INTRODUCTION TO

MARKETING
C O M P E T I N G IN T H E 21 S T C E N T U R Y

STUDENT GUIDE

Introduction to Marketing
Competing in the 21st Century

S t u d e n t

G u i d e

TM

University Access 6255 Sunset Boulevard, Suite 801 Los Angeles, California 90028 888.960.1700 www.universityaccess.com Copyright (c) 1999 University Access, Inc. Printed in the United States of America ISBN 1-58313-100-0

FROM THE PROFESSOR
Consider the billions of products and services traded every day in sales transactions all over the globe, in supermarkets and other stores, over the telephone and over the Internet, and in factories and corporate offices everywhere. How do businesses decide what to produce? How do they get their products and services to the consumer? Consider, too, the billions of advertising and promotional messages sent out each day on television, on the radio, in newspapers, and in magazines about these goods and services. How do businesses decide what markets to target and what to say to them? How do businesses decide what products and services to sell and how to price them? The answer to all of these complicated questions is deceptively simple: marketing. Most people think of marketing as just advertising or selling, but, as this course will illustrate, marketing is much more. Introduction to Marketing: Competing in the 21st Century will examine the many facets of marketing as the engine behind the exchanges that make our economy work and, therefore, as a powerful force in our lives. It will take you behind the scenes of real businesses at work and show how marketing affects every one of us every day. It is designed to combine the strengths of new and traditional media: television, printed textbooks and study guides, and the Internet (including a variety of online work such as interactive exercises, independent and collaborative exercises, case studies, net-based research projects, and discussion starters). Introduction to Marketing: Competing in the 21st Century is a comprehensive and contemporary introduction to the essential principles of marketing. It’s intended to be a springboard for further discussion and analysis. Your instructor will put his or her personal stamp on this material by leading discussions, providing immediate learning direction, and challenging you to appreciate marketing in your own life.

Professor John A. Quelch, D.B.A. Dean of the London Business School and former Professor of Marketing at Harvard Business School

. . . 199 About the Professor . . . . . 175 Lesson Twelve — International Marketing: Competing in a Global Marketplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 — Market Research . . . . . . . . . . . . . . . . . . . . . 38 Lesson Four Project One Lesson Five Lesson Six — Market Segmentation. . . . . . . and Positioning: Developing a Focus . . Targeting. . . . . . . . . . . . . Government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Course Goals . . . . . . . . . 131 — A Closer Look at Advertising: When. . . . Student Guide. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Society. . . . . . . . . . and Recommended Textbook . . . . . and Economics . . . . . . . . . . . Building Customer Loyalty . .Ta b l e o f C o n t e n t s Course Components Video Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 — Brand Management: Building an Image. . . . . . . . . . . . . . . . . . . . . . 205 About University Access. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . 176 Participating Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Where. . . and How to Advertise . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ethics. . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 Course Materials Information . . . 163 Project Three — Marketing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Lesson Summaries and Expected Learning Outcomes Lesson One Lesson Two — The Marketing Process: Creating Value . . . . . . . . . 196 Advisory Board . . . . . . . . . . . . 206 Other University Access Courses. . . . . . . . . . . . . . . . . . . . . . . . 191 Participating Experts. . . . . . . . . 114 Lesson Nine Lesson Ten — Marketing Communications Personal Selling. . . . 113 Lesson Eight — Distribution: Retailing and Wholesaling Strategies . . . . . . . . . . . . . . . . . Competition. . . . . . . . 201 Course Development Team . . . . . . . . . . . . . . and Public Relations . . . . . and Analyzing the Customer . Sales Promotion. . . . . . . . . . . . . . . . . . . . . . . 84 Lesson Seven — Strategies for Services: Marketing the Intangible. . . . . . . . . . . . . Online Courseware. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 — Product Strategy: Planning and Development Throughout the Product Life Cycle. . . . . . . . . . . . . . . . Why. . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 99 Project Two — Feasibility . . . . . . . . . . . . . . . . . . . . . . . . . . Understanding. . 146 Lesson Eleven — Pricing Strategy: Defining Value . . . . . . . . . . Advertising. . . . . . . . . . . . . . . 10 — The Marketing Environment: Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 Introduction to Marketing: Student Guide — 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Lesson Three — Consumer and Organizational Buying Behavior: Researching. . . . . . . . . . .

Dean of the London Business School and former Professor of Marketing at Harvard Business School. 6 — Introduction to Marketing: Student Guide . Customizable discussion questions and supplementary materials are also included. and in our everyday lives. a standard in the classification of learning objectives. Professor Quelch’s lectures include interviews with experts and real-world case studies that illustrate the important role marketing plays in businesses small and large. In addition.com. Students in the teleweb version of the course also get access to the videos through an arrangement with Broadcast. D. Students are never more than one click away from the syllabus that the instructor has customized. faculty members have access to an online test bank. The thirty-plus hours of online courseware offer elements such as case studies. Along with streaming audio and video. collaborative exercises. The course’s carefully selected examples from world-renowned companies educate students not only how to identify marketing principles in action. To preview the online courseware. Online Courseware The teleweb version of Introduction to Marketing: Competing in the 21st Century features online courseware that applies the information in the video in innovative ways. but also how to apply these principles on their own. University Access instructional designers. making it possible to conduct testing via the Internet. experts in the area of marketing and wellversed in adult learning theory. Each program is outlined in the accompanying Student Guide. interactive academic experience. in nonprofit organizations. have created a rich. Quelch.A. visit www. Through challenging multimedia activities and resources delivered via the Internet.Course Components Video Programs Introduction to Marketing: Competing in the 21st Century consists of twelve one-hour broadcast/video lectures presented by Professor John A.. students achieve the highest levels of Bloom’s Taxonomy of the Cognitive Domain. Internet research projects.B.com/courses/undergrad. the courseware includes cutting-edge features. interactive exercises. Each program’s content is guided by academically crafted learning objectives that have been approved by Professor Quelch and a University Access Advisory Board of academicians. and topical discussion starters.universityaccess.

which have been introduced in the video portion. Completing the Lesson — Step-by-step instructions for students indicating the order in which activities should be completed.universityaccess. Introduction to Marketing: Student Guide — 7 . Assignments — Practical projects and written exercises designed to help students achieve a richer understanding of the learned concepts.com) and check the Resources area for Introduction to Marketing: Competing in the 21st Century. and case studies. Lesson Outline — An outline of the video lectures to illustrate the relationships of the concepts and principles presented in the video. go to the University Access Library (www. expanded list. Lesson Summary — A comprehensive summary of the video lectures. All lessons contain the following components: Expected Learning Outcomes — A description of what the student can expect to learn and achieve in the lesson. in order to maximize learning potential. Additional Resources — A compilation of Web sites and organizations of interest to marketing students. expert guests. Key Points — The major points explained by the professor. Bibliography and Recommended Reading — A list of books and magazines that focus on marketing. Case Studies — An in-depth analysis of real-world case studies dealing with contemporary issues. For an updated.The Student Guide This guide is designed to lead students through each lesson of the course.

338. In addition. 8 — Introduction to Marketing: Student Guide . be sure to contact your instructor. Perreault. Jerome McCarthy’s text. You can request a textbook desk copy by sending your request on institutional letterhead to: The McGraw-Hill Companies College Division P O. NJ 08520-1450 Phone: 800. prompt 3 Fax: 609. Box 445 .5625 Getting Started You will receive a class syllabus from your instructor that will contain a complete overview of the course requirements.com/fourps.The Textbook This course is designed for use with William D. The text focuses not only on marketing but also on marketing strategy planning. Thirteenth Edition. If you have not received the syllabus by the first day of class. and E. Basic Marketing: A Global-Managerial Approach.. The unifying theme of the ideas presented in this text is how managers should make the marketing decisions that best satisfy customer needs. 148 Princeton Road S-1 Hightstown. New York: Irwin:McGraw-Hlll. online content related to the textbook can be found at www.426. which is essentially about how to do a superior job of satisfying customers.3987. Each video program is paired with a corresponding reading assignment. Jr.mhhe.

assignments. given certain situations. • evaluate methods of delivering customer service and measuring customer satisfaction.C o u r s e G o a l s After viewing the programs and completing the case studies. • describe the role of distribution and explain the importance of supply chain management. • evaluate product line planning strategies. • differentiate the factors that affect pricing policy. value. exercises. and competition have on marketing. • explain the importance of integrated marketing communications. • illustrate the relationship between price. government. • explain the concept of positioning and assess various positioning strategies. • list examples of major issues that marketers must consider when managing and developing international distribution channels. • describe the process of developing brand loyalty. • explain the stages of the product life cycle. • define “value” and explain marketing’s role in creating value for customers. • define the purpose and benefits of segmentation and targeting and describe the major approaches to doing so. • state ways in which ethics can be integrated into the marketing process. economics. • describe the new product development process. • explain qualitative and quantitative market research methods. • assess the roles of the five methods of communication. • assess the marketing issues in multinational corporations. • cite the effects that society. • list the different types of advertising and describe which method is best. technology. • evaluate key trends in the global environment. Introduction to Marketing: Student Guide — 9 . and quality. • describe the consumer decision-making process and the major factors influencing consumer buying behavior. and quizzes in the Student Guide and/or the Online Courseware. • compare and contrast the marketing of services and the marketing of goods. students should be able to: • explain the concept of marketing and its function in society.

Examples from established companies such as Hilton Hotels Corporation and from nonprofit organizations such as the California Science Center are examined. • identify marketing’s function in both corporations and nonprofit organizations. Professor Quelch encourages students to appreciate marketing as far more than advertising and selling — to recognize it as a process that plays a vital role in modern life. • describe the marketing process.Lesson One The Marketing Process Creating value Expected Learning Outcomes Lesson One introduces the topics to be covered in Introduction to Marketing: Competing in the 21st Century. • state key marketing challenges in the 21st century. By the end of the lesson. establishing the terminology and principles used throughout the rest of the course. 10 — Introduction to Marketing: Student Guide . • define “value” and explain marketing’s role in creating value for customers. you should be able to: • explain the concept of marketing and explain its importance.

Completing Lesson One

Lesson One

In order to obtain the most out of this course, the following steps should be taken in the sequence listed below. As with each lesson, please check the syllabus for additional or altered instructions from your professor. 1. Review the Expected Learning Outcomes for Lesson One in the Student Guide. 2. Read the text assignment for Lesson One, as indicated in the syllabus. 3. Watch the video program for Lesson One (The Marketing Process: Creating Value). Use the Lesson One outline in the Student Guide to help you follow the flow of the lecture. 4. In the Student Guide, read: • The program summary for Lesson One. • The key points for Lesson One. • The case study for Lesson One. 5a. If you are a Telecourse student (with no online component to your course), complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. 5b. If you are a Teleweb student (with an online component to your course), ignore the assignments that are listed in the Student Guide. Instead, complete the online exercises for Lesson One and submit them to your instructor according to his or her instructions. In addition, post any questions you have to the Discussion Boards, and be sure to check the Boards at least three times a week. 6. Take the quiz for Lesson One, if assigned by your instructor. If you are a Teleweb student, you will find the quiz online. If you are a Telecourse student, your instructor will deliver the quiz to you, along with directions on how to submit your answers.

Introduction to Marketing: Student Guide

11

Lesson One Outline

I. OVERVIEW II. WHAT IS MARKETING A. Market Defined People with latent needs and the ability to purchase a product B. Marketing Defined The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to satisfy the objectives of both the buyer and the seller C. History of Marketing D. Four Factors Needed Before Marketing 1. Unsatisfied Needs 2. Desire to Satisfy Needs 3. Communicate Needs 4. Product to Fulfill Needs E. Influences on the Marketing Process 1. Controllable Factors – The 4 Ps a. Product – a good, service, or idea b. Price – the cost of something either in money or exchange c. Promotion – the communication of information between seller and potential buyer d. Placement – means of getting products into the consumers’ hands 2. Uncontrollable Factors – The external influences that marketers can’t do anything about – those found in the broader environment a. social trends/social issues b. technological changes c. competition d. economic fluctuations e. regulatory mandates

III. THE MARKETING PROCESS A. Analyze the Immediate Situation – The 3 Cs 1. Company Analysis – assess your firm in terms of its financial capacities, its human resource capabilities, and its managerial capabilities 2. Competition Analysis – assess your competition 3. Customer Analysis – determine the needs and wants of your potential customers B. Assessing the Environment 1. Economy 2. Regulations 3. Technology 4. Ecological Concerns 5. Society

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Introduction to Marketing: Student Guide

C. Marketing Strategy 1. Identifies the Target Market The customers or group of customers it aims to serve 2. States the Marketing Mix – The 4 Ps a. What the product is b. Where the product will be sold c. How it will be promoted d. At what price it will be sold D. The Marketing Mix 1. Product Policy a. Product Line How many different kinds of products are offered b. Product Line Depth How many varieties of one particular product are offered 2. Pricing Policy a. Customer perception b. Level of Competition c. Cost Base 3. Placement Policy a. Intensive b. Exclusive 4. Promotion Policy E. Marketing Plan F Marketing Implementation .

Lesson One

IV. CREATING VALUE A. Value Defined The perceived benefits of a product outweighing the cost

V. THE ROLE OF MARKETING A. In Profit and Nonprofit Organizations B. In Politics C. In Economic Development

VI. ETHICS IN MARKETING

VII. MARKETING IN THE 21ST CENTURY A. Globalization B. Technology

VIII. SUMMARY

Introduction to Marketing: Student Guide

13

Program Summary
Introduction to Marketing: Competing in the 21st Century

Lesson One

The Marketing Process: Creating Value
What Is Marketing?
Before discussing marketing, we must understand a few basic concepts: What is a “market”? A market is a group of customers 1) with a set of needs that are waiting to be satisfied and 2) with the ability to buy a product that will satisfy those needs. “Ability” in this case means the authority, time, and money to acquire a good or service. This brings us closer to a working definition of this all-encompassing phenomenon called marketing. Marketing is the total process of planning and executing the product, pricing, promotion, and distribution of ideas, goods, and services — all to satisfy the objectives of both the buyer and the seller. That's a big-picture explanation. Looking more closely, you can see that four essential factors must exist in order for marketing to occur: Need. First, marketers must identify a pool of people with unsatisfied or latent needs. If someone wants to develop a product, question one must be, is there a need for it? Question two is, who might need it? In many cases, consumers aren't even aware they need or want the benefits of a product. That's a latent, or hidden, need. Ability to Satisfy a Need. Second, someone must come along who has the desire and ability to satisfy those needs. The company that can create a product that addresses unmet needs is in a position to succeed. Ability to Communicate. Both the buyers and the sellers must be able to communicate with each other. The potential customer must know the product exists. That means the marketer must get the word out — talk to the customer and learn the best way to develop that product so that it truly satisfies the customer and creates benefits that the customer seeks. Actual Product Needed. Finally, don't forget that the idea, good, or service itself must be not only conceptualized but actually realized. It can be anything from in-line skates to investment services, and a seller who cultivates demand must be ready to deliver on the promise.

What Influences the Marketing Process?
Two sets of factors influence the marketing process: controllable factors and uncontrollable factors. The controllable factors are commonly referred to as the 4 Ps, or as the marketing mix, and they are the foundation of the marketing process. We'll see them again and again in this lesson and throughout the course. Product. A service, good, or idea. Price. The cost of something in either money or exchange.
14 — Introduction to Marketing: Student Guide

and managerial capabilities. Has this affected marketing? Consider the ever-growing number of low-fat. The starting point. the process calls for applying the results of these analyses to the broader environment. What about the legal and regulatory climate? What agencies oversee a company or a business sector? What laws must a company know and obey? What opportunities are created when regulatory agencies promote new competition? Technological Environment. they must nevertheless be taken into consideration when developing a marketing strategy. talented. How does changing technology affect a company? How does it affect a company's marketing and all the ways it reaches out to customers? How does technological change affect how the firm orders and manages its supplies? Step Three: Marketing Strategy After the immediate situation has been analyzed (the 3 Cs) and after the uncontrollable environment has been assessed. known as the 3 Cs. technological advances. Economic Environment. These include social issues. competition. Is the economy healthy? What is the current state of such forces as inflation. What about the increasing ethnic diversity of Americans? It has provided countless opportunities and challenges for companies as they have addressed latent needs by creating and selling products targeted to specific ethnic groups. while they are often far beyond a company's influence. a company can move toward developing a marketing strategy. and entrenched is the competition? Are competitors serving the whole market or are they leaving someone out? Customer Analysis. How strong. Social Trends. and remembering the 4 Ps. sound. The uncontrollable factors are equally important and. business cycles. Introduction to Marketing: Student Guide — 15 . and so on. Who are the marketer’s customers and what do they need? How can the marketer fulfill those needs? Step Two: Assessing the Broader Environment — Beyond the 3 Cs Next. low-salt products in fast-food restaurants and on supermarket shelves. is a three-part analysis of the marketer's immediate situation: Company Analysis. regulatory mandates. While social trends might be out of your control. The communication of information between the seller and the potential buyer. Marketers must have a firm grasp of their own company's strengths and weaknesses. People are more health conscious than ever. and so forth? What’s in store for the future? Legal and Regulatory Environment. resource availability. economic fluctuations. Promotion. Competitive Analysis. let's examine the marketing process in more detail. Lesson One THE MARKETING PROCESS Step One: The 3 Cs With these influences in mind.Placement. financial and human resources. they all affect a company's health and its marketing strategy for better or worse. unemployment. The channels through which products get into consumer’s hands.

Simply put. Low price is one criterion that some consumer segments might place a lot of value on. THE ROLE OF MARKETING So far this lesson has covered the basics of how effective marketing is planned and executed. so as to satisfy the target market. An intensive approach would make it available as widely as possible. however. including different versions of the product. including a budget. and promoted so that it finds its market. it can use the 4 Ps to ensure the product is designed. Customarily. a marketing strategy first identifies the target market. another convenience. A museum. Step Four: Creating the Written Marketing Plan With the basic strategy in place. Designer handbags or expensive perfumes are less ubiquitous and usually sold one-to-one. in prestigious locations. and profit. placed. But what makes marketing the “pervasive and powerful force” it is in this society? What's the larger role marketing plays in all aspects of day-to-day life? If a company is a for-profit enterprise. and another prestige. pricing strategy. market share. then states the product specifics. It’s important to know which benefits your target customers value in particular — and to provide them with value based on the criteria that are important to them. This leads back to the 4 Ps and the implementation of the marketing mix. it must first thoroughly understand them. the plan includes details about the planned product line. Placement policy is the strategic approach to distributing a good or service. Coca-Cola. public relations. an in-depth plan for placement. Pricing policy takes at least three key pricing influences into account: customer perception of the value of the product. Promotion policy covers all the ways a company communicates with the market it wants to reach: personal selling. Each of these requires specific strategic policy decisions. Product policy concerns which goods and/or services a marketer sells to the target market. Understanding what customers’ value is the essence of effective marketing. marketing plays a different but equally important role. service. warranties. for example. Exclusive distribution. Customer value is created when the perceived benefits of a product match or outweigh the cost. CREATING VALUE Marketing starts — and ends — with the customer. In order for a company to provide value to its customers. select places. places the product only in a few. and advertising. If a company understands what creates value for its target market. with a high level of customer attention. Another consumer segment might value quality service above all else. For a nonprofit organization. and at what price. for example. and the promotion strategy.This statement of purpose specifies the target market and states policies on the related marketing mix. sales promotion. the success of marketing is easy to measure: It leads to increased sales. product development plans for the coming year. relies on effective marketing to 16 — Introduction to Marketing: Student Guide . is available almost anywhere on earth. and the cost of making the product. how it will be promoted. etc. priced. the next step is to expand each of the 4 Ps into a written marketing plan. where it will be sold. packaging. how the competition prices its products.

demeanor. whether for an idea such as a referendum. The subject will be revisited throughout this series. Remember that marketing brings buyers and sellers together and facilitates transactions. Introduction to Marketing: Student Guide — 17 . A job interview is a case study in marketing. prior research. Because the role of marketing in modern society is so vital. Each requires the same careful planning and the same regard for creating value as a corporate marketing plan. and punctuality all affect his or her success or failure in obtaining a job. so pervasive.increase the number of its visitors. cover costs. ethics is perhaps the force over which individuals have the most control. and so powerful. it can be measured by an institution's continuing survival. or for individual candidates for public office. In some cases. advances in technology offer new means for buyers and sellers to communicate and new opportunities for companies and organizations to reach target markets more efficiently than ever. Political campaigns involve marketing. MARKETING IN THE 21ST CENTURY Enormous forces are changing the nature of marketing. Lesson One MARKETING ETHICS Of all the forces that affect marketing. and support its endowment. Another important role of marketing is the facilitation of economic development of entire communities. Constitutional amendment. An applicant’s appearance. In addition. everyone involved must consider marketing's inherent ethical issues. Marketing isn't just about profit. from towns to villages to nations. It also translates into increased competition for all companies throughout the world. The globalization of markets requires marketers to apply proven Western marketing ideas in emerging markets. Is marketing just for businesses and organizations? No. And the marketing of individuals isn't just for celebrities or politicians.

the marketing mix – include: • • • • Product Price Placement Promotion • Uncontrollable Factors include • • • • • Social and cultural trends Technological trends Economic conditions Government and regulatory agencies Competition 5. the 3 Cs • Company analysis — Assess your own company's resources. Customer value is perhaps the most essential marketing issue. • Customer analysis — What do your customers want and need? • The external environment — the uncontrollable factors. Marketing is the process of planning and executing the pricing.k. • Competitor analysis — Assess your competitors. 4. The primary goal of marketing is to create value by: • Assessing the needs of a market. • Satisfying those needs. 6. Marketing begins and ends 18 — Introduction to Marketing: Student Guide .a. • Controllable Factors — a. • The marketer must have a desire and an ability to satisfy those needs. the following four factors must exist: • There must be a pool of people with unmet needs. • There must be something to exchange. Marketing is influenced by both controllable and uncontrollable factors. 3. marketers must conduct a thorough analysis of: • The immediate situation — a. • There must be communication between the parties. After conducting a thorough analysis of the immediate and external environments. 2. promotion. For marketing to occur. which are largely beyond the organization's control. the next step in the marketing process is to develop a marketing strategy.k. In order to develop a comprehensive marketing plan.a. and • States the marketing mix you will implement to appeal to that target audience.a. A marketing strategy is a statement of purpose that: • States who your target market is. 7. the 4 Ps — a. and distribution of goods to create exchanges that satisfy both organizational and individual objectives.k.Key Points 1.

10. As marketers. Lesson One 8. Marketing plays an important role in the economic development of a society. and for individuals. the objective of marketing is to create value. What one person values is very different from what the next person values. or ideas. 9. for cultural institutions. And we'll have to keep up with and find ways to utilize the fast-paced evolution of technology. Whether the marketing is for services. 11. goods. Marketers will need to continue to adapt the principles we've learned and apply them in creative ways. we must not try to be all things to all people — rather.with the customer. Introduction to Marketing: Student Guide — 19 . Customer value comes when the perceived benefits of a good outweigh the cost of obtaining that good. for charities and causes. we must determine which value we can best deliver to our target market. Marketing activities are performed by for-profit companies and also by nonprofit organizations — for political candidates. Many challenges face marketers in the 21st century. We'll have to look beyond our local competitors when we analyze our marketplace.

Before this. businesses that have been in operation since the early years of the United States have undergone distinct stages. businesses focused on production rather than marketing. the ban on travel was lifted. including the Waldorf-Astoria. In the late 1950s and early 1960s. HILTON INTRODUCES MARKETING TO THE HOTEL INDUSTRY James Collins. former senior vice president of marketing for Hilton Hotel Corporation. evaluated each group’s needs. a school of thought emerged that it was possible to both satisfy the organization’s goals and satisfy the needs of customers. not after the production of that good. The typical solution most businesses implemented was to increase their sales force in order to find new markets. Commercial Hotels Both business and leisure travelers select Hilton's commercial hotels due to their ideal locations. 24-hour food service. and began the process of adjusting Hilton’s product line accordingly.Case Study Hilton Hotels Corporation is the world's leading lodging company. due to the relative affluence of the families of the 1950s. began his forty-three-year career at Hilton in 1944 in the midst of the Sales Era. HISTORICAL BACKGROUND Most U. 20 — Introduction to Marketing: Student Guide . Sales Era: Around the 1920s. and entertainment and recreational options available. many businesses discovered that they were able to produce more goods than could be consumed by their regular consumers. goods were scarce in the United States. Production Era: In the early 1900s. the Hilton brand name has been synonymous with excellence in the hospitality industry. In addition. For more than seventy-five years. and consumers were willing to buy virtually any products that were available. businesses resumed holding conventions. The hotels offer guests accommodations and amenities for business or leisure. and courtesy shuttle service. in response to these social changes. Thus. This is what Hilton’s product line looks like today: HILTON PRODUCT LINE Airport Hotels Airport Hiltons are located just minutes from the runway and offer Zip-In Check-In®. Collins closely examined the many different kinds of hotel guests. and that marketing should be brought into the production cycle before a good is even conceived. and business travel increased dramatically. the quality of the hospitality services available. Among its 450 hotels are some of the most well-known properties to be found anywhere. It recognized that sales is only an element of the overall marketing process. the marketing concept had never been applied to the hotel industry.S. Marketing Era: In the early 1960s. This is largely due to Hilton’s valiant marketing efforts. people began travelling for pleasure more than ever before. With the end of the war. Collins determined that Hilton had to become a marketing company instead of a sales company.

extended-stay guest. was the first chain to offer amenities such as air conditioning and direct-dial telephones as standard features. MARKETING PROGRAMS This drive for quality has worked hand-in-hand with a series of national marketing programs that appeal to Hilton's key target audiences. INNOVATIONS Hilton has been on the forefront of hotel innovation since its inception.” Hilton Suites This is Hilton's product for the value-minded. Hilton Hotels has led the way with innovations for executives on the road. BUSINESS TRAVEL PROGRAMS Since 1919. and copying. and large and small conferences. Lesson One Answer the following questions. and fully staffed business centers that provide assistance with graphic presentations. and aggressive expansion all underscore a continued commitment to those principles that have made the Hilton name synonymous with first-class hospitality. Resort Hotels Hilton resorts provide vacationers with top-notch accommodations. In addition. They continue to renovate and upgrade the appearance of their hotels. Hilton pioneered the concept of airport hotels. with a strong business orientation. word processing. outstanding meeting facilities. It is positioned as “fourstar lodging at a three-star price. They offer in-room fax machines. Hilton Garden Inn® Hilton Garden Inn® is a mid-priced product line targeted to today's growing segment of middle-market travelers. and food and beverage alternatives reflective of the local area and culture. their franchises undergo a vigorous review process. Each question has been derived from information contained in the video and/or the case study listed above. renovations. in order to ensure consistency and quality among individual properties. For the business traveler.” a “family vacation program. and was an industry pioneer when it launched its Web site in 1995. full-service properties. dedicated to hosting large and small meetings. exhibitions. Their managers are educated at the Hilton Quality Service Institute on Hilton’s service philosophy. was the first hotel company to list on the New York Stock Exchange. and resort destinations. Hilton's marketing programs.” and a program aimed at mature travelers. Introduction to Marketing: Student Guide — 21 .Conrad International Hotels The Conrad International Hotels is a network of first-class luxury resorts situated in the world's key business markets. the properties provide a business center free of charge. QUALITY Hilton Hotels has taken an aggressive stand to ensure its hotels consistently deliver on the Hilton promise. These programs include a “frequent guest program. Convention Hotels Hilton's convention hotels are large. eliminating those hotels that do not meet the company's standards. TeleSuite Networks ® with teleconferencing capabilities. conventions. tourist.

The marketing mix can be manipulated to reach a company’s target market(s). also known as the 4 Ps. Pricing What is Hilton’s pricing policy? d. 1. The controllable factors are a company’s marketing mix. post any questions you have to the Discussion Boards. Promotion What is the purpose of Hilton’s advertising? What other forms of promotion does Hilton utilize? 4. Product What is the product Hilton offers its customers? b. Placement How would you describe Hilton’s placement/distribution? c. In addition.If you are a Telecourse student (with no online component to your course). a. complete the online exercises for Lesson One and submit them to your instructor according to his or her instructions. Instead. How does Hilton manipulate its marketing mix to create value for its customers? 22 — Introduction to Marketing: Student Guide . and be sure to check the Boards at least three times a week. A company’s marketing process is ruled by two sets of influences: controllable factors and uncontrollable factors. If you are a Teleweb student (with an online component to your course). ignore the following assignment. How did the transition from the Sales Era to the Marketing Era redefine marketing? 2. complete the assignment and submit it to your instructor according to his or her directions. How did the transition affect the way in which Hilton conducted its business? 3.

including: • Company Analysis: Having a firm grasp of your own company's strengths and weaknesses. • Price: Cost of something either in money or exchange. promotion. These include: • societal concerns • technological advances • competition Marketing Mix • economic fluctuations • regulatory agencies Lesson One Marketing Marketing Environment A unique blend of the 4 Ps (Product. how well they satisfy customers' needs. goods. or idea which is the need-satisfying offering of a firm. pricing. The uncontrollable variables that a company must consider when determining an overall marketing strategy. Marketing Plan Marketing Strategy Product The 3 Cs The 4 Ps Introduction to Marketing: Student Guide — 23 . The controllable variables that a company manipulates in order to satisfy a target market. The most restrictive form of distribution in which a product is available through only one or a few dealers within a given area. • Customer Analysis: Truly understanding what the customers need and want. how entrenched they are. They are: • Product: Good. service. Good. how good their management is. Placement. Written statement detailing the specific marketing strategy (the marketing mix and the target market). budgets related to each of the four elements of the marketing mix. etc. A three-part analysis of the marketer's immediate situation. and distribution of ideas. and Price) designed to produce mutually satisfying exchanges with a target market. • Competitor Analysis: Understanding the effectiveness of your competitors. A statement of purpose that specifies the target market and the related marketing mix (the 4 Ps) that a company will implement to reach that target market. service or idea that is the need-satisfying offering of a firm. • Placement: Channels through which products get into the consumer's hands. Promotion. A group of customers with a set of needs and the ability to buy a product that will satisfy those ideas. The distribution of goods that aims at maximum market coverage. • Promotion: Communication of information between seller and potential buyer. and the time-related details for carrying out that strategy. and services to satisfy the objectives of both the buyer and seller. The process of planning and executing the conception.Glossary Customer Value Exclusive Distribution Intensive Distribution Market Value created when the perceived benefits of a product match or outweigh the cost of obtaining that product.

friendly staff. For example. For example. 24 — Introduction to Marketing: Student Guide .Assignments Assignment One: Supermarket Survey In an intensely competitive. as well as your knowledge of the importance of customer value. One list should contain the values the wife might feel are important. Step 3: Based on your observations. in order of priority: selection. The couple has asked you to show them the house. For example. how would you present the Product (the house) to the wife versus the husband? What aspects of Price. Assignment Two: One House. convenience. Step 4: List recommendations for further ways that the store could provide added value to you to earn your repeat business and loyalty. Situation: You are a real-estate agent attempting to sell a house to a married couple. Step 2: On your next trip to the supermarket. etc. Step 1: Think of a couple you know well and compile two lists based on your knowledge of them. Make a list of what matters to you. with a good selection of products? Are prices clearly marked on the shelves or on the individual items? Do the grocery baggers offer to take your bags to the car for you? Write down your observations. short lines. location. but they can't come at the same time. low-margin industry. determine whether the store attempts to appeal to the qualities you value as listed in Step 1. customize the different approaches you might use in presenting the 4 Ps in trying to sell the house to the couple. Step 1: Begin thinking about the characteristics you value as a consumer in a supermarket. by creating a strategy for selling an identical product to two different people. one for each buyer's distinct needs. price. and Placement would your plan take into consideration? Develop two separate written plans. Two Buyers Apply your knowledge of the 4 Ps of marketing. supermarkets must strive to gain a competitive advantage by maximizing the value of the goods and services that they provide in relation to their cost. which of the two might be more interested in a large laundry room? Kitchen? Garage? Backyard? Appliances? Which of the two might be more price sensitive? Which might be more interested in the school district that the house belongs to? Which might be more interested in the general location of the house? Is being close to work important? Or would they prefer to be close to friends and family? Is shopping nearby? In what areas would their opinions be widely apart? In which areas would they agree completely? Step 2: Using the information you recorded in Step 1. observe the ways in which the store tries to create value for you as a consumer. Based on the following scenario. Product. Therefore. you will show the house to the husband in the morning and to the wife in the evening. outline a written plan designed to make the product appealing to each of the potential customers. do the managers of the store have all of the checkout lanes open to speed the lines along? Do they have a wide selection of the products you buy? Do they make their own bakery products and prepared foods? Is the meat department clean. the other list should reflect the husband’s values.

technological advances. • Cite the effects of economic forces on marketing decisions. The case studies include how a small company like HotHotHot responds to changing tastes and cultural trends. Introduction to Marketing: Student Guide — 25 . • Summarize how the government and other groups regulate marketing. Society. Government. and the competitive milieu. • Demonstrate how sociocultural trends impact a firm’s marketing activities. Expected Learning Outcomes By the end of this lesson. • Describe how technological advances have affected companies. how an up-and-coming athletic wear company competes with giant companies like Nike and Adidas. and their services. Ethics. their products. It also examines the ethical situations that govern how marketers interface with the external environment. • List examples of how ethics can be integrated in the marketing planning process. Lesson Two explores the continually evolving marketing environment — including cultural and economic conditions. so it is important to understand all the external factors that can affect a company’s marketing strategies. and the history of Coca-Cola’s farsighted marketing strategies. and Economics Marketing doesn’t happen in a vacuum.Lesson Two The Marketing Environment Lesson Two Technology. regulatory agencies. Competition. the students should be able to: • Analyze the effect of the competitive environment on an organization’s marketing strategy.

4.Completing Lesson Two In order to obtain the most out of this course. 5a. 2. As with each lesson. ignore the assignments that are listed in the Student Guide. 3. complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. and Economics). In addition. post any questions you have to the Discussion Boards. If you are a Telecourse student (with no online component to your course). Watch the video program for Lesson Two (The Marketing Environment: Technology. 26 — Introduction to Marketing: Student Guide . If you are a Telecourse student. Ethics. please check the syllabus for additional or altered instructions from your professor. you will find the quiz online. • The key points for Lesson Two. as indicated in the syllabus. Take the quiz for Lesson Two. complete the online exercises for Lesson Two and submit them to your instructor according to his or her instructions. If you are a Teleweb student (with an online component to your course). Government. In the Student Guide. Instead. the following steps should be taken in the sequence listed below. along with directions on how to submit your answers. • The case study for Lesson Two. if assigned by your instructor. your instructor will deliver the quiz to you. Use the Lesson Two outline in the Student Guide to help you follow the flow of the lecture. Competition. 1. 5b. 6. and be sure to check the Boards at least three times a week. If you are a Teleweb student. Review the Expected Learning Outcomes for Lesson Two in the Student Guide. Read the text assignment for Lesson Two. Society. read: • The program summary for Lesson Two.

Macroeconomic and Microeconomic Trends V. Age — the age distribution of Americans is shifting a. Ethical Considerations III. The state of the economy is significant to marketers because consumer spending is deeply affected by expectations about the future. Economic Environment 3. Baby Boomlets i.S. Regulatory Agencies 4. born after 1977 2. Marketing strategies are developed in response to and in harmony with what is currently happening in the external environment. Gen Xers i. CULTURAL ENVIRONMENT A. WHAT IS THE MARKETING ENVIRONMENT? A. Introduction to Marketing: Student Guide — 27 . Baby Boomers i. The external environment is shaped by the following factors: 1. Income 4. account for more than 75 percent of the nation’s wealth iii. Occupation 5. economic activity. Shifting demographics create opportunities for marketers. Technological Change 5. account for 50 percent of purchases made in consumer products and services b. Sex 3. 1. Cultural Environment 2. Demographics – a description of the population according to selected characteristics. as well as self-governing regulatory agencies. Societal Ethics/Concerns D. Geographic Location B. and consumer spending accounts for two-thirds of U. ECONOMIC ENVIRONMENT A. born between 1946 – 1965 ii. Ethnic Diversity Lesson Two IV. B. Changing Roles of Men and Women C. born between 1966 – 1976 ii. Competitive Environment 6. REGULATORY AGENCIES A. Guidelines imposed by federal and state laws.Lesson Two Outline I. OVERVIEW II. dramatically different purchasing behavior than Baby Boomers c.

Product Strategy 3. Promotion 5. COMPETITIVE ENVIRONMENT A. Determine your present competitors and potential competitors. Health and Safety a. Tobacco and Alcohol 3. Market Research 2. VII. to how they’re produced. Purpose is to ensure fair business practices and protect consumers C. TECHNOLOGICAL CHANGE A. know your customers. Significant environmental force that is very difficult to predict owing to the speed at which new technologies are being developed. B. Know the business you’re in. FDA b.B. Potential ethical pitfalls may occur in the following areas: 1. ETHICAL CONSIDERATIONS A. Pricing 6. and promoted. Distribution 4. 2. Analyze the competitive environment. Has had a crucial effect on marketing. Consumer Protection VI. Ecological Concerns IX. from the products that are now available. If competing globally. VIII. Focus primarily in three areas 1. Be aware of customer inertia. 3. 4. SUMMARY 28 — Introduction to Marketing: Student Guide . 1. distributed. Industry Structure 2.

The company must respond to each of them appropriately for the product to succeed. etc. But once that product leaves the factory. and moreover. it faces external and uncontrollable forces. Demographics One key tool for understanding the cultural environment is demographics. controlling quality. A good marketer. and as it is evolving. WHAT IS THE MARKETING ENVIRONMENT? Simply put. Within a company.” relying on a comprehensive view of today’s market and tomorrow’s changes to create a successful marketing strategy. as much as possible. occupation. it must anticipate future trends and events that may change or confirm its marketing plans. and. It must pay close attention to many factors in the external environment. the way a company creates a marketing strategy. the gender mix changes. know how all those factors are changing every day. and occupation. Society. Government. Competition. says the Professor. and Economics In Lecture Two of Introduction to Marketing. where he or she lives. People age. and so on.. how many units to make. These external factors will greatly affect. likes and dislikes. one may exert nearly complete control over every aspect of how a product is made: what materials to use.Program Summary Introduction to Marketing: Competing in the 21st Century Lesson Two Lesson Two The Marketing Environment Technology. Professor Quelch explains that a company cannot work in a vacuum in developing a marketing strategy. income. Demographic shifts are a constant of life. That means. is “something of a sage or seer. how old he is. but each can have a profound impact on its operations. gender. CULTURAL ENVIRONMENT “Know the customer” is a marketer’s first law. knowing who the customer is. Demographics are variables that divide the population according to selected characteristics such as age. Ethics. They include: • Cultural Environment • Economic Environment • Regulatory Agencies • Technological Change • Competitive Environment • Ethical Considerations Each of these factors may be beyond a company’s capacity to control or even affect. the marketing environment is the context in which a business works. income shifts up or down according to the overall economy. These Introduction to Marketing: Student Guide — 29 . This is the cultural environment: a big-picture understanding of the population as it is right now. income. gender. and perhaps even drive.

and you’ll see the effect the Boomlets are already having on the American economy. They’re everywhere: from nutritional supplements. skin creams and lotions to luxury cars and condominium communities. Having grown up in an era characterized by a high divorce rate. and how many men have become the primary grocery shoppers for their households. and even different media. These are today’s demographics. They’re computer-savvy and they want a new kind of marketing. the children of the Boomers. and no: witness the following segment. and the new opportunities they represent for marketers. Consider the rapid growth of the Western and Sunbelt states as more families move there. Gen Xers. The Internet has influence for them. and marketers must know what’s changing and how to adjust for it. not to mention an unprecedented level of mass communications. It’s even possible to track back over the last ten to twenty years to see how the Boomers have affected the marketplace. Now it’s ten minutes. The size and spending capacity of this demographic sector have created a need for a new wave of products and services for the mature household. Are Baby Boomers the whole marketplace? Do their rules apply to every segment? No. and they control about 75 percent of the nation’s wealth. For example. Consider the new buying power of Hispanics in the United States. Baby Boomlets. Do companies know about this trend? They certainly do. the so-called “permission marketing. Their families. and how many families are made up of children from prior marriages. The average time for preparing a family meal used to be an hour. The population is aging: In the next few years. their needs change. interests. and swelling investment funds in preparation for their retirements. different products. Their consumer choices are everywhere: look at any Top 100selling music list or blockbuster motion picture. These Americans make up the fastest growing demographic segment in the nation. Look at the number of second marriages one sees today. spending big on their children’s schooling. driving sport utility vehicles for family activities. Now they’re driving a more value. and their experience reflects a different America than that of the Boomers. Each of these represents a major shift in the needs and values of the population. about half the purchases made in most consumer service and product categories are made by the Baby Boomers. or consider that women make 50 percent of new car purchases. And right behind the Gen Xers are the “Echo Boomers” or “Baby Boomlets. improvements in health care and the “graying” of the enormous Baby Boom generation born between 1946 and 1965 will increase the number of Americans over age fifty-five to its highest ever percentage. Gen Xers were born between 1966 and 1976.changes create latent needs. two working parents.and family-oriented economy. and day-care. Generation X. characterized by expensive personal products and high-priced city living.” This is an enormous population segment. Baby Boom marketing doesn’t necessarily sway Gen Xers. tomorrow’s will be slightly different. and a way for companies to succeed or fail depending on how effectively they respond. the age distribution of Americans is changing. stimulating new growth in the outlying suburbs and “edge” cities. they’re more cynical and less accepting of marketing messages than any previous segment of the population. A much smaller group. For example: think about how many women have become corporate managers putting in sixty-hour work weeks. and so become opportunities for marketers. As people age. and lifestyles change. What does that mean for a marketer? It’s an opportunity to sell 30 — Introduction to Marketing: Student Guide .” which is less “in your face” and more interactive than television or print marketing. They want different activities. When they were a little younger they made the 1980s the Me Decade. Baby Boomers.

