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

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

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

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

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

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

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. • describe the marketing process. you should be able to: • explain the concept of marketing and explain its importance. • state key marketing challenges in the 21st century. establishing the terminology and principles used throughout the rest of the course. • define “value” and explain marketing’s role in creating value for customers. 10 — Introduction to Marketing: Student Guide .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. 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. By the end of the lesson.

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

12

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 so forth? What’s in store for the future? Legal and Regulatory Environment. These include social issues. Competitive Analysis. and entrenched is the competition? Are competitors serving the whole market or are they leaving someone out? Customer Analysis.Placement. let's examine the marketing process in more detail. a company can move toward developing a marketing strategy. economic fluctuations. and managerial capabilities. competition. resource availability. Social Trends. Promotion. the process calls for applying the results of these analyses to the broader environment. Economic Environment. is a three-part analysis of the marketer's immediate situation: Company Analysis. While social trends might be out of your control. How strong. 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. and so on. they all affect a company's health and its marketing strategy for better or worse. technological advances. while they are often far beyond a company's influence. low-salt products in fast-food restaurants and on supermarket shelves. Is the economy healthy? What is the current state of such forces as inflation. Marketers must have a firm grasp of their own company's strengths and weaknesses. business cycles. The starting point. The channels through which products get into consumer’s hands. known as the 3 Cs. The uncontrollable factors are equally important and. Has this affected marketing? Consider the ever-growing number of low-fat. unemployment. The communication of information between the seller and the potential buyer. regulatory mandates. People are more health conscious than ever. Introduction to Marketing: Student Guide — 15 . they must nevertheless be taken into consideration when developing a marketing strategy. talented. 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. sound. 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. and remembering the 4 Ps. 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. Lesson One THE MARKETING PROCESS Step One: The 3 Cs With these influences in mind. financial and human resources.

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

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

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

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

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

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

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

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

Therefore. Step 4: List recommendations for further ways that the store could provide added value to you to earn your repeat business and loyalty. 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. 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. customize the different approaches you might use in presenting the 4 Ps in trying to sell the house to the couple. For example. observe the ways in which the store tries to create value for you as a consumer. Assignment Two: One House. Step 3: Based on your observations. in order of priority: selection. For example. by creating a strategy for selling an identical product to two different people. but they can't come at the same time. the other list should reflect the husband’s values. etc. friendly staff. you will show the house to the husband in the morning and to the wife in the evening. how would you present the Product (the house) to the wife versus the husband? What aspects of Price. 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. 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. Based on the following scenario. as well as your knowledge of the importance of customer value. Step 1: Begin thinking about the characteristics you value as a consumer in a supermarket. Situation: You are a real-estate agent attempting to sell a house to a married couple. Product. One list should contain the values the wife might feel are important. and Placement would your plan take into consideration? Develop two separate written plans. determine whether the store attempts to appeal to the qualities you value as listed in Step 1. convenience. short lines. Step 2: On your next trip to the supermarket. Step 1: Think of a couple you know well and compile two lists based on your knowledge of them.Assignments Assignment One: Supermarket Survey In an intensely competitive. Two Buyers Apply your knowledge of the 4 Ps of marketing. low-margin industry. outline a written plan designed to make the product appealing to each of the potential customers. location. price. For example. The couple has asked you to show them the house. one for each buyer's distinct needs. Make a list of what matters to you. 24 — Introduction to Marketing: Student Guide .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Marketers must invest time in understanding the customer through market research. 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. attitudes. or other statistics. averages. • Personal Influences • Word of Mouth • Opinion Leaders • Reference Group Influences • Family 5. The marketer needs to understand who is typically involved in the decision-making process and attempt to communicate to each player. 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. no. and emotional responses seeking in-depth. quantitative and qualitative. Some examples of quantitative research are: • Surveys or interviews with definitive answers such as yes. • • • • • Problem Recognition Information Search Evaluation of Alternatives Purchase Decision Post Purchase Behavior Introduction to Marketing: Student Guide — 47 . A marketer must understand the purchase decision process and how it applies to his or her product. 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. 6. The five steps of the purchase decision process are as follows. Consider the difference in buying the following: • Impulse Purchase • Planned Purchase • Emergency Purchase 4. not yes or no answers. There are two ways research can be categorized. Sociocultural factors are key influences in consumer behavior.Key Points Lesson Three 1. 2. The type of purchase plays a strong role in how a consumer buys. • Qualitative refers to “soft” data gathering of consumer’s opinions. open-ended responses. The role of each player in the decision-making unit is key information to a marketer.

However. 9. In organizational buying. climate. global buying behavior differs in the manner in which negotiations are conducted and in the way decisions are made. 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 . Consumer global buying behavior differs depending on local culture.7. and customs. 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.

