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

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

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

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

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

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

• state key marketing challenges in the 21st century. • define “value” and explain marketing’s role in creating value for customers. 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. you should be able to: • explain the concept of marketing and explain its importance. Examples from established companies such as Hilton Hotels Corporation and from nonprofit organizations such as the California Science Center are examined. 10 — Introduction to Marketing: Student Guide . By the end of the lesson.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. • identify marketing’s function in both corporations and nonprofit organizations. • describe the marketing process. establishing the terminology and principles used throughout the rest of the course.

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

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Lesson One Outline

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

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

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Introduction to Marketing: Student Guide

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

Lesson One

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

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

VI. ETHICS IN MARKETING

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

VIII. SUMMARY

Introduction to Marketing: Student Guide

13

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

Lesson One

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

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

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

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

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

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

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

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

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

In addition. complete the assignment and submit it to your instructor according to his or her directions. Instead. 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 you are a Teleweb student (with an online component to your course). Pricing What is Hilton’s pricing policy? d. ignore the following assignment. complete the online exercises for Lesson One and submit them to your instructor according to his or her instructions. How did the transition from the Sales Era to the Marketing Era redefine marketing? 2. a. The marketing mix can be manipulated to reach a company’s target market(s). post any questions you have to the Discussion Boards. also known as the 4 Ps. 1. A company’s marketing process is ruled by two sets of influences: controllable factors and uncontrollable factors. Promotion What is the purpose of Hilton’s advertising? What other forms of promotion does Hilton utilize? 4. How does Hilton manipulate its marketing mix to create value for its customers? 22 — Introduction to Marketing: Student Guide . The controllable factors are a company’s marketing mix. How did the transition affect the way in which Hilton conducted its business? 3. Placement How would you describe Hilton’s placement/distribution? c. Product What is the product Hilton offers its customers? b.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• Gathering data for marketing purposes is necessary. Introduction to Marketing: Student Guide — 51 . according to his or her instructions. 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. 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. • Evaluate different strategies for reaching target markets. an ad agency whose offerings are targeted at the emerging Hispanic market. and the psychographic segmentation strategies behind the Absolut Vodka campaign. • Describe the major approaches to segmenting consumer markets. It then discusses how marketers target specific segments of the market and ends with an analysis of positioning. examines the mistakes that marketers can make. Lesson Four discusses the various segmentation criteria marketers use. 52 — Introduction to Marketing: Student Guide . Expected Learning Outcomes By the end of this lesson. but it is necessary for marketers to focus their marketing resources on the people who are most likely to buy it. • Explain the concept of positioning and why it is useful. then outlines the steps involved in the segmentation process. • State positioning strategies that can strengthen competitive advantage. and Positioning Developing a Focus It isn’t necessary to convince the whole world to buy your product. The case studies include how Toyota developed a new line of cars targeted at Generation X. the students should be able to: • Explain the role of segmentation and targeting in the marketplace.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lesson Five

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

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

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

Lesson Five

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lesson Seven

Lesson Seven

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

Expected Learning Outcomes

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

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

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Lesson Seven Outline

Lesson Seven

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

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

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

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

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

VIII. SUMMARY

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

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

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

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

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

Lesson Seven

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

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

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

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

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

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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.

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

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

Employee Incentives

4 Is of Marketing Services Franchising

Service

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

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 .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10) Distribution structures differ greatly from one country to another. • Selective — Selling product in a few outlets. 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. Keep in mind. Lesson Eight Introduction to Marketing: Student Guide — 127 . Marketers can choose from the following: • Exclusive — Selling product through only one wholesaler or retailer in the industry. 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. • 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. The marketer needs to evaluate the following factors when determining distribution strategy. It can also reduce stock-outs. distribution may be highly fragmented. in many emerging markets. thus reducing expenses. A company going into the international market should typically find a local distributor who knows the foreign market. 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.6. Over time.

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

say.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. 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. Lesson Eight Logistics Selective Distribution Transactional Functions Vertical Marketing Systems (VMS) Introduction to Marketing: Student Guide — 129 . by training the sales people to explain the product at the point of sale and to answer technical questions. 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. The functions that move products from place to place and combine them in ways that make them easier to buy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

according to his or her directions.” Send your one-page assignment to your instructor. Introduction to Marketing: Student Guide — 145 .• If the call was answered by a “live” person. what questions did you ask? What were the responses? Lesson nine • Did the firm request information about you? If so. • Based on your telephone contact. comment on the firm's “marketing orientation. 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.