REGULATORY AGENCIES Marketers must appreciate the various rules and regulations overseen by federal. quick-preparation foods. And whole industries have been supplanted by new ones as consumer preferences changed before the old industries could respond. so they make more ambitious decisions about buying expensive items such as cars and homes.convenience in the form of delivered meals. The time and money spent bringing a “new” product to market can be wasted if a competitive product is already available. to promote fair competition among businesses and fairness to consumers Health and Safety. and discretionary income from a variety of government and private sources that marketers watch with great care. The way a company runs itself. Lesson Two ECONOMIC ENVIRONMENT Consumer spending represents two-thirds of all economic activity in the United States. A company must know what business it’s in. and they take on debt more willingly. and how it markets its products may be governed under regulations designed to serve two key functions: first. disposable income. Know Your Business. government regulators typically focus on four areas: Industrial. so the strength of the overall economy and the level of consumer confidence in the country are critical for marketers. safety. to ensure the quality. In prosperous times. of technological changes. Companies are responsible for knowing the regulatory climate in which they work and for observing the law. to protect consumers and their health and safety. In the last decade alone the Internet has affected marketing in a way that no one would have predicted. and second. Nevertheless. In the United States and developed countries. Introduction to Marketing: Student Guide — 31 . COMPETITIVE ENVIRONMENT Companies must pay close attention to the competitive climate in which they work. and they’re all reflected in hard data on such measurements as gross income. It sounds simple. state. and local regulatory agencies. Opportunities await companies that can get ahead of trends and spot an opportunity early. marketers must stay abreast. And this is just the beginning of such changes. to ensure fair business practices and competition. to restrict marketing of such products to young people Consumer Protection. to protect consumers from harmful products and misleading marketing TECHNOLOGICAL CHANGES Technological advancement moves today at such a dizzying speed it’s nearly impossible to predict the effects it will have and the opportunities it will create. and efficacy of products Tobacco and Alcohol. or meals that can be eaten on the run. These decisions all are vital to marketers. the products and services it sells. people feel confident in their ability to get and keep a good-paying job. creating whole new businesses while making others nearly obsolete. and even ahead.

customers are understandably concerned about privacy. Good ethics are essential in several areas: Market Research. that customer is likely to tell friends and family about a bad experience. 32 — Introduction to Marketing: Student Guide . A promotion that makes a promise needs backing from a product or service that keeps the promise. Unethical actions taken in a climate where consumers. Moreover. but neglected one vital one: ethics. “Planned Obsolescence” used to be a hallmark of American products. and now. Consumers themselves may present challenges to companies.but many companies fail to recognize this truth and characterize themselves incorrectly. Each of these competitive factors is true locally.. and so on. globally. addressing the wrong customers or sending the wrong messages — until they either figure it out or go out of business. etc. Understanding local complexities and intricacies is vital when a company enters a new and unfamiliar market. regulatory climate. but it’s often true: Stores in impoverished neighborhoods and areas often sell at higher prices than stores in affluent communities. Every market poses challenges such as barriers to entry. Product Strategy. Quality matters. or lack of motivation. Consumer groups demand data-protection laws. Distribution. Lack of competition seems a fair reason for charging more. supermarket scanners. nationally. the costs of starting up. and bad word-of-mouth can undermine any marketing budget. In a technological climate where data is gathered on the Internet. ETHICAL CONSIDERATIONS Some of the most notorious case studies in marketing come from companies that behaved with intense competitiveness in all these areas. but is that marketing. customers may keep buying their usual brand or product out of loyalty. but companies can’t create products that are planned to break down and hope that the same customer will return for more. potential risks. It sounds unfair. because customers in the poorer places have fewer options. economic climate. Along with knowing a company’s real business comes knowing the competition. ignorance. Consumer Inertia. Unless a company can convince consumers that their company’s product is clearly superior. and regulatory agencies are paying attention — and they all are — usually come back to haunt the offending companies. all will help determine success of failure for the new player. credit card usage. access to distribution. from telephone polls. just by sticking with their usual buying behavior out of habit. It’s unlikely a company will get repeat business from a customer who feels betrayed. and dozens of other sources. and it was one of the doctrines that nearly killed the American car companies in the mid-twentieth century. or is it taking advantage? Promotions. that can make it difficult for a company to enter the marketplace. This inertia can be frustrating for a company that makes a better product but can’t get consumers to try it. competition. Demographics. No product lasts forever. and few should. Know Your Competitors.

and bait-and-switch promotions. misleading ads. to take advantage of unwary consumers. but some companies still use deceptive pricing practices. Pricing is regulated. Lesson Two Introduction to Marketing: Student Guide — 33 .Pricing. hidden costs.

34 — Introduction to Marketing: Student Guide . • Product Strategy — Balancing the useful life of the product with the increased revenue from replacements. Some examples included the differences in the characteristics and buying patterns of different age groups such as Baby Boomers vs Gen Xers. and protect consumers and ensure their health and safety. These factors are: • • • • • Competitive Environment Technological Environment Governmental and Regulatory Environment Economic Environment Sociocultural Environment 2. 7. economic activity. and sustainable.Key Points 1. The telephone. Sociocultural forces in the external environment include demographic shifts and cultural changes.S. Ethics can be integrated into the marketing process in numerous ways. • Promotions — Determining when a promotion is “misleading. These advances have resulted in the emergence of entirely new industries. It is critical that marketers stay abreast of technological changes because not only do they create entire industries. extremely important to understand these factors and how they can affect your particular market. Understanding competition starts with knowing what business you are in. They enact laws. 6. 5. successful. which accounts for two-thirds of the U. It is therefore. • Ecological Issues — Integrating meaningful environmental policies into the marketing mix. and inflation) affect consumer spending. The external environment consists of five uncontrollable factors. Technology has had a profound effect on marketing. These forces also include cultural issues such as the changing roles of men and women. but they also change the way business is conducted. • Distribution — Weighing the factors of distributing in impoverished areas. Marketing strategy must be shaped with these forces in mind. ensure that fair business practices are in effect. Marketers need to be aware of these laws and regulatory agencies so they can develop a marketing strategy that encompasses existing or proposed legislation or regulations. Government and regulatory agencies have a strong effect on marketing through legislative action and regulatory controls. interest rates. It is important to observe in which areas of marketing and in which situations unethical behavior occurs most often: • Market Research — Drawing the line between collecting data for more effective marketing and invading privacy. Understanding the competitive environment is paramount in developing marketing strategy. Marketers need to develop marketing strategies that account for economic factors.” • Pricing — Communicating clear pricing claims. television. 3. These forces will test your marketing strategies to make sure they are resilient. 4. Then you must understand who your present and potential competitors are. and the Internet — all have had a tremendous effect on the way people do things. the personal computer. Microeconomic forces (such as income trends and other forces affecting consumer buying power) and macroeconomic trends (such as the state of the economy.

in response to requests for ever-hotter sauces. it became the first hot sauce maker to take advantage of another growing trend: marketing via the Internet. such as professional tasters and sample booths in food stores. salad dressings. Economically. but the Internet is their doorway to the expanding global market. HotHotHot was already serving its local market with a broad line of products when. that population’s spending power was growing as well. country of origin. the Caribbean. California. says Raveen Arora. Roughly four hundred large and small companies have followed HotHotHot into the market and onto the Web. Executive Vice President Raveen Arora reports that. too watery? Is the label eye-catching and the bottle attractive? Does the whole product convey an attitude of fun? HotHotHot’s customers (the ones with asbestos tongues are known as “chiliheads”) help monitor quality and point the company in new directions. founded their company in 1983. and visibility” are the foundations of HotHotHot’s marketing strategy. They use Web-based questionnaires in addition to traditional means. and in 1994 they took over a retail operation in Pasadena. individuals whose own websites (now numbering over a thousand) that feature links back to HotHotHot’s home page. a Californiabased hot sauce company. a trend that exploded as nonHispanics fell in love with cuisine from Mexico. a quintessential marketing challenge they’ll win. consistency. It helps the Aroras plan new products and improve current ones. France. HotHotHot is developing a line called “Skull and Bones. Switzerland and Denmark have delivered plenty of repeat business. where sauces are listed by name. and firepower. and Canada are especially big markets.” which.” The company also sells through its network of Hot Partners. Raveen and Govind Arora.Case Study Can a bottle of Rigormortis be the perfect gift for Valentine’s Day? HotHotHot. HotHotHot exemplifies how savvy marketers can leverage trends in the marketing environment into a remarkable business success. Now HotHotHot makes sauces flavored with mangos and apricots. says Raveen. the Hispanic population of the United States was growing. ingredients. The Aroras intend to stay independent and in the lead. Demographically. price. and other dangerously tasty sauces at heat levels from mild to meltdown to buyers throughout the United States and around the world. Mad Dog Inferno. is proving that it can. in 1994. by “being more Introduction to Marketing: Student Guide — 35 Lesson Two . The website does more than sell the company’s products. using credit card ordering via a secure server twenty-four hours a day. too salty. and distribution to retailers. he says ominously. Germany. ads in food magazines and The Wall Street Journal. cooking seasonings and rubs. The retail store is long since closed — Marketing Executive Govind Arora says the Web is “65 percent of our marketing strategy. is “off the scale.” “Quality. and it’s growing every day. Is the sauce too sweet. and Southeast Asia. Spain. they now must face a new environmental trend: competition. Bad Girls In Heat. Their business expanded steadily as they took advantage of some key national trends. The Aroras use traditional marketing methods such as seasonal and holiday gift promotions. seafood and barbecue marinades. And to keep winning worldwide. Today HotHotHot sells Blair’s Sudden Death. the father-and-son team behind the HotHotHot name. Those two developments helped create a new market for spicy food. to test new recipes and get customer ideas. and pickles – about seventy items in all.

The real world. Data gathering that educates a company about consumer needs. preferences. being more aware. government agencies typically focus on four areas: • Industrial. and keeping our relationships intact. safety. and buying decisions. DIRECTIONS Answer the question below and send your completed case study to your professor according to his or her directions. and the level of consumer confidence. the context in which a business works. motivations.” So even on Valentine’s Day. regional. and efficacy of products • Tobacco and Alcohol. they’ll be turning up the heat.versatile.. and occupation. In the United States and developed countries. gender. etc. to promote fair competition among businesses and fairness to consumers • Health and Safety. to protect consumers from harmful products and misleading marketing Consumer Inertia Cultural Environment Demographics Distribution Economic Environment Marketing Environment Market Research Regulatory Agencies 36 — Introduction to Marketing: Student Guide . The placement of goods within a market. to ensure the quality. What macro-environmental trends have affected HotHotHot’s marketing strategy and how? Glossary Competitive Environment Such factors as barriers to entry. The market population as it is right now. Descriptions of the population according to selected characteristics such as age. or local economy. Habituated consumer buying behavior. the costs of starting up. and as it is evolving. access to distribution. to restrict marketing of such products to young people • Consumer Protection. which can make it easy for a company to dominate a market and difficult for another company to enter the marketplace. income. The state of the national.

or gardening. Campbell’s altered the recipe for its nacho cheese sauce. bakery. Describe the product or product line that was adapted owing to a shift in one or more environmental trends. have the burden of responding to the outside world. Describe how other environmental trends could possibly affect the marketing of this product in the future. clothing. Wal-Mart is the No. The local Chamber of Commerce has just announced that construction will begin on a new Wal-Mart across the street from your business. • You. customer service.1 retailer in the world. • Send your paper addressing the following items to your instructor. You must develop strategies to compete profitably. With nearly $100 billion in annual sales and more than 3. The company made a spicier version to appeal to tastes of the West and Southwest. Explain how the shift in environmental factors specifically affected the marketing of this product and how. cutting prices is not a legitimate option. Its powerful and efficient distribution system. and therefore marketers must continually adjust their marketing strategies. and a milder version for the less spicy tastes of Midwesterners. as the marketer. • Send your answers to the following questions to your instructor. sporting goods. customers follow.600 stores.Assignments Assignment One: Save the Family Fortune Wherever Wal-Mart goes. from prescription drugs to garden supplies. What marketing strategies can your small business use to compete against Wal-Mart? How can you add value to your offerings? What things can you do well that will be difficult for a large retailer to copy successfully? Lesson Two Assignment Two: Environmental Trends The marketing environment is ever-changing. If you don’t want to be bounced around. in response to changing customer tastes and the increasing ethnic diversity of Americans. Introduction to Marketing: Student Guide — 37 . Since Wal-Mart has the resources to meet or beat any price you set. according to his or her instructions. and sales and marketing strategies allow Wal-Mart to offer a vast array of products. • Imagine that you own a small retail shop in one of the following industries: hardware. Wal-Mart’s arrival in a new town has spelled doom. You must take all external factors into consideration to avoid being a cork on the ocean. it’s very important to have thought through the manner in which you are going to address and respond to the evolving marketing environment. • Find a product or product line that was developed in response to a shift in one of the environmental factors. But for many small businesses. grocery. according to his or her directions. For instance. placing you in direct competition with the discounters. Customers flock to Wal-Mart because they believe they can get almost everything they want at a highly competitive price.

the challenges of organizational buying. gathers its quantitative and qualitative data. then discussing the types of purchases. the importance of talking directly to one’s customers. and the dynamics of the Decision Making Unit. and Analyzing the Customer Marketing begins with the customer. the social and cultural influences on consumer behavior. ending with a discussion on the research methods marketers use in order to better understand their customers’ wants and needs. • Describe the major factors influencing buyer behavior. Expected Learning Outcomes By the end this lesson.Lesson Three Consumer and Organizational Buying Behavior Researching. • Compare the differences in buying behavior across the globe. a market research firm specializing in the music industry. 38 — Introduction to Marketing: Student Guide . • State the steps involved in consumer buying decisions and arrange them in order. and the purchasing dynamics of a family. The case studies include how Left Bank. outlining the steps in the purchase decision process. • Describe how organizational buying behavior differs from consumer buying behavior. the students should be able to: • State methods of qualitative and quantitative market research. It then explores the similarities and differences between consumer and organizational buying behavior across the globe. Understanding. so understanding the motivations and influences behind buyer behavior is crucial. Lesson Three examines customer-oriented marketing.

complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. post any questions you have to the Discussion Boards. 6. read: • The program summary for Lesson Three. Watch the video program for Lesson Three (Consumer & Organizational Buying Behavior: Researching. As with each lesson. 1. 5a. please check the syllabus for additional or altered instructions from your professor. the following steps should be taken in the sequence listed below. Use the Lesson Three outline in the Student Guide to help you follow the flow of the lecture. your instructor will deliver the quiz to you. If you are a Telecourse student.Completing Lesson Three Lesson Three In order to obtain the most out of this course. Review the Expected Learning Outcomes for Lesson Three in the Student Guide. complete the online exercises for Lesson Three and submit them to your instructor according to his or her instructions. Understanding & Analyzing the Customer). If you are a Telecourse student (with no online component to your course). • The key points for Lesson Three. If you are a Teleweb student (with an online component to your course). Instead. Take the quiz for Lesson Three if assigned by your instructor. 5b. 4. Introduction to Marketing: Student Guide — 39 . as indicated in the syllabus. and be sure to check the Boards at least Three times a week. If you are a Teleweb student. 3. Read the text assignment for Lesson Three. you will find the quiz online. ignore the assignments that are listed in the Student Guide. along with directions on how to submit your answers. In the Student Guide. In addition. 2.

Children are socialized as consumers by their families b. Problem Recognition b. Marketer’s Role in the Decision-Making Process E. involves more complex buying behavior 40 — Introduction to Marketing: Student Guide . or only mildly engage in some of the steps a. Evaluation of Alternatives d. Types of Purchases 1. the consumer might intensely engage in each step. All of the individuals who are involved in making or influencing the buying decision III. delivery b. places more emphasis on a. Information Search c. Personal Influence a. A family’s purchases rely significantly on what stage of the family life cycle they are in F Decision-Making Unit . Opinion Leaders 2. post-sales service d. Sociocultural Influences on the Decision-Making Process 1. Word of Mouth b. Organizational buying behavior differs from consumer buying behavior. Post-Purchase Behavior • Cognitive Dissonance – The feeling of post-purchase psychological tension a consumer often experiences C. OVERVIEW II. Impulse 2. you must understand what motivates consumers to buy products. The Purchase-Decision Process 1. financing c. Reference Groups 3. B. ORGANIZATIONAL BUYING BEHAVIOR A. quantity discounts often offered 4. Planned 3. CONSUMER BUYING BEHAVIOR A.Lesson Three Outline I. Organizational buying behavior: 1. involves higher dollar amount 2. Depending on the type of purchase being made. To be a successful marketer. Family a. Purchase Decision e. deals with a smaller number of buyers 3. Emergencies D.

individual buying behavior will be affected to a certain extent by the following: 1. not yes or no answers – “soft” data b. Sometimes the data doesn’t provide you with a deep understanding of your customer C. The data that comes out of market research is only as good as the questions that are being asked 2. structured research that can be presented in numerical format – “hard data” VI. Routine Purchases 2. Caveats of Market Research 1. Kinds of Market Research 1. MARKET RESEARCH A. local culture 3. Quantitative a. How Organizational and Consumer Buying Behavior Are Similar: 1. Issues of Rationality 3. the manner in which negotiations are conducted and decisions are made 2. and motivations can marketers create products that respond to those needs. Purchase Risk Lesson Three IV. local climate 4. B. Market research must be conducted because only by truly understanding consumer wants. local customs V. The fundamentals of consumer psychology and consumer buying behavior are similar worldwide.B. Open-ended responses. GLOBAL ISSUES A. SUMMARY Introduction to Marketing: Student Guide — 41 . Organizational buying behavior is less culture bound than individual buying behavior B. However. Often involves focus groups 2. needs. Qualitative a.

Every purchase 42 — Introduction to Marketing: Student Guide . how to put themselves into the consumer’s purchase-decision process. They visit customers at work and at home. because the answers tell them how to sell their product — if the answers are available and interpreted correctly. and so on. and that difference can be addressed by a purchase. not just for one sale. Professor Quelch looks at the buying behavior of individual consumers and of organizations. in the real settings where the products are used. Finally. the consumer might engage intensely in each step. The differences among customers fascinate marketers. Some marketing messages strike home so effectively. CONSUMER BUYING BEHAVIOR A marketer must be passionate about knowing the consumer’s needs and desires. Understanding why someone wants or needs a product or service clarifies the way a marketer reaches out to the customer. they help create a feeling of loyalty that binds the customer to the company for a lifetime. The first step in the consumer’s purchase decision process is simple: The consumer recognizes a need. Understanding and Analyzing the Customer Why do people buy what they do? Why do they choose one product from among the many beside it on the supermarket shelf. or engage only mildly in some of the steps. Consumer choices are as full of quirks and habits as animal behavior in the wild. They seek feedback on everything from packaging to personalities so that they can continually adjust their products and messages. he discusses some of the new challenges now being faced by marketers in the global economy. The purchase-decision process can be elaborate or simple. and for the best ones. There’s a difference between the way things are and they way the consumer wants them. in countless variations. From there. They never group their customers into homogenous (and misleading) collections. but there are tools and methods to help marketers try. They ask questions. They’re deeply intrigued by it. They differ widely. Depending on the type of purchase being made. Problem Recognition. Understanding them will never be an exact science. how do we obtain information to help us understand differences in purchasing behavior? The answer is market research. but they also share certain patterns. Such attentive marketers are customer oriented. or select one service out of a dozen similar services? Marketers always ask these questions. The Purchase-Decision Process All great marketers know how to think like a consumer. The consumer wants a sandwich and needs bread. In Lesson Three. they recognize that buyers are real people who behave differently in different situations. he asks. the consumer’s watch breaks and he or she needs a replacement. Instead.Program Summary Introduction to Marketing: Competing in the 21st Century Lesson Three Consumer and Organizational Buying Behavior Researching. Great marketers have what almost seems a sixth sense for consumer behavior. but for continued repeat purchases and long-term customer satisfaction. these differences always create new opportunities.

consumers weigh the alternatives. from whom to buy. consumers look for ways to fulfill it. the more a consumer is likely to be deeply involved in all these stages. especially after a big purchase such as a car or an appliance. The events aren’t planned. Emergencies are unplanned: the water heater breaks. feedback forms. Sociocultural Influences on the Decision-Making Process What’s the marketer’s role in all of this? How and when does an effective marketer try to Introduction to Marketing: Student Guide — 43 . After evaluating the alternatives. as rated by Consumer Reports? Do any of my co-workers drive a car they’d recommend to me? What do the car companies say about their products? Information media. Now the questions are. an external search is necessary. a car. Marketers call these alternatives the “evoked set. not all products are alike. The feeling of tension a consumer may experience is called cognitive dissonance. a computer hard drive collapses. and they look internally and externally for information on how. style and prestige. Once the need is recognized. but having the cash to pay for them should be. However. social. For more complicated products. Lesson Three Types of Purchases Marketers classify purchases into three types: Impulse purchases are spur-of-the-moment decisions: buying something that’s not on the shopping list. and how well the specific dealer treated them. The more this is true.” For consumers looking at cars. the car’s transmission makes noises it shouldn’t. and an ongoing relationship are ways marketers stay close to customers after big purchasing decisions. Internally they check their memories: What did I buy last time? Where did I buy it? Was I satisfied or should I try an alternative? For simple purchases. A house. The consumer may recognize it on his own. Are all purchases this involved? No. The evoked set is then narrowed by specific criteria such as gas mileage. Follow-up calls. What’s the best model car this year within a certain price range. Customers often secondguess themselves. If a purchase is minor. and economic sense. and marketer sources all can offer helpful input for making an important buying decision. Effective marketers recognize that a satisfied customer will make repeat purchases and spread favorable word-of-mouth that will bring in other customers. this may be all the information they need. Evaluation of Alternatives. long-term service. Planned purchases tend to be bigger and more complicated. some buying decisions are major in a personal. or a company may use marketing to stimulate the recognition consumers haven’t yet realized. chances are some of the steps will be shortened or skipped. and it’s important for a marketer to alleviate it and reassure the customer that the purchase was a good one. Once the information is gathered.begins with recognizing a need. because. any major investments that require careful thinking and research. the consumer decides on one product. and when? Companies and consumers both recognize that the sale doesn’t end with the purchase. engine performance. the evoked set might be the half-dozen models that fit the desired parameters such as price range or model. obviously. Information Search. or all three. personal sources. Purchase Decision. making the comparisons and tradeoffs that narrow the field. seating capacity.

Some influences are sociocultural: the influence of one’s own groups. Do they start the buying process? Do they provide research or information? Do they have good or bad things to say about a product or company? How do they help finalize the decision? Here’s an example: Volvo emphasizes safety over other common car features such as style. also called business-to-business or industrial marketing purchases. A voter who feels strongly about a certain issue. ORGANIZATIONAL BUYING BEHAVIOR Organizations don’t purchase the same ways individuals do. Businesses buy in quantity: office supplies. big 44 — Introduction to Marketing: Student Guide . and what roles they play for consumers. Children are socialized as consumers by their families. a woman’s influence is the key. whom one may not know personally but whom one believes and trusts. And a family’s purchases rely significantly on the stage of the family life cycle it is in. Smaller Number of Buyers. or price. messages about clothes and entertainment to singles. The family is a consumer’s first source of education on developing preferences and trust in products and companies. Consumers usually buy what they need in small amounts. knowing that in many Decision-Making Units. consulting services. and so on. and more complex buying behavior than individual consumer purchases. A company that makes nylon stockings for retail sale may have more customers than it can keep track of. That company won’t need the mass-marketing methods that consumer-oriented companies use. luxury. Not surprisingly. They’ll target their market with different media and sales messages in different ways. might want to know where the National Rifle Association stands on a certain candidate in an upcoming election. Organizational transactions. leaders. Higher Dollar Amount. Also. messages about toys and furniture to young couples with children. The Decision-Making Unit The number and influence of decision-makers vary from one family to another. and Opinion Leaders. gun control for example. and their reasons for buying often are very different. it’s likely to be women who place safety above the other considerations. Marketers aim messages at consumers based in part on this: messages about prescription drugs and vacation packages to older couples. They develop brand preferences as early as age two based on what they see and use in the household. generally involve a smaller number of buyers. In the Decision-Making Unit. Personal influences include Word of Mouth from trusted and valued personal associations. equipment. Reference groups are people to whom consumers look for information on something specific. or DMU — all of the individuals involved in making or influencing the buying decision. It’s important for marketers to know who makes up a Decision-Making Unit. influences from outside the family may come to bear on the process. role models. A company that makes specialized permeable nylon fabrics for medical application is likely to know all its customers in the medical supply business. family. etc. Opinion Leaders may be athletes and celebrities. Volvo targets women with their messages about safety.influence these decisions? By understanding the many factors that influence the process. or trusted experts and institutions such as doctors or consumer organizations. a higher dollar amount. The total is called the DecisionMaking Unit. and perhaps the most important one. The consumer’s family is another obvious source of influence.

More Complex Buying Behavior. seals of approval from consumer organizations. However. each made without reopening the decisionmaking process. marketers must be keenly aware of local cultures and preferences as they impact individual buying behavior. experts. Such decisions might be reviewed annually. Assuming that business is conducted the same way in Japan or Chile as it is in the United States has been the downfall of many major U. no buyer wants a product he or she isn’t sure will be satisfying. Typically. and acquisitions experts. Companies employ whole fields of specialists. and both will minimize risk by purchasing from vendors they know and trust. Its Problem Recognition stage is generally more complex than that of a consumer. One of the most interesting is their common aversion to risk. for less important purchases. This changes the character of the vendorcustomer relationship. free samples. purchasing managers. involving a group of qualified managers. so that buying decisions are made with the optimal balance of price and benefit. the company will send its specific requirements out to selected vendors with a call for bids. financing. Business practices and decision-making criteria tend to be relatively standardized even across national boundaries. deciding as precisely as possible what it needs. very specialized product or service will often spend great effort planning its purchase. but no company reviews such decisions for the sake it of every time it needs something. In cases where the outcome is risky. It’s often said that companies generally make buying decisions more rationally than individual consumers do. How can marketers minimize this perceived risk? For both individuals and companies. Whether it’s a company or an individual. GLOBAL ISSUES In the global marketplace. and users. culture. The company’s price range will likely be kept secret. A company buying a very expensive. and customs are just three of the many factors that influence buying Introduction to Marketing: Student Guide — 45 . But organizational buying behavior is less culture-bound than that of individuals in the global market. reliable warranties. S.amounts for big outlays of funds. to help ensure long-term repeat business and mutual satisfaction. both will do extra work in searching for information and evaluating alternatives. with close mutual interdependency. and post-sale service. each vendor’s proposed price is factored in to the total. companies that sought overseas business without a deep understanding of the cultural nuances of their potential market. the decision may be very simple. and it’s important for marketers not to patronize or to let their own prejudices about what to buy influence their judgment about whether someone is buying in an emotional (and therefore unreasonable) fashion. money-back guarantees. and endorsements from opinion leaders all can prove valuable. When the vendor proposals come back. Routine repurchases might be simply a matter of scheduling: a regular pickup by Federal Express or a regular delivery of paper by an office supply company. it’s closer than the relationship between businesses and individual consumers. Next. people are people. and heavy emphasis on on-time delivery. And the level of post-sales service is high. individuals and organizations do have some key considerations in common. It’s more like a partnership. However — and this is crucial for marketers to know — there may be significant cultural differences in the way negotiations are conducted and decisions are made. Custom-designed products and services are common between businesses. Local climate. Still. Lesson Three Similarity of Business and Consumer Buying Behavior Despite the differences in making buying decisions. Incentives such as bulk discounts may be offered.

Some vital questions don’t get asked in focus groups. Statistics and analyses may do more to obscure an opportunity than they do to reveal it. and to hear exactly how consumers express their interests or opinions about what they like. Focus groups sit and talk for ninety minutes to two hours and explore issues about a company in depth. and some things can’t be measured statistically. seasonal changes. A common way to gather qualitative market research data is through focus groups. and it renders their feedback into percentages. men make all the important buying decisions. It’s important for marketers to get out into the field. if it’s not done well. Local economies. and emotional responses rather than yes or no answers. Quantitative. and sometimes the data fails to provide a deep understanding of the customer. A good marketer makes the tripod stand by adding his or her own intuitions and questions. but each culture has its version of the family. Decision-Making Units may vary from culture to culture. it needs that third leg: personal experience and insight on the part of a good marketer. The best way for marketers to understand their customers is by doing thorough market research. The problem with focus groups is that they’re too small. Good marketing takes the courage of a marketer’s convictions. People will always have certain needs and seek certain benefits. eight people don’t represent an entire market. 50 percent of the focus group likes this feature. watch their behaviors. see the customers. all will affect a marketer’s approach. and hear their comments. Companies that try to sell a standard food product in every market will witness very different sales results and feedback from customers. There are two kinds of market research: Qualitative. averages. based on — and this takes us back to the beginning — that passionate interest in consumer behavior.decisions around the world. and motivations can a company create products that respond to those needs. Qualitative market research is “soft” — it comes from open-ended discussions that yield opinions. Something else to consider is the makeup of the Decision-Making Unit. Market research data is only as good as the questions being asked. dislike. MARKET RESEARCH Despite all the differences. Marketers. want. Market research is a tripod with three legs. needs. and other statistics that can be readily compared and measured. Consider for example the different cuisines worldwide. there are some fundamentals of consumer psychology and buying behavior that are more or less standard worldwide. and combining the two can still be misleading. holidays and giftgiving customs. and don’t want. so companies can’t extrapolate off the group and say. but between regions within them. small gatherings of six to eight selected consumers moderated by a skilled leader (usually not a company employee).” Quantitative research complements qualitative research by dealing with much larger groups. so 50 percent of the market will like it. be warned: Market research can do more to throw a company off track than help it. In many countries. To stand. 46 — Introduction to Marketing: Student Guide . Neither quantitative nor qualitative research has all the answers. attitudes. not just between countries. Inspiration comes more often from hard work in the field than it does from reports in the corporate headquarters. They’re a good way for marketers to learn to think as the customer thinks. Only by truly understanding the consumer’s wants. and women have relatively little influence. Sometimes the best products get created after everyone has already confirmed they’d fail. Quantitative market research is structured research that can be presented in numerical format — “hard data. Obviously. ask them questions. They can all offer special challenges to marketers.

Some examples of quantitative research are: • Surveys or interviews with definitive answers such as yes. Sociocultural factors are key influences in consumer behavior. not yes or no answers. A marketer must understand the purchase decision process and how it applies to his or her product. • Personal Influences • Word of Mouth • Opinion Leaders • Reference Group Influences • Family 5. The marketer must then consider how he or she can intervene in this process to ensure his or her product is among the set of options considered. • Qualitative refers to “soft” data gathering of consumer’s opinions. or other statistics. attitudes. 6. The five steps of the purchase decision process are as follows. or maybe in which the answers can be tallied and quantified • Surveys or interviews with numeric answers • Analysis of existing data such as past financial performance and quantifiable buyer preferences 3. open-ended responses.Key Points Lesson Three 1. Marketers must invest time in understanding the customer through market research. • • • • • Problem Recognition Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behavior Introduction to Marketing: Student Guide — 47 . 2. Consider the difference in buying the following: • Impulse Purchase • Planned Purchase • Emergency Purchase 4. no. and emotional responses seeking in-depth. averages. The role of each player in the decision-making unit is key information to a marketer. quantitative and qualitative. There are two ways research can be categorized. The marketer needs to understand who is typically involved in the decision-making process and attempt to communicate to each player. The type of purchase plays a strong role in how a consumer buys. Some examples of qualitative data collection methods are: • Focus Groups • Open-ended Questionnaires or Interviews • Observation • Quantitative data gathering seeks structured responses that can be summarize in numbers.

climate. global buying behavior differs in the manner in which negotiations are conducted and in the way decisions are made. However. organizational buying behavior is less culture-bound than individual buying behavior since business practices and decision-making criteria are pretty standardized across national boundaries. 48 — Introduction to Marketing: Student Guide . Organizational buying behavior differs from consumer buying behavior in the following ways: • Smaller number of buyers • Sales involve higher dollar amounts • More complex buying behavior 8.7. In organizational buying. and customs. 9. Consumer global buying behavior differs depending on local culture.

a car. etc.Glossary Lesson Three Cognitive Dissonance The feeling of tension a consumer may experience after a purchase. possibly complicated purchases such as a house. Small consumer gatherings convened by marketers to explore issues about a company in depth.” People to whom consumers look for information on something specific. Larger. attitudes. a higher dollar amount. Spur-of-the-moment decisions: buying something that’s not on the shopping list. leaders. instead of yes or no answers. any major investments that require careful thinking and research. All of the individuals involved in making or influencing the buying decision. Unplanned but necessary purchases. Business-to-business or industrial marketing purchases. generally involve a smaller number of buyers. Decision-Making Unit Emergencies Focus Groups Impulse Purchases Organizational Transactions Planned Purchases Purchase-Decision Process Qualitative Market Research Quantitative Market Research Reference Groups Sociocultural Influences Introduction to Marketing: Student Guide — 49 . on a consumer’s buying decisions. and more complex buying behavior than individual consumer purchases. family. Structured research dealing with large consumer groups that can be presented in numerical format — “hard data. The influence of one’s own groups. Problem Recognition > Information Search > Evaluation of Alternatives > Purchase Decision > Post-Purchase Behavior Research designed to yield “soft” or anecdotal data such as opinions. and emotional responses. role models..

which the store may use for its own purposes or sell to other marketers. do you research it thoroughly? Do you ask the opinions of your family and friends? Are you influenced by advertising? Understanding the consumer is essential to being an effective marketer. And what better place to start than with your own buying behavior? Consider your decision to enroll in this class – a high purchase item. Store club cards. But others claim that it is an invasion of privacy. details of credit card purchases.Assignments Assignment One: The Buying-Decision Process What kind of buyer are you? How do you make your purchase decisions? When it comes to buying a large ticket item. New technologies make it even easier to do. Many marketers say that this practice is necessary and allows them to target their specific market more effectively. You may consider such data private and confidential. An important part of this understanding is knowing the steps people go through when they make their buying decisions. touted to give members added benefits. phone number. Address the items listed above. Address the following: • • • • • • • • • • • • Problem recognition Information search Evaluations of alternatives Purchase decision Post-purchase behavior Which steps did you go through when deciding to purchase this item? Where did you obtain information about this item? Who and what influenced your purchase decision? What were your alternatives? How did you evaluate your alternatives? Which step or steps did you focus on the most? The least? How did you decide where to buy the product? What kind of post-purchase behavior did you exhibit? Next. Consider the following: • Do you think marketers are obliged to tell you when personal information about you is being gathered? • Do you think they should tell you how it is being used and to whom it is being sold? Why or why not? 50 — Introduction to Marketing: Student Guide . social security number. • What have you learned about yourself as a consumer? When you’ve completed the assignment. claiming that it benefits the consumer. send your one-page paper to your instructor. They have begun selling the information to third-party marketers eager to pay for it. but many banks don’t. banks acquire a consumer’s name. address. think of a low purchase item you’ve recently bought. Gathering information and doing research is an important part of marketing. are a new way of compiling mailing lists and buyer profiles. according to his or her instructions. Assignment Two: Marketers and Privacy In the course of doing business. and bank account balances.

How are your responses different than when answered from a consumer’s point of view? Submit your responses to the questions raised by this dilemma to your instructor. according to his or her instructions. but at what point does it become an invasion of privacy? Lesson Three • How far should marketers go to get their market research? How far would you go? • How does this proliferation of data benefit you as a consumer? • Go back and answer these same questions from a businessperson’s point of view. Introduction to Marketing: Student Guide — 51 .• Gathering data for marketing purposes is necessary.

It then discusses how marketers target specific segments of the market and ends with an analysis of positioning. • Evaluate different strategies for reaching target markets. an ad agency whose offerings are targeted at the emerging Hispanic market. and Positioning Developing a Focus It isn’t necessary to convince the whole world to buy your product. Lesson Four discusses the various segmentation criteria marketers use.Lesson Four Market Segmentation. 52 — Introduction to Marketing: Student Guide . • Describe the major approaches to segmenting consumer markets. examines the mistakes that marketers can make. and the psychographic segmentation strategies behind the Absolut Vodka campaign. Expected Learning Outcomes By the end of this lesson. Targeting. The case studies include how Toyota developed a new line of cars targeted at Generation X. the students should be able to: • Explain the role of segmentation and targeting in the marketplace. then outlines the steps involved in the segmentation process. • State positioning strategies that can strengthen competitive advantage. • Explain the concept of positioning and why it is useful. but it is necessary for marketers to focus their marketing resources on the people who are most likely to buy it.

As with each lesson. In addition. Take the quiz for Lesson Four. post any questions you have to the Discussion Boards. ignore the assignments that are listed in the Student Guide. 3. Read the text assignment for Lesson Four.Completing Lesson Four Lesson Four In order to obtain the most out of this course. 5a. Watch the video program for Lesson Four (Market Segmentation. 2. 5b. If you are a Teleweb student. your instructor will deliver the quiz to you. the following steps should be taken in the sequence listed below. Targeting & Positioning: Developing a Focus). complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. as indicated in the syllabus. if assigned by your instructor. • The key points for Lesson Four. and be sure to check the Boards at least Four times a week. Introduction to Marketing: Student Guide — 53 . along with directions on how to submit your answers. 1. read: • The program summary for Lesson Four. If you are a Telecourse student (with no online component to your course). please check the syllabus for additional or altered instructions from your professor. 4. If you are a Teleweb student (with an online component to your course). Review the Expected Learning Outcomes for Lesson Four in the Student Guide. complete the online exercises for Lesson Four and submit them to your instructor according to his or her instructions. If you are a Telecourse student. Instead. Use the Lesson Four outline in the Student Guide to help you follow the flow of the lecture. In the Student Guide. 6. you will find the quiz online.

3. MARKET SEGMENTATION A. Start With the Customer 2. at a price point that consumers will buy. Differentiate Your Product 54 — Introduction to Marketing: Student Guide . Mass Marketing At one end of the spectrum is mass marketing. Segmentation Segmented marketing lies between these two extremes. Gender b. but also to the pleasure traveler segment.Lesson Four Outline I. Segmentation Strategies 1. OVERVIEW II. Segmentation Pitfalls 1. Usage Patterns 4. B. where the entire market is seen as one segment. Demographic a. Segmentation by Product. Psychographic 5. 4. 1. The Art of Segmentation E. Market Segment Defined Consumers can be separated into different groups.” These segments represent a fairly homogeneous group of customers who will respond to a marketing mix in a similar fashion. known as “market segments. For instance. Ethnicity d. airlines cater not only to the business traveler segment. Family Life Cycle 2. Not Customer 2.” where products are custom tailored for each individual. economically. Mass Customization Mass customization is a way in which a company can customize its products to suit particular segments. Geographic 3. Age c. 2. Failing to Identify Emerging Segments F Steps of Segmentation . This allows them to enjoy the benefits of the economies of scale in their production process. Segment of One At the other end of the spectrum is a “segment of one. but with the ability to tailor their product to different segments of the market. all consumers are viewed as being alike. Benefits Valued D. Segmentation by Demographics 3. The Segmentation Spectrum 1. C. Develop Segmentation Structure 3. Targeting the Largest Segment 4.

State the Evidence of Your Superiority C. 2. Determine Probable Market Share Within That Segment 3. Usage and Application 4. Specify Your Target Market 2. Price 3. Particular User Group 5. as compared to other similar products. Competitive Comparison Advertising V. Product Class 6. Loyal 2. Sizable Segment b. Determine Economic Factors IV. Easily Identifiable c. with regard to important attributes. SUMMARY Lesson Four Introduction to Marketing: Student Guide — 55 . the next step is to determine which segments of the market you want to target. B. Accessible d. Determining Your Target Segment 1. The unique place a product occupies in the mind of the consumer. how customers think about brands in a market. Sustainable e. Determine Market Potential of Segment a. Positioning With Clarity 1. Six Approaches to Positioning 1. State How Your Product Is Superior 3.III. TARGETING YOUR MARKET A. POSITIONING A. Positioning Defined 1. After determining how to segment a particular market. Positioning = Segmentation + Differentiation B. Benefits 2.