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

Assignment Two: Marketers and Privacy In the course of doing business. Store club cards. • What have you learned about yourself as a consumer? When you’ve completed the assignment. Address the items listed above. 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. send your one-page paper to your instructor. claiming that it benefits the consumer. Gathering information and doing research is an important part of marketing. banks acquire a consumer’s name. but many banks don’t. Many marketers say that this practice is necessary and allows them to target their specific market more effectively. But others claim that it is an invasion of privacy. are a new way of compiling mailing lists and buyer profiles. think of a low purchase item you’ve recently bought. 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. And what better place to start than with your own buying behavior? Consider your decision to enroll in this class – a high purchase item. details of credit card purchases. address. New technologies make it even easier to do. and bank account balances. which the store may use for its own purposes or sell to other marketers. touted to give members added benefits. 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. according to his or her instructions. They have begun selling the information to third-party marketers eager to pay for it.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. phone number. 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.

• Gathering data for marketing purposes is necessary. Introduction to Marketing: Student Guide — 51 . 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.

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

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

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

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

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

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

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

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

not just claims. State the Evidence of the Superiority. make a definite claim. A marketing program must always keep positioning at the top of its mission. Superior performance. quality of ingredients. Positioning is essential. against the existing products. durability. etc. the marketer must gather data and listen to prospective customers to learn how they feel about existing products in the market. explaining what features of this product are better than those already on the shelves. for this product’s superiority. Here are Six Approaches to Positioning: Benefits. 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. with regard to important attributes. Determine Economic Factors. Positioning With Clarity How does a marketer position with clarity? By using these three steps: Specify the Target Market Segment. Competing is tough and costly. 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. and how effectively it would compete. 60 — Introduction to Marketing: Student Guide . They should feel a low level of risk in making the change. 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. And third. more specific one that wants the new product.Determine Probable Market Share Within That Segment. and if a company doesn’t do it. the competition will position it and its products as second-rate. 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. Second. Is this segment already being served by established. and their need for additional information about the new product should be minimal. This is niche marketing: focusing on a very specific segment and developing products and messages that appeal to it. State How the Product Is Superior. as compared to other similar products. and each is a powerful argument to the customer about why a product is better than its competition. To develop a position in a market. 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. Give customers as much information as they need. the marketer must decide how the proposed new product would be perceived. Say why it’s better. That is. There are many possible positions to take. 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. 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. and convince them that there are sound reasons. It’s how customers think about brands in a market.

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

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

This is the way a marketer differentiates his product from the others in the marketplace. 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 . 8. The target market must be specific. • Segment of one — Customizing the product for each individual customer. 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. and creating a product or service exclusively for that segment. 10. Positioning refers to the unique place a product occupies in the mind of the consumer. • Niche marketing — Choosing one segment of the market. Lesson Four 7. The positioning of the product must be clear. • Segmented marketing — Creating a different marketing strategy for each segment they are going after. 9. Once the segment or segments are chosen.• 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 marketer must create a position for this product in each target market. • Determine economic factors involved in reaching this segment.

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

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

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

to develop a product to fulfill the needs of your chosen target market. the students will have developed a comprehensive marketing plan.Project One Project One Market Research This is the first of three projects designed to integrate many components of marketing. they may look at various segments 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. 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 . In doing this. Project One is focused on researching and analyzing the characteristics and buying habits of a target market of your choice. • Describe the major approaches to segmenting consumer markets. you should be able to: • Locate sources of marketing data. combined with the analysis of the external environment. special needs. This will create more relevance for you in doing this project. • Explain the role of segmentation and targeting in the marketplace. • State methods of qualitative and quantitative market research. The Project Companies often analyze different markets to determine if there are any trends. • Summarize and present marketing information in a coherent fashion. By the end of Project One. or particular buying habits they can service. With the completion of the three projects. 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. Choose a target market that you have some interest in or preliminary knowledge of. both in print and on the Internet. In Project Two you will use that data.

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

how a small entrepreneur manages her clothing product line. Expected Learning Outcomes By the end of this lesson.” • Outline the steps in the new product development process. • Evaluate product line planning strategies. • Describe the stages in the product life cycle. it is time to consider the marketing mix. it then goes on to delineate the different product categories. 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. product line management. The lesson outlines the stages in the new product development process. Beginning with a definition. Introduction to Marketing: Student Guide — 69 . the different stages in the product life cycle. The case studies include how Baskin-Robbins develops and tests its ice-cream products. 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. and how a music management company is repositioning and reviving one of its more mature products — the 70s rock band. the students should be able to: • Define the true meaning of “product. Blondie. • Summarize the key issues in developing products for the global marketplace.

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

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

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

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

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

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
Introduction to Marketing: Student Guide — 75

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.
76 — Introduction to Marketing: Student Guide

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.

Introduction to Marketing: Student Guide

77

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.
78 — Introduction to Marketing: Student Guide

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. having a different brand name in each country for an identical product. Sales even out and less entrenched competitors leave. Sales are slow and profits are minimal. Lesson Five Introduction to Marketing: Student Guide — 79 . even though the formula is different or. • Decline Phase. Another issue has to do with keeping the same brand name worldwide. The product is first launched during this stage. • Maturity Phase. Maintaining market share and adding product features are the focus in this phase. and profits peak. Typically sales increase. The company must decide whether to delete or harvest the product. Creating consumer awareness and stimulating trial is the focus during this period. conversely.• Introductory phase. competitors emerge. Brand differentiation is key in this stage. Sales and profits are declining often due to changes in environmental factors. • Growth Phase.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

Introduction to Marketing: Student Guide

99

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.

