Fifth, they select the position. Finally, they monitor the positioning strategy.

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Extended Chapter Outline

XXVI.The Segmentation, Targeting, Positioning Process (PPT 9-04) A. Step 1: Establish the Overall Strategy or Objectives (PPT 9-05) B. Step 2: Use Segmentation Methods (PPT 9-06) 1. Geographic Segmentation (PPT 9-07) 2. Demographic Segmentation (PPT 9-08) Adding Value 9.1: Dealing with Modern Life by Playing: LOGO Promises Mindfulness and Meaning for Adults (PPT 9-09) highlights LEGO’s reasoning for targeting a new demographic for the product, adults. Because LEGO is well established, it did not need to undergo much product testing. The little plastic blocks, when packaged and marketed in various ways, can seemingly be all things to all consumers. It just depends on what people want to build with them.

Ethical & Societal Dilemma 9.1 Supporting Black-Owned Businesses Even after They’re Purchased by Conglomerates discusses the fact that certain product categories have neglected the needs of minority consumers in categories such as cosmetic and hair products. This has left an opportunity for entrepreneurs to develop such products. When these small companies are acquired by a large conglomerate, consumers face a dilemma as to whether they continue to buy the products or do they switch to another small business. For entrepreneurs, the dilemma is they want to grow and expand, but expanding their reach may alienate the loyal customers that have been with them from the start.

3. Psychographic Segmentation (PPT 9-10)

Social & Mobile Marketing 9.1: Using Our Outdoor Voices, Literally and Figuratively highlights Outdoor Voices’ assertion that its purpose is the ―get the world moving‖ and ―doing things‖ rather than selling athletic and outdoor gear. The company is going to market the ways that its comfortable attire enables people to do fun things outside with their friends. Protected from such irritations as chafing or ill-fitting garments.

Outdoor Voices has also started publishing a lifestyle magazine.

4. Benefit Segmentation (PPT 9-11) 5. Behavioral Segmentation (PPT 9-12) Occasion Loyalty Marketing Analytics 9.1: Taking he Temperature of Consumers to Track Disease and Market Products provides an overview of how an app tracks users’ temperatures and how the information is used beyond personal use.

6. Using Multiple Segmentation Methods (PPT 9-13)

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 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 9-14)

1. What are the various segmentation methods?

Answer: Geographic, Demographic, Psychographic, Benefit, and Behavioral.

C. Step 3: Evaluate Segment Attractiveness (PPT 9-15) 1.

2.

3.

4.

5.

Identifiable (PPT 9-16) Substantial (PPT 9-17) Reachable (PPT 9-18) Responsive (PPT 9-19) Profitable (PPT 9-20, PPT 9-21, and PPT 9-22)

D. Step 4: Select a Target Market (PPT 9-23) 1.

2.

3.

4.

Undifferentiated Targeting Strategy, or Mass Marketing Differentiated Targeting Strategy Concentrated Targeting Strategy Micromarketing

E. Step 5: Identify and Develop Positioning Strategy (PPT 9-24) Adding Value 9.2: When Your Brand is Popular among a Non-Target Market: Patagonia’s Decision to Limit Sales to Maintain Its Value-Based Image discusses the company’s decision to limit distribution to companies that ―prioritize the planet.‖

F. Positioning Methods (PPT 9-28) 1.

2.

3.

4.

Value Proposition (PPT 9-25, PPT 9-26, PPT 9-27)) Salient Attributes Symbols Competition

G. Positioning Using Perceptual Mapping (PPT 9-29, PPT 9-30, PPT 9-31, and PPT 9--32)  Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 9-32) 1. What is a perceptual map?

Answer: A perceptual map displays, in two or more dimensions, the position of products or brands in the consumer’s mind.

2. Identify the six positioning steps.

Answer: The six positioning steps are: Determine consumers’ perceptions and evaluations of the product or service in relation to competitors’, identify competitors’ positions, determine consumer preferences, select the position, and monitor the positioning strategy.

Additional Resources

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One of the most difficult concepts for students to understand is that of product positioning.

Instructors should emphasize that product position is based primarily on competing brands in the marketplace and the consumer’s perception of the brand. The perceptual map from the text should be thoroughly reviewed with students.

Students can learn this in a classroom setting where the instructor delegates one person in the class to be the facilitator and then assigns the classroom with creating a class perceptual map (fast-food franchises can be used as an example). This can also take place in groups with each group presenting their perceptual map to the class.

Online Tip: This exercise can be transferred to the online platform where groups are given the same tasks then asked to post the groups’ results. An ensuing discussion board can then compare/contrast the various perceptual maps.

The four strategies of undifferentiated, differentiated, concentrated, and micromarketing should be further explored with critical thinking exercises. Emphasize that it is the approach to the marketing message in relation to its target market(s), NOT the type of product it is.

Students confuse this. Providing additional exercises, such as having students research advertisement campaigns on the web, then determining if they are differentiated, undifferentiated, concentrated, or micromarketing segmentation strategies, will help them to better understand that the strategy is based on the target market characteristics not the product.

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

Segmentation: The College Food Industry Methods for Segmenting Markets Methods for Segmenting Markets Segmentation, Targeting, and Positioning Process Segmentation, Targeting, and Positioning Process McDonald’s: Segmentation, Targeting, and Positioning Thermos: Effective Market Segmentation Mercedes-Benz Zipcar: Segmentation iSeeit! Video Case: Segmentation Process iSeeit! Video Case: Market Positioning iSeeit! Video Case: Target Marketing Strategies P&G Segments Its Market Along Multiple Dimensions

Case Analysis Click & Drag Matching Click & Drag Matching Video Case Video Case Case Analysis Video Case Video Case Video Case Video Case Case Analysis

Learning Objectives 0901 02 03 04 05 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X

Segmentation: The College Food Industry 

Activity Type: Case Analysis



Learning Objectives: 09-01, 09-02, 09-03, 09-05



Difficulty: Medium



Activity Summary: A short case discusses a segmentation effort undertaken by Sodexho for its campus food service business. Students answer questions applying chapter concepts to the case.

Activity



Introduction: Sodexho USA's Campus Services Division offers a broad range of service styles, price points, and menu selections with customizable options to suit the needs of different groups. These innovative food programs are the result of extensive research into student dining trends and preferences and are designed to better serve the company's food service markets.



Concept Review: Firms choose from various segmentation methods based on the type of goods/services offered and on their segmentation goals. Many firms use basic demographic or geographic variables as a segmentation tool to identify a target market, but if a firm wishes to dig deeper into why customers might purchase a product, the firm might also wish to investigate lifestyle, loyalty, or benefit segmentation. There are many segmentation tools that firms can use to best identify a market that will be responsive to their product offerings.

Follow-Up Activity

Class discussion: What segmentation methods might you use to segment the market for food service on this campus? What segments would you expect to find to be the largest?

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Methods for Segmenting Markets 

Activity Type: Click & Drag



Learning Objectives: 09-01



Difficulty: Medium



Activity Summary: The student classifies different products and services according to the segmentation method that would make the most sense when segmenting the market for the product or service.

Activity



Introduction: There is no single best way to segment a market. Firms choose methods based on the type of goods/services they offer and on their goals. For instance, if the firm wants to identify its customers easily, geographic or demographic segmentation likely will work best. But if it wishes to dig deeper into why customers might buy its offering, then lifestyle, benefits, or loyalty segmentation are more appropriate. Geodemographic segmentation provides a blend of geographic, demographic, and psychographic approaches. Typically, a combination of several segmentation methods is most effective.



Concept Review: Firms choose from various methods of segmenting the market on the basis of the types of goods/services they offer and their goals for the segmentation strategy. Firms assess whether a segment is worth pursuing by determining whether the customer is identifiable and whether the segment is substantial, reachable, and profitable. Firms then position their products according to value, attributes, use, or competitive edge.

Methods for Segmenting Markets – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate for the Click & Drag Above



Learning Objectives: 09-01



Difficulty: Medium



Activity Summary: Students identify the best way to segment markets for a variety of products and the characteristics of consumers based on descriptions of the product and the focus the company uses when segmenting.

Activity

Introduction: No single best way to segment a market exists. Firms choose methods based on the

type of goods/services they offer and on their goals. For instance, if the firm wants to identify its customers easily, geographic or demographic segmentation likely will work best. But if it wishes to dig deeper into why customers might buy its offering, then lifestyle, benefits, or loyalty segmentation are more appropriate. Geodemographic segmentation provides a blend of geographic, demographic, and psychographic approaches. Typically, a combination of several segmentation methods is most effective.

Segmentation, Targeting, and Positioning Process

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

Activity Type: Click & Drag



Learning Objectives: 09-01



Difficulty: Medium



Activity Summary: The student classifies different activities conducted in a shampoo segmentation study according to the step of the STP process they represent.

Activity



Introduction: France-based L'Oreal has seized the opportunity to pursue the customer segment interested in natural/organic products with its Garnier Fructis line of shampoos and conditioners that are made from fruit and vitamin extracts. Read about L'Oreal's strategy and assemble the STP Process stages as instructed.



Concept Review: Firms choose from various methods of segmenting the market on the basis of the types of goods/services they offer and their goals for the segmentation strategy. Firms assess whether a segment is worth pursuing by determining whether the customer is identifiable and whether the segment is substantial, reachable, and profitable. Firms then position their products according to value, attributes, use, or competitive edge.

Follow-Up Activity

Class discussion or writing prompt: Visit the Garnier Fructis website (http://www.garnierusa.com/_en/_us/fructis/#home). Does the website look like it does a good job of communicating the ―natural, healthy products‖ message? Why or why not?

Segmentation, Targeting, and Positioning Process – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate for the Click & Drag Above



Learning Objectives: 09-01



Difficulty: Medium



Activity Summary: The student classifies different activities conducted in a shampoo segmentation study according to the step of the STP process they represent.

Activity



Introduction: France-based L'Oreal has seized the opportunity to pursue the customer segment interested in natural/organic products with its Garnier Fructis line of shampoos and conditioners that are made from fruit and vitamin extracts. Read about L'Oreal's strategy and assemble the STP Process stages as instructed.



Concept Review: Firms choose from various methods of segmenting the market on the basis of the types of goods/services they offer and their goals for the segmentation strategy. Firms assess whether a segment is worth pursuing by determining whether the customer is identifiable and whether the segment is substantial, reachable, and profitable. Firms then position their products according to value, attributes, use, or competitive edge.

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Follow-Up Activity Class discussion or writing prompt: Visit the Garnier Fructis website (http://www.garnierusa.com/_en/_us/fructis/#home). Does the website look like it does a good job of communicating the ―natural, healthy products‖ message? Why or why not?

McDonald’s: Segmentation, Targeting, and Positioning 

Activity Type: Video Case



Learning Objectives: 09-01, 09-02, 09-03, 09-04, 09-05



Difficulty: Medium



Activity Summary: This video case discusses how McDonald’s approaches segmentation. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: McDonald's identifies the various groups of fast food customers that would respond similarly to its marketing efforts. These are known as market segments. After evaluating each segment's attractiveness, McDonald's must choose one or more segments to target with its marketing mix.



Concept Review: A company could make one type of product and hope that every consumer would buy it, but that would be a mistake. A better approach is to analyze the market to determine the different types of products people want and then to offer products that cater to the wants of specific groups. But it is not enough just to make the product. Companies must position their products in the minds of their target market so that those consumers understand why a particular product beats the competition when it comes to meeting their needs.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities

Class discussion or writing prompt: McDonald’s primarily uses demographic segmentation methods to form its consumer segments. Suppose they segmented their market using psychographic methods instead. Describe some psychographic segments McDonald’s might choose to target, and identify some products they might offer to these segments.

Segmentation: Thermos 

Activity Type: Video Case



Learning Objectives: 09-01, 09-02, 09-03, 09-04



Difficulty: Medium



Activity Summary: This video case explains Thermos’ differentiated segmentation strategy. After the video ends, students are asked questions about the video and related course concepts.

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Activity 

Introduction: Thermos is the global market leader in insulated food and beverage containers. Since its founding in 1904, the company has developed thousands of products. With such an extensive product line, it's important for Thermos to be able to target its products to specific consumer segments.



Concept Review: Effective segmentation, targeting, and positioning (STP) are critical to a firm's success. First, firms use a variety of methods to segment their markets. Then the segments have to be evaluated on their attractiveness—should the firm pursue them with a market offering? In choosing which segments to serve, there are several targeting strategies that can be used. Firms must then determine and communicate their value proposition to provide buyers with reasons to purchase the product. The overall positioning strategy must carefully consider the brand in relation to competitor's offerings. As discussed in Chapter 2, the STP process is the third step in the overall strategic marketing plan.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities

Visit the Thermos website (http://thermos.com/) and notice the features that show how they have implemented their segmentation strategy. The ―Thermos Stories‖ section is particularly helpful. Also, review their Facebook page.

Mercedes-Benz 

Activity Type: Case Analysis



Learning Objectives: 09-01, 09-02, 09-03, 09-05



Difficulty: Medium



Activity Summary: Students read a case describing tactics used by Mercedes Benz to target different customer segments; then, students answer questions applying chapter concepts to the case.

Activity



Introduction: Mercedes-Benz, a well-known luxury brand, has developed initiatives targeting several customer segments. This activity is important because it is essential for marketers to understand the strategic importance of market segmentation. The goal of this exercise is to apply frameworks from the segmentation, targeting, and positioning (STP) process to some of the activities undertaken by Mercedes-Benz.

Zipcar: Segmentation 

Activity Type: Video Case



Learning Objectives: 09-01, 09-02, 09-03



Difficulty: Medium



Activity Summary: Zipcar, the car sharing service, serves three distinct customer segments with its offerings. The video case describes the three segments and explains some marketing activities targeting each segment. After the video ends, students are asked questions about the video and related course concepts.

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Activity 

Introduction: The Zipcar car sharing service relies on careful segmentation of its market in order to ensure that the company’s marketing tactics serve the markets well. Car sharing appeals to several different market segments; the video describes these segments and explains how Zipcar strives to serve each one. This activity is important because effective segmentation is the cornerstone of a successful marketing strategy. The goal of this exercise is to test your understanding of segmentation, targeting, and positioning by applying these concepts to the Zipcar example.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

As a class or in small groups, differentiate between the Urbanites and the Urban Boomers. What differences between these segments have caused Zipcar to treat these as two different segments, instead of combining them as a single segment of urban users?

iSeeit! Video Case: Segmentation Process 

Activity Type: Video Case



Learning Objectives: 09-01, 09-05



Difficulty: Easy



Activity Summary: This video case looks at segmentation issues among car buyers.

Activity



Introduction: Organizations segment markets so they can respond more effectively to the wants of potential buyers and increase overall sales and profits. By identifying similarities between customers, businesses can identify their specific needs, take steps to segment and target markets, and then execute a marketing program based upon the dynamics of product, price, promotion and place. You can find segmentation in action as Justin begins his process of deciding which new vehicle is right for him. Marketers must know and understand what customers like Justin are looking for when they develop and market their vehicles. Using a perceptual map, they map the characteristics customers like Justin place emphasis on, such as practicality (good mileage and economical) and style (good looks and cool extras). Then they create products that are attractive and develop marketing messages that customers like Justin will respond to. While Justin makes the final decision based upon what is important to him, marketers make sure they have developed their brands and products to make their vehicles attractive to specific market segments.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

iSeeit! Video Case: Market Positioning 

Activity Type: Video Case



Learning Objectives: 09-04, 09-05



Difficulty: Medium



Activity Summary: This video case demonstrates how a firm makes positioning decisions to achieve a competitive advantage.

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Activity 

Introduction: After a firm’s marketers have segmented its market and selected its target consumer groups, the final step is to position the firm’s products and brand. These efforts, known as market positioning, assume that consumers compare the benefits of competing products and brands against each other. This activity is important because positioning helps firms decide how to allocate their marketing resources based on their positioning goals.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

P&G Segments Its Market Along Multiple Dimensions 

Activity Type: Case Analysis



Learning Objectives: 09-01



Difficulty: Medium



Activity Summary: Students read a case about how P&G applies the segmentation, targeting, and positioning (STP) process to its marketing strategy and then answer the questions that follow.

Activity



Introduction: A part of the segmentation, targeting, and positioning (STP) process is to use a method or combination of methods to segment the market. This activity is important because this step develops descriptions of the different segments, which helps firms better understand the customer profiles in each segment. With this information, firms can distinguish customer similarities within a segment and dissimilarities across segments.

The goal of this exercise is to demonstrate your understanding of the STP process used by P&GA

chapter 10 marketing research and analytics Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview

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This chapter explores how information systems create greater value for the customer. The research process is one of the main concepts in this chapter as well as introducing the student to research vocabulary and concepts.

Brief Chapter Outline The Marketing Research Process Secondary Data Primary Data Collection Techniques BIG Data Marketing Analytics The Ethics of Using Customer Information

Learning Objectives LO 10-1

Identify the five steps in the marketing research process.

The first step is to define objectives and research needs, which sounds so simple that managers often gloss over it. But this step is crucial to the success of any research project because, quite basically, the research must answer those questions that are important for making decisions. In the second step, designing the research project, researchers identify the type of data that are needed, whether primary or secondary, on the basis of the objectives of the project from Step 1, and then determine the type of research that enables them to collect those data. The third step involves deciding on the data collection process and then collecting the data. The process usually starts with qualitative research methods such as observation, in-depth interviews, or focus groups. The information gleaned from the qualitative research is then used in quantitative research, which may include a survey, an experiment, or the use of scanner and panel data. The fourth step is to analyze and interpret the data and develop insights. The fifth and final step is to develop and implement an action plan. Although these steps appear to progress linearly, researchers often work backward and forward throughout the process as they learn at each step.

LO 10-2

Describe the various secondary data sources.

External secondary data comprise information that has been collected from outside sources, such as the U.S. Census, the Internet, books, articles, trade associations, or syndicated data services. Internal secondary data can also be derived from internal company records such as sales, customer lists, and other company reports and are analyzed using data mining and big data software.

LO 10-3

Describe the various primary data collection techniques.

Primary data are collected to address specific research needs. Techniques used for primary qualitative research include observation, social media, in-depth interviews, and focus groups. Techniques used for primary quantitative research include surveys (both offline and online), scanner, panel, and experiments.

LO 10-4

Summarize the differences between secondary data and primary research.

Compared with primary research, secondary research is quicker, easier, and generally less expensive.

However, if you are using secondary data using big data, then the investment in programs supporting secondary data can be expensive. However, because secondary research is collected for reasons other than those pertaining to the specific problem at hand, the information may be dated, biased, or simply not specific enough to answer the research questions. Primary research, in contrast, can be designed to answer very specific questions, but it also tends to be more expensive and time-consuming.

LO 10-5

Identify the 5Vs of big data.

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The 5 Vs of big data is a framework for describing the characteristics of big data. It includes volume, variety, velocity, veracity, and value dimensions. Volume infers that big data contain a large amount of data. Variety suggests that the big data contain both numeric and textual data and are obtained from different media formats. Velocity infers that big data are collected and can be analyzed and accessed quickly. Veracity suggests that big data users must evaluate the accuracy and reliability of the collected data. And finally, value implies that more valuable the data are to its users, the better they are.

LO 10-6

Examine the characteristics of marketing analytics.

Marketing analytics can be used to make a plethora of decisions including how to determine the marketing mix, how to determine which segments to target, how to understand and manage those customer segments, and ow to create micro-segmentation strategies at a local level. The tools used to analyze the big data are descriptive, predictive, prescriptive, and active. Descriptive analytics tools help firms organize, tabulate, and depict their available data, usually in easy-to-understand reports, tables, and charts. Predictive analytics tools rely on historically available data to forecast the future. Prescriptive analytics tools are simulations, which ask a series of what if-type questions, and optimization techniques, which find the most effective or best result, to help firms better understand what they should do. Active analytics tools use artificial intelligence algorithms that are used to analyze input gathered by the Internet of Things (IoT).

LO 10-7

Examine the circumstances in which collecting information on consumers is ethical.

Marketing researchers should gain permission to collect information on consumers, and it should be for the sole purpose of conducting marketing research endeavors. Information should not be collected under the guise of marketing research when the intent is to sell products or to fund-raise. In addition, marketers must take responsibility for protecting any information they collect.

Extended Chapter Outline XXVII. The Marketing Research Process (PPT 10-04 and PPT 10-05) A. Marketing Research Process Step 1: Defining the Objectives and Research Needs (PPT 1006) B. Marketing Research Process Step 2: Designing the Research (PPT 10-07) C. Marketing Research Process Step 3: Collecting the Data (PPT 10-08)

D. Marketing Research Process Step 4: Analyzing the Data and Developing Insights (PPT 1009 and PPT 10-10) E. Marketing Research Process Step 5: Developing and Implementing an Action Plan (PPT 10-11)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 10-12) 1. What are the steps in the marketing research process?

Answer: The steps in the marketing research process are: define the objectives and research needs; design the research process; the data collection process; analyze data; and present results.

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2. What is the difference between data and information?

Answer: Data can be defined as raw numbers or other factual information that, on their own, have limited value to marketers. However, when the data are interpreted, they become information.

XXVIII. Secondary Data (PPT 10-13) A. Inexpensive External Secondary Data B. Syndicated External Secondary Data (PPT 10-14, 10-15, 10-16, 10-17)

C. Internal Secondary Data  Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 10-18) 1. What are the differences between panel and scanner data?

Answer: The key difference between scanner research and panel research is how the data are aggregated. Scanner research typically focuses on weekly consumption of a particular product at a given unit of analysis: panel research focuses on the total weekly consumption by a particular person or household.

XXIX. Primary Data Collection Techniques (PPT 10-19) A. Observation (PPT 10-20) B. In-Depth Interviews (PPT 10-21) C. Focus Group Interviews (PPT 10-21)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 10-22) 1. What are the types of qualitative research?

Answer: Observation, In-Depth Interviews, Focus Groups, and Social Media.

D. Panel- and Scanner-Based Research Adding Value 10.1: How Booking.com Leveraged Market Research to Develop Novel Offerings for Travelers Looking for Something Different provides an overview of Booking.com’s efforts to meet its customers’ needs by offering the ability to book rooms in unique places rather than simply the traditional international hotel chains. They did this because 22 percent of U.S. and 37 percent of international prefer nontraditional accommodations.

E. Experimental Research (PPT 10-28) F. Advantages and Disadvantages of Primary and Secondary Research

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 10-32)

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1. What are the types of quantitative research?

Answer: Experiments, Survey, Scanner, and Panel

XXX.

Big Data (PPT 10-33 and 10-34) A. B.

Volume (PPT 10-35) Variety (PPT 10-35) Marketing Analytics: How Much Is Your Search History Worth? Would $10 Cover It? Amazon’s Prime Day Offer and Strategy highlights Amazon’s use of Assistant to track users’ web search behavior. It learns what shoppers plan to purchase as well as what kinds of movies they like and which actors appear to be of most interest to them.

Amazon sells the data to other businesses. Is giving that much information worth the $10 Amazon give consumers for subscribing?

C. D.

Velocity (PPT 10-35) Veracity (PPT 10-35) Social & Mobile Marketing 10.1: Selfies as Data: Relying on a New Form of SelfReporting to Gauge Consumer Behavior discusses marketer’s inability to gauge what consumers do in the privacy of their own homes. By paying consumers small fees to take selfies as they perform basic, mundane tasks, several service companies are enabling product firms to gain a totally new and far more accurate view of what their customers are doing. The selfies provide information about ways in which consumers use products that companies were unaware.

E.

Value (PPT 10-35)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 10-36) 1. What are the 5 Vs of big data?

Answer: Volume, Variety, Velocity, Veracity, and Value XXXI.

Marketing Analytics (PPT 10-37) A.

Marketing Decisions (PPT 10-38)

1.

2.

3.

4.

B.

Making Marketing Mix Decisions Determining Which Segments to Target Understanding and Managing Customer Segments Creating Mico-Segmentation Strategies at a Local Level

Tools and Methods 1.

2.

Descriptive Analytics Tools (PPT 10-39) Predictive Analytics Tools (PPT 10-39)

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Adding Value 10.2: Recommended for you (to Buy): How Streaming Services Allow for Personalized Product Placements provides an overview of how streaming services such as Netflix and Hulu use ads tailored toward who and when videos are streamed. Content is also tailored to the viewer. For example, a chase scene may show SUVs to one viewer whereas a sports car might appear to another viewer based on data collected about the viewer. Vudu, which is owned by Walmart, offers ―shoppable ads‖ where viewers can click on an ad and have it automatically populate to their Walmart.com shopping cart. The promise of further developments suggests they will probably be less evident and more understated than these examples.

3.

4.

Prescriptive Analytics Tools (PPT 10-40) Active Analytics Tools (PPT 10-40)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 10-41) 1. What decisions can be made using marketing analytics?

Answer: Decisions about the marketing mix, which segments to target, understanding those segments and how to manage them, and creating micro-segmentations strategies at a local level can be made using marketing analytics.

2. What are the four broad categories of marketing analytics tools and methods?

Answer: The four categories of marketing analytics tools and methods include: descriptive analytic tools, predictive analytics tools, prescriptive analytic tools, and active analytic tools.

XXXII. The Ethics of Using Customer Information (PPT 10-42) ethical & societal dilemma 10.1 Vacuuming Up More Than Dirt: The Information Collected by Roomba and Its Potential Users highlights the privacy concerns associated with the data collected when robot vacuums such as Roomba when mapping a house to operate efficiently. The concern arose when iRobot worked on a deal to share the information with outside companies. The information goes beyond just the layout of the house to identifying things such as if the house has children or pets. Do your students have any concerns about sharing information? Would it make a difference if the company required the homeowner’s permission to share?

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 10-39) 3. Under what circumstances is it ethical to use consumer information in marketing research?

Answer: Marketers must adhere to legislative and company policies, as well as respect consumers’ desires for privacy.

4. What challenges do technological advances pose for the ethics of marketing research?

Answer: As technology continues to advance, the potential threats to consumers’ personal information grow in number and intensity. Facial recognition software is one example.

Additional Resources

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This chapter is one that quite often students don’t like. They have difficulty in applying the research vocabulary and understanding the research process. Students can often regurgitate the process but when asked how it applies they are often confused. A teaching tip on understanding how information systems can create value is to have students write down a product website they often visit and why they visit it (the value they find in the website). Have them partner up in class and exchange papers. The partner will then think of ways (using the book as an aid) that information systems can add value to that website. A discussion between the partners after this exercise often leads to clarity of how information systems create greater value to the customer and the instructor can write some of these on the board during classroom discussion.

Online Tip: This exercise can be easily transferred to a discussion posting in the online forum where students are partnered up in the same way (or perhaps they can answer anyone’s post that hasn’t had a reply yet) resulting in a short summary paper addressing how information systems create value.

The second concept is the research process. Again, students can often regurgitate the process but can’t apply the concepts or the research terminology. After a discussion on vocabulary and concepts led by the instructor, students can learn this process by applying critical thinking. This can be done either in groups or as a class (for the online forum it can be a virtual team exercise). Assign either the class or the teams a problem to solve (usually one that is widely understood by students) that is marketing based and has students use their critical thinking to apply each step of the research process and use 3-5 terms (such as exploratory, causal, descriptive).

Some examples of assigned research topics: (1) Will moving the pizza from the back to the front of the college cafeteria result in more pizza sales? (2) Will offering an additional incentive to students to return used book to the bookstore (instead of selling them on Amazon.com) provide more buy-back opportunity for the college? The important aspect of this exercise is to keep the problem market-related and have students use the vocabulary words correctly and understand how the process can lead to the solving of marketing-related issues.

Slide 9 in the Instructor PowerPoints contains a link to a video in which an expert discusses the importance of developing targeted questions to develop effective strategies from Big Data (https://www.youtube.com/watch?v=CStxyj0tJ6g). What do students think about the potential uses of Big Data?

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

Nike: Understanding Female Customers Superior Razors: The Marketing Research Process Superior Razors: The Marketing Research Process Kraft: Marketing Research Behind Ritz Toasted Chips AutoTrader.com: Using Marketing Research Dunkin’ Donuts: Market Research and Bakery Sandwiches Using Market Research to Redefine the YMCA iSeeit! Video Case: Market Research Process iSeeit! Video Case: Marketing Research Data The 5 Vs of Big Data The Tools and Methods for Marketing Analytics Swim, Lift, Play – But Also Donate: Using Marketing Research to Define the YMCA Marketing Analytics Toolkit--Survey Research: Brilliant Minds on Sports Marketing Analytics Toolkit--Survey Research: The Coffee Collective Marketing Analytics Toolkit--Survey Research: The Preparatory Academy

Case Analysis Click & Drag Matching Video Case Case Analysis Video Case Case Analysis Video Case Video Case Matching Matching Case Analysis

Learning Objectives 1001 02 03 04 05 X X X X X X X X X X X X X

X X

X X X

X X X

X

X X

X

X

Worksheet Worksheet Worksheet

Nike: Understanding Female Customers 

Activity Type: Case Analysis



Learning Objectives: 10-03, 10-04



Difficulty: Medium



Activity Summary: This case describes Nike’s efforts to understand its female customers. Students are asked questions applying chapter concepts to the case.

Activity



Introduction: Nike is one of the most recognized brands in the world, predominantly for its apparel and athletic shoe products. In recent years, Nike has failed to cater to the needs of its female customers compared to smaller athletic brands. To investigate why the firm wasn’t capturing the female market share, Nike conducted research to better understand the female market. Nike wanted to use this research to build a better product offering that was attractive to women. Review the case that follows and answer the questions regarding Nike’s research techniques.



Concept Review: Marketing research consists of a set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers involved in marketing goods, services, or ideas. Marketing research is a critical function of any business decision

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process. When marketing managers attempt to develop their strategies, market research can provide valuable information that will help them make segmentation and positioning decisions.

Follow-Up Activity Visit the Nike Women YouTube channel and see how Nike has implemented the findings of their research in its marketing communications: https://www.youtube.com/user/NikeWomen.

One of the most popular ads is ―Voices‖ from 2012, which can be found in the ―Popular Uploads‖ section of the page.

Superior Razors: The Marketing Research Process 

Activity Type: Click & Drag



Learning Objectives: 10-01



Difficulty: Medium



Activity Summary: This case asks the student to classify different steps in a marketing research project according to the step of the marketing research process each one represents.

Activity



Introduction: The marketing team at Superior Razors, a producer of a national brand of men's shaving products, has conducted research to find out how well the company is doing in comparison to its competition and to hypothesize how it will fare in the near future. Read about the research project and then assemble the marketing research process as instructed.



Concept Review: Firms invest billions of dollars in marketing research every year. Why do marketers find this research valuable? First, it helps to reduce some of the uncertainty under which they constantly operate. Successful managers know when research might help their decision making, and they take appropriate steps to acquire the information they need. Second, marketing research provides a crucial link between firms and their environments, which enables firms to be customer oriented because they build their strategies using customer input and continual feedback. Third, by constantly monitoring their competitors, firms can respond quickly to competitive moves.

Superior Razors: The Marketing Research Process – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 10-01



Difficulty: Medium



Activity Summary: This case asks the student to classify different steps in a marketing research project according to the step of the marketing research process each one represents.

Activity



Introduction: The marketing team at Superior Razors, a producer of a national brand of men's shaving products, has conducted research to find out how well the company is doing in comparison to its competition and to hypothesize how it will fare in the near future. Read about the research project and then assemble the marketing research process as instructed.

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Concept Review: Firms invest billions of dollars in marketing research every year. Why do marketers find this research valuable? First, it helps to reduce some of the uncertainty under which they constantly operate. Successful managers know when research might help their decision making, and they take appropriate steps to acquire the information they need. Second, marketing research provides a crucial link between firms and their environments, which enables firms to be customer oriented because they build their strategies using customer input and continual feedback. Third, by constantly monitoring their competitors, firms can respond quickly to competitive moves.

Kraft: Marketing Research Behind Ritz Toasted Chips



Activity Type: Video Case



Learning Objectives: 10-02, 10-03



Difficulty: Medium



Activity Summary: This video case describes a research project that led to the introduction of Ritz Toasted Chips, a snack product from Kraft. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: What is the difference between a cracker and a chip? Kraft asked that very question as it decided to launch Ritz Toasted Chips, an extension of their Ritz cracker brand, originally launched in 1934. Kraft needed to do market research to understand what would be the best product to create and introduce to the market.