At the other is the “segment of one. custom-designed for the buyer to unique specifications. Whirlpool and other manufacturers can make a basic machine and give the customer choices on specific features. At the other end of the spectrum are unique. and seek to win and keep a core group of loyal customers that will help it stay profitable. add-ons. very expensive products from buildings to airports to couture clothes. Mass Marketing. Sometimes the best approach is to treat the market as a single massive unit. he says. For instance. Every segment is characterized by two characteristics: • The people in the segment have common needs and desires. Targeting. is the mass market. but each one has characteristics that make it different from the rest. and extras in order for them to have exactly what they need. Segment of One.” meaning the individual customer. This lesson describes the idea of market segmentation. The marketer’s challenge is to find that spot on the spectrum where the best success can be achieved. the ways marketers single out and focus on the customers they want to pursue. assuming no divisions that would make people buy one product as opposed to another. If a company sells commodities.” At one end. and separating the segments according to the qualities that make them unique. the method marketers use to divide prospective customers into groups of people with similar characteristics. and needs. These are one-of-a-kind items. Mass Customization is a way for a company to serve a mass market with customized products at prices buyers will pay. In Lesson Four. a mass market. such as grain by the ton. this makes sense. MARKET SEGMENTATION Market segmentation is the process of taking a unit. He discusses target marketing. A 56 — Introduction to Marketing: Student Guide .Program Summary Introduction to Marketing: Competing in the 21st Century Lesson 4 Marketing Segmentation. Each segment is part of the larger whole. Professor Quelch calls the marketplace a “spectrum. And he defines positioning. and Positioning Developing a Focus It may seem like common sense to pursue the biggest possible market for a product or service — but often it makes better sense for a company to focus its efforts. • The people in the segment will respond to a particular marketing program in a similar fashion. attitudes. Of course. Professor Quelch explains how companies can succeed by narrowing their target and developing a focus: selecting a specific segment of the marketplace and aiming to satisfy the specific needs and desires of that group. the strategies marketers use to set their brands apart from other similar products. not every product made this way is completely unique.

which would appeal to a single Gen Xer. Demographic segmenting separates the market into categories: age groups. Why Segment the Market? Segmenting the market is challenging and complicated — why bother? Because buyers aren’t all alike any more than products are. It’s Introduction to Marketing: Student Guide — 57 . • Gender — Countless products aim for men. educational levels. selecting. but for segmentation to work.. A family is more likely to get a station wagon or a minivan as its primary car than a convertible. The cost of making completely unique custom-made dishwashers would be so high that no one would buy. are made by women. reaching to. • Age — Tastes change as a person ages. The Baby Boomers have needs and wants different from those of the Gen Xers who came after them. There are many specific ways to separate segments within the mass. occupations. for example. These lessons have mentioned Volvo and Saturn as companies that do extensive marketing toward women based on the knowledge that over half the car purchases made in the U. gender groups. It’s just common sense. casings. etc. And if a company is small. • Ethnic Groups — Different ethnic groups want different products. to name just a few. Sometimes companies pursue several segments with different products or messages. Families buy in bulk to save time and money. • Family Life Cycle — Families and individuals have different buying styles. Segmented Marketing aims between mass customization and segment of one. and women want messages and car features that are different from the ones men want. alters its messages for various ethnic groups about shaving products to reflect the fact that the physical characteristics of beards vary among the races. and a certain age group can often be characterized by the products it buys. and countless more for women. may be more or less alike.S. there’s no room for confusion — the targeting and selection process must be accurate. But mass customization strikes a successful balance between generic and one-of-a-kind. that convertibles would sell better in warm places such as California and Florida than they would in Minnesota and Maine. Segmenting on the basis of geography is very common among marketers. and satisfying a specific part of the mass market. Obviously some products are suited for some groups and not others. monitors. Gillette. and the motors.customer’s choices must be limited within reason. based on careful planning and a company’s certain understanding of the business it’s in. This entails researching. Individuals may spend more on convenience foods and single portion meals. Knowing the market means targeting products and marketing messages effectively toward the group most likely to need and want the product. Lesson Four Segmentation Strategies Segmenting the market isn’t arbitrary. Demographic. it needs to find that place in the market where it can compete against the established companies. and different messages. Geographic. or different versions of the same product. Segmenting helps them find that spot where they can break through — where they can effectively find and serve a group of customers big enough to keep the company profitable. for instance. ethnic groups.

or about the prestige of the brand name? The Art of Segmentation Segmentation is something of an art. It’s possible to segment a market any number of ways. combining a scientific approach to gathering facts with an intuitive feeling for how the customer thinks and acts. A low-usage customer wants only a checking account and an ATM card. and savings with that bank. or how a customer uses a product is called a usage pattern. Soft drinks. In the case of cars. The bank’s profit from them is higher. low-usage customers and thus serve the whole community. often aim for young markets by showing television commercials and print ads featuring extreme sports and young people drinking the product. subcompacts. Usage Patterns. Campbell’s Soup made a nacho cheese sauce and tried to mass-market it to the whole Uniteds States. In the Northeast. Benefits Valued. the profit on their business is high. The first way to fail is to think that a segment describes a group of products instead of a group of people. makes foreign exchange transfers. The art of marketing is to understand which two or three driving forces best segment the market. checking. without asking any people if they actually wanted cars like that. Psychographics. and now they sell two different recipes. however.probably more surprising — and it takes research to find out facts like this — that regional tastes can make or break a product. but again. so they pursue such customers. and the bank wants more of them. How much. etc. Medium-usage customers may have several investment accounts. Companies do exhaustive research identifying mixes of products and services for lifestyles that individuals live or want to live. customers found it too spicy. for example. but overusing the facts invites “analysis paralysis” and may just create confusion. one for each region. This take-it-or-leave-it marketing worked until someone else — the Japanese car companies — offered alternatives based on consumers’ wants and needs. A high-usage customer might be a local business that keeps its deposits with that bank. In the Southwest. and they require more service and more effort on the bank’s part. Segmentation by values. Knowing what benefits a market segment values is an important way to sell to them. 58 — Introduction to Marketing: Student Guide . attitudes. mid-sizes. It took years for Detroit to figure out the problem and address the real desires of the American car buyer. and then they associate their product with that lifestyle’s attitudes and values. The American car companies almost drove themselves out of business by offering fleets of cars divided into compacts. These customers can be the most work of all to serve. These high-usage customers help provide revenues that enable the bank to serve the low-margin. Segmentation Pitfalls There are plenty of ways to misunderstand the process of segmentation and to end up making a serious mistake. for example — do they put safety over styling? Long-term value over price? How do they feel about gas mileage. and lifestyle is another useful way to segment a market. Not Customer. thereby linking them in the audience’s mind. has loans. they found it too mild. A good marketer has to be careful about using too many facts. and uses other high-end services.. Segmentation by Product. The banking industry designs products and sets fees according to three general usage patterns. how often. and then to carve out a niche in the marketplace that is unique and offers a strong competitive position. Campbell’s listened.

but isn’t too complicated to change quickly if better information emerges. • Sizable Segment — Is the segment big enough to sustain profits? • Easily Identifiable — Can the segment be readily identified? • Accessible — Can the segment be reached with products and marketing messages? • Sustainable — Will the segment be there tomorrow. Most companies go after the heavy users. for example. After deciding how to segment a market. Lesson Four Steps of Segmentation Good marketers keep three rules in mind when formulating a plan for market segmentation. and demographic data won’t answer the question.Segmentation by Demographics. Determining segments before the customer is understood leads to mistakes. The world is changing very rapidly. Smart companies have taken notice and geared marketing messages specifically toward them. TARGETING THE MARKET Determine Market Potential of Segment. The better opportunity might lie in finding one specific niche of customers who don’t want to be treated as part of the mass. it’s often impossible to reach it. There are several criteria for deciding. but if that market is already being served by half a dozen competitors. step two is to determine which particular segments to target. Make sure the customer understands the differences between those other ones and a new one. But single-person households have to wash clothes too. Know the customer. next week. has new and unprecedented buying power in the United States. but it’s forgotten routinely even by experienced companies. the large households with lots of dirty clothes. and new markets are emerging to offer new opportunities to marketers. The Hispanic market. Knowing today’s markets doesn’t mean you know tomorrow’s. next year. for example. and the light to moderate users might represent an opportunity for the company that markets detergent just for them. Targeting the Largest Segment. and still willing to purchase your product? • Loyal — Can the people in the segment be counted on for loyalty and repeat business? Introduction to Marketing: Student Guide — 59 . Differentiate the Product. It sounds obvious. Create a segmentation plan that really captures the diversity of the market. The sheer volume of available demographic data often invites companies to spend too little time researching their customers. Failing to Identify Emerging Segments. There’s no point in copycatting ten other products already on the shelves. The largest segment of the market is a tempting prize for any company. Start With the Customer. Develop Segmentation Structure. but why they’re buying it is a whole different issue. Who is buying the product is often easy to learn. Consumers don’t have a lot of choice when it comes to buying laundry detergents.

A marketing program must always keep positioning at the top of its mission. The goal is to find a segment where the new product would be embraced for superiority in the values the segment holds most important: the “jugular benefits. POSITIONING Positioning is the unique place a product occupies in the mind of the consumer.” the features or benefits that address the values the segment wants above all others. for this product’s superiority. 60 — Introduction to Marketing: Student Guide . against the existing products. and if a company doesn’t do it. They should feel a low level of risk in making the change. with regard to important attributes. Positioning is essential. explaining what features of this product are better than those already on the shelves. To develop a position in a market. durability. the marketer must first come up with a product that’s superior — and perceived to be superior — based on the benefits which that particular target segment values as being especially important. Superior performance. Say why it’s better. And third. Competing is tough and costly. There are many possible positions to take. not just claims. as compared to other similar products. Is this segment already being served by established. and each is a powerful argument to the customer about why a product is better than its competition. Here are Six Approaches to Positioning: Benefits. and their need for additional information about the new product should be minimal. the marketer must gather data and listen to prospective customers to learn how they feel about existing products in the market. and how much success can really be expected? The ideal segment to target includes people who will see a high level of differentiation or value in buying the new product. Positioning With Clarity How does a marketer position with clarity? By using these three steps: Specify the Target Market Segment. make a definite claim. etc. It’s how customers think about brands in a market. State How the Product Is Superior. Give customers as much information as they need. There’s a simple formula for it: P = S + D: Positioning = Segmentation + Differentiation. Getting the best profit-per-dollar might mean avoiding the biggest market segment and zeroing in on a smaller. the marketer must decide how the proposed new product would be perceived. It’s important for a company to find a market segment in which it can communicate its messages and sell its products with the highest possible return. the competition will position it and its products as second-rate. Second. That is. State the Evidence of the Superiority. This is niche marketing: focusing on a very specific segment and developing products and messages that appeal to it. quality of ingredients.Determine Probable Market Share Within That Segment. and how effectively it would compete. entrenched companies with similar products? Are the customers in this segment loyal to a certain brand or product? How difficult is it going to be to enter this marketplace. more specific one that wants the new product. Determine Economic Factors. and convince them that there are sound reasons.

in which the name is synonymous with the product itself. Lesson Four Introduction to Marketing: Student Guide — 61 . Product Class.” Usage and Application. Competitive Comparison Advertising. Best reliability in real-world situations. Head-to-head competition based on features. Particular User Group. The gold standard of its product class: a Xerox machine. benefits. Best appeal to the values of a target market segment. the best “bang for the buck. A bargain. and/or price. a Kleenex tissue.Price.

not customer. There are three main points that marketers should keep in mind when segmenting: • Understand the customer before you start the segmentation process. or family life cycle. These approaches can be combined to achieve a more defined market: • Geographic — Segmenting by location. • Usage patterns — Segmenting based on how much or how often a consumer uses a product. • Develop a segmentation structure that captures the diversity of the market without being too complex. 6. There are five typical segmentation approaches in the consumer markets. education level. • Benefits valued — Segmenting based on the benefits that a group of consumers consider most important. • Not identifying emerging segments. ethnicity. 2. 3. • Demographic — Segmenting by such characteristics as age. Market segmentation means dividing up the market into groups of customers with similar characteristics. • Targeting the largest segment.Key Points 1. gender. and needs who are more likely to respond to a tailored marketing program adapted to their unique characteristics. • Segmenting by demographics because the data is the most readily available and it is the easiest. The following steps are helpful: • Determine market potential of each segment: • • • • 62 — Is it sizable? Is it easily identifiable? Is it easily accessible? Will it be sustainable? Introduction to Marketing: Student Guide . 4. There are four pitfalls that companies fall into when segmenting: • Segmenting by product. Targeting refers to choosing the segment or segments of customers the marketer wants to pursue. income. 5. • Differentiate your product or service in the customer’s mind. • Psychographic — Segmenting by lifestyle. attitudes. the next step is to determine which segments of the market to target. After deciding how to segment a particular market.

the superiority claims of the product must be communicated to that target market clearly and there must be a specific reason why a customer in that target market should believe the claim of superiority. • Segmented marketing — Creating a different marketing strategy for each segment they are going after. Once the segment or segments are chosen. • Segment of one — Customizing the product for each individual customer. There are six different approaches to positioning : • Benefits superiority • Price • Usage and application • Particular user group • Product class • Competitive comparison advertising Introduction to Marketing: Student Guide — 63 . 10. 9. This is the way a marketer differentiates his product from the others in the marketplace. Positioning refers to the unique place a product occupies in the mind of the consumer. and creating a product or service exclusively for that segment.• Can you generate some degree of loyalty? • Determine probable market share. the marketer needs to choose a targeting strategy: • Mass marketing — Approaching the entire market as a homogenous segment. The target market must be specific. 8. The positioning of the product must be clear. • Determine economic factors involved in reaching this segment. Lesson Four 7. The marketer must create a position for this product in each target market. • Niche marketing — Choosing one segment of the market.

geographic groups. with regard to important attributes. Serving a mass market with a few options but not with as many options as would be the case with mass customization. The stages of a family’s development that will influence its buying decisions. Serving a mass market with customized products at prices buyers will pay. Market segmentation by lifestyle. 80/20 Rule Family Life Cycle Jugular Benefits Market Segmentation Market Segment Mass Customization Mass Marketing Positioning Psychographics Segmentation Strategies Segmented Marketing Segment of One Marketing Usage Patterns 64 — Introduction to Marketing: Student Guide . ethnic groups. as compared to other similar products. The unique place a product occupies in the mind of the consumer. Treating the market as a single massive unit. Useful for marketing commodities.Glossary Demographic Segmenting Separating a mass market into categories such as age groups. and separating the segments according to the characteristics that make them unique. How much or how often a customer uses a product. A subset of a market in which the people have common needs and desires. strategic ways to separate segments within the mass market. and will respond to a particular marketing program in a similar fashion. etc. above all others. custom-designed products to a specific buyer. Pattern in which 20 percent of a firm's customers make up 80 percent of its sales. P = S + D: Positioning = Segmentation + Differentiation. The features or benefits that address the values. Specific. occupational groups. attitudes. that the targeted market segment wants. and values. assuming no divisions exist that would make people buy one product versus another. The process of taking a unit. a mass market. gender groups. Marketing unique.

You will choose a brand-name product and analyze its relationship to other goods in the same category. their efforts to perfect segmentation. targeting.” and “liable. Assignment Two: Susceptible Markets Webster’s Dictionary defines susceptible as “easily influenced. toothpaste. or small appliances. This assignment will capitalize on the opportunity. laundry detergent. and then assess the product’s positioning by studying its marketing mix in different stores. It is just as useful to observe a lesser-known brand. usage patterns. demographic factors.Assignments Assignment One: Real-World Segmentation. Fortunately. • Go to different stores and observe how much shelf space your product is allotted compared to other brands in this category. Introduction to Marketing: Student Guide — 65 . psychographic factors. and Positioning The real world is a giant marketing laboratory. benefits sought." Those with a desire to get rich quickly or those who are easily confused by alluring marketing promotions might be defined as susceptible markets. Lesson Four • Choose a brand-name product from one of these categories: dry breakfast cereal. The brand need not be a market leader. • Did you find different product placement in different stores? What conclusions are suggested by your findings? • To whom is this product targeted? • How is the message communicated to the target market? • How does the packaging of the product address the target market? • Why do you think the manufacturer chose that target market? • What other brands does this company produce in this category? • How narrowly have the marketing managers segmented the market? • Is their segmentation based on geographic factors. and positioning strategies are available for public viewing and evaluation. moved. Targeting.” Its synonyms include words like “vulnerable. or a combination thereof? • How is this brand positioned among the competition? Send your one. according to his or her directions. analyze the product’s intended target market.” “at risk.to two-page paper answering these questions to your instructor. or affected. and marketers are conducting experiments all the time.

The mailing promotions were personalized. • What are the ethical implications of targeting products to more susceptible markets? Defend your answer. 66 — Introduction to Marketing: Student Guide . And if they bought a magazine. according to his or her directions. a sweepstakes promotions company made millions by enticing consumers to buy magazines with the promise of bettering their chances to win. their entry would have priority. At what point does targeting become immoral. telling recipients that they were among a handful of winners who were eligible to win the grand prize.During the 1990s. if at all? Send your one-page response to your instructor. All they had to do was mail in the form by a certain date. • Are marketers who engage in these types of promotions bad marketers? • All products are aimed at target markets – market segments that are more likely to respond to a product.

• Summarize and present marketing information in a coherent fashion. These segments can be categorized by: • Geographic criteria • Demographic criteria • Psychographic criteria • Benefits the user values • Usage patterns Select a target marketplace to begin this project. • Explain the role of segmentation and targeting in the marketplace. In Project Three you will use the data collected in Projects One and Two to create a marketing strategy appropriate for that product and target market. combined with the analysis of the external environment. • State methods of qualitative and quantitative market research. The Project Companies often analyze different markets to determine if there are any trends. they may look at various segments in the marketplace. to develop a product to fulfill the needs of your chosen target market. In doing this.Project One Project One Market Research This is the first of three projects designed to integrate many components of marketing. With the completion of the three projects. • Describe the major approaches to segmenting consumer markets. Choose a target market that you have some interest in or preliminary knowledge of. Some examples are: • Children between the ages of eight and thirteen • African-Americans • Californians • Heath-conscious adults • People who buy products in bulk Introduction to Marketing: Student Guide — 67 . special needs. In Project Two you will use that data. By the end of Project One. the students will have developed a comprehensive marketing plan. This will create more relevance for you in doing this project. both in print and on the Internet. or particular buying habits they can service. you should be able to: • Locate sources of marketing data. Project One is focused on researching and analyzing the characteristics and buying habits of a target market of your choice.

ethnicity. Your paper should address: What is the size of the market in terms of numbers and purchasing power? What are the growth trends projected for this market? What are the demographic characteristics of this market? Be sure to address age. gender. Identify the buying habits of the subgroups. Determine which subgroup has the most potential to target. Evaluate size of and growth of the market and unique buying characteristics that a targeted marketing strategy could address. or special usage needs or benefits valued. and educational level. Be sure to evaluate geographic. psychographic characteristics. income. if appropriate.Once you choose your target market. 68 — Introduction to Marketing: Student Guide . you will need to gather data to address the following characteristics of the target market. Determine other common characteristics and further define these groups into subgroups. household type. Identify the needs of these subgroups.

product line management. the different stages in the product life cycle. Introduction to Marketing: Student Guide — 69 . how a small entrepreneur manages her clothing product line. Expected Learning Outcomes By the end of this lesson. Beginning with a definition. • Describe the stages in the product life cycle. • Evaluate product line planning strategies. Blondie. and how a music management company is repositioning and reviving one of its more mature products — the 70s rock band. continues with the pitfalls of product development.Lesson Five Product Strategy Lesson Five Planning and Development Throughout the Product Life Cycle Once the marketer has researched the external marketing environment and the needs and wants of the target customer.” • Outline the steps in the new product development process. it is time to consider the marketing mix. and ends with a discussion of global product development. Lesson Five examines the first of the 4 Ps that make up the marketing mix – product. The case studies include how Baskin-Robbins develops and tests its ice-cream products. The lesson outlines the stages in the new product development process. it then goes on to delineate the different product categories. the students should be able to: • Define the true meaning of “product. • Summarize the key issues in developing products for the global marketplace.

If you are a Telecourse student (with no online component to your course). complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. your instructor will deliver the quiz to you. 5b. 2. In the Student Guide. and be sure to check the Boards at least three times a week. 3. If you are a Teleweb student. read: • The program summary for Lesson Five. 70 — Introduction to Marketing: Student Guide . If you are a Telecourse student. Review the Expected Learning Outcomes for Lesson Five in the Student Guide. Instead. as indicated in the syllabus. if assigned by your instructor. along with directions on how to submit your answers. Use the Lesson Five outline in the Student Guide to help you follow the flow of the lecture. In addition. Watch the video program for Lesson Five (Product Strategy: Planning and Development throughout the Product Life Cycle). the following steps should be taken in the sequence listed below.Completing Lesson Five In order to obtain the most out of this course. 5a. 4. you will find the quiz online. Read the text assignment for Lesson Five. post any questions you have to the Discussion Boards. • The key points for Lesson Five. complete the online exercises for Lesson Five and submit them to your instructor according to his or her instructions. As with each lesson. please check the syllabus for additional or altered instructions from your professor. If you are a Teleweb student (with an online component to your course). 1. Take the quiz for Lesson Five. ignore the assignments that are listed in the Student Guide. • The case study for Lesson Five. 6.

Market Testing 7. B. Not having objective screening system in place. Reinforces Customer Loyalty 3. service. OVERVIEW Lesson Five II. or idea that possesses both tangible and intangible attributes. Idea Generation 2. Overstating the speed of adoption. Reduces Risks C. 4. Product policy is more than simply bringing out a new product periodically. Types of Products 1. Convenience Products a. NEW PRODUCT DEVELOPMENT A. Product Extensions B. Entirely New Products 2. Concept Development 4. Screening 3. Shopping Products 3. Underestimating how much new product will cannibalize existing products. Possible Pitfalls of New Product Development 1. Two Categories of New Products 1. Unsought Products III. 3. Impulse Items c. PRODUCT LINE MANAGEMENT A. 1. Augmented Product – The tangible product itself and the services and satisfactions that come along with that product. Not generating enough ideas or having enough new ideas in development. Responds to Latent Customer Needs 2. Introduction to Marketing: Student Guide — 71 . Reasons for the Development of New Products 1. Emergency Products 2. IV. Stages of Product Development 1. It is a matter of ensuring that the products in your overall product line fit together in a coherent and sensible fashion. 2. Definition – A product is a good. that satisfies customers’ needs and is part of a marketing exchange. Business Analysis 5. Commercialization D. Product Testing 6. Motivates Employees 4.Lesson Five Outline I. Staples b. Specialty Products 4. WHAT IS A PRODUCT? A.

SUMMARY 72 — Introduction to Marketing: Student Guide . Growth Phase 3. Decline Phase VI. PRODUCT LIFE CYCLE A. To what degree does the product need to be adapted from country to country? 2. Product life cycle describes the phases a new product goes through during the course of its life. Can the same product be sold all over the world? 3.V. Issues to Consider 1. GLOBAL PRODUCT DEVELOPMENT A. Introduction Phase 2. Should the same brand name be used worldwide? VII. 1. Maturity Phase 4.

He examines the steps involved in new product development. Let's look more closely at the idea of tangible attributes. In the inner circle are the tangibles. In the outer circles are the intangibles. the potential business success that can result from having it. all the pre-purchase and postpurchase services and satisfactions that aren't the product. he defines what a product is and what the differences are between its tangible and intangible qualities. The inner circle is the product itself: a cola drink. The customer isn't buying just the PC. Professor Quelch considers issues involved in global product development. Say for example the product is a personal computer. Packaging design. customer service. Efficiency. CPU. abstract qualities. It helps to think of such a product as an augmented product. Last. They're what can be sensed literally: color.. all Introduction to Marketing: Student Guide — 73 . Professor Quelch focuses on the first of these. and Promotion are the “4 Ps” that make up a marketing mix. He or she is buying all those additional intangibles too. but come with the product. a car. the product. He looks at product line management and the logical reasoning behind product lines. with its tangible attributes. and bundled software. the monitor. etc. In Lesson Five. Happiness is an intangible attribute of great products.Program Summary Introduction to Marketing: Competing in the 21st Century Lesson Five Lesson Five Product Strategy Planning and Development Throughout the Product Life Cycle Product. texture. Product life cycle is defined and discussed. Visualize two concentric circles. that satisfies customers' needs. delineating some of the factors the marketer must bear in mind when taking a product into the international marketplace. or idea that possesses both tangible and intangible attributes. a product is defined as a good. In this section of Introduction to Marketing. Pricing. and is obtained as part of a marketing exchange. memory. and the help hotline a new owner can use toll-free. The outer circle is those additional intangibles. and tells why developing new products is necessary both for established and new companies. Also present in the outer circle might be the manufacturer's good name. and assurance all can lend an aura to a product as simple as a soft drink that increases its value and sets it apart from others like it. the new efficiency that comes with using the machine. and the product policies a company makes that help bring the product into being. service. the warranty for on-site service. keyboard. Placement. the increased productivity. comfort. brand name. taste. prestige … these are emotional. WHAT IS A PRODUCT? Generally speaking. Intangible attributes can't be sensed or touched.

Something that's a staple for one customer might be a shopping product or a specialty product for another. they're low-cost products. This categorization helps marketers determine the best ways of marketing them. or day care for the children will look at multiple vendors. comparing and contrasting the various features. Impulse Items need to be widely distributed and displayed in eye-catching ways right at the point of purchase. Unsought Products are the ones consumers don't yet realize they want. benefits. The next two are those bought much less often. Generally. auto repair services. and without a lot of thought. Consumers will do the legwork to hunt them down. Marketers of unsought products need to emphasize the benefits of buying such products. clothes. A good marketer recognizes this. price isn't as important as immediate relief. Specialty Products are unique products that consumers spend more effort finding and getting. Types of Products Products can be classified into categories. Brand name and widespread distribution are important for staples because people who like a brand such as Maxwell House or Pepsi stick with it and want it wherever they are. A marketer for shopping products should concentrate on selling intangibles: quality assurance. but if it somehow doesn't deliver the intangibles. and prices before making a decision to buy. A product that delivers a feeling of reliability. • Impulse Items are spur-of-the-moment purchases. and assurance may have value far greater than its actual price. not how the marketer feels about it. Not all consumers see products the same way. warranties. Shoppers looking for furniture. such as candy at the supermarket checkout counter. such as an umbrella from a street vendor. They can be classified even more specifically into three types: • Staples are products that people buy habitually. security. 74 — Introduction to Marketing: Student Guide .with the goal of buying satisfaction. milk. Convenience Products are the ones consumers buy often. and they'll pay a premium price. such as toilet paper. Marketers need to keep in mind that these categories work based on how the consumer feels about a product. and designer labels all are specialty products. People see ads for life insurance and cemetery plots every day but don't often run out to buy them. and sliced bread. The literal product may indeed perform exactly as advertised. a knowledgeable selling staff. Hard-to-find health food items. exclusive brand names. This is called product meaning. and some people buy anything on impulse. If it's an emergency. and focus their efforts on personal selling. Product meaning is the tangible and psychological improvements a product makes in the life of the user. • Emergency Products are things one buys only when one needs them. and the company reputation. marketers focus on image advertising and personalized service from the sales people. its value is debatable. and the marketing communications about the product reflect this. To sell specialty products. Convenience products and shopping products are generally those that consumers buy frequently. Shopping Products are those about which consumers give more thought.

NEW PRODUCT DEVELOPMENT
Staying competitive today means a company must work continually to come up with new products. New can mean entirely new, or it can mean a new variation on an existing product, called a product extension. Good companies have a new product portfolio under constant development. Such a portfolio might combine entirely new products with extensions and variations on existing products. Why should companies that are already successful take new risks and make new products? First, they need to address latent customer needs. Often the technology for a product has been in existence for years before a company applies it in a new product that addresses a latent need. People who weren't aware of the technology or their need for it suddenly find they can’t do without it. The fax machine is just one example. Fax technology has been available for decades, but only recently was it used in a product that was readily available at a low price. Keeping customers loyal is the second reason why companies continually develop new products. People who have high brand loyalty are more likely to stay with the brand if the company keeps improving it with new variations. Take cars, for example: A loyal Ford buyer wants new designs and new accessories, and will keep buying Fords as long as the company delivers. In many cases, new variations stimulate the consumer to buy earlier and more often. Motivating employees is a third argument for introducing new products. It excites a job force to stay competitive and try new things. Companies that have a great reputation for innovation and creative leadership can attract and keep employees who want to be part of the excitement. Fourth, new products actually reduce the risk of losses for companies, because the real risk to businesses isn't moving ahead, it's standing still. The competition never stops looking for ways to get ahead. New products may entail some limited risk, but the risk to a company of not moving forward is almost unlimited in today's competitive environment.

Lesson Five

Stages of Product Development
The product development process has seven key stages. 1. Idea Generation. Good companies work continually to generate ideas from every possible source. Employees, customer research, feedback from customers, news about the competition, management retreats, even outside “creativity stimulation” firms. 2. Screening. Getting a lot of ideas can be easy, but they must be sifted like dirt to find those golden nuggets. Screening evaluates ideas against a number of criteria to sift out the useless ones and find the ones that companies will want to carry to the next step. 3. Concept Development. A select few ideas get carried into concept development, the stage where companies may build prototypes or talk with customers about how well they might like this proposed new product. Formal market research might be used here to evaluate the idea before it moves on to the next stage. 4. Business Analysis. How well would this new product fit with the company's other products, prices, promotions, and placement strategies? 5. Product Testing. If the product makes it to this stage, it's actually built or created and then actively tested. It may undergo vigorous, lengthy, and costly testing by agencies such as the Food and Drug Administration or the Underwriters
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Laboratory to determine safety and efficacy. A company may also place it among select consumers and focus groups to see how well they like it, and where it needs to be improved. 6. Market Testing. Before the product is widely available the company will test whether consumers will buy it by placing it in limited venues and taking trial runs at promotional strategies and marketing messages. 7. Commercialization. If the idea has survived and gotten stronger through these evolutionary stages, it's positioned and ready for the full-scale launch. Ideally, this process is conducted with optimal speed and efficiency through all seven stages. However, there are some classic pitfalls that can slow or halt the product development process and kill a product long before the market ever sees it.

Possible Pitfalls of New Product Development
1. Not generating enough ideas or having enough new ideas in development. Companies that don't continually generate new ideas stop good new products before they start. They're vulnerable to competitors who keep the idea flow moving. 2. Not having an objective screening system in place. The flip side of not having enough good ideas is having too many bad ones, with no method for screening them out. 3. Underestimating how much a new product could cannibalize existing products. This is especially risky when extending a product line. When a company competes against itself, it may make a product that takes existing customers away from its old products. 4. Overstating the speed of adoption. Assuming that the world will love a product as fast as the company loves it is a serious mistake. A premature launch, the manufacture of too many units too soon, or overestimating the customer's perception of the benefits of the new product often lead to it being left on the shelf. One final point regarding product development: many of the best innovations related to a product aren't actually innovations on the product. A terrific new ad campaign, a new pricing position, new packaging or a new benefit (selling development service with every roll of film, for example), or distribution to new markets — all can re-energize a product, giving it new life. Name-brand cosmetics used to be sold only in department stores. Selling them in discount drugstores changed the business.

PRODUCT LINE MANAGEMENT
More than just bringing out a new product periodically, a company's Product Policy ensures that the products in the total product line fit together in a coherent and sensible fashion. A company needs to know the logical reasoning behind its product line. Consumers need to know it too. They want to look at a line of cars, for example, and see the logic in the pricing of various models and the additional options and features that go with them. Higher priced models would logically offer more features and benefits than economy models. Sometimes, companies overcomplicate their product line by bringing out too many products. Addon after add-on to the product line can confuse the customer, cost manufacturing and distribution money that could be better applied elsewhere, and diminish the strength of a brand name.
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Managing the product line requires continual evaluation. If a product line takes too long to explain to a customer (or to a company's own sales people, for that matter), it might need to be trimmed. Sometimes it's a good idea to delete a product from the product line rather than continue to invite these problems.

Lesson Five

PRODUCT LIFE CYCLE
Product life cycle describes the stages a product goes through after it's commercialized. First is the Introduction Phase, when the product is launched. Typically, this stage is a struggle of slow growth and low profits, if any, as the product earns its place. During this stage the company is working to generate consumer awareness and stimulate demand. Next comes the Growth Phase. If a product catches on with the consumer, sales rise sharply, profits peak, and both new and repeat buyers seek more of the product. Competitors notice the new product too, so the company may introduce a new version and work to keep its market edge. In the Maturity Phase sales even out. Marketing messages and costs are geared toward keeping market share. In the Decline Phase sales and profits slip. The product may be outmoded technologically, or the competition may have introduced something people simply like better. The company must decide whether to delete the product or to harvest it. Harvesting means keeping the product but eliminating further marketing and promotional investments.

GLOBAL PRODUCT DEVELOPMENT
These lessons have emphasized the enormous potential of selling to other countries and cultures, but also the important cultural, economic, climatic, and other differences that differentiate them from the United States. To sell successfully in a new marketplace, a company must, as always, first get to know the customer. To what degree does a product need to be adapted from country to country? People don't all like the same things. Water conditions aren't the same from place to place. Income levels differ widely. How will a product change under different conditions? Will the bouillon soup mix that sells well in Michigan taste the same using the water in Mexico City? Food products are a particular example of how a product requires adaptation from place to place. Can the same product be sold all over the world? In some cases, yes. Software programs, for example, must account for different languages, but their basic operations are likely to be the same worldwide. That's important because software companies need to make worldwide launches quickly in their rapidly changing market. Should the same brand name be used worldwide? Some companies assume that a successful product should keep its name regardless of where it sells. Others sell the same products under multiple names in multiple markets. A carefully selected name can add value to a product in any market, and a poorly selected one can damage the product. General Motors assumed some years ago that their popular midsize Nova would be a hit in Latin America. They didn’t find out ahead of time that “Nova” in Spanish sounds like “no va” — “doesn't go.” That's not a very helpful name to give a car when a company is trying to show consumers how good it is.

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Key Points
1. A product is a good, service, or idea that possesses both tangible and intangible attributes. • Tangible attributes can be touched, seen or tasted. • Intangible attributes are the abstract satisfactions that a product can give. 2. Marketers classify products into certain categories so we can best determine how to market them. • Convenience products • Staples • Impulse • Emergency • Shopping products • Specialty products • Unsought products 3. In today’s highly competitive environment, it is essential for companies to develop new products to compete effectively. New products can be new to the company or product extensions. 4. There are seven key stages to the process of new product development: • Idea Generation • Screening • Concept Development • Business Analysis • Product Testing • Market Testing • Commercialization 5) There are a number of pitfalls to avoid in the new product development process. Primarily, not having enough ideas, secondly is failing to have an objective screening system in place, thirdly is underestimating the degree to which a new product you launch will end up cannibalizing existing products in your line, and fourth is overstating the likely speed of adoption. 6) Product line management is important in ensuring that all the products in the line fit together in a coherent fashion. Some companies end up with product lines that are too complex because new products are just added and nothing is deleted. A good rule of thumb is that the salesperson should be able to articulate in twenty words or less the rationale for each item in the product line. 7) The product life cycle describes the phases a new product goes through during the course of its life. The product and the marketplace have different characteristics during each phase. Marketing strategy will differ from phase to phase.
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• Decline Phase. The company must decide whether to delete or harvest the product. Creating consumer awareness and stimulating trial is the focus during this period. conversely. even though the formula is different or. competitors emerge. Brand differentiation is key in this stage. • Maturity Phase. and profits peak. Typically sales increase. having a different brand name in each country for an identical product. Sales even out and less entrenched competitors leave. Maintaining market share and adding product features are the focus in this phase. Sales and profits are declining often due to changes in environmental factors. Sales are slow and profits are minimal. • Growth Phase. Lesson Five Introduction to Marketing: Student Guide — 79 . The product is first launched during this stage. 8) A key issue in global product development is determing to what degree the product formula needs to be adapted from one market to another.• Introductory phase. Another issue has to do with keeping the same brand name worldwide.

Different stores sell different flavors according to regional tastes or the immediate competitive environment. Ice-cream is a fun food. and fund-raisers.400 stores later. Fifty years. but Baskin-Robbins takes every decision about its products seriously. to the continuing delight of its customers. featuring a new color scheme and shop layout. specialty coffee and juice drinks. adapt. when Burt Baskin and Irv Robbins reinvented the industry in 1954 with a new concept: thirty-one flavors. BaskinRobbins has reinvented itself almost that many times. more or less.” Even delivery methods are changing: Baskin-Robbins now sells from mobile units that can visit parties. a “one-hour vacation” from a hectic day. Send to your instructor. Answer the questions below. placing your work in a word-processing document. but also such treats as frozen yogurt. Trends have enormous influence in the food marketplace. fifty countries. and capitalize on changing tastes and fashions in its industry. such as the growing market for low-fat foods or the increasing demand for designer coffee drinks. one for every day of the month. and sugar-free and fatfree desserts. according to his or her directions. Nevertheless. Baskin-Robbins develops and tests new products regularly. Entrepreneur magazine rates Baskin-Robbins one of the top franchises in the United States.Case Study Chocolate. vanilla. Today’s Baskin-Robbins offers not only thirty-one flavors. The more the offerings change. and tested again. custom-made ice-cream cakes and pies. Directions Watch the video clip. the more the company’s primary goal remains the same: Baskin-Robbins motto is “Happiness Served Daily. the company will replace it with something more likely to please: “Cappuccino and Espresso Concerto. Each new offering reflects trends observed by Baskin-Robbins’ marketers in society at large. and 4. and strawberry were the average ice-cream shop’s choices.” It’s no small task serving the market happiness every day when the market’s tastes change almost that often. and the company is twelve-time winner as “America’s Favorite Sweets Chain” in a survey by Restaurants and Institutions magazine. changed. What has contributed to the evolution of Baskin-Robbins’ product line? How does Baskin-Robbins manage its product line in order to increase customer loyalty? What can the company do in the future? 80 — Introduction to Marketing: Student Guide . schools. Baskin-Robbins’ evolving product line reflects the company’s ability to lead. The product line is tested. the company is preparing to change its image with a new “Store of the Future” design. always keeping in mind that it’s essential to have an integrated product line and a consistently high level of quality. The thirty-one flavors are adjusted again and again: if sales figures show that “Pink Bubblegum” is one of the least popular flavors. Baskin-Robbins wants customers to think of the whole experience of buying ice-cream at BaskinRobbins as a celebration. vitaminenriched fruit smoothies.

abstract qualities of a product. Products to which consumers give some pre-purchase evaluation. Product. etc. Pricing. which can’t be touched or sensed literally. Spur-of-the-moment purchases. such as toilet paper. and Promotion. service. Unique products that consumers spend effort finding and getting. taste. Things one buys only when one needs them. or idea that possesses both tangible and intangible attributes. Lesson Five Convenience Products Emergency Products 4 Ps / Marketing Mix Harvesting Impulse Items Intangible Attributes Product Product Extension Product Life Cycle Product Meaning Product Policy Shopping Products Specialty Products Stages of Product Development Idea Generation > Screening > Concept Development > Business Analysis > Product Testing > Market Testing > Commercialization Staples Tangible Attributes Products that people buy habitually. Unsought Products Introduction to Marketing: Student Guide — 81 . such as efficiency or prestige. such an umbrella from a street vendor. Products that consumers don't yet realize they need. texture. Placement. and is obtained as part of a marketing exchange. A company’s plan to ensure that the products in the total product line fit together in a coherent and sensible fashion. milk. Introduction Phase > Growth Phase > Maturity Phase > Decline Phase The tangible and psychological improvements a product makes in the life of the user. A good. such as candy at the supermarket checkout counter. A new variation on an existing product. Emotional. The ones consumers buy often and without a lot of thought. a new flavor. that satisfies customers' needs. Product attributes that can be sensed literally.Glossary Augmented Product The tangible and intangible attributes of a product taken together. and sliced bread. Keeping a product active but eliminating further marketing and promotional investments. such as color. a new size or package.