100

Introduction to Marketing: Student Guide

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.
Introduction to Marketing: Student Guide — 101

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

102

Introduction to Marketing: Student Guide

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

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

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

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

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.

Introduction to Marketing: Student Guide

107

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.

108

Introduction to Marketing: Student Guide

Key Points

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.

Introduction to Marketing: Student Guide

109

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

110

Introduction to Marketing: Student Guide

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. or received a bad haircut. Think about a poor service situation you’ve recently suffered through. generally. 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. Write a two-page paper that addresses the following: • Write a full description of your experience. Consider a bad service experience you’ve recently had. 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. his catering business is struggling. if any. as owner of the company. Assignment Two: The Caterer Needs Help Michel Rochette is a gourmet chef with credentials from one of the best culinary schools in the world. 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 — . Research indicates that customers dissatisfied with a product spread negative word of mouth to eleven acquaintances. Despite Rochette’s financial situation and reputation. Rochette has grown tired of working in a restaurant and preparing the same dishes night after night.Assignments Lesson Seven Assignment One: The Bad Haircut We’ve all been victims of poor service at one time or another. while satisfied customers tell six. His skills have earned him an excellent reputation both in local social circles and in the culinary world. He has hired you as a marketing consultant. listen to those they trust. had an experience with an unhelpful or rude salesperson. He has decided to start his own catering business. He can’t seem to cater as many engagements as he’d like. • What action. Perhaps you received poor service in a restaurant. He currently has solid financial backing and five people working for him. It is extremely difficult and costly for businesses to overcome or neutralize bad word of mouth. Word of mouth can be either positive or negative. according to his or her directions.

according to his or her directions.• 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. 112 — Introduction to Marketing: Student Guide .

• Outline the steps in the new product development process. • Evaluate product line planning strategies. an existing product. positioning. Explain how it creates value for the target market. In this phase. • Define “value” and explain marketing’s role in creating value for customers. 5. 3. Depict how economic trends affect the marketing of this product. An improvement of. The next step is to develop a product that can fulfill an unmet need. 9. Discuss how technological trends affect the marketing of this product. Express how political and legal trends affect the marketing of this product. or revision to. 2. you should be able to: • Analyze the effect of the external environment on an organization’s marketing strategy. • Explain the relationship between segmentation. Who are the competitors that fill the same need? Introduction to Marketing: Student Guide — 113 .Project Two Project Two Feasibility Project Two builds on the work and skills developed in Project One. A new product line. Explain how it uniquely meets that particular subgroup’s need. A repositioned product. Describe how competition affects this market. 7. Once your product is chosen. 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. Adjust your product until you come up with a feasible product. 8. 6. 4. The Project You have chosen and researched a particular target market and have probably observed some unmet needs or trends within this market. targeting. Your paper should: 1. This product can either be: 1. 3. Examine how social and cultural trends affect the marketing of this product. 2. By the end of the lesson. Describe how you will position it. 5. you will research and develop a product that is well suited to a particular subgroup’s needs identified in Project One. A new-to-the-world product. and product development. Describe the product in detail. 4. An addition to an existing product line.

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

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

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

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

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

ROLE OF DISTRIBUTION Distribution simply means the movement of goods from one point to another. Placement is a vital part of a successful marketing strategy. also known as Distribution. and often the one requiring the most imagination. The channel. starts with the producer at one end and ends with the customer at the other end. Professor Quelch examines the third P in the marketing mix: Placement. then. distribution channels perform three vital functions. says Professor Quelch. The term “distribution channels” is defined. 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. and so are distribution trends. A typical distribution channel starts with a manufacturer shipping goods in bulk via. Distribution plays a central role in the marketing of any good or service. 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. The wholesalers break the bulk shipments into smaller lots for delivery to warehouses or individual retail stores. for example. truck or rail. and encompasses all the intermediaries. 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.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. and Professor Quelch examines the different channels available to take a product from the factory to the user. The retailers then stock the products in their shelves for the customer. Functions of Distribution Channels In order to make the exchanges between manufacturer and customers more efficient and costeffective. Supply chain management is examined. and the lecture closes with the distribution challenges inherent in the global marketplace. How does a marketer select the optimal one? Channel selection and strategy are covered. and all the transactions among them. A seasoned marketer. to a series of wholesalers. Lesson Eight discusses placement and the crucial role it plays in the overall marketing process. Introduction to Marketing: Student Guide — 119 .

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

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

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

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

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

which in turn triggers a production order. but starting out offers challenges that must be conquered first. so the manufacturer must check the distributor's references and find out just what the distributor will do to push the manufacturer’s product. shopping habits. Selecting the right local distributor is critically important. Some special challenges face the international marketer. Lesson Eight GLOBAL DISTRIBUTION Distribution in the global marketplace means making use of a number of methods and channels for moving goods. and the savings can be passed along to the consumer. Introduction to Marketing: Student Guide — 125 . a manufacturer may want to establish part or all of its own system in a foreign country. 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. The payoffs are decreased inventory carrying costs and a more cost-efficient distribution process. Since knowing the territory is essential.order for delivery is sent to a P&G plant. a typical manufacturer will need a local distributor who knows the market. and product choices? Eventually.