Concept Review: Because research is both expensive and time consuming, it is important to establish in advance exactly what information is required to answer specific research questions and how that information should be obtained. It is important to ensure that the potential benefits of answering the research questions exceed the cost of conducting the research.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Internet research challenge: Have students find some websites for consulting companies that perform marketing research for consumer packaged goods companies like Kraft. Note the wide range of different kinds of studies performed.

AutoTrader.com: Using Marketing Research 

Activity Type: Case Analysis



Learning Objectives: 10-01, 10-02, 10-03, 10-04



Difficulty: Medium



Activity Summary: This case describes a marketing research project undertaken by Autotrader.com to understand the influences on consumers shopping for a car. Students answer questions applying chapter concepts to the case.

Activity



Introduction: Imagine you are responsible for making next year's media buys for a large automobile dealership. You have your choice among traditional media, like television and newspaper advertising,

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and Internet-based channels, like social networking sites and automotive sites. How do you decide which types of advertising are most likely to build sales? The online automobile dealer AutoTrader.com recognizes that convincing car dealers to advertise on its site requires proof that their media dollars will be well spent. To convince dealers, AutoTrader.com uses marketing research to better understand consumers’ car buying behavior. 

Concept Review: Marketing research consists of a set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers involved in marketing goods, services, or ideas. Marketing research is a five-step process. First, the research objectives are defined. Second, the study is designed. In the third step, researchers collect the data.

There are numerous secondary data sources and various primary data collection techniques. Next is the thorough and methodical step of analyzing and interpreting the data. In the final phase in the marketing research process, the results are prepared and presented to the appropriate decision makers, who undertake appropriate marketing strategies. In the research process, there are also ethical considerations that must be examined.

Follow-Up Activity

Class discussion: Who has recently purchased a car? Do AutoTrader’s research findings match students’ own experiences?

Dunkin’ Donuts: Marketing Research and Bakery Sandwiches 

Activity Type: Video Case



Learning Objectives: 10-01, 10-02, 10-03



Difficulty: Medium



Activity Summary: Dunkin’ Donuts decided to expand its offerings by developing a line of bakery sandwiches. This video case describes their development process. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Dunkin’ Donuts saw an opportunity to expand its product mix beyond traditional breakfast foods by offering bakery sandwiches with fillings such as ham, turkey, and chicken and tuna salad. The company used marketing research techniques at every step of the development process in order to ensure that the sandwiches they introduced would meet customers’ needs and could be made and sold profitably in its locations.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity





The first phase of marketing research for Dunkin’ Donuts was to learn about when people wanted to eat, what proteins and bakery items they preferred, and what prices they wanted to pay. In small groups, have the students choose one research method OTHER than a survey and describe how it could be used to learn more about consumers' sandwich preferences.

Students sometimes have trouble understanding how experiments work. As a class, design a simple experiment that could be used to compare three different recipes for a ham and cheese croissant sandwich.

Using Market Research to Redefine the YMCA

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

Activity Type: Case Analysis



Learning Objectives: 10-01, 10-02, 10-03, 10-04



Difficulty: Medium



Activity Summary: This case describes marketing research conducted by the YMCA as a first step in a campaign to change consumers’ perceptions of its purpose and mission. After reading the case, students answer questions requiring them to apply chapter concepts to the case.

Activity



Introduction: The YMCA conducted marketing research to gain a better understanding of how its brand was viewed by consumers. This activity is important because marketers are frequently called on to design and implement marketing research programs. The goal of this activity is to apply marketing research frameworks to the YMCA’s research activities. iSeeit! Video Case: Market Research Process



Activity Type: Video Case



Learning Objectives: 10-01, 10-02, 10-03



Difficulty: Easy



Activity Summary: This video case explores how marketing research could be used to help to make decisions about programs at a coffee shop.

Activity



Introduction: Marketing research is a detailed process by which marketers can improve decision making by using formal, structured approaches and information. By asking the right questions of the right people, marketers can gain insights into the wants and needs of customers and take the necessary actions to grow their businesses. This holds true for Martha at the Coffee Collective. She is already successful within her local market but she wants to improve her offerings by hosting an open mic night for local musicians, storytellers and other activities. She decides to have Gabbie and Marco collect survey data as part of their marketing class assignment to see if her customers would want this new feature. While Gabbie and Marco both design, collect and analyze information from potential customers, they find mixed results from their surveys, mostly because Gabbie adopted a more structured process. After looking at the results, Martha decides not to offer this new feature at the Coffee Collective and instead focuses on providing the products, service and coffee drinking experience that her customers have come to expect.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Marketing Research Data



Activity Type: Video Case



Learning Objectives: 10-01, 10-02, 10-03



Difficulty: Easy



Activity Summary: This video case illustrates how a firm collects, analyzes, and utilizes data to make strategic marketing decisions.

Activity

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

Introduction: Data are the building blocks of marketing research. Marketers collect and use both qualitative data and quantitative data. Without data, researchers cannot make informed marketing decisions. This activity is important because while data is essential to marketing research, data alone does not tell the whole story. Researchers need to analyze the data and translate it into information that will help marketers solve their marketing research problem.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

The 5 Vs of Big Data 

Activity Type: Matching



Learning Objectives: 10-05



Difficulty: Medium



Activity Summary: Students will read statements and match them to the characteristics of big data they best represent.

Activity



Introduction: Marketing research professionals have seen enormous changes in recent years due to the vast increase in the amounts of digital data to which retailers, service providers, and manufacturers have access to. This activity is important because firms have to embraced a relatively new form of secondary data called big data, which are data sets that are too large and complex to analyze with conventional data management software.



Concept Review: The goal of this activity is to demonstrate your understanding of the different characteristics of big data.

The Tools and Methods for Marketing Analytics 

Activity Type: Matching



Learning Objectives: 10-06



Difficulty: Medium



Activity Summary: Students will read statements and match them to the category of tools and methods for marketing analytics it best represents.

Activity



Introduction: The analytics tools and methods available to perform marketing analytics come from a wide range of source domains, such as psychology, statistics, sociology, econometrics, management science, information systems, computer science, linguistics, and so on. Across domains, though, these tools and methods can be classified into four broad categories: descriptive, predictive, prescriptive, and active.



Concept Review: The goal of this activity is to demonstrate your understanding of the different categories of tools and methods for marketing analytics.

Swim, Lift, Play – But Also Donate: Using Marketing Research to Redefine The YMCA 

Activity Type: Case Analysis

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

Learning Objectives: 10-01, 10-02, 10-03



Difficulty: Medium



Activity Summary: This case describes how the YMCA uses the marketing research process as a part of its marketing strategy. Students will answer questions about the case.

th

Activity 



Introduction: Marketing research consists of a set of techniques and principles for systematically collecting, recording, analyzing, and interpreting data that can aid decision makers who are involved in marketing goods, services, or ideas. This activity is important because when marketing managers attempt to develop their strategies, marketing research can provide valuable information that will help them make segmentation, positioning, product, price, place, and promotion decisions.

Concept Review: The goal of this exercise is to demonstrate your understanding of the marketing research process used by the YMCA Marketing Analytics Toolkit--Survey Research: Brilliant Minds on Sports



Activity Type: Worksheet



Learning Objectives: 10-06



Difficulty: Medium



Activity Summary: Students analyze the results of a survey and answer questions that will help in making strategic decisions.

Activity



Introduction: Typically viewed as the most popular type of quantitative primary collection method, a survey is a systematic means of collecting information using a questionnaire.

Individual questions on a survey can be either unstructured or structured. Unstructured questions are open-ended and allow respondents to answer in their own words. An example of an unstructured question would be, ―When you are considering purchasing a new automobile, what are the most important characteristics?‖ yields an unstructured response. However, the same question could be posed to respondents in a structured format by providing a fixed set of response categories, such as price, safety, reliability, or design style, and then ask respondents to rate each’s importance.



Concept Review: Structured questions are closed-ended and questions for which a set of specific answers are provided for respondents to evaluate.

Marketing Analytics Toolkit--Survey Research: The Coffee Collective 

Activity Type: Worksheet



Learning Objectives: 10-06



Difficulty: Medium



Activity Summary: Students analyze the results of a survey and answer questions that will help in making strategic decisions.

Activity

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

Introduction: Typically viewed as the most popular type of quantitative primary collection method, a survey is a systematic means of collecting information using a questionnaire.

Individual questions on a survey can be either unstructured or structured. Unstructured questions are open-ended and allow respondents to answer in their own words. An example of an unstructured question would be, ―When you are considering purchasing a new automobile, what are the most important characteristics?‖ yields an unstructured response. However, the same question could be posed to respondents in a structured format by providing a fixed set of response categories, such as price, safety, reliability, or design style, and then ask respondents to rate each’s importance.



Concept Review: Structured questions are closed-ended and questions for which a set of specific answers are provided for respondents to evaluate.

Marketing Analytics Toolkit--Survey Research: The Preparatory Academy 

Activity Type: Worksheet



Learning Objectives: 10-06



Difficulty: Medium



Activity Summary: Students analyze the results of a survey and answer questions that will help in making strategic decisions.

Activity



Introduction: Typically viewed as the most popular type of quantitative primary collection method, a survey is a systematic means of collecting information using a questionnaire.

Individual questions on a survey can be either unstructured or structured. Unstructured questions are open-ended and allow respondents to answer in their own words. An example of an unstructured question would be, ―When you are considering purchasing a new automobile, what are the most important characteristics?‖ yields an unstructured response. However, the same question could be posed to respondents in a structured format by providing a fixed set of response categories, such as price, safety, reliability, or design style, and then ask respondents to rate each’s importance.



Concept Review: Structured questions are closed-ended and questions for which a set of specific answers are provided for respondents to evaluate.

chapter 11 product, branding, and packaging decisions

Tools for Instructors      

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources

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Connect Application Exercises

Chapter Overview This chapter examines product lines, mix, and breadth. Different branding strategies are addressed.

Students use critical thinking skills to discover why brands are valuable to a firm. Product packaging and labeling also contribute to the firm’s overall strategy and those concepts are also reviewed in this chapter.

Brief Chapter Outline Complexity and Types of Products Product Mix and Product Line Decisions Branding Branding Strategies Packaging

Learning Objectives LO11-1 Describe the components of a product.

The product itself is important, but so are its associated services, such as support or financing. Other elements combine to produce the core customer value of a product: the brand name, quality level, packaging, and additional features.

LO11-2 Identify the types of consumer products.

These products tend to be classified into four groups: specialty, shopping, convenience, and unsought products. Each classification involves a different purchase situation and consumer goal.

LO11-3 Explain the difference between a product mix’s breadth and a product line’s depth.

Breadth, or variety, entails the number of product lines that a company offers. Depth involves the number of categories within one specific product line.

LO11-4 Identify the advantages that brands provide firms and consumers.

Brands play important roles in enabling people to make purchase decisions more easily and encouraging customer loyalty. For firms specifically, they also constitute valuable assets, improve a company’s bottom line, and help protect against competition.

LO11-5 Explain the various components of brand equity.

Brand equity summarizes the value that a brand adds or subtracts from the offering’s value. It comprises brand awareness, or how many consumers in the market are familiar with the brand; brand associations, which are the links consumers make between the brand and its image; and brand loyalty, which occurs when a consumer will only buy that brand’s offer. Brand equity also encompasses the concept of perceived value, which is a subjective measure that consumers develop to assess the costs of obtaining the brand.

LO11-6 Determine the various types of branding strategies used by firms.

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Firms use a variety of strategies to manage their brands. First, they decide whether to offer manufacturer and/or private-label brands. Second, they have a choice of using an overall family brand or a collection of product line or individual brands. Third, to reach new markets or extend their current market, they can extend their current brands to new products. Fourth, firms can co-brand with another brand to create sales and profit synergies for both. Fifth, firms with strong brands have the opportunity to license their brands to other firms. Finally, as the marketplace changes, it is often necessary to reposition a brand.

LO11-7 Distinguish between brand extension and line extension.

Whereas a brand extension uses the same brand name for a new product that gets introduced into new or the same markets, a line extension is simply an increase of an existing product line by the brand.

LO11-8 Indicate the advantages of a product’s packaging and labeling strategy.

Similar to brands, packaging and labels help sell the product and facilitate its use. The primary package holds the product, and its label provides product information. The secondary package provides additional consumer information on its label and facilitates transportation and storage for retailers as well as their customers. Labels have become increasingly important to consumers because they supply important safety, nutritional, and product usage information.

Extended Chapter Outline XXXIII. Complexity and Types of Products A. Complexity of Products (PPT 11-04) B. Types of Products (PPT 11-05) 1. Specialty Products/Services 2. Shopping Products/Services Adding Value 11.1: Have You Seen the One about JS Watch Company? A Luxury Marketing and Pricing Strategy That Doesn’t Take Itself Too Seriously describes how JS Watch company, producer of expensive, prestige watches features premium prices and limited releases. Rather than a traditional or stuffy approach to their design, the owners embrace a quirky and entertaining philosophy that sets them far apart from most watchmakers.

3. Convenience Products/Services 4. Unsought Products/Services

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 11-06) 1. Explain the three components of a product.

Answer: Core customer value, actual product, and associated services.

2. What are the four types of consumer products?

Answer: Specialty, shopping, convenience, and unsought.

XXXIV. Product Mix and Product Line Decisions (PPT 11-07, 11-09) 1. Increase Depth (PPT 11-10) ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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2. Decrease Depth (PPT 11-10) 3. Decrease Breadth (PPT 11-11) Adding Value 11.2: Nearly Every Marketer Is Limiting Its Product Lines in an Attempt to Ensure It Can Provide at Least the Basics discusses the impact of COVID19 on product offerings. Product offering are narrower, shallower, and smaller.

Consistent with the smaller offerings, consumers are turning to familiar, known product options.

4. Increase Breadth (PPT 11-11)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 11-13) 1. What is the difference between product mix breadth and product line depth?

Answer: A firm’s product mix breadth (sometimes also referred to as variety) represents a count of the number of product lines offered by the firm. Product line depth, in contrast, equals the number of products within a product line.

2. Why change product mix breadth?

Answer: Firms often add new product categories to capture new or evolving markets, increase sales, and compete in new venues. Sometimes it is necessary to delete entire product lines to address changing market conditions or meet internal strategic priorities.

3. Why change product line depth?

Answer: Firms may add items to address changing consumer preferences or to preempt competitors while boosting sales. From time to time, it is also necessary to delete products to realign resources. The decision is never taken lightly. Generally, substantial investments have been made to develop and manufacture the products. Yet firms often must prune their product lines to eliminate unprofitable or low-margin items and refocus their marketing efforts on their more profitable items.

XXXV. Branding (PPT 11-14 and PPT 11-15) A. Value of Branding for the Customer (PPT 11-16) 1.

2.

3.

4.

5.

B.

Brands Facilitate Purchases Brands Establish Loyalty Brands Protect from Competition and Price Competition Brands Are Assets Brands Affect Market Value

Brand Equity for the Owner (PPT 11-17) 1. Brand Awareness (PPT 11-18) 2. Perceived Value (PPT 11-19) 3. Brand Associations (PPT 11-20) Marketing Analytics 11.1: Brand Intimacy Rating, Broadly and in the Fast-Food Market in Particular provides and overview the notion of brand intimacy and how consumers for affect-laden, emotional bonds with brands, even reaching the level of love.

Fast-food companies are featured, including Starbucks, Chick-fil-A. Direct measures

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provide different results than when indirect measures, such as social media are used.

Despite the meaningful insights that brands might glean from the rankings, they do not correlate perfectly with performance.

4. Brand Loyalty (PPT 11-21) Social & 11.1: Social & Mobile Marketing: From Jingles to Music Videos: Creating an Authentic Auditory Brand describes how brands are moving beyond the few notes of jingles, hiring professional and popular musicians to craft and release songs to market their offerings as well as integrating distinctive sound identities into various touchpoints and interactions with consumers. Whether just a few notes or full-fledged production.

Music can resonate in unparalleled ways with consumers, sparking their recall, engagement, and interest.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 11-22) 1. How do brands create value for the customer and the firm?

Answer: Branding provides a way for a firm to differentiate its product offerings from those of its competitors and can be used to represent the name of a firm and its entire product assortment, one product line, or a single item. Brand names, logos, symbols, characters, slogans, jingles, and even distinctive packages constitute the various brand elements firms use, which they usually choose to be easy for consumers to recognize and remember.

2. What are the components of brand equity?

Answer: The components of brand equity are brand awareness, perceived value, brand associations, and brand loyalty.

XXXVI. Branding Strategies (PPT 11-23) A.

Brand Ownership (PPT 11-24) 1. Manufacturer/National Brands 2. Retailer/Store Brands

B.

Naming Brands and Product Lines (PPT 11-25) 1. Family Brands 2. Individual Brands

C. Brand and Line Extensions (PPT 11-26) D. Co-Branding (PPT 11-28) E. Brand Licensing (PPT 11-29) F. Brand Repositioning (PPT 11-30) Ethical & Societal Dilemma 11.1: Art and the Fashionable Sock: A New Era in Licensing Agreements discusses the way licensing is changing. The new iteration of licensing agreements involved brands seeking licenses from makers of high-end artwork. ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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In cases where the artist has died, less chance of diluting the artistic reputation. The dilemma coves for living artists. If they license their work to a brand, will they be accused of selling out? If they refuse, are they giving up a golden opportunity to expand their reach and make a living?

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 11-31) 1. What are the differences between manufacturer and private-label brands?

Answer: Manufacturer brands, also known as national brands, are owned and managed by the manufacturer; some famous manufacturer brands are Kraft, Nike, Coca-Cola, KitchenAid, and Sony. Private-label brands, also called retailer/store brands, are products developed by retailers.

In some cases, retailers manufacture their own products; in other cases, they develop the design and specifications for their retailer/store brands and then contract with manufacturers to produce those products. Some national brand manufacturers work with retailers to develop a special version of their standard merchandise offering to be sold exclusively by the retailer.

2. What is co-branding?

Answer: Co-branding is the practice of marketing two or more brands together on the same package, promotion, or store. Co-branding can enhance consumers’ perceptions of product quality by signaling unobservable product quality through links between the firm’s brand and a well-known quality brand. For example, Yum! Brands frequently combines two or more of its restaurant chains, including A&W, KFC, Long John Silver’s, Pizza Hut, and Taco Bell, into one store space. This co-branding strategy is designed to appeal to diverse market segments and extend the hours during which each restaurant attracts customers. Yet co-branding also creates risks, especially when the customers of each of the brands turn out to be vastly different. For example, the Burger King and Häagen-Dazs co-branding strategy failed because the customer profiles for each brand were too different. Co-branding may also fail when there are disputes or conflicts of interest between the co-brands.

3. What is the difference between brand extension and line extension?

Answer: Whereas a brand extension uses the same brand name for a new product that gets introduced into new or the same markets, a line extension is simply an increase of an existing product line by the brand.

4. What is brand repositioning?

Answer: Brand repositioning, or rebranding, refers to a strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences.

Adding Value 11.3: An Abbreviation No More: Weight Watchers Rebrands as Simply WW highlights the company’s rebranding because ―the world doesn’t need another diet.‖ WW is designed to reflect the company’s broader focus on customers’ health.

XXXVII. Packaging (PPT 11-32 and PPT 11-33) A. Product Labeling (PPT 11-34)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 11-35)

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1. Why do firms change packaging?

Answer: Firms occasionally change or update their packaging as a subtle way of repositioning the product. A change can be used to attract a new target market and/or appear more up to date to its current market.

2. What objectives do product labels fulfill?

Answer: Labels on products and packages provide information the consumer needs for his or her purchase decision and consumption of the product. Because they identify the product and brand, labels are also an important element of branding and can be used for promotion. A product label is much more than just a sticker on the package; it is a communication tool. Many of the elements on the label are required by laws and regulations (i.e., ingredients, fat content, sodium content, serving size, calories), but other elements remain within the control of the manufacturer. In addition, the way manufacturers use labels to communicate the benefits of their products to consumers varies with the product.

Additional Resources This is a fun exercise to get students excited about brands. To demonstrate the value of a brand, instructors may want to start the topic discussion by gathering brand symbols and brand character icons without any identifying writing on them. These can be obtained through a web search of the character; for instance, type ―Tony the Tiger‖ in your search engine and download the graphic. Place the symbols on a transparency in color. Start the class by dividing the class into four or five groups. The instructions: The leader is to write down the brand name from input of group members. Time the exercise. It usually doesn’t take long depending on how many characters you use. At the conclusion declare a winner and then ask the students ―Why are brands valuable?‖ Students realize the importance of brand recognition through the brand character or icon.

Online tip: The same exercise can be used in an online forum in synchronous connection with the class where each of the brand characters are shown. The first student that types in the correct brand name would ―win‖ and the instructor shows the next image. A synchronous course discussion can then occur about the importance of the brand character/logo.

Product packaging is known as the last five seconds of marketing. Instructors can bring in an empty Pringles can as well as other interesting examples of packing. Pringles is one of the first package designs to protect from breakage of food items such as potato chips. The class can address how packaging becomes the last five seconds of marketing. Package label requirements by the FDA and package design for shelf space should also be addressed.

Students can view one of the original 1965 Oscar Meyer ads here: http://www.youtube.com/watch?v=aNddW2xmZp8. This could lead to a discussion of memorable jingles.

How is a memorable jingle valuable to a brand? The video at the following link discusses the Apple vs.

Samsung lawsuit: https://www.youtube.com/watch?v=MX8O7z4NtoU. How do these brands provide value?

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type 01

Band-Aid: Building on the Value of the Brand Types of Products Types of Products Branding Strategies Branding Strategies Frito-Lay Branding with Doritos Three Stripes: Branding at adidas iSeeit! Video Case: Brand Equity Identifying Branding Strategies iSeeit! Video Case: Creating Value through Product Mix Decisions Yogurt Lovers Say, ―It’s All Greek To Me‖

02

Case Analysis Click & Drag Matching Click & Drag Matching Video Case Video Case Video Case Matching Video Case

X X

Case Study

X

Learning Objectives 1103 04 05 06 07 X X X

08

X X X X

X X X

X X X

X X

X

X

Band-Aid: Building on the Value of the Brand 

Activity Type: Case Analysis



Learning Objectives: 11-03, 11-05, 11-07



Difficulty: Hard



Activity Summary: The case discusses how Band-Aid manages its product mix. Students answer questions that apply chapter concepts to the case.

Activity



Introduction: The Band-Aid brand, which is a part of global consumer goods giant Johnson & Johnson, is widely known as a leader in the wound-care market. Band-Aid has built its brand reputation through continued product innovations and line expansions, helping Band-Aid become one of the most recognized names in bandages, gauzes, and tapes. In this mini case, we focus on BandAid's branding and product strategies.



Concept Review: The value of a brand translates into brand equity, or the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the goods or service. Firms institute a variety of brand-related strategies to create and manage key brand assets. These strategies can include branding policy, decisions to extend the brand name to other products and markets, using the brand name cooperatively with that of another firm, and licensing the brand to other firms.

Follow-Up Activity

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Individually or in small groups, ask students to visit the Band-Aid website and map out their product mix (i.e., identify different product lines, and the products in those lines). Assess the depth and breadth of the product mix and product lines.

Types of Products 

Activity Type: Click & Drag



Learning Objectives: 11-02



Difficulty: Medium



Activity Summary: Students are asked to classify four product examples according to the product type each one represents.

Activity



Introduction: Consumer products are products and services used by people for their personal use.

Marketers categorize consumer products into several categories; this helps marketers determine the appropriate pricing, promotion, and placement strategy. In this activity, you will be asked to determine which product falls into which category.



Concept Review: Marketers classify consumer products by the way the products are used and the way that they are purchased. Four main product categories include specialty goods/services, shopping goods/services, convenience goods/services, and unsought goods/services.

Student are asked to view descriptions of four products, and to classify each one according to its product type.

Follow-Up Activity In small groups, ask students to think of some products that could be classified as more than one of the four product types, depending on the consumer.

Types of Products – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 11-02



Difficulty: Medium



Activity Summary: Students are asked to classify four product examples according to the product type each one represents.

Activity



Introduction: Consumer products are products and services used by people for their personal use.

Marketers categorize consumer products into several categories; this helps marketers determine the appropriate pricing, promotion, and placement strategy. In this activity, you will be asked to determine which product falls into which category.



Concept Review: Marketers classify consumer products by the way the products are used and the way that they are purchased. Four main product categories include specialty goods/services, shopping goods/services, convenience goods/services, and unsought goods/services.

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Student are asked to view descriptions of four products, and to classify each one according to its product type.

Follow-Up Activity In small groups, ask students to think of some products that could be classified as more than one of the four product types, depending on the consumer.

Branding Strategies 

Activity Type: Click and Drag



Learning Objectives: 11-06



Difficulty: Medium



Activity Summary: Students match five different brand examples with different brand naming strategies.

Activity



Introduction: A brand name can add value to a product beyond its physical and functional characteristics. However, marketers often need to make very tough decisions regarding the basic positioning of the brand. The following exercise requires you to distinguish between the various branding strategies marketers use.



Concept Review: Firms institute a variety of brand-related strategies to create and manage key brand assets such as the decision to own the brands, establishing a branding policy, extending the brand name to other products and markets, cooperatively using the brand name with that of another firm, and licensing the brand to other firms.

Brands can be owned by any firm in the supply chain, whether manufacturers, wholesalers, or retailers. There are two basic brand ownership strategies: manufacturer brands and private-label brands.

Follow-Up Activity



Class discussion: As shown in the exercise, Kellogg’s uses a family brand strategy, with its various types of cereal branded with the Kellogg’s name plus an individual product name (Kellogg’s Frosted Flakes, Kellogg’s Corn Flakes, and so on).



Show the Kellogg’s product mix (from its website). Ask the students what basically everything in the product mix has in common (nearly all are breakfast foods). Have the students think of some brand extensions that would fit the Kellogg’s brand well … and some others that would be a poor fit.



If you have the time to continue, next go to the General Mills website and conduct a similar investigation. Their product mix covers a much wider range of products. This may be why, although the General Mills brand logo does appear on their cereal boxes, it tends to be much less prominent than is the Kellogg’s logo. ―Kellogg’s‖ has strong brand associations with ―breakfast‖ and ―cereal,‖ whereas ―General Mills‖ does not.

Branding Strategies – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate for the Click and Drag Alternate

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

Learning Objectives: 11-06



Difficulty: Medium



Activity Summary: Students match five different brand examples with different brand naming strategies.

th

Activity 

Introduction: A brand name can add value to a product beyond its physical and functional characteristics. However, marketers often need to make very tough decisions regarding the basic positioning of the brand. The following exercise requires you to distinguish between the various branding strategies marketers use.



Concept Review: Firms institute a variety of brand-related strategies to create and manage key brand assets such as the decision to own the brands, establishing a branding policy, extending the brand name to other products and markets, cooperatively using the brand name with that of another firm, and licensing the brand to other firms.

Brands can be owned by any firm in the supply chain, whether manufacturers, wholesalers, or retailers. There are two basic brand ownership strategies: manufacturer brands and private-label brands.

Follow-Up Activity



Class discussion: As shown in the exercise, Kellogg’s uses a family brand strategy, with its various types of cereal branded with the Kellogg’s name plus an individual product name (Kellogg’s Frosted Flakes, Kellogg’s Corn Flakes, and so on).



Show the Kellogg’s product mix (from its website). Ask the students what basically everything in the product mix has in common (nearly all are breakfast foods). Have the students think of some brand extensions that would fit the Kellogg’s brand well … and some others that would be a poor fit.



If you have the time to continue, next go to the General Mills website and conduct a similar investigation. Their product mix covers a much wider range of products. This may be why, although the General Mills brand logo does appear on their cereal boxes, it tends to be much less prominent than is the Kellogg’s logo. ―Kellogg’s‖ has strong brand associations with ―breakfast‖ and ―cereal,‖ whereas ―General Mills‖ does not.

Frito-Lay Branding with Doritos



Activity Type: Video Case



Learning Objectives: 11-04, 11-05



Difficulty: Medium



Activity Summary: This video discusses a Doritos rebranding campaign that used several online channels. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Why is the Doritos brand valuable to Frito-Lay and what are the different branding strategies Frito-Lay uses? This video addresses these questions. It also explains the value of the Doritos line packaging and label, which must send out a strong message from the shelf.

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

Concept Review: Branding provides a way for a firm to differentiate its offerings from those of its competitors. A brand name can represent an entire product assortment, one product line, or a single item. Brand names, logos, symbols, characters, slogans, jingles, and even distinctive packages constitute the various brand elements that firms hope customers will recognize and remember.

Brands add value to goods and services beyond physical and functional characteristics.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

In class, visit the Doritos website to explore the company’s most recent promotion(s). As of this writing, Doritos is conducting a ―Bold Missions‖ promotion, challenging product fans to perform various unusual tasks and post evidence on social media (which they then display on the site). Doritos is also awarding prizes for completion of the tasks. This is a promotion of the Doritos ―Bold Flavor‖ experimental flavors. As such, it is very much in the same spirit as was the promotion discussed in the video.

Three Stripes: Branding at adidas 

Activity Type: Video Case



Learning Objectives: 11-04, 11-05, 11-06



Difficulty: Medium



Activity Summary: This video explains the adidas branding strategy, in particular describing the brand naming strategy and how the ―three stripes‖ logo is used on the brand’s products. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: The ―three stripes‖ logo on all adidas products is an important element of the brand, designed to help consumers identify that the product comes from adidas. Originally, all of the company’s products were branded under the adidas name; however, over time the company has developed some sub-brands to serve specific target markets.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Have students visit the Nike website. What is Nike’s branding strategy for its shoes? How does it differ from adidas’s strategy?

As of this writing, you can view this information at http://store.nike.com/us/en_us/pw/shoes/brk?ipp=120 Nike currently has sub-brands for different shoe technology as well as a ―Nike Free‖ collection. iSeeit! Video Case: Brand Equity 

Activity Type: Video Case



Learning Objectives: 11-05, 11-06



Difficulty: Easy



Activity Summary: This video case looks at sources of brand equity for a coffee business.

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Activity



Introduction: One of the core decisions in marketing is branding, where an organization uses a series of identifiable symbols, names or phrases to distinguish itself from competitors. In order to understand the effectiveness of these initiatives, businesses must evaluate brand equity, brand awareness, perceived value, and associations to their brand. The Coffee Collective appreciates this importance and needs to establish a deeper understanding of its brand equity within the market. Martha uses a survey and loyalty program to better gauge what consumers think when they hear Coffee Collective, what customers perceive as the value of buying coffee at the Coffee Collective, and what associations they may have with her store. From what she has learned about the brand equity of her business, Martha can develop an appropriate branding strategy to help ensure that her business maintains its relevance within the marketplace.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Identifying Branding Strategies



Activity Type: Matching



Learning Objectives: 11-07



Difficulty: Medium



Activity Summary: Students will match seven brand-related strategies with key brand assets Activity



Introduction: The decisions surrounding brand related strategies are: whether to use manufacturer brands or retailer/store brands, how to name brands and product lines, whether or not to extend the brand name to other products and markets, should the brand name be used with another firm or licensed to another firm, and whether or not the brand should be repositioned. iSeeit! Video Case: Creating Value through Product Mix Decisions



Activity Type: Video Case



Learning Objectives: 11-03



Difficulty: Medium



Activity Summary: This video case demonstrates how a firm can capture value using an effective product mix strategy.

Activity



Introduction: All companies sell some combination of products—from a single product item to a product line. The product mix includes all a company’s products. A company can expand its product mix by expanding its product mix breadth or its product line depth. This activity is important because marketers assess the performance of each product individually and the product mix collectively to determine which products they should add to or remove from the product mix. Developing a product mix strategy not only helps grow revenues, it can lead to a sustainable competitive advantage.

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Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

chapter 12 developing new products Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview This chapter focuses on the ways that a firm can create value through innovation. Students learn about the product life cycle, the importance of product differentiation, as well as concepts unique to new product development and launch.

Brief Chapter Outline Why Do Firms Create New Products?

Diffusion of Innovation How Firms Develop New Products The Product Life Cycle

Learning Objectives LO12-1

Identify the reasons firms create new products.