Send your two-page paper to your instructor. This project should drive the message home that building a better mousetrap won't always guarantee success. • You should spend about fifteen minutes interviewing each person. You are responsible for marketing it. unconventional thinking. good. Before doing so. • You should spend about thirty minutes developing the features available on your models for your final proposal to be presented to the CEO (your instructor in this case). Thinking beyond the textbook might be a challenge to you. or service idea that will fail in the marketplace. A fictitious product is described below. These remote controls are effective only on the buyers’ children. • You should spend about twenty-five minutes developing questions to be asked during your interview. Your responsibility is to develop a remote control that offers standard features and one that offers optional features. There are no real textbook answers to this assignment. The Product: Kid Control You are part of the marketing team for the Kid Control Company. But the world of marketing is multifaceted and presents unending challenges that require creative. The management team thinks that this product will appeal to parents with children between the ages of one to eighteen. this exercise will require you to approach marketing backwards. 82 — Introduction to Marketing: Student Guide . you need to interview at least two people who have children between the ages of one to eighteen. The management team has created the first remote control that controls children. Your challenge is to design a product. according to his or her directions.Assignments Assignment One: New Product Development This hands-on assignment relies on your creativity and it will help you better understand the connection between market research and the development of a new product. Preparation The initial preparation includes arranging interviews with two people in the target market age group. Your management team wants to offer two remote controls. not other children. develop a list of standard and optional features that can be offered to customers. since you must truly understand the subject of marketing to succeed at this assignment to fail. You will see that failure is a valuable learning tool and that many great ideas are born from failure. • From these interviews and your own creative ideas. Assignment Two: Guaranteed Failure Now that you understand marketing concepts and have analyzed several case studies. This assignment makes it okay to fail.

• Describe how you would market it. or idea.Write a two-page paper that addresses the following: • Describe the good. Send your assignment to your instructor. service. • Discuss why it would fail. Lesson Five Introduction to Marketing: Student Guide — 83 . according to his or her directions.

beginning with a discussion of the benefits of branding. Lesson Six focuses on the challenging issue of brand management. 84 — Introduction to Marketing: Student Guide . and in the ever-competitive marketplace. • Compile a list of the benefits of branding. the branding strategy of the surf and dive company. It then explores the various branding strategies marketers employ to develop customer loyalty and ends with a look at issues of global branding. • Contrast the differences in global and local branding. Body Glove. The case studies include the challenges that NBC faces in developing its brand and keeping its customers loyal. Building Customer Loyalty A brand is a method of identification.Lesson Six Brand Management Building an image. recognizable brand will set a product apart from others in its field. • Describe the process of developing brand loyalty. having a strong. the students should be able to: • Interpret what branding is. Expected Learning Outcomes By the end of this lesson. • Analyze and critique various branding strategies. and the history of one of the strongest brands in the world – Coca-Cola.

3. If you are a Teleweb student. please check the syllabus for additional or altered instructions from your professor. If you are a Telecourse student. If you are a Telecourse student (with no online component to your course). Take the quiz for Lesson Six. If you are a Teleweb student (with an online component to your course). along with directions on how to submit your answers. • The key points for Lesson Six. and be sure to check the Boards at least three times a week. 6. Read the text assignment for Lesson Six. Lesson Six Introduction to Marketing: Student Guide — 85 . the following steps should be taken in the sequence listed below. Watch the video program for Lesson Six (Brand Management: Building an Image. ignore the assignments that are listed in the Student Guide. Use the Lesson Six Outline in the Student Guide to help you follow the flow of the lecture.Completing Lesson Six In order to obtain the most out of this course. Building Customer Loyalty). • The case study for Lesson Six. Review the Expected Learning Outcomes for Lesson Six in the Student Guide. In addition. As with each lesson. 4. 1. Instead. your instructor will deliver the quiz to you. as indicated in the syllabus. 5b. post any questions you have to the Discussion Boards. In the Student Guide. read: • The program summary for Lesson Six. complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. 2. complete the online exercises for Lesson Six and submit them to your instructor according to his or her instructions. 5a. you will find the quiz online. if assigned by your instructor.

Price Premium 2. BRANDING STRATEGIES A. Benefits to Distributors and Retailers 1. Is a Virtual Contract 4. Differentiation 3. THE BENEFITS OF BRANDING A. or design – or a combination of these – to identify a product. III. A company manufactures products but sells them under the brand name of a wholesaler or retailer. Family Branding. Respect 3. D. OVERVIEW II. A no-brand product. Brands Build Store Traffic IV. Each product has its own individual name. A firm markets products under its own name and that of a reseller because the segment attracted to the reseller is different from the firm’s own market. B. WHAT IS A BRAND? A. Strong Pull Demand 2. term. Benefits to Producers 1. Mixed Branding. Branding is the use of a name. Brand Equity 1. symbol. C. BRAND LOYALTY A. Genesis of Brand Loyalty 1. Lowers Economic Risk 2. B. Generic Branding. Trust 86 — Introduction to Marketing: Student Guide .Lesson Six Outline I. Increases Customer Satisfaction B. Brand equity is the added value a brand name provides a product beyond the practical benefits of the product. Liking 2. A company uses one name for all its products. Consumer Benefits 1. Friendship 4. V. Private Branding. Distribution Power and Presence C. Individual Branding. Becomes a Symbol of Quality 3. E.

Totally Disloyal 3. Consistent Positioning 4.B. Product Category Focus 7. Completely Loyal 2. Rotators D. Sale Buyers 4. Geographical Sales Balance 3. Brand Loyalty by Category VI. GLOBAL BRANDING A. Degrees of Loyalty 1. Durability Lesson Six C. Intensity 2. Addresses Similar Customer Needs 5. Common Features of Global Brands 1. SUMMARY Introduction to Marketing: Student Guide — 87 . Corporate Name VII. Two Aspects of Brand Loyalty 1. Country of Origin Valued 6. Strength in Home Market 2.

and even if the price is higher than the unknown product. Lexus. WHAT IS A BRAND? A brand is a way of marking property. the added value a brand name provides a product beyond its practical benefits. and the real purposes it serves both for the company that makes it and the consumer who buys it? In Lesson Six of Introduction to Marketing. a logo. Added value? Say a customer wants to buy oranges. loyalty. they've been to McDonald’s and like the food. promotes recognition and remembering among customers. That's brand equity at work. it's worth it because the brand adds value to the product. Brand Equity Branding is critical to almost any product's success. Coca-Cola. and that they'll be satisfied. symbol. In marketing. The other kind has no label. It's a word. McDonald's has promised them “what you want is what you get” in countless marketing messages. or design – or a combination of these – to identify a product. and they're confident that any McDonald's will keep the promise. The store stocks two kinds side by side. One kind has the Sunkist label. how do companies build brand loyalty? And finally. 88 — Introduction to Marketing: Student Guide . The practice has been used for millennia to set one person's place or belongings apart from someone else's. They see two hamburger restaurants side by side: McDonald's and Joe's Burgers. so they don't know that Joe's Burgers could serve the best burgers for miles around. So. Professor Quelch examines branding. and even makes a promise about the product to consumers. and helps illuminate one of the most important concepts in marketing. Brand equity means trust. It's a promise that the product is what the customer expects and wants. Chances are that customer does what millions of others do: pick the Sunkist. Xerox … everyone has favorite brands. A brand on cattle in the Old West was an identification tag. but the promise of that well-known and respected name gives the customer added assurance that the orange will be exactly what he or she wants. and names they trust and identify immediately with quality and satisfaction. Customers choose a recognized. and repeat business based on that assurance. The price for the Sunkist may be slightly higher. Moreover. products. marking these animals as the property of a certain owner.Program Summary Introduction to Marketing: Competing in the 21st Century Lesson Six Brand Management Building Customer Loyalty Big Mac. Ivory. But how much does the average person really understand about how such a brand is built. What is a brand? What benefits does successful branding bring to a product line? What different branding strategies do companies use? Most important. Here's another example: a family driving cross-country wants to stop for lunch. some combination of colors (which canned soup comes with a red and white label?) that sets a product apart from the others near it. But like most Americans. and companies pay a great deal of attention to building brand equity. branding is the use of a name. term. trusted brand over an unknown because they want value for the price. how does global branding work in the complex international marketplace? Lesson Six answers all these questions. They're not locals. they make the safe choice and stop at McDonald's. Tide.

This is especially true for luxury items or premium brands. convenience stores. Distribution Power and Presence. and more desired by the consumer. Coca-Cola is available just about anywhere — supermarkets. No retailer refuses to stock Coca-Cola because it's such a powerful brand with a devoted following almost everywhere. CocaCola can leverage the distribution strength of its flagship product to the advantage of its other products and brands. That price premium is proof of Sunkist's strong competitive advantage. even office buildings and hospitals. gas stations. that customer will be pleased. Branding makes it easy to pick a product among many others.THE BENEFITS OF BRANDING Benefits to Consumers What are the benefits of branding? Who stands to gain when a brand is strong and respected? The obvious answer is the manufacturer or seller. If customers perceive that a product is worth more than its competitors. better. no matter where or when a customer buys this product. even at a higher price. making the other brands easier to buy for customers everywhere. A brand is a promise the company makes to its customers. a McDonald's sandwich. Every company wants its products and services to stand out in the mind of the consumer. customer awareness of Sunkist and trust in that name helped Sunkist get chosen over its competitor. Wal-Mart. Companies that have very strong brands (such as Procter & Gamble and Coca-Cola) can gain a measure of strength in driving their products through the available distribution channels. not to mention restaurants. but in fact. A Virtual Contract. over a product they don't know. Introduction to Marketing: Student Guide — 89 . Price Premium. Good branding offers several instant benefits to shoppers: Convenience. that brand is different. people stick with it again and again. Moreover. the consumer is probably the principal beneficiary of branding. more valuable. All these benefits add up to increased customer satisfaction. Differentiation. In the orange example earlier. Branding reduces the chance that a shopper will waste money on an inferior product or an uninformed purchase. Time after time. or trying a new one that promises some new benefit. saying.” whether it's a Cadillac or a pint of Häagen-Dazs. even for low-cost items such as ice cream. effective branding offers important benefits also to companies and manufacturers. Lesson Six Benefits to Producers Of course. Many people take real pleasure in buying a favorite brand. A Symbol of Quality. Lowered Economic Risk. no matter what a shopper's income level is. a Pirelli tire. It's enjoyable to buy something one feels is “the best. The key benefit branding offers a producer is a competitive advantage. or a pair of Levi's symbolizes the best efforts of the companies that make and stand behind them. Increased Customer Satisfaction. Once the brand is familiar and trusted.

However. Let's stay with the example of Coca-Cola for a moment. 90 — Introduction to Marketing: Student Guide . Still. Campbell's Soup is one example. Many supermarkets use private branding to feature items that compete against brand-name products. chances are they'll go to a store that does. That's a loss leader. because establishing a new consumer brand in the United States carries a price tag of $50 million or more. and make up for the loss by selling more of everything else. Campbell's Healthy Request. Customers who want a certain brand come to the store to buy it. If a store doesn't stock their favorite ketchup or soup. and so on. How does that strong branding help distributors and retailers? Because Coca-Cola is so widely known and preferred. People already want Coca-Cola. the profit per unit on private-branded products is lower than it would be if the manufacturers marketed the product under their own labels. the whole family of products and even the company itself may experience negative publicity and a resulting dip in sales. They demand it. Family Branding This occurs when a company uses one name for all its products. It's also a risk: if a new offering fails. It's the practice of selling a product with the retailer’s name on it — not the manufacturer's. and sometimes it's necessary when a company makes a range of unrelated products.Benefits to Distributors and Retailers Branding Creates Pull Demand. Campbell's Home Cooking. Private branding gives the manufacturer cost-savings by moving the advertising costs over to the seller. or if some problem occurs. and make additional purchases too. Individual Branding This means giving each product its own individual name. and retailers in turn don't need to convince buyers about it. and sellers sign big contracts with such manufacturers that keep their factories busy. a proven way for a retailer to make an overall profit: increase traffic by taking a loss on a favorite brand. it's an instant mark of quality and acceptance on almost any new product the company creates. two different products with two different benefits and markets. for example. distributors don't have to introduce it to retailers and convince them that it's a good product. That's called pull demand. that's a good investment. Family branding can be a great money-saver. All their soup products emphasize that trusted Campbell's name: Campbell's Chunky. because individually branded products don't get lost in the shuffle. Individual branding means that the company must treat each product as unique and create unique marketing for each. Branding Builds Store Traffic. Private Branding This system is used by many smaller companies. The Campbell's name is so widely known and trusted. Consumers remember them and have a distinct impression of their individual characteristics. If the store sells the branded item at a sale price this week. Distributors and retailers hardly need to market it. makes Safeguard antibacterial soap and Camay skin-softening soap. Only the very largest marketers can afford this strategy. It costs more than family branding. BRANDING STRATEGIES There are many strategies for creating and building successful brands. cutting the cost of introducing a new offering. They just keep the shelves stocked and the machines full. Procter & Gamble. it drives even more business to the store and helps move the items that aren't on sale.

It’s the ideal every marketer wants. they'll treat that product almost as a friend. BRAND LOYALTY Despite the differences among branding strategies. may not be just a question of taste. Trust happens naturally if repeated purchases have given the customer repeated satisfaction. Some manufacturers do this in order to reach market segments who wouldn't necessarily buy the product under the manufacturer's own name. and buy it over and over. Trust. but of deeper feelings. if a consumer likes a brand and uses it repeatedly with consistent satisfaction. etc.. Friendship. for example. Marketers have to be careful not to mistake short-term intensity for loyalty. some of the reasons behind brand loyalty are both common sense and good business practice. This week's hot designer jeans are next week's clearance sale items. Introduction to Marketing: Student Guide — 91 . they all have one goal: maximizing profit. a firm markets products under its own name and that of a reseller. leaving marketers wondering what happened. Liking. Two Aspects of Brand Loyalty A company might assume that brand loyalty exists where it really doesn't — and the company that does so is vulnerable. Genesis of Brand Loyalty How does brand loyalty happen? In some ways it's a mystery — what makes consumers deeply loyal to Pepsi vs. long-term acceptance from a target market. However. Intensity can be very strong but very short-lived. One of the ways they secure those investments is by building brand loyalty. Lesson Six Generic Branding This term applies to no-brand products. the consumer will keep buying. comfort. but also under the Sears name. Creating products entails enormous investment from manufacturers. Brand loyalty is an attitude. supportiveness. If consumers respect the product and brand name and believe that the brand represents quality and other intangible benefits. If customers make an emotional association between the brand and feelings of friendliness. they'll probably be loyal to the brand. The strength of customers' brand loyalty is called intensity. The appeal of generics is low price. and emotions. Coca-Cola or vice versa. Durability. because the segment attracted to the reseller is different from its own market. Respect.Mixed Branding In mixed branding. Intensity. This is sustained. Sometimes brand loyalty disappears. The Toshiba and Sears televisions aren't identical. as in the case of fads and fashions. intense. a state of mind. winning the customers' trust and getting them to buy that product again and again. Obviously. Toshiba. memories. Manufacturers using mixed branding are careful to make the different brands of their products different versions as well. to appeal to people who might be more price-sensitive than the Toshiba-brand buyers. sells televisions under the Toshiba name. and it's a prime objective of marketing.

GLOBAL BRANDING Every year.Is the customer truly loyal? Marketers need to understand the difference between durability and sheer customer inertia. Brand Loyalty by Category Some categories of products attract a particularly strong brand loyalty. but in fact. Banks. Refreshment. Their loyalty isn't to the product. It comes in degrees. people are especially loyal to one brand. price adjustments. 2. Financial World magazine publishes a list of the top ten global brands. Some brands — some of the most powerful. Coca-Cola can sell its product based on these features in any market on earth. too. and buy whichever one happens to be on sale. might assume all their customers are deeply loyal. recognizable. Cigarettes are a good example. so is mayonnaise. It means a brand is strong worldwide. Within that product category. these brands have several common features. The objective. Each of these global powerhouses is strong at home. of course. but don't want to face the red tape and paperwork of moving their accounts to another bank. and financially valuable ones on earth. Habituated customers don't know they're looking for an alternative to their usual product choice until one day they try it. Global strength doesn't mean regional strength. such as Coca-Cola — make the list year after year. 3. by improving the product. etc. partly because there are few selections. and buy based on price. but the truth might be that half their customers want to leave. or some other criterion. Totally Disloyal applies to customers who feel that toothpaste is toothpaste. Geographical Sales Balance. is for marketers to increase the degree of loyalty wherever possible. Surprisingly. and convenience are desirable in any language. It's important to understand the differences between these examples. Mayonnaise users might be simply indifferent to trying something new. Regardless of their product categories. Common Features of Global Brands 1. good taste. is loyal to both. Consistent Positioning that Addresses Similar Customer Needs. availability. regardless of the brand. no-substitutions allowed devotion. changing the marketing messages. for example. Misunderstanding loyalty works the other way. Another example of apparent loyalty that isn't real: when a customer buys a certain brand of products only when it's on sale. Degrees of Loyalty Brand loyalty isn't always total. Completely Loyal is total. then stock up. It's to the savings. Rotators like three or four brands of a product. Strength in Home Market. 92 — Introduction to Marketing: Student Guide . Sale Buyers purchase a brand only when the price is acceptable. Their domestic strength gives them the momentum and money to win in the global market. A customer who buys Miller beer to drink at home and Heineken in restaurants might seem disloyal to both. Smokers might have a lifelong and powerfully emotional attachment to a brand of cigarette.

For now. and Gillette don't put their names on wide. Corporate Name. Nike. 5. IBM. and comfort. Kodak. Intel. Morocco. 6. Buying a Sony home electronics product is a good investment anywhere. Country of Origin Valued. They sell their strengths. If the country of origin is an enemy nation. Focus and strength help companies. the global success stories are those companies with a strong focus in their businesses. to make their own best sales arguments. not software. diverse ranges of products. fun. Coca-Cola makes soft drinks. not designer suits. Lesson Six Introduction to Marketing: Student Guide — 93 . McDonald's makes fast food. a product won't succeed in a new market. American products do well in most countries worldwide because the American lifestyle is associated with entertainment. Product Category Focus. or Malaysia. whether it's Montreal.4. such as those listed above.

Branding offers consumers such benefits as: • a reduced chance of wasted money on an inferior product or uninformed purchase.Key Points 1. • Private branding. 5. • the ability of brands to build store traffic. A company uses distinct names for each product. design. Four ingredients help create brand loyalty: • Consumers’ liking • Consumers’ respect • The brand as a friend • Creating trust in the brand 7. The common characteristics of global brands are that: 94 — Introduction to Marketing: Student Guide . we know that if a consumer uses a brand frequently and experiences consistent quality that will help develop an affinity to that brand. • a near-contract. A manufacturers’ products that are sold to a retailer or wholesaler with the retailer or wholesalers name on the package. term. 4. A company uses a single name for all its products. Although the full set of relationships resulting in brand loyalties not yet fully understood. • Mixed branding. • easier access to distribution channels. since the consumer comes to expect a certain level of quality and delivery every time. • Generic branding. Five main branding strategies be can employed by markets: • Family branding. A no-brand product. Branding offers distributors and retailers such benefits as: • the existence of a strong pull demand. • Individual branding. • reassurance that they are buying the same quality product each time. 2. It is a prime objective of marketing. Branding is the use of a name. 3. A company markets products under their own name and that of a reseller. symbol. 6. Branding offers producers such benefits as: • the ability to charge a price premium as a result of the perceived differentiation. or combination of these to identify a product. Brand loyalty is an attitude or state of mind that results in consumers constantly purchasing the same brand.

• they are often valued because of the country of origin.• they are strong in their domestic markets. • they have a certain geographical balance. Introduction to Marketing: Student Guide — 95 . • they are often focused on one product category. • they address similar needs worldwide. Lesson Six • they have consistent positioning.

Directions Watch the video and answer the question below.” “Seinfeld. but ultimately it is the viewers. Critique NBC’s branding strategy. educated audience—the people advertisers want to reach—by broadcasting memorable and entertaining shows. more specialized broadcasters who can create entertainment brands. and smart” is another attempt at branding. The test facing NBC is to develop an overall brand identity while appealing to people from all segments of the population with diverse products including news. It’s a strategy that the new competition will continue to challenge. has been a powerhouse from the era of radio to the cable-and-digital age. so television is more efficient than ever for advertisers. giving NBC not just new competition from other large networks. Cable channels can’t match television’s broad reach. if any. Of the major networks. Send your completed case study to your professor. and online programming. but new kinds of competition — smaller. not the network. Indeed. The fact that it appears on NBC probably doesn’t make a show more entertaining in people’s minds. With the usual branding strategies generally off limits. The network’s creative strategy. not networks. the famous three-tone chimes and the NBC peacock. sports. making shows that are “fun.” they’re watching NBC. prime time and daytime programs. CNN’s brand means news. With its desirable audience.” “Mad About You. according to his or her instructions. Technology has multiplied entertainment options. who decide whether that’s working or not. NBC can charge premium rates.” “Wings.Case Study The National Broadcasting Company. Its “Must-See TV” strategy placed hits such as “Cheers. are widely recognized. and building a brand identity for itself as the Thursday night network doesn’t fulfill NBC’s need to create must-see entertainment seven days a week. However. NBC attracts the most upscale.” and “LA Law” back to back and enabled NBC to brand a whole evening of programming. winning every evening is the goal. NBC does have certain branding advantages. would you suggest? 96 — Introduction to Marketing: Student Guide . NBC attempts to cultivate viewer loyalty by creating original programs and continually reminding viewers that whether it’s “Providence” or “Dateline NBC” or “Saturday Night Live. As more such companies enter the arena and audience viewing habits change. NBC is a globally recognized company. MTV is music. and NBC uses them as repeating elements between shows and in promotions. it’s difficult for a broad programmer like NBC to brand itself and win blanket loyalty. not because they’re loyal to NBC. many shows over the years have changed networks and taken their audiences along. they’ll watch “Friends” because they like the show. better known as NBC. Its perennial trademarks. Do you find it effective or ineffective? Why? What changes. quality. but is it a brand? People watch shows. ESPN means sports. specials.

to Rotating. availability. There are degrees of brand loyalty from Complete Loyalty. and buying whichever one happens to be on sale. and buy based on price. term. to Sale Buying. respect. more valuable. intense. long-term acceptance from a target market. or some other criterion. and that they'll be satisfied. The practice of selling a product to the retailer or wholesaler with that retailer’s or wholesaler’s name on it — not the manufacturer's. The competitive advantage offered by branding that enables a company to charge a higher price than a competitor. no-substitutions allowed devotion. to Total Disloyalty. or design – or a combination of these – to identify a product. and/or trust. that stimulates repeat buying. Marketing products under both the manufacturer’s name and the reseller’s name.Glossary Brand Equity The added value a brand name provides a product beyond its practical benefits. in which customers who feel that toothpaste is toothpaste regardless of the brand. Sustained. The factors about a product that support the customer’s perception of it as being worth more than its competitors — different. based on liking. The use of a name. Lesson Six Branding Brand Loyalty Differentiation Durability Family Branding Generic Branding Individual Branding Intensity Loss Leader Mixed Branding Price Premium Private Branding Pull Demand Introduction to Marketing: Student Guide — 97 . total. The practice of not using a brand name. or more desirable. Using a single name or variations on a single name for a family of products. liking three or four brands of a product. symbol. better. Giving individual products individual names and individual brand identities. then stocking up. Strong demand for a product by the market. The strength of customers' brand loyalty. A customer attitude of dedicated preference and trust for a brand. friendship. A product sold at a loss to stimulate customer interest and traffic and make up the loss by increasing sales of other items. purchasing a brand only when the price is acceptable. A promise that the product is what the customer expects and wants.

logos. • Discuss the type of buyers that would be most interested in your product. low-fat frozen dinners that will compete with Lean Cuisine. if you choose a grocery store. symbols. according to his or her directions. Healthy Choice.). a clothing store. and Smart Ones. what should be the limits? • Do you remember wanting as a child certain products specifically because of the use of cartoon characters in that product’s branding? Which products? • As an adult. 98 — Introduction to Marketing: Student Guide . • Your paper should be one to two pages in length. • Note which brands are sold there. etc. This product line will compete with well-known manufacturers’ brands that your store stocks. the color. As head of marketing for this store. In the United States alone. what do you feel are the pros and cons of marketers using this approach? • Should marketing to children be regulated and restricted? If so. perhaps with children. the style the brand name is written in. you’ve been asked to design a line of products with a private-label brand.) • Determine how your private-label products would create more value for consumers than the current offerings.Assignments Assignment One: Marketing to Children Children between the ages of two and twelve watch about three-and-a-half hours of television every day. according to his or her directions. the packaging. • Determine a brand name and brand mark (the part of a brand that cannot be spoken – for instance. what do you feel are the pros and cons of using this approach? • As a consumer. (For example. you might propose a line of private-label. do you purchase any products that use cartoon characters in their branding? Which ones? Do you think branding has anything to do with your purchases? Send your one-page response to your instructor. Assignment Two: Private-Label Brand Imagine that you are a retailer running a grocery store. or any other type of retail store of your own choice. Send your completed assignment to your instructor. • Do you believe it is ethical for marketers to target children? Why or why not? • As a marketer. • Go to a store that is similar to the one you’ve chosen for this exercise. these young viewers have $6 billion in allowance money to spend. • Choose a product line that you’d like to develop. and they influence their parents’ buying decisions to the tune of $50 billion a year. • Note any distinguishing features of your product that could be capitalized on. a hardware store. Increasingly. Experts say that one of the most popular methods for targeting kids – using cartoon characters – can increase brand identity and customer retention among children and adults. with the graphic of your brand mark on a separate page. the use of cartoon characters to market adult products – like the now-defunct Joe Camel cigarette ads – has generated press and widespread criticism.

Lesson Seven

Lesson Seven

Strategies for Services
Marketing the Intangible
How do you market something intangible, something you can’t touch or hold? With the growth of the service economy, marketers are facing that challenge now more than ever before. Lesson Seven focuses on the marketing of services, beginning with a definition and a brief history of the growth of the service economy. The lesson then describes the differences between service and goods marketing, discusses the service marketing mix, and then examines successful service strategies that develop customer satisfaction. The case studies include Saturn Corporation and the strategies behind its customer service, Subway Sandwiches on franchising, and Hilton Hotels and Louise’s Trattoria on employee training.

Expected Learning Outcomes

By the end of this lesson, the students should be able to: • List the key features of services. • Describe the growth of the service economy and its impact on marketing strategy. • Compare and contrast the marketing of services and the marketing of goods. • Identify the marketing mix for services. • Apply strategies to increase the perceived value of a service firm’s offering. • Evaluate methods of delivering customer service and measuring customer satisfaction.

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Completing Lesson Seven
In order to obtain the most out of this course, the following steps should be taken in the sequence listed below. As with each lesson, please check the syllabus for additional or altered instructions from your professor. 1. Review the Expected Learning Outcomes for Lesson Seven in the Student Guide. 2. Read the text assignment for Lesson Seven, as indicated in the syllabus. 3. Watch the video program for Lesson Seven (Strategies for Services: Marketing the Intangible). Use the Lesson Seven Outline in the Student Guide to help you follow the flow of the lecture. 4. In the Student Guide, read: • The program summary for Lesson Seven. • The key points for Lesson Seven. 5a. If you are a Telecourse student (with no online component to your course), complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. 5b. If you are a Teleweb student (with an online component to your course), ignore the assignments that are listed in the Student Guide. Instead, complete the online exercises for Lesson Seven and submit them to your instructor according to his or her instructions. In addition, post any questions you have to the Discussion Boards, and be sure to check the Boards at least three times a week. 6. Take the quiz for Lesson Seven, if assigned by your instructor. If you are a Teleweb student, you will find the quiz online. If you are a Telecourse student, your instructor will deliver the quiz to you, along with directions on how to submit your answers.

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Lesson Seven Outline

Lesson Seven

I. OVERVIEW II. WHAT IS A SERVICE? A. The distinction between a tangible good and an intangible service is not always crystal clear. Many goods and services are a combination of the two.

III. GROWTH OF THE SERVICE ECONOMY A. The service economy has been increasing 1. Over 50 percent of the U.S. GDP comes from service industries. 2. Over 90 percent of new jobs created each year are in the service industry.

IV. SERVICE VS. GOODS MARKETING A. Four unique elements of services called the 4 Is 1. Intangibility a. You can’t touch or smell a service. 2. Inconsistency a. Services tend to be inconsistent, because a service provider is a person and people are not consistent on a day-to-day basis. 3. Inventory a. Services are perishable and cannot be inventoried as goods can. 4. Inseparability a. Services tend to simultaneously be produced and consumed. The consumer can’t separate the deliverer of the service from the actual service itself.

V. SERVICE MARKETING MIX A. The traditional marketing mix we use for tangible products can also be applied to services, though with slight variations. 1. Product a. Because most services are intangible and don’t have an associated product component, they are more difficult to describe, so the brand or image of the service company becomes exceptionally important in consumer decisions. 2. Price a. In service industries, price is referred to in many ways, such as fees, rates, fares, tuition, premiums, commissions, rents, charges, tolls, etc. b. When the consumer has little knowledge by which to judge a service, the price often indicates the quality of the service to the consumer. 3. Placement a. Service providers traditionally distribute their offering through simpler channels than products do, because storage shipping and inventory are not issues with services. The user usually obtains the service directly from the provider. b. Recent Changes in Distribution i. Technology ii. Franchising 4. Promotion a. Challenging aspect of service marketing. Since services are purchased based on trust, marketers have to portray a strong overall company image.
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VI. SUCCESSFUL SERVICE STRATEGIES A. Creating a brand reputation and image is one of the most important strategies for the marketer of services. One way to build a favorable impression is to ensure that consistently high quality service is always provided. Methods of encouraging this include: 1. Training Employees 2. Motivating Employees 3. Empowering Employees 4. Providing Employee Incentives a. Stock ownership b. Employee-owned companies c. Bonuses based on sales

VII. CUSTOMER SERVICE & SATISFACTION A. How Customers Evaluate Service 1. Reliability 2. Responsiveness 3. Assurance 4. Empathy 5. Tangibles B. Measuring Customer Satisfaction 1. It’s how the customer perceives the quality of service that’s vital. 2. Companies should have a permanent, ongoing program in place. 3. It should define what the customer wants in terms of attributes and levels of quality. 4. It should include both empirical and qualitative input. C. Service Recovery 1. Consumers who complain are often your best customers. 2. It’s important to have an easily accessible customer satisfaction measurement process in place. D. Being In Touch With The Customer E. Question of Standardization

VIII. SUMMARY

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they don't invite easy comparison — one can't examine two services side by side like two oranges. where before most food purchases were made in stores and consumed at home. with a look at how the 4 Ps (Product. Of the three million jobs created in the United States annually. Because services are intangible. The combination equals a high-end value for the customer. comprised of the 4 Is (Intangibility. a few essentials are different. People can drive only so many cars or wear so many shoes. and marketers must understand them. are 100 percent service. How does a company distinguish its services from others? Branding is how. and where it's going in America and the world. financial advice. Some successful service marketers are examined. And Professor Quelch asks. however. Branding is an essential source of reassurance about the quality of a service and the credibility of the company offering it.S. Marketing products that the consumer can't see or feel requires some different strategies than the selling of tangible products. Professor Quelch examines the intangible products that make up an increasing part of the marketing universe: services. It takes a look back and a look ahead at the growth of the service sector. Half the gross domestic product comes from service industries. America is evolving from a goods-producer to a producer of information-based. Dinner in a fine restaurant or a clothing purchase in a custom-tailor shop involve a tangible product with intangible services added. SERVICE VERSUS GOODS MARKETING Marketing services presents special challenges. Inconsistency.Program Summary Lesson Seven Introduction to Marketing: Competing in the 21st Century Lesson Seven Strategies for Services Marketing the Intangible In Lesson Seven of Introduction to Marketing. This lesson surveys what a service is. service. While the fundamentals of service marketing are much like those of marketing products. economy. but they can't have enough entertainment or medical care or information. Placement. As earlier lectures said. marketing products involves a marketing mix called the 4 Ps. Pricing. and has been for years. and medical care. Some purchases. Inventory. nearly half the food purchases in the United States are made and consumed outside the home. intangible services. It looks at the similarities and differences between service marketing and the marketing of tangible goods. GROWTH OF THE SERVICE ECONOMY The service sector is. Inseparability). Marketing services has the 4 Is: Intangibility is the first I. Promotion) work within a service strategy. Also. or idea with tangible or intangible qualities. And because a service is Introduction to Marketing: Student Guide — 103 . 90 percent are in the service sector. the service aspects of the changing products being offered are more important than ever. such as management consulting. how does customer service affect customer satisfaction? WHAT IS A SERVICE? A product is a good. the fastest-growing sector of the U. For example.

Service offerers need to pay close attention not only to what they're offering. doctors. branding is vitally important. even the time of day. For both. A customer buying Campbell's Tomato Soup at the market is several steps removed from the Campbell company. Companies offering services must try to stop inconsistency before it starts by creating internal standards of conduct and quality control. Most services tend to be produced and consumed simultaneously. Consider the offices and appearances of law firms.intangible. a familiar menu. well-furnished offices make a statement about the professionalism of the people there and about the value of the services they offer? Wouldn't it be out of place for them to work in offices full of cheap furniture? Inconsistency is the second I. any tangible aspects of it must be emphasized. McDonald's is a great example of this. Because most services are intangible and don’t have an associated product component. Most of the product marketing principles discussed in earlier lectures apply as well. Effective branding for a service means delivering consistent quality and satisfaction. must carry a message that reassures the customer. the customer is talking directly with a McDonald's employee when making the purchase. They're useful only at the time they're offered. affect demand. and friendly. Services are perishable. not only in the tasks they do. A bad haircut. So again. Knowing what customers need. furnishings. fast service that's nearly 100 percent consistent from restaurant to restaurant. McDonald's invests heavily in training employees. offices. even the letterhead. a mixed-up order in a restaurant. but at McDonald's. but also in their interactions with the customer. banks. and the results help them keep a high level of acceptance and trust among their customers. whether it's Jeeps or Cokes. SERVICE MARKETING MIX Notwithstanding the differences between marketing products and marketing services. The consumer can’t separate the deliverer of the service from the actual service itself. The company's address. with some variations. Do their clean. They use uniform procedures and standards to give the customer spotless premises. 1. knowing the customer is rule No. but when. and value is the key to success. an error by an accountant all are examples of very common service inconsistencies. Inventory is the third I. want. As mentioned. They need to train employees extensively. Demand fluctuates. they are more 104 — Introduction to Marketing: Student Guide . Consistency is expected for tangible goods. but an airline that flies with empty seats on Tuesday can't sell those seats on Wednesday. But services can be inconsistent. Manufacturers of hairbrushes can store those products for future sale. training is critically important. In general. and service offerers must keep that in mind. Inseparability is the fourth I. The seasons. and that affects the total service experience — and whether the customer would buy that service again. and a consistently good experience for the customer. or financial advisors. the 4 Ps of product marketing still apply to services. customers are more involved in service transactions than they are in buying products. They deliver more than food. Timing is crucial. HOW DO THE 4 Ps APPLY TO SERVICE MARKETING? Product.

no matter whether it's for a law firm or a shoe repair shop. The exceptions are franchises and intermediaries such as agents or brokers. And.95” or “$. they're doing an effective job promoting the firm. Storage. placement is generally less complicated than it is for products. and assume that an expensive version of a service is worth more than an inexpensive version of it. and responsiveness that make for a good customer experience. promotion of many services may be regulated. $39. Online banking and ATMs are making it possible for a banking customer to get full banking services without ever visiting the actual bank. rates. Motivation can come in the form of salaries. It's a system in which a parent company owns a brand name and may set uniform quality standards. charges. if the service is good. Good service providers focus extensively on training employees on how to interact with customers. If a firm's sales and service people interact well with people. etc. offices. thorough.95. A dentist who charges a premium price would probably have more credibility in the local market than one who advertises “Discount Root Canals. Most service users simply get the service right from the provider. so the provider has to keep the regulatory environment in mind. If they present an image that feels credible and trustworthy. it's the best advertisement a firm can use. it helps the firm's overall relationship with the market it wants to win. image counts. A firm's sign. tuition. Consumers don't often know how to judge a service. Lesson Seven Price. and people all are visual promotions for the firm. If the practice is taken too far. most of all. Many consumers judge a service by how much it costs. SUCCESSFUL SERVICE STRATEGIES What steps can a company take to deliver consistently good service that builds a strong brand reputation and image? Training Employees. They have to communicate the intangible image and benefits of the service. Technology is driving the evolving placement of many information-based services.” Placement. The cost of keeping good employees through motivations such as these is less than that of Introduction to Marketing: Student Guide — 105 . commissions. and inventory control aren't issues for services. so the brand or image of the service company becomes exceptionally important in consumer decisions. or a fast-food restaurant. and getting them to pass that respect along to the customer. Unmotivated. Franchises can give an especially high level of service if the owner combines the training and standards of the parent company with his or her own extra level of motivated service. as opposed to products. And remember. Also. rents. courteous. premiums. but licenses other companies or individuals to own and operate the outlet that sells the service.002” on a can of soup is a mistake. Motivating Employees. such as an auto-maintenance and muffler repair franchise. but optimal training emphasizes friendliness. letterhead. the employees seem impersonal and robotic. incentive prizes.difficult to describe. fares. Treating employees well means respecting and valuing them. and credible. are prompt. etc. In service industries. Promotion is a challenge for service marketers. where it's obvious that a price stamp of “$59. bonuses. Service distribution is changing rapidly. and inspire trust. price is referred to in many ways: fees. indifferent employees give unmotivated. indifferent service. tolls. shipping. set the company apart from the competition. For services. listening and speaking skills. Good service builds repeat business and new business from word-of-mouth referrals. Franchising is an increasingly popular distribution system for services. educational opportunities.

but understanding what really satisfies customers is one of the biggest challenges a service business faces. Chances are. Customers need to feel assured about a company's honesty and integrity. Sometimes it's a good idea to let them use their own judgment in solving problems or resolving conflicts. All the employees have a strong personal interest in providing good service for the sake of the company's competitive survival. and ultimately improves service. 106 — Introduction to Marketing: Student Guide . and consistent — done right the first time and every time — keeps customers happy and faithful. and personal. The better a store does. on time. accurate. legal services. Good employees want to use a measure of personal responsibility for their relations with the customer. Responsiveness is next. or is the customer treated like a number? A customer who feels valued personally will probably value the service provider in return. caring. What is customer satisfaction? How does a company exceed expectations and really delight a customer? What do customers expect? How Customers Evaluate Service Research shows that regardless of the kind of service. customers consistently look for five factors from a service company: Reliability is the most important component of service quality for customers. Car repair. the more the manager makes. The following companies have created ways to encourage good performance through incentives: • Starbucks. and they spread bad word-of-mouth. that customer doesn’t want to wait while a service person makes three phone calls to discuss the solution with a superior. Motivated employees help the customer build a relationship with the company. someone who owns shares in the company that are more or less valuable depending on the company's performance will be more motivated to perform well than someone who is just an employee. particularly if they don't understand the service being bought. Is the service friendly. and keep coming back.continually finding and training new people. makes the employee feel trusted. • Avis and United Airlines are employee-owned companies. Kinko's. CUSTOMER SERVICE AND SATISFACTION What constitutes good customer service? Companies can easily keep track of their revenues and expenses. Empowering Employees. medical care. Empathy is important. every time? Does a customer who needs help have to wait on hold for fifteen minutes? Assurance is important. all require a company to provide a high level of assurance. If a customer isn't happy with a situation. • Au Bon Pain offers large bonuses based on sales to store managers who increase sales volume. Customers who feel uneasy or mistrustful don't come back. Giving employees a measure of discretionary authority to make things right saves time. Is the service delivered promptly. and many other companies motivate employees by stock ownership. instead of being robotic or impersonal. A service that's dependable. Microsoft.

Tangibles help support intangible services. Clear, readable bank statements and well-prepared tax forms are essential for clients of financial services. Clean, comfortable, professional-looking premises speak volumes for doctors and dentists. Some car dealers provide free coffee and donuts to customers waiting for service. It's an expense, but it pays off in good feeling and repeat business.

Lesson Seven

Measuring Customer Satisfaction
Customer satisfaction is a feeling. How can a feeling be measured? Many companies have permanent, ongoing programs to assess how well they're satisfying their customers. Measuring the feeling starts with defining it. It's essential to know the attributes that convey value to the customers. What do they want? What can a company do to make them happy? It’s how the customer perceives the quality of service that’s most important. Good companies don't try to get all the answers from within. They ask the most important people in the service equation, the customers themselves. The information they get is both quantitative and qualitative. The numbers tell one story, while the verbal information gleaned from interviews, phone surveys, focus groups, etc., add vital detail.

Complaints Help
Companies that get no complaints may congratulate themselves for top quality service, but they may have a serious problem — they just don't know it yet. It's not that the customers aren't complaining. It's that they're complaining to other customers, friends, and family. That's very damaging. Some say that customers who complain to a company are that company’s best customers.

Service Recovery
Many customers don't complain because they don't understand what their rights are or don't have tangible evidence to support a claim, especially when it involves an employee who has been rude or provided poor service. They might not know to whom to complain, or where to go. They might even fear retaliation. It's essential to have a customer complaint mechanism in place. Feedback forms, toll-free numbers, random surveys, all tell the customers that their thoughts and feelings are valued. Customers who aren't happy, and who explain why they aren't, do the company a great favor. Most unhappy customers simply don't come back and never say why, but complainers offer specific advice — and free of charge, too — that can improve performance and literally save a company. Having a good complaint management system in place is inviting free consultation from the best experts in the field.