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

6. The marketer needs to evaluate the following factors when determining distribution strategy. thus reducing expenses. This efficiency can benefit the manufacturer by resulting in a reduction of inventory that reduces the amount of working capital needed. • Intensive — Selling product through as many outlets as possible. Over time. 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. 10) Distribution structures differ greatly from one country to another. which leads to more satisfied customers. the company may decide that it is selling enough to warrant setting up its own foreign subsidiary and handling distribution locally. A company going into the international market should typically find a local distributor who knows the foreign market. Marketers can choose from the following: • Exclusive — Selling product through only one wholesaler or retailer in the industry. distribution may be highly fragmented. in many emerging markets. Lesson Eight Introduction to Marketing: Student Guide — 127 . It can also reduce stock-outs. • Selective — Selling product in a few outlets. • 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. Keep in mind.

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

by training the sales people to explain the product at the point of sale and to answer technical questions. The functions that move products from place to place and combine them in ways that make them easier to buy. say. Centrally managed distribution systems that increase efficiency and marketing impact. All the buying and selling transactions that occur among the members of the distribution channel.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. Lesson Eight Logistics Selective Distribution Transactional Functions Vertical Marketing Systems (VMS) Introduction to Marketing: Student Guide — 129 . 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

but did it produce action? The Milk Advisory Board emphatically says yes. 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 . each time with a different funny spin. airplane banners. gourmet retailers. 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. On a typical day. The objective: cement the impression that the only real cheese is Real California Cheese.” So says the California Milk Advisory Board. DIRECTIONS Watch the video and answer questions below. Production has risen 75 percent since the campaign was launched. and a Cheesemobile. who consume a significant amount of dairy products. and in the stores.2 billion pounds of cheese a year and has nearly doubled the variety of cheeses it produces in response to the new interest. which not long ago was in a quandary. To change that perception. The industry sells 1. And the Cheesemobile. shelf displays. California’s $4 billion-per-year dairy industry is the biggest in the United States. memorable brand identity using an integrated marketing campaign. were shown that California cheese meets a high standard for quality. and desire. interest. shaped like a giant wheel of cheese.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. whose traditional cuisine is low in dairy products. Different market segments got different messages: Hispanics. Behind the media campaign was a coordinated integrated marketing effort to get the word out about the quality and variety of California cheese. Seven of ten California pizza makers now use Real California Cheese. were shown how cheese could supplement a healthy diet. “It’s the Cheese” was the punch line to seemingly endless funny. Businesses heard about cheese as well: Pizza makers were shown how using Real California Cheese would add perceived value to their products. they thought of Wisconsin. food writers. according to his or her own instructions. and restaurant reviewers were educated at seminars and tastings to promote good publicity. The board used in-store tasting booths next to the dairy case. Why? It’s the marketing. in-store promotions. while Asians. but when people thought of cheese. a Californian might see the slogan and the logo several times on TV. from the car. The so-called “influentials” such as cookbook authors. 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. The theme of the campaign runs across all media from billboards to television spots. attention-getting questions. Send the completed case study to your professor. and shelf displays to show shoppers the how cheese could improve their home cooking. The campaign created attention. discount coupons on related dairy items such as eggs.

Your business currently has two locations. these are the companies that you are most likely to purchase items from on a regular basis throughout your life. 3. 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. time and date called. high-end. you’ve pinpointed an ideal location for a new store. brand name of the product. However. and company that makes the product. Your customers are label-conscious as well as budget-conscious. direct interaction with. according to his or her directions. Your new location will open in six months. In outlining your plan. Find three consumer products you purchase regularly that have a “1-800” consumer information telephone number on the label. Send your responses to your instructor. why is this type of information offered? 144 — Introduction to Marketing: Student Guide . This offers a unique way for you to interact with the companies and evaluate for yourself evidence of the companies’ marketing orientations.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. 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. based on population trends in that area. Many of these companies have “1-800” customer comment phone numbers. You only accept clothing made by well-known designers. however. • 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. if any. Outline a promotion plan you would implement to communicate your message to your target audience and meet your objectives. second-hand clothing business. and the items must be in excellent condition. Think about a few questions you’d like to ask each company. 2. 1.

” Send your one-page assignment to your instructor.• If the call was answered by a “live” person. according to his or her directions. 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. 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. • Based on your telephone contact. comment on the firm's “marketing orientation.

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

along with directions on how to submit your answers. 6. read: • The program summary for Lesson Ten. complete the online exercises for Lesson Ten and submit them to your instructor according to his or her instructions. 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. Read the text assignment for Lesson Ten. As with each lesson. you will find the quiz online. Review the Expected Learning Outcomes for Lesson Ten in the Student Guide. 3. Use the Lesson Ten Outline in the Student Guide to help you follow the flow of the lecture. Watch the video program for Lesson Ten (A Closer Look at Advertising: When. Instead. Why & How to Advertise).Completing Lesson Ten In order to obtain the most out of this course. 1. the following steps should be taken in the sequence listed below. 5b. 2. 5a. • The key points for Lesson Ten. as indicated in the syllabus. If you are a Telecourse student. If you are a Teleweb student. If you are a Teleweb student (with an online component to your course). Lesson Ten Introduction to Marketing: Student Guide — 147 . Take the quiz for Lesson Ten. please check the syllabus for additional or altered instructions from your professor. if assigned by your instructor. ignore the assignments that are listed in the Student Guide. In the Student Guide. In addition. and be sure to check the Boards at least three times a week. 4. post any questions you have to the Discussion Boards. your instructor will deliver the quiz to you. Where.