Firms need to innovate to respond to changing customer needs, prevent declines in sales from market saturation, diversify their risk, and respond to short product life cycles, especially in industries such as fashion, apparel, arts, books, and software markets, where most sales come from new products. Finally, innovations can help firms improve their business relationships with suppliers.

LO12-2

Describe the different groups of adopters articulated by the diffusion of innovation theory.

The diffusion of innovation theory can help firms predict which types of customers will buy their products or services immediately upon introduction, as well as later as they gain more acceptance in the market.

Innovators are those buyers who want to be the first to have the new product or service. Early adopters do not take as much risk as innovators but instead wait and purchase the product after careful review.

The members of the early majority don’t like to take risks and therefore tend to wait until the bugs have been worked out of a particular product or service. The late majority are buyers who purchase the product after it has achieved its full market potential. Finally, laggards like to avoid change and rely on traditional

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products until those products are no longer available. Laggards may never adopt certain products or service.

LO12-3

Describe the various stages involved in developing a new product or service.

When firms develop new products, they go through several steps. First, they generate ideas for the product or service using several alternative techniques, such as internal research and development, R&D consortia, licensing, brainstorming, tracking competitors’ products or services, or working with customers.

Second, firms test their concepts by either describing the idea of the new product or service to potential customers or showing them images of what the product would look like. Third, the design process entails determining what the product or service will actually include and provide. Fourth, firms test market their designs. Fifth, if everything goes well in the test market, the product is launched. Sixth, firms must evaluate the new product or service to determine its success.

LO12-4

Explain the product life cycle.

The product life cycle helps firms make marketing mix decisions on the basis of the product’s stage in its life cycle. In the introduction stage, companies attempt to gain a strong foothold in the market quickly by appealing to innovators. During the growth stage, the objective is to establish the brand firmly. When the product reaches the maturity stage, firms compete in-tensely for market share, and many potential customers already own the product or use the service. Eventually, most products enter the decline phase, during which firms withdraw marketing support and eventually phase out the product. Knowing where a product or service is in its life cycle helps managers determine its specific strategy at any given point in time.

Extended Chapter Outline XXXVIII.

Why Do Firms Create New Products? (PPT 12-04) Adding Value 12.1: Nura: The Earphone That Sound Great to You Because They’re Tailored to Your Ear highlights the uniqueness Nura earphones provides by detecting the frequencies to which each individual listener is most sensitive. By processing those signals and syncing with a user’s smartphone, the devices then adjust their output, such that each wearer receives a transmission of sound that each wearer receives a transmission of sound that is uniquely and specifically designed for her or his ears.

A. Changing Customer Needs ethical & societal dilemma 12.1: The Portal as a Privacy Challenging Product Offering from Facebook discusses this video-enabled smart speaker that supports easy video chats. Through a TV or a Portal tablet. It can collect people’s personal conversations appearance, and location, making it a potential invasion of users’ privacy.

B. Market Saturation C. Managing Risk through Diversity Adding Value 12.2: Adding Podcasts to Portfolios: How Platforms and Streaming Services Are Expanding Their Product Lines highlights how the Apple Store and other streaming services are attempting to broaden offerings to consumers who want more than just music. The Apple Store and Spotify have indicated their intentions to add more podcasts and rely increasingly on this source of consumer revenues. Spotify believes it can compete effectively against Apple.

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Social & Mobile Marketing 12.1: A Battle Royale for Gamers: Call of Duty versus Fortnite discusses how Fortnite, an upstart company, introduced a different format to appeal to gamers. The established Call of Duty, which had grown a little stale, followed with a beta version using a similar mode. The move indicates success through the rise in Activision’s, Call of Duty’s owner, stock.

D. Fashion Cycles

E. Improving Business Relationships

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 12-05) 1. What are the reasons firms innovate?

Answer: Changing customer needs, market saturation, managing risk through diversity, and fashion cycles XXXIX. Diffusion of Innovation (PPT 12-06 and PPT 12-09) A. Innovators B. Early Adopters C. Early Majority D. Late Majority E. Laggards F. Using the Diffusion of Innovation Theory (PPT 12-11) 1.

2.

3.

4.

Relative Advantage Compatibility Observability Complexity and Trialability

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 12-12) 1. What are the five groups on the diffusion of innovation curve?

Answer: The five groups are innovators, early adopters, early majority, late majority, and laggards.

2. What factors enhance the diffusion of a good or service?

Answer: Factors such as relative advantage, compatibility, observability, and complexity and trialability enhance the diffusion of a good or service.

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XL. How Firms Develop New Products (PPT 12-13) A. Idea Generation (PPT 12-14) 1.

2.

3.

4.

5.

6.

7.

Internal Research and Development (PPT 12-15) R&D Consortia (PPT 12-16) Licensing (PPT 12-17) Brainstorming (PPT 12-18) Outsourcing (PPT 12-19) Competitors’ Products (PPT 12-20) Customer Input (PPT 12-21)

B. Concept Testing (PPT 12-22) C. Product Development (PPT 12-23 and PPT 12-24) D. Market Testing (PPT 12-25) 1. Premarket Tests (PPT 12-25) 2. Test Marketing (PPT 12-25) E. Product Launch (PPT 12-26) F. Evaluation of Results (PPT 12-27)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 12-28) 1. What are the steps in the new product development process?

Answer: The steps in the new product development process are idea generation, concept testing, product development, market testing, product launch, and evaluation of results.

2. Identify different sources of new product ideas.

Answer: To generate ideas for new products, a firm can use its own internal research and development (R&D) efforts, collaborate with other firms and institutions, license technology from research-intensive firms, brainstorm, research competitors’ products and services, and/or conduct consumer research.

XLI.

The Product Life Cycle (PPT 12-29 and PPT 12-30)

A. Introduction Stage (PPT 12-32)

B. Growth Stage (PPT 12-33) C. Maturity Stage (PPT 12-34) 1. Entry into New Markets or Market Segments Adding Value 12.3: Wearables That Want Your Sweat to Improve Your Service Access discusses the health benefits of the Apple Watch Series 5 and 6 currently offers and have in development. Currently, they have an FDA-approved ECG monitor. In development are sweat collectors that will change the way various sectors, such as health care and exercise, get delivered.

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2. Development of New Products D. Decline Stage (PPT 12-35) E. The Shape of the Product Life Cycle Curve F. Strategies Based on Product Life Cycle: Some Caveats

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 12-37) 1. What are the key marketing characteristics of products or services at each stage of the product life cycle?

Answer: In the introduction stage, marketers attempt to build awareness and develop the market for the product. In the growth stage, marketers seek to build brand preferences and increase market share. In the maturity stage, marketers attempt to defend market share and maximize profits. In the decline stage, marketers maintain the product, harvest the product, or discontinue the product.

2. Why might placement decisions for products or services into stages of the product life cycle become a self-fulfilling prophecy?

Answer: If a product experiences several seasons of declining sales, a manager may determine that it has moved from the growth stage to decline and so decides to stop promoting the product.

As a result, of course, sales decline further. The manager then believes he or she made the right decision because the product continues to follow a predetermined life cycle. But what if the original sales decline was due to a poor strategy or increased competition—issues that could have been addressed with positive marketing support?

Additional Resources

The way to truly understand new product development is to have students work in teams to create a new product. Students can work in teams of 5 to brainstorm and come up with ideas of new products.

Instructors need to put some boundaries on the assignment such as it can’t be too far-fetched (such as self-driving automobiles) and the product should have enough differentiation (not just an added ingredient to an energy bar). If students get stumped, suggest that they think of a current product and then think of a way to make it better or to solve a problem (such as unbreakable holiday lights or lights where the bulb never burns out). Then have students make an illustration of the product and address the phases of the new product development. Students can present their findings to the class.

Another way to get students involved is to have them research organizations to discover how new products were made. 3M Post-its were made by mistake when a glue did not bond. An employee used it to mark pages in a hymnal so he wouldn’t lose the page and it could be easily removed without damage.

Have students share their findings with the class. Online tip: This same assignment can take the form of a posting in which students present their findings via the discussion board in the online forum. Students can then respond to other learners by commenting on their ―new product‖ and making suggestions.

The key to student comprehension of new product design is to involve the student in new product development to use their critical thinking skills to think about each of the phases of new product development as well as the elements of the marketing mix to bring the product to market. Instructors may want to assign new product development as part of a Marketing Plan where students need to develop a new product and incorporate all elements of the marketing plan for a cumulative course project. Of course, new product development phases would be addressed as part of the plan.

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

Stages of the Product Life Cycle Stages of the Product Life Cycle The Product Development Process The Product Development Process Sara Lee: Developing a New Product You Be the Judge: Click Here, Be Sued Diffusion of Innovation

Click & Drag Matching Click & Drag Matching Video Case Video Case Click & Drag

Learning Objectives 1201 02 03 04 X X X X X X X X X X X

Diffusion of Innovation New Product Development at Red Mango The Launch, Death, and Potential Reemergence of Google Glass iSeeit! Video Case: New Product Development A Toy Company for a New Age: How Mattel is Reinventing Itself for Modern Customers Innovation at Wham-O New Product Development at Anki Hit or Miss, Dyson Wants to Make Products That Solve Problems in Different Ways

Matching Video Case Case Analysis

X X

X X X

Video Case

X X

Case Analysis

X

X

X

Video Case Video Case

X

X

X X

X

X

Case Analysis

Stages of the Product Life Cycle 

Activity Type: Click & Drag



Learning Objectives: 12-04



Difficulty: Medium



Activity Summary: The student matches market characteristics and consumer profiles to the stages of the product life cycle.

Activity



Introduction: During each stage of a product's life cycle, the types and levels of sales, profits, and competition rise, peak, and eventually decline. Categorize the following statements by the market attributes and consumer types that characterize each product life cycle stage.



Concept Review: The product life cycle defines the stages that new products move through as they enter, are established in, and ultimately leave the marketplace. In their life cycles, products pass through four stages: introduction, growth, maturity, and decline. The product life cycle offers a useful tool for managers to analyze the types of strategies that may be required over the life of their products. Even the strategic emphasis of a firm and its marketing mix (4Ps) strategies can be adapted from insights about the characteristics of each stage of the cycle.

The student is presented with information on both market characteristics and consumer profiles for a set of situations and is asked to match each of these scenarios to one of the four product life cycle stages. ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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Follow-Up Activity Internet research challenge: Ask students to investigate the sales growth pattern in the tablet market, using the most current data they can find, and identify the PLC stage in which the tablet market currently sits.

Stages of the Product Life Cycle – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate for the Click & Drag Above



Learning Objectives: 12-04



Difficulty: Medium



Activity Summary: The student matches market characteristics and consumer profiles to the stages of the product life cycle.

Activity



Introduction: During each stage of a product's life cycle, the types and levels of sales, profits, and competition rise, peak, and eventually decline. Categorize the following statements by the market attributes and consumer types that characterize each product life cycle stage.



Concept Review: The product life cycle defines the stages that new products move through as they enter, are established in, and ultimately leave the marketplace. In their life cycles, products pass through four stages: introduction, growth, maturity, and decline. The product life cycle offers a useful tool for managers to analyze the types of strategies that may be required over the life of their products. Even the strategic emphasis of a firm and its marketing mix (4Ps) strategies can be adapted from insights about the characteristics of each stage of the cycle.

The student is presented with information on both market characteristics and consumer profiles for a set of situations and is asked to match each of these scenarios to one of the four product life cycle stages.

Follow-Up Activity Internet research challenge: Ask students to investigate the sales growth pattern in the tablet market, using the most current data they can find, and identify the PLC stage in which the tablet market currently sits.

The Product Development Process 

Activity Type: Click & Drag



Learning Objectives: 12-03



Difficulty: Medium



Activity Summary: Students apply the product development process to the description of the development of a hypothetical technology product.

Activity



Introduction: In this example, a hypothetical computer accessories company called ElectroCompt creates a product to enhance users' experience with the Apple iPod. The SuperChargeIn is a slim protective sleeve with a battery-operated charger built in so iPod users never run out of charge when

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they are on the go. Read about how the hypothetical product SuperChargeIn was conceived and delivered to market and then organize the product development process as instructed. 

Concept Review: New goods and services keep current customers coming back for more and draw new customers into the market. Broad product assortments also help to diversify the firm's portfolio, thus lowering its overall risk and enhancing its value. Although they carry significant risk, new-to-theworld products have tremendous potential because they offer something that has never before been available.

Students are asked to match a set of product development activities to the stages of the product development process.

The Product Development Process – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate for the Click & Drag Above



Learning Objectives: 12-03



Difficulty: Medium



Activity Summary: Students apply the product development process to the description of the development of a hypothetical technology product.

Activity



Introduction: In this example, a hypothetical computer accessories company called ElectroCompt creates a product to enhance users' experience with the Apple iPod. The SuperChargeIn is a slim protective sleeve with a battery-operated charger built in so iPod users never run out of charge when they are on the go. Read about how the hypothetical product SuperChargeIn was conceived and delivered to market and then organize the product development process as instructed.



Concept Review: New goods and services keep current customers coming back for more and draw new customers into the market. Broad product assortments also help to diversify the firm's portfolio, thus lowering its overall risk and enhancing its value. Although they carry significant risk, new-to-theworld products have tremendous potential because they offer something that has never been available.

Students are asked to match a set of product development activities to the stages of the product development process.

Sara Lee: Developing a New Product 

Activity Type: Video Case



Learning Objectives: 12-01, 12-03, 12-04



Difficulty: Medium



Activity Summary: This case discusses the product development process for a new type of bread with some whole grain but the taste and appearance of white bread. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: The following video features the Sara Lee brand, which is known around the world.

One of the strategies Sara Lee uses to keep its brand fresh and diversified is innovative product development.



Concept Review: New goods and services keep current customers coming back for more and draw new customers into the market. Multiple products also help to diversify the firm's portfolio. To

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generate ideas for new products, a firm can use its own internal research and development (R&D) efforts, collaborate with other firms and institutions, license technology from research-intensive firms, brainstorm, research competitors' products and services, and/or conduct consumer research. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities

For an interesting follow-up to this case, assign this article to be read outside of class, or discuss it in class: http://www.cspinet.org/new/200807212.html Sara Lee was threatened with a lawsuit following the introduction of the bread discussed in the video case; consumer protection groups felt that the name and packaging were misleading, suggesting that the bread contained more whole grains than it did.

You Be the Judge: Click Here, Be Sued 

Activity Type: Video Case



Learning Objectives: 12-01, 12-02, 12-04



Difficulty: Medium



Activity Summary: An excerpt from a fictionalized trial dealing with an allegation of misappropriation of an innovative idea. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: In this You Be the Judge business law case, Ms. Garner argues that she developed an innovative process for one-click shoe shopping for her Dazzletoes website, and that Flights of Fancy has copied it unfairly. Mr. Higgins counters that he's been using the same customer service process for years in his brick and mortar store and is entitled to continue its use online.



Concept Review: Innovation is the process by which ideas are transformed into new goods and services that will help firms grow. Without innovation, firms would have only two choices: to continue to market current products to current customers, or to take the same products to other markets with similar customers. Although innovation strategies may not work in the short run, long-term considerations compel firms to introduce new goods and services.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Class discussion: This fictional trial video is incomplete in that an infringement lawsuit would require lots of information and testimony not shown here. But regardless of that, ask the students, if they were the judges, how they would decide. Of the testimony shown in the video, which factors are important to the decision? What else would they want to know? This is also a place where, if you want, you can briefly expand on what the text says about patent protection.

Diffusion of Innovation 

Activity Type: Click & Drag

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

Learning Objectives: 12-02



Difficulty: Medium



Activity Summary: The student identifies products being adopted by each of the adopter groups discussed in diffusion of innovation theory.

th

Activity 

Introduction: There are certain products that can be associated with users in each stage of the diffusion of innovation curve. Match each product with the consumer type for each stage of diffusion.



Concept Review: The process by which the use of an innovation—whether a product, a service, or a process—spreads throughout a market group, over time and across various categories of adopters, is referred to as diffusion of innovation. The theory surrounding diffusion of innovation helps marketers understand the rate at which consumers are likely to adopt a new product or service. It also gives them a means to identify potential markets for their new products or services and predict their potential sales, even before they introduce the innovations.

Students are asked to identify the adopter group most likely to adopt particular products described in the activity.

Diffusion of Innovation – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate for the Click & Drag Above



Learning Objectives: 12-02



Difficulty: Medium



Activity Summary: The student identifies products being adopted by each of the adopter groups discussed in diffusion of innovation theory.

Activity



Introduction: There are certain products that can be associated with users in each stage of the diffusion of innovation curve. Match each product with the consumer type for each stage of diffusion.



Concept Review: The process by which the use of an innovation—whether a product, a service, or a process—spreads throughout a market group, over time and across various categories of adopters, is referred to as diffusion of innovation. The theory surrounding diffusion of innovation helps marketers understand the rate at which consumers are likely to adopt a new product or service. It also gives them a means to identify potential markets for their new products or services and predict their potential sales, even before they introduce the innovations.

Students are asked to identify the adopter group most likely to adopt particular products described in the activity.

Follow-Up Activity In small groups, ask students to assess a product that has diffused very quickly, and one that is diffusing slowly, and assess the reasons, using the factors that affect speed of diffusion (relative advantage, complexity, trialability, observability, compatibility). The products listed in the exercise can be used for this (for example, iPod vs. electric car), or others can be chosen.

New Product Development at Red Mango

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

Activity Type: Video Case



Learning Objectives: 12-01, 12-03



Difficulty: Medium



Activity Summary: This video explores how new product development happens at Red Mango, a frozen yogurt chain. After the video ends, students are asked questions about the video and related course concepts.

th

Activity 

Introduction: Founded in 2007 by Dan Kim, Red Mango originally sold frozen yogurt. Its first shop was in Los Angeles. Success with its frozen yogurt resulted in rapid expansion for the firm. There are currently more than 200 Red Mango locations in 28 states and two Central American countries. Since 2007, Red Mango has developed many successful new products, including parfaits, fruit smoothies, and, more recently, blended iced coffee. The accompanying video will illustrate how Red Mango followed the new product development process to launch its blended iced coffee.



Concept Review: It is almost a requirement today that firms innovate and develop new products.

Customer needs change, markets become saturated, and fashion trends evolve. For these and other reasons, growth would be very difficult for companies without innovation resulting in new products.

The new product development process typically follows a series of stages. First, new product ideas must be generated from a variety of sources. Next, these product ideas are turned into concepts that are tested on consumers. If the concept test is successful, a prototype is manufactured and tested during the product development stage. Next, some firms choose to test market—they release the actual product in a limited geographic area to test the market potential. The last two stages are the actual product launch, followed by evaluation of the results. This evaluation is ongoing because products must be carefully managed throughout their life cycle.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

The Launch, Death, and Potential Reemergence of Google Glass



Activity Type: Case Analysis



Learning Objectives: 12-01, 12-02, 12-04



Difficulty: Medium



Activity Summary: The short case describes the history of Google Glass, reflecting on what worked, what didn’t, and what might happen in the future.

Activity



Introduction: Google Glass, Google’s first entry into the wearable technology market, had a limited and unexpectedly brief introduction to the market. This activity is important because new product development is a challenging area of marketing—and business in general—but is essential to a firm’s long-term survival. The goal of this activity is to apply new product development concepts and frameworks to Google’s experience with Glass.

After reading the case, the student is asked to answer questions about the information presented. iSeeit! Video Case: New Product Development 

Activity Type: Video Case



Learning Objectives: 12-03

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

Difficulty: Easy



Activity Summary: This video case considers the stages of the new product development process for a potential flavor additive for a bottled water company.

th

Activity 

Introduction: To develop new products and services efficiently, organizations go through a process to ensure that their products are ready for market. This process is meant to evaluate interest in a product and helps to increase the chances of success within the marketplace. Hope Springs Water Co. is using this process to identify opportunities to develop new complementary offerings to its bottled water. As Ju Li and her marketing team look for product-expansion opportunities, they are approached by a supplier who would like them to distribute a natural flavoring additive. Before they agree to distribute the new product, they need to ensure interest within the marketplace and that preliminary sales data support an expensive national launch. By using the new-product development process, Hope Springs can make decisions on hard data and a structured process instead of guessing whether this new additive will be successful within the marketplace.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

A Toy Company for a New Age: How Mattel is Reinventing Itself for Modern Customers



Activity Type: Case Analysis



Learning Objectives: 12-01, 12-02, 12-03



Difficulty: Medium



Activity Summary: This case challenges students demonstrate their understanding of the diffusion of innovation as well as why and how companies develop new products.

Activity

Introduction: Customers lives are defined by the many new products and services developed

through scientific and technological advances and by the added features included in these new choices. Companies add value to product and service offerings through innovation. The use of these innovations spreads throughout a market group over time. Marketers must understand how firms develop new products and services and get customers to adopt them in a timely manner.

After reading the case, the student is asked to answer questions about the information presented.

Innovation at Wham-O 

Activity Type: Video Case



Learning Objectives: 12-01, 12-02, 12-03



Difficulty: Easy/Medium



Activity Summary: This video case considers the how new products are developed for the marketplace.

Activity

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

Introduction: Innovation leads to new products and services that provide value for both the firm and its customers. The organization leadership’s responsibility is to pursue a new-product development process to identify opportunities and convert them into profitable products and services. Customers’ needs are constantly changing and leading to different desires in the marketplace. Firms must implement a process that typically follows a series of stages to remain successful.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

New Product Development at Anki



Activity Type: Video Case



Learning Objectives: 12-03



Difficulty: Medium



Activity Summary: This video case considers how new products are developed for the marketplace.

Activity



Introduction: New can be a complicated idea. Some innovative products can add additional feature(s) to an existing product or introduce something never seen before. The customer experience is endlessly being changed with different products through technological breakthroughs and fresh features to existing products. To remain competitive, companies are under constant pressure to develop new products. Anki is no exception as demonstrated in this video.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Hit or Miss, Dyson Wants to Make Products That Solve Problems in Different Ways 

Activity Type: Case Analysis



Learning Objectives: 12-02, 12-03



Difficulty: Medium



Activity Summary: Students read the case about how Dyson uses the diffusion of innovation theory as a part of its marketing strategy and then answer the questions that follow.

Activity



Introduction: The process by which the use of an innovation spreads throughout a market group, over time and across various categories of adopters, is based on the diffusion of innovation theory. This activity is important because the theory helps marketers understand the rate at which consumers are likely to adopt a new product or service. It also gives them the means to identify potential markets for their new products or services and predict their potential sales, even before they introduce innovations.

Concept: The goal of this exercise is to demonstrate your understanding of the diffusion of innovation theory.

chapter 13 services: the intangible product

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Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview In this chapter, students learn the difference between marketing a product vs. marketing a service.

Students find that since a service can’t be ―seen‖ or measured with a quantifiable outcome, that the marketing strategy must be different in marketing services. The building blocks of service quality are the foundation of the chapter, which then dovetails into how to improve customer service through the methods to reduce delivery gaps.

Brief Chapter Outline Services Marketing Differs from Product Marketing Developing a Service Strategy Using the Seven Ps Providing Great Service: The Gaps Model Service Recovery

Learning Objectives LO 13-1 Describe how the marketing of services differs from the marketing of products.

Unlike products, services are intangible, inseparable, variable, and perishable. They cannot be seen or touched, which makes it difficult to describe their benefits or promote them. Service providers therefore enhance service delivery with tangible attributes, like a nice atmosphere or price benefits. Services get produced and consumed at the same time, so marketers must work quickly, and they are more variable than products, though service providers attempt to reduce this variability as much as possible. Finally, because consumers cannot stockpile perishable services, marketers often provide incentives to stagger demand.

LO 13-2 Describe the components of a service strategy.

LO 13-3 Discuss the four gaps in the Service Gap Model.

The knowledge gap reflects the difference between customers’ expectations and the firm’s perception of those customer expectations. Firms need to match customer expectations with actual service through research. The standards gap is the difference between the firm’s perceptions of customers’ expectations and the service standards it sets. Appropriate service standards and measurements of service performance help close this gap. The delivery gap is the difference between the firm’s service standards and the actual service it provides to customers. Closing this gap requires adequate training and empowerment of employees. The communication gap refers to the difference between the actual service provided to customers and the service that the firm’s promotion program promises. Firms close the communications gap by managing customer expectations and promising only what they can deliver.

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LO 13-4 Examine the five service quality dimensions.

First, reliability refers to whether the provider consistently provides an expected level of service. Second, responsiveness means that the provider notes consumers’ desires and requests and then addresses them. Third, assurance reflects the service provider’s own confidence in its abilities. Fourth, empathy entails the provider’s recognition and understanding of consumer needs. Finally, tangibles are the elements that go along with the service, such as the magazines in a doctor’s waiting room.

LO 13-5 Explain the zone of tolerance.

The area between customers’ desired service and the minimum level of service they will accept is the zone of tolerance. It is the difference between what the customer really wants and what he or she will accept before going elsewhere. Firms can assess their customers’ zone of tolerance by determining the desired and expected level of service for each service dimension, their perceptions of how well the focal service performs and how well a competitive service performs, and the importance of each service quality dimension.

LO 13-6 Identify three service recovery strategies.

In a best-case scenario, the service never fails. But some failures are inevitable and require the firm to make amends to the customer by: (1) listening carefully and involving the customer in the service recovery; (2) finding a fair solution to the problem that compensates the customer for the failure and follows procedures the customer believes are fair; and (3) resolving the problem quickly.

Extended Chapter Outline Adding Value 13.1: Following Marco Polo’s Journey on Your Plate, with Le Petit Chef describes using 3D projective technology to make the ―smallest chef in the world‖ appear on people’s plates. Throughout the show, the chef traces the path taken by Marco Polo, highlighting dishes inspired by that journey. Skullmapping, the creators, ha not stopped with the little chef. It has also developed Cocktailfactory 3D projection that projects onto bar tops. The three featured characters in Coctailfactory provide a virtual experience on a desert island, framed by both a jungle and a volcano.

Adding Value 13.2: From Stretch to High Tech: Lululemon Moves Beyond Leggings to Push the Mirror In-Home Exercise Device focuses on Lululemon testing the waters to build beyond it’s known retail offerings of yoga and exercise-related gear and clothing to offering self-services. The Mirror device streams both live and recorded exercise classes. Purchasing Mirror gives Lululemon a new revenue stream.

XLII.

Services Marketing Differs from Product Marketing (PPT 13-07)

A. Intangible (PPT 13-08) B. Inseparable Production and Consumption (PPT 13-09) C. Heterogeneous (PPT 13-10) D. Perishable (PPT 13-11)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 13-12) 1. What are the four marketing elements that distinguish services from products?

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Answer: The four marketing elements that distinguish services from products are that services are intangible, they have inseparable production and consumption, they are variable, and they are perishable.

2. Why can’t we separate firms into just service or just product sellers?

Answer: Another difference between services and products is that services are produced and consumed at the same time; that is, service and consumption are inseparable. Because service production can’t be separated from consumption, astute service marketers provide opportunities for their customers to get directly involved in the service.

XLIII.

Developing a Service Strategy Using the Seven Ps (PPT-13) A. B. C. D. E. F. G.

XLIV.

Product Price Place Promotion Presentation Personnel Processes

Providing Great Service: The Gaps Model (PPT 13-14)

A. The Knowledge Gap: Understanding Customer Expectations (PPT 13-15 and PPT 13-16) 1. Evaluating Service Quality Using Well-Established Marketing Metrics (PPT 13-17) B. The Standards Gap: Setting Service Standards (PPT 13-21) ethical & societal dilemma 13.1: High-Tech, High Speed Betting: How Regulatory and Technology Changes Might Change the Sports Wagering Market discusses the fact that states now have the right to determine if they want to allow sports betting. With 5G mobile technology. Gamblers will have the ability to wager on the type of play a team will make. Some critics have expressed concerns that the new technology will add to the risk of addictive behaviors. Wireless carriers are determined to make it easy for consumers to adopt the technologies. The delimma: does online betting and its associated technologies increase customer’s satisfaction, or help promote addictive behavior?

C. The Delivery Gap: Delivering Service Quality (PPT 13-22) 1. Empowering Service Providers (PPT 13-23) 2. Support and Incentives for Employees (PPT 13-24) 3. Use of Technology (PPT 13-25) Adding Value 13.3: Take a Virtual ―Test Drive‖ before Booking Your Next Trip discusses how the travel industry is using virtual reality and 360 videos rovide virtual opportunities to let travelers get a sense of what a travel experience will be before booking it.

D. The Communications Gap: Communicating the Service Promise (PPT 13-26) Social & Mobile Marketing 13.1: The Doctor Will See You Now, At Least Virtually details how doctor visits have changed since the COVIS-19 era emerged. Virtual visits have become common place. The companies that provide the digital platforms that

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enable doctors and patients to interact anticipate continuing demand for their services.

Health services have also expanded to offer new possibilities for people to obtain testing.

Through virtual and mobile channels, consumers’ expectations are likely to expand, and providers will need to deliver through those channels to avoid any delivery gaps.

E. Service Quality and Customer Satisfaction and Loyalty (PPT 13-27) Marketing Analytics 13.1: Do Low-Price Shoppers Want Service Too? Aldi Says So, and it’s Delivering it to Them discusses how Aldi is providing delivery services in some market area despite the fact it is a low-cost retailer. Its delivery service has been successful in approximately 75 markets and plans to expand. The company is also testing curb-side pick-up in some stores.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 13-28) 1. Explain the four service gaps identified by the Service Gaps Model.

Answer: The four service gaps are: the knowledge gap, the standards gap, the delivery gap, and the communications gap.

2. List at least two ways to overcome each of the four service gaps.

Answer: To overcome the knowledge gap, firms must understand the customers’ expectations.

To understand those expectations, firms undertake customer research and increase the interaction and communication between managers and employees. To overcome the standards gap, the manager needs to set an example of high service standards and the employees must be thoroughly trained. Delivery gaps can be reduced when employees are empowered to act in the customers’ and the firm’s best interests and supported in their efforts so they can do their jobs effectively. The communications gap can be reduced by managing customer expectations and by promising only what you can deliver, or possibly even a little less.

XLV.

Service Recovery (PPT 13-29)

A. Listening to the Customers and Involving Them in the Service Recovery (PPT 13-30) B. Finding a Fair Solution (PPT 13-31) 1. Distributive Fairness 2. Procedural Fairness C. Resolving Problems Quickly (PPT 13-32)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 13-33) 1. Why is service recovery so important to companies?

Answer: Effective service recovery efforts can significantly increase customer satisfaction, purchase intentions, and positive word of mouth, though customers’ post-recovery satisfaction levels usually fall lower than their satisfaction level prior to the service failure.

2. What can companies do to recover from a service failure?

Answer: Listen to the customer, find a fair solution, and resolve problems quickly.

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Additional Resources

The Broadmoor Hotel example in the text is strongly recommended to allow students to apply the five service quality areas. A good way to do this is to divide the class into 4 or 5 groups and have them tackle the case. Then open classroom discussion by dialogue in comparing/contrasting the responses from each of the groups. Of course, a good understanding of the five service qualities is needed before assigning the case. One good way to do this after discussion/lecture on the topic is to divide the class into groups. Have each group develop a role-play skit on (1) good customer service incorporating the five service quality areas and an alternate skit on (2) bad customer service.

Students have fun with the skit exercise and it often brings out some humorous acting moments.

Instructors will want to assign different topics (popular food chain, hotel, college bookstore, retail chain, etc.) to each group to get them focused on the skit and not thinking up ―what‖ to complete the skit on.

Each group presents the ―good‖ skit first in which the audience (the rest of the class) takes notes and discussion takes place on how the five service qualities were present. The group then performs their ―bad service skit‖ in which discussion follows on how to incorporate good service techniques and improve the service gaps.

Online teaching tip: Instructors can have students complete this same exercise by having students record individual skits/scenarios and uploading them to the online platform. Other learners in the online environment can then post their analysis on the five service qualities and either their suggestions on improving the delivery gaps or write a paper outlining the same concepts (meanwhile the other learners are also preparing their own skits). Instructors may want to pair students on the responses in the online forum. For fun, instructors may want to have the class use online voting to vote on the best ―performance.‖ Slide 9 of the Instructor PowerPoints for this chapter provides a link to a humorous FedEx commercial (http://www.youtube.com/watch?v=Set-r53xvBI). How do students evaluate delivery services? Is prompt delivery the only criteria? If a delivery service has a service failure, how can they recover? Another video in the PowerPoints is a commercial for Trigon, in which a little girl talks about a snotty doctor she recently visited. What did the company learn from the research they used in these ads? (http://www.youtube.com/watch?v=adLqv-gQv7w).