Being in Touch With the Customer
In the best companies, top management understands the customers because they work hard to know what customers are thinking. These leaders don't get trapped in their offices. They get out in the field and meet customers, or even take on low-level work in their companies so they can see first-hand what it's like to be a customer and whether the company's standardized service rules help or hinder good service delivery. Too much standardization sometimes prevents a willing employee from doing the right thing. The best rules are flexible and unconditionally put the customer first.

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Perceived Service
Federal Express understands service and communicates that understanding inside and outside the company with a simple statement: “Federal Express has redefined service as all actions and reactions that customers perceive they have purchased.” Note the emphasis on perception. Marketers must always influence how customers perceive things. Saying we did or didn't actually do this or that to an unhappy customer isn't enough. If the customer didn't perceive the benefit, it's no help. That's what marketing is: perception.

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Lesson Seven

1. A service is an intangible offering. However, the distinction between tangible and intangible offerings is not crystal clear. Most products are a combination of tangible and intangible, goods and services. 2. Understanding service marketing is important since the service sector has become one of the most vital components of the U.S. economy. Ninety percent of the roughly three million new jobs created each year are in the service sector. 3. There are four factors that make services unique and differentiate them from goods. They are referred to as the 4 Is of service. • Intangibility. You can not touch a service. Branding and tangible aspects are important to emphasize. • Inconsistency. Services are not always consistent. Creating a standard code of conduct and providing employee training help with this aspect. • Inventory. Services are perishable and must be used at the time they are offered. Understanding demand for the services and instituting peak and off peak pricing is helpful. • Inseparability. It is difficult to separate services from the provider. Providing a mechanism for consistency is important. 4. The same marketing mix that applies to goods, applies to services. However, keep in mind the following. • Product. Branding is vitally important. • Price. Often the quality of a service is judged by its price. • Promotion. Need to communicate a strong image and service benefits and differentiate the service from the competition. • Distribution. Typically done through simpler channels than goods. 5. Successful strategies used in service marketing are like the tactics used in product marketing. The following are strategies a firm can use to increase the perceived value of a service firm’s offering: • Emphasize branding to assure customers of consistent quality. • Develop detailed service guidelines regarding how the employees should interact with customers. • Motivate front-line employees. • Empower employees. 6. In order to offer services that exceed expectations, a company must constantly measure customer satisfaction. Customer satisfaction occurs when performance exceeds expectations.

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7. Customers base their evaluations of customer satisfaction on five factors: • Reliability — Is the service reliable? • Responsiveness — Is the service responsive? • Assurance — Can customers trust the service? • Empathy — Do they get individualized, caring service? • Tangible aspects — What do the physical aspects of the service communicate? 8. Measuring customer satisfaction is important. A marketer should consider the following: • The quality of service can be measured by combining the customer’s evaluations of the five factors mentioned above. • Identify what the customer wants in terms of service. • Determine how the company perceives the quality of service. • Give the customers an easy way to complain.

Glossary
Customer Criteria for Service Quality Reliability, Responsiveness, Assurance, Empathy, and Tangibles that support intangible services. Company measures and policies that inspire good performance, including stock ownership, employee ownership, and/or bonuses based on sales. Intangibility, Inconsistency, Inventory, Inseparability. An increasingly popular distribution system for services; a system in which a parent company owns a brand name and may set uniform quality standards, but licenses other companies or individuals to own and operate the outlet which sells the service, such as an auto-maintenance and muffler repair franchise, or a fast-food restaurant. An intangible product such as management consulting, financial advice, and medical care.

Employee Incentives

4 Is of Marketing Services Franchising

Service

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Did you complain to management and have the situation rectified? Or did you just complain to friends and family about your bad experience? Word of mouth is possibly the most powerful source of information for consumers because people. Consider a bad service experience you’ve recently had. while satisfied customers tell six. Research indicates that customers dissatisfied with a product spread negative word of mouth to eleven acquaintances. Address the following issues facing Rochette in a two-page paper: • What “intangibility” issues does Rochette face? What can he do to overcome this marketing challenge? • What “inconsistency” issues does Rochette face? What steps can he take to address this services marketing challenge? 111 Introduction to Marketing: Student Guide — . He has hired you as a marketing consultant. as owner of the company. generally. had an experience with an unhelpful or rude salesperson. Perhaps you received poor service in a restaurant. according to his or her directions. listen to those they trust. Despite Rochette’s financial situation and reputation. Assignment Two: The Caterer Needs Help Michel Rochette is a gourmet chef with credentials from one of the best culinary schools in the world. did you take to protest the poor service? What were the results of that action? • How many people did you tell about your negative experience? • How would you have handled this situation differently had you been the person providing the service? • What steps would you take. if any.Assignments Lesson Seven Assignment One: The Bad Haircut We’ve all been victims of poor service at one time or another. He currently has solid financial backing and five people working for him. His skills have earned him an excellent reputation both in local social circles and in the culinary world. or received a bad haircut. Rochette has grown tired of working in a restaurant and preparing the same dishes night after night. Think about a poor service situation you’ve recently suffered through. He has decided to start his own catering business. It is extremely difficult and costly for businesses to overcome or neutralize bad word of mouth. his catering business is struggling. • What action. Write a two-page paper that addresses the following: • Write a full description of your experience. to prevent this problem from recurring? • How did this experience make you feel about that place of business? Send your completed assignment to your instructor. Word of mouth can be either positive or negative. He can’t seem to cater as many engagements as he’d like.

• What “inventory” issues does Rochette face? What steps can he take to minimize the effects of this services marketing challenge? • What “inseparability” issues does Rochette face? What steps can he take to overcome this services marketing challenge? • What can he do to distinguish his catering service from the competition? • What segments of the market should Rochette target? Why? • What qualities might this market value? How can this be incorporated into his marketing mix? • What features of his service should Rochette emphasize and communicate to his target market? • What is the most effective way to communicate the value of his services to his target market? Send your assignment to your instructor. according to his or her directions. 112 — Introduction to Marketing: Student Guide .

Explain how it uniquely meets that particular subgroup’s need. Who are the competitors that fill the same need? Introduction to Marketing: Student Guide — 113 . Examine how social and cultural trends affect the marketing of this product. An improvement of. Explain how it creates value for the target market. Express how political and legal trends affect the marketing of this product. 5. targeting. By the end of the lesson. 4. 9. 2. 6. 7. The next step is to develop a product that can fulfill an unmet need. Once your product is chosen. you will research and develop a product that is well suited to a particular subgroup’s needs identified in Project One.Project Two Project Two Feasibility Project Two builds on the work and skills developed in Project One. This product can either be: 1. and product development. 4. 3. A new product line. • Define “value” and explain marketing’s role in creating value for customers. In this phase. The Project You have chosen and researched a particular target market and have probably observed some unmet needs or trends within this market. A repositioned product. Adjust your product until you come up with a feasible product. • Outline the steps in the new product development process. Describe the product in detail. Describe how competition affects this market. • Explain the relationship between segmentation. Describe how you will position it. or revision to. A new-to-the-world product. you should be able to: • Analyze the effect of the external environment on an organization’s marketing strategy. Depict how economic trends affect the marketing of this product. research the external environment to determine which uncontrollable factors will affect the marketing of that product to your target market and whether or not it is feasible to launch the product. An addition to an existing product line. 2. 3. Your paper should: 1. 8. positioning. an existing product. 5. Discuss how technological trends affect the marketing of this product. • Evaluate product line planning strategies.

retailing. • Identify distribution strategies. • List examples of major issues marketers must consider when managing and developing international distribution channels. placement. and wholesaling strategies. and how a small company distributes its product over the Internet. • Depict and analyze the types of distribution channels. and the issues that marketers face in managing global distribution channels. The case studies include how Food From the ’Hood picked the best distribution strategy for its product. then examines the various distribution channels and how they are managed. Lesson Eight begins with a discussion of the crucial role distribution plays in marketing.Lesson Eight Distribution Retailing and Wholesaling Strategies The Second P of the marketing mix. Expected Learning Outcomes By the end of this lesson. • Describe the importance of supply chain management. yet most vital aspects of the marketing process. It explores distribution. the students should be able to: • Describe the role of distribution in marketing strategy. the role of the intermediary in business-to-business selling. 114 — Introduction to Marketing: Student Guide . the retailing strategies of Giorgio’s of Beverly Hills. distribution trends. is one of the most complicated.

6. 2. ignore the assignments that are listed in the Student Guide. complete the online exercises for Lesson Eight and submit them to your instructor according to his or her instructions. Take the quiz for Lesson Eight. 3. 4. and be sure to check the Boards at least three times a week. the following steps should be taken in the sequence listed below. if assigned by your instructor. Use the Lesson Eight Outline in the Student Guide to help you follow the flow of the lecture.Completing Lesson Eight Lesson Eight In order to obtain the most out of this course. Instead. 5a. If you are a Teleweb student. read: • The program summary for Lesson Eight. complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. along with directions on how to submit your answers. • The key points for Lesson Eight. As with each lesson. In addition. Read the text assignment for Lesson Eight. If you are a Teleweb student (with an online component to your course). 1. as indicated in the syllabus. Watch the video program for Lesson Eight (Distribution: Retailing & Wholesaling Strategies). your instructor will deliver the quiz to you. you will find the quiz online. post any questions you have to the Discussion Boards. Review the Expected Learning Outcomes for Lesson Eight in the Student Guide. In the Student Guide. Introduction to Marketing: Student Guide — 115 . If you are a Telecourse student. If you are a Telecourse student (with no online component to your course). please check the syllabus for additional or altered instructions from your professor. 5b.

sorting and breaking down quantities into amounts that an end consumer wants to buy 3. Functions of Distribution Channels 1. Consumer C. combining products in ways that make it easier to buy them c. DISTRIBUTION CHANNELS A. moving products from place to place b. 116 — Introduction to Marketing: Student Guide . 2. i. ROLE OF DISTRIBUTION A. Keep costs as low as possible. Placement is the third of the 4 Ps. that is.Lesson Eight Outline I. Distribution plays a central role in the marketing of any product or service. E. Producer sells directly to consumer. It makes the flow of goods from the manufacturer to the consumer much more efficient by reducing the number of transactions required. OVERVIEW A. Retailer. B. Facilitative a. creating sales forecasts iv. grading products iii. III. placing a product in the right venue at the right time. Correct placement. 3. selling transactions 2. Hold a considerable amount of inventory and bear the capital costs associated with that. Transactional a. For Consumer Goods a. B. Logistical a. Facilitate the efficient flow of goods. II. can determine a product’s success or failure. gathering market information D. buying transactions b. 1. make both buying and selling easier i. F Types of Distribution Channels . The Role of Intermediaries 1. Wholesaler. Direct Channel has no intermediaries. Distribution is also called Placement. b. Manufacturer. Typical Distribution Channel 1. Indirect Channels have intermediaries. Distribution channels consist of firms and people that allow marketers to get their products to the customer as efficiently and cost effectively as possible. Distribution is defined as the movement of goods from one point to another. Why Do We Need Distribution? 1. financing transactions ii.

Is the intermediary willing to carry your product? c. Channel management begins with the selection of the most appropriate channels and intermediaries to distribute a particular product. ii. Separate firms develop a single program for the distribution of a line of products. Contractual. Administered. iii. b. What is the intermediary’s reputation? e. Factors to Be Considered in the Selection of a Distribution Channel 1. Some channels of distribution have become standard industry practice. Retailer Sponsored Co-op c. Distribution Strategies c. What is the intermediary’s target clientele? 4. Size of Product Lines d. Strengths and Weaknesses C. Indirect Channels have intermediaries. Is the product complex? Does it require a trained sales force to install it? 3. Corporate. Producer sells directly to Organizational Buyer. b. such as travel agents or ticket agents. a. Agent brings together a Producer and Distributor. Channels are united by contracts that specify each member’s responsibilities. Introduction to Marketing: Student Guide — 117 . Franchise Lesson Eight IV. Manufacturer sells product through only one wholesaler or retailer in a given area. Product Characteristics a. i. One company owns all aspects of a channel. SELECTION OF CHANNELS AND STRATEGIES A. Producer to Retailer to Consumer. Three Kinds of Vertical Marketing Systems i. Distribution Strategies 1. Exclusive Distribution a. Producer to Wholesaler to Retailer to Consumer. many firms align themselves with one another to increase efficiency and marketing impact. Producer to Agent to Wholesaler to Retailer to Consumer. Sometimes Indirect. The right or wrong choice of distribution channels can lead to the ultimate success or failure of a product. Direct Channel has no intermediaries. c. in channels of distribution. Where and how do the target customers want to buy your product? 2. it generally uses agents. B. i. 2. Number and Size b. Intermediary Characteristics a. From the Distributor. Wholesaler Sponsored Co-op b. Often. Producer to Distributor to Organizational Buyer. For Services a.i. ii. Customer Characteristics a. Competitor Characteristics a. ii. iii. products then go to the Organizational Buyer. 4. Is the product perishable? b. Vertical Marketing Systems a. since services are usually produced and consumed at the same time. For Organizational Goods a. 3. What is the intermediary’s sales and profit history? d. Usually Direct without any intermediaries. If a service firm uses an intermediary. b.

Manufacturer sells product through only a few outlets. VII. SUMMARY 118 — Introduction to Marketing: Student Guide . or try to do it all yourself. Internet (allows consumers to order directly from the manufacturer) VI. 1. Intensive Distribution a. Club Stores 3. VIII. Transportation Distances 2. V. Legal Restrictions 3. DISTRIBUTION TRENDS A. GLOBAL DISTRIBUTION A. 3. “One Stop Shops” such as Super Kmart 5. B. Whether to arrange for foreign intermediaries to handle some or all aspects of distribution. The entire process that contributes to the creation and delivery of goods and services. Gas Stations Teaming Up With Fast Food Chains 6. Challenges of Global Distribution 1. Selective Distribution a. Use of Technology in Supply Chain Management 1. Has led to decreased inventory carrying costs. Outlet Malls 4. Warehouse Stores 2. Cultural Differences 4.2. Manufacturer sells product through as many outlets as possible. and improved conflict resolution. reduced costs. Marketers are changing their methods of distribution to best satisfy consumers’ wants and needs. The savings can be passed along to the consumer. SUPPLY CHAIN MANAGEMENT A. Effectively managing the supply chain can lead to increased innovation. 1. making the distribution process more cost efficient.

and often the one requiring the most imagination. A typical distribution channel starts with a manufacturer shipping goods in bulk via. or through wholesalers and retailers? Should this product be sold? In what cities? In what type of store? Will it be sold nationwide? In foreign countries? How will it get to the stores? Who will transport it? Is the transportation infrastructure capable of handling the movement? DISTRIBUTION CHANNELS Distribution channels are firms and people that allow manufacturers to get their products to the customer as efficiently and cost-effectively as possible. ROLE OF DISTRIBUTION Distribution simply means the movement of goods from one point to another. Introduction to Marketing: Student Guide — 119 . then. Professor Quelch examines the third P in the marketing mix: Placement. Placement is a vital part of a successful marketing strategy. knows that placing a product in the right location at the right time can make all the difference in increasing a product's sales and profitability. Supply chain management is examined.Program Summary Lesson Eight Introduction to Marketing: Competing in the 21st Century Lesson Eight Distribution Retailing and Wholesaling Strategies In Lesson Eight of Introduction to Marketing. A seasoned marketer. and Professor Quelch examines the different channels available to take a product from the factory to the user. Distribution plays a central role in the marketing of any good or service. The retailers then stock the products in their shelves for the customer. starts with the producer at one end and ends with the customer at the other end. says Professor Quelch. The wholesalers break the bulk shipments into smaller lots for delivery to warehouses or individual retail stores. and encompasses all the intermediaries. truck or rail. How does a marketer select the optimal one? Channel selection and strategy are covered. An amazing new product doesn't help the company or the consumer unless the company can answer some key questions: • • • • • • • • • Should this be sold directly to the consumer. Lesson Eight discusses placement and the crucial role it plays in the overall marketing process. and so are distribution trends. The term “distribution channels” is defined. to a series of wholesalers. and the lecture closes with the distribution challenges inherent in the global marketplace. for example. The channel. Functions of Distribution Channels In order to make the exchanges between manufacturer and customers more efficient and costeffective. and all the transactions among them. distribution channels perform three vital functions. also known as Distribution.

by collecting goods and creating new assortments of them for the end customer. and so on. with an intermediary. Why Do We Need Distribution? Distribution makes the flow of goods from the manufacturer to the consumer as efficient as possible by minimizing the number of transactions required. Thus. Each manufacturer makes a single product. Can this be simplified? Yes. creating sales forecasts. from the manufacturer to the wholesaler to the retailer.000 items in a single store. the intermediary adds efficiency to the flow of goods. six transactions Imagine three manufacturers and three end consumers in a hypothetical marketplace. It also covers sorting and breaking down quantities into amounts that a consumer wants to buy. If this intermediary stocks all three products from the three manufacturers. gathering market information. for example. and furnishes information on the customer back to the manufacturer. Food wholesalers. Logistics are the functions that move products from place to place and combine them in ways that make them easier to buy.The transactional functions include all the buying and selling transactions that occur among the members of the distribution channel. That reduces the number of transactions from nine to six. The ad has an 800 number to call for information on what stores sell it. If each consumer wanted to buy each manufacturer’s product and each manufacturer had to sell to each consumer. The manufacturer might offer an item in enormous bulk only. it would take nine transactions. Logistics also includes making sure that the right products end up in the right stores. Facilitating functions include such things as financing transactions. we have three transactions going into the intermediary. Without intermediary. stock products from many manufacturers and can combine them in response to orders from supermarket chains that might carry as many as 20. These transactions include policies to account for returns of damaged or out-of-date merchandise. Take a typical purchase today: a customer sees a coat in a magazine. All these are facilitating functions. grading products. 120 — Introduction to Marketing: Student Guide . which puts that customer on its catalog mailing list. nine transactions With intermediary. The store that sells the coat lets the customer charge it instead of paying cash. and then three transactions going out to each of the three consumers. Logistics includes breaking such bulk down into smaller and smaller units step by step along the distribution channel.

If the intermediaries didn't exist. restaurants. items would be overstocked or out of stock more frequently. • Direct Channel. the markups don't push the price for a good up over the cost a customer is willing to pay. For smaller retailers. an independent negotiator who buys from the manufacturer and then sells to wholesalers. Small manufacturers that sell to large wholesalers often use agents instead of hiring a sales force. Direct Channels involve no intermediaries. • A direct distribution channel has no intermediaries. Distribution Channels for Organizational Goods Distribution channels for organizational goods can also be classified into direct and indirect channels. for example. and take a reasonable markup for the job. Intermediaries hold a considerable amount of inventory and bear the associated capital costs. Some large retailers such as J. ensuring they're in the right places in the appropriate quantities when the customer is ready to make a purchase. Intermediaries help regulate the flow of goods. Lesson Eight Distribution Channels for Consumer Goods Distribution channels for consumer goods can be classified into direct and indirect channels. • Producer to Wholesaler to Retailer to Consumer. wine shops. C. the products would have to be held at some other point in the distribution channel. Direct Channels involve no intermediaries. Penney and Wal-Mart buy directly from manufacturers and sell to consumers. such as a glassware shop that’s part of a glass factory. • Producer to Retailer to Consumer.The Role of Intermediaries But don't intermediaries mark up the prices on goods? Wouldn't eliminating the intermediaries of the world eliminate the extra expenses they create? Products are physical things. The availability of goods would change. Indirect Channels include one of more intermediaries. Buyers buy direct from the Introduction to Marketing: Student Guide — 121 . who sell it in turn to retailers (liquor stores. A store that’s attached to a factory. it's more common to buy from wholesalers. storing and releasing them in a timely way. In an efficient channel. and they have to be somewhere. The most complicated variation includes an agent. is a direct channel in which the producer sells directly to the consumer. and bars) who then sell it to customers. • Producer to Agent to Wholesaler to Retailer to Consumer. Agents and brokers don't take physical possession of the products. As with consumer goods. Vineyards. sell their products to wine wholesalers. Agents are also called manufacturers' representatives or brokers. at manufacturers’ warehouses or in customers’ homes. a direct distribution channel for organizational goods has no intermediaries. or a direct-to-consumer Internet sales connection such as the one offered by Dell Computer.

Contractual. each firm in a distribution system is an independent company. The high level of after-sales service is kept up by local wholesalers and suppliers who stock readily available parts. centrally managed distribution systems that increase efficiency and marketing impact. Corporate. or use certain promotional materials or software that all their distributing partners must also use. Independent retailers ally to increase purchasing 122 — Introduction to Marketing: Student Guide . Some powerful producers such as Procter & Gamble or Campbell's use their power to set standardized systems for billing.manufacturer — airplanes. However. for example. since services are produced and consumed at the same time. Distribution Channels for Services Do services require distribution channels? Yes. An import-export company. to standardize purchasing procedures. The distributor/wholesaler in this channel stocks inventory and provides promotional support for the product line. and retail stores. for example. • Agent Brings Together a Producer and Distributor. ticket agents. brings together buyers and sellers who might not otherwise find each other in the industrial marketplace. Many new agents are appearing almost daily in the Internet.. • Retailer Sponsored Co-Op. Such agents are disappearing because the Internet is being used more and more by customers buying directly from service firms. Indirect Channels for Organizational Buyers have one or more intermediaries: • Producer to Distributor to Organizational Buyer. An agent seeks out markets for a producer's product. etc. electronic reordering. etc. Contractual VMS are the most common kind. Sherwin-Williams Paint Company is an example. or else much shorter than those for products. This makes the channel more efficient and keeps costs down. and they're generally direct. A contractual channel enables companies to increase their control over a channel without owning it. more and more firms are aligning themselves into Vertical Marketing Systems. There are three types: • Wholesaler Sponsored Co-Op: A wholesaler establishes a contractual relationship with retailers. and their responsibilities specifically delineated. warehouses. The members are under contract to each other. Vertical Marketing Systems Typically. One company owns all aspects of a corporate channel: production facilities. There are three kinds of VMS: Administered. Such electronic agents don't have the real estate costs associated with chains of retail stores. If a service firm uses intermediaries. and product promotion. and may also locate sources of supply for distributors. it's generally in the form of agents such as travel agents. inventory management.

and how big are they? What distribution strategies do they use? How broad. Selective distribution may not reach as many people. They may own their own warehouses and run consumer ads collectively. the distribution channel must be made to serve the product. that means shortening it for the sake of speed. and became one of the great success stories of the 1990s. Customer Characteristics. How many of competitors are there. If the competition is just too strong in one distribution channel. A parent company gives franchisees rights to operate a business according to the franchiser's marketing plan and with the franchiser's trademark. Tradition can dictate some channels of distribution. then Timex and L'eggs can keep selling to drugstores. and the Internet. it will be perceived differently from a similar product that appears only in beauty salons or jewelry stores. Franchisees pay a fee and contribute royalties based on sales to chain-wide advertising costs. and complete are their product lines? What are their strengths and weaknesses? A company entering a new market or promoting a new product must know how the new offering will stand out. or just a few? What's their sales and profit history? Who are their customers? What kind of reputation do they have? Do they demand to know exactly how your product will improve their bottom line? Competitor Characteristics. maybe another channel would be more effective. or are they giving preference to a competitor? Will they carry a whole line of products. Intermediary Characteristics. Take Dell.power in dealing with suppliers. Where and how do the target customers want to buy your product? Knowing the customers includes knowing how they want to shop. If a product appears in Kmart. Fresh vegetables or flowers can't be left on pallets in a railyard for two weeks. The right or wrong distribution channel can make or break a product. There are several important factors to keep in mind when selecting and designing a distribution channel. However. Introduction to Marketing: Student Guide — 123 . deep. Many franchisees are required to buy from the franchiser and sell only the franchiser's products. respectively. for example: This company created new distribution channels to compete against such established computer sellers as IBM and Compaq. but it may reach the ones a company really wants. Several factors about the competition should be taken into account in designing an effective distribution channel. Product Characteristics. Is the product perishable? Is the product complex? Does it require a trained sales force to install it? If the answers are yes. generally. catalogs. Just because a product has been distributed a certain way for years does not necessarily mean that there aren’t better methods of distribution. a company should never stop evaluating its distribution options. Lesson Eight • Franchise. whether or not they're the best possible business practice. If customers are used to seeing Timex watches or L'eggs pantyhose in drugstores instead of jewelry or clothing stores. SELECTION OF CHANNELS AND STRATEGIES Channel management begins with the selection of the most appropriate channels and intermediaries to distribute a particular product. It's also important for a manufacturer to know the intermediaries: Are they willing to carry the product. Dell sold through mail order.

they move huge volumes together and share extensive data electronically to manage inventory and ordering. full-size shopping malls that specialize in obsolete. CocaCola is a prime example. Every time a customer buys Crest at a Wal-Mart. DISTRIBUTION TRENDS Distribution channels aren't fixed in stone. by training the sales people to explain the product at the point of sale and to answer technical questions. Here are six examples: Warehouse Stores. It requires high investment in showrooms and inventory and a specialized sales effort. Selective Distribution. or second-quality inventory from name-brand makers at low prices. say.. car. Outlet Malls are popular. including groceries. They sell bulk goods at low prices. Needless to say. etc.DISTRIBUTION STRATEGIES Marketers can select from three different distribution strategies: Exclusive Distribution. and gives consumers access to product and pricing information that used to be hard to get. in one store. reduced costs. Distribution channels today are changing to satisfy consumers’ changing wants and needs. are popular for customers seeking good value from brand-name manufacturers. The Net is allowing consumers to buy from manufacturers regardless of location. also called hypermarts and club stores. Again. Some are members-only stores that a shopper joins for an annual fee. Gas Stations Teaming Up With Fast Food Chains. SUPPLY CHAIN MANAGEMENT The aim of supply chain management is to make the flow of goods along the channel more efficient and to reduce the amount of working capital that's tied up in inventories and safety stocks at each stage of the channel. The manufacturer sells product through only a few retail outlets. The manufacturer sells products through only one wholesaler or retailer in a given area. excess. High-end stereo equipment is an example. Procter & Gamble and Wal-Mart collaborate closely in managing their supply chain. Internet. They're open to the general public. and killing two birds with one stone is an idea driving new combinations of product offerings. When a certain number of units is reached. and gets a special commitment from the retailers to push the product. The latest Nike styles are available only through specialty outlets such as Footlocker and some Niketown stores. one-stop convenience is increasingly important to many time-pressed shoppers. One-Stop Shops such as Super Kmart sell everything. Intensive Distribution. the purchase is catalogued in the company database. So are Nike products. This means selling through as many outlets as possible. and often let a shopper buy everything for the household. Effective supply chain management can be a competitive edge and lead to increased innovation. and improved conflict resolution. an automatic 124 — Introduction to Marketing: Student Guide . all under one roof. They must be adapted as the marketplace changes.

Lesson Eight GLOBAL DISTRIBUTION Distribution in the global marketplace means making use of a number of methods and channels for moving goods. shopping habits. which in turn triggers a production order. Some special challenges face the international marketer. so the manufacturer must check the distributor's references and find out just what the distributor will do to push the manufacturer’s product. Will the distributor give it a place or lose it among the competition? Will the distributor train sales people and help promote the product? What is the local transportation system? Are the roads good (are there roads at all)? What legal restrictions apply? What cultural differences must be taken into account on matters like store hours.order for delivery is sent to a P&G plant. and the savings can be passed along to the consumer. Since knowing the territory is essential. a typical manufacturer will need a local distributor who knows the market. and product choices? Eventually. a manufacturer may want to establish part or all of its own system in a foreign country. Selecting the right local distributor is critically important. The payoffs are decreased inventory carrying costs and a more cost-efficient distribution process. but starting out offers challenges that must be conquered first. Introduction to Marketing: Student Guide — 125 .

• Contractual. 126 — Introduction to Marketing: Student Guide . • Services are typically distributed through much shorter channels. There are three types of VMS: • Administered. A single program for the distribution of its line of products. • An indirect organizational channel is when goods flow from producer to wholesaler to buyer. The following are examples of distribution channels: • A direct consumer channel has no intermediaries. Vertical Marketing Systems (VMS) are becoming a more prevalent way of distributing products. • Retailer sponsored co-op – Retailers join together to increase their market power. • Franchise — A parent company sells the right to operate a business according to the franchiser’s marketing plan and to use the franchiser’s trademark. Distribution channels are the firms and people that assist the movement of goods and services from producer to consumer. • Facilitative — Making buying and selling easier. A consumer buys directly from the factory. • Corporate. • Logistical — Moving product from place to place and combining them in ways that make them easier to buy. 5. 2. 4. There are numerous ways of getting goods and services from one point to another. Distribution includes all aspects of moving products from one point to another. • An Indirect consumer distribution channel includes one or more intermediaries. Distribution channels form three basic functions to make the flow of goods from the manufacturer to the consumer much more efficient: • Transactional — Expediting the buying and selling transactions. • Wholesaler sponsored co-op — Wholesalers establish a contractual relationship with retailers that standardizes procedure. 3. It is most efficient when the product requires extensive customization. from raw material acquisition to manufacturing to end-user. Some examples include: • Producer to wholesaler to retailer • Producer to agent to wholesaler to retailer • A direct organizational channel is a direct line from producer to consumer. Members are united by contracts specifying each member’s responsibility. One company owns all aspects of a channel.Key Points 1. inventory management and promotion of products.

• Intensive — Selling product through as many outlets as possible. This efficiency can benefit the manufacturer by resulting in a reduction of inventory that reduces the amount of working capital needed. 8) Distribution trends lead to interesting changes in the marketing process: • Warehouse stores • One-stop shopping stores • Outlet stores • Technology enhancements 9) Supply chain management is an important aspect of distribution strategy since it aims to make the process of moving goods through the supply chain more efficient. the company may decide that it is selling enough to warrant setting up its own foreign subsidiary and handling distribution locally. Over time. 10) Distribution structures differ greatly from one country to another. distribution may be highly fragmented. • Selective — Selling product in a few outlets. Keep in mind. Marketers can choose from the following: • Exclusive — Selling product through only one wholesaler or retailer in the industry. Lesson Eight Introduction to Marketing: Student Guide — 127 . It can also reduce stock-outs. thus reducing expenses.6. which leads to more satisfied customers. A company going into the international market should typically find a local distributor who knows the foreign market. in many emerging markets. The marketer needs to evaluate the following factors when determining distribution strategy. • Customer characteristics • Product characteristics • Intermediary characteristics • Competitor characteristics 7) The way in which a product is sold varies in terms of the number of outlets required to successfully market it.

and retail stores. etc. Such things as financing transactions. Franchisees pay a fee and contribute royalties based on sales to help pay for chain-wide advertising costs. Wholesaler Sponsored Co-Op: A wholesaler establishes a contractual relationship with retailers to standardize purchasing procedures. which assist the movement of goods in a distribution channel. They may own their own warehouses and run consumer ads collectively. and so on. Franchise: A parent company gives franchisees rights to operate a business according to the franchiser's marketing plan and to use the franchiser's trademark. Contractual VMS Direct Channels Distribution Distribution Channels Exclusive Distribution Facilitating Functions Intensive Distribution 128 — Introduction to Marketing: Student Guide . manage inventory. The movement of goods from one point to another. The most common type of VMS in which the channel members are under contract to each other. or for using certain promotional materials or software that all their distributing partners must also use. This makes the channel more efficient and keeps costs down. Retailer Sponsored Co-Op: Independent retailers ally to increase purchasing power in dealing with suppliers. There are three types: 1. 3. This kind of system enables companies to increase their control over a channel without owning all facets of the distribution channel. Corporate VMS A VMS in which one company owns all aspects of a corporate channel: production facilities. Many franchisees are required to buy from the franchiser and can sell only the franchiser's products. Firms and people that allow manufacturers to get their products to the customer as efficiently and cost-effectively as possible. A distribution strategy in which the manufacturer sells products through only one wholesaler or retailer in a given area. Distribution channels that have no intermediaries. grading products. Selling through as many outlets as possible. warehouses. 2. creating sales forecasts.. and their responsibilities specifically delineated. electronic reordering. and manage how products are promoted. gathering market information.Glossary Administered VMS A VMS controlled by a powerful producer in which the producer sets procedural rules for billing.

Intermediary A participant in a distribution channel that adds efficiency to the flow of goods by collecting goods and creating new assortments of them for the end customer. by training the sales people to explain the product at the point of sale and to answer technical questions. All the buying and selling transactions that occur among the members of the distribution channel. Lesson Eight Logistics Selective Distribution Transactional Functions Vertical Marketing Systems (VMS) Introduction to Marketing: Student Guide — 129 . The functions that move products from place to place and combine them in ways that make them easier to buy. A distribution strategy in which the manufacturer sells products through only a few outlets and gets a special commitment from the outlets to push the product. say. Centrally managed distribution systems that increase efficiency and marketing impact.

The president of the company has instructed you to investigate the possibility of cutting out the wholesalers and selling directly to the retailers. However. it wasn’t so long ago that if you needed to go to the bank. banking can be done almost anywhere. In this exercise. • List possible limitations of the new channel.” a tile supply store that sells to wholesalers. Mail your two-page response to your instructor according to his or her directions. • Design a new channel of distribution for that service. and furniture stores. 130 — Introduction to Marketing: Student Guide . • Select a service that is well suited for expansion within existing markets. who in turn sell to tile. • Give an overview of the market offering. Traditional distribution channels are always being rethought.Assignments Assignment One: Cutting Out a Wholesaler Imagine that you work for “Tile Time. bank branches are now appearing in such nontraditional locations as grocery stores and college campuses. • Give a rationale for expansion. in order to save money. Address the following items in a one-page paper. with the proliferation of ATMs and online banking. according to his or her directions. • What words of caution might you voice regarding this matter? • What kind of information would you research and analyze before giving your final recommendation? Send your assignment to your instructor. Assignment Two: The Distribution of Services The selection of proper distribution channels is crucial. In addition. you had to go to the bank’s brick-and-mortar location during business hours. you will rethink an existing distribution channel for a service of your choice. For instance. department. day or night. whether marketing services or goods. • List the factors you considered in creating this new distribution system.

It outlines the five steps involved in developing a promotion plan and details how to evaluate the effectiveness of promotions. and the ways a Subway franchisee promotes his store. But when people hear the term ”promotions. • Critique the effectiveness of a marketing communications program. a day in the life of a salesman. • Assess the roles of four methods of communication. Expected Learning Outcomes By the end of this lesson. and Public Relations The Third P of the marketing mix is the public face of marketing. Introduction to Marketing: Student Guide — 131 . • Develop a marketing communications plan.” many tend to think only of advertising. Advertising. Sales Promotion. event sponsorship. The case studies include the successful integrated marketing plan of the California Milk Advisory Board. It ends with a look at how these methods can be combined to produce an integrated marketing communications plan. Lesson Nine explores the full range of promotion methods available to the marketer.Lesson Nine Marketing Communications Lesson nine Personal Selling. the students should be able to: • Explain the importance of integrated marketing communications.

complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. as indicated in the syllabus. Instead. Review the Expected Learning Outcomes for Lesson Nine in the Student Guide. Watch the video program for Lesson Nine (Marketing Communications: Personal Selling. 1. If you are a Teleweb student (with an online component to your course). 5a. complete the online exercises for Lesson Nine and submit them to your instructor according to his or her instructions. read: • The program summary for Lesson Nine. please check the syllabus for additional or altered instructions from your professor. Take the quiz for Lesson Nine. Advertising & Public Relations). and be sure to check the Boards at least three times a week.Completing Lesson Nine In order to obtain the most out of this course. In the Student Guide. If you are a Teleweb student. post any questions you have to the Discussion Boards. Use the Lesson Nine Outline in the Student Guide to help you follow the flow of the lecture. 4. As with each lesson. ignore the assignments that are listed in the Student Guide. 6. 3. In addition. 132 — Introduction to Marketing: Student Guide . If you are a Telecourse student (with no online component to your course). If you are a Telecourse student. if assigned by your instructor. 2. Read the text assignment for Lesson Nine. 5b. • The key points for Lesson Nine. you will find the quiz online. • The case study for Lesson Nine. Sales Promotion. the following steps should be taken in the sequence listed below. your instructor will deliver the quiz to you. along with directions on how to submit your answers.

When the message needs to be 100 percent consistent. When should a marketer NOT use personal selling? i. Benefits of Advertising i. when. PROMOTION METHODS A. Public Relations a. d. or others in the channel.Lesson Nine Outline I. shape opinions. 3. Companies must integrate their promotions plans. Gets attention. Definition: the information that a company communicates to its various publics. goods. Promotion) B. Forms of PR include documents such as annual reports and press releases. C. c. Reaches a much narrower audience. Advertiser has control over what it wants to say. c. Benefits of personal selling: i. influence them to try it. to influence attitudes and behavior. lobbying efforts. d. Pricing. iii. When a customized solution is needed. When the product is inappropriate. and how often. Develop tailored solutions. Reassurance to buyers. Personal Selling a. to whom. ii. Used to make customers aware of a product. ii. Definition: presentations to individuals or small groups. ii. e. Gather feedback and handle customer problems. iv. . iii. 2. Lesson nine II. ii. Definition of Promotion: The communication of information between the seller and the potential buyer. c. and to remind them after the purchase that they enjoyed it and want to buy it again. or services by an identified sponsor. trying to get Introduction to Marketing: Student Guide — 133 . iii. Conveys product information and benefits to potential customers. When should a marketer use personal selling? i. Advertising a. C. b. B. iii. Identify prospective customers. special events. b. and influence beliefs. b. The four methods of promotions: 1. When the expense is inappropriate. Promotion: the Fourth P in the marketing mix (Product. When training is involved. Main form of PR is publicity: any unpaid form of communication. a form of communication management. OVERVIEW A. Definition: any paid form or non-personal presentation of ideas. Placement. Promotion is the most visible element of the marketing mix. When the customer wants to see the product. A successful promotion plan can cover a variety of promotional methods and be evaluated for its effectiveness. Used to disseminate information.

samples. Rebates. 134 — Introduction to Marketing: Student Guide . Event Marketing: Special events or sponsorship activities can help promote a product or a brand by associating it with a charity. Benefits of PR: i. Stimulates trial purchase of new products. or activity. b. 2. Benefits of Sales Promotions: a. etc. Saves money. b. III. d. Sales Promotion a. f. Problems: a. Immediate value: a price-pack or reduced price label on a package. Definition: A short-term incentive targeted to someone along the distribution channel or to the end customer. rebate. or to buy a greater amount of something than they usually do. b. displays. Develop the Message. that requires work from the customer. Gives the company the advantage of credibility. Hazards of PR i. c. and Action). designed to generate an immediate demand or volume increase at the point of sale. Designed to get customers to try something new or buy earlier than planned. c. Motivates customers to buy bigger quantities or make earlier purchases. Tactics. d. ii. Desire. Negative coverage can be damaging. Set Target Markets. Short term increase in sales. 4. ii. Benefits of Sales Promotion: i. Less expensive than personal selling. Set Communications Objectives (AIDA: Attention.a magazine or a news program or some other medium to say favorable things at no cost to the company. Too many promotions and too little advertising can make it harder to build a solid brand reputation. Interest. e. 3. Sales Promotions are an increasing part of the marketing budget due to declining brand loyalty and greater competition for the consumer dollar. C. Makes the sales pattern volatile. b. Motivates players in a distribution channel. cause. etc. e. Some companies can schedule promotions to anticipate and plan for demand spikes. Tactics — Three Types of Promotion: a. d. coupons. Benefits 1. a free gift redeemable by coupon. Quick consumer response. g. DEVELOPING A PROMOTION PLAN A. D. Delayed value: a coupon.. ii. B. iii. Sales Promotions: Problems. c. Bonus pack: A bonus size package at the same price. Can boost sales. sweepstakes. c. e. Can't be controlled. Invites logistical problems in the distribution channel. Sales increases followed by sharp declines.

V. Measure the results of the marketing plan by holding them up against the plan's objectives IF the objectives are clear at the outset. Select the Appropriate Media. Lesson nine IV. EVALUATING MARKETING PROMOTIONS A. Set Budget. E. SUMMARY Introduction to Marketing: Student Guide — 135 .D.