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

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

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

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

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

environmental cleanliness. making illustrations. choosing fonts. A thorough knowledge of the target market is essential to picking the right medium. Prudential Insurance. Introduction to Marketing: Student Guide — 153 . and do? TYPES OF ADVERTISING MEDIA All these questions require an enormous investment of time. Choosing a print medium means creating copy. for an ad. There are plenty of alternatives. aid to the needy. emphasize fun and camaraderie. or combination of media. How to Say It Once what to say has been decided. copy scripting. 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 political candidates are often advertised by the use of moral appeals. Choosing radio means creating sounds. perhaps explaining how it works and comparing it favorably against a competitor's product. 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. Humorous appeals can be very effective and memorable. Soft drink ads. because an ad has so little time to do what it must do: grab the audience's attention.What response is the ad intended to elicit? To motivate people to become new customers. Showing it being poured into a glass emphasizes the premium positioning of the beer. wear.” Social causes. Toothpaste ads inspire the fear of dentists and cavities. and voice casting. a rational appeal tells them that the product will remove stains and brighten colors. and how to say it seems clear. It's crucial that the marketer chooses the media that will communicate most effectively. the marketer must decide on a symbolic or stylistic format — where to say it. Keep the goal in mind here: the maximum effective exposures for the minimal cost. Michelin tire ads show children and say that buying Michelins is an investment in their safety. and within each one. many additional choices. Is television best? Will an on-camera spokesman be needed? A cast of actors? What should they say. Where to Say It When the kind of appeal has been determined. and countless other advertisers have overcome marketing challenges by making unforgettably funny advertisements. Consumers are bombarded with thousands of ad messages every day. marketers must decide how it should be said. If it's clean laundry they want. etc. for example. Moral appeals target the audience's sense of what's “right. Volkswagen. Emotional appeals are good for stirring up feelings that motivate a purchase.

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

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

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

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

• Gross rating points is reach multiplied by frequency.000 individuals or households. • Rating measures the number of people exposed to your advertisement in television and radio. hold their interest. Marketers evaluate media to determine which media is the most appropriate to use. • When sales volume supports advertising costs. • What. • When the product lends itself to emotional appeals. how often. • When there is an opportunity for product differentiation. and where do you say it? • Will the appeal be: • Rational? • Emotional? • Moral? • Humorous? 5. how. • CPM (cost per thousand) describes the cost required to reach 1. • Frequency measures the average number of times a person is exposed to an ad during a particular planning period. • When the product has hidden qualities that make the product brandable.• When the overall demand trend in the product category is favorable. To make an ad effective. The following measurements are used: • Reach measures the number of people exposed to your advertisement in print media. 4. arouse their desire and motivate them to action. 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 . 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. It should get the audiences attention. 6.

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

Product Awareness Promotional Mix Knowledge of the existence of the good or service. then indicate their reactions to the ads using recording devices or questionnaires. Participants view previews of movies or TV shows that include advertisements. A variation of flighting with higher spending at certain times of year. A company’s advertising. The number of people exposed to an advertisement. 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. The cost-saving practice of advertising in 30 seconds of television air time with two 15-second commercials. Use of cable technology to feed two different versions of an ad campaign into two sets of volunteer homes. and public relations. sales promotion. 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. combined in various ways to communicate with the target market. Reaching an audience to whom the message of an advertisement is irrelevant. personal selling. Pulsing Pattern Rational Appeal Reach Split-Cable Sales Test Splitting 30s Theater Unaided Recall Post-Test Wasted Coverage 160 — Introduction to Marketing: Student Guide . Purchases made by the viewers in these homes are recorded and measured to see if the two campaigns resulted in significantly different sales.

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

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. saying whether or not you feel this is the most appropriate method to use and why.