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

Wegmans Services Its Employees and Its Customers Services Marketing Differs from Product Marketing Services Marketing Differs from Product Marketing Understanding Service Gaps Understanding Service Gaps Netflix: Service Excellence 24/7 Sweetwater FedEx: Excellence in Customer Service Transportation Network Services: Uber vs. Lyft vs.

Taxis iSeeit! Video Case: Service Quality How AI Is Revolutionizing Customer Service iSeeit! Video Case: The Service Gaps Model iSeeit! Video Case: Service Recovery Understanding GrubHub’s Service

Case Analysis Click & Drag Matching Click & Drag Matching Video Case Video Case Video Case Case Analysis Video Case Case Analysis Video Case Video Case Case Analysis

Learning Objectives 1301 02 03 04 05 X X X X X X X X X X X X X X X X X X X

X X X X

X X

X

X X

Wegmans Services Its Employees and Its Customers 

Activity Type: Case Analysis



Learning Objectives: 13-01, 13-03



Difficulty: Hard



Activity Summary: This case describes the unique customer service approach of Wegmans, a supermarket chain. Students answer questions applying chapter concepts to the case.

Activity



Introduction: Many grocery stores strive to meet customers' needs. However, for Wegmans, that is not enough. Wegmans works to exceed customers' needs and expectations on a daily basis. In an industry where over three-fourths of consumers do not believe that traditional supermarkets can provide anything different from nontraditional markets such as Walmart, Wegmans has been able to develop a strong and loyal customer base.



Concept Review: Providing good customer service can add value to a firm's products. Even firms that primarily sell tangible goods (such as clothing stores) view service as a way to establish a sustainable competitive advantage. Firms can be pure services-based businesses, or they can use service as a differentiating tool to help them sell physical products. The marketing of services differs from product marketing, however, in four fundamental ways: services are intangible, inseparable, variable, and perishable.

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Follow-Up Activity For another, photo-intensive view of what’s good about Wegmans, show the following in class: http://www.buzzfeed.com/rachelysanders/why-wegmans-is-the-greatest-supermarket-ever You can ask students to note the following:  Which items on the list are related to products, and which to services? The list points out that grocery stores are somewhere in the middle of the product/service continuum. And note that Wegmans is exemplary in both areas. The case talks mostly about services, but the product assortment is equally attractive. 

The Wegmans formula truly creates loyal customers and fantastic word of mouth. Skim the comments—when was the last time you saw such unanimously glowing comments on the Internet?



Note the number of items that have to do with the Tangibles component of service quality.

Services Marketing Differs from Product Marketing



Activity Type: Click & Drag



Learning Objectives: 13-01



Difficulty: Medium



Activity Summary: Students are presented with eight statements about services—four related to a health club and four related to a hotel. They must classify each of them in two ways: (a) by the difference between products and services the statement represents, and (b) whether the statement represents a customer experience or a marketing activity.

Activity



Introduction: Two national firms, the Prestige Hotel and Pro Fitness chains, strive to deliver quality service to their customers. To do so, they address the four core differences between services and goods. In the following scenario, you will be asked to categorize statements about the customer's experiences and the firm's marketing efforts by the core difference they represent.



Concept Review: Economies of developed countries like the United States have become increasingly dependent on services. For example, service industries like retail and information services account for about two-thirds of the U.S. gross domestic product (GDP) and the lion's share of U.S. jobs. The marketing of services differs from goods marketing because of the four fundamental ways in which services differ from goods: They are intangible, inseparable, variable, and perishable.

Follow-Up Activity

In small groups, have students discuss how the four characteristics of services apply to university education. Some ideas: 

Intangibility: Although education has tangible elements, the actual learning process is intangible, and it can sometimes be difficult to assess its long-term value until much later.



Inseparability: The instructor and the student both have important roles in the delivery of educational services. Classroom education is ―more inseparable‖ than asynchronous online classes since the student can, at least up to a point, set his/her own schedule for learning.

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

Perishability: If a class ends up having two or three empty spaces in the fall, those spaces can’t be ―saved‖ until the spring, when the class may have a waiting list.



Variability: Many factors can contribute to variability in the educational experience. Obviously, variability can come from differences in instructors’ approaches, or in differences in mood or alertness of the instructor from one day to the next. An old, broken-down classroom with uncomfortable desks may lead to a different experience from one in a comfortable, bright, attractive room. Different students may experience the same class in different ways because of variation in their knowledge, experience, interest level, and degree of effort.

Services Marketing Differs from Product Marketing – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternative for the Click & Drag Above



Learning Objectives: 13-01



Difficulty: Medium



Activity Summary: Students are presented with eight statements about services—four related to a health club and four related to a hotel. They must classify each of them in two ways: (a) by the difference between products and services the statement represents, and (b) whether the statement represents a customer experience or a marketing activity.

Activity



Introduction: Two national firms, the Prestige Hotel and Pro Fitness chains, strive to deliver quality service to their customers. To do so, they address the four core differences between services and goods. In the following scenario, you will be asked to categorize statements about the customer's experiences and the firm's marketing efforts by the core difference they represent.



Concept Review: Economies of developed countries like the United States have become increasingly dependent on services. For example, service industries like retail and information services account for about two-thirds of the U.S. gross domestic product (GDP) and the lion's share of U.S. jobs. The marketing of services differs from goods marketing because of the four fundamental ways in which services differ from goods: They are intangible, inseparable, variable, and perishable.

Follow-Up Activity

In small groups, have students discuss how the four characteristics of services apply to university education. Some ideas: 

Intangibility: Although education has tangible elements, the actual learning process is intangible, and it can sometimes be difficult to assess its long-term value until much later.



Inseparability: The instructor and the student both have important roles in the delivery of educational services. Classroom education is ―more inseparable‖ than asynchronous online classes since the student can, at least up to a point, set his/her own schedule for learning.



Perishability: If a class ends up having two or three empty spaces in the fall, those spaces can’t be ―saved‖ until the spring, when the class may have a waiting list.



Variability: Many factors can contribute to variability in the educational experience. Obviously, variability can come from differences in instructors’ approaches, or in differences in mood or alertness of the instructor from one day to the next. An old, broken-down classroom with uncomfortable desks may lead to a different experience from one in a comfortable, bright,

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attractive room. Different students may experience the same class in different ways because of variation in their knowledge, experience, interest level, and degree of effort.

Understanding Service Gaps 

Activity Type: Click & Drag



Learning Objectives: 13-02



Difficulty: Medium



Activity Summary: The student is presented with four examples of problems caused by service gaps, and four possible solutions for problems related to gaps, and must classify these items according to the related gap.

Activity



Introduction: Apartment complexes often look for ways to recruit new tenants and retain current tenants. Although apartment complexes offer the tangible benefit of shelter to their tenants, many apartment complexes also offer additional services to tenants to encourage tenants to stay or to support the rent prices. The following scenario identifies the several service gaps of a company that runs an apartment complex as well as solutions for reducing these service gaps.



Concept Review: Customers have certain expectations about how a service should be delivered. A service gap occurs when the delivery of a service fails to meet customer expectations. There are four types of service gaps: knowledge gap, standards gap, delivery gap, and the communications gap. It is important for marketers to identify these gaps and develop strategies for minimizing them.

Follow-Up Activity

Divide the students into groups and have one student in each group briefly describe a service failure s/he experienced (either as the customer or as the provider). Ask the group to decide which gap(s) caused the problem and identify what could have been done differently to prevent the problem. Then share the stories and analysis.

This topic could also be assigned as an individual writing prompt.

Understanding Service Gaps – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate for the Click & Drag Above



Learning Objectives: 13-02



Difficulty: Medium



Activity Summary: The student is presented with four examples of problems caused by service gaps, and four possible solutions for problems related to gaps, and must classify these items according to the related gap.

Activity



Introduction: Apartment complexes often look for ways to recruit new tenants and retain current tenants. Although apartment complexes offer the tangible benefit of shelter to their

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tenants, many apartment complexes also offer additional services to tenants to encourage tenants to stay or to support the rent prices. The following scenario identifies the several service gaps of a company that runs an apartment complex as well as solutions for reducing these service gaps. 

Concept Review: Customers have certain expectations about how a service should be delivered. A service gap occurs when the delivery of a service fails to meet customer expectations. There are four types of service gaps: knowledge gap, standards gap, delivery gap, and the communications gap. It is important for marketers to identify these gaps and develop strategies for minimizing them.

Follow-Up Activity

Divide the students into groups and have one student in each group briefly describe a service failure s/he experienced (either as the customer or as the provider). Ask the group to decide which gap(s) caused the problem and identify what could have been done differently to prevent the problem. Then share the stories and analysis.

This topic could also be assigned as an individual writing prompt.

Netflix: Service Excellence 24/7 

Activity Type: Video Case



Learning Objectives: 13-02



Difficulty: Medium



Activity Summary: This case explains how Netflix delivers quality service to its customers.

After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Netflix is an online movie rental service that distributes more than two million DVDs per day. Customers are offered a variety of experiences as part of the service at the Netflix.com website: They can rate movies, create a personalized movie queue, and watch previews customized to their tastes.



Concept Review: A knowledge gap occurs when marketers don't understand what their customers want. They may not be providing customers enough service or the right kind of service, in which case customers will be disappointed. To understand customer expectations, marketers analyze service quality through comprehensive studies and by interacting with customers.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Class discussion: What new challenges does Netflix face in delivering quality service, now that so much of its business involves streaming video instead of DVD shipments? What gap(s) do these challenges fall into? (For this discussion to work, you need to have some Netflix customers in your class; it’s a popular enough service that you will probably have at least a few.)

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Some possible answers:  The streaming service has fewer movies available than does the DVD service; this is especially true for the newest and oldest titles. A DVD customer who switches to streaming might be disappointed if they were expecting a comparable selection. This is a communication gap, not a knowledge gap: Netflix certainly understands that customers want more movies, but they have contractual issues to work out with movie studios. 

With the DVD service, Netflix’s service quality is dependent on good performance by the US Postal Service. The company has worked closely with the USPS to ensure fast delivery and located distribution centers close to as many customers as possible.

But with streaming, Netflix’s performance depends on every Internet provider that sits between its servers and its customers’ computers, creating major potential for delivery gaps.

(You may also want to discuss the net neutrality debate if you’re up to date on it.)

Sweetwater



Activity Type: Video Case



Learning Objectives: 13-02, 13-03, 13-05



Difficulty: Medium



Activity Summary: This case discusses Sweetwater Sound, an online retailer of audio equipment and music-related products. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Sweetwater Sound was started in 1979 as a professional recording studio.

Now named simply Sweetwater, it has evolved into one of the leading online retailers of recording and audio equipment, musical instruments, and accessories. Central to its success is the company's passion for exceptional customer service. Sweetwater offers free shipping and a free 2-year warranty on all items sold. It hires staff with real-world experience in music and recording and then extensively trains them on delivering exceptional service.

Sweetwater's sales engineers personally follow up on all customer orders. Sweetwater also offers extensive post-sales support. By fully understanding customer service quality, Sweetwater is among the best at actually delivering it.



Concept Review: Today, services account for almost 80% of U.S. GDP. Beyond this economic impact, providing exceptional customer service is a critical component in delivering value to customers. Marketing services has some fundamental differences from marketing tangible goods. To deliver exceptional service, marketers need to understand and reduce various service gaps. They also need to understand the five dimensions of service quality. If things go wrong with the service delivery, prompt and fair service recovery is imperative. In this activity, you will be applying your knowledge of marketing services to the specific case of Sweetwater.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

FedEx: Excellence in Customer Service



Activity Type: Video Case



Learning Objectives: 13-02, 13-03, 13-05



Difficulty: Medium

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Activity Summary: FedEx prides itself on excellent customer service. This video case describes some of its initiatives. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Delivering high-quality service is a top priority at FedEx. The company seeks to offer excellent, consistent service across all communication channels and through the entire customer experience. This philosophy permeates the entire organization. Attention to service quality helps to generate customer loyalty and repeat business, which is one key to FedEx’s success.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

With an operation as large and complex as FedEx’s it is important to design and operate their services efficiently and effectively. Have the students work in groups, with each group choosing one of the gaps in the Gaps Model. If they were managers at FedEx responsible for closing that gap, what problems would they look out for, and what actions would they take?

Transportation Network Services: Uber vs. Lyft vs. Taxis 

Activity Type: Case Analysis



Learning Objectives: 13-01, 13-02, 13-03, 13-04



Difficulty: Medium



Activity Summary: This case discusses how Uber and Lyft operate, how they compare to taxi services, and the challenges they face. Students answer questions applying chapter concepts to the case.

Activity



Introduction: Local transportation options have expanded recently due to the launch of Uber and Lyft; these services seek to address some of the problems with taxi services. The goal of this exercise is to check your understanding of services marketing and management frameworks by applying these frameworks to the services offered by Uber and Lyft. This activity is important because services represent a large portion of our economy, and effective management and marketing of services is crucial to the success of many businesses.

Follow-Up Activity

Ask the class if anyone has used Uber or Lyft, and how the service experienced performed on the five building blocks of service quality (reliability, responsiveness, assurance, empathy, and tangibles). Also, ask if any students have driven for Uber or Lyft, or have considered doing so, and to discuss the challenges of driving for the companies in terms of the gaps model. Although both companies enforce some standards to try to standardize service quality, the rating system is probably the most powerful tool for closing any delivery gap, since drivers know that low ratings will cause them to be dropped by the service. iSeeit! Video Case: Service Quality

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

Activity Type: Video Case



Learning Objectives: 13-01, 13-03



Difficulty: Easy



Activity Summary: This video case explores different aspects of service quality for a coffee shop.

Activity



Introduction: Service quality is difficult to measure given that each customer has a different expectation about a service experience. While the service gap, which is the difference between customers' expectations and the service experienced, can be difficult to analyze, Martha can still focus on ensuring that every customer has a similar quality experience. To do this, she focuses on the tangibles—making sure dirty tables are cleaned and ensuring the reliability of the Coffee Collective’s coffee by training her baristas on how to make each cup of coffee taste the same. Martha makes sure her servers are responsive to the needs of the customer by making sure that they know their jobs well. She also encourages employees to have empathy for their customers so that employees can put themselves in the customer’s shoes. By focusing on these service quality attributes, she hopes to ensure that every customer leaves satisfied and becomes a loyal customer who talks positively about their experiences.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

How AI is Revolutionizing Customer Service 

Activity Type: Case Analysis



Learning Objectives: 13-01, 13-02, 13-03



Difficulty: Medium



Activity Summary: This case discusses how AI is used in marketing. It helps students understand how marketing services differs from marketing products.

Activity



Introduction: Economies of developed countries, such as the United States, have become increasingly dependent on services. Services marketing differs from product marketing because of four fundamental differences that managers must take into account. The majority of firms must understand these differences in marketing services because most offerings contain both a good and a service component. iSeeit! Video Case: The Service Gaps Model



Activity Type: Video Case



Learning Objectives: 13-02



Difficulty: Medium



Activity Summary: This video case demonstrates how a firm applied the service gaps model to identify how it could improve the quality of its service.

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Activity 

Introduction: From restaurants to cell phone providers to grocery stores, think about the businesses you go back to repeatedly versus the ones you tried once and never went back to again. The reason is almost always service quality. This activity is important because firms need to better understand the differences between customers’ perceptions and customers’ initial expectations of a service outcome. To evaluate service quality, firms will apply a framework called the Service Gaps Model. This model evaluates gaps in the following service areas: knowledge, design and standards, delivery, and communication.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Service Recovery



Activity Type: Video Case



Learning Objectives: 13-02; 13-05



Difficulty: Medium



Activity Summary: This video case demonstrates the different strategies a firm can employ to quickly and effectively respond to a service failure.

Activity 

Introduction: When the perceived quality of a service encounter is negative, it is referred to as a service failure. However, failure doesn’t always mean that something broke during the delivery process; it just means that the service experience did not go according to plan. This activity is important because when a firm experiences a service failure, it must respond quickly to improve a customer’s level of satisfaction through service recovery.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Understanding GrubHub’s Service



Activity Type: Case Analysis



Learning Objectives: 13-02, 13-03



Difficulty: Medium



Activity Summary: Students read the case about how GrubHub offers its services and then answer the questions that follow.

Activity



Introduction: Customers have certain expectations about how a service should be delivered. When the delivery of service fails to meet those expectations, a service gap results. The service gaps model is designed to encourage the systematic examination of all aspects of the service delivery process and prescribe the steps needed to develop an optimal service strategy.

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Concept: This activity is important because firms must recognize that because of service intangibility, service quality, or customers’ perceptions of how well a service meets or exceeds their expectations, it is often difficult for customers to evaluate services. The goal of this exercise is to demonstrate your understanding of the service gaps model and how companies deliver service quality.

chapter 14 pricing concepts for capturing value Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview This chapter introduces students to the economic influence of setting prices. Students often find these concepts difficult to grasp. Also introduced are the five Cs of pricing, company objectives and strategy implications, and break-even point calculations.

Brief Chapter Outline The Five Cs of Pricing Pricing Strategies Legal and Ethical Aspects of Pricing

Learning Objectives LO14-1 List the four pricing orientations.

A profit-oriented pricing strategy focuses on maximizing, or at least reaching a target, profit for the company. A sales orientation instead sets prices with the goal of increasing sales levels. With a competitor-oriented pricing strategy, a firm sets its prices according to what its competitors do. Finally, a customer-oriented strategy determines consumers’ perceptions of value and prices accordingly.

LO14-2 Explain the relationship between price and quantity sold.

Generally, when prices go up, quantity sold goes down. Sometimes, however—particularly with prestige products and services—demand actually increases with price.

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LO14-3 Explain price elasticity.

Changes in price generally affect demand; price elasticity measures the extent of this effect. It is based on the percentage change in quantity divided by the percentage change in price. Depending on the resulting value, a market offering can be identified as elastic, such that the market is very price sensitive, or inelastic, in which case the market cares little about the price.

LO14-4 Describe how to calculate a product’s break-even point.

Because the break-even point occurs when the units sold generate just enough profit to cover the total costs of producing those units, it requires knowledge of the fixed cost, total cost, and total revenue curves. When these curves intersect, the marketer has found the break-even point.

LO14-5 Indicate the four types of price competitive levels.

In a monopoly setting, one firm controls the market and sets the price. In an oligopolistic competitive market, a few firms dominate and tend to set prices according to a competitor-oriented strategy.

Monopolistic competition occurs when there are many firms competing for customers in a given market but their products are differentiated. Finally, pure competition means that consumers likely regard the products offered by different companies as basic substitutes, so the firms must work hard to achieve the lowest price point, limited by the laws of supply and demand.

LO14-6

Describe the difference between an everyday low pricing (EDLP) strategy and a high/low strategy.

An everyday low pricing strategy is maintained when a product’s price stays relatively constant at a level that is slightly lower than the regular price from competitors using a high/low strategy, and is less frequently discounted. Customers enjoy an everyday low pricing strategy because they know that the price will always be about the same and will be a better price than the competition’s. High/low pricing strategy starts out with a product at one (higher) price, and then discounts the product. This strategy first attracts a less price-sensitive customer who pays the regular price, and then a very price-sensitive customer who pays the low price.

LO14-7

Explain the difference between a price skimming and a market penetration pricing strategy.

When firms use a price skimming strategy, the product or service must be perceived as breaking new ground, or customers will not pay more than what they pay for other products. Firms use price skimming to signal high quality, limit demand, recoup their investment quickly, and/or test people’s price sensitivity.

Moreover, it is easier to price high initially and then lower the price than vice versa. Market penetration, in contrast, helps firms build sales and market share quickly, which may discourage other firms from entering the market. Building demand quickly also typically results in lowered costs as the firm gains experience making the product or delivering the service.

LO14-8

List the pricing practices that are illegal or unethical.

There are almost as many ways to get into trouble by setting or changing a price as there are pricing strategies and tactics. Some common legal issues pertain to advertising deceptive prices. Specifically, if a firm compares a reduced price with a ―regular‖ or reference price, it must actually have sold that product or service at the regular price. Bait and switch is another form of deceptive price advertising, where sellers advertise items for a very low price without the intent to really sell any at that price. Collusion among firms to fix prices is always illegal.

Extended Chapter Outline XLVI.

The Five Cs of Pricing (PPT 14-04)

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Company Objectives (PPT 14-05) 1. Profit Orientation (PPT 14-06) 2. Sales Orientation (PPT 14-07) Adding Value 14.1: The Secret to Nissan’s Success: Fleet Sales discusses Nissan’s quest to account for 10% of the U.S. auto market. The company plans to accomplish this through fleet sales to rental companies, which come with a much lower margin. It asserts that the consistent volume of selling to rental companies will make up for the lost margins.

Adding Value 14.2: A Radical Pricing Departure by Apple That Represents Its Adherence to the Same Strategy discusses Apple’s prestigious pricing strategy, which has supported its innovation and appealing image. COVID-19 brought sales declines, which led to the company changing its pricing strategy. Three strategic decisions included (1) not producing a new model of AirPods for 2020, (2) new models of iPhones no longer come with Earpods, and (3) it cut the price on AirPods. Apple is responding creatively, quickly, and competitively to new market conditions, with an innovative approach that ensures its continued competitive advantage and reinforces its positioning.

3. Competitor Orientation (PPT 14-08) 4. Customer Orientation (PPT 14-09)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 14-10) 1. What are the five Cs of pricing?

Answer: The five Cs of pricing are Company Objectives, Customers, Costs, Competition, and Channel Members.

2. Identify the four types of company objectives.

Answer: The four types of company objectives are Profit Orientation, Sales Orientation, Competitor Orientation, and Customer Orientation.

NOTE: The 5 below is a continuation of the 5 Cs of Pricing, not the Progress Check above.

5. Customers (PPT 14-11) 6. Demand Curves and Pricing (PPT 14-12 and PPT 14-13) 7. Price Elasticity of Demand (PPT 14-14)

ethical & societal dilemma 14.1: Competitive Pricing Across Channels: Target’s Transparency, or Lack Thereof provides and over view of an investigative reporter’s study comparing Target’s pricing between online, app, and in-store offerings. To compete with Amazon, prices were cheaper online. The app offered higher prices, which were even higher when he was closer to a store. Highest prices were found in-store.

This dynamic pricing strategy is likely to continue; however, the company plans to provide more information about how those prices are determined.

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8. Factors Influencing Price Elasticity of Demand (PPT 14-16) Income Effect (PPT 14-17) Substitution Effect (PPT 14-18) Cross-Price Elasticity (PPT 14-19)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 14-20) 1. What is the difference between elastic demand and inelastic demand?

Answer: Elastic demand is when relatively small changes in price will generate fairly large changes in the quantity demanded, so if a firm is trying to increase its sales, it can do so by lowering prices. The market for a product is generally viewed as inelastic when lowering prices will not appreciably increase demand; customers just don’t notice or care about the lower price.

2. What are the factors influencing price elasticity?

Answer: Price elasticity is influenced by income effect, substitution effect, and cross-price elasticity.

B.

Costs (PPT 14-21) 1. Variable Costs 2. Fixed Costs 3. Total Cost

C.

Break-Even Analysis and Decision Making (PPT 14-22 and PPT 14-23)

D.

Markup and Target Return Pricing (PPT 14-24)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 14-25) 1. What is the difference between fixed costs and variable costs?

Answer: Fixed costs are those costs that remain essentially at the same level, regardless of any changes in the volume of production. While variable costs are those costs, primarily labor and materials, that vary with production volume.

2. How does one calculate the break-even point in units?

Answer: To determine the break-even point in units mathematically, we must introduce one more variable, the contribution per unit, which is the price less the variable cost per unit. Therefore, the break-even point becomes: Break-even point (units) = fixed costs/contribution per unit.

E.

Competition (PPT 14-26)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 14-27) 1. What are the four different types of competitive environments?

Answer: There are four levels of competition—monopoly, oligopolistic competition, monopolistic competition, and pure competition.

F.

Channel Members (PPT 14-28)

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Pricing Strategies (PPT 14-29)

A.

Everyday Low Pricing (EDLP) (PPT 14-30)

B.

High/Low Pricing (PPT 14-31)

C.

New Product Pricing Strategies (PPT 14-32) 1. Penetration Pricing 2. Price Skimming

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 14-33) 1

Explain the difference between EDLP and high/low pricing.

Answer: With an everyday low pricing (EDLP) strategy, companies stress the continuity of their retail prices at a level somewhere between the regular, nonsale price and the deep-discount sale prices their competitors may offer. By reducing consumers’ search costs, EDLP adds value; consumers can spend less of their valuable time comparing prices, including sale prices, at different stores. Alternatively, some retailers prefer a high/low pricing strategy, which relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases. In the end, which consumers prefer which strategy depends on how those consumers evaluate prices and quality. Some prefer not to expend the time to find the lowest price and favor EDLP as an efficient way to get low, even if not the very lowest, prices. Alternatively, other consumers may relish the challenge of getting the lowest price or be so price sensitive that they are willing to expend the time and effort to seek out the lowest price every time.

2

What pricing strategies should be considered when introducing a new product?

Answer: Some new product pricing strategies include price skimming, which is offering a new product at a higher price to those who are willing to pay a premium to have a product first; and market penetration pricing, which is offering a product at a low price for its introduction to the market.

XLVIII.

Legal and Ethical Aspects of Pricing (PPT 14-34)

A.

Deceptive or Illegal Price Advertising (PPT 14-35) 1. Deceptive Reference Prices 2. Loss-Leader Pricing 3. Bait and Switch

B.

Predatory Pricing (PPT 14-36)

C.

Price Discrimination (PPT 14-37)

D.

Price Fixing (PPT 14-38) 1. Gray Market Pricing (PPT 14-39) ethical & societal Dilemma 14.2: New Advertising Information about Prescription Drugs: Their Prices! discusses the type of information included in pharmaceutical.

Advertisement and what is missing, namely pricing. The government is moving toward

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rectifying the situation, but one company, Johnson & Johnson, is leading the way by providing pricing for Xarelto in its ads. Other companies in the industry balk at providing prices for several reasons: (1) consumers rarely pay list prices and (2) providing the list price could have negative effects on consumer welfare. One benefit of disclosing prices is that it might cause pressure from consumer advocate groups and members of Congress to lower prices. Consumers who are aware might also put pressure on pharmaceutical companies;

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 14-40) 1

What common pricing practices are considered to be illegal or unethical?

Answer: Some common illegal or unethical pricing practices include deceptive reference prices, loss-leader pricing, bait and switch, predatory pricing, price discrimination, and price fixing.

Additional Resources The five Cs of pricing are critical for students to understand. Students often don’t realize that other factors other than cost factors influence the pricing strategy. Reviewing the five Cs of pricing and having students come up with examples will help to enhance understanding of these concepts.

It is important for students to also understand that there may be other objectives other than maximizing profit margin. Amazon.com in its first years purposely used a competitor–oriented approach and sacrificed profit loss. The company was ridiculed by other dot-coms until Amazon.com revealed their strategy: To have households identify with the brand name. By pricing products and shipping low, it would increase usage of the site. Thus, the strategy was to sacrifice profits to have Amazon.com become the market leader and gain household brand name recognition for online purchases.

The break-even point graph is often difficult for students to understand unless they have had an economics course. Instructors will need to weigh the importance of teaching the graph, the BEP formula, or both. Some time will need to be spent by the instructor explaining the graph. It is wise to give students a BEP problem such as the one listed in the application problems and have them graph it if the instructor chooses to also teach the dynamics of the graph.

Should students need additional help in pricing, turn to the testing materials, select some multiple choice BEP and pricing concept (equilibrium, profit, loss, fixed cost, variable costs) types of problems, and create a worksheet where students can work on it either independently or in small groups in the class. Often, students can help each other in understanding these concepts and small groups are recommended.

Online Tip: Have students develop a marketing-related word problem using BEP analysis. Have them post it to the discussion board. Have other learners solve the problem. Have the student that created the word problem come back and give feedback. You may want to pair students up as partners in the online environment.

Slide 17 in the Instructor’s PowerPoints for this chapter includes a link to an ad for Walmart that stresses good service in the holiday season, but as always, ends their ad with messaging related to their low-price offerings AND the importance of low price (live better) (https://www.youtube.com/watch?v=H3TZ8rhpVQ). Is it possible to offer good service and low prices?

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

Taco Bell: Pricing for Value The 5 Cs of Pricing The 5 Cs of Pricing U.S. Cellular: Matching Price with Perceived Value Planet Fitness: Pricing for Success Pricing: SBC Levels of Competition Deceptive or Illegal Pricing Deceptive or Illegal Pricing iSeeit! Video Case: Accurately Determining Costs iSeeit! Video Case: Capturing Value through Pricing Concept iSeeit! Video Case: Legal and Ethical Issues in Pricing T-Mobile’s Pricing Strategy Is A Game Changer Price Elasticity of Demand: Chippers Cookie Bakery Price Elasticity of Demand: Naturally Good Organics Price Elasticity of Demand: AWAKE Marketing Analytics Toolkit--BreakEven Analysis: Duke’s House of Chowder Marketing Analytics Toolkit--BreakEven Analysis: Majestic Pool Builders

Video Case Click & Drag Matching Video Case Case Analysis Video Case Matching Click & Drag Matching

01 X X X X

02 X

X

X X

X

X

X X X

X

X X X X

X

X

X

X X

Video Case Case Analysis

08

X

Video Case Video Case

Learning Objectives 1403 04 05 06 07 X

X

X

X

X

X

X

X

Worksheet

X

X

Worksheet

X

X

Worksheet

X

X

Worksheet

X

Worksheet

X

Taco Bell: Pricing for Value 

Activity Type: Video Case



Learning Objectives: 14-01, 14-02, 14-05



Difficulty: Medium



Activity Summary: Explores Taco Bell’s value-based pricing initiatives. After the video ends, students are asked questions about the video and related course concepts.

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Activity 

Introduction: Offering quality food at a great price is nothing new to Taco Bell. Founded in 1962, Taco Bell pioneered value-based pricing with its three-tiered menu, offering food choices for 59, 79, and 99 cents. Taco Bell's director of marketing discusses how value plays a key role in the firm's pricing strategies.



Concept Review: Of the four Ps—product, price, place, and promotion—price is the most challenging to manage, partly because it is often the least understood. Historically, managers have treated price as an afterthought to their marketing strategies, matching competitors' prices or, worse yet, by adding up their costs and tacking on a desired profit to set the sales price. Prices were rarely changed except in response to radical shifts in market conditions. Even today, pricing decisions are often relegated to standard rules of thumb that fail to reflect our current understanding of the role of price in the marketing mix.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Although the specific price points have changed, Taco Bell still pursues a value menu strategy today (called the ―Why Pay More?‖ menu), offering individual items from 89 cents to $1.59, and ―Why Pay More Deals‖ for $2.49 (prices as of spring 2014). Taco Bell has also tested a $1 ―Cravings‖ menu in some stores.

McDonald’s, though, has chosen to go in a different direction. Assign the following article, discussing a higher-priced value menu strategy: http://www.qsrmagazine.com/news/higher-price-point-value-menu-could-be-win As a class discussion or writing prompt, ask about the issue of price-sensitive customers: 

Why might $1 (and less) value menus have been more important in 2009–2010 than they are today?

(Consider the economy then and now)



Are there differences in the Taco Bell and McDonald’s target markets that might also lead to differences in the strategy?



Comment on this quote from the article: Kerr says catering to the most price-sensitive guests can be both difficult and dangerous for a brand.

“At some point, operators need to ask themselves if a dollar is realistic,” she says. “Consumers realize that prices increase, and holding on to the dollar market is not good business. It just doesn’t make sense.”

The Five Cs of Pricing



Activity Type: Click & Drag



Learning Objectives: 14-01



Difficulty: Medium



Activity Summary: The student is asked to classify four companies’ pricing strategies according to the pricing orientation represented.