THE FOUR ELEMENTS OF THE PROMOTIONAL MIX Four main methods make up the promotional mix: Advertising. Sales people making small presentations can choose their audience. Lesson Nine covers the various promotion methods used by marketers and shows how such methods are incorporated into an overall promotion plan. however. Personal selling is a very effective way to identify prospective customers. a television commercial. where. Advertising Advertising is the most visible component of the promotional mix: a billboard. and remind them after the purchase that they enjoyed it and want to buy it again. How does a marketer know when the plan is working and when it needs to be changed or scrapped? Finally. Coca-Cola advertises through the mass media to reach a global audience. but chances are. of communications. For example. a magazine ad. which delivers the broadest message to the widest possible audience. A simple definition of advertising is any paid form or non-personal presentation of ideas. are probably the most visible element of the marketing mix. which can be one-on-one and highly specific. Personal Selling At the other end of the spectrum is Personal Selling. These four methods work in a spectrum. Public Relations. The word paid is an important part of this definition. Effective ads get attention. to personal selling. Personal Selling. is just one aspect of the whole promotions story. Advertising & Public Relations In Lesson Nine of Introduction to Marketing. to really get to know 136 — Introduction to Marketing: Student Guide . not Field & Stream. Used in various combinations. it's visible to many segments. The advertiser can control what it wants to say.Program Summary Introduction to Marketing: Competing in the 21st Century Lesson Nine Marketing Promotions Personal Selling. goods. influence them to try it. but not the only part. They convey product information and benefits to potential customers. especially advertising. It reaches a much narrower audience. from advertising. Professor Quelch examines the fourth P of the marketing mix: Promotions. to whom. What is promotion? Promotion is the communication of information between the seller and the potential buyer. or services by an identified sponsor. when. these elements attempt to make customers aware of a product. Sales Promotion. or others in the channel. Professor Quelch discusses how companies can integrate all the various forms of marketing communications. and how often. to influence attitude and behavior. and Sales Promotion. a company selling financial services would likely choose The Wall Street Journal to reach customers. It may target a specific market segment. Advertising. and customize or adjust their message accordingly. Advertising is a prominent part. but it has advantages over advertising. Marketers use a variety of tools for communicating value to the customer. Promotions. with the exception of public service announcements. because. get instant customer feedback. advertising is always purchased. while a local bakery might advertise on a local cable station to reach its target audience.

Lesson nine When a customized solution is needed. Instead. offer new information. With publicity. personal selling costs a lot. Often they're designed to get customers to try something new. there's more information than a thirty-second TV commercial can handle. offers a company a way to stay in touch with customers. Telephone marketing offers a way to sell on a personal basis without much of the costs of faceto-face personal selling. It comes in many forms: documents such as annual reports and press releases. and more obvious. Also. That's why publicity is rarely the cornerstone of any effective promotional campaign. and so too can be the increase in sales they create. samples. and negative coverage can be damaging. Supporting public broadcasting has helped Mobil polish its image and reach an affluent audience for years. or to buy a greater amount of something than they usually do. They need personal attention from a salesperson. It's any unpaid form of communication. Good publicity gives the company the advantage of credibility. a company isn't paying directly for advertising space. sweepstakes. It's excellent for giving personal reassurance to buyers when they have particular issues or questions. In the last fifteen years. who are prohibited from most other forms of promotions. Salespeople need some flexibility in their presentations. sponsor sports or music events as a way to reach their target audience and even get their logos and products on television. it has grown considerably in importance. and to develop tailored solutions for their individual needs. and an ongoing dialogue in those cases when training and after-sales service are important. displays. tailor-made fashions. Sales promotion is a short-term incentive targeted to someone along the distribution channel or to the end customer. PR is the information that a company communicates to its various publics. Sales promotions are short-lived. or activity. A demonstration of a new toy on the evening news around Christmastime will increase sales. special events. all are designed to generate an immediate demand or volume increase at the point of sale. or to buy earlier than planned. Public Relations The third component of the promotional mix is Public Relations. Some products shouldn't be promoted this way. and sometimes that results in inconsistencies between the messages delivered to customers. Sales Promotion A fourth component of the promotional mix is Sales Promotion. It has one purpose: increase sales. publicity can't be controlled. Are there times when personal selling isn't appropriate? When the message needs to be 100 percent consistent. get feedback. coupons. a news program. it's trying to get a magazine. Customers buying an expensive car. Coverage such as this is like free advertising for the company. and influence beliefs. and lobbying efforts. It's less expensive than personal selling. personal selling may not be the way to go. Rebates. etc. It's a form of communication management. For example. or a special forklift won't be satisfied with just a little information. or when the customer wants to see the product. Special events or sponsorship activities can help promote a product or a brand by associating it with a charity. shape opinions. However. Publicity is the main form of PR. Many tobacco companies and liquor companies. Introduction to Marketing: Student Guide — 137 . cause. and can be aimed at a wide or a narrow audience. a good review from an impartial writer helps a new restaurant. A whole industry of telemarketing. with large call centers. Companies use PR to disseminate information.them. or when training is involved. or some other medium to say favorable things at no cost to the company.

Short Term Financial Results. offering the product at a sale price to wholesalers. inviting logistical problems into the distribution channel. and the planning extends all the way through their distribution channels from manufacturer to the point of sale. that is. manufacturers often create a promotion inside the channel. say. coupled with advertising. It's just a label stuck on the package that says. and the sales pattern becomes volatile. more manufacturing capability than they use. and redeem it at the checkout counter. and sales promotions are an effective way to augment sales and keep a manufacturer competitive. Immediate Value. First. An example of an immediate value promotion is a price-pack or price special. the sharp sales increases are usually followed by sharp declines. “Only 99 cents. the value is real for those 138 — Introduction to Marketing: Student Guide . Also. Greater Competition for the Consumer Dollar. New Power Inside the Distribution Channel. because players in the channel have more power than ever to extract concessions from manufacturers. They're also more likely to buy on impulse and less likely to plan their purchases in shops or supermarkets. so many companies use them instead of advertising when they're under pressure to show immediate results. based on the objective. More promotions than ever are targeted to work inside the distribution channel. Sales promotions can generate a quick upward spike in sales and profits. Such a promotion. take it to the store. An example of a delayedvalue promotion is a coupon. Why? Declining Brand Loyalty. Others are designed to offer delayed value. and wait for the rebate. people aren't as loyal to brands as they used to be. Redeeming rebates can be even more delayed and more work: buy the product. SALES PROMOTIONS: PROBLEMS AND TACTICS Many manufacturers. Some are designed to offer immediate value. in weighing sales promotions against advertising in their budgets. It requires a little work from the customer: cut it out.” Delayed Value. Manufacturers often have excess capacity. fear that too many promotions and too little advertising make it harder to build a solid brand reputation. Tactics Sales promotions can be sorted into two categories. Manufacturers in developed countries must contend with flat demand and slow population growth. Some companies schedule promotions in order to anticipate such demand spikes. To maximize their capacity and increase their profits. but today they're increasingly prominent. can be very effective. send in the rebate coupon. However.WHY ARE SALES PROMOTIONS AN INCREASING PART OF THE MARKETING BUDGET? Twenty years ago sales promotions were relatively modest compared to advertising.

and where they should be addressed. Interest. INTEGRATED MARKETING PROMOTIONS Consider the factors that influence a promotional plan: the characteristics of the product. the stage of the product's life cycle. etc. Keeping everyone in the loop helps ensure the success of a promotion plan. Set Target Markets. A bonus pack is a little extra something. and each may be the responsibility of different people or departments in a company. Set a Budget. Not all companies are clear on their objectives at the outset. if Toyota is running a national ad offering a sales incentive. Decide how to allocate assets among the various promotion methods so as to accomplish the objectives. Lesson nine Developing a Promotion Plan Developing a Promotion Plan takes five steps. the intended audience. such as “25 percent more free!” in a detergent box or soda bottle. or a different promotion plan should be tailored for each target market. the promotion plan should be adaptable to them all. stimulates their interest. They can motivate everyone in a distribution channel. Any good promotion either captures the customer's attention. and Action. Desire. Each one will influence the choice of how best to communicate a promotional message. If the market includes different targets. though. and may be unfair to the people responsible. every Toyota dealer needs to be aware and prepared. Bonus Packs. Decide what the plan should accomplish. however. AIDA means Attention. Caution should be taken not to pack the message too full. They stimulate trial purchase of new products and get people to buy bigger quantities or make earlier purchases. There's an acronym for this: AIDA. 139 Introduction to Marketing: Student Guide — . Promotions work quickly. Set Communications Objectives. Decide whom the plan should address. Choose among the media the ones that will convey the promotion most effectively. Sales promotions are versatile and give companies several advantages. measuring sales volume increase after executing a plan designed to build awareness is uninformative. Select the Appropriate Media. Another example of immediate value is a bonus pack. provokes their desire. for the decisions that need to be made in each step.who take advantage of it. That's one more reason why many smaller companies use promotions often. It's essential that the communications plan be integrated: for example. Develop the Message. and there's a hidden benefit for the manufacturer: Many people who buy the product because of the rebate don't do the work to get the rebate. There's no formula. They're also good for conserving money: Companies pay up front for advertising but promotional costs come simultaneously with the actual sale. Good promotions often are the result of good marketing instincts and experience. or makes them take the action the marketer wants them to take. Companies measure the results of the marketing plan by holding results up against the plan's objectives. so keep the message simple.

5. • Develop tailored solutions. Advertising is any paid form of nonpersonal presentation of ideas. Telemarketing is a component of personal selling. 140 — Introduction to Marketing: Student Guide . 7. 2. personal selling gives the marketer the ability to: • Identify prospective customers. when the product is fairly complex. But personal selling has its drawbacks: • It can be very costly. when to say it and how often to say it. • Gather customer feedback. It involves various types of media such as TV. Because of the face-to-face contact. It reaches a much narrower audience than advertising. 6. • One can control what to say. Speaking to prospects and customers by phone is much more cost-efficient than meeting face-to-face and it offers some of the same benefits. It has several advantages: • It is attention grabbing. The following are four methods of marketing communication: • Advertising • Personal Selling • Public Relations • Sales Promotions 4. • One can easily convey product benefits. Promotion is the communication of information between seller and potential buyer or others in the channel to influence attitudes and behavior. This is referred to as integrated marketing communications. radio. goods. 3. or services by an identified sponsor. • It can also be subject to inconsistencies since the message is delivered personally and can be modified. Personal selling is appropriate when a customized solution is needed. Personal selling is face-to-face selling or one-on-one selling. • Give personal reassurance to buyers. It is important to coordinate all marketing communications to ensure that a consistent message is delivered across all audiences. when training is involved. and magazines. • Handle customer problems as they arise. who to say it to.Key Points 1. or when the target market is not served by mass media.

9. There are five steps involved: • Determine what the objective of the promotion is. Lesson nine • Publicity. • It is incurred on more of a “pay as you go” basis. Public Relations is information that a company communicates to its various publics. the company has little control over what is said. • Set the promotion budget. • It can stimulate trial purchases. • Event marketing is also a form of public relations. the marketer must be able to critique the effectiveness of the campaign. • It can lead to logistical distribution problems by creating sharp sales increases and decreases. including customers. 10. Companies can promote their product or sponsor sports. however. or any event where their target audience may attend. Introduction to Marketing: Student Guide — 141 .8. • Develop the message. 12. the company tries to get the media to run a complimentary story about them. when it is said. This means step one in the promotions plan is vitally important in determining the effectiveness of the promotion. This type of promotion has seen a surge in popularity over the past couple of decades. any unpaid form of communications. The benefits of Sales Promotion are: • It is versatile. Once the promotion plan is set. This type of communication tends to be more credible than a paid form of advertisement. art-related. • It can increase the quantity purchased. A promotions plan is an important component of the communications program. a sales promotion has several disadvantages: • It can detract from the long-term ability to build a brand reputation. stockholders. government. and to whom it is said. Sales Promotion is a short-term incentive that can be targeted at either the end consumer or anyone along the distribution channel with the sole purpose to create an increase in sales. • It can provide simultaneous incentives to everyone in the distribution channel and to the end consumer. However. or general public. The marketer must always measure the results against objectives. A common mistake is not setting clear objectives against which outcomes can be measured. 11. concert. • It can induce earlier buying. • Determine and prioritize the target market. In essence. employees. is the most visible form of public relations. • Select the media.

Any unpaid form of communication such as press coverage. if favorable. The most visible component of the promotional mix. The information that a company communicates to build a favorable reputation — a good “corporate image” — disseminate information. gather feedback.Glossary Advertising Any paid. Direct. A larger than normal package of a product offered at the normal price (immediate value). designed to increase sales. consumers. can give a company credibility. or services by an identified sponsor. A company’s program for creating and executing effective communications with a market or markets. or brand by associating it with a charity. The communication of information between the seller and the potential buyer or others in the channel to influence attitudes and behavior. which. Set Target Markets 3. and handle customer problems. and shareholder groups. or buy a greater amount of something than they usually do. reviews. Set Communications Objectives 2. etc. Special event sponsorships that promote a company. Select Appropriate Media 5. with agencies. A promotion that requires the customer to perform some task such as clipping a coupon or returning a rebate coupon to receive value. and influence beliefs. buy earlier than planned. develop tailored solutions for customer’s individual needs. non-personal presentation of ideas. cause. or activity. give reassurance to buyers. motivate customers to try something new. spoken. Bonus Pack Delayed Value Promotion Event Marketing Immediate Value Promotion Personal Selling Publicity Public Relations Promotion Promotional Plan Sales Promotion 142 — Introduction to Marketing: Student Guide . or small group presentations in person or by telephone in which a salesperson can identify prospective customers. individual.. A special designed to stimulate sales by offering immediate value to the consumer. shape opinions. product. Develop Message 4. Includes five steps: 1. goods. Set Budget Short-term incentives targeted to someone along the distribution channel or to the end customer.

The so-called “influentials” such as cookbook authors.” So says the California Milk Advisory Board. The industry sells 1. while Asians. according to his or her own instructions. Production has risen 75 percent since the campaign was launched. were shown that California cheese meets a high standard for quality. airplane banners. in-store promotions. The objective: cement the impression that the only real cheese is Real California Cheese. The promotions feature appetizing shots of the products and a logo with a sunrise and the words “Real California Cheese” on all cheese products made by state-certified manufacturers. DIRECTIONS Watch the video and answer questions below. appeared statewide at fairs and public events to make a unique visual statement. the board took a commodity product made by multiple manufacturers and gave it a single. and a Cheesemobile. but when people thought of cheese. interest. a Californian might see the slogan and the logo several times on TV. and desire. from the car.2 billion pounds of cheese a year and has nearly doubled the variety of cheeses it produces in response to the new interest. Different market segments got different messages: Hispanics. Businesses heard about cheese as well: Pizza makers were shown how using Real California Cheese would add perceived value to their products. but did it produce action? The Milk Advisory Board emphatically says yes. attention-getting questions. and in the stores. discount coupons on related dairy items such as eggs. food writers. “It’s the Cheese” was the punch line to seemingly endless funny.Case Study Why do California redwoods refuse to grow anywhere else? What were the Mamas and the Papas dreaming about? Why did the term “awesome” originate in California? “It’s the Cheese. Send the completed case study to your professor. And the Cheesemobile. whose traditional cuisine is low in dairy products. which not long ago was in a quandary. shelf displays. each time with a different funny spin. The board used in-store tasting booths next to the dairy case. and shelf displays to show shoppers the how cheese could improve their home cooking. they thought of Wisconsin. memorable brand identity using an integrated marketing campaign. How does the California Milk Advisory Board’s campaign illustrate the principles behind successful integrated marketing communications? What challenges might the board face in the future? What can the board do to ensure its success in the future? Introduction to Marketing: Student Guide — 143 Lesson nine . Why? It’s the marketing. gourmet retailers. Seven of ten California pizza makers now use Real California Cheese. The theme of the campaign runs across all media from billboards to television spots. were shown how cheese could supplement a healthy diet. To change that perception. California’s $4 billion-per-year dairy industry is the biggest in the United States. and restaurant reviewers were educated at seminars and tastings to promote good publicity. On a typical day. Behind the media campaign was a coordinated integrated marketing effort to get the word out about the quality and variety of California cheese. who consume a significant amount of dairy products. The campaign created attention. shaped like a giant wheel of cheese.

In outlining your plan. high-end. 1. however. based on population trends in that area. Think about a few questions you’d like to ask each company. Outline a promotion plan you would implement to communicate your message to your target audience and meet your objectives. Assignment Two: Call 1-800 Many of the companies we’ve examined in this course are packaged goods companies that you’ve probably had little. Your customers are label-conscious as well as budget-conscious.Assignments Assignment One: Second-Hand Clothing Your family owns and operates a successful. Address the following items in a written report: • List the number called. Send your responses to your instructor. time and date called. why is this type of information offered? 144 — Introduction to Marketing: Student Guide . However. You only accept clothing made by well-known designers. if any. you’ve pinpointed an ideal location for a new store. This offers a unique way for you to interact with the companies and evaluate for yourself evidence of the companies’ marketing orientations. Many of these companies have “1-800” customer comment phone numbers. • Was the call answered by a “live” person or a voice-mail system? • What difference would this make to a consumer caller? • What kind of information was available? • From a marketing perspective. Your business currently has two locations. according to his or her directions. direct interaction with. consider the following: • What should be the objective of the campaign in relation to the AIDA model and why? • What kinds of promotion elements should the campaign emphasize and why? • How would you implement and control the plan? • How would you prevent the promotion from reducing sales at your existing stores? • What steps would you take to ensure that you implement an integrated marketing communications plan? Address these issues in a two-page paper. these are the companies that you are most likely to purchase items from on a regular basis throughout your life. and company that makes the product. Your new location will open in six months. brand name of the product. 2. and the items must be in excellent condition. 3. second-hand clothing business. Find three consumer products you purchase regularly that have a “1-800” consumer information telephone number on the label.

• Based on your telephone contact. comment on the firm's “marketing orientation.• If the call was answered by a “live” person. what kind of information was requested and why do you think the firm wanted it? • Review pages 35-38 of your textbook on what it means for a firm to use a “marketing orientation” as a business management philosophy. Introduction to Marketing: Student Guide — 145 . what questions did you ask? What were the responses? Lesson nine • Did the firm request information about you? If so. according to his or her directions.” Send your one-page assignment to your instructor.

the students should be able to: • Explain the purpose of advertising. and the making of a television promotional spot. • Describe when to use advertising. it presents students with a behind-the-scenes exploration of the advertising industry. when to use advertising.Lesson Ten A closer Look at Advertising When. Expected Learning Outcomes By the end of this lesson. Even though advertising is only a small portion of the marketing process. • List and compare different types of advertising. and how to measure the effectiveness of an advertising campaign. it is certainly the most visible and the most glamorous. they think advertising. what types of advertising media are available. Lesson Ten examines the role advertising plays in society. • Explain how to determine the effectiveness of advertising. and How to Advertise When most people think of marketing. The case studies include the methods and theories behind the billboards developed by Outdoor Systems. In addition. the strategies behind the Legoland advertising campaign. 146 — Introduction to Marketing: Student Guide . Where. Why.

In the Student Guide. read: • The program summary for Lesson Ten. Why & How to Advertise).Completing Lesson Ten In order to obtain the most out of this course. Lesson Ten Introduction to Marketing: Student Guide — 147 . 2. Where. Use the Lesson Ten Outline in the Student Guide to help you follow the flow of the lecture. 1. If you are a Teleweb student. 3. 6. 5b. 4. ignore the assignments that are listed in the Student Guide. the following steps should be taken in the sequence listed below. you will find the quiz online. if assigned by your instructor. 5a. along with directions on how to submit your answers. post any questions you have to the Discussion Boards. as indicated in the syllabus. As with each lesson. please check the syllabus for additional or altered instructions from your professor. complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. Take the quiz for Lesson Ten. If you are a Teleweb student (with an online component to your course). and be sure to check the Boards at least three times a week. In addition. your instructor will deliver the quiz to you. If you are a Telecourse student (with no online component to your course). If you are a Telecourse student. complete the online exercises for Lesson Ten and submit them to your instructor according to his or her instructions. Instead. • The key points for Lesson Ten. Read the text assignment for Lesson Ten. Review the Expected Learning Outcomes for Lesson Ten in the Student Guide. Watch the video program for Lesson Ten (A Closer Look at Advertising: When.

woman and child in the nation. Provides product awareness — conveys or enhances knowledge about the good or service. referred to as rating. THE PROMOTION MIX A. Neil Borden's The Economic Effects of Advertising outlines five criteria for when to advertise: 1. the percentage of people or households in a given market who are tuned in to a particular show. B. OVERVIEW A. 148 — Introduction to Marketing: Student Guide . Shows customers how to prepare and use the product. Introduces the product to a customer. Advertising. Frequency. V. Reach: number of people exposed to an advertisement. ADVERTISING’S ROLE A. E. 1. D. Rating. Promotional mix includes advertising. Advertising is “the public face of marketing. to separate or differentiate it from competitors' brands. 3. II. most people don't know how advertising works. exceed $160 billion — about $615 for every man. 2. When the product can be promoted using emotional appeals. In TV and radio. . or augments what they already know about it. When the sales volume supports advertising costs. B. Advertising Terminology: Reach. the most glamorous and best-known element of marketing. It can be both highly scientific and highly creative.” 4. When demand is on the rise. 5.Lesson Ten Outline I. combined in various ways to communicate with the target market. When there's an opportunity for product differentiation. Annual advertising expenditures in the U.S. is the fourth main method of communication between a company and the markets. WHEN TO ADVERTISE A. I. ADVERTISING MEDIA A.” Despite its high visibility. F Tells how much the item costs and where it's available. H. III. GRP and CPM . C. IV. Builds morale in the distribution channel and develops retailer interest. Creates a favorable image of a particular brand. Provides reassurance to customers. When a product has “hidden qualities. G. sales promotion. Shows what the product looks like. so shoppers can pick it out easily. and public relations. personal selling.

and how well. households have bought products advertised on infomercials. Options includes company sites. B. 25 percent of U. so wasted coverage is much less than on TV. Effective if a viewer passes them repeatedly on a regular route. bus banners. complicated messages aren't appropriate for standard commercials. neon signs. Inappropriate for products that must be seen to be appreciated. national and local.S. 2. Print 1. 2. called splitting 30s. Visible trademarks and logos. Long. Testing is done before. 5. promotion. and after an ad campaign to measure if. 2. Over 400 new magazines introduced every year in the United States. E. but expensive. Print helps consumers understand features and benefits of complicated products. G. Rapidly growing global medium. 4. it accomplishes the company's objectives. 2. general and specialized. and paid hyperlinks. Reader can linger and reread something interesting and valuable. 5. 4. There are seven times more radio stations in the U. 2. 4.S. or cost per thousand. 4. D. Reach only the people on that route.000 of the targeted individuals or households. Radio more segmented than TV. bench ads. during. Typically it competes for attention with other activities the listener is doing. H. F Outdoor . 3. 2. Program-length ads that combine education. and sell. 6. 3. 3. VI. CPM. EFFECTIVENESS OF ADVERTISING A. Nontraditional Media 1. I. 3. Helps marketers target very specific markets. Frequency is the average number of times a person is exposed to an ad during a particular planning period.2. Radio 1. 2. 3. etc. many for niche audiences. Infomercials have a full half-hour to inform and inspire a viewer to act. due to high cost. magazines and trade journals. Other Media 1. Introduction to Marketing: Student Guide — 149 Lesson Ten . Powerful advertising medium because of its reach. Radio can still convey powerful drama and illusion. Reach multiplied by frequency yields gross rating points: R x F = GRP . Number of readers of a magazine might far exceed its number of subscribers. Television — Infomercials 1. Visual impact has to be instantaneous. 1. posters. Promotional video to promote. Wide range of options: newspapers. than television stations. Includes billboards. 6. 3. Far cheaper than making an ad for television. and entertainment. C. Television — Standard Commercials 1. banners on other sites. explain. Marketer's own product is a form of advertising (Campbell's Soup). Many advertisers use 15 second commercials. Internet 1. the cost of reaching 1.

Marketers have an ethical responsibility to advertise in appropriate ways. Federal Trade Commission. Pre-Testing: before the campaign 1. Advertisers can be subject to legal liability for ads that break the law. D. Attitude Test VII. Theater C. Aided Recall D. VIII.B.S. LEGAL AND ETHICAL ISSUES A. Portfolio 2. SUMMARY 150 — Introduction to Marketing: Student Guide . B. The U. C. Unaided Recall Post-Test E. Good ads don't make up for bad products. Jury 3.

In Lesson Ten of Introduction to Marketing. Professor Quelch discusses some of the legal and ethical issues involved in advertising. It helps provide reassurance to customers. how to say it. Introduction to Marketing: Student Guide — 151 .” Despite its high visibility. Professor Quelch examines the need for companies to communicate with their markets. Sales promotions are short-term incentives to consumers or to people inside the distribution channel — rebates. combined in various ways to communicate with the target market. Public relations is used to build a favorable reputation — a good “corporate image” — with agencies. to separate or differentiate it from competitors' brands. It's made up of a variety of tools already examined in these lectures. and when to use it. coupons. but increasingly via telephone or over the Internet. What to say. facts. markdown specials. advertising can show customers how to prepare and use the product. directions and questions to their markets. etc. particularly among people who might not otherwise try the product. sales promotion. Advertising also helps create a favorable image of a particular brand. personal selling. Next. Many companies give away recipes. usually in person. and How to Advertise Advertising is “the public face of marketing. and at advertising's role in marketing — why and why not. samples. is the fourth main method of communication between a company and the markets. and public relations. Personal selling is direct spoken communications between sellers and potential customers. It shows what the product looks like. What's its role? THE ROLE OF ADVERTISING What does advertising do? Companies need to communicate a variety of ideas.Program Summary Introduction to Marketing: Competing in the 21st Century Lesson Ten Lesson Ten A Closer Look at Advertising When. and it can be both highly scientific and highly creative. most people don't know how advertising works. Ads offer simple messages about how much the product costs and where it's available. He looks at the promotional mix and all the communications methods available to today's companies. consumers. He describes the various types of advertising and discusses how to measure its effectiveness. Advertising. and that they'll be pleased with the purchase. showing how their food item can be used. Last. saying that this particular product and brand is exactly what they're looking for. so the first role advertising plays is to provide information. including advertising. Why. THE PROMOTIONAL MIX A company's marketing communications program is known as its promotional mix. and how much to spend all fall under the definition of advertising. for example. Advertising provides product awareness — it conveys or enhances knowledge about the good or service. by seeking good free publicity. These free recipes can stimulate sales. and other shareholder groups. the most glamorous and best-known element of marketing. so shoppers can pick it out easily. Where.

Neil Borden's The Economic Effects of Advertising outlines five criteria for when to advertise: 1. That's why annual advertising expenditures in the U. An ad for women's dietary supplements during a college football game would cost a small fortune but would reach a largely indifferent audience. and child in the nation. ads help build morale in the distribution channel and develop retailer interest. exceed $160 billion — about $615 for every man. The cost of advertising can be high. 5. When there's an opportunity for product differentiation. or it can be timed and targeted to reach a specific group. or current users? Is it the people who make the buying decision.S. It offers a company the potential to reach many customers at once. billboards. and much of it can be wasted if it fails to communicate with the desired target audience. when. magazines. When the sales volume of a product can support advertising. 4. There are many forms to choose from: radio. and how often to say it. Sunkist advertises that its oranges are juicier and sweeter than other oranges because a customer can't always tell that from looking at the orange. or is it people who influence the decision-makers? What do they want to hear? What will get their attention? Where do they get their information? What's the best way to reach them? 152 — Introduction to Marketing: Student Guide . REQUISITES FOR EFFECTIVE ADVERTISING Before a company spends its first advertising dollar. 3. If a retailer and wholesaler see that a manufacturer is investing in advertising to develop consumer demand. advertise. Who Is the Customer? Answering the question “Who is the customer?” begins the process of tackling several other key questions: Who's the target audience? Is it potential buyers. television. they're more willing to give it shelf space and take less of a margin before reselling the product.” qualities that make a product brandable. Ads can stimulate and accelerate demand at that time. Advertising's many functions make it a very important medium. If a company has a new way to set a product apart. the Internet — and the cost per viewer is relatively low — much lower than the cost of reaching a customer through a sales call. 2. woman. When demand is on the rise. it needs to know what makes an ad effective. Two questions must be answered: Who is the customer? What is the objective of the ad? When these key questions have been answered. advertise. newspapers. advertise.Finally. If the product can be promoted by using emotional appeals. When a product has “hidden qualities. Companies shouldn't advertise at times and in ways they can't afford. Advertising can emphasize the product’s value over and above its basic functions. where. advertise. When is it appropriate to advertise? Neil Borden's List A book written in 1920 remains a classic today. that's the time to say it. the marketer can go on to decide what to say and how. WHEN TO ADVERTISE Advertising is flexible. advertise. Should a company ever decide not to advertise? Certainly.

or combination of media. How to Say It Once what to say has been decided. Showing it being poured into a glass emphasizes the premium positioning of the beer. and how to say it seems clear. wear. How should the message be structured? Will it draw conclusions for the audience or not? Will it emphasize strengths or admit weaknesses? Will the strongest argument be given first or last? What's the tone of the ad — serious or light? Consider one of the rules strictly followed by the ad agencies for Heineken: never show Heineken being drunk from the bottle. and within each one. Moral appeals target the audience's sense of what's “right. for example. and voice casting. Toothpaste ads inspire the fear of dentists and cavities. copy scripting. Prudential Insurance. and do? TYPES OF ADVERTISING MEDIA All these questions require an enormous investment of time. Volkswagen. It's crucial that the marketer chooses the media that will communicate most effectively. Is television best? Will an on-camera spokesman be needed? A cast of actors? What should they say. environmental cleanliness. perhaps explaining how it works and comparing it favorably against a competitor's product. Choosing radio means creating sounds. making illustrations. Where to Say It When the kind of appeal has been determined. and political candidates are often advertised by the use of moral appeals. Michelin tire ads show children and say that buying Michelins is an investment in their safety. the marketer must decide on a symbolic or stylistic format — where to say it. marketers must decide how it should be said. There are plenty of alternatives. choosing fonts. or to reach people at some other stage in the decision-making process? To familiarize people with the company name? To build anticipation for a forthcoming product? Or is it to spur people into action right away? Lesson Ten What to Say A marketer can take several approaches in determining what to say: Rational appeals speak to the audience's self-interest and say that the product will give them the benefits they want. Introduction to Marketing: Student Guide — 153 . If it's clean laundry they want. a rational appeal tells them that the product will remove stains and brighten colors. Humorous appeals can be very effective and memorable. and countless other advertisers have overcome marketing challenges by making unforgettably funny advertisements. Soft drink ads. A thorough knowledge of the target market is essential to picking the right medium. Keep the goal in mind here: the maximum effective exposures for the minimal cost. many additional choices. Consumers are bombarded with thousands of ad messages every day. because an ad has so little time to do what it must do: grab the audience's attention. Emotional appeals are good for stirring up feelings that motivate a purchase. etc. aid to the needy.” Social causes. for an ad.What response is the ad intended to elicit? To motivate people to become new customers. Choosing a print medium means creating copy. emphasize fun and camaraderie.

TV reaches millions of people to whom a message may be just irrelevant. GRP and CPM . the effectiveness of their ads. Frequency. radio isn't appropriate for products that really must be seen to be appreciated. Frequency is the average number of times a person is exposed to an ad during a particular planning period. Each medium offers advantages and disadvantages the marketer must weigh to get the best bang for the buck. Infomercials have a full half-hour to inform and inspire a viewer to act. 154 — Introduction to Marketing: Student Guide . Longer. Also. so the wasted coverage is much less than on TV. That's the cost of reaching 1. Cost Per Thousand. so despite its age. infomercials are program-length ads that combine education. promotion. and entertainment. It's called wasted coverage when an ad is watched by people who will never do anything about it. Specialized channels such as Discovery and MTV are helpful for advertisers seeking to target specific viewers. the percentage of people or households in a given market who are tuned in to a particular show. fifteen seconds may be fourteen seconds more than viewers want to see. Reaching 50 percent of the target audience with six ad exposures during a fixed period equals 300 GRP Marketers set specific GRP objectives to judge .000 of the targeted individuals or households. Marketers use GRP and CPM to help them decide which media can help them reach their target market. it's called rating. or cost per thousand. Rating. Reach is the advertising term for the number of people exposed to an advertisement. a practice called splitting thirties that cuts costs but makes it difficult to get a message across in such a short time. Finally. They're very popular — 25 percent of U. It's also much more segmented than TV. Many advertisers make fifteen-second commercials to save money. and where to spend their advertising dollars most effectively. but a good radio ad can still convey powerful drama and illusion.S. households have bought products such as appliances and cosmetics that are advertised on infomercials. and the remote control makes it very easy for them to change the channel or mute the audio. In TV and radio. A thirty-second commercial for national exhibition can cost hundreds of thousands of dollars. more complicated messages aren't appropriate for such short commercials. radio remains a powerful advertising medium. Television — Infomercials Increasingly popular. Another important figure measures effectiveness: CPM. and typically it competes for attention with other activities the listener is doing. But it's also an expensive medium on which to advertise. However. Gross Rating Points.Advertising Terminology: Reach. Reach multiplied by frequency yields a figure called Gross Rating Points. Producing a radio ad is far cheaper than making an ad for television. such as lawn care product commercials viewed by children. Television — Standard Commercials Television is a powerful advertising medium because of its sheer ubiquity. Radio The United States has seven times more radio stations than television stations.

The researcher then asks questions about the ads — were they memorable? Informative? Did one stand out? Jury. An unfavorable reaction in the pre-tests can save the marketer from spending huge amounts on broadcasting a miscalculated message. uniforms. A Campbell's Soup can is an American icon and an object of Pop Art. Every time a batter stands at home plate it can be a subtle ad for Nike. posters. caps. Participants view a single ad and rate it against various criteria determined by the researcher. banners on other sites. the logo. A reader can linger and reread something interesting and valuable. The Net offers marketers options including their own sites. and after an ad campaign to measure if. Participants read the text ad along with other ads without knowing which ad is being tested. Other Media The marketer's own product is a form of advertising. EFFECTIVENESS OF ADVERTISING How does a marketer know if its advertising works? Extensive testing is done before. it accomplishes the company's objectives. Also. bus banners. and the characteristics of the product itself all communicate messages to the customer. Pre-Testing Advertisers often pre-test a selection of ads before launching the actual campaign to learn how consumers will react to them. Introduction to Marketing: Student Guide — 155 . Internet Internet advertising is a rapidly growing medium that potentially can reach a worldwide audience. The product name. newspapers and magazines. Print ads give the marketer room to help consumers understand the features and benefits of complicated products. Pharmaceutical companies and real estate interests use these to promote. during. and equipment worn by athletes on and off the playing field. Nontraditional Media Nike's trademark “swoosh” is displayed on clothes.Print Print offers a very wide range of options. and sell. its package design. However. Lesson Ten Outdoor Billboards. Another type of nontraditional ad is the promotional video. neon signs — they're all effective. print helps marketers target very specific markets. And an unexpected advantage to print advertising lies in the number of readers who look at a magazine over and above the subscriber (how many people have looked at Newsweek in a doctor's waiting room?). so the number of readers of a magazine might far exceed its number of subscribers. general and specialized. More than 400 new magazines are introduced every year in the United States. and how well. and the visual impact has to be instantaneous. explain. the price. bench ads. national and local. and paid hyperlinks. There are three types of pre-tests: Portfolio. especially if a viewer passes them repeatedly on a regular route. many for niche audiences. they generally reach only the people on that route.

many advertisements are regulated. For products where demand doesn't vary much through the year.S. Unaided Recall Post-Test Researchers ask participants. A splitcable sales test uses modern cable technology to feed two different versions of an ad campaign into two sets of volunteer homes. unethical. so a marketer needs to achieve the objective without overspending. a continuous pattern is commonly used. then ask if and where they've seen it before. SCHEDULING ADS When and how often should a marketer run an ad? It's known that advertising is most effective when seen by a prospect several times. gimmicks. then indicate their reactions to the ads using recording devices or questionnaires. and hustles for decades. If the FTC finds an ad to be misleading. it may require the company to run corrective advertising. Purchases made by the viewers in these homes are recorded and measured to see if the two campaigns resulted in significantly different sales. The U. markets show consumers an ad. and advertisers can be subject to legal liability for ads that break regulations. etc. and if their feelings changed after seeing it. 156 — Introduction to Marketing: Student Guide . Good ads don't make up for a bad or dangerous products. American consumers have been saturated with ads. Aided Recall In an aided recall test. Attitude Test In this test researchers ask participants how they feel about a campaign. Pulsing is a variation of flighting. to determine whether the ad led to more favorable opinions. Moreover. with higher spending at certain times. Participants view previews of movies or TV shows that include advertisements. The short-term gain realized from a successful one-shot ad campaign that raises expectations and sales quickly becomes ill will if the customers aren't happy after the sale. It guards against unfair. or use intellectual property without authorization. and what they remember about it — what brand it promotes.Theater. what ads do you remember seeing or hearing today? What's the best ad you've seen this month? In these tests the researchers don't suggest any brand names. LEGAL AND ETHICAL ISSUES IN ADVERTISING Ads can be powerfully influential. so marketers have an ethical responsibility to use them in appropriate ways. with some ads scheduled in bunches according to the time of year. But there's a budget to think about too. violate copyright. Toys may be advertised this way. Federal Trade Commission regulates advertising in the United States. and they're perfectly capable of making judgments that truly are in their own best interest. it's also important for advertisers to give the audience due credit. promotions. mislead or damage. or deceptive advertising. A flighting pattern is on-and-off. That said. messages.

Advertising can: • Raise awareness of a product. a print ad is also easy to flip over and ignore. However. More than 25 percent of all U. The downside of Internet advertising is that the Web is an increasingly cluttered medium. Some are as follows: • Traditional television is a particularly powerful medium. there is a lack of visual component and is of limited value to products that need to be seen to be appreciated.Key Points 1. • Print is a flexible media in that provide very wide or very focused coverage.S. They are especially useful for products retailing over $20. part educational and part promotion. • Infomercials are program-length advertisements that are part entertainment. 3. The purpose of advertising is to provide information. banners. • Show retailer and wholesaler the marketer is committed to invest money in building consumer demand. Print ads can explain the features of a complicated product and a customer can linger over a print ad. Conversely. • Communicate distribution locations. • Create a favorable image of a particular brand. • Radio is much more segmented than television and is lower in cost. and posters on transportation vehicles. signage. • Build employee morale. There are different types of advertising vehicles to use. households have purchased a product advertised on an infomercial. But it is costly. The images are realistic and TV reaches 95 percent of homes in the United States. 2. and you may be reaching those not in your target market. It outlines five criteria for when advertising makes sense: Lesson Ten Introduction to Marketing: Student Guide — 157 . • Show consumers how to prepare and use the product. • Reassure consumers that the product and brand is exactly what they are looking for. A poster or billboard is a good “reminder” ad since it can reach many people and reach them repeatedly. • Communicate pricing. • Show the packaging so it can be readily identified in a store. • Internet advertising allows marketers to reach people all over the world through Web sites. A marketer named Neil Borden wrote a book called The Economic Effects of Advertising. • Outdoor includes billboards. the remote control can flash right over a commercial.00 that can be demonstrated. The Internet offers great opportunities for targeted marketing and even one-onone marketing at a relatively low cost.

Marketers test the effectiveness of ads through: • Pretests —To determine which ad is effective through: • Portfolio tests • Jury tests • Theater tests • Post-tests —To determine if an ad was indeed effective through: • Aided recall • Unaided recall • Attitude test • Split-cable test 158 — Introduction to Marketing: Student Guide . • Frequency measures the average number of times a person is exposed to an ad during a particular planning period. The following measurements are used: • Reach measures the number of people exposed to your advertisement in print media. • Gross rating points is reach multiplied by frequency. • When there is an opportunity for product differentiation. 6. • When the product lends itself to emotional appeals. hold their interest. It should get the audiences attention.• When the overall demand trend in the product category is favorable. 4. how. the marketer must answer the following questions: • Who is the customer? • What is the objective of the ad? • How do you communicate it effectively? • The message should follow the AIDA model. • CPM (cost per thousand) describes the cost required to reach 1. Marketers evaluate media to determine which media is the most appropriate to use.000 individuals or households. arouse their desire and motivate them to action. • What. • When the product has hidden qualities that make the product brandable. • Rating measures the number of people exposed to your advertisement in television and radio. how often. • When sales volume supports advertising costs. To make an ad effective. and where do you say it? • Will the appeal be: • Rational? • Emotional? • Moral? • Humorous? 5.

Humorous Appeal Infomercials Advertising designed to entertain and be memorable.S. Introduction to Marketing: Student Guide — 159 Jury Moral Appeal Portfolio Pre-Testing . Advertising which targets the viewer’s sense of correctness or propriety. Lesson Ten Attitude Test Continuous Pattern Cost Per Thousand (CPM) Emotional Appeal Federal Trade Commission The U. Flighting Pattern On-and-off advertising for products affected by seasonal or irregular demand. Program-length advertisements that combine education. then ask if and where they've seen it before. Advertising which provokes feelings. Participants view a single ad and rate it against various criteria determined by the researcher. Participants read the text ad along with other ads without knowing which ad is being tested. and if their feelings change after seeing it. promotion. efficient. Researchers ask participants how they feel about a campaign.000 of the targeted individuals or households with an advertisement. government agency charged with enforcing federal (FTC) antitrust and consumer protection laws. another measurement of advertising effectiveness. (R x F = GRP. etc. and entertainment. Steady advertising for products the demand for which does not vary much through the year. and also works to enhance the smooth operation of the marketplace by eliminating acts or practices that are unfair or deceptive. reaching 50 percent of the target audience with six ad exposures during a fixed period equals 300 GRP). The FTC seeks to ensure that the nation's markets function competitively and are vigorous. The researcher then asks questions about the ads: Were they memorable? Informative? Did one stand out? Evaluating an advertisement or campaign before the launch. and what they remember about it — what brand it promotes. and free of undue restrictions. A specific GRP objective is used to judge the effectiveness of advertisements. Frequency Gross Rating Points (GRP) Reach multiplied by Frequency. positive or negative. The average number of times a person is exposed to an advertisement during a particular period. The cost of reaching 1. to learn how customers will react and then make necessary changes. to determine whether the ad led to more favorable opinions.Glossary Aided Recall Marketers show consumers an ad.