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

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

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

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

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

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

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

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

They are as follows: • Promotional Initiative — Using pricing as a way to prime the pump of demand. $15.Key Points Lesson Eleven 1. • Skimming — Pricing high and expecting low volume. True costs are the fixed and variable costs associated with manufacturing and selling of a product. $14. • Penetration — Pricing low and expecting high volume. 4) Once the costs are determined. • Elasticity of demand. The problem lies with technology being able to track the difference and enterprising traders identifying those markets. • Psychological Pricing — Setting price that just seems right to the consumer. there are a number of pricing strategies a marketer can employ. They are: • Competition in the marketplace. resource outlay. • Substitute products. Marketers need to fully understand these to determine what it would take for the resource intake-revenues to exceed. • The company’s objectives and resources.00. Pricing is what the customer is being asked to pay in return for the value of goods or services delivered. 5) Different issues arise when setting pricing in a global environment such as skimming in one market and penetrating in another. 2. • Variable costs — The costs associated with the manufacture of a single unit of product. or at least to meet. Introduction to Marketing: Student Guide — 171 . • Perceived value that the customer has for the product. • Odd-Even Pricing — Pricing an item just below the next dollar level. 3.99 vs. • Stage in the company’s life cycle. • True costs involved in making and selling the product. True costs include: • Fixed costs — The costs marketers incur regardless of whether or not they sell their product. There are numerous factors that marketers must address when setting price. It has a direct effect on both total revenue and total profits.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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. Evidently. The Finish Line. and Da Da’s distinctive products are hot in markets as far away as New Zealand. distinctive construction. The company plans to start Internet-based sales and distribution. 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 send digitized photos and color variations of the new design to clients in Australia. 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. established company. Japan. and the product is shipped from there to ports worldwide.Case Study Lesson Twelve Despite its small size. and the United States for instant feedback. South America. Da Da can outrun the competition enough to stay at the forefront of fashion. The giant shoe companies take roughly 120 days to design. How? By using effective global marketing. 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. Da Da’s next move will extend its global reach. Speed gives Da Da another edge: by executing products with new colors. Europe. and manufacture a new product. an even faster way to stay one step ahead. and several other global retailers are steady Da Da customers. Once an option only for a large. They sell for about 25 percent off the big manufacturers’ rates. Send the completed case study to your professor. Adidas. Adidas. Los Angeles-based Da Da Footwear thrives in competition with giants such as Nike. so Da Da has to deliver competitive quality in better-than-competitive time. Da Da does it all in forty-five. make and test. in part because Da Da can turn its accelerated product development into savings for the buyer. How has global marketing helped DaDa compete with giants such as Nike. DIRECTIONS Watch the video clip and answer the question below. and Reebok. Meanwhile. and innovative digital embroidery so quickly. it’s working: Foot Locker.

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

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

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

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

500 bulletins. is the largest out-of-home media company in North America. is one of the world's biggest electronics companies. The Tonight Show with Jay Leno. and sports marketing services in North America. including 125. transit shelters. and the leader in the global lighting market. and Dateline NBC. we are in the people business selling food”). owns NBC Television. and Mexico. subway. ground beef. Tiger Foods Tiger Foods. Philips also designed a method of recycling mercury within each lamp so the lamp would need a smaller supply. Philips Lighting Corporation Royal Philips Electronics. with fifteen located in and around Los Angeles. ER. “We are not just in the food business. Inc. 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. Outdoor Systems. and has partial ownership in cable channels such as A&E. My Romance distributes through bookstores and web retailers including Amazon. based in the Netherlands.S. read by name television actors. Canada.000 subway displays in New York City. NBC Television The National Broadcasting Company. building-sized banners." and specializes in fresh. California. founded in 1998. Louise’s contracts directly with growers and producers in Italy for items such as extra virgin olive oil. NBC Television serves thirteen company-owned stations and more than 200 domestic affiliates. New York-based NBC produces programs including Friends. prosciutto. Tiger Foods is in Toluca Lake. My Romance Audio Romance Classics My Romance was founded in 1997 by former daytime drama actor Greg Marx. and one in Milwaukee..com. Featuring mercury content less than 20 percent that of standard fluorescents.Louise’s Trattoria Louise’s Trattoria is a chain of sixteen restaurants. The company calls its restaurants “neighborhood casual. specializes in distributing smoked meats. Louise’s is privately held and based in Los Angeles. The company also operates 24hour cable channels CNBC and MSNBC. mall displays. parmesan cheese. The Phoenix. the Alto line is the first lamp capable of passing the U. Arizona-based company operates approximately 237. turkey. and wine. wholly owned by General Electric. pasta. OSI has operations in most of the largest markets in the United States. and is publicly traded on the New York Stock Exchange. The company developed the Alto line of low mercury fluorescent lamps in response to environmental concerns about hazardous mercury waste. and encouraged the market to switch to low mercury lamps. Saturday Night Live. The Los Angeles-based company creates romance fiction on audio cassettes. Inc. the second-largest television network in the United States. 194 — Introduction to Marketing: Student Guide . Outdoor Systems Advertising. posters. and chicken to delicatessens and sandwich shops. healthy Italian cuisine. Environmental Protection Agency’s stringent tests for non-hazardous waste.