Activity

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

Introduction: Different firms embrace different goals. Consequently, these goals affect the pricing strategy. Pricing of a company's products and services should support and allow the firm to reach its overall goals. In this activity, you will be asked to differentiate among pricing orientations.



Concept Review: Each firm embraces objectives that management believes will make the firm more successful. These specific objectives usually reflect how the firm intends to grow. Do managers want it to grow by increasing profits, increasing sales, decreasing competition, or building customer satisfaction? These questions are answered by a firm's choice of pricing strategy.

Follow-Up Activity

Small group exercise:  Have the students think of a futuristic, revolutionary product (a transporter is one good possibility). 

Ask them to design a short survey to find out how much customers are willing to pay for a ride in a transporter (or to purchase the futuristic product of their choice).



How much confidence would they have in the answers they got? Why?

A common conclusion is likely to be that customer-oriented pricing is a difficult strategy to employ for a revolutionary product like this, because customers have neither the experience nor (in many cases) a good reference point to use to determine the value provided. One thing the marketer can do that may help is to suggest a reference by comparing the new product to something more familiar to the consumer that serves a similar purpose. For example, in the case of the transporter, one comparison would be to air travel, emphasizing the advantages of instant transportation that add value.

The Five Cs of Pricing – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate for the Click & Drag Above



Learning Objectives: 14-01



Difficulty: Medium



Activity Summary: The student is asked to classify four companies’ pricing strategies according to the pricing orientation represented.

Activity



Introduction: Different firms embrace different goals. Consequently, these goals affect the pricing strategy. Pricing of a company's products and services should support and allow the firm to reach its overall goals. In this activity, you will be asked to differentiate among pricing orientations.



Concept Review: Each firm embraces objectives that management believes will make the firm more successful. These specific objectives usually reflect how the firm intends to grow. Do managers want it to grow by increasing profits, increasing sales, decreasing competition, or building customer satisfaction? These questions are answered by a firm's choice of pricing strategy.

Follow-Up Activity

Small group exercise:  Have the students think of a futuristic, revolutionary product (a transporter is one good possibility). 

Ask them to design a short survey to find out how much customers are willing to pay for a ride in a transporter (or to purchase the futuristic product of their choice).



How much confidence would they have in the answers they got? Why?

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A common conclusion is likely to be that customer-oriented pricing is a difficult strategy to employ for a revolutionary product like this, because customers have neither the experience nor (in many cases) a good reference point to use to determine the value provided. One thing the marketer can do that may help is to suggest a reference by comparing the new product to something more familiar to the consumer that serves a similar purpose. For example, in the case of the transporter, one comparison would be to air travel, emphasizing the advantages of instant transportation that add value.

U.S. Cellular: Matching Price with Perceived Value 

Activity Type: Video Case



Learning Objectives: 14-01, 14-02, 14-03, 14-05



Difficulty: Medium



Activity Summary: This case discusses pricing strategy at U.S. Cellular. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: U.S. Cellular is a mid-range service provider in the highly competitive cell phone market. In this market, Verizon Wireless and AT&T are the major players. To compete, smaller firms like U.S. Cellular must find ways to deliver greater value to their customers. However, price has a major impact on value perceptions. In turn, value perceptions influence pricing. In 2010, U.S. Cellular created a pricing strategy known as The Belief Plan, but it confused customers. They perceived that the price was set too high for the value it offered. This forced U.S. Cellular to rethink its strategy.

Watch the following video to examine the many factors U.S. Cellular needs to consider when setting price.



Concept Review: Setting price is a formidable challenge for marketers. Knowing how customers perceive value in the product or service is only one component of the five Cs of pricing. A firm's overall pricing orientation will depend on the company objectives. Marketers must consider competitors and their strategies. Markets are characterized by four types of competition: monopoly, oligopoly, pure competition, and monopolistic competition. Costs are a major element in setting price.

Channel members must also be accounted for. Prices change, and when changing prices, marketers must be aware of the price elasticity of demand for their particular product or service. When price is set correctly, firms reap substantial rewards. But when the price is wrong, customer response will be swift and severe.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities

Discussion: Companies need to be careful when adopting innovative pricing plans; as the video case shows, customers can become confused and be unable to see the value being offered.

One fairly recent example of a company that made this mistake is J.C. Penney. The first part of this article offers a good summary of the pricing plan and consumers’ response: http://www.forbes.com/sites/lauraheller/2013/02/08/mission-accomplished-jcpenney-was-the-mostinteresting-retailer-of-2012/ It is a cautionary tale worth sharing.

Planet Fitness: Pricing for Success

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

Activity Type: Case Analysis



Learning Objectives: 14-01, 14-04, 14-05



Difficulty: Medium



Activity Summary: This case discusses the pricing approaches that have helped Planet Fitness to achieve success. Students are asked questions applying chapter concepts to the case.

th

Activity 

Introduction: Planet Fitness has adopted an unusual pricing strategy in the fitness market, setting prices well below those of its major competitors. The goal of this activity is to demonstrate a creative use of pricing to target a market segment that is not well served by competitors. This activity is important because, according to marketing managers, pricing is one of the most difficult activities to perform well, and it is essential to understand the factors that must be considered when choosing a pricing strategy.

Pricing: SBC



Activity Type: Video Case



Learning Objectives: 14-01, 14-03, 14-04



Difficulty: Hard



Activity Summary: This video explains SBC’s pricing strategy. Although the company provides products at a variety of price points, pricing focuses primarily on providing value through quality and innovative features. After the video, students answer questions asking them to apply chapter concepts to SBC’s strategy.

Activity



Introduction: Specialized Bicycle Components, Inc. (SBC) caters to the experienced cyclist. In this video, SBC’s brand manager explains the company’s segmentation and pricing strategy. This activity is important because pricing is one of the most challenging tasks that marketers need to perform. An understanding of the issues and options when pricing a product is crucial. The goal of this exercise is to test your understanding of pricing issues and considerations by applying chapter frameworks to the SBC example.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Levels of Competition 

Activity Type: Matching



Learning Objectives: 14-05



Difficulty: Easy



Activity Summary: The student is asked to classify four companies’ levels of competition according to the competitive position described.

Activity

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Introduction: Four levels of competition exist—monopoly, oligopolistic competition, monopolistic competition, and pure competition. Each has its own set of pricing challenges and opportunities. This activity demonstrates an understanding of the different levels of competition.

Deceptive or Illegal Pricing 

Activity Type: Click and Drag



Learning Objectives: 14-08



Difficulty: Hard



Activity Summary: Students are asked to classify five deceptive or illegal pricing actions according to the category it represents.

Activity



Introduction: Firms use many pricing tactics to try to improve their market share. Some are perfectly legitimate and can be considered fair pricing practices, whereas others are deceptive or even illegal.

For this activity, you will need to review the types of practices associated with illegal and unethical pricing strategies.



Concept Review: Prices tend to fluctuate naturally and respond to varying market conditions.

Although we rarely see firms attempting to control the market in terms of product quality or advertising, they often engage in pricing practices that can unfairly reduce competition or harm consumers directly through fraud and deception. Laws and regulations at both the federal and state levels attempt to prevent unfair pricing practices, but some are poorly enforced, and others are difficult to prove.

Follow-Up Activity

Role playing: In pairs or small groups, students develop a short role-playing vignette demonstrating the unethical pricing practices listed in the activity. The vignette can show a salesperson interacting with a potential customer, a discussion among employees of the ethics-violating company, or a discussion between officials from two or more companies that compete with each other. Have the groups perform their vignettes for the class, who must guess which ethics violation is being dramatized. To make sure all of the ethics violations are covered, you could give each group a sheet of paper identifying their assigned violation.

Deceptive or Illegal Pricing – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to the Drag and Drop Above



Learning Objectives: 15-06



Difficulty: Medium



Activity Summary: Students are asked to classify five deceptive or illegal pricing actions according to the category it represents.

Activity



Introduction: Firms use many pricing tactics to try to improve their market share. Some are perfectly legitimate and can be considered fair pricing practices, whereas others are deceptive or even illegal.

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For this activity, you will need to review the types of practices associated with illegal and unethical pricing strategies. 

Concept Review: Prices tend to fluctuate naturally and respond to varying market conditions.

Although we rarely see firms attempting to control the market in terms of product quality or advertising, they often engage in pricing practices that can unfairly reduce competition or harm consumers directly through fraud and deception. Laws and regulations at both the federal and state levels attempt to prevent unfair pricing practices, but some are poorly enforced, and others are difficult to prove.

Follow-Up Activity

Role playing: In pairs or small groups, students develop a short role-playing vignette demonstrating the unethical pricing practices listed in the activity. The vignette can show a salesperson interacting with a potential customer, a discussion among employees of the ethics-violating company, or a discussion between officials from two or more companies that compete with each other. Have the groups perform their vignettes for the class, who must guess which ethics violation is being dramatized. To make sure all of the ethics violations are covered, you could give each group a sheet of paper identifying their assigned violation.

iSeeit! Video Case: Accurately Determining Costs 

Activity Type: Video Case



Learning Objectives: 14-03, 14-04



Difficulty: Medium



Activity Summary: This video demonstrates the importance of differentiating the fixed and variable costs of doing business.

Activity



Introduction: A marketer should understand all of the costs associated with its product offering, whether the product is a good, service, idea, or some combination of these. Costs include the money, time, and effort expended to produce and market a product. This activity is important because firms and marketers must understand that not all costs are measured in dollars; many real costs, such as the cost of reallocating human resources to complete a project or the time required to bring a new product to market, may be very high yet hard to quantify in dollars.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Capturing Value through Pricing Concept



Activity Type: Video Case



Learning Objectives: 14-01, 14-02, 14-03, 14-05



Difficulty: Medium



Activity Summary: This video demonstrates how a firm can capture value through effective pricing strategies.

Activity

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

Introduction: Many factors influence how a firm sets prices. This activity is important because pricing is one of the most important strategic decisions a firm faces—it reflects the value the product delivers to consumers as well as the value it captures for the firm.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Legal and Ethical Issues in Pricing



Activity Type: Video Case



Learning Objectives: 14-08



Difficulty: Medium



Activity Summary: This video explains how unethical pricing practices can impact a business in the real world.

Activity



Introduction: Pricing is one of the most watched and regulated marketing activities because it directly impacts the financial viability of both organizations and individuals. This activity is important because many legal and ethical issues impact pricing decisions, including pricing discrimination, price fixing, predatory pricing, and deceptive pricing.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

T-Mobile’s Pricing Strategy Is A Game Changer



Activity Type: Case Study



Learning Objectives: 14-01, 14-02, 14-03, 14-05



Difficulty: Medium



Activity Summary: Students read the case about how T-Mobile implements its pricing strategy and then answer questions that follow.

Activity



Introduction: Although knowing how consumers arrive at their perceptions of value is critical to developing successful pricing strategies, sellers also must consider other factors, which is why developing a good pricing strategy is such a formidable challenge to all firms. This activity is important because consumers generally believe that price is one of the most important factors in their purchase decisions.



Concept: The goal of this activity is to demonstrate your understanding of what ―price‖ is as a marketing concept, why it is important, how marketers set pricing objectives, and how various factors influence price setting Price Elasticity of Demand: AWAKE 

Activity Type: Worksheet



Learning Objectives: 14-03



Difficulty: Hard

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th

Activity Summary: Students evaluate price elasticity of demand.

Activity



Introduction: Price Elasticity of Demand measurers how changed in a price affect the quantity of the product demanded. Specifically, it is the ratio of the percentage change in quantity demanded to the percentage change in price. In order to understand how to plan a successful pricing program, marketers must understand how elastic or inelastic the consumers are to changes in price. In other words, to what extent will a price increase or decrease result in changes in demand? For some products a price increase may in fact result in a drop in revenue if the quantity demanded declines. However, for that same product a price decrease may actually result in a revenue increase if the quantity demanded rises significantly.

% Change in Quantity Demanded Price elasticity of Demand = --------------------------------------------------------------------% Change in Price To calculate Percentage Change in Quantity Demanded: Quantity Demanded at T2 − Quantity Demanded at T1 % Change in Quantity Demanded = --------------------------------------------------------------------------------- × 100 Quantity Demanded at T1 To calculate Percentage Change in Price: Price at T2 − Price at T1 % Change in Price = ------------------------------------------------------------------------------ × 100 Price at T1 Remember that markets are elastic if the Price Elasticity of Demand is less than -1. Thus, an elasticity of -5 would indicate that a 1% decrease in price produces a 5% increase in quantity sold. But it is important to remember that markets are not always elastic some marketing are inelastic. 

Concept Review: In an inelastic demand market, price elasticity of demand is greater than -1. That means that if price elasticity of demand is -.50 then a 1% increase in price results in a ½ percent decrease in the quantity demanded. Inelastic demand markets allow marketers to raise price with fewer customers leaving the market than in elastic demand markets. However, a price decrease will not entice large groups of buyers into the market as they might in an elastic demand market.

Price Elasticity of Demand: Chippers Cookie Bakery 

Activity Type: Worksheet



Learning Objectives: 14-03



Difficulty: Hard



Activity Summary: Students evaluate price elasticity of demand.

Activity



Introduction: Price Elasticity of Demand measurers how changed in a price affect the quantity of the product demanded. Specifically, it is the ratio of the percentage change in quantity demanded to the percentage change in price. In order to understand how to plan a successful pricing program, marketers must understand how elastic or inelastic the consumers are to changes in price. In other

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words, to what extent will a price increase or decrease result in changes in demand? For some products a price increase may in fact result in a drop in revenue if the quantity demanded declines. However, for that same product a price decrease may actually result in a revenue increase if the quantity demanded rises significantly.

% Change in Quantity Demanded Price elasticity of Demand = --------------------------------------------------------------------% Change in Price To calculate Percentage Change in Quantity Demanded: Quantity Demanded at T2 − Quantity Demanded at T1 % Change in Quantity Demanded = --------------------------------------------------------------------------------- × 100 Quantity Demanded at T1 To calculate Percentage Change in Price: Price at T2 − Price at T1 % Change in Price = ------------------------------------------------------------------------------ × 100 Price at T1 Remember that markets are elastic if the Price Elasticity of Demand is less than -1. Thus, an elasticity of -5 would indicate that a 1% decrease in price produces a 5% increase in quantity sold. But it is important to remember that markets are not always elastic some marketing are inelastic. 

Concept Review: In an inelastic demand market, price elasticity of demand is greater than -1. That means that if price elasticity of demand is -.50 then a 1% increase in price results in a ½ percent decrease in the quantity demanded. Inelastic demand markets allow marketers to raise price with fewer customers leaving the market than in elastic demand markets. However, a price decrease will not entice large groups of buyers into the market as they might in an elastic demand market.

Price Elasticity of Demand: Naturally Good Organics 

Activity Type: Worksheet



Learning Objectives: 14-03



Difficulty: Hard



Activity Summary: Students evaluate price elasticity of demand.

Activity



Introduction: Price Elasticity of Demand measurers how changed in a price affect the quantity of the product demanded. Specifically, it is the ratio of the percentage change in quantity demanded to the percentage change in price. In order to understand how to plan a successful pricing program, marketers must understand how elastic or inelastic the consumers are to changes in price. In other words, to what extent will a price increase or decrease result in changes in demand? For some products a price increase may in fact result in a drop in revenue if the quantity demanded declines. However, for that same product a price decrease may actually result in a revenue increase if the quantity demanded rises significantly.

% Change in Quantity Demanded Price elasticity of Demand = --------------------------------------------------------------------% Change in Price ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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To calculate Percentage Change in Quantity Demanded: Quantity Demanded at T2 − Quantity Demanded at T1 % Change in Quantity Demanded = --------------------------------------------------------------------------------- × 100 Quantity Demanded at T1 To calculate Percentage Change in Price: Price at T2 − Price at T1 % Change in Price = ------------------------------------------------------------------------------ × 100 Price at T1 Remember that markets are elastic if the Price Elasticity of Demand is less than -1. Thus, an elasticity of -5 would indicate that a 1% decrease in price produces a 5% increase in quantity sold. But it is important to remember that markets are not always elastic some marketing are inelastic. 

Concept Review: In an inelastic demand market, price elasticity of demand is greater than -1. That means that if price elasticity of demand is -.50 then a 1% increase in price results in a ½ percent decrease in the quantity demanded. Inelastic demand markets allow marketers to raise price with fewer customers leaving the market than in elastic demand markets. However, a price decrease will not entice large groups of buyers into the market as they might in an elastic demand market.

Price Elasticity of Demand: AWAKE 

Activity Type: Worksheet



Learning Objectives: 14-03



Difficulty: Hard



Activity Summary: Students evaluate price elasticity of demand.

Activity



Introduction: Price Elasticity of Demand measurers how changed in a price affect the quantity of the product demanded. Specifically, it is the ratio of the percentage change in quantity demanded to the percentage change in price. In order to understand how to plan a successful pricing program, marketers must understand how elastic or inelastic the consumers are to changes in price. In other words, to what extent will a price increase or decrease result in changes in demand? For some products a price increase may in fact result in a drop in revenue if the quantity demanded declines. However, for that same product a price decrease may actually result in a revenue increase if the quantity demanded rises significantly.

% Change in Quantity Demanded Price elasticity of Demand = --------------------------------------------------------------------% Change in Price To calculate Percentage Change in Quantity Demanded: Quantity Demanded at T2 − Quantity Demanded at T1 % Change in Quantity Demanded = --------------------------------------------------------------------------------- × 100 Quantity Demanded at T1 To calculate Percentage Change in Price:

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Price at T2 − Price at T1 % Change in Price = ------------------------------------------------------------------------------ × 100 Price at T1 Remember that markets are elastic if the Price Elasticity of Demand is less than -1. Thus, an elasticity of -5 would indicate that a 1% decrease in price produces a 5% increase in quantity sold. But it is important to remember that markets are not always elastic some marketing are inelastic. 

Concept Review: In an inelastic demand market, price elasticity of demand is greater than -1. That means that if price elasticity of demand is -.50 then a 1% increase in price results in a ½ percent decrease in the quantity demanded. Inelastic demand markets allow marketers to raise price with fewer customers leaving the market than in elastic demand markets. However, a price decrease will not entice large groups of buyers into the market as they might in an elastic demand market.

Marketing Analytics Toolkit--Break-Even Analysis: Duke’s House of Chowder 

Activity Type: Worksheet



Learning Objectives: 14-04



Difficulty: Medium



Activity Summary: Students perform a break-even analysis.

Activity



Introduction: Breakeven Analysis is a useful technique that enables managers to examine the relationships among cost, price, revenue, and profit over different production and sales levels.

Central to this analysis the determination of break-even point or the point at which the number of units sold generates just enough revenue to equal the total costs. At this point, profits are zero.

To determine the break-even point in units mathematically, you must examine the price, fixed costs, variable costs and calculate the contribution per unit, which is the price per unit less the variable cost per unit. When a company has crossed the break-even point, it will start earning profit at the same rate of contribution per unit. The formula for determining the break-even point is: Fixed costs Break-even point (units) = ---------------------------Contributions per unit Contributions per unit – price per unit – variable cost per unit



Concept Review: Although a break-even analysis cannot help managers set prices, it does. Help them assess their pricing strategies because it clarifies the conditions in which different prices may make a product or service profitable. At any quantity of. Units sold, the formula for Profit – (Contribution per unit x Quantity) – Fixed Costs.

Marketing Analytics Toolkit--Break-Even Analysis: Majestic Pool Builders 

Activity Type: Worksheet



Learning Objectives: 14-04



Difficulty: Medium



Activity Summary: Students perform a break-even analysis.

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Activity 

Introduction: Breakeven Analysis is a useful technique that enables managers to examine the relationships among cost, price, revenue, and profit over different production and sales levels.

Central to this analysis the determination of break-even point or the point at which the number of units sold generates just enough revenue to equal the total costs. At this point, profits are zero.

To determine the break-even point in units mathematically, you must examine the price, fixed costs, variable costs and calculate the contribution per unit, which is the price per unit less the variable cost per unit. When a company has crossed the break-even point, it will start earning profit at the same rate of contribution per unit. The formula for determining the break-even point is: Fixed costs Break-even point (units) = ---------------------------Contributions per unit Contributions per unit – price per unit – variable cost per unit



Concept Review: Although a break-even analysis cannot help managers set prices, it does. Help them assess their pricing strategies because it clarifies the conditions in which different prices may make a product or service profitable. At any quantity of. Units sold, the formula for Profit – (Contribution per unit x Quantity) – Fixed Costs.

Marketing Analytics Toolkit--Break-Even Analysis: Serenity Hideaways 

Activity Type: Worksheet



Learning Objectives: 14-04



Difficulty: Medium



Activity Summary: Students perform a break-even analysis.

Activity



Introduction: Breakeven Analysis is a useful technique that enables managers to examine the relationships among cost, price, revenue, and profit over different production and sales levels.

Central to this analysis the determination of break-even point or the point at which the number of units sold generates just enough revenue to equal the total costs. At this point, profits are zero.

To determine the break-even point in units mathematically, you must examine the price, fixed costs, variable costs and calculate the contribution per unit, which is the price per unit less the variable cost per unit. When a company has crossed the break-even point, it will start earning profit at the same rate of contribution per unit. The formula for determining the break-even point is: Fixed costs Break-even point (units) = ---------------------------Contributions per unit Contributions per unit – price per unit – variable cost per unit

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

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Concept Review: Although a break-even analysis cannot help managers set prices, it does. Help them assess their pricing strategies because it clarifies the conditions in which different prices may make a product or service profitable. At any quantity of. Units sold, the formula for Profit – (Contribution per unit x Quantity) – Fixed Costs.

chapter 15 supply chain and channel management Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview This chapter introduces the student to supply chain management. Instructors should tie in the role of the supply chain to value creation and how it contributes to the marketing effort.

Brief Chapter Outline The Importance of Marketing Channel/Supply Chain Management Designing Marketing Channels Managing the Marketing Channel and Supply Chain Making Information Flow through Marketing Channels Making Merchandise Flow through Marketing Channels

Learning Objectives LO15-1 Understand the importance of marketing channels and supply chain management.

Marketing channels allow companies to get their products in the appropriate outlets in sufficient quantities to meet consumer demand. To anticipate this demand, advertising and promotions must be coordinated with the departments that control inventory and transportation. Otherwise, customers would come in seeking a promotion and not find the product.

Without the members in a marketing channel, consumers would be forced to find raw materials, manufacture products, and somehow get them to where they could be used, all on their own. Thus, each marketing channel member adds value to the product by performing one or more of these functions.

Marketing channel management also creates value for each firm in the chain and helps bind together

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many company functions, including manufacturing, inventory management, transportation, advertising, and marketing.

LO15-2 Understand the difference between direct and indirect marketing channels.

There are two ways by which businesses get their goods to consumers. Using a direct marketing channel, a customer can purchase goods from the manufacturer without needing to go through a retailer or intermediary, generally online (e.g., Ascend speakers) or at company stores (e.g., Apple). More commonly, manufacturers choose to offer their goods to consumers through an intermediary, such as a retailer (e.g., Walmart), implementing an indirect marketing channel strategy.

LO15-3 Describe how marketing channels are managed.

The more closely aligned the marketing channel members are with each other, the less likely there will be significant conflict. An administered marketing channel occurs when a dominant and powerful marketing channel member has control over the other members. In a contractual marketing channel (e.g., franchising), coordination and control are dictated by contractual relationships between members.

Corporate marketing channels can operate relatively smoothly because one firm owns the various levels of the chains. Marketing channels also can be effectively managed through strong relationships developed with marketing channel partners. To create such relationships, the partners must trust each other, communicate openly, have compatible goals, realize there is benefit in being interdependent, and be willing to invest in each other’s success.

LO15-4 Describe the flow of information and merchandise in the marketing channel.

Information flow involves: flow 1 (customer to store), flow 2 (store to buyer), flow 3 (buyer to manufacturer), flow 4 (store to manufacturer), flow 5 (store to distribution center), and flow 6 (manufacturer to distribution center and buyer). Merchandise flow involves: flow 1 (manufacturer to retailer distribution centers), flow 2 (manufacturer directly to stores), flow 3 (distribution centers to stores, when shipped first to distribution centers), and flow 4 (retailer to customer).

Extended Chapter Outline XLIX.

The Importance of Marketing Channel/Supply Chain Management (PPT 15-04)

Marketing Channels Add Value (PPT 15-07) Marketing Channel Management Affects Other Aspects of Marketing (PPT 15-08) L. Designing Marketing Channels (PPT 15-10) Adding Value 15.1: Developing Quick Response Systems for Unpredictable Sports Outcomes: How Fanatics Gets Gear to Fans without Delay discusses how Fanatics is revolutionizing the sports gear products to get merchandise to fans almost instantly, something that was virtually impossible in the past because of all the licensing issues.

Direct Marketing Channel Indirect Marketing Channel Franchising (PPT 15-11) LI. Managing the Marketing Channel and Supply Chain (PPT 15-12) Marketing Channel Conflict

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1. Vertical Channel Conflict 2. Power in the Marketing Channel Adding Value 15.2: Tesla’s Ongoing Evolution: Adding Manufacturing, Taking Over More of the Supply Chain discusses Tesla’s transition into manufacturing some of its products rather than purchasing from other channel members. This move is sparked by bottlenecks and supply issues.

Managing Marketing Channels and Supply Chains through Strategic Relationships (PPT 15-14) 3.

4.

5.

6.

7.

Trust Open Communication Common Goals Interdependence Credible Commitments Adding Value 15.3: Ensuring the Cars Run (Off the Production Line) despite Disruptions highlights the need for multiple sources for essential parts in the automobile industry based on the lessons learned with the COVD-19 crisis. Most manufacturers are located in China, which were closed for months because China was the epicenter of the crisis. This complicated the situation in the supply chain because the industry is one that has largely adopted JIT inventory systems.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 15-15) 1. What are the differences between an indirect and a direct marketing channel?

Answer: There are no intermediaries between the buyer and seller in a direct marketing channel.

In indirect marketing channels, one or more intermediaries work with manufacturers to provide goods and services to customers.

2. What is the difference vertical and horizontal channel conflict?

Answer: Vertical conflict happens when supply chain members that buy and sell from each other are in disagreement; whereas, horizontal channel conflict happens between members at the same level of the channel, such as retailers.

3. What are the six types of power that one channel member can have over another?

Answer: One channel member can have reward, coercive, referent, expertise, information and legitimate power over another channel member.

4. How do firms develop strong strategic partnerships with their marketing channel partners?

Answer: They require mutual trust, open communication, common goals, and credible commitments.

LII. Making Information Flow through Marketing Channels (PPT 15-16 and PPT 15-17)

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 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 15-18) How does information flow through the marketing channel?

Answer: Information flows through the marketing according to flow 1 (Customer to Store), flow 2 (Store to Buyer), flow 3 (Buyer to Manufacturer), flow 4 (Store to Manufacturer), flow 5 (Store to Distribution Center), flow 6 (Manufacturer to Distribution Center and Buyer).

LIII.

Making Merchandise Flow through Marketing Channels (PPT 15-19)

Distribution Centers versus Direct Store Delivery (PPT 15-20) Getting Merchandise to Customers (PPT 15-21) 1. Ship Merchandise to Stores 2. Customer Store Pickup Adding Value 15.2: Pick It Up and Put It Down: Where Robots Succeed and Where They Fail projects how Artificial Intelligence (AI) will be incorporated with robotics to allow the machines to grasp and place products, which they can’t currently do very well.

Humans are still required for these functions. This automation will decrease reliance on humans in the distribution process. Do your students believe robotics and automation are the way companies should go? What do they think will happen to the humans who have traditionally fulfill these functions?

3. Deliver Merchandise Directly to Customer from Fulfillment Center (PPT 15-22)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 15-23) 1. How does merchandise flow through a typical marketing channel?

Answer: Manufacturing – Distribution Center (optional) – Store Customer 2. Should retailers use distributions centers or have manufacturers deliver merchandise directly to stores?

Answer: Whether to use distributions centers or have manufactures deliver merchandise directly to stores is not the same in all cases. Retailers consider the total cost associated with each alternative and the customer service criterion of having the right merchandise at the store when the customer wants to buy it.

3. What are the options for getting merchandise to customers?

Answer: Customers can buy in the traditional way by picking up merchandise displayed in a store: they can pick up merchandise in a store that they have purchased online; or, they can have merchandise delivered. ethical & societal dilemma 15.1: Controlling Theft with Dummy Packages: Amazon’s Efforts to Catch Unethical Delivery Drivers highlights the company’s efforts to control theft and unethical behavior through dummy shipments. Amazon ships mislabeled empty boxes or ones filled with worthless items to see if the delivery drivers handle them properly. When scanned, an error message indicates the shipment has not been entered into Amazon’s system. The driver tells his supervisor or returns the

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package to the distribution center, he does the right thing. For the unethical or dishonest driver, it is a trap to catch him stealing.

Additional Resources Students can understand how a product gets from point A to the end delivery point but may not understand the role of the intermediaries in transport and their responsibility to the marketing effort.

These factors should be addressed in teaching the chapter.

Students can find this chapter difficult to fully understand. Showing the DVD for this chapter titled ―New Balance: Managing Supply from U.S. and Overseas‖ may clarify the role of supply chain management in the marketing effort.

Instructors may want to assign students to roles in the distribution channel (manufacturer, warehouse distributor, truck driver or transport person, wholesale, retailer) and various intermediaries with the assignment given to them as follows: How does your role add to the marketing effort? This exercise gets students to think about the connection to ―Place,‖ one of the elements of the marketing mix, to the overall marketing strategy.

Similar to the last chapter, the instructor may want to review the vocabulary of the chapter by having students complete story problems surrounding the vocabulary words presented in this chapter.

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

New Balance: Managing Supplies for U.S. and Overseas Supply Chain Management Making Information Flow and Making Merchandise Flow Making Information Flow and Making Merchandise Flow Walmart: Pioneer in Supply Chain Management Understanding the Distribution Center Understanding the Distribution Center Fast Fashion: Efficient Supply Chain Management at Zara Supply Chain: Icebreaker Supply Chain: How Domino’s Gets Its Pizza to Plate iSeeit! Video Case: Supply Chain iSeeit! Video Case: Types of Marketing Channels

Video Case Video Case Click & Drag

Learning Objectives 1501 02 03 04 X X X X

X

X X

Matching Case Analysis Click & Drag Matching Case Analysis Video Case Video Case Video Case Video Case

X X

X

X X X X X X X X

X X

X

X

X X

New Balance: Managing Supplies for U.S. and Overseas 

Activity Type: Video Case



Learning Objectives: 15-01, 15-03, 15-04



Difficulty: Medium



Activity Summary: The video case discusses the challenges of managing a global supply chain, as conducted by New Balance. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Most consumers recognize the New Balance brand as one associated with quality athletic shoes and apparel. What consumers don't know is that behind the scenes, New Balance is able to provide excellent product and customer service because of its commitment to creating an organized and efficient supply chain.



Concept Review: Every marketing decision is affected by the supply chain. When products are designed and manufactured, how and when the critical components reach the factory must be coordinated with production. The sales department must coordinate its delivery promises with the factory or distribution centers. Five interrelated processes emerge in supply chain management: making information flow, making merchandise flow, managing inventory, designing the supply chain, and managing the relationships among supply chain partners.

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Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities

For a fascinating look at a global supply chain, show ―Planet Money Makes a T-Shirt‖ in class and then discuss it (you could also assign it to be watched outside class and ask students to write about it). http://apps.npr.org/tshirt/ - /title This is a five-part video, but the videos are very short, with a total length of less than 15 minutes. They follow the supply chain for a t-shirt from the start (growing the cotton) to the end (boxing them up and sending them to consumers who ordered them). This includes short looks at garment factories in Bangladesh and Colombia, where the shirts were sewn.

If you are interested in more details, you can listen to the original podcasts, which go beyond supply chain basics to address questions of global outsourcing: http://www.npr.org/series/248799434/planet-moneys-t-shirt-project Supply Chain Management 

Activity Type: Video Case



Learning Objectives: 15-01, 15-02, 15-04



Difficulty: Medium



Activity Summary: In this simulated meeting, a retailer and one of her suppliers discuss a problem that has arisen with a large order. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Beth Armstrong owns a sporting goods store for kids in a Northeastern town. When a 500-unit order Beth places online goes awry, she meets with a senior account representative, Bill Schule, to resolve the issues. The interaction raises a wide range of issues pertaining to the retailer, the supplier, and the consumer.