A company’s advertising. Reaching an audience to whom the message of an advertisement is irrelevant. A variation of flighting with higher spending at certain times of year. The cost-saving practice of advertising in 30 seconds of television air time with two 15-second commercials. Purchases made by the viewers in these homes are recorded and measured to see if the two campaigns resulted in significantly different sales. Pulsing Pattern Rational Appeal Reach Split-Cable Sales Test Splitting 30s Theater Unaided Recall Post-Test Wasted Coverage 160 — Introduction to Marketing: Student Guide . personal selling. and public relations. The number of people exposed to an advertisement. Participants view previews of movies or TV shows that include advertisements. also known as “ratings” in television and radio. Advertising that speaks to the audience's self-interest and says that the product will give them the benefits they want.Product Awareness Promotional Mix Knowledge of the existence of the good or service. Researchers ask participants what ads do you remember seeing or hearing today? What's the best ad you've seen this month? In these tests the researchers don't suggest any brand names. sales promotion. then indicate their reactions to the ads using recording devices or questionnaires. combined in various ways to communicate with the target market. Use of cable technology to feed two different versions of an ad campaign into two sets of volunteer homes.

You need to illustrate each of the principles. and explain why you now believe it is a “good” ad. designing a billboard. Interest c.Assignments Assignment One: Creating an Advertisement This exercise requires you to select and analyze six print advertisements. Print might be easiest. designing signage for a sporting event. Moral 2. • Create another advertisement for that same product using a different advertising medium. Desire d. Action You can use any kind of advertisement. Emotional d. etc. designing a storyboard for a television commercial. • Three of these ads you should feel are “good” ads in terms of copy and layout. the other three “bad. • Your written responses to the above items should be a maximum of two pages.or two-page written response to your instructor. and your one. Humorous b. culminating with your improving on one of the advertisements and then creating an entirely new ad for a different advertising medium. Appeals a. • Find a total of six print ads from either newspapers or magazines. Attention b. the two ads you created. Clearly mark each ad (or your written summary of a commercial) with the advertising principle Introduction to Marketing: Student Guide — 161 . Lesson Ten Assignment Two: Advertising Principles This assignment requires you to identify eight advertising campaigns. but if you’ve recently heard a radio commercial or seen a television commercial that uses one of these principles.” • Analyze each advertisement. Send the ads you collected. according to his or her directions.) • Explain your reasoning in using this particular supplemental medium. Rational c. AIDA Model a. Why do you perceive each ad to be “good” or “bad?” • Select one of your “bad” ads. 1. (This could be in the form of writing radio copy. write a brief description of the commercial. revise the layout and copy. Each campaign you select should use one of the advertising principles listed below.

saying whether or not you feel this is the most appropriate method to use and why. Send the ads and your list of principles being applied and your assessment of the effectiveness of those principles to your instructor. 162 — Introduction to Marketing: Student Guide .that it demonstrates. according to his or her directions.

• Assess various pricing strategies. • Illustrate the relationships between price. the Fourth P of the marketing mix. value. The case studies include Hilton Hotels’ pricing strategies. • State global issues in pricing. Introduction to Marketing: Student Guide — 163 . Expected Learning Outcomes By the end of this lesson. • Define true costs and describe the role they play in setting prices. and how one small business cut its prices to stay competitive. the students should be able to: • Differentiate the factors that influence pricing policy. Lesson Eleven examines all of the factors that contribute to a company’s pricing policy. establishes much more than the cost of a product.Lesson eleven Lesson Eleven Pricing Strategy Defining value Pricing. discusses perceived value. and quality. then analyzes various pricing strategies. starting with an in-depth look at pricing’s role in the marketing mix and the various factors affecting it. It concludes with a discussion of pricing issues in the global marketplace. The lesson then details how to determine true costs. the approach one entrepreneur uses to price her clothing line. It sets the value of the product in the eyes of the consumer and places it among the competition.

your instructor will deliver the quiz to you. along with directions on how to submit your answers. 5b. and be sure to check the Boards at least three times a week. if assigned by your instructor. If you are a Teleweb student. Review the Expected Learning Outcomes for Lesson Eleven in the Student Guide. complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. If you are a Telecourse student (with no online component to your course). complete the online exercises for Lesson Eleven and submit them to your instructor according to his or her instructions. In addition. 164 — Introduction to Marketing: Student Guide . 6. 4. please check the syllabus for additional or altered instructions from your professor. you will find the quiz online. 2. Instead. Take the quiz for Lesson Eleven. post any questions you have to the Discussion Boards.Completing Lesson Eleven In order to obtain the most out of this course. Read the text assignment for Lesson Eleven. 3. Use the Lesson Eleven Outline in the Student Guide to help you follow the flow of the lecture. the following steps should be taken in the sequence listed below. In the Student Guide. As with each lesson. If you are a Telecourse student. If you are a Teleweb student (with an online component to your course). as indicated in the syllabus. Watch the video program for Lesson Eleven (Pricing Strategy: Defining Value). read: • The program summary for Lesson Eleven • The key points for Lesson Eleven 5a. ignore the assignments that are listed in the Student Guide. 1.

DETERMINING TRUE COSTS A. Price in the Marketing Mix 1. Price is often — but not always — denominated in money. Pricing: One of the most crucial decisions a marketer must make is how much to charge for a product. 2. OVERVIEW A.Lesson Eleven Outline Lesson Eleven I. PRICING AND PERCEIVED VALUE A. B. Variable Costs B. Promotion. Objectives and Resources 4. Demand 5. 1. Cost of Making the Product III. Fixed Costs 2. Product Life Cycle 3. Cost Structure (Resource Outlay) 1. B. Competition or Substitutes 2. PRICING STRATEGIES A. Breakeven: The dollar amount of goods or services a firm must sell to generate enough revenue to cover its costs. Sets the product among the competition. Product. Gives the customer a means by which to appraise the value of the product. One exception: barter. Promotional Pricing Introduction to Marketing: Student Guide — 165 . Cost structure: high fixed costs and low variable costs. B. PRICING POLICY A. II. Factors Affecting Price and Value 1. Pricing establishes more than simply what it costs to buy the product. Revenue = Unit Price Times Quantity Sold 2. IV. low fixed costs and high variable costs. Definition of Price: what the customer is being asked to pay in return for the value of goods or services delivered. Profit = Revenue Minus Total Cost D. and Placement create and add value for the customer. subject to the competitive environment. Perceived value: The highest price a company can charge is the perceived value customers have for the product. pricing extracts value in return. C. C. Lowest price a company can charge is the variable cost. V.

B. Foreign countries are at different stages of development. VII. C. Price Skimming E. GLOBAL PRICING A. Psychological Pricing C. Formation of the European Union and the removal of tariffs there have reduced the flexibility that multinational companies once had to set different prices in Europe. D.B. Penetration Pricing VI. Odd-Even Pricing D. Modern traders can make quantity buys in places where a company is using a penetration strategy with low prices. SUMMARY 166 — Introduction to Marketing: Student Guide . then resell the products at much higher prices elsewhere. Skimming strategy may work in one place. but penetration strategy may be sensible in another.

Pricing is a competitive weapon. particularly with expensive items. but setting a price must take other considerations into account. Professor Quelch looks at the role of Pricing. CUSTOMER VALUE It's important for the marketer to price a product with customer value in mind. What is price? Price is what the customer is being asked to pay in return for the value of goods or services delivered. Sometimes it's value given. Once again. Also. Pricing establishes more than simply what it costs to buy the product. and Placement are about creating and adding value for the customer. more revenue doesn't necessarily mean more profits. It's critical to a firm's success. because it directly affects a firm's revenues and profits. In Lesson Eleven of Introduction to Marketing.Program Summary Lesson Eleven Introduction to Marketing: Competing in the 21st Century Lesson Eleven Pricing Strategy Defining Value One of the most crucial decisions a marketer must make is how much to charge for a product. and other factors. Finally. and shows how a sound pricing strategy can help make a marketing program successful. How should Introduction to Marketing: Student Guide — 167 . perceived value. However. so pricing must be done with an understanding of the target market in mind. Different market segments value different things. Product. PRICE IN THE MARKETING MIX Let's examine monetary pricing. Often — but not always — it's money. as in the case of barter. it's different. a marketer's first rule is know the customer. competition is a factor in setting price. A competitor may cut prices to build market share. Professor Quelch looks at pricing in the global marketplace. Customers will weigh costs versus benefits of several comparable products before deciding to buy. And. It gives customers a means by which to appraise the value of the product. Pricing is about extracting value in return. and also sets the product among the competition. PRICING POLICY Pricing is the fourth of the 4 Ps in the Marketing Mix. the last of the 4 Ps of the Marketing Mix. and in the matter of pricing. Promotion. it means knowing the features and benefits of a product that the customer values and will pay for. as two key equations demonstrate: Revenue = Unit Price Times Quantity Sold Profit = Revenue Minus Total Cost Pricing is of absolute importance to a firm because it directly affects both total revenue and total profits. A firm's pricing policy encompasses a number of important factors. keep in mind. Lecture Eleven discusses pricing policy. Pricing involves the cost of production.

of course. in general. FACTORS AFFECTING PRICE AND VALUE Several factors should affect a marketer's determination of price. Cost structure contains two elements: fixed costs. and so on. Obviously. Competition or Substitutes. and damage revenues and profits in the long run. the company breaks even. 168 — Introduction to Marketing: Student Guide . A company doesn't have to make any products to incur these costs. maintenance. DETERMINING TRUE COSTS Costs are too important in the pricing decision to skip over quickly. When revenue intake equals resource outlay. utilities. Objectives and Resources. for example. costs for transportation. This is possible only if the company has the resources to absorb the losses in such a price war. Variable costs are the costs associated with the manufacture of a single unit of the product: materials. consider the internal ones: What are the company's objectives? What does it want to achieve in profit. Demand. will demand increase? Demand that's closely pegged to price is called elastic. the company must know what revenues it needs to meet resource outlay. debut at high prices. Is this a new product. and how many competitors? Are they entrenched? Within what price range do these competitors sell? Are there cheaper substitutes for premium brands? Is this a product that will be urgently needed. labor costs. sales. To establish effective pricing. then the prices fall as the technology becomes more common. Or. warehousing.a marketer respond? A matching price cut might seem like common sense. Winning in a targeted niche might mean smaller sales but higher profit. Breakeven is the dollar amount of goods or services a firm must sell to generate enough revenue to cover its costs. Besides the external pricing factors. and market share? Survival is. but it could diminish the image of the company and its product. What competition will a product face. costs a company will incur whether or not it sells a single unit of the product. or can the purchase be put off indefinitely? Product Life Cycle. That means demand must be estimated. packaging. Marketers need to be fully aware of what it costs to make and sell the good or service their firm is offering. sales commissions. How will the market respond to a price hike? Is demand strong enough to warrant the increase? If the company lowers the price. it might actually be a company's objective to suffer short-term losses by introducing a product into a new market at an artificially low price. The marketer must know the breakeven for each good or service produced. the higher it can be priced. that is. the first objective. Attempting to maximize sales and market share isn't necessarily a sound strategy. Fixed costs include rent. pricing must take into account the costs of making and marketing the product. etc. or a new version of an old and accepted one? The newer the product. thereby building market share with a subsequent price hike in mind. Inelastic demand won't be affected by price. Technology products. and then a price estimated based on that. Costs.

Another example: a T-shirt from a famous boutique might sell for $29. high variable structure. dark caves. An airline. both are desirable. promotional pricing in the form of price cuts. processing. staff. The fixed cost for making the shirts is the same.00 in a discount store two miles away. for example.99. are well-made. A skimming strategy means pricing high and aiming for low volume. In situations where pricing can stimulate demand. the profit on each seat sold is typically 90 percent over and above the variable cost of carrying the extra passenger.00. Sometimes a price just seems right to a consumer. Psychological Pricing.99 seems significantly less than $15. and so on. Maximizing volume is the goal: After the breakeven point. Lesson Eleven PRICING AND PERCEIVED VALUE The highest price a company can charge is the perceived value customers have for the product. PRICING STRATEGIES Having seen many of the variables that must be factored into pricing policies. such as business flyers or late purchasers. The same garment might sell for $10. A mushroom grower is an example of a company with a low fixed. has a structure of high fixed costs and low variable costs. Gucci handbags. ground facilities. but raising prices a little can make an enormous difference. high-margin items distributed selectively to expensive boutiques. in the airline industry. $14. pay high ticket prices. Odd-Even Pricing. and that's enough to make the sale. That's why. The lowest price a company can charge is the variable costs.99. for example. Other customers. there can be wide variations in ticket prices. If market research shows a consistently “reasonable” price for a product among the consumers surveyed. so skimming works for them. or rebates can increase market share. such as a seasonal offer or an introductory offer. Increasing sales volume doesn't necessarily help a mushroom company raise revenues. Promotional Pricing. Gucci and other high-end fashion makers have no interest in winning a broad market. It may result from an old retail habit of making the sales clerk make change at the time of the sale (which makes it harder for the clerk to pocket the money and not ring it up). The expense of the planes. so it's crucial for the airline to fill those seats. and distribution can be high. However. not exactly high-rent business premises. For some consumers. Some customers get bargain-fare tickets that run just slightly over the variable costs. and the cost of serving an extra passenger is low. with today's computerized cash registers. Skimming and Penetration. Perceived value is subject to the competitive environment. since the key objective is to fly with a full aircraft. For the airline. for example. Demand will not be greatly affected by changes within that range. and personnel are high regardless of whether the airline's flights are full or empty. $25. that's much less an issue that it used to be. but the perceived value of the shirts depends on the venue where the shopper finds them. that's the target price range to set. coupons. a company can consider some different pricing strategies. and the airline still can make a profit. But the variable costs of labor.A firm's cost structure will likely be an important factor in setting prices. It also makes sense for companies introducing a new product that doesn't Introduction to Marketing: Student Guide — 169 .95. Its fixed costs include rent on growing spaces — typically. Odd-Even pricing is the practice of setting a price one cent below a dollar level: $14.

So a skimming strategy may work in one place. Not surprisingly. Foreign countries are at different stages of development. GLOBAL PRICING The issues described here all apply to pricing in the global marketplace. For example: say that Gillette is pricing shaving equipment low to penetrate a market in Vietnam. An independent trader who learns that Gillette products can be had for bargain prices there may buy in bulk. So the price it sets will be low. and set a price that will determine what the competition can charge. unique global pricing issues apply as well.have competition. some improvement in the distribution channel. but very hard to raise one. perhaps even at a loss. establish customer loyalty. 170 — Introduction to Marketing: Student Guide . then resell the products at much higher prices in Japan and Singapore. all are better for the company than reducing a mediocre product’s price in an attempt to rescue it. Another example: The formation of the European Union and the removal of tariffs there has reduced the flexibility that multinational companies once had to set different prices throughout Europe. A final note on pricing: The objective of a pricing policy is not to drive the competition out of business. and the sales venues will be just about anyplace that will sell the item. and make quantity buys in places where a company is using a penetration strategy with low prices. A penetration strategy aims to win high sales volume. changing prices as a competitive maneuver is one of the least imaginative moves a business can make. Penetration is a way to beat the competition into a territory. A new or better product. modern traders can find out that information. a new message. but a penetration strategy may be sensible in another. Many new products are introduced at a top price because companies know it's easy to lower a price. In fact. However.

• Penetration — Pricing low and expecting high volume. • The company’s objectives and resources. $15. • Elasticity of demand. There are numerous factors that marketers must address when setting price. resource outlay. • Psychological Pricing — Setting price that just seems right to the consumer.Key Points Lesson Eleven 1. • Variable costs — The costs associated with the manufacture of a single unit of product. Marketers need to fully understand these to determine what it would take for the resource intake-revenues to exceed. • Skimming — Pricing high and expecting low volume. It has a direct effect on both total revenue and total profits. • Stage in the company’s life cycle. • Substitute products. • True costs involved in making and selling the product.00. They are: • Competition in the marketplace. 5) Different issues arise when setting pricing in a global environment such as skimming in one market and penetrating in another. True costs are the fixed and variable costs associated with manufacturing and selling of a product. • Odd-Even Pricing — Pricing an item just below the next dollar level. 4) Once the costs are determined. The problem lies with technology being able to track the difference and enterprising traders identifying those markets. or at least to meet. there are a number of pricing strategies a marketer can employ. $14. • Perceived value that the customer has for the product. True costs include: • Fixed costs — The costs marketers incur regardless of whether or not they sell their product. 3. Pricing is what the customer is being asked to pay in return for the value of goods or services delivered.99 vs. Introduction to Marketing: Student Guide — 171 . They are as follows: • Promotional Initiative — Using pricing as a way to prime the pump of demand. 2.

Costs associated with the manufacture of a single unit of the product: materials. utilities. labor costs. • Psychological Pricing Pricing which seems “right” or “reasonable” to a consumer. $99. and also to set the product among the competition. a means by which to appraise the value of the product. warehousing. Elastic Demand Inelastic Demand Odd-Even Pricing Perceived Value Price Pricing Policy Pricing Strategies • Promotional Pricing Short-term pricing discounts to stimulate demand and increase market share. etc. Fixed Costs combined with Variable Costs (high fixed/low variable. also the highest price a company can charge for a product. the pricing policy should include the understanding that Revenue = Unit Price Times Quantity Sold. The value placed by a customer on a product.99. The practice of setting a price one cent below a dollar level: $14. subject to the competitive market and the venue in which the customer finds the product. • Breakeven • Cost Structure • Fixed Costs • Variable Costs Customer Value The features and benefits of a product that the customer values and will pay for.99. Consumer demand that is closely linked to the price of a product. For monetary pricing. What the customer is being asked to pay (in cash or value given) in return for the value of goods or services delivered. Costs such as rent. packaging. 172 — Introduction to Marketing: Student Guide . maintenance. that a company will incur whether or not it sells a single unit of the product. and so on.Glossary Costs The expense or resource outlay of making and marketing a product. and Profit = Revenue Minus Total Cost. Consumer demand for a product that is relatively fixed and unaffected by changes in the product’s price. demand will not be greatly affected by changes within that range. costs for transportation. low fixed/high variable). sales commissions. A company’s strategic thinking for establishing prices for its products. and so on. The dollar amount of goods or services a firm must sell to generate enough revenue to cover its costs. such as a seasonal offer or an introductory offer. Variable costs equal the lowest price a company can charge for a product.

Pricing high and aiming for low sales volume. also useful in situations in which a company is introducing a new product that doesn't have competition.Penetration A pricing strategy that aims to win high sales volume. In general. and set a price that will determine what the competition can charge. and a new version of an old and accepted one may be late in its life cycle. and the distribution as intensive as possible. the price is set low. The stage in the product’s existence and development after introduction. establish customer loyalty. perhaps even at a loss. usually used for prestige or high-end items and not to win a broad market. a new product is early in its life cycle. Lesson Eleven Product Life Cycle Skimming Introduction to Marketing: Student Guide — 173 . the earlier a product is in its life cycle. the higher it can be priced. A way to beat the competition into a territory.

Bob and Betty could no longer sustain their business. make a recommendation for a pricing policy that is sounder. Once you have completed this one-page assignment. Questions: • Were Bob and Betty selling products with elastic or inelastic demand? • Why do you think the “How-To” seminars did not sustain their business? • What determinants of price possibly affected their business? Write a one-page paper that addresses the above items. you are now the marketing manager. Assignment Two: The Cost of Salty Snacks In the past.000 items. 174 — Introduction to Marketing: Student Guide . They employed a knowledgeable and personable staff. a Super Wal-Mart and a Super Kmart opened within five miles of their store. You have just been given a promotion.500. In addition.000 per year and they carried more than 20. where experts volunteered to put on demonstrations of various home improvement projects. has always based its pricing solely on cost. Within one year. You don’t feel that your company’s pricing policy should be based strictly on cost. each with a hardware supply section. The store held 100 free “How-To” seminars per year. send it to your instructor. Their goal was not to only sell hardware supplies but also to serve as a resource to their small community. Write a memo to the president of your company explaining the reasons you feel strongly that your company’s pricing policy should not be based on this factor alone. your company. according to his or her directions. Their sales peaked at about $1. Send your assignment to your instructor according to his or her directions. However.Assignments Assignment One: Bob & Betty Bob and Betty Boudreaux combined his knowledge of tools and her knowledge of home improvement to create Bob & Betty’s Hardware and How-To. Salty Snack Foods.

The marketing plan will identify appropriate pricing. and distribution strategies that are appropriate based on the target market. you now must evaluate the material you have collected and design a marketing plan based on your research. You have segmented the market and determined an appropriate target among the various segments. promotion. you have developed a strong set of tools for market analysis and marketing strategy development. 6. 9. promotion. Introduction to Marketing: Student Guide — 175 . Your last task is to develop a marketing plan by addressing pricing. analyzed the target market. 7. You have researched and evaluated the uncontrollable factors that typically affect marketers. value. 3. • Illustrate the relationships between price. and placement policies for your chosen product. 5. Your paper should address the following: 1.Project Three Project Three Marketing Plan Project Three is the culmination of the previous two projects. Having researched the marketing environment. • Describe the role of distribution in marketing strategy. By the end of this lesson. 2. What factors will affect the product's distribution? How will the product be distributed? Why do you think that distribution strategy is the most effective? What methods of promotion will you use? What message or messages will you be communicating about your product? How often will you promote using each different method? What will your promotion budget be? How will you price the product? Explain how the price you chose incorporated the value added for your target market. you should be able to: • Evaluate different strategies for reaching target markets. and quality The Project By this time in the course. You have determined needs of your target audience and developed a product or service to serve those needs and create value. 8. and designed a product to satisfy that segment’s needs. 4. • Develop a marketing communications plan.

then explains why and when a business should go global. how a foreign company must shape its marketing strategies to fit into the U.Lesson Twelve International Marketing Competing in a Global Marketplace The world is shrinking and the marketplace is growing. • Cite reasons why a company should consider going global. Expected Learning Outcomes By the end of this lesson. Finally. it examines the role of multinational corporations and the issues confronting them in the global marketplace. the students should be able to: • Evaluate the key trends in the global environment. Lesson Twelve begins with a look at the international marketplace. • Assess the marketing issues in multinational corporations. • State challenges of marketing to emerging markets. The case studies include Da Da’s plan to go global with its sportswear line. more and more companies are going global. • Convey the importance of global marketing. market. It then investigates how companies can gain market entry in other countries and evaluates the particular needs and characteristics of emerging markets. Because more countries now participate in the free market economy.S. 176 — Introduction to Marketing: Student Guide . and how technology helps a small company go global.

3. Read the text assignment for Lesson Twelve. Introduction to Marketing: Student Guide — 177 . and be sure to check the Boards at least three times a week. you will find the quiz online. 5b. 2. your instructor will deliver the quiz to you. In the Student Guide. If you are a Telecourse student (with no online component to your course). if assigned by your instructor. ignore the assignments that are listed in the Student Guide. 4. along with directions on how to submit your answers. complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. If you are a Telecourse student. Watch the video program for Lesson Twelve (International Marketing: Competing in a Global Marketplace). please check the syllabus for additional or altered instructions from your professor. In addition. Take the quiz for Lesson Twelve. read: • The program summary for Lesson Twelve • The key points for Lesson Twelve. • The case study for Lesson Twelve. If you are a Teleweb student (with an online component to your course). As with each lesson. 5a. as indicated in the syllabus. complete the online exercises for Lesson Twelve and submit them to your instructor according to his or her instructions. Instead.Completing Lesson Twelve Lesson Twelve In order to obtain the most out of this course. 1. 6. the following steps should be taken in the sequence listed below. If you are a Teleweb student. post any questions you have to the Discussion Boards. Review the Expected Learning Outcomes for Lesson Twelve in the Student Guide. Use the Lesson Twelve outline in the Student Guide to help you follow the flow of the lecture.

Four Factors Driving the New Global Economy 1. Reasons to enter the global marketplace 1. The global marketplace: unprecedented opportunities and new hazards for marketers II. rather than just a source of cheap goods and raw materials B. B. Increasing Global Competition III. Gain Insight 4. Multinational Marketing: adjustment and alteration of marketing mix to fit unique profile of different national target markets IV. Leading market: economy evolving into a strong new market 178 — Introduction to Marketing: Student Guide . Principal problem in entering new market isn't expense. Risks of rapid expansion 1. B. Build Sales Volume 2. Expanding Population 3. OVERVIEW A. but it's not appropriate for all companies. Going global overnight: speed C. MARKET ENTRY A. Ego of CEO C.Lesson Twelve Outline I. Companies that once were national now look to the global marketplace for new customers and new sources of products. Risk of waiting for 100 percent domestic success: piracy/duplication of the business model V. supply. it's market penetration. Expanding Free Markets 2. Globalization is the wave of the future. Hedge Against Domestic Market 5. Modern Telecommunications 4. Develop New Product 3. Emerging market: a strong enough economy to be viable for goods from developed countries. WHY GO GLOBAL? A. Global Marketing as Segmentation Problem 1. Global Marketing: use of a standard marketing program or marketing mix to apply to customers throughout the world 2. B. Best Defense 6. THE INTERNATIONAL MARKETPLACE A. Cultural insensitivity 2. EMERGING MARKETS A. and knowledge. Expanding too rapidly to handle growth and volume of sales and distribution in the new market D.

Development of category VI. Trailing market: an economy with low per-capita income. not yet viable markets for most American companies D. Gain distribution stronghold L. Distribution Points of Difference 1. Criteria for Market Entry 1. Multinational companies 4. Government receptivity to foreign investment 4. Market Entry Determinants 1. Poor facilities 5. Innovative marketing practices I. Government protectionism of indigenous companies and products J. Dominance of local competitors 4. Political stability 2. local products F Pricing Points of Difference . Potential vs. Market size 2. SUMMARY Introduction to Marketing: Student Guide — 179 Lesson Twelve . Outdated retailing practices 4. Key Points of Difference 1.C. 1. Inefficient wholesaling 3. Customer immobility H. Economic volatility 3. Resistance to delayed or added value G. Establishing good government relations 3. Vulnerability K. Market Selection Criteria 1. Three tiers of products a. Low advertising rates 8. Selling Points of Difference 1. Inexpensive labor makes it economical to create a sales organization 2. Transportation infrastructure 2. Growth trend 3. joint-venture products c. Launching a Product Balance speed with learning and adjusting to new environments M. Mode of entry 2. How Much to Invest? E. Tradition of bartering 2. No competition 7. high priced premium imports b. Awareness of Western products 5. Best joint venture partner 6. MULTINATIONAL CORPORATIONS VII.

The twenty-first century will witness unprecedented opportunities for marketers as more and more products. Professor Quelch examines the international marketplace. and knowledge. Competition crosses borders. he discusses multinational corporations. practices. As these economies improve. He looks at emerging markets. However. and companies that once were strictly national are looking to the global marketplace for new customers and new sources of products.” “developing. Four Factors Driving the New Global Economy Expanding Free Markets. the most dynamic segment of the global marketplace. every economy is changing rapidly. investment capital moves at the speed of light. In this era of mergers and acquisitions. and asks why a business should go global. Increasing Global Competition. Reason three is the ever-growing volume of information moving across national and regional borders. and third worlds. and companies cross international boundaries. and great companies are joining forces as never before. Consumers who once were isolated from the rest of the world now see how people in the developed world live. 180 — Introduction to Marketing: Student Guide . and finally. the population is enjoying more affluent lifestyles and more disposable income. Geopolitical changes since the end of the Cold War are allowing formerly closed economies to evolve into free markets. No longer: Today's international marketplace is becoming too dynamic to fit those static labels. The birth rate in much of the world is expanding. supply. In this lesson. or the first. while it's stable or actually falling in some Western countries.Program Summary Introduction to Marketing: Competing in the 21st Century Lesson Twelve International Marketing Competing in a Global Marketplace In the final lesson of Introduction to Marketing. In a world where other lands and culture are readily accessible and the new business opportunities are immense. second. THE INTERNATIONAL MARKETPLACE The world used to be divisible into “developed. and this stimulates demand for the same products and comforts. Eastern Europe and China are just two examples of profound change and new economic energy. Modern Telecommunications.” and “undeveloped” countries. The rate of population growth in these emerging economies is higher than that of the developed world. Professor Quelch examines in detail an issue that has been touched upon in several previous lectures: the global marketplace. and companies must respond by developing new internal efficiencies and economies. these opportunities can easily be lost by companies that act in haste and fail to plan for the complexity and hazards of the selling worldwide. Expanding Population.

and all of them should be weighed before a company ventures into the world marketplace. Ego of CEO. Higher sales volume helps a company manufacture more efficiently and sell excess inventory. This is an irrational reason to globalize. Global Marketing is the use of a standard marketing program or marketing mix to apply to customers throughout the world. Entering a new country where its name and the product are unfamiliar can remind a company how to roll up its sleeves and fight for market share. Lesson Twelve Global Marketing as Segmentation Problem A company can have the capital. but it's nonetheless a powerful one: Many business leaders want to globalize as a matter of personal pride and competitiveness. all may compel a company to create separate segment-by-segment plans for each new nation. Playing in the world game is a good hedge against uncontrollable negative factors at home. Best Defense. Sometimes the best defense is a strong offense. but it's not appropriate for all companies. The global market sometimes teaches lessons that can be applied not only abroad. Hedge Against Domestic Market. and the distribution muscle to compete abroad. its products won't succeed in new markets. Established companies may suffer from the complacency that too much success can foster. These approaches can be called global marketing and multinational marketing. Develop New Product. A one-size-fits-all approach can work for a company. One reason to globalize is to sell more product. differences in the regulatory environment. and those that achieve it do it carefully. Most of the valid reasons for going global are purely rational. Some markets may be similar to the company's home market. but at home as well. Gain Insight. an energetic CEO with a personal drive to compete abroad can be a real asset to a company. The cost of entry may be a sound investment if the company succeeds in penetrating the new market and appealing to the new potential buyers. Companies can recover research and development costs and possibly create a new profit center by opening new markets. If the rest of the reasons to do so are compelling and make good business sense. so an American company might find itself fighting to keep market share against foreign competitors on its own home turf. Other markets will require the company to rethink itself and its marketing messages. Build Sales Volume. but if it lacks marketing know-how. so the basic marketing tactics that succeed at home might work abroad. the competitive mix. Companies around the world are globalizing. MARKET ENTRY The problem in entering a new market isn't expense. the people. it's market penetration. Different territories might require different marketing strategies. how best for a company to achieve successful market entry? Introduction to Marketing: Student Guide — 181 . Competing abroad can strengthen a company in the battle to retain its customers at home. Or. The question is.WHY GO GLOBAL? Globalization is the irreversible wave of the future. Multinational Marketing is the adjustment and alteration of the marketing mix to fit the unique profile of different national target markets. consumer tastes and needs. A downturn in the domestic market can be offset by strength in the global market.

it's essential to sell globally immediately before the product gets stolen and duplicated. a company may end up stranding a product without follow-up service in a new territory and making a lot of customers very unhappy. That said. and African products are packaged accordingly. The picture of the baby on the box would have moved product in the U. taking advantage of the relative familiarity of the language. business practices. Risks of Rapid Expansion Rapid international expansion comes with two key risks.Going Global Overnight: Speed Familiarity helps when a country is trying to sell in a new country. but in Africa a picture of the cereal was needed. but the formula for its comfortable neighborhood coffee shops was easy for a competitor to duplicate in the United Kingdom. The nuances and unique qualities of the people in a new market must be appreciated before a company can sell successfully in that place. a baby cereal. all in all. failure to know the customer. often it's equally risky to wait for 100 percent domestic success before going global. a food company introduced a domestic success.. Insupportability. Starbucks Coffee was a domestic hit. The picture of the baby was only confusing to shoppers. Achieving speed successfully requires planning. in Africa. It must prepare its distribution channels to deliver after-sale service and customer satisfaction. A company aiming to move fast needs to do more than just dump its products in the new market. Cultural Insensitivity. Starbucks had to buy out this competitor that had beat them to the market. for example. 182 — Introduction to Marketing: Student Guide . and many ambitious plans have failed because one or both was ignored until it was too late. It's not just technology companies that must worry about piracy. If the distribution and support channels for a product aren't ready. To expand there. Low-maintenance products such as books are much easier to sell in new territories. but it neglected to look into packaging design before shipping the product. A second and more quantifiable risk is that a company may expand too rapidly and be unable to support itself with systems for handling the growth and volume of sales and distribution in the new market. particularly now that the Internet supports international ordering and processing. customs.S. and media to move quickly and gain a foothold abroad. If a company makes software.S. The cereal box showed a smiling baby and described the product in the text on the box — standard packaging for a literate Western market. and thus preserved capital and avoided the kind of expense that might have spread their resources too thin during their ongoing American expansion. Many U. It had done research on diet and taste preferences in the area. because they were buying an infrastructure that already had a following. companies have started globalizing by moving first into the United Kingdom. It turned out to be a good move. Many African consumers buy based on a picture of the product on the box. particularly for technology companies that risk piracy. Risk one is the possibility of cultural insensitivity on the part of the company — put more simply. and international delivery services work about as fast as domestic ones. The risk here is of spending time and capital to place a product that is already doomed to fail because the marketers didn't do their homework: for example. particularly if the product is an expensive or complicated one such as farm equipment or computers. A little research might have showed them that most of the people in the African market couldn't read.

not getting it in a year. Lesson Twelve How Much to Invest? How much should a company commit when entering the global market? With so many options. such as Cambodia or the poorest of the Latin American countries. Rural India is heavily populated. Companies can choose to invest in a trailing market. or in a fully developed country where the quality of the labor market is high. for example. Emerging markets can compete as effectively as developed one for expansion capital. The term “emerging markets” may be too broad to be truly useful. are local products made by indigenous companies. items created in joint ventures between local companies and Western multinationals. Typically an emerging market will have three tiers of products. That limits the kind of products that can be sold there. Some firms deliver to areas like this via van. and build a long-term presence. so customers’ inability to get to where the product is for sale may require them simply to go without or to buy irregularly. Also customer mobility is limited too. for example. and also. as investment by multinationals helps improve the quality of the locally produced goods. such as perfume or other luxury products. and enable the company to strengthen its distribution channels. at the bottom of the three tiers. backwards retailing practices. In trailing economies. Western companies trying to sell high-priced items with high service backup face these challenges. vast segments of the population live in areas that are inaccessible to bulk transports. Value is different too: In developed countries. Pricing Points of Difference Emerging economies typically have a much stronger tradition of bartering than developed ones. paying for something usually means getting it now. the question is more complicated than it was even ten or twenty years ago. plus probable cooperation from government. so some marketers break such markets into leading and trailing markets. Second are joint-venture products. The high-end items may be so new and exciting for customers in an emerging market that demand is extremely high. but it's underserved by highways and rail. Being first in a new market can be a huge advantage for a company — that “honeymoon” period can help cement loyalty to the company. so price in the United States and price in Somalia are two different concepts. rather than just a source of cheap goods and raw materials. take advantage of cheap advertising. Consumers generally revert to their old product preferences after a time. A trailing market is a country that still has a low per-capita income. Typically such excitement tapers off as time passes. They're not yet viable markets for most American companies. Distribution Points of Difference Probably the biggest challenge to marketing in emerging economies is distribution. In many emerging economies. but they offer some special challenges for marketers making a strategic investment. There are some key points of difference between marketing in a developed market and in an emerging one. if not to the products. and stores that are a far cry from the Western model. First are the high-priced premium imports. or even bicycle. Introduction to Marketing: Student Guide — 183 . Fragmented distribution channels go hand in hand with other challenges: inefficient wholesaling.EMERGING MARKETS An emerging market is one with a strong enough economy to be viable for goods from developed countries. A leading market is a country that is evolving into a strong new market. it's possible for a product to sell at a higher price with a valueadded service packaged in a long-term warranty. to take advantage of low labor and capital costs. Third.

Market Selection Criteria When assessing a market for possible entry. Criteria for Market Entry Market Size. Being first in a new territory means limited or no competition. If the market is growing in population and economic strength.Selling Points of Difference Labor in the emerging markets is very inexpensive compared with labor in the developed West. using the following criteria. can be a bargain. even when the local ones are inferior? Potential vs. Are local competitors too entrenched for a new company to fight? If not. Even a small percentage of that figure would make a colossal market for any company. they're waiting for Western products of all kinds. magazines. There are additional criteria to consider when planning the timing and logistics of entering a new market. or do officials periodically resist it and nationalize foreign investments? Is the government protectionist in favor of local products. and probably outweigh any considerations about the vulnerability of China's economy. Being first is likely to mean access to the best business partners. and other things not typically sold where one gets stamps. The transition from communism to capitalism has awakened a talent for innovative marketing in some entrepreneurs. Some sellers use vans as mobile shops and drive the store to the customer. Creating a sales organization. 184 — Introduction to Marketing: Student Guide . China's billion-plus population makes a powerful argument for a company deciding whether or not to enter that market. Growth Trend. which typically reward the entrepreneurs who take the risk of being first. Being first in an emerging market means moving swiftly to take advantage of several opportunities: Best Joint Venture Partner. particularly for direct selling. The challenge of access to the customer can be turned to advantage for companies that sell portable items. Vulnerability A company preparing to enter an emerging market weighs the potential it represents versus the vulnerability of the economy. including government. Dominance of Local Competitors. In Poland the post office system adapted to stay in business by selling romance novels. Is it politically stable? Is the economy settled or volatile? Is the government open to foreign investment. No Competition. chances are it's an attractive target for entry. for a time. rather than tie up inventory in Russia. a company needs to ask itself some important questions. and have goods delivered weekly. where are they weak? In product quality? In advertising? Distribution? Awareness of Western Products. Many Russian sellers keep warehouses in Finland. Are the local people aware of Western products? Are they attracted to the aura of the American lifestyle? If so.

Marketers must be prepared to adjust product. The economies of Burma. Hong Kong. pricing. advertising. develop facilities. and motivating new hires in cultures still learning how to conduct twenty-first century business. A new player with experience can help create the local ad industry and develop valuable business relationships. It knows where it wants to work. Gain Distribution Stronghold. cultures. or execute partnerships in a new market. Multinational Companies. Launching too fast means spending heavily on a risky. Ad rates in emerging markets are very low. A common mistake when entering a new market is failing to develop good relationships with the local government. The first player in the arena can dominate the distribution channels and create a barrier to competitive entry. Taiwan. product formula. and Japan all have very different political considerations. distribution. and commerce. Development of Category. How will the company enter. Introduction to Marketing: Student Guide — 185 . They face the challenge of standardizing their products and procedures. The Pacific Rim offers very diverse challenges within a single region. promotion. balancing a fast rollout schedule with its ability to learn on the job and adjust to new situations. then moving every three months into new countries: Indonesia. when. and in what sequence. Several things must be determined: Mode of Entry. and customer service? Coca-Cola balances these needs by standardizing the product formula and the trademark appearance while letting the local managers and bottlers take initiative in shaping the local marketing. state and provincial authorities can be an invaluable help or an insurmountable barrier for a company seeking to sell.Low Advertising Rates. Other companies need to strike that balance. How does a multinational achieve consistent quality without taking away from their employees and partners the right to adapt the brand. The next question is how to enter those markets. Multinationals are relatively new players on the world business stage. how will the partnership work? And how quickly will the new entry be executed? Establishing Good Government Relations. but they're already experienced at involving themselves in local politics. and was a great success. by acquisition of a local subsidiary? By developing its own new arm? By joint venture? If it chooses a local partner. Taiwan. and each must be treated as unique. Citibank achieved optimal speed. and placement based on the development stage of the new market. Lesson Twelve LAUNCHING A PRODUCT Citibank successfully launched its credit cards in the Pacific Rim by starting in Singapore. pricing. complicated effort that can do more to expose mistakes than win customer loyalty. to name just one example. MARKET ENTRY DETERMINANTS A company has committed to selling abroad. Malaysia. A company moving into new territory needs to determine the optimal balance with its product in mind. Central.

which is the use of a standard marketing program or marketing mix to apply to customers throughout the world. • They may have developed a new product that they believe will be of great value and interest to people in foreign markets and may be able to recover some research and development costs by expanding the market. we have seen a huge expansion of the marketing as more of the world’s population enters the free market economy. Primarily. • It is also fashionable for the CEO to proclaim that they are doing business in a number of countries versus only domestically. Second. you have to get your product out all over the world immediately to block piracy. your management may not be culturally sensitive enough to recognize the nuances in other cultures. • Telecommunications and increased travel enables consumers in one country to easily learn about consumers in another country. 3. 4. someone else will. • They can build up more volume of sales and therefore generate more efficient manufacturing. Global marketing is becoming more pervasive in the business environment for the following reasons: • Starting in the 1990s. • Multi-nation approach adjusts the marketing mix to fit the unique profile of different national target markets. • It can send a strong message to the competition that your organization will be a tough competitor in the domestic and global market. There are numerous reasons why companies should go global. However. When deciding what markets to enter there are several issues to consider. which may require adaptation.Key Points 1. The birth rate in developed countries are falling. If you don’t supply them. • Going global overnight is becoming easier to do with today’s technology. • It can give a company a hedge against the volatility of the domestic market. • Competition is now at an industry level as opposed to a national level. In addition. • They may actually gain insight that will enable them to do a better job domestically. They are: • Global marketing strategy. 2. • The rate of population growth is expanding faster in many of these emerging economies. emerging nations no longer want to wait a few years to get new products. There are two types of global strategies a marketer should understand. 186 — Introduction to Marketing: Student Guide . If you are in the computer software industry. it is not without risks. the company infrastructure may not be able to handle the demand. • Entering the global marketplace too slowly may also have risks associated with it.