California. including the Echo. radio controllers. Based on Jerry and Joe Teisan’s lifelong interest in model aviation. makes and sells model airplane and glider kits. With over 14. trucks. Subway has more franchises than any other restaurant chain except McDonald's. hospitals. and is charged with increasing Toyota’s market share among buyers in the same demographic. and its twomillionth produced in 1999. not only for product quality.. Subway began as a storefront in Bridgeport. but also for community relations. Still owned by its co-founders. the lowest-priced Japanese car on the market and the company’s first car in five years to start at under $10. Saturn has won numerous awards.Saturn Corporation Saturn Corporation. 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. The Genesis Group is credited with influencing the design. Trick R/C was founded in 1996. and spare parts to hobbyists and retailers around the world. airports. bus and railroad terminals. Connecticut. Connecticut. labor relations.000.000 restaurants in seventy countries. based in Venice. Subway Restaurants Today the world's largest submarine sandwich franchise. based in Milford. and military bases. and marketing. Inc. durable products. Women’s World Cup Women’s World Cup 1999 Organizing Committee. Two years of qualifying matches culminated in the final round of teams from sixteen nations. development. truck stops. customer satisfaction. Introduction to Marketing: Student Guide — 195 . and marine engines. markets its sandwiches as healthy alternatives to other fast food. Volvo Group companies in North America now include makers and dealers of cars. arenas. Toyota Motor Sales of America/Toyota Genesis Group Convened in 1998 by Toyota Motor Sales USA. design and engineering. in 1965. Created to be a “clean slate” and to take innovative directions in technology.000 ticket holders. Rockleigh. and product design. and makes a specialty of operating in non-traditional locations including convenience stores. who played in venues across the United States before roughly 500. Since then. 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. and opened its first franchise in 1974. was conceived in 1982 and officially announced in 1985 as a response to the success of Japanese automakers in the United States. Subway. amusement parks.. grocery stores. a subsidiary of General Motors Corporation. 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. Inc. buses. the Toyota Group consists of eight employees age thirty-five and under. New Jersey-based Volvo has built a reputation for safe. the company’s first vehicle was completed in 1990. and pricing of three new Toyota models for the years 1999 and 2000. casinos. when Internet-based global marketing permitted the Teisans to turn a handicraft with devoted local buyers into a business with customers worldwide. In 1963. The company’s signature product is its Zagi line of radio-operated electronic aerobatic wings suitable for sport gliding or combat.

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

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

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

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

She serves on the Editorial Board of the Journal of Consumer Research. and Xerox. Searle. where she teaches Advertising. Martin Professor of Marketing at the Kellogg Graduate School of Management at Northwestern University in Evanston. Tybout is the Harold T. Consumer Information Processing. Abbott Labs. Professor Tybout consults for many Fortune 100 companies. among them Dow Chemical. A trustee of the Marketing Science Institute (1988-1998). Levy Teaching Award (1995-96). Her numerous awards. and Marketing Management. Dow Elanco. and fellowships include the General Foods Research Chair and the Sidney J. 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. Illinois. Tybout Professor of Marketing Northwestern University Evanston. Illinois Alice M. 200 — Introduction to Marketing: Student Guide .Alice M. honors.

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

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

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

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

Box 445 .com.426.755. prompt 3 Fax: 609. New York: Irwin/McGraw-Hill.5645 The McGraw-Hill Companies College Division P O.755.5480. Visa. please contact University Access directly at 888. go to www..745.com and proceed to the Telecourse Rental Program area. Student Guides. If broadcast master videos of this course and/or other courses are needed.3987. University Access Sales Service Department Phone: 888. MasterCard. plus ordering information. Please refer to the following listings or the Faculty Guide for ordering information. and videos for the telecourse and teleweb course can be ordered online through the University Access Campus Store at www.9950 clientservice@universityaccess. Jerome McCarthy. Please call 888. Jr.960.universityaccess.1700 or at clientservice@universityaccess. 148 Princeton Road S-1 Hightstown.962.960. Select the course name — Introduction to Marketing: Competing in the 21st Century — and follow the instructions. William D.3987 Fax: 614.. 1999 Videos (box set contains entire 12-hour program) Introduction to Marketing Student Video Set Los Angeles.960.com.338. NJ 08520-1450 Phone: 800. Faculty and Campus Bookstores Faculty and campus bookstores can obtain textbook packages and student guides by contacting the publisher directly. To rent online. a purchase order or check must be received before the materials can be shipped.com Students — To Order Online Textbook packages.3987 Fax: 614. New York: Irwin/McGraw-Hill 1999 and Introduction to Marketing: Student Guide Requests for textbook desk copies must be made on institutional letterhead and sent to: The McGraw-Hill Companies Phone: 800. Introduction to Marketing: Student Guide — 205 . Textbook Package Perreault. American Express and Discover are accepted. and E.rmimedia.5625 The McGraw-Hill Companies Phone: 800. Textbook and ordering information is also available in the Faculty Guide. Basic Marketing: A Global-Managerial Approach.338. 1999.338.Course Materials Information What follows is a comprehensive list of all the class materials needed for Introduction to Marketing: Competing in the 21st Century. When ordering materials directly from University Access. California: University Access. The Faculty Guide is reserved for faculty and instructors and is available only to licensees of University Access courseware.1700 to place an order.1700 Fax: 323. Video Rentals Students can rent course videos from RMI Media by calling 800. 13th Edition.5645 Or to order the student guide only: Introduction to Marketing: Student Guide.