Concept Review: Supply chain management refers to a set of approaches and techniques firms employ to: (1) efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time; and (2) minimize systemwide costs while satisfying the service levels their customers require. Inefficiency in the supply chain can lead to a variety of problems, including delayed shipments, higher prices, and dissatisfied customers.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities

This video offers an opportunity to integrate current and past course material. Ask students to watch the video again from the perspective of the three service recovery strategies: listen to the customer, find a fair solution, and resolve the problem quickly. The supplier’s rep does all of those things fairly skillfully, and as

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a result he is able to manage the retailer’s emotional state and work with her to solve her immediate problem.

Making Information Flow and Making Merchandise Flow 

Activity Type: Click & Drag



Learning Objectives: 15-04



Difficulty: Medium



Activity Summary: Students are asked to identify different types of information flows in the supply chain.

Activity



Introduction: When a customer decides to purchase a Sony DVD player at her local Best Buy store, it triggers action throughout the entire supply chain. It is possible that by the time she leaves the parking lot, the manufacturer has already ordered another player to be built, and this occurs with the tens of thousands of these players being sold every day around the world. Read about this purchase, and then assemble the information flow model as instructed.



Concept Review: Supply chain management refers to a set of approaches and techniques firms employ to: (1) efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time; and (2) minimize systemwide cost while satisfying the service levels their customers require. Five interrelated activities emerge in supply chain management: making information flow, making merchandise flow, managing inventory, designing the supply chain, and managing the relationships among supply chain partners.

Making Information Flow and Making Merchandise Flow – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 15-04



Difficulty: Medium



Activity Summary: Students are asked to identify different types of information flows in the supply chain.

Activity



Introduction: When a customer decides to purchase a Sony DVD player at her local Best Buy store, it triggers action throughout the entire supply chain. It is possible that by the time she leaves the parking lot, the manufacturer has already ordered another player to be built, and this occurs with the tens of thousands of these players being sold every day around the world. Read about this purchase, and then assemble the information flow model as instructed.



Concept Review: Supply chain management refers to a set of approaches and techniques firms employ to: (1) efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time; and (2) minimize systemwide cost while satisfying the service levels their customers require. Five interrelated activities emerge in supply chain management: making information flow, making merchandise flow, managing inventory, designing the supply chain, and managing the relationships among supply chain partners.

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Walmart: Pioneer in Supply Chain Management 

Activity Type: Case Analysis



Learning Objectives: 15-01, 15-03, 15-04



Difficulty: Hard



Activity Summary: Discusses how Walmart manages its supply chain. Students are asked questions relating chapter concepts to the case.

Activity



Introduction: Walmart dominates the retailing industry in terms of its sales revenues, its tremendous customer base, and its ability to drive down costs and deliver value to customers. Walmart takes pride in having received numerous accolades for its ability to continuously improve efficiency in the supply chain while meeting its corporate mandate of offering customers everyday low prices. Review the following case and answer the corresponding questions regarding Walmart's supply chain strategy.



Concept Review: Supply chain management refers to a set of approaches and techniques firms use to streamline the flow of merchandise. Firms with a supply chain management focus strive to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time. Supply chain management also focuses on minimizing system-wide costs while satisfying the service levels customers require.

Follow-Up Activity

Assign the following article: http://time.com/money/4182681/walmarts-express-stores-close/ The article explains that Walmart has given up on its ―Express Stores‖ format, which was a smaller store along the lines of a convenience store.

Discussion question or writing prompt: The article notes that Walmart’s supply chain is optimized for the superstore format. What supply chain changes would be needed to support smaller stores?

Understand the Distribution Center 

Activity Type: Click & Drag



Learning Objectives: 15-03



Difficulty: Medium



Activity Summary: The student is asked to match distribution center activities to the four major distribution center functions.

Activity



Introduction: Supply chain management allows firms to recognize and solve distribution problems that many firms face today. Many retailers use distribution centers to streamline merchandise flow.

The distribution center acts as the mediator between the supplier and the store location, preparing the

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merchandise to be floor-ready. There are several activities the distribution center performs. The following exercise examines the different distribution center activities. 

Concept Review: Distribution centers are often more advantageous for retailers because of multiple factors. Distribution centers enable the retailer to carry less merchandise in the individual stores. This in turn lowers inventory investments system-wide for retailers. The distribution center performs the following activities: coordinating inbound transportation; receiving, checking, storing, and crossdocking; getting merchandise floor-ready; and coordinating outbound transportation.

Follow-Up Activity

Discuss: Distribution centers are discussed in the chapter primarily from the perspective of a center that provides merchandise to retailers. How would the distribution center for a company like Amazon.com— that ships products to consumers—differ from one designed to ship merchandise to retailers?

Some possible answers:  Cross-docking will occur less often, since often the cartons that arrive at the distribution center will contain multiple quantities of an item. 

There is no need to get merchandise floor-ready.



There are likely to be more, smaller shipments.



Distribution centers for consumer goods are more likely to handle outbound shipping via shipping companies (UPS, FedEx, USPS) and less likely to use a company’s own fleet of trucks. Although Amazon is experimenting with its own delivery trucks for the ―last mile‖ part of delivery: http://online.wsj.com/news/articles/SB10001424052702304788404579521522792859890 Understand the Distribution Center – Keyboard Navigable Alternate Version



Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 15-03



Difficulty: Medium



Activity Summary: The student is asked to match distribution center activities to the four major distribution center functions.

Activity



Introduction: Supply chain management allows firms to recognize and solve distribution problems that many firms face today. Many retailers use distribution centers to streamline merchandise flow.

The distribution center acts as the mediator between the supplier and the store location, preparing the merchandise to be floor-ready. There are several activities the distribution center performs. The following exercise examines the different distribution center activities.



Concept Review: Distribution centers are often more advantageous for retailers because of multiple factors. Distribution centers enable the retailer to carry less merchandise in the individual stores. This in turn lowers inventory investments system-wide for retailers. The distribution center performs the following activities: coordinating inbound transportation; receiving, checking, storing, and crossdocking; getting merchandise floor-ready; and coordinating outbound transportation.

Follow-Up Activity

Discuss: Distribution centers are discussed in the chapter primarily from the perspective of a center that provides merchandise to retailers. How would the distribution center for a company like Amazon.com— that ships products to consumers—differ from one designed to ship merchandise to retailers?

Some possible answers: ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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

Cross-docking will occur less often, since often the cartons that arrive at the distribution center will contain multiple quantities of an item.



There is no need to get merchandise floor-ready.



There are likely to be more, smaller shipments.

th

Distribution centers for consumer goods are more likely to handle outbound shipping via shipping companies (UPS, FedEx, USPS) and less likely to use a company’s own fleet of trucks. Although Amazon is experimenting with its own delivery trucks for the ―last mile‖ part of delivery: http://online.wsj.com/news/articles/SB10001424052702304788404579521522792859890

Fast Fashion: Efficient Supply Chain Management at Zara 

Activity Type: Case Analysis



Learning Objectives: 15-03, 15-04



Difficulty: Hard



Activity Summary: This case describes Zara’s ―fast fashion‖ supply chain. Students answer questions relating chapter concepts to the case.

Activity



Introduction: In the fast fashion retail business strategy, supply chain management processes serve to introduce fashionable merchandise rapidly, such that stores can respond immediately to customer demand for merchandise. This was pioneered by Zara, a global specialty apparel chain located in La Coruna, Spain. The approach is particularly effective for specialty apparel retailers that target fashionconscious consumers who simply must have the latest looks—but want to do so on a very limited budget. These shoppers load up on new fast fashions every few weeks, instead of purchasing a few higher-priced basics every few months. This creates unique challenges for a firm's supply chain management.



Concept Review: Supply chain management refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time. Another goal is to minimize system-wide costs while satisfying the service levels customers require. Supply chain management adds value for customers because it gets the products to them efficiently, quickly, and at low cost.

Follow-Up Activity

For the ―dark side‖ of the Zara supply chain, these articles shed some light on concerns about the impact of ―fast fashion‖ on garment workers and the environment. This is related to the ―Planet Money T-Shirt‖ video recommended as a follow-up to the New Balance video case. http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/jennifer_elks/ethical_fa st_fashion_hm_trying_prove_its_no http://www.ethicalfashionforum.com/the-issues/fast-fashion-cheap-fashion In addition, a 2015 film called The True Cost addresses issues related waste and exploitation in fast fashion. Its approach is simplistic, so don’t expect any startling insights or creative solutions, but for someone who hasn’t thought about these issues—and some students probably haven’t—it might be of value. For more about the film, visit truecostmovie.com.

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Supply Chain: Icebreaker 

Activity Type: Video Case



Learning Objectives: 15-02, 15-03



Difficulty: Medium



Activity Summary: This case explains supply chain management for Icebreaker, a New Zealand clothing company. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: In 1994, Jeremy Moon founded Icebreaker, a New Zealand–based company that makes high-tech clothing from merino wool and other natural sources. Icebreaker is now a global enterprise with manufacturing plants, distribution centers, and retail outlets on four continents. Getting the right product to the right place at the right time requires successful marketing channel management. Watch the following video to discover the variety of approaches and techniques Icebreaker uses to efficiently and effectively manage the company's supply chain.



Concept Review: Marketing channel management refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation. The goal of marketing channel management is that merchandise is produced and distributed in the right quantities, to the right locations, and at the right time while minimizing costs. There is no one best channel structure.

Channels can be direct, indirect, or some combination thereof. The majority of firms today use vertical marketing systems (VMS) to manage their channels. In a VMS, channel members act as a unified system. There are three types of vertical marketing systems: contractual, administered, and corporate. More often than not, channel members also establish long-term strategic partnerships.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Supply Chain: How Domino’s Gets Pizza to Plate



Activity Type: Video Case



Learning Objectives: 15-02, 15-03, 15-04



Difficulty: Medium



Activity Summary: The video explains the hub-and-spokes approach Domino’s uses to manage delivery of ingredients to its retail outlets. After the video, students are asked questions applying chapter concepts to the case material.

Activity



Introduction: Domino’s needs an efficient supply chain in order to profitably serve pizza to its large customer base. This video explains various aspects of the company’s supply chain operations and relationships. This activity is important because marketers must be able to design and manage efficient and effective supply chains. Problems in a supply chain can lead to reduced profits and lost customers. The goal of this exercise is to check your understanding of key supply chain concepts by applying them to Domino’s.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

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iSeeit! Video Case: Supply Chain 

Activity Type: Video Case



Learning Objectives: 15-01, 15-02, 15-04



Difficulty: Medium



Activity Summary: This video case looks at supply chain issues for a bottled water company.

Activity



Introduction: Marketing channels involve a series of intermediary organizations or individuals who help move products and services from the manufacturer to the end user. Supply chain management represents the management of diverse intermediaries and channels including middlemen, brokers, wholesalers, retailers, distributors, and dealers—all of which add value, and cost, to the final consumed product. Take for instance Hope Springs and the supply chain it uses to get its bottled water from one of the company's three manufacturing facilities into the hands of thirsty customers. Hope Springs knows that while distribution may add cost to the final product, it also adds significant value because of the complexity behind effectively managing this process. From delivery to warehousing and restocking to inventory, Hope Springs knows it needs to focus on the core of its business and let distributors take care of the logistics, facilitation, and transactional aspects of getting bottled water to customers.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

iSeeit! Video Case: Types of Marketing Channels 

Activity Type: Video Case



Learning Objectives: 15-02



Difficulty: Medium



Activity Summary: This video case illustrates the advantages and disadvantages of different marketing channels within the supply chain.

Activity



Introduction: Within the supply chain are various marketing channels—supply chain intermediaries, including wholesalers, distributors, and retailers, through which the flow of products travel. These different marketing channels may be direct or indirect, depending on the configuration of intermediaries involved. This activity is important because marketers need to understand the specific purpose each channel serves in the downstream flow (movement of goods to the final customer) and upstream flow (movement of payment to the manufacturer and other members in the supply chain) of a supply chain.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

chapter 16 retailing and omnichannel marketing

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Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview This chapter explores the issues manufacturers consider when choosing retail partners. Students evaluate the types of retailers available for distributing products and learn how manufacturers and retailers work together to develop strategies.

Brief Chapter Outline Choosing Retailing Partners Identify Types of Retailers Developing a Retail Strategy Using the Seven Ps Managing an Omnichannel Strategy

Learning Objectives LO16-1

Discuss the four factors manufacturers should consider as they develop their strategy for working with retailers.

When they initiate the decision process for choosing retail partners, manufacturers determine how likely it is that certain retailers would carry their products and whether target customers expect to find their products for sale at those retail locations. Next, manufacturers need to identify types of retailers that would be appropriate locations for their products. After identifying likely and appropriate retailers, manufacturers work with their retailer partners to develop a strategy that comprises the four Ps. Finally, manufacturers, again with their retail partners, must determine which elements of an omnichannel strategy will be effective.

LO16-2

Outline the considerations associated with choosing retail partners.

Manufacturers often start by noting the basic channel structure, which includes the level of vertical integration, the relative strength of the retailer and the manufacturer, and the strength of the brand. They also consider where their target customers expect to find products, which depends largely on the retailer’s image. Channel member characteristics also are important inputs, as is the level of distribution intensity.

LO16-3

List the three levels of distribution intensity.

Intensive distribution intensity means the product is available virtually everywhere, in as many places as will agree to carry it. In an exclusive distribution intensity strategy, the manufacturer allows only one retailer (or retail chain) in each area to sell its products. Selective distribution is the middle ground option; several retailers carry the products, but not all of them.

LO16-4

Describe the various types of retailers.

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Retailers generally fall into one of three categories: food retailers, general merchandise retailers, or service retailers. Each of the categories consists of various formats, including supermarkets, supercenters, warehouse clubs, convenience stores, department stores, discount stores, specialty retailers, drugstores, category specialists, extreme-value retailers, and off-price stores. Although service retailers primarily sell services, if they sell to consumers, they are still retailers. Service retailers span the gambit from universities to automobile oil change shops.

LO16-5

Describe the components of a retail strategy.

To develop a coordinated strategy—which represents a key goal for an effective channel partnership between retailers and manufacturers—both retailers and manufacturers need to consider all of the four Ps in conjunction: product, place, promotion, and price.

LO16-6

Identify the benefits of omnichannel retailing.

The various types of retail channels—stores, catalogs, and the Internet—all offer their own benefits and limitations, including those related to availability, convenience, and safety, among others. If a retailer adopts an omnichannel strategy, it can exploit the benefits and mitigate the limitations of each channel and help expand its overall market presence. Furthermore, an omnichannel strategy offers the chance to gain a greater share of customers’ wallets and more insight into their buying behaviors.

To function in multiple channels, retailers must organize their operations carefully to ensure an integrated customer experience. In particular, they have to have an integrated CRM system, determine how to maintain a consistent brand image across the various channels, whether to charge the same or different prices, and how best to deliver merchandise to multiple channels.

Extended Chapter Outline LIV.

Choosing Retailing Partners (PPT 16-06) Social & Mobile Marketing 16.1 Groceries Are Essential, and in a p Pandemic, So Are Mobile and Contactless Channels to Get Them highlights the changes grocery retailers made during the COVID-19 pandemic in 2020. They experienced massive increases in online and delivery orders.

A. Channel Structure B. Customer Expectations C. Channel Member Characteristics (PPT 16-09) D. Distribution Intensity (PPT 16-10) 1. Intensive Distribution 2. Exclusive Distribution 3. Selective Distribution

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 16-11) 1. What issues should manufacturers consider when choosing retail partners?

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Answer: When choosing retail partners, manufacturers must look at the basic channel structure, where their target customers expect to find the products, channel member characteristics, and distribution intensity.

2. What are the differences among intensive, exclusive, and selective levels of distribution intensity?

Answer: Intensive distribution strategy is designed to place products in as many outlets as possible. Manufacturers also might use an exclusive distribution policy by granting exclusive geographic territories to one or very few retail customers so no other retailers in the territory can sell a particular brand. Exclusive distribution can benefit manufacturers by assuring them that the most appropriate retailers represent their products. Selective distribution uses a few selected customers in a territory to sell products. Retailers still have a strong incentive to sell the products, but not to the same extent as if they had an exclusive territory.

LV. Identify Types of Retailers (PPT 16-12) A. Food Retailers (PPT 16-13) 1. Supermarkets Social & Mobile Marketing 16.2 Can Brick and Mortar Last in an Online and Mobile Retail World? Questions if traditional retailers compete with electronic alternative in the long run. Several retailers’ efforts to do this are highlighted.

2. Supercenters 3. Warehouse Clubs Adding Value 16.1 When Grocery Shopping Turns into … Something Else, Something Fun overviews how grocery stores are seeking to go beyond customer expectations by creating shopping experiences filled with fun, entertainment, and added service.

4. Convenience Stores 5. Online Grocery Retailers (PPT 16-14) B. General Merchandise Retailers (PPT 16-15) 1.

2.

3.

4.

5.

6.

7.

Department Stores Full-Line Discount Stores Specialty Stores Drugstores Category Specialists Extreme-Value Retailers Off-Price Retailers

C. Service Retailers (PPT 16-16)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 16-17) 1. What strategies distinguish the different types of food retailers?

Answer: The different types of food retailers include supermarkets, supercenters, warehouse clubs, convenience stores, and online grocery retailers. Perishables including meat, produce, baked goods, and dairy products account for almost 54 percent of supermarket sales and typically have higher margins than packaged goods do. By offering broad assortments of grocery

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and general merchandise products under one roof, supercenters provide a one-stop shopping experience. Warehouse clubs are large retailers that offer a limited and irregular assortment of food and general merchandise, little service, and low prices to the general public and small businesses. Convenience stores enable consumers to make purchases quickly, without having to search through a large store and wait in a lengthy checkout line. Milk, eggs, and bread once represented most their sales, but now most sales come from gasoline and cigarettes. Online grocery stores deliver groceries and non-perishable items to time-strapped customers who are willing to pay more to access options for ordering groceries online and having them delivered.

2. What strategies distinguish the different types of general merchandise retailers?

Answer: Department stores are retailers that carry a broad variety and deep assortment of merchandise, offer customer services, and organize their stores into distinct departments for displaying merchandise. Full-line discount stores are retailers that offer a broad variety of merchandise, limited service, and low prices. Specialty stores concentrate on a limited number of complementary merchandise categories targeted toward very specific market segments by offering deep but narrow assortments and sales associate expertise. Drugstores are specialty stores that concentrate on pharmaceuticals and health and personal grooming merchandise.

Prescription pharmaceuticals represent almost 70 percent of drugstore sales. Category specialists are big-box retailers or category killers that offer a narrow but deep assortment of merchandise. Most category specialists predominantly use a self-service approach, but they offer assistance to customers in some areas of the stores. Extreme-value retailers are small, full-line discount stores that offer a limited merchandise assortment at very low prices. Off-price retailers offer an inconsistent assortment of brand-name merchandise at a significant discount from the manufacturer’s suggested retail price (MSRP).

3. Are organizations that provide services to consumers retailers?

Answer: Services retailers, or firms that primarily sell services rather than merchandise, are a large and growing part of the retail industry.

LVI.

Developing a Retail Strategy Using the Seven Ps

A. Product (PPT 16-18) B. Price (PPT 16-19) Adding Value 16.2 Having Fun with Marketing: Expanding the Product Mix: Target’s Extensive Private-Label Plans gives an overview of Target’s attempts to be distinctive to compete in modern markets through introducing 12 new private-label brands.

C. D. E. F. G. LVII.

Place (PPT 16-20) Promotion (PPT 16-21) Presentation (PPT 16-22) Personnel (PPT 16-22) Processes (PPT 16-22) Managing an Omnichannel Strategy (PPT 16-23)

A. Deeper and Broader Selection B. Personalization 1. Personalized Customer Service 2. Personalized Offering

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C. Expanded Market Presence ethical & societal dilemma 16.1: How Retailers and Tech Companies Collaborate to Create Beacons That Track Shoppers---and What Shoppers Can Do About It (or Not) details how retailers use beacon technology to track consumers through the stores.

This technology relies on Bluetooth connection to locate a customer in a store. The store can then ping the customer with an ad corresponding to the merchandise if that particular location.

D. Integrated CRM

E. Brand Image F. Pricing G. Supply Chain

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 16-24) 1. What are the components of a retail strategy?

Answer: Like other marketers, retailers perform important functions that increase the value of the products and services they sell to consumers. These functions are classified into the four Ps: product, price, promotion, and place.

2. What are the advantages of traditional stores versus Internet-only stores?

Answer: The relative advantages of the most traditional retail channels are browsing, touching, and feeling products, personal service, cash and credit payment, entertainment and social experience, immediate gratification, and risk reduction.

3. What challenges do retailers face when marketing their products through multiple channels?

Answer: Consumers desire a seamless experience when interacting with omnichannel retailers.

However, providing this seamless experience for customers is not easy for retailers. Because each of the channels is somewhat different, a critical decision facing omnichannel retailers is the degree to which they should or are able to integrate the operations of the channels.

Additional Resources The core component of this chapter is distribution intensity: exclusive, selective, and intensive. It is important to point out that the type of distribution is ALSO dependent upon the retail outlets or omnichannels that agree to stock the product. Products with high involvement of decision making such as cars, HD TVs, and appliances take up space in the showroom, and retailers do have a choice on whether they want to give up that space to your brand or another manufacturer’s. Good channel relationships are key especially when it comes to the retailer who will make decisions on how the product is presented to the target market.

The benefit to the manufacturer provided by using different channels is key and the application questions in the chapter also give students an opportunity to apply these concepts.

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Stores

Catalogs

Internet

Browsing Touching and feeling Personal service Cash and credit Entertainment and social interaction Instant gratification Risk reduction

Convenience Information Safety

Broader selection More information Personalization Touch and feel attributes

th

This chapter is a good opportunity to stress CRM and the importance of retaining existing customers. It is also a good chapter to mention customization of the product and the importance of an integrated marketing effort.

Online Tip: Have students compare Internet retailer sets and evaluate the benefits. Have them repeat this process for the same retailer’s store and catalogs.

Slide 23 in the Instructor PowerPoints for this chapter contains a link to a video on the future of brick-andmotor retailing (https://www.youtube.com/watch?v=T86A6tq5tL0). What do students think is the future of brick-and-motor retailing? Can they envision a world where all retailing is done online?

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type 01

Types of Retailers Types of Retailers Retailing: Staples, Inc. Staples, Inc: The Retail Mix M&M’s: Multichannel Marketing Making Macy’s Meaningful Is Big-Box Retailing Right for your Product? iSeeit! Video Case: Retail Strategy Nordstrom Rack: Retail Strategy Ashley Stewart iSeeit! Video Case Major Types of Retailers iSeeit! Video Case: Omnichannel Retailing

Click & Drag Matching Case Analysis Video Case Video Case Case Analysis Video Case Video Case Video Case Case Analysis Video Case Video Case

Learning Objectives 1602 03 04 05 X X

06

X X X X X

X X X

X

X X X X X X

X X X X X

X X X

Types of Retailers 

Activity Type: Click & Drag



Learning Objectives: 16-04



Difficulty: Medium



Activity Summary: The student is asked to categorize different retail chains according to the type of retailers they represent.

Activity



Introduction: Manufacturers need to understand the general characteristics of retailers to determine the best channels for their product. There are many types of retailers and each type has its own unique characteristics and set of challenges. The following activity reviews examples and characteristics of food retailers and general merchandise retailers.



Concept Review: Food retailing has changed dramatically in the past 20 years. The conventional supermarket no longer dominates the food retailing landscape. The fastest growing sectors of the food retail market are supercenters, warehouse clubs, convenience stores, and extreme value food retailers.

General merchandise retailers focus on the distribution of household and lifestyle items. The major types of general merchandise retailers are department stores, full-line discount stores, category specialists, specialty stores, home improvement centers, off-price retailers, and extreme value retailers.

Types of Retailers – Keyboard Navigable Alternate Version



Activity Type: Matching Alternate to Click & Drag Above

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

Learning Objectives: 16-04



Difficulty: Medium



Activity Summary: The student is asked to categorize different retail chains according to the type of retailers they represent.

Activity



Introduction: Manufacturers need to understand the general characteristics of retailers to determine the best channels for their product. There are many types of retailers and each type has its own unique characteristics and set of challenges. The following activity reviews examples and characteristics of food retailers and general merchandise retailers.



Concept Review: Food retailing has changed dramatically in the past 20 years. The conventional supermarket no longer dominates the food retailing landscape. The fastest growing sectors of the food retail market are supercenters, warehouse clubs, convenience stores, and extreme value food retailers.

General merchandise retailers focus on the distribution of household and lifestyle items. The major types of general merchandise retailers are department stores, full-line discount stores, category specialists, specialty stores, home improvement centers, off-price retailers, and extreme value retailers.

Retailing: Staples, Inc. 

Activity Type: Case Analysis



Learning Objectives: 16-06



Difficulty: Medium



Activity Summary: This case describes multichannel retailing initiatives undertaken by Staples.

Students answer questions relating chapter concepts to the case.

Activity



Introduction: Originally opened in 1986 by executive-turned-entrepreneur Tom Stemberg, Staples has reached sales of greater than $23 billion. By evolving its original mission of slashing the costs and reducing the hassle of running an office, Staples has become the world's largest office products company. Review the discussion of Staples and its multichannel integration strategy and answer the questions that follow.



Concept Review: Retailing sits at the end of the supply chain, where marketing meets the consumer.

Regardless of how good a firm's strategy is or how great the product or service is, if it is not available when and where the customer wants it, it will not sell. To function in multiple channels, retailers must organize their operations carefully to ensure an integrated customer experience.

Follow-Up Activity

For some historical perspective, share this article with the class. It is a New York Times article from 1988 describing the new (at the time) trend of office supply superstores. Note all the names of superstore chains that no longer exist; also note that the small office supply/stationery stores they mention have also mostly vanished, unable to compete on price.

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http://www.nytimes.com/1988/06/18/business/big-discount-stores-shake-up-retailers-of-officesupplies.html Staples wasn’t the first category specialist—for example, Home Depot was founded in 1978—but the article makes it clear that, at the time, the concept wasn’t familiar to everyone.

Also, note that this was written six years before the start of the commercial Internet.

Staples, Inc.: The Retail Mix 

Activity Type: Video Case



Learning Objectives: 16-05



Difficulty: Medium



Activity Summary: This case describes the retail strategy adopted by Staples. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Creating a strategy for growth is an important step in any business. Some growth strategies focus on current customers while others seek to attract new customers. Different strategies apply to different types of customers. For Staples, a leader in the office supply market, a major growth strategy solution was to connect with its current customer base through a segment of its business that had been overlooked.



Concept Review: Retailing is the final touch point in the supply chain that acts as the primary interface with the consumer. Regardless of how strong a firm's marketing strategy is, if the product or service is not available when and where the customer wants it, the product or service will not sell. To have better control over their interactions with consumers, many manufacturers have evolved their placement strategies to include multiple channels as distribution outlets to reach their customers. This includes using stores, catalogs, and the Internet to sell merchandise and reach customers.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

M&M’s: Multichannel Marketing



Activity Type: Video Case



Learning Objectives: 16-06



Difficulty: Medium



Activity Summary: This case describes multichannel marketing initiatives undertaken by M&M’s.

After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: The traditional method for Mars, Inc., to get its merchandise to the final consumer is through retailers. However, there are other options for delivery that have relative advantages from not only the retailer's perspective, but from the manufacturer's and customer's perspective as well. Mars, Inc. wants to take advantage of synergies that come from providing products through multiple channels. As the video plays, answer the questions that appear on the screen.



Concept Review: Retailing is the final touch point in the supply chain that acts as the primary interface with the consumer. Regardless of how strong a firm's marketing strategy is, if the product or

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service is not available when and where the customer wants it, the product or service will not sell. To have better control over their interactions with consumers, many manufacturers have evolved their placement strategies to include multiple channels as distribution outlets to reach their customers. This includes using stores, catalogs, and the Internet to sell merchandise and reach customers. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Visit the personalized M&M’s website in class (http://www.mymms.com/) and start creating an order. For example, you might create one in your school colors, with the course number inscribed, or something similar. Note the pricing, and also the limitations, and use this to talk about mass customization. o Making Macy’s Meaningful 

Activity Type: Case Analysis



Learning Objectives: 16-02, 16-04, 16-05



Difficulty: Medium



Activity Summary: This case discusses strategies undertaken by Macy’s to build sales in an increasingly challenging retail category. Students read the case and then apply chapter concepts to the case information.

Activity



Introduction: Macy’s, long a leading department store in the U.S., is trying a variety of new tactics to attract shoppers to its stores in the face of a sales decline. The goal of this exercise is to test your understanding of retail strategy by analyzing these initiatives, applying retail strategy frameworks from the text. This activity is important because managers must understand how to serve customers in the competitive retail environment, especially given increasing competition from online retailers.

Follow-Up Activity

Ask students to research how Macy’s is doing. Since this case was written, Macy’s has closed several stores and is facing continuing problems. Here are two articles that were current at the time of this writing:  

http://money.cnn.com/2017/01/04/news/companies/macys-job-cuts-stock/ http://nypost.com/2017/02/01/macys-sale-rumored-as-long-time-ceo-steps-down/ Is Big-Box Retailing Right for Your Product?



Activity Type: Video Case



Learning Objectives: 16-02, 16-03, 16-04, 16-06



Difficulty: Medium



Activity Summary: In an unusual business case study investigating a failure instead of a success, this video discusses unsuccessful attempts by Vosges Haut-Chocolat to work with two large retail chains. After the video ends, students are asked questions about the video and related course concepts.

Activity

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

Introduction: Vosges Haut-Chocolat, a luxury chocolate brand, introduced a mid-market brand called Wild Ophelia to appeal to a different customer segment. Unfortunately, dealings with two large retailers interested in selling the product did not go well. The video explains what went wrong. This activity is important because marketers often underestimate the challenges of selling a product through a mass market retailer. While the opportunities can be huge, marketers must remember the importance of choosing appropriate retailers to sell a product. The goal of this exercise is to test your understanding of the issues involved in selecting retail partners.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity

Discuss the types of channel relationships exemplified in the video, and Vosges’ lack of power with these large channel partners. Visit Vosges’ website and find out where it currently distributes Wild Ophelia chocolates. iSeeit! Video Case: Retail Strategy 

Activity Type: Video Case



Learning Objectives: 16-03, 16-04, 16-05



Difficulty: Medium



Activity Summary: This video case explores retail strategy for a coffee shop.

Activity



Introduction: Retailing is an important marketing activity that helps match products and services that are created by businesses to the consumers who desire them. To create value (and charge a higher price), retailers add value by offering products that consumers desire and are willing to pay for, providing access at the right time and place, making the purchase process easier, or having the ability to customize products and services. The same holds true for the Coffee Collective. When Martha was establishing her college-crowd focused atmosphere, she needed to identify retail items that her customers wanted and expected to see. This includes the constant evaluation and adjustment of retail offerings—such as the addition of single-serve organic dog biscuits—to make sure that she is meeting the needs and expectations of her customers. She knows that she must have an effective retail strategy that fits her business model and partner with suppliers that carry products that fit with her target market.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Nordstrom Rack: Retail Strategy



Activity Type: Video Case



Learning Objectives: 16-03, 16-04, 16-05, 16-07



Difficulty: Medium



Activity Summary: This case reviews the retail strategy followed by Nordstrom Rack. After the video ends, students are asked questions about the video and related course concepts.

Activity

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

Introduction: Since 1973, Nordstrom Rack has been the off-price division of fashion retailer Nordstrom. Nordstrom Rack has been successful in applying the four Ps to its retail strategy. The stores stock high-quality merchandise from well-known brands at discounted prices, creating the ―treasure hunt‖: the search through ever-changing merchandise for ―things customers didn’t know they had to have when they walked in.‖ Nordstrom Rack also sells its products on its website nordstromrack.com, and on a flash sale site called HauteLook.



Concept Review: Retailing is the final touch point in the supply chain that acts as the primary interface with the consumer. Regardless of how strong a firm's marketing strategy is, if the product or service is not available when and where the customer wants it, the product or service will not sell.