Transportation infrastructure. • Distribution point of difference. multinational corporations. and customer immobility. One of the most important issues they face is how they can achieve worldwide standards for marketing in diverse markets. the marketer must look at the following criteria: • How large is that market? • How quickly is it growing? • Is there a dominant local competitor? • Are the consumers in the market aware of Western products? 8) When entering an emerging market. 7) In emerging markets. Inexpensive labor makes it economical to create a sales organization. outdated retailing practices. and local products.5. • Selling points of difference. rather than just cheap sources for goods and raw materials. Emerging markets are those that have strong enough economies to be viable markets for goods from developed countries. • Pricing points of difference. Bartering and resistance to added value. Will they enter through acquisition. developing a separate company. marketers must determine how they will enter the market. How can they motivate everyone involved in the organization while still exerting control? 6. poor facilities. or through a joint venture with a local company? Lesson Twelve Introduction to Marketing: Student Guide — 187 . Expanding global markets has given rise to a fairly new and expanding class of players. There are several ways marketing differs in emerging markets: • There are typically three tiers of products — high-priced imports. inefficient wholesaling. joint-venture products.

Issues a company must address in assessing a potential new foreign market. economic growth trend. possible joint venture partners. A market that has a strong enough economy to be viable for goods from developed countries. idea. and other nuances and unique qualities of the people in a new market. etc. establishing good government relations. trademark. The adjustment and alteration of the marketing mix to fit the unique profile of different national target markets. low advertising rates. including: mode of entry.. Tactical factors to be considered after a company has made the strategic decision to enter a new market. the volatility of its economy.” Such factors as market size. items created in joint ventures between local companies and Western multinationals. such as perfume or other luxury products. regional. and adjustments to the company’s marketing mix based on the development stage of the new market. government policies on foreign investment and/or protectionism. Typically an emerging market will have three tiers of products: high-priced premium imports.Glossary Cultural Insensitivity The failure of a company to understand the cultural. Theft or unauthorized duplication of a product. dominance of local competitors. joint-venture products. capacity to gain a distribution stronghold. etc. A market that is not yet at the point where it is viable for goods from developed countries. The use of a standard marketing program or marketing mix to apply to customers throughout the world. and local products made by indigenous companies. which a company must consider a part of a strategic decision to enter a new market. the presence of multinational corporations. awareness of Western products. rather than just a source of cheap goods and raw materials. or intellectual property. A market that is reaching the stage of its economic development where can be considered “emerging. Emerging Market Global Marketing Leading Market Market Entry Criteria Market Entry Determinants Market Selection Criteria Multinational Marketing Piracy Trailing Market 188 — Introduction to Marketing: Student Guide . including its political stability. ethnic.

DIRECTIONS Watch the video clip and answer the question below. Meanwhile. Da Da’s next move will extend its global reach. and manufacture a new product. Adidas. Speed gives Da Da another edge: by executing products with new colors. Once an option only for a large. The company plans to start Internet-based sales and distribution. established company. and Da Da’s distinctive products are hot in markets as far away as New Zealand. Send the completed case study to your professor. A sketch by founder/designer Lance Simpson can be a working model in Da Da’s Taiwan-based research and development partner five days later. make and test.Case Study Lesson Twelve Despite its small size. Los Angeles-based Da Da Footwear thrives in competition with giants such as Nike. distinctive construction. and Reebok. Evidently. and Reebok? Could DaDa have been successful if it only operated domestically? Why or why not? In what other ways can DaDa compete with larger competitors? Introduction to Marketing: Student Guide — 189 . Da Da can outrun the competition enough to stay at the forefront of fashion. and innovative digital embroidery so quickly. it’s working: Foot Locker. South America. and several other global retailers are steady Da Da customers. Da Da can send digitized photos and color variations of the new design to clients in Australia. and the product is shipped from there to ports worldwide. Adidas. The giant shoe companies take roughly 120 days to design. so Da Da has to deliver competitive quality in better-than-competitive time. in part because Da Da can turn its accelerated product development into savings for the buyer. an even faster way to stay one step ahead. and the United States for instant feedback. Why is speed so crucial for Da Da? CEO and President Lavetta Willis says her company has “one chance and one chance only” to prove itself to a new client. The Finish Line. Da Da does it all in forty-five. How has global marketing helped DaDa compete with giants such as Nike. They sell for about 25 percent off the big manufacturers’ rates. Japan. Europe. global marketing is now a way for a startup to leverage speed and agility into consistent success. The new prototype goes to China for manufacturing. How? By using effective global marketing.

190 — Introduction to Marketing: Student Guide . Soon you will send employees overseas to secure manufacturing facilities. establish distribution channels. from garbage cans to microwaveable cookware. Some people believe that refusing to do business with these countries is the most effective way to pressure them to change. to market in Japan. Which method do you believe is most effective and why? Address this in a one-page paper. You will bring your line of plastic containers. Assignment Two: Plastic Containers for Japan You are the director of marketing for a firm about to undertake its first global expansion. and begin promoting your product. Send your completed assignment to your instructor. Write a memo to your staff that details the possible ways the role of culture will affect the new global venture.Assignments Assignment One: To Do Business – or Not Many governments of the world still deny their citizens basic human rights. according to his or her directions. according to his or her directions. Others argue that maintaining a presence in those countries is a more effective method to force change. Send your assignment to your instructor.

has processed more than 3. atmosphere.5 million purchase requests for new and used vehicles. Autobytel Inc. California. Puerto Rico. Baskin-Robbins U. Hormel Foods. Bell Atlantic. The company was ranked second in the airline industry among America's Most Admired Companies as compiled by Fortune magazine in March.Pa rt i c i pat i n g B u s i n e s s e s La Agencia de Orci & Asociados Based in Los Angeles. Babe’s Booth Babe’s Booth is a Los Angeles home-based business founded in 1991. La Agencia de Orci & Asociados is one of the leading independent Hispanic advertising agencies in the United States. it was named Internet Company of the Year by the Software Council of Southern California. the company’s pioneering concept of serving thirty-one flavors of ice cream changed the industry. a former television actress. Co. and Washington Mutual Bank. and plans buying trips to Paris and Milan to expand her offerings.. Inc. service. started with a line of ethnic greeting cards. Founded in 1995. (AMR Corporation) American Airlines is the second-largest air carrier in the United States. Introduction to Marketing: Student Guide — 191 . and in October 1998. AMR holds 80 percent of Sabre.400 franchised stores in fifty countries. Baskin-Robbins has grown to more than 4. Massachusetts. Entrepreneur magazine ranks the company as one of the top franchisers in the United States. 1 travel reservation system. and staffed by over seventy bilingual and bicultural professionals from sixteen countries. American Airlines’ parent company..com was named the 4th Fastest Growing New Small Business in America by Dun & Bradstreet and Entrepreneur magazine. Shell Oil Co. AMR. the company uses Internet technology to link customers with affiliate dealers throughout the United States. the agency represents clients including Allstate Insurance. American Airlines serves about 180 destinations in the Americas and Europe. and plus-size natural-fiber clothing targeted to women over thirty.A.S. Miami. Headquartered in Randolph. menu variety. and convenience. In 1997. Dallas/Fort Worth. Autobytel. For twelve of the past fifteen years. value. With hubs in Chicago. and is currently generating over $1 million an hour in vehicle sales. with billings exceeding $60 million. Babe Evans. cleanliness. La Agencia de Orci & Asociados is a founding member of The Association of Hispanic Advertising Agencies (AHAA). provides commuter service through American Eagle. Based in Irvine. Since its founding in 1950. American Airlines. American Honda. then expanded to jewelry. operator of the No. footwear. and San Juan. 1999. Founded in 1986 by Hector and Norma Orcí. an award based on quality. Evans has organized other minority boutique owners and vendors to share mailing lists and a customer base. Baskin-Robbins has been voted “America's Favorite Sweets Chain” in the prestigious Restaurants and Institutions magazine survey. and accounts for 45 percent of all new vehicles sold through an online service. Autobytel Inc.

Lexus.S. Founded in the early 1950s as an adjunct to a sports shop. Tennessee. U.S. Coca-Cola has grown to an international beverage and bottling company with nearly 30. Interactive Digital Evolution merged with U. Still family owned. Since 1995. The company was founded in 1973. A third of the soft drinks and half the colas consumed in the United States are made by Coca-Cola. which it sells through sporting goods stores worldwide. The Coca-Cola Company Since 1886. Da Da Footwear Los Angeles-based Da Da Footwear designs and markets athletic footwear and apparel. Coca-Cola’s bottle and logo are among the most recognized trademarks in the world. Body Glove’s annual sales exceed $2 million. The Board created the award-winning “It’s the Cheese” marketing campaign to promote awareness of the quality and variety of cheese made in California. and enterprise relationship management solutions for more than 200 clients. and today is a key to new business practices such as “just-in-time" shipping. Comedy Central. Federal Express Corporation Federal Express is the world’s largest express transportation company. and Washington. Da Da’s distinctive product colors and designs. D. enable it to compete successfully against much larger shoemakers.1 million packages daily. the leading producer of dairy products in the United States. when Atlanta pharmacist Dr. Interactive in 1998. the National Football League. The company was founded in 1998 by former college athlete Lavetta Williams. New York. California Milk Advisory Board The California Milk Advisory Board. Seattle. John Stith Pemberton concocted a caramel-colored soda syrup in his backyard. a producer-funded organization based in San Francisco. and The Walt Disney Company. knowledge management. The combined company. Interactive.000 employees. and global sourcing and selling across markets. The company has full-service offices in Los Angeles. delivering more than 3. California-based company invented the neoprene wetsuit to enable divers and surfers to enjoy California’s cold Pacific waters.C. The company continues to manufacture the most innovative and technologically advanced wetsuits and diving wear on the market. Digital Evolution/U.000 vehicles. the “It’s the Cheese” campaign has proven instrumental in a 75 percent increase in production and a near doubling of the number of California-made specialty cheeses. was founded in 1969. digital marketing. including AT&T. Da Da sells to retailers around the world. 192 — Introduction to Marketing: Student Guide . and beverage bases for more than 160 soft-drink brands manufactured in nearly 200 countries. Based in Memphis. Federal Express serves 210 countries with more than 43. and innovative marketing such as concert tie-ins. electronic commerce.Body Glove Body Glove grew out of twin brothers Bill and Bob Meistrell’s lifelong passion for diving and ocean recreation.S. the Hermosa Beach. Philadelphia. McNeil Consumer Products. concentrates. has produced more than 400 e-commerce. and its stock is one of thirty Blue Chip issues that make up the Dow Jones Industrial Average. selling syrups. and to achieve margins far above industry norms.

000 markets. Testosterone. Designed for children aged two to twelve. Pavement. the Conrad International Cairo in Egypt. with sales in excess of $25 million. pickles and condiments. manages. and plans national distribution of its products. and other national newspapers and magazines. and/or franchises more than 250 hotels and resorts worldwide. watches. New York-New York Hotel and Casino. EuroCos. cooking seasonings and rubs. blended her own nail polish and sold a small batch to the Los Angeles retailer where she worked. fullservice advertising agency. In1994 the San Pedro. Legoland California is located in Carlsbad. and Greed. Asher & Partners services clients including Legoland California. Begun in 1992. The program has received coverage from Business Week. Newsweek. Legoland California Inc. Food From The ‘Hood distributes 10. Hard Candy Hard Candy makes cosmetics including nail polish and lipstick. Jail Bait.Food From The ‘Hood Food From The 'Hood is a student-owned-and-operated entrepreneurship program at Crenshaw High School in Los Angeles. The company wholesales to stores across North America. makes a wide variety of salad dressings. Haze. Called “The Scent of the Century" by Newsweek magazine. scarves. The Giorgio name also brands other consumer products plus handbags. Asher & Partners is a Los Angeles-based. HotHotHot HotHotHot. The program’s profits are awarded as scholarships to Crenshaw students. including airport lodgings. mid-range hotels. In August. California-based company was the first hot sauce maker to market its products via the Internet. then a pre-med student. The Beverly Hills-based company began in 1995 when founder Dineh Mohajer. the first Legoland in the United States. Hilton Hotels Corporation Hilton Hotels Corporation owns. With billings more than $120 million a year. and five-star casino resorts such as New York’s Waldorf-Astoria® and its newest property. and integrated with P&G's prestige fragrance business. and the State of California HIV Prevention Campaign. and hot sauces. to form Procter & Gamble’s Fine Fragrance Division. eyewear. jewelry and umbrellas. California-based company employs more than 45. is a theme park based on Lego toys made by the Denmark-based Lego Group. the program stresses values. Hard Candy specializes in nail polish for men and women in signature colors with names such as Gigolo. Giorgio Beverly Hills Giorgio Beverly Hills was created as the signature fragrance for the Giorgio boutique in 1981. and now does the majority of its business electronically with customers as distant as Japan and South America. 1994. the Beverly Hills. California. annual sales were $60 million. Suzuki Motors. Founded in 1919. By 1986. Giorgio continues to rank among the world’s best-selling perfumes. seafood and barbecue marinades. and socially responsible business practices by making and marketing a line of natural salad dressings and by maintaining an organic garden. / Asher & Partners Legoland California. Sky.000 people and is publicly traded on the New York Stock Exchange.000 cases of dressing annually to 2. Giorgio Beverly Hills was purchased by Procter & Gamble. self-discipline. founded by father and son Raveen and Govind Arora in 1983. Introduction to Marketing: Student Guide — 193 .

Inc. read by name television actors. Tiger Foods is in Toluca Lake. 194 — Introduction to Marketing: Student Guide .Louise’s Trattoria Louise’s Trattoria is a chain of sixteen restaurants. is the largest out-of-home media company in North America. specializes in distributing smoked meats.S. The Tonight Show with Jay Leno. based in the Netherlands. including 125. My Romance distributes through bookstores and web retailers including Amazon. is one of the world's biggest electronics companies. and chicken to delicatessens and sandwich shops." and specializes in fresh. Founder/Owner Jon Startz and Vice President of Sales Randy Quinton also educate customers on optimum preservation and presentation of meat products (Tiger Foods’ business cards say. healthy Italian cuisine. OSI has operations in most of the largest markets in the United States. with fifteen located in and around Los Angeles. and is publicly traded on the New York Stock Exchange.com. Inc. transit shelters. Saturday Night Live. Featuring mercury content less than 20 percent that of standard fluorescents. The company also operates 24hour cable channels CNBC and MSNBC. owns NBC Television. the second-largest television network in the United States. subway. The Los Angeles-based company creates romance fiction on audio cassettes. and Dateline NBC. wholly owned by General Electric. and one in Milwaukee. and the leader in the global lighting market. “We are not just in the food business. Arizona-based company operates approximately 237. and wine. Louise’s is privately held and based in Los Angeles. and sports marketing services in North America. the Alto line is the first lamp capable of passing the U. Environmental Protection Agency’s stringent tests for non-hazardous waste. Philips also designed a method of recycling mercury within each lamp so the lamp would need a smaller supply. The company calls its restaurants “neighborhood casual. California.500 bulletins. and encouraged the market to switch to low mercury lamps. we are in the people business selling food”). and Mexico. Louise’s contracts directly with growers and producers in Italy for items such as extra virgin olive oil.. Philips Lighting Corporation Royal Philips Electronics. prosciutto. mall displays. founded in 1998.000 subway displays in New York City. Outdoor Systems. New York-based NBC produces programs including Friends. Tiger Foods Tiger Foods. NBC Television serves thirteen company-owned stations and more than 200 domestic affiliates. building-sized banners. turkey. ground beef. parmesan cheese. Canada. The company developed the Alto line of low mercury fluorescent lamps in response to environmental concerns about hazardous mercury waste. ER. The Phoenix. posters. and has partial ownership in cable channels such as A&E. Outdoor Systems Advertising. NBC Television The National Broadcasting Company. pasta. My Romance Audio Romance Classics My Romance was founded in 1997 by former daytime drama actor Greg Marx.

when Internet-based global marketing permitted the Teisans to turn a handicraft with devoted local buyers into a business with customers worldwide. was conceived in 1982 and officially announced in 1985 as a response to the success of Japanese automakers in the United States. Since then. Still owned by its co-founders. Toyota Motor Sales of America/Toyota Genesis Group Convened in 1998 by Toyota Motor Sales USA. development. and marketing. Connecticut. With over 14. and military bases. bus and railroad terminals. markets its sandwiches as healthy alternatives to other fast food. based in Milford. and makes a specialty of operating in non-traditional locations including convenience stores. the company’s first vehicle was completed in 1990. customer satisfaction. amusement parks. but also for community relations. who played in venues across the United States before roughly 500. and opened its first franchise in 1974. Volvo became the first European car manufacturer to open a North American assembly plant in the post war era. Trick R/C Products Trick R/C Products. based in Venice. truck stops. arenas. The Genesis Group is credited with influencing the design.. including the Echo. labor relations. and is charged with increasing Toyota’s market share among buyers in the same demographic. and its twomillionth produced in 1999. Two years of qualifying matches culminated in the final round of teams from sixteen nations. In 1963. Inc.000. and pricing of three new Toyota models for the years 1999 and 2000. California. durable products.Saturn Corporation Saturn Corporation. design and engineering. Introduction to Marketing: Student Guide — 195 . Rockleigh. Women’s World Cup Women’s World Cup 1999 Organizing Committee. airports. The company’s signature product is its Zagi line of radio-operated electronic aerobatic wings suitable for sport gliding or combat. Inc. buses. in 1965.000 restaurants in seventy countries. not only for product quality. New Jersey-based Volvo has built a reputation for safe. Volvo Group companies in North America now include makers and dealers of cars. Subway. and spare parts to hobbyists and retailers around the world.. Based on Jerry and Joe Teisan’s lifelong interest in model aviation. Subway has more franchises than any other restaurant chain except McDonald's. the Toyota Group consists of eight employees age thirty-five and under. and product design. Volvo Cars of North America Volvo Cars of North America was founded in 1955 by an American hardware wholesaler who was impressed by Volvo taxis during a visit to Sweden. a subsidiary of General Motors Corporation.000 ticket holders. Connecticut. is the Los Angeles-based nonprofit legal entity that successfully designed the 1999 Women’s World Cup to be a “breakthrough event” for women’s sports. grocery stores. Subway Restaurants Today the world's largest submarine sandwich franchise. Saturn has won numerous awards. makes and sells model airplane and glider kits. Created to be a “clean slate” and to take innovative directions in technology. hospitals. Trick R/C was founded in 1996. radio controllers. and marine engines. trucks. the lowest-priced Japanese car on the market and the company’s first car in five years to start at under $10. Subway began as a storefront in Bridgeport. casinos.

She received a doctorate in business and a master’s in psychology from Stanford University. segmented and value pricing. Associate Professor of Marketing University of Southern California Mr. Berry is a professor emeritus at University of California at Los Angeles. His research interests are in channels of distribution. Dutta holds a doctorate from the University of Minnesota. In addition. 196 — Introduction to Marketing: Student Guide . he has authored four curriculum handbooks on children and the learning of values in a McGraw-Hill multimedia series. marketing strategy.” published in the Journal of Consumer Research. and Universal Pictures. He is author of the book Children and Television: Images in a Changing Sociocultural World. and managing gray markets in domestic and international settings. Nickelodeon. and Economics and Organization to name only few..D. the Children’s Television Workshop. His teaching and consulting have focused in the areas of market positioning and assessing market niches. and pricing. Ms. Drolet is an assistant professor at the John E. Drolet has a master’s in public policy and bachelor’s in classical history from the University of Chicago. Anderson Graduate School of Management. Journal of Law. Before arriving at USC. Berry Senior Adviser for CBS Network Advisory Board on Educational Children’s Programming Dr. His major areas of research relate to the study of media and social behavior and crosscultural counseling psychology. Abbott Laboratories. Warner Bros. and Motorola. Dutta’s articles on these subjects have been widely published. and a doctorate of education in counseling psychology from Marquette University. Ph. Dr. a master’s from the University of Wisconsin. in the Journal of Marketing. Among her research papers is “The Role of Attribute Values in Consumer Choice. Berry has served as a consultant and adviser to children’s programs at NBC. including Amoco. Marketing Letters. Dutta has consulted and taught for a number of major corporations. Her research focuses on consumer preference and decision-making and interpersonal psychological processes. Jim Henson Productions. Shantanu Dutta. Aimee Drolet Assistant Professor of Marketing The Anderson School of Management University of California at Los Angeles Ms.Pa rt i c i pat i n g E x p e rt s Dr. strategic partnering. Mr. Berry’s most recent book is Research Paradigms in the Study of Television and Social Behavior. he was on the faculty at the University of Chicago. He holds a bachelor’s degree from Central State University. Dr. Gordon L.

Dr. She currently consults with a range of consumer marketing companies and advertising agencies. Mr. Her awardwinning dissertation and followup work examine the relationships consumers form with brands. the University of California. and later from Michigan Law School with a juris doctorate and a focus on international trade. the Department of Insurance. and antitrust law. Mr. Along with his numerous publications. Elbrecht Supervising Attorney of the Legal Services Unit California Department of Consumer Affairs Mr. Associate Professor of Business Administration in the Marketing area Harvard Business School Professor Fournier teaches the brand marketing elective in the MBA program at Harvard University and strategic marketing management in the executive education program. He is an associate professor of marketing at the University of Southern California. warranties. including Saatchi and Saatchi Advertising. Elbrecht has served with the Department of Consumer Affairs since 1976. Ms. Hilton Hotels Corporation. electronic funds transfer. the Smart Card Forum. Kamins received his doctorate from New York University in 1984. with a concentration on money. Elbrecht graduated from Yale University with a degree in economics.D Marketing Consultant. His unit currently provides a wide range of legal services. Land Rover. Coca-Cola. Introduction to Marketing: Student Guide — 197 . telecommunications. including banking. sales. AT&T. Harley-Davidson. banking. Member of the Editorial Board of the Journal of Advertising and the Journal of Business Research Dr. She also teaches executive education programs for other universities and corporations. litigation. Before joining the faculty at Harvard Business School. rumor. Susan Fournier. Michael A. American Express. the strength of those relationships. and cognitive and affective processes in advertising. Ph. Psychology and Marketing. credit and cable communications. and education. In the course of his career. Kamins’s current research interests lie in the areas of the pioneer advantage.D. and Consumer Research Foundation. celebrity advertising. insurance. Elbrecht has served as an adviser to the Direct Marketing Association. the State Bar of California. He has worked in areas affecting consumers. and exaggeration in advertising.Richard A. Journal of Marketing. He helped design and administer California’s State Quality Awards. Fournier served as vice president and associate research director at Young & Rubicam advertising in New York. puffery. He has consulted for such companies as Thompson’s Minwax. and Kalkan and for such individuals as Kareem Abdul Jabbar. Kamins. Ms. including legislative drafting. Kamins has published more than thirty articles in scholarly journals in marketing and psychology inclusive of the Journal of Marketing Research. and how marketers’ actions can enhance or dilute those bonds. Dr. Ph. and Phillips Electronics. Fournier received her doctorate in marketing from the University of Florida. She also holds a master’s in marketing from Pennsylvania State University and a bachelor’s degree from the University of Massachusetts at Amherst. and the Journal of the Market Research Society. Pacific Bell. advocacy before administrative agencies.

Ph. Department of Commerce. investment. Tribune/Knight Ridder Services. Dr. Shukla was appointed to the Los Angeles Board of Information Technology Commissioners as well as to a special blue-ribbon task force on communications infrastructure for the City of Los Angeles. He has also taught marketing management to executive MBAs at the University of Chicago. He has also consulted for such organizations as Hewlett Packard. Involved in high technology since 1983. and the Journal of Public Policy and Marketing. the Coca-Cola Company. Texas Instruments. the Journal of Marketing. Nunes earned his bachelor’s at Northwestern University and his master’s in business administration at the University of Chicago. having worked in administration at the U. the Los Angeles Regional Technology Alliance has been recognized internationally as a focal point for information. along with numerous years of experience in media and public relations. Independent Consultant Professor of Marketing Marshall School of Business University of Southern California Dr. Nunes has several years of business and consulting experience. In October 1997 Mr. the Journal of Advertising. David W. Chicago (now DDB Needham). Stewart has worked as a manager of research for Needham. Peapod Home Shopping Service. Dr. Stewart serves or has served on the editorial boards of twelve professional journals. he founded his own company. and Abbott Laboratories. Mr. Rohit K.Joseph Nunes. and the Digital Coast Roundtable. 198 — Introduction to Marketing: Student Guide . Brooker Professor of Marketing and Chairman of the Department of Marketing University of Southern California Former Editor of the Journal of Marketing Before moving to California in 1986. providing database and communications solutions and devices. Hughes. including the Caltech/MIT Enterprise Forum. Shukla President & Chief Executive Officer of the Los Angeles Regional Technology Alliance Under his leadership. Stewart. He has also served as an independent consultant to BBDO Advertising Agency. and Steers Advertising. Intel. Ph. including the Journal of Marketing Research. Harper. Mr. Stewart has been honored for innovation in teaching by the Decision Sciences Institute and received the 1988 Senior Research Fellowship from the American Academy of Advertising. and business strategy in Southern California.D. Mr.S. Honeywell. where he received his doctorate. and the United States Federal Trade Commission. Robert E. Shukla serves on the board of several organizations. David Stewart was senior associate dean and associate professor of marketing at the Owen Graduate School of Management at Vanderbilt University. IBM. Los Angeles. Dr. Shukla holds a master’s in economics and politics from Cambridge University and a master’s in communications from Loyola Marymount University. the Annenberg Incubator Project. Stewart received his bachelor’s from Northeast Louisiana University and his master’s and doctorate in psychology from Baylor University. Nunes is currently an assistant professor of marketing at the University of Southern California’s Marshall School of Business.D. in 1998 Mr. EC2.

Professor Tewell recently developed a complete two-year degree DistanceEducation program in marketing. with a focus on operations management. Jack Heinsius Instructor Modesto Junior College Modesto. Pennsylvania. and received his bachelor’s in retailing at the University of Denver. Douglas Professor of Marketing New York University New York City. His publications include books on merchandising and store-location theory. New York Susan P Douglas has a doctorate in business and applied economics from the University of . and international marketing research. and a master’s in economics and history from the University of Manchester. Her research interests include global marketing strategy. He has also taught international business and marketing at California State University at Sacramento. California Jack Heinsius has been a business instructor at California’s Modesto Junior College since 1979. and sales management. sales. Ray Tewell Professor of Marketing American River College Sacramento. where she also received a bachelor’s in economics. crosscultural consumer behavior. retailing. and International Marketing Research. and modern history. he administered the Work Experience Program and taught at Columbia College at Sonora. California. international business. industrial wholesaling. Before joining the faculty at Modesto. She teaches International Marketing Management and is a Research Professor of International Business at New York University. Heinsius has extensive experience working in private industry for a variety of corporations in retailing. politics. and manufacturing. He did additional graduate work in marketing at the University of Colorado at Boulder. He has taught marketing. She has also published articles in the Journal of Research in Marketing.A d v i s o ry B o a r d Susan P. She is co-author of Global Marketing Strategy for the McGraw-Hill Research Series. and advertising at American River College since 1965. Mr. for four years. Introduction to Marketing: Student Guide — 199 . California Ray Tewell earned his master’s in marketing from the California State University at San Francisco. He has consulted in management and marketing for the Yosemite Community College District and independently with local and national firms. and he has developed a certificate program for the retail grocery industry in the Sacramento area.

Professor Tybout consults for many Fortune 100 companies. honors. Consumer Information Processing. Tybout Professor of Marketing Northwestern University Evanston. among them Dow Chemical. Tybout is the Harold T. Dow Elanco. She serves on the Editorial Board of the Journal of Consumer Research. where she teaches Advertising. and fellowships include the General Foods Research Chair and the Sidney J. Abbott Labs. and Marketing Management. Searle. She holds a doctorate in marketing from Northwestern University and a master’s in consumer behavior and a bachelor’s in business administration from Ohio State University. A trustee of the Marketing Science Institute (1988-1998). Illinois. Levy Teaching Award (1995-96). and Xerox. Martin Professor of Marketing at the Kellogg Graduate School of Management at Northwestern University in Evanston. Her numerous awards.Alice M. 200 — Introduction to Marketing: Student Guide . Illinois Alice M.

). Professor Quelch has served as a consultant. He is also a nonexecutive director of Pentland Group PLC. and U. England.B. the Harvard School of Public Health (M. Unicapital Corporation. Coca-Cola. Textron. industry associations. and human resource management. and The Wall Street Journal. The Economist. and society. and speaker for firms. sellers and lessors of commercial equipment. Cases in Marketing Management and Strategy: An Asia-Pacific Perspective (1997). Procter & Gamble. and USA Floral Products Inc.). seminar leader. AT&T. Colgate-Palmolive. Oxford University (M. published in leading journals such as Harvard Business Review.S. providing services to local. multinational.A. McKinsey Quarterly.About the Professor JOHN A. General Electric. including Global Marketing Management (1998). He has consulted with more than fifty leading global companies in a wide variety of industries and markets. Hoffman LaRoche.). and government agencies in more than forty countries. public policy. Quelch is Dean of the London Business School and Professor at London University. the role of the multinational corporation and the nation state. He has written more than fifty articles on marketing management and public policy issues. one of the world’s largest marketing communications groups. Office Products Company. international marketing. and The Marketing Challenge of Europe 1992 (1991). and global clients. and Harvard Business School (D. He is frequently quoted by news and business journals including Business Week. and issues at the juncture of business management. He formerly served as the Sebastian S.S. Introduction to Marketing: Student Guide — 201 . and he has appeared on CNN and CNBC. Professor Quelch is an internationally recognized expert on global business. and Westinghouse. Financial Times. QUELCH One of the world’s leading authorities on modern marketing.B. John A. Professor Quelch was educated at Exeter College. Fidelity Investments. Professor Quelch serves as a nonexecutive director of London-based WPP Group PLC.A. Honeywell. Born in London. and Sloan Management Review. international makers of sports and leisure wear.). IBM. the Wharton School of the University of Pennsylvania (M. including American Airlines. Kresge Professor of Marketing and Co-Chair of the Marketing Area at Harvard Business School. Gillette.A. He is the author or co-author of twelve standard texts. with offices in ninety-two countries. He was a founding nonexecutive director of Reebok International Ltd.

A&E Network’s Ancient Mysteries. delivers frequent professional presentations about marketing. ABC-TV. She launched and currently serves as Executive Editor of the online journal "@cademyonline. Executive Producer After earning a bachelor’s from Princeton University and a certificate from the Woodrow Wilson School of Public and International Affairs. Her substantial background in education includes more than twelve years of experience in teaching. and directing television documentaries and educational films for more than twenty years. Palmer received her M." a publication on information technology. and Introduction to Entrepreneurship: Building the Dream. she also has many years of experience as a Marketing and Strategic Planning Consultant. learning and curricular development on both the college and secondary school level.A. specializing in the utilization of technology to enhance marketing efforts.Course Development Team Elizabeth Kellison. executive. 202 — Introduction to Marketing: Student Guide . Introduction to Microeconomics: Analytical Building Blocks for Business. Ms. the Learning Channel. Director of Creative Affairs. including production of three other University Access courses: Introduction to Business Communications: Tools for Leadership. and a bachelor’s in journalism from the University of Southern California. management education and distance learning. NBC Network News. from Pepperdine University and her B. She has been writing. Rupert Macnee. documentaries. She has worked extensively in the field of educational programming. and dedicates a great deal of her time to enhancing her community.A. and a bachelor's in Russian from Williams College in Williamstown. director. Professor of Marketing Lynda Palmer is a Professor of Undergraduate and Graduate Marketing at Pepperdine University in Malibu. Lifetime Television. She has a master's in Russian Literature from the University of North Carolina at Chapel Hill. which is co-published by University Access and AACSB-the International Association for Management Education. Hill’s work has appeared on the Discovery Channel. An Evening at the Improv.B. Massachusetts. In addition to her academic expertise. Macnee was a producer on the recent University Access series. Lynda Palmer. and writer in entertainment. and in syndication. He has accumulated wide experience as a producer. She is an active member of several professional and honor societies. Introduction to Macroeconomics: Mastering the Global Economy. Director of Academic Affairs Elizabeth Kellison is in charge of the University Access curricula and University Access's relationships withacademicians around the United States. in Economics from the University of Washington. Lynne Hill. producing. Rupert Macnee began his extensive career in film and television with the long-running wildlife series The Untamed World. and industrial films including the Discovery Channel series Movie Magic. and the comedy series. California. CourseWorks Lynne Hill holds a master’s in television journalism from the University of California. Los Angeles.

a Houston-based financial services company. Instructional Designer After studying marketing at Northern Arizona University. Her areas of expertise were variable annuities. Producer Ken Gale has written and produced more than a dozen documentaries on a variety of subjects over the past fifteen years. Robert Tisinai. He was the writer of course materials and developer of online content for the University Access courses Introduction to Microeconomics: Analytical Building Blocks for Business and Introduction to Macroeconomics: Mastering the Global Economy. He went on to earn a master’s in economics with distinction in macroeconomics from Stanford University. content supervisor. distance learning. Sullivan. His work has appeared on national news programs. and Introduction to Marketing: Competing in the 21st Century. Introduction to Microeconomics: Analytical Building Blocks for Business. California. newspapers. story researcher.Anne Donnelly. Before that. Producer Kerrin T. Sullivan’s editorial experience includes magazines. and producer on projects ranging from educational CD-ROM titles for teens and adults to producing five recent University Access courses: Introduction to Business Communications: Tools for Leadership. and writer. Christina Taylor has worked as designer. He was news director/producer for KCOP-TV in Los Angeles. and he produced many continuing medical education programs for the Annenberg Center at the Eisenhower Medical Center in Palm Springs. Introduction to Marketing: Student Guide — 203 . and numerous other pivotal events. and television journalist since 1958. Tisinai has also designed and implemented courses in online education. a weekly half-hour medical news program by and for doctors on Lifetime Medical Television. plus numerous local newscasts. Kerrin T. director. Producer Holder of a bachelor of fine arts degree in theater from the University of California at Santa Barbara. with more than twenty-five years of experience in local and national broadcast journalism. Anne Donnelly developed and delivered training programs as an instructional designer for AIM Management Group. and radio (for which he has won four Golden Mike awards). He has also worked as a corporate public-relations manager and as owner-operator of a public relations and advertising firm. Manager of Instructional Design Robert Tisinai is a graduate of Pennsylvania State University. He also contributed to Introduction to Marketing: Competing in the 21st Century. taught for both the business and economics departments at San Francisco State University. Gale was co-executive producer of Physician’s Journal Update. She joins the University Access team with Introduction to Marketing: Competing in the 21st Century. Watergate. He has been a print. covering the Vietnam war. including ABC’s World News Tonight and Nightline. offshore mutual funds. footage researcher. radio. Sullivan is an Emmy Award-winning producer. He was a teaching assistant and instructor at Stanford University. and retirement plans. Introduction to Macroeconomics: Mastering The Global Economy. and Internet research tools for UCLA Extension’s Online Teaching Certification Program. Ken Gale. Christina Taylor. civil rights. where he won the Senior Award in Economics. Introduction to Entrepreneurship: Building the Dream. she served as an agency development specialist for Nationwide Insurance Company. where he pursued doctoral studies.

Brenda Reiswerg. hosted by Katie Couric. 204 — Introduction to Marketing: Student Guide . CourseWorks Brenda Reiswerg was executive producer of University Access’ courses Introduction to Microeconomics: Analytical Building Blocks for Business and Introduction to Entrepreneurship: Building the Dream. hosted by Jane Seymour (a Peabody Award winner). Houston’s public television affiliate. hosted by Oprah Winfrey (a Humanitas Award winner). she spent several years at the documentary film unit at KUHT. She produced such notable television documentaries as Scared Silent. hosted by Walter Cronkite. Break the Silence. Senior Vice President. A graduate of the University of Texas. and Everybody’s Business: America’s Children. Victory Over Violence.

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• utilize each feature and function (such as announcements. After the training. • understand the ways students interact with the professor. University Access trains them to administer online courses effectively.University Access’s broadband content can be offered through almost any distribution channel including the Internet. discussion groups. online testing. Introduction to Marketing: Student Guide — 207 .) at the most appropriate time. • Customizing courses. University Access uses a variety of means to assist you in meeting your organization’s needs: • Creating and designing specific courses for your company. • Use of our pre-produced. • customize the courseware to meet specific teaching needs. making full use of both the synchronous and asynchronous features of the courseware. providing feedback to improve their techniques. corporate Intranets. For more information.1700 or corporate@universityaccess. faculty should be able to: • interact with students in a chat room. • correct and submit grades for online tests and homework assignments effectively. etc. University Access continues to support instructors during the academic term.com. Training and Support University Access provides training and support to instructors as they adapt to the online teaching environment. and traditional video. high caliber courseware. • comprehend how students interact with the courseware. please contact the Corporate Sales Department at 888. private satellite networks.960.

meeting management. Connolly. augmented by interviews with guest experts and real-world case studies that illustrate the academic content. Distance Learning Association Excellence in Distance Learning Teaching Award in 1998. but it is a journey fraught with obstacles and setbacks.S. business writing. Introduction to Microeconomics covers such crucial topics as supply and demand. and more.Other University Access Courses Introduction to Business Communication Tools for Leadership Business students and corporate clients will find valuable practical information in Introduction to Business Communication: Tools for Leadership. and interactive discussions that bring vitality to the lessons. including Wolfgang Puck’s expanding food empire. This course features visits to several businesses.” Introduction to Microeconomics can be used as a standalone course or in conjunction with its companion. Illustrating these subjects are case studies that range from such large corporations as Kinko’s and Subway. It is a practical tool for business professionals. This course has been honored with two 1998 United States Distance Learning Association awards. Introduction to Business Communication.” Introduction to Microeconomics Analytical Building Blocks for Business The complex issues of firms’ and households’ economic decisions are made clear in this Introduction to Microeconomics: Analytical Building Blocks for Business course. monopolies. the skills needed. public speaking. Together. Introduction to Entrepreneurship Building the Dream Starting a business may be one of the most challenging and rewarding journeys a person can take. to smaller fast-growing companies that include Border Grill and Hard Candy. Lectures by Dr. market equilibrium. and the humanities. director of the Lloyd Greif Center for Entrepreneurial Studies at the University of Southern California’s Marshall School of Business. The course presents compelling teaching in a dynamic video format. Laree Kiely. profit maximization. these courses create a complete first-year introduction to economics. negotiations. how to develop a business plan. research materials. teamwork. The course also includes on-location case studies of such enterprises as The J. Taught by Thomas O’Malia. as well as students of business. .. associate professor of economics and finance. the historic Rickenbacker guitar factory. the means of marketing the product. Introduction to Entrepreneurship: Building the Dream helps prepare students to succeed on that trip. interviews with leading business professionals. covers such important topics as communications theory.D. and international analysis. to technological organizations such as EarthLink and QAD. professor of management communication at the University of Southern California’s Marshall School of Business. For students who want to launch their own businesses or those who want to be more innovative in a corporate setting. Introduction to Macroeconomics: Mastering the Global Economy. Paul Getty Museum. social sciences. and diversity. Southern California Edison. University of North Carolina – Chapel Hill. This course has been honored by the United States Distance Learning Association with the 1999 first place award for “Excellence in Distance Learning — Higher Education. the television series Frasier. budget-conscious American family. the course includes documentary-style interviews. which won the prestigious U. including second place in the category of “Best Distance Learning Program — Higher Education” and third place for “Best Distance Learning Program — Continuing Education. resource allocation. and the Hartford Courant. and a typical. taught by Dr. the Jet Propulsion Laboratory. ways of testing the feasibility of an idea. combined with a powerful Web site of interactive courseware activities. management. Ballet Folklorico de Mexico. how to raise capital. and case studies — in combination with a dynamic Web site of interactive courseware — all enhance the learning experience and show how to apply microeconomics to a wide variety of issues in the rapidly changing world. Ph. The course explains the entrepreneurial way of thinking and acting. taught by Robert Connolly. this course is both practical and inspiring.

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• Make sure top management is in touch with the customer. .

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