interactive educational experience for distance and lifelong learners. high-quality business courseware developed in concert with the nation’s top business-school professors. • access to a leading distance-learning platform with asynchronous and synchronous functions. an online journal created for the rapidly evolving worlds of distance education and lifelong learning. University Access has joined with AACSB — The International Association for Management Education — to launch @cademyonline (www. This belief was expanded in 1999 by offering videos of the courses through an arrangement with Broadcast. anywhere. Magazine/Cisco Grand Prize in the “Startup” category as part of its “Growing With Technology” awards program. and corporate education. anytime.About University Access University Access is an Internet-based company specializing in broadband content for higher education. In addition to its numerous partnering colleges and universities worldwide. partnered with University Access in 1998. University Access changed the paradigm of distance learning with the innovation of its teleweb courses.com). the Internet and television. the largest distributor of technology-based college credit. University Access’s award-winning platform is an organization’s to use — at no extra charge — when licensing the modular courseware. including the 1999 Inc. University Access collaborates with respected professors from the world’s leading business schools to create a world-class curriculum. University Access serves three distinct marketplaces: undergraduate. comprising documentary-style video lectures and customizable Internet-based courseware. providing a top-quality learning experience for anyone.com. including: • award-winning. Corporate Training The corporate division of University Access handles a variety of skill development goals for corporate partners. all at minimal cost. University Access is a critically acclaimed distance-learning company that has won numerous honors in the last two years. PBS Adult Learning Service (ALS). By combining the strengths of two distribution media. Video and Internet technologies enable organizations to leverage University Access connections with well-known business leaders in ways that are convenient and specific to an organization’s needs. University Access is building a complete business degree at a distance. 206 — Introduction to Marketing: Student Guide . University Access is building a library of online and video courseware for a powerful. University Access offers a variety of options to assist organizations in meeting their educational and training needs. University Access specializes in broadband content for education. as well as full technical support and training.academyonline. • instructional design services for creating and designing multimedia courses. With a similar belief that teleweb courses were the future architecture of distance education. graduate business.

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

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

price levels. Students learn the concept of Gross Domestic Product (GDP). which include interactive and collaborative exercises and Internet research projects. unemployment. Managing Risks. and as a companion to Introduction to Microeconomics: Analytical Building Blocks for Business.universityaccess. Together. Web links and Java applets enrich the course’s innovative online activities. this teleweb course features expert commentary from leading legal authorities and dramatic case studies of landmark judicial decisions that affect social policy as well as the environment in which all businesses operate.com Information can also be obtained by writing: PBS/ALS 1320 Braddock Place Alexandria.1700 Email: sales@universityaccess. interest rates. Jane P Mallor. macroeconomics is a rigorous social science that helps develop analytical skills.D. and monetary and fiscal policy issues.com Telephone: 888. and investment to economic growth. the aggregate supply and demand model. please contact us at: www.ALS. VA 22314-1698 Telephone: 800. Introduction to Macroeconomics: Mastering the Global Economy is on the cutting edge of next-generation education. Along with its real world effects. University of North Carolina – Chapel Hill. The material is grounded in the work of Robert Connolly. and compelling case studies. international trade and capital flows. animated graphics. Managing Risks University Access’ new teleweb course. The Legal Environment of Business: Making Decisions.960. the money supply. The Legal Environment of Business Making Decisions. Introduction to Macroeconomics: Mastering the Global Economy is invaluable as a stand-alone course.ALS8 Introduction to Marketing: Student Guide — 209 . these courses create a complete first-year introduction to economics. Presented by Prof. award-winning professor of business law at Indiana University’s Kelley School of Business. the importance of interest rates. To learn more about our course offerings. associate professor of economics and finance. and unemployment commonly determine the outcome of elections and the transfer of power in a country. provides a sound legal foundation that students can use to understand the important laws and regulations affecting today’s businesses.. as a supplement to any existing macroeconomics program. Such basic macroeconomic issues as inflation. Ph.Introduction to Macroeconomics Mastering the Global Economy Macroeconomics is based on today’s headlines as well as historical events. saving. . and inflation. The content is illuminated by interviews with renowned experts.

Los Angeles. Suite 801. 210 — Introduction to Marketing: Student Guide . University Access. Now you can buy the entire twelve-hour video series for just $5. 6% NC) Total Price Limit one series at $69 plus tax and shipping.Video Order Form University Access would like to thank you for enrolling in one of our courses. or by email at videoorders@universityaccess.75 per hour — more than a 75 percent discount off the retail price of $295! For more information. please contact our video sales department by phone at 888.1700. we are extending this special discount offer. and just mention the following special offer code: SVG1.com. BILLING ADDRESS Name ________________________________________ Address ______________________________________ City __________________________________________ State Zip ________________________________________ __________________________________________ S H I P P I N G A D D R E S S (if different) Name ________________________________________ Address ______________________________________ City __________________________________________ State Zip ________________________________________ __________________________________________ Phone ________________________________________ (include area code) Phone ________________________________________ (include area code) E-Mail ________________________________________ E-Mail ________________________________________ Pricing t Current Student Price: $69 t Regular Price: (limit one) School _________________________________________ Semester ____________________ $295 Payment Method t Check (make payable to University Access) t Credit Card # _____________________________________ Expiration Date _________________ Name on Card _________________________ Signature ____________________________________ Quantity Video Title/Series Introduction to Marketing (home use only) Subtotal Shipping ($8 per series) Sales Tax (8. all University Access students may purchase a copy of the video series from the course(s) they completed or are currently taking at the discounted student rate of $69 (plus tax and shipping. Throughout the course and up to thirty days after completion of the semester or quarter. where applicable. Submit order form by fax: (323) 960-1707 Or mail to: Video Sales Department.960.25% CA. where applicable). 6255 Sunset Blvd. CA 90028. So that you may continue to enjoy its value long after the semester ends.

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

Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.