Retailers focus on the four Ps to create their strategy. In addition, retailers may use multiple channels to reach their customers. This often includes online approaches, such as websites, mobile apps, and social media presence.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity



Discuss the ―treasure hunt‖ idea introduced in the video in more detail. Which benefits of in-store shopping are related to the appeal of the ―treasure hunt‖?



In small groups, ask the students to use the situational factors influencing consumer behavior (from Chapter 6) to compare and contrast consumer experiences in Nordstrom and Nordstrom Rack. In what situations might a consumer choose one store or the other, given that both stores sell the same brands?



Explore the idea of ―flash sale‖ stores like HauteLook. The following article discusses why flash sale sites were initially popular, and why the business model does not look as robust today. http://www.businessoffashion.com/articles/intelligence/trouble-flash-sales Ashley Stewart



Activity Type: Case Analysis



Learning Objectives: 16-04, 16-05, 16-06



Difficulty: Medium/Hard



Activity Summary: This case discusses how a middle-aged Korean American man turned around a struggling brand, Ashley Steward, that catered primarily to African American women. James Rhee, CEO of Ashley Stewart, the largest plus-size retailer in the United States did just that. Students will demonstrate their understanding of retail strategy components by answering the questions at the end of the case.

Activity

Introduction: Founded in 1991, Ashley Stewart was named after two distinct style icons: Laura

Ashley and Martha Stewart. The founder Joseph Stint sold his shares of the company in 2000. The following decades saw some challenges, such that the company filed for bankruptcy in 2010 and then reorganized again in 2014. But by that point, Rhee—inspired by the brand’s promise and its connections to its customers—had resigned from his position on the board as an investor in the retailer to become its CEO.1 Today, Ashley Stewart maintains just shy of 100 stores in the United States and a global e-commerce platform, helping curvy women around the world find beautiful fashions that fit.

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1. This case was written by Megha Mehta (Babson College), Elisabeth Nevins (Effectual Editorial Services), Dhruv Grewal (Babson College).

iSeeit! Video Case: Major Types of Retailers 

Activity Type: Video Case



Learning Objectives: 16-01, 16-04



Difficulty: Medium



Activity Summary: This video case illustrates the different advantages and disadvantages of each type of retailer.

Activity



Introduction: Retailers end the supply chain, providing value to both customers and manufacturers.

There are multiple types of retailers in which a firm can sell its products. This activity is important because manufacturers must consider the product category and desired target market before deciding on the right type of retailer for their products.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

iSeeit! Video Case: Omnichannel Retailing 

Activity Type: Video Case



Learning Objectives: 16-06



Difficulty: Medium



Activity Summary: This video case illustrates how a firm can implement effective omnichannel retailing to create a seamless experience for customers. See this in action at Wanderlust Tours in the video that follows.

Activity



Introduction: Omnichannel retailing is a multichannel retailing approach that allows the customer to have an integrated customer experience across all of a retailer’s distribution platforms—from its brickand-mortar stores to its mobile apps. This activity is important because in today’s highly technological world, consumers, retailers, and manufacturers are placing a greater emphasis on omnichannel retailing.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

chapter 17 integrated marketing communications

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Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview This chapter focuses on the importance of the integrated marketing campaign effort.

Brief Chapter Outline Communicating with Consumers Channels Used in an Integrated Marketing Communications Strategy Planning for and Measuring IMC Success Learning Objectives LO17-1

Identify the components of the communication process.

The communication process begins with a sender, which provides the message to a transmitter, who develops or encodes the message for transmission through a communication channel. When a recipient receives the message, it may have been altered by noise in the environment. To find out, the sender needs to receive some form of feedback from the recipient.

LO17-2

Explain the four steps in the AIDA model.

Awareness is the first ―thinking‖ step, during which the consumer simply recognizes a brand or product.

During the interest step, the consumer starts to ―feel‖ and become intrigued enough to explore the product or brand. This interest then leads to another feeling, namely, desire for the marketed item.

Finally, to be successful, marketing communication must prompt an action: a purchase, a commitment, a recommendation, or whatever else the company is trying to get consumers to do.

LO17-3

Describe the various integrative communication channels.

Advertising has long been the primary channel for marketing communication and is still a constant presence, but other media channels have become more and more prominent. For example, direct marketing media options, particularly online options, have increased in recent years. Outbound direct marketing telephone calls have declined, but Internet-based technologies like e-mail and m-commerce have increased. Public relations also has become increasingly important as other media forms become more expensive and as consumers grow more skeptical of commercial messages. With regard to new and electronic media, the wealth of recent options includes websites, corporate blogs, and social media such as YouTube, Facebook, and Twitter.

LO17-4

Explain the methods used to allocate the integrated marketing communications (IMC) budget.

Various rule-of-thumb methods rely on prior sales and communication activities to determine the best allocation. For example, the competitive parity method sets the budget so that the share of communication expenses equals the firm’s share of the market. The percentage-of-sales method, just as it sounds, uses a fixed percentage of sales as the amount of the budget. In contrast, the objective-and©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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task method establishes specific communication objectives, identifies which media can best attain those objectives, and then determines the related costs to expend.

LO17-5

Identify marketing metrics used to measure IMC success.

Marketers rely on a mix of traditional and nontraditional measures to determine IMC success. Because potential customers generally need to be exposed to IMC messages several times before they will buy, firms estimate the degree to which customers are exposed to a message by multiplying frequency (the number of times an audience is exposed to a message) by reach (the percentage of the target population exposed to a specific marketing communication). Measuring Internet IMC effectiveness requires different measures, such as click-through tracking that measures how many times users click on banner advertising on websites.

Extended Chapter Outline LVIII.

Communicating with Consumers

A. The Communication Process (PPT 17-05) 1.

2.

3.

4.

5.

6.

The Sender The Transmitter Encoding The Communication Channel The Receiver Noise Adding Value 17.1: Chex Quest Returns! Bringing a Nostalgic Branded Game into Today details how General Mills is using an unusual communications channel, gaming online, to reintroduce its branded video game Chex Quest to reach nostalgic customers.

7. Feedback Loop B. How Consumers Perceive Communication (PPT 17-06) 1. Receivers Decode Messages Differently 2. Senders Adjust Messages According to the Medium and Receivers’ Traits

C. The AIDA Model (PPT 17-07) Social & Mobile Marketing 17.1: How Much Stuffing Is Enough? Oreon Uses TikTok to Find Out discusses Mondelez’s, the company that owns the Oreo brand, determination to find out how consumers like to eat Oreos by running a vast integrated marketing campaign. It specifically highlights the #CoikieWithACause TikToc challenge.

1.

2.

3.

4.

Awareness (PPT 17-08) Interest (PPT 17-09) Desire (PPT 17-10) Action (PPT 17-11) Adding Value: 17.2: But Can the Duck Belt Out a Hit? Aflac’s Country Music Marketing Communications to Clarify What Its Products Do provides an overview of what Aflac did to solve the problem of consumer’s lack of interest because they didn’t understand the products. The company seeks to clarify this problem with its advertising campaign, ―Aflac Isn’t.‖

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 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 17-13) 1. What are different steps in the communication process?

Answer: The different steps in the communication process are: The message originates from the sender, who must be clearly identified to the intended audience. The sender works with a creative department, whether in-house or from a marketing (or advertising) agency, to develop marketing communications. Encoding means converting the sender’s ideas into a message, which could be verbal, visual, or both. The communication channel is the medium— print, broadcast, the Internet, and so forth—that carries the message. The receiver is the person who reads, hears, or sees and processes the information contained in the message and/or advertisement. The sender, of course, hopes that the person receiving it will be the one for whom it was originally intended.

Noise is any interference that stems from competing messages, a lack of clarity in the message, or a flaw in the medium, and it poses a problem for all communication channels. The feedback loop allows the receiver to communicate with the sender and thereby informs the sender whether the message was received and decoded properly. Feedback can take many forms: a customer’s purchase of the item, a complaint, or compliment, the redemption of a coupon or rebate, a tweet about the product on Twitter, and so forth.

2. What is the AIDA model?

Answer: The AIDA model suggests that Awareness leads to Interest, which lead to Desire, which leads to Action. At each stage, the consumer makes judgments about whether to take the next step in the process. Customers actually have three types of responses, so the AIDA model is also known as the think, feel, do model. In making a purchase decision, consumers go through each of the AIDA steps to some degree, but the steps may not always follow the AIDA order. For instance, during an impulse purchase, a consumer may feel and do before he or she thinks.

LIX.

Channels Used in an Integrated Marketing Communications Strategy (PPT 17-14) Adding Value: 17.3: Dashing beyond Delivery: How DoorDash Is Leveraging All Its Marketing Options highlights three integrated marketing campaigns Door Dash is using while remaining consistent with its underlying service proposition.

A. Advertising (PPT 17-15) B. Public Relations (PPT 17-16) C. Sales Promotions PPT (17-17) D. Personal Selling (PPT 17-18) E. Direct Marketing PPT (17-19) F. Online Marketing (PPT 17-21) 1. Websites (PPT 17-22) Social & Mobile Marketing: 17.2: Tasty: A Revolution in Marketing or Just the Latest Example of IMC? provides an overview of Tasty, a division of BuzzFeed, taking a good idea and leveraging it across multiple channels to reach customers wherever they are. Its success has been the model for other companies to create similar platforms.

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2. Blogs (PPT 17-23) 3. Social Media (PPT 17-24) Adding Value 17.2: Combining Two Popular Trends: Advertising on Podcasts through In-Home Voice Assistants provides examples of companies that are using podcasts and in-home voice assistants, alone and in combination, to consider their potential for advertising and promoting the companies’ offerings.

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 17-25) 1. What are the different elements of an IMC program?

Answer: The different elements of an IMC program are advertising, public relations, sales promotions, personal selling, direct marketing, and online marketing.

LX. Planning for and Measuring IMC Success A. Goals (PPT 17-26) B. Setting and Allocating the IMC Budget (PPT 17-28, PPT 17-29), and PPT 17-30)) C. Measuring Success Using Marketing Metrics (PPT 17-31) 1. Traditional Media 2. Web-Based Media .

D. Planning, Implementing, and Evaluating IMC Programs—An Illustration of Google Advertising (PPT 17-32)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 17-35) 1. Why is the objective-and-task method of setting an IMC budget better than the rule-of-thumb methods?

Answer: The objective-and-task method determines the budget required to undertake specific tasks to accomplish communication objectives. Rule-of-thumb methods use prior sales and communication activities to determine the present communication budget. Although they are easy to implement, they have various limitations 2. How do firms use GRP to evaluate the effectiveness of traditional media?

Answer: When measuring IMC success, the firm should examine when and how often consumers have been exposed to various marketing communications. Marketing communications managers usually state their media objectives in terms of GRP (gross ratings points), which represent reach multiplied by frequency (GRP = reach * frequency).

3. How would a firm evaluate the effectiveness of its Google advertising?

Answer: Using Google AdWords, a firm can assess the effectiveness of its advertising expenditures by measuring the reach, relevance, and return on investment for each of the keywords that potential customers used during their Internet searches.

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Additional Resources This chapter focuses on the importance of the integrated marketing campaign effort. It is important for students to understand that all elements of the promotional mix must come together to form one unique, unified, marketing message or ―big idea‖ for the product. A good understanding of AIDA in presenting design elements is also critical and instructors should spend some time in class and through critical thinking exercises to fully explore these elements.

This is a simple concept that can form basic marketing strategies in the marketing tools. Instructors may want to divide the class in groups and have them develop an ad based on a candy bar on large poster board. They should work as a group and incorporate the elements of ad design (a preview of the next chapter on advertising design elements would need to be discussed) as well as the elements of AIDA. Have students tape their group ad to the white board and have each group present their advertisement and the AIDA concepts present. This critical thinking exercise is both creative and fun! Online tip: Have students individually create an advertisement incorporating the advertising design elements and AIDA. They can create the advertisement electronically, or hand-draw and scan to the discussion board.

Students are to write a paragraph on how AIDA is present in their ads. Have an anonymous online vote and declare a winner!

Another important concept is the IMC effort. While students often understand that these components are present, what should be emphasized is that they all must work together to deliver one, unified, unique message to the target market. Thus, the brand logo should be present on advertisements but also used in electronic media and direct marketing. The same ―big idea‖ or slogan should be used in the personal selling process, advertising, public relations efforts, etc. Remaining consistent with ONE message flowing through the elements of the promotional mix will allow more opportunity for the message to break through the ―noise,‖ enabling for brand recognition of a logo, or slogan, or shape of a package to trigger brand recall of your specific product when the consumer compares like brands.

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

Scion and Its Innovative IMC Campaign The Communication Process The Communication Process Frito Lay: Integrated Marketing Communications HSN Taking IMC to the Max: Pepsi Max and Modern Communications IMC at Dunkin’ iSeeit! Video Case: Benefits of Direct Marketing iSeeit! Video Case: The Communication Process Marketing Analytics Toolkit--Return on Marketing Investment: Green Initiatives Marketing Analytics Toolkit--Return on Marketing Investment: Keep Up with Jones Marketing Analytics Toolkit--Return on Marketing Investment: Jackson’s Moving & Storage

Case Analysis Click & Drag Matching Video Case Video Case Case Analysis Video Case Video Case Video Case

Learning Objectives 1701 02 03 04 05 X X X X X X X X X X X X X

X

X

Worksheet

X

Worksheet

X

Worksheet

X

Scion and its Innovative IMC Campaign 

Activity Type: Case Analysis



Learning Objectives: 17-01, 17-03



Difficulty: Hard



Activity Summary: This case describes Toyota’s campaign for its Scion line, targeted at younger buyers. Students answer questions relating chapter concepts to the case.

Activity



Introduction: This activity highlights Toyota's innovative campaign for the Scion. Toyota had a very specific objective in mind when it launched the Scion. The company was intent on winning over a much younger demographic with the hope of building loyal, lifetime customers. To reach this goal, Toyota launched an innovative integrated marketing communications (IMC) campaign.



Concept Review: Integrated marketing communications (IMC) represents the promotion P of the marketing mix. IMC encompasses a variety of communication disciplines—advertising, personal selling, sales promotion, public relations, direct marketing, and electronic media— used in combination to provide clarity, consistency, and maximum communicative impact.

IMC programs regard each of the firm's marketing communications elements as part of a whole, each of which offers a different means to connect with the target audience.

Follow-Up Activity

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th

Use this case in combination with the Ford Fiesta case in the Chapter 19 activities. Compare and contrast the IMC efforts of the two companies. It is an interesting comparison given that they have essentially the same target market.

The Communication Process



Activity Type: Click & Drag



Learning Objectives: 17-01



Difficulty: Medium



Activity Summary: Students read about activities that are part of the communication process and are asked to match them to the step of the process they represent.

Activity



Introduction: Target is a discount retailer that operates nearly 1,750 stores in 49 states.

Target differentiates itself from its competitors by offering more upscale, trend-forward merchandise at low cost. The store is planning a Back-to-School sale aimed at moms with children going back to school. These women make the majority of their household purchases.

Read about the Target sale announcement and then assemble the communication process model as instructed.



Concept Review: As the number of communication media has increased, the task of understanding how best to reach target consumers has become far more complex. The Communication Process model describes how communications go from the firm to the consumer and the factors that affect the way the consumer perceives the message.

Follow-Up Activity



Discuss: In the activity, Target measures store traffic to evaluate the impact of the ad campaign. What are some of the challenges of that kind of evaluation? This is an opportunity to expand on the discussion in the chapter of the lagged effect, and also to talk about how other changes in the environment can sometimes make it hard to see the impact of advertising.

The Communication Process – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 17-01



Difficulty: Medium



Activity Summary: Students read about activities that are part of the communication process and are asked to match them to the step of the process they represent.

Activity



Introduction: Target is a discount retailer that operates nearly 1,750 stores in 49 states.

Target differentiates itself from its competitors by offering more upscale, trend-forward merchandise at low cost. The store is planning a Back-to-School sale aimed at moms with children going back to school. These women make the majority of their household purchases.

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Read about the Target sale announcement and then assemble the communication process model as instructed. 

Concept Review: As the number of communication media has increased, the task of understanding how best to reach target consumers has become far more complex. The Communication Process model describes how communications go from the firm to the consumer and the factors that affect the way the consumer perceives the message.

Follow-Up Activity



Discuss: In the activity, Target measures store traffic to evaluate the impact of the ad campaign. What are some of the challenges of that kind of evaluation? This is an opportunity to expand on the discussion in the chapter of the lagged effect, and also to talk about how other changes in the environment can sometimes make it hard to see the impact of advertising.

Frito Lay: Integrated Marketing Communications



Activity Type: Video Case



Learning Objectives: 17-03



Difficulty: Medium



Activity Summary: This case discusses IMC efforts by Frito-Lay—on behalf of Doritos—to engage their customers. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: There are three elements of any IMC strategy: the consumer, the channels through which the message is communicated, and the evaluation of the results of the communication. This video examines one of the communication channels that Frito-Lay uses as part of its IMC strategy.



Concept Review: Integrated marketing communications (IMC) encompasses a variety of communication disciplines in combination to provide clarity, consistency, and maximum communicative impact. Instead of consisting of separate marketing communications elements with no unified control, IMC programs regard each of the firm's marketing communications elements as a part of a whole, each of which offers a different means to connect with the target audience. This integration of elements provides the firm with the best means to reach the target audience, and it enhances the value story by offering a clear and consistent message.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity



In class, visit the Doritos website and identify current interactive initiatives.



View some past years’ ―Crash the Super Bowl‖ ads (easy to find on YouTube). From 2009– 2012, Doritos ads created through the contest earned #1 spots in the USA Today AdMeter poll in three of the four years.

HSN

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

Activity Type: Video Case



Learning Objectives: 17-01, 17-03, 17-05



Difficulty: Medium



Activity Summary: This case discusses HSN’s multichannel retailing and marketing communications strategy. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Started in 1982, HSN (Home Shopping Network) has become a $2.8 billion multichannel retailer, using television, e-commerce, m-commerce, catalogs, and brick and mortar stores. It has recently launched applications for all major smartphones. HSN reaches 90 million homes, 24 hours a day, 7 days a week, 365 days a year. HSN has always been an innovator in its use of integrated marketing communications.



Concept Review: Promotion is the communication element of the 4 Ps. Marketers can use a variety of communication disciplines. Doing so requires Integrated Marketing Communications (IMC). IMC involves coordinating the use of these disciplines to provide message clarity, message consistency, and maximum communication impact. Technology has expanded the channels marketers can use to reach their target customers. Technology has also changed how an audience can interact with the broadcast content. In this activity, you will be applying your knowledge of IMC to the specific case of HSN.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity



Discuss: Suppose that HSN is trying to separately evaluate the impact of its various communication media. How can they do this in a multichannel world? For example, someone might see a product on TV but then buy it online. (This is hard to do and is one reason why multichannel strategies are complex.)

Taking IMC to the Max: Pepsi Max and Modern Communications



Activity Type: Case Analysis



Learning Objectives: 17-01, 17-02, 17-03



Difficulty: Medium



Activity Summary: This case discusses innovative marketing communications efforts by PepsiCo on behalf of Pepsi Max. Students read the case and are then asked to answer questions applying chapter concepts to the case material.

Activity



Introduction: Pepsi has developed an innovative, integrated campaign to support Pepsi Max. This activity is important because integrated marketing communications is essential to a product’s—and a firm’s—ability to effectively communicate value to potential customers. The goal of this exercise is to test your understanding of integrated marketing communications by applying chapter concepts to Pepsi’s activities.

Follow-Up Activity

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Pepsi Max’s ―Unbelievable‖ social media campaign won a 2015 Webby award for its creativity. In class, review the campaign and evaluate it. For details, see: http://webbyawards.com/winners/2015/online-film-video/branded-entertainment/integratedcampaigns/pepsi-max-unbelievable-campaign/

IMC at Dunkin’ 

Activity Type: Video Case



Learning Objectives: 17-03, 17-05



Difficulty: Easy/Medium



Activity Summary: This case discusses Dunkin’s integrated marketing communications.

After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: The integration provided by an IMC campaign gives Dunkin the best means to

connect with its intended target audience with a clear and consistent message. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Benefits of Direct Marketing



Activity Type: Video Case



Learning Objectives: 17-03



Difficulty: Medium



Activity Summary: This video illustrates how a firm can use direct marketing to target different types of consumers.

Activity 

Introduction: Direct marketing includes both offline media (such as catalogs, direct mail, telemarketing, and televised infomercials) as well as digital media (such as email, text-message marketing, and mobile advertising). This activity is important because of how a firm develops its direct marketing campaign can lead to very different response rates from consumers. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: The Communication Process



Activity Type: Video Case



Learning Objectives: 17-01

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

Difficulty: Medium



Activity Summary: This video illustrates how a firm effectively uses the traditional communication process to reach potential customers.

th

Activity 

Introduction: Consumers are inundated with thousands of promotional messages a day. In order for a firm’s message to stand out, marketers must understand the communication process. This activity is important because the ability to effectively communicate a marketing message is the difference between success and failure.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Marketing Analytics Toolkit--Return Return on Marketing Investment: Green Initiatives 

Activity Type: Worksheet



Learning Objectives: 18-05



Difficulty: Hard



Activity Summary: Students identify the various IMC element (advertising, social media, promotions, etc.) the cost of each element and then the sales generated by each element.

Activity



Introduction: In order to evaluate the success of any Integrated Marketing Campaign the

marketer must calculate the Return on Marketing Investment (ROMI). The ROMI informs the marketer as to which IMC activities (advertising, social media, key words, etc.) generate the greatest return (sales). This important metric guides future resource allocation decisions. 

Concept Review: To calculate ROMI you will need to use the following formula:

Gross Margin − Marketing Expenditure ROMI = ----------------------------------------------------------------- × 100 Marketing Expenditure

Marketing Analytics Toolkit--Return Return on Marketing Investment: Keep Up with Jones 

Activity Type: Worksheet



Learning Objectives: 18-05



Difficulty: Hard



Activity Summary: Students evaluate the current IMC media buys to promote a product or service and evaluate where future resources should be directed.

Activity



Introduction: In order to evaluate the success of any Integrated Marketing Campaign the

marketer must calculate the Return on Marketing Investment (ROMI). The ROMI informs

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the marketer as to which IMC activities (advertising, social media, key words, etc.) generate the greatest return (sales). This important metric guides future resource allocation decisions. 

Concept Review: To calculate ROMI you will need to use the following formula:

Gross Margin − Marketing Expenditure ROMI = ----------------------------------------------------------------- × 100 Marketing Expenditure Marketing Analytics Toolkit--Return on Marketing Investment: Jackson’s Moving & Storage 

Activity Type: Worksheet



Learning Objectives: 18-05



Difficulty: Hard



Activity Summary: Students evaluate the current IMC media buys to promote a product or service and evaluate where future resources should be directed.

Activity



Introduction: In order to evaluate the success of any Integrated Marketing Campaign the

marketer must calculate the Return on Marketing Investment (ROMI). The ROMI informs the marketer as to which IMC activities (advertising, social media, key words, etc.) generate the greatest return (sales). This important metric guides future resource allocation decisions. 

Concept Review: To calculate ROMI you will need to use the following formula:

Gross Margin − Marketing Expenditure ROMI = ----------------------------------------------------------------- × 100 Marketing Expenditure

Chapter 18 advertising, public relations, and sales promotions Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview

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This chapter addresses the steps in planning an advertising campaign, the elements of an effective advertisement, and sales promotions. Instructors should review the advertising budget strategies in detail.

Students generally have a good idea of sales promotions as consumers.

Brief Chapter Outline Step 1: Identify Target Audience Step 2: Set Advertising Objectives Step 3: Determine the Advertising Budget Step 4: Convey the Message Step 5: Evaluate and Select Media Step 6: Create Advertisements Step 7: Assess Impact Using Marketing Metrics Regulatory and Ethical Issues in Advertising Public Relations Sales Promotion Learning Objectives LO18-1 Describe the steps in designing and executing an advertising campaign.

Firms (1) identify their target market, (2) set advertising objectives, (3) set the advertising budget, (4) depict their product or service, (5) evaluate and select the media, (6) create the ad, and (7) assess the impact of the ad.

LO18-2 Identify three objectives of advertising.

All advertising campaigns are designed to inform, persuade, or remind customers. Informative advertising is communication used to create and build brand awareness. Persuasive advertising is communication used to motivate consumers to take action. Finally, reminder advertising is communication used to remind or prompt repurchases.

LO18-3 Describe the different ways that advertisers appeal to consumers.

Advertising appeals are either informational or emotional. Informational appeals influence purchase decisions with factual information and strong arguments built around relevant key benefits that encourage consumers to evaluate the brand favorably. Emotional appeals indicate how the product satisfies emotional desires rather than utilitarian needs.

LO18-4 Identify the various types of media.

Firms can use mass media channels like newspapers or television to reach large numbers of anonymous audience members. Niche media, such as cable television and specialty magazines, are generally used to reach narrower segments with unique demographic characteristics or interests. When choosing media, firms must match their objectives to that channel. Also, certain media are better at reaching a particular target audience than are others.

LO18-5 Identify agencies that regulate advertising.

Advertising is regulated by a plethora of federal and state agencies. The most important federal agencies are the FTC, which protects consumers against general deceptive advertising; the FCC, which has jurisdiction over radio, television, wire, satellite, and cable and covers issues regarding the use of tobacco products and objectionable language; and the FDA, which regulates food, dietary supplements, drugs, cosmetics, and medical devices.

LO18-6 Describe the elements of a public relations toolkit.

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A variety of elements composes a firm’s public relations toolkit. They include publications, video and audio programs, public service announcements, annual reports, media kits (e.g., press kits), news releases, and electronic media (e.g., websites).

LO18-7 Identify the various types of sales promotions.

Sales promotions are special incentives or excitement-building programs that encourage purchase and include coupons, deals, premiums, contests, sweepstakes, samples, POP displays, rebates, and product placement. They either push sales through the channel, as is the case with contests directed toward retail salespeople, or pull sales through the channel, as coupons and rebates do.

Extended Chapter Outline LXI.

Step 1. Identify Target Audience (PPT 18-06)

LXII.

Step 2. Set Advertising Objectives (PPT 18-07)

A. Informative Advertising (PPT 18-08) B. Persuasive Advertising (PPT 18-09)

C. Reminder Advertising (PPT 18-10) D. Focus of Advertisements (PPT 18-11 and PPT 18-12) Adding Value 18.1 How to Advertise during a Pandemic: IKEA Offers Building Instructions for Forts at Home highlights IKEA’s implementation of a creative advertising program during the COVID-19 pandemic by publishing a series of five instruction manuals for how to build forts at home.

Ethical & Societal Dilemma 18.1 Effectively Controversial or Just Plain Cruel? A Public Health Campaign in South Dakota describes how South Dakota is using advertising to increase awareness of meth addictions. Critics complained that the Ironic and humorous messages were inappropriate for such a serious problem.

LXIII.

Step 3. Determine the Advertising Budget (PPT 18-14)

LXIV.

Step 4. Convey the Message (PPT 18-14)

A. The Message B. The Appeal (PPT 18-15) 1. Informational Appeals 2. Emotional Appeals (PPT 18-16) ethical & societal dilemma 18.2: When Is a Toy Educational, and When Is It Just Play? The Potential for Misleading Claims by Marketers of STEM Toys discusses the fact that no rules govern what toys can be labeled as educational. Companies are selling toys as STEM because parents are concerned about their children falling behind their counterparts on other countries in the areas of science, technology, engineering and ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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mathematics. A concern that marketers make unverified or misleading claims about their products.

LXV.

Step 5. Evaluate and Select Media (PPT 18-17) ethical & societal dilemma 18.3: It’s Both Cute and Horrifying: A Historical Ad That Tried to Get Toddlers to Chew More Gum demonstrates how ethics in advertising have changed over the years by highlighting a 1938 Wrigley’s campaign targeting toddlers to chew gum. Each letter mailed contained a piece of gum

A. Mass and Niche Media (PPT 18-18) B. Choosing the Right Medium (PPT 18-19, 18-20) C. Determining the Advertising Schedule (PPT 18-21) LXVI.

Step 6. Create Advertisements (PPT 18-22)

LXVII.

Step 7. Assess Impact Using Marketing Metrics (PPT 18-23)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 18-24) 1. What are the steps involved in planning an ad campaign?

Answer: The steps involved in planning an ad campaign include identifying target audiences, setting advertising objectives, determining the budget, conveying the message, evaluating and selecting the media, creating advertisements, and assessing impact using marketing metrics.

2. What is the difference between informational, persuasive, and reminder advertising?

Answer: Informational advertising helps consumers make purchase decisions by offering information and strong arguments built around relevant issues that encourage consumers to evaluate the brand favorably based on the key benefits it provides. Persuasive advertising motivates consumers to act. Reminder advertising is communication used to remind or prompt repurchases, especially products that have gained market acceptance and are in the maturity stage of their life cycle.

3. What are the pros and cons of the different media types?

Answer: The advantages of television are that it has wide reach and incorporates sound and video; however, it has high costs, several channel and program options, and may increase awareness of competitors’ brands. The advantages of radio are that it is relatively inexpensive, can be selectively targeted, and has wide reach; however, it has no video, which limits presentation; consumers give less focused attention than TV; and exposure periods are short.

The advantages of magazines are that they are very targeted and subscribers pass them along to others; however, they are relatively inflexible and it takes some time for the magazine to be available. The advantages of newspapers are that they are flexible, timely, and able to localize; however, it can be expensive in some markets; it involves potential loss of control over placement; and advertisements have a short life span. The advantages of Internet/mobile are that it can be linked to detailed content, is highly flexible and interactive, and allows for specific targeting; however, it is becoming cluttered and the ad may be blocked by software on the computer. The advantages of outdoor/billboard advertising are that it is relatively inexpensive and offers opportunities for repeat exposure; however, it is not easily targeted, has placement problems in some markets, and exposure time is very short. The advantages of direct marketing ©McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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are that it is highly targeted and allows for personalization; however, cost can vary depending on type of direct marketing use; traditional media, like mail, will be more expensive than newer media.

4. How can the effectiveness of advertising be evaluated?

Answer: The effectiveness of an advertising campaign must be assessed before, during, and after the campaign has run. Firms can use Pretesting, Tracking, and Posttesting.

LXVIII. Regulatory and Ethical Issues in Advertising (PPT 18-25, 18-26) ethical & societal dilemma 18.4: When Is It Bragging, ad When Is It False Advertising --- and Who Decides? Comparative Advertising by Chevrolet and the Responses by Its Rivals discusses GMs advertising campaign and the competitors claiming it’s false advertising. In the ads, the company claims the four models are the most reliable. However, Ford, Toyota, and Honda, the subjects of the comparative ads, claim the ads are false advertising based on the fact the ratings are based on 2015 models, but the ads are for 2017 models.

LXIX.

Public Relations (PPT 18-28, PPT 18-29, and PPT 18-30)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. PPT 18-31) 1. Why do companies use public relations as part of their IMC strategy?

Answer: Public relations people on both sides help orchestrate the events to get the maximum benefit for both parties. Good PR has always been an important success factor.

2. What are the elements of a public relations toolkit?

Answer: They include publications, video and audio offerings, annual reports, media relations items like press kits, news releases, speeches, and event sponsorships; and electronic media such as websites and e-mail campaigns.

LXX.

Sales Promotion (PPT 18-32)

A. Types of Sales Promotion (PPT 18-33 and PPT 18-34) 1. Coupons 2. Deals 3. Premiums 4. Contests 5. Sweepstakes 6. Samples 7. Loyalty Programs 8. Point-of-Purchase Displays 9. Rebates 10. Product Placement B. Using Sales Promotion Tools

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 18-35)

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1. What are various forms of sales promotions?

Answer: These can include coupons, deals, premiums, contests, sweepstakes, samples, loyalty programs, point-of-purchase displays, rebates, and product placement.

2. What factors should a firm consider when evaluating a sales promotion?

Answer: To evaluate a trade promotion, the retailer considers:  The realized margin from the promotion.  The cost of the additional inventory carried due to buying more than the normal amount.  The potential increase in sales from the promoted merchandise.  The long-term impact on sales of the promotion.  The potential loss suffered when customers switch to the promoted merchandise from merchandise that is more profitable.  The additional sales made to customers attracted to the store by the promotion.

Additional Resources

Students often see advertisements but do not realize that the ad as well as the ad message has undergone a comprehensive process before the consumer ever sees or hears it. This process is reflected in Exhibit 18.1. Instructors may want to divide students into 7 groups and assign each group one role that corresponds to one of the steps in the ad campaign planning process. Students will learn that they need to work cooperatively in order for the ad to be successful. After group 1 identifies the target audience for one particular product (perhaps a new cereal) they hand it over to group 2 who sets the advertising objectives. This may take a bit of time (step 6 can be a rough sketch due to time constraints) but it is interesting to observe the class and see what the final outcome is.

Online Tip: Have students in the online platform also go through the process in either teams or individually using the discussion board. One online class could be divided into 3 or 4 representing a product with 7 parts within which represent the steps in the ad campaign. Product A has a discussion thread where the person assigned ―identify target market‖ posts, then the person who is assigned Product A, step 2, then posts, etc. which will culminate into a full process of going through the steps. Product B would have a discussion thread, as would Product C and Product D. In teaching design concepts of an ad, assign students a familiar product, such as a new candy bar that also keeps you awake, and have each group design an ad incorporating all the elements of the ad into their work. Each group then presents and explains the elements to the class stimulating class discussion on the topic and enhancing understanding of how critical the components are. Students really enjoy the hands-on creativity that this teaching tip brings.

Students can also design a sales promotion for the above ad stating the purpose of the sales promotion and the value it brings to both the manufacturer and the consumer.

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Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity Conveying the Message Steps in Planning an Ad Campaign Steps in Planning an Ad Campaign Types of Sales Promotions Types of Sales Promotions Advertising: Ford Making Master Card Priceless iSeeit! Video Case: Advertising, Promotions, and Public Relations Types of Media Available for Advertising iSeeit! Video Case: Three Objectives of Advertising Beyond Product Placement: The Positive Partnership of Lexus and Black Panther

Type Case Analysis Click & Drag Matching Click & Drag Matching Video Case Case Analysis Video Case

01 X X X

02 X

Learning Objectives 1803 04 05 06 X

07

X X X

X X X

X

Matching

X X

X X

X X

X

Video Case

X

Case Analysis

X

X

X

Conveying the Message 

Activity Type: Case Analysis



Learning Objectives: 18-01, 18-02, 18-03



Difficulty: Hard



Activity Summary: This case explains Dole’s advertising strategy for the introduction of Dole Fruit Bowls. The student answers questions applying chapter concepts to the case.

Activity



Introduction: Dole Food Company has been selling pineapples since 1851 and today is the world's largest producer and marketer of fresh fruit, fresh vegetables, fresh-cut flowers, and a growing line of packaged foods. In the mid-1990s, Dole developed a new product line to meet consumers' evolving needs, and along with the new product line came new advertising challenges. Review the case and answer the corresponding questions about Dole's advertising strategy.



Concept Review: All advertising campaigns are designed to inform, persuade, or remind customers about a product, company, or category. Ads can be used to stimulate demand for a particular category or industry, or for a specific brand, firm, or item. To create a successful campaign, a firm needs to identify its target market, set advertising objectives, depict its product, evaluate and select media, create the ad, and assess the ad's impact.

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By the end of 2003, volume growth at Dole also was sweet as customers continued to choose Dole's healthy snack over more traditional ones. Today, Dole is the world's largest producer and marketer of fresh fruit, fresh vegetables, fresh-cut flowers, and a growing line of packaged foods. Dole does business in more than 90 countries and employs 36,000 full-time employees as well as 23,000 full-time seasonal (or temporary) employees worldwide. By understanding the needs of consumers, modifying the product to meet those needs, and using advertising to convey the benefits of the product to different consumer segments, Dole was able to create a successful product.

Follow-Up Activity This can be done individually, in small groups, or as a class. Visit the Dole website and choose a fairly new product mentioned there (the ―Videos‖ page is a good place to look—find one for which they’ve posted a video). Review the product information on the website (which may be minimal, or may include splashy graphics) and view product videos. What does the target market appear to be? Identify a different target market, and describe an ad that would be appropriate for that target market.

Steps in Planning an Ad Campaign 

Activity Type: Click & Drag



Learning Objectives: 18-01



Difficulty: Medium



Activity Summary: The student classifies a set of activities according to the steps of the advertising planning process they represent.

Activity



Introduction: During the process of marketing a new product to address shifting consumer needs, Dole found itself pursuing a new target market and creating a new product line. Read about the process Dole went through to develop the advertising campaign and then assemble the advertising development process as instructed.



Concept Review: Designing a successful advertising program requires much planning at each step in the process, helping to ensure that the intended message reaches the right audience and has the desired effect. To get a consumer to remember both the ad and the brand, advertisers first must get the person's attention. This job has been made difficult by the increasing number of communication channels and changes in consumers' media usage. Advertisers are attempting to use creativity and a mix of media that offer better opportunities to reach their target markets.

In the activity, examples of activities are provided, and the student must associate each example to the appropriate step of the advertising planning process.

Follow-Up Activity (Same as for the previous activity, since both activities relate to Dole). This can be done individually, in small groups, or as a class. Visit the Dole website and choose a fairly new product mentioned there (the ―Videos‖ page is a good place to look—find one for which they’ve posted a video). Review the product information on the website (which may be minimal or may include splashy graphics) and view product videos. What does the target market appear to be? Identify a different target market, and describe an ad that would be appropriate for that target market.

Steps in Planning an Ad Campaign – Keyboard Navigable Alternate Version

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

Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 18-01



Difficulty: Medium



Activity Summary: The student classifies a set of activities according to the steps of the advertising planning process they represent.

th

Activity 

Introduction: During the process of marketing a new product to address shifting consumer needs, Dole found itself pursuing a new target market and creating a new product line. Read about the process Dole went through to develop the advertising campaign and then assemble the advertising development process as instructed.



Concept Review: Designing a successful advertising program requires much planning at each step in the process, helping to ensure that the intended message reaches the right audience and has the desired effect. To get a consumer to remember both the ad and the brand, advertisers first must get the person's attention. This job has been made difficult by the increasing number of communication channels and changes in consumers' media usage. Advertisers are attempting to use creativity and a mix of media that offer better opportunities to reach their target markets.

In the activity, examples of activities are provided and the student must associate each example to the appropriate step of the advertising planning process.

Follow-Up Activity (Same as for the previous activity, since both activities relate to Dole). This can be done individually, in small groups, or as a class. Visit the Dole website and choose a fairly new product mentioned there (the ―Videos‖ page is a good place to look—find one for which they’ve posted a video). Review the product information on the website (which may be minimal or may include splashy graphics) and view product videos. What does the target market appear to be? Identify a different target market, and describe an ad that would be appropriate for that target market.

Types of Sales Promotions 

Activity Type: Click & Drag



Learning Objectives: 18-07



Difficulty: Medium



Activity Summary: The student classifies different examples of sales promotions according to the category each one represents.

Activity



Introduction: Firms, especially retailers, are constantly trying to develop promotions that stimulate sales and drive purchases. Many sales promotions attempt to build short-term sales, whereas other sales promotions programs, like loyalty programs and contests, have become integral components of firms' long-term customer relationship management programs. Billy's Sporting Goods store is considering offering a sales promotion to stimulate sales and build longterm relationships. The following exercise examines some of the different types of sales promotions and their advantages and disadvantages.

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

th

Concept Review: Sales promotions are special incentives or excitement-building programs that encourage consumers to purchase a particular product or service, typically used in conjunction with other advertising or personal selling programs. The tools of any sales promotion can be focused on either channel members such as wholesalers or retailers or end-user consumers.

There are many types of sales promotion, including: coupons, deals, premiums, contests, sweepstakes, samples, loyalty programs, POP displays, rebates, and product placement.

The student is asked to classify eight examples of sales promotions according to the category to which each one belongs.

Follow-Up Activity Pick two products that offer a significant contrast (perhaps a car and a pair of shoes, both with college students as the target market). In small groups, ask the students to decide which types of sales promotions would be most appropriate for each of the two products, and give some specific examples (with a level of detail like those in the activity).

Types of Sales Promotions – Keyboard Navigable Alternate Version 

Activity Type: Matching Alternate to the Click & Drag Above



Learning Objectives: 18-07



Difficulty: Medium



Activity Summary: The student classifies different examples of sales promotions according to the category each one represents.

Activity



Introduction: Firms, especially retailers, are constantly trying to develop promotions that stimulate sales and drive purchases. Many sales promotions attempt to build short-term sales, whereas other sales promotions programs, like loyalty programs and contests, have become integral components of firms' long-term customer relationship management programs. Billy's Sporting Goods store is considering offering a sales promotion to stimulate sales and build longterm relationships. The following exercise examines some of the different types of sales promotions and their advantages and disadvantages.



Concept Review: Sales promotions are special incentives or excitement-building programs that encourage consumers to purchase a particular product or service, typically used in conjunction with other advertising or personal selling programs. The tools of any sales promotion can be focused on either channel members such as wholesalers or retailers or end-user consumers.

There are many types of sales promotion, including: coupons, deals, premiums, contests, sweepstakes, samples, loyalty programs, POP displays, rebates, and product placement.

The student is asked to classify eight examples of sales promotions according to the category to which each one belongs.

Follow-Up Activity Pick two products that offer a significant contrast (perhaps a car and a pair of shoes, both with college students as the target market). In small groups, ask the students to decide which types of sales promotions would be most appropriate for each of the two products, and give some specific examples (with a level of detail like those in the activity).

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Advertising: Ford 

Activity Type: Video Case



Learning Objectives: 18-02



Difficulty: Medium



Activity Summary: This case explores the social marketing campaign to support the relaunch of the Ford Fiesta. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Ford's recent relaunch of its Ford Fiesta stands as a great marketing success. As you will see, it helped to reposition the product to a new target market by using the target's love for technology and social networking.



Concept Review: This video explores an advertising campaign that Ford has used to incorporate social networking and the use of technology in reaching its target market. The campaign was very effective because it met the goal of reaching its target market in ways that far exceeded the company's original goals.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activities



Since many of the students will be about the same age as the Fiesta target market, ask them to assess this campaign. Regardless of what the video says, what aspects of the campaign do they think were most (and least) appropriate to appeal to young adults, and why?



Use this case in combination with the Scion case in the Integrated Marketing Communications chapter (Chapter 18). Compare and contrast the IMC efforts of the two companies. It is an interesting comparison given that they have essentially the same target market.

Making MasterCard Priceless



Activity Type: Case Analysis



Learning Objectives: 18-01, 18-02, 18-03, 18-04, 18-05



Difficulty: Hard



Activity Summary: This case describes a campaign building on the long-standing MasterCard Priceless campaign. The student answers questions applying chapter concepts to the case.

Activity



Introduction: In 1997, MasterCard International and the advertising agency McCann Erickson Worldwide launched the emotion-based Priceless campaign, which celebrated life's most precious moments with the tagline, "There are some things money can't buy. For everything else, there's MasterCard." The campaign was hugely successful, saving MasterCard from disaster.

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However, as consumer values and needs changed and the marketplace evolved, MasterCard faced a new challenge: how to retain customer loyalty and brand identification while reinvigorating its advertising. The solution was the Priceless Cities campaign. 

Concept Review: Advertising is a paid form of communication, delivered through media from an identifiable source, about an organization, product, service, or idea, designed to persuade the receiver to take some action, now or in the future. When marketers plan and execute an advertising campaign, there are a series of steps they need to go through. Among these are determining the overall advertising objectives and deciding how to convey the message. Firms also need to evaluate and choose from a variety of mass and niche media. As part of an overall IMC strategy, most firms also combine various types of sales with advertising.

Follow-Up Activities



Individual writing prompt: Ask students to identify another advertising campaign that has been used over a long period of time but has changed slightly to maintain consumer interest. Ask them to explain how it has changed, and assess how effective the changes have been in keeping the campaign fresh and getting consumers’ attention.

Two current examples (as of this writing) are direct competitors in the online insurance market: Geico and Progressive. Geico’s primary spokes-animal has been the gecko, though they have also branched out with other types of ads. Progressive has used Flo as their spokesperson, with only occasional diversions.



Alternatively, you can discuss a classic example: the Energizer Bunny ads. Each ad started with an apparent ad for some other product, which was then interrupted by a motorized stuffed rabbit banging a drum with the Energizer logo. The tagline: ―Energizer—it keeps going and going.‖ Over time, consumers started to wonder, each time an ad started, if it would be interrupted by the bunny. In this way, Energizer managed to sometimes get consumers’ attention even during other products’ ads! Several of the ads are available on YouTube; just search on ―Energizer Bunny Ads.‖



Another classic example was the Taster’s Choice series, which consisted of a series of small vignettes in which two neighbors in an apartment building became acquainted, and slowly a romance developed. Some of these are available on YouTube. Any students who have watched the Buffy the Vampire Slayer TV series will also find them interesting because the male character was played by Anthony Stewart Head, who was Giles the librarian on the show. iSeeit! Video Case: Advertising, Promotions, and Public Relations



Activity Type: Video Case



Learning Objectives: 18-02, 18-04, 18-06, 18-07



Difficulty: Medium



Activity Summary: This video case considers different tools to promote a coffee shop.

Activity



Introduction: Organizations have a variety of valuable tools and techniques to reach customers and communicate the unique value they provide. By using advertising to create awareness, promotions to entice customers to switch brands, and public relations to create awareness, businesses can influence customers' decision-making behaviors. Take for example the Coffee Collective and its newest offering—patio seating. Developed with its dog-loving customers in mind, Martha decides to promote this value-added offering by partnering with the local humane

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society. She leverages advertising, in the form of radio and social media, to create awareness of the pet adoption event hosted on her new patio. By offering a free dog treat for each coffee purchased, she leverages promotion to entice customers to switch to her coffee shop. Finally, by partnering with the humane society, she hopes to create awareness by having diverse media outlets talk about her unique event free of charge. While each of these techniques has their strengths and weaknesses, by all accounts her integrated strategy of using all three channels has been successful. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Types of Advertising Media



Activity Type: Matching



Learning Objectives: 18-04



Difficulty: Medium



Activity Summary: The student demonstrates their understanding of the advantages and disadvantages of the various types of media available for advertising.

Activity



Introduction: There is a connection between the content of an advertisement and the characteristics of the media used to carry the message. This activity is important because each alternative of media is more suited to accomplishing different objectives than others. Also, all media choices have particular advantages and disadvantages that should be taken into account when planning a media strategy. iSeeit! Video Case: Three Objectives of Advertising



Activity Type: Video Case



Learning Objectives: 18-02



Difficulty: Medium



Activity Summary: This video case illustrates the three unique objectives of advertising: to inform, to persuade, and to remind in the context of the product life cycle.

Activity



Introduction: Advertising is everywhere we look, making it one of the most noticeable marketing activities. Firms spend hundreds of billions of dollars on advertising campaigns each year in an effort to appeal to large numbers of individuals. This activity is important because in order for marketers to develop an effective advertising campaign, they must understand the marketing goals for the products or services they are promoting, as well as where these products and services are in their life cycles.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Beyond Product Placement: The Positive Partnership of Lexus and Black Panther

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

Activity Type: Case Analysis



Learning Objectives: 19-07



Difficulty: Medium



Activity Summary: Students read the case about Lexus product placement campaign and then answer questions that follow.

Activity



Introduction: When marketers use product placement, they pay to have their product included in nontraditional situations, such as in a scene in a movie or television program. This activity is important because, by doing so, they attempting to increase the visibility of their products



Concept Review: By understanding how best to entice customers to purchase or consume a particular product, a firm can develop promotional elements that are of interest to and achieve the desired response from those customers. The goal of this exercise is to demonstrate your understanding of product placement and how it’s used to appeal to customers.

chapter 19 personal selling and sales management Tools for Instructors       

Chapter Overview Brief Chapter Outline Learning Objectives Extended Chapter Outline PowerPoint Slides Additional Resources Connect Application Exercises

Chapter Overview This chapter focuses on the personal selling process, ethical and legal issues of selling, and managing the sales force.

Brief Chapter Outline The Scope and Nature of Personal Selling The Personal Selling Process Managing the Sales Force Ethical and Legal Issues in Personal Selling

Learning Objectives LO19-1 Describe the value added of personal selling.

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Although the cost of an average B2B sales call is expensive, many firms believe they couldn’t do business without their sales forces. Customers can buy many products and services without the help of a salesperson, but in many other cases, it is worth the extra cost built into the price of a product to be educated about the product or get valuable advice. Salespeople can also simplify the buying process and therefore save the customer time and hassle.

LO19-2 Define the steps in the personal selling process.

Although we discuss selling in terms of steps, it truly represents a process, and the time spent in each step varies according to the situation. In the first step, the salesperson generates a list of viable customers. During the second step, the preapproach, the salesperson gathers information about the customer and prepares for the presentation. The third step, the sales presentation, consists of a personal meeting between the salesperson and the customer. Through discussion and by asking questions, the salesperson learns where the customer is in the buying process and tailors the discussion around what the firm’s product or service can do to meet that customer’s needs. During the fourth step, the close, the salesperson asks for the order. Finally, during the follow-up, the salesperson and support staff solidify the long-term relationship by making sure the customer is satisfied with the purchase and addressing any complaints. The follow-up therefore sets the stage for the next purchase.

LO19-3 Describe the key functions involved in managing a sales force.

The first task of a sales manager, assuming a firm is starting a sales force from scratch, is to determine whether to use a company sales force or manufacturer’s representatives. Then sales managers must determine what the primary selling responsibilities will be—order getter, order taker, or sales support. The sales manager recruits and selects salespeople, but because there are all sorts of sales jobs, he or she must determine what it takes to be successful and then go after people with those attributes. In the next step, training, firms can choose between on-the-job and online training. Sales managers are also responsible for motivating and compensating salespeople. Most salespeople appreciate a balance of financial and nonfinancial rewards for doing a good job. Finally, sales managers are responsible for evaluating their salespeople. Normally, salespeople should be evaluated on a combination of objective measures, such as sales per hour, and subjective measures, such as how friendly they appear to customers.

LO19-4 Describe the ethical and legal issues in personal selling.

Ethical and legal issues arise in three areas in personal selling. First, ethical and legal issues could arise based on how the sales manager interacts with the sales force. Second, there might be inconsistencies between corporate policy and the salesperson’s ethical comfort zone. Finally, ethical and legal issues can arise as the salesperson interacts with customers.

Extended Chapter Outline LXXI.

The Scope and Nature of Personal Selling (PPT 19-04)

A. Personal Selling as a Career (PPT 19-05) B. The Value Added by Personal Selling (PPT 19-06) 1. Sales People Provide Information and Advice 2. Sales People Save Time and Simplify Buying 3. Salespeople Build Relationships LXXII. The Personal Selling Process (PPT 19-07)

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A. Step 1: Generate and Qualify Leads (PPT 19-08, 19-09) Adding Value 19.1 A LinkedIn Advertising Campaign That Focuses on How People Can Sell discusses the fact that one of its efforts is to people perform their jobs effectively. One of the resulting things it did was to run a campaign that focuses on selling.

B. Step 2: Preapproach and the Use of CRM Systems (PPT 19-10) C. Step 3: Sales Presentation and Overcoming Reservations (PPT 19-11) 1. The Presentation Adding Value 19.2 Selling When the Sharks Are Circling: The Selling Lessons to Learn from Shark Tank Contestants highlights the three things contestants need to accomplish to be make a successful presentation to the Sharks on Shark Tank. First, they have to get accepted onto the show. Second, they have to appeal to the Sharks.

Finally, although receiving the funding is clearly helpful, even entrepreneurs that do not convince a shark might benefit from the increased exposure the show grants their products. The key is a well-told story.

2. Handling Reservations D. Step 4: Closing the Sale (PPT 19-13) E. Step 5: Follow-Up (PPT 19-14)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 19-15) 1. Why is personal selling important to an IMC strategy?

Answer: Firms that use personal selling as part of their integrated marketing communications program do so because it adds value to their product or service mix—that is, personal selling is worth more than it costs.

2. What are the steps in the personal selling process?

Answer: Generate and qualify leads, preapproach, sales presentation and overcoming reservations, closing the sale, follow-up.

LXXIII. Managing the Sales Force (PPT 19-16) A. Sales Force Structure (PPT 19-17) 1. Company Sales Force or Manufacturer’s Representative 2. Salesperson Duties (PPT 19-18) a. Order Getting b. Order Taking c. Sales Support

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ethical & societal dilemma 19.1: Are Multilevel Marketing Sales a Route to Fabulous Wealth or Really just a Pyramid Scheme? focuses on LuLa Roe as a multilevel marketing sales structure. Although MLMs arguable differ from pyramid schemes, continued evidence from recent events in the MLM industry suggest the lines often get crossed. d. Combination Duties Adding Value 19.3: Managing the Sales Force and the Merchandise at Old Navy highlights Old Navy’s use of technology to manage its sales force by equipping each employee with mobile technology. They receive notifications of when inventory needs to be restocked, reminders to cashiers to get contact information or encourage customers to open a credit card, notifications about pulling merchandise of an online order to be picked up in store among other things. The efforts appear to be successful.

B. Recruiting and Selecting Salespeople (PPT 19-19 and PPT 19-20) C. Sales Training (PPT 19-21) D. Motivating and Compensating Salespeople (PPT 19-22) 1. Financial Rewards 2. Nonfinancial Rewards 3. Evaluating Salespeople by Using Marketing Metrics (PPT 19-23)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 19-24) 1. What do sales managers need to do to manage their sales force successfully?

Answer: Sales managers need to train, motivate, and compensate their sales force adequately.

2. What is the difference between monetary and nonmonetary incentives?

Answer: Monetary incentives include bonuses, a sales contest, or commission. Nonfinancial incentives include objects like plaques or rings, free trips or days off, or public recognition.

LXXIV. Ethical and Legal Issues in Personal Selling (PPT 19-25) A. The Sales Manager and the Sales Force (PPT 19-26) B. The Sales Force and Corporate Policy (PPT 19-27) C. The Salesperson and the Customer (PPT 19-28)

 Progress Check: Several questions are offered for students to check their understanding of core concepts. (PPT 19-29) 1. What are three areas of personal selling in which ethical and legal issues are more likely to arise?

Answer: The sales manager and the sales force, the sales force and corporate policy, and the salesperson and the customer.

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Additional Resources Students are familiar with the selling process and most of the concepts relating to customer sales; however, they are likely unfamiliar with the B2B buying process so vocabulary such as product specification, RFP, and performance assessments should be thoroughly reviewed.

Students can often regurgitate the two selling processes in Exhibit 19.2. However, they may not have a true understanding of what happens in each stage and how it leads to sales. Divide the class into 4 or 5 groups. Assign two groups the personal selling process with the mission to develop a script of selling a common product (pick one, a car perhaps). Each of these two groups should have a different product to script through the personal selling process and present the skit to the class. The class will have the task of identifying the various stages of the personal selling process (taking notes) and the skit is discussed after the ―debut.‖ Students have fun with the skit and learn more about the importance of the personal selling process.

While two groups are scripting and rehearsing the personal selling assignment, two or three other groups are assigned a product that they will script and present using the B2B buying process. The role of the audience is again to take notes on identifying each phase of the B2B buying process with class discussion after the presentations.

Another key area is ethical and legal issues of personal selling. Online Tip: Have students post a legal or ethical selling dilemma in a story problem (bait and switch, puffery, embellishment of reimbursements, etc.). Have other students write their own and have the learning community respond to each other’s ethical selling dilemma. The writer of the dilemma would have the task of contributing to a solution through feedback on the discussion board once the students posts a response.

Connect Application Exercises This section summarizes each Application Exercise available with this chapter. Each summary comprises an introduction to the exercise, concept review, and follow-up activity. Associated details related to the learning objectives, activity type, AASCB category, and difficulty levels are also included. These summaries are intended to guide your course planning; perhaps you want to assign these exercises as homework or practice, before or after class. For best practices on how and when to assign these exercises, see the IM Implementation Guide at the beginning of this chapter.

Activity

Type

The Personal Selling Process The Personal Selling Process Personal Selling: GPI Procurement Services Sweetwater: Personal Selling Alta Data Solutions: Making the Sale iSeeit! Video Case: B2C VS. B2B Market Strategy iSeeit! Video Case: Steps of the Personal Selling Process iSeeit! Video Case: Understanding Personal Selling Want to Buy a Robot? Making the Sale

Click & Drag Matching Video Case Video Case Case Analysis Video Case Video Case Video Case Case Analysis

Learning Objectives 1901 02 03 04 X X X X X X X X X X X X X X

The Personal Selling Process 

Activity Type: Click & Drag

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Learning Objectives: 19-02

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

Difficulty: Medium

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Activity Summary: Students are asked to match up tasks in a fictional personal selling process with the step of the process that each represents.

th

Activity 

Introduction: The following activity highlights the various steps of the personal selling process through the story of Kirsten (a fictional person). After being solicited quite regularly by television producers and documentary filmmakers, Kirsten, a photographer, created a business selling collections from her extensive photo library to show to production houses.

Review the story about how Kirsten landed the biggest client of her career and then assemble the stages of the personal selling model as instructed.



Concept Review: Although selling may appear a rather straightforward process, successful salespeople follow several steps. Depending on the sales situation and the buyer's readiness to purchase, the salesperson may not use every step, and the time required for each step will vary depending on the situation. For instance, if a customer goes into The Gap already prepared to purchase some chinos, the selling process will be fairly quick, but if Dell is attempting to sell personal computers for the first time to a university, the process may take several months. Some sales processes can take years.

The Personal Selling Process – Keyboard Navigable Alternate Version

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Activity Type: Matching Alternate to the Click & Drag Above

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Learning Objectives: 19-02

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Difficulty: Medium

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Activity Summary: Students are asked to match up tasks in a fictional personal selling process with the step of the process that each represents.

Activity



Introduction: The following activity highlights the various steps of the personal selling process through the story of Kirsten (a fictional person). After being solicited quite regularly by television producers and documentary filmmakers, Kirsten, a photographer, created a business selling collections from her extensive photo library to show to production houses.

Review the story about how Kirsten landed the biggest client of her career and then assemble the stages of the personal selling model as instructed.



Concept Review: Although selling may appear a rather straightforward process, successful salespeople follow several steps. Depending on the sales situation and the buyer's readiness to purchase, the salesperson may not use every step, and the time required for each step will vary depending on the situation. For instance, if a customer goes into The Gap already prepared to purchase some chinos, the selling process will be fairly quick, but if Dell is attempting to sell personal computers for the first time to a university, the process may take several months. Some sales processes can take years.

Personal Selling: GPI Procurement Services 

Activity Type: Video Case



Learning Objectives: 19-01, 19-02, 19-04

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

Difficulty: Medium

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Activity Summary: Discusses the relationship selling approach, as executed by GPI Procurement. After the video ends, students are asked questions about the video and related course concepts.

Activity

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Introduction: André Thornton, president and CEO of GPI Procurement Services, believes in building strong relationships, offering top-quality services, and, above all, meeting his customers' needs.



Concept Review: Personal selling is the two-way flow of communication between buyer(s) and the seller that is designed to influence the buyer's purchase decision. Personal selling can take place in various situations: face to face, via video teleconferencing, on the telephone, or over the Internet. Approximately 13.5 million people are employed in sales positions in the United States, including those involved in business-to-business (B2B) transactions—like manufacturers' representatives selling to retailers or other businesses— and those completing business-to-consumer (B2C) transactions such as retailer salespeople, real estate agents, and insurance agents.

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Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity



Ask the class how many of them want to start a business someday (or have already started one). Would they be providing products or services? Ask a few of them to explain their business ideas and discuss how important (or not) relationships with customers will be in their business (some businesses might legitimately have a transactional orientation). Also, ask them if they have thought about how much of an entrepreneur’s job, especially in the early days, is selling.

Sweetwater: Personal Selling

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Activity Type: Video Case

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Learning Objectives: 19-02

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Difficulty: Medium

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Activity Summary: Describes the relationship selling approach as executed by Sweetwater, an online seller of musical instruments and related equipment. After the video ends, students are asked questions about the video and related course concepts.

Activity



Introduction: Sweetwater is a music retailer that prides itself on building relationships with its customers. Sweetwater has differentiated itself in the market by using one-on-one interactions between its sales engineers and its customers.



Concept Review: This video covers the five steps necessary to complete a typical sales transaction. Sweetwater, however, has taken the traditional approach to sales one step further by creating relationships with its customers. As you watch the video, pay close attention to the different methods Sweetwater uses when selling its products to its customers.

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Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

Follow-Up Activity



Assign or review in class the ―Sweetwater Story‖ page on the Sweetwater website (http://www.sweetwater.com/about/). It underscores the points made in the video.

Ask the class, despite all of the positive things said in the video and on the website, what is the potential downside of Sweetwater’s approach? This is an opportunity to talk about ―showrooming,‖ the practice of going into a store that has significant merchandise on display, but then purchasing the product elsewhere at a lower price. The experts at Sweetwater could be used in a similar way: consumers could call them, get advice and help, but then buy their products from a discount supplier. Sweetwater’s prices are unlikely to be the lowest, since providing excellent service costs money.

Alta Data Solutions: Making the Sale

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Activity Type: Case Analysis

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Learning Objectives: 19-02, 19-03

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Difficulty: Medium

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Activity Summary: This case presents a hypothetical sales situation in which a sales rep is having problems closing a large sale. After reading the case, students are asked to analyze the situation by applying chapter concepts.

Activity



Introduction: This case presents a hypothetical sales scenario involving a technology solutions firm and a potential new customer. This activity is important because personal selling is the lifeblood of many firms, in particular those selling in B2B environments. The goal of this exercise is to test your understanding of personal selling processes and practices by analyzing this scenario using the frameworks and scenarios presented in the chapter.

Follow-up Activity

Ask students to role play a sales call aimed at closing the sale. Alternately, this can be assigned as an out-of-class exercise, allowing students to prepare a scripted sales call. iSeeit! Video Case: B2C VS. B2B Market Strategy 

Activity Type: Video Case

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Learning Objectives: 19-01, 19-03

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Difficulty: Medium

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Activity Summary: This video case looks at the role of sales representatives in B2B marketing, considering a potential business relationship between a bottled water company and a coffee shop.

Activity



Introduction: Personal selling serves three major roles in a firm’s overall marketing effort: (1) it creates a critical link between the firm and its customers; (2) salespeople are the company

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in a customer’s eyes; and (3) it may play a dominant role in a firm’s marketing program. This final point is illustrated by Hope Springs. The company knows that business-to-customer (B2C) sales are not enough to maintain profitability; it must rely on business-to-business (B2B) sales to maintain a profitable bottom line. Ju Li, a marketing executive with Hope Springs, uses available advertising and promotion tools to reach the company's target customer markets. However, she also realizes the importance of her direct sales force in reaching business customers such as Martha at the Coffee Collective. Through effective sales force management, Ju Li and her team must effectively communicate to business customers like the Coffee Collective to help demonstrate how its bottled water will sell well to her customers and increase overall sales. 

Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented. iSeeit! Video Case: Steps of the Personal Selling Process

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Activity Type: Video Case

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Learning Objectives: 19-02

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Difficulty: Medium

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Activity Summary: This video case summarizes the personal selling process. Please note that the video adds two steps to the five-step process in the textbook. The following questions will apply to both versions of the personal selling process.

Activity



Introduction: Salespeople work in fast-changing, competitive, and complex environments.

Every product that is sold has different characteristics. But, for most products, the personalselling environment includes some elements of rapid change, threats from competitors, and increasingly complex relationships and sales processes. This activity is important because for salespeople to personally sell effectively, they must follow a clear process.



Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

iSeeit! Video Case: Understanding Personal Selling 

Activity Type: Video Case



Learning Objectives: 19-01



Difficulty: Medium



Activity Summary: This video case illustrates how personal selling can be used effectively for the right type of product.

Activity



Introduction: Personal selling is an integrated marketing communication tool that takes many forms and can include someone trying to sell you insurance or a new car. In today’s information-rich world, the role of personal selling is more important than ever—if the context is right. This activity is important because marketers need to understand that personal selling is not right for every product or service.

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Video: The video is presented to the student below the introductory information. The video plays embedded on the page, after which questions are presented.

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