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

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

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

Internet 1. G. There are seven times more radio stations in the U. 1. called splitting 30s. 2. Wide range of options: newspapers. 5. Long. Visible trademarks and logos. neon signs. 2. Options includes company sites. 3. Effective if a viewer passes them repeatedly on a regular route. and how well. and paid hyperlinks. Far cheaper than making an ad for television. households have bought products advertised on infomercials. Reader can linger and reread something interesting and valuable. Number of readers of a magazine might far exceed its number of subscribers. 3. 2. Marketer's own product is a form of advertising (Campbell's Soup). posters. Radio can still convey powerful drama and illusion. due to high cost. EFFECTIVENESS OF ADVERTISING A. E. 6. and after an ad campaign to measure if. 2. Reach only the people on that route. Infomercials have a full half-hour to inform and inspire a viewer to act. 3. Radio more segmented than TV. F Outdoor . Television — Infomercials 1. Many advertisers use 15 second commercials. Helps marketers target very specific markets. Powerful advertising medium because of its reach.S. Other Media 1. 2. I. D. the cost of reaching 1. Inappropriate for products that must be seen to be appreciated. Rapidly growing global medium. Introduction to Marketing: Student Guide — 149 Lesson Ten . Reach multiplied by frequency yields gross rating points: R x F = GRP . national and local. many for niche audiences.000 of the targeted individuals or households. explain. Over 400 new magazines introduced every year in the United States. Print 1. Television — Standard Commercials 1. and entertainment. banners on other sites. Typically it competes for attention with other activities the listener is doing. complicated messages aren't appropriate for standard commercials. etc. Program-length ads that combine education. promotion. 3. and sell. Visual impact has to be instantaneous. Promotional video to promote. 4. C. VI. 5. H. bus banners. general and specialized. 4. 3. Print helps consumers understand features and benefits of complicated products. 4. but expensive. Nontraditional Media 1.2. Includes billboards. 2. B. bench ads. 3. than television stations. CPM. 25 percent of U. so wasted coverage is much less than on TV. or cost per thousand. Testing is done before. it accomplishes the company's objectives. 4. magazines and trade journals. 2. Frequency is the average number of times a person is exposed to an ad during a particular planning period. during. 6.S. Radio 1.

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

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

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

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

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

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

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

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

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

(R x F = GRP. The average number of times a person is exposed to an advertisement during a particular period. Lesson Ten Attitude Test Continuous Pattern Cost Per Thousand (CPM) Emotional Appeal Federal Trade Commission The U. positive or negative. Program-length advertisements that combine education. Humorous Appeal Infomercials Advertising designed to entertain and be memorable. government agency charged with enforcing federal (FTC) antitrust and consumer protection laws. and what they remember about it — what brand it promotes. and also works to enhance the smooth operation of the marketplace by eliminating acts or practices that are unfair or deceptive. Flighting Pattern On-and-off advertising for products affected by seasonal or irregular demand. another measurement of advertising effectiveness. Introduction to Marketing: Student Guide — 159 Jury Moral Appeal Portfolio Pre-Testing . Participants read the text ad along with other ads without knowing which ad is being tested. A specific GRP objective is used to judge the effectiveness of advertisements.Glossary Aided Recall Marketers show consumers an ad. efficient. etc. reaching 50 percent of the target audience with six ad exposures during a fixed period equals 300 GRP). and entertainment. Advertising which targets the viewer’s sense of correctness or propriety. and free of undue restrictions. to learn how customers will react and then make necessary changes. to determine whether the ad led to more favorable opinions. Researchers ask participants how they feel about a campaign.S. The FTC seeks to ensure that the nation's markets function competitively and are vigorous. The researcher then asks questions about the ads: Were they memorable? Informative? Did one stand out? Evaluating an advertisement or campaign before the launch. promotion. and if their feelings change after seeing it. Steady advertising for products the demand for which does not vary much through the year. then ask if and where they've seen it before. Participants view a single ad and rate it against various criteria determined by the researcher. Advertising which provokes feelings. The cost of reaching 1.000 of the targeted individuals or households with an advertisement. Frequency Gross Rating Points (GRP) Reach multiplied by Frequency.

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

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

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

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

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

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

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

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

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

or rebates can increase market share. both are desirable. for example.00 in a discount store two miles away. that's much less an issue that it used to be. Increasing sales volume doesn't necessarily help a mushroom company raise revenues. Gucci handbags. such as business flyers or late purchasers. $14. has a structure of high fixed costs and low variable costs. An airline. Perceived value is subject to the competitive environment. Some customers get bargain-fare tickets that run just slightly over the variable costs. and distribution can be high. The fixed cost for making the shirts is the same. For some consumers. for example. $25. Maximizing volume is the goal: After the breakeven point. Sometimes a price just seems right to a consumer.A firm's cost structure will likely be an important factor in setting prices. in the airline industry. 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). But the variable costs of labor. Skimming and Penetration. coupons. A mushroom grower is an example of a company with a low fixed. PRICING STRATEGIES Having seen many of the variables that must be factored into pricing policies. that's the target price range to set. ground facilities. so skimming works for them. there can be wide variations in ticket prices. Its fixed costs include rent on growing spaces — typically. Odd-Even pricing is the practice of setting a price one cent below a dollar level: $14. For the airline. and the cost of serving an extra passenger is low. In situations where pricing can stimulate demand. but raising prices a little can make an enormous difference.99.99. Demand will not be greatly affected by changes within that range. A skimming strategy means pricing high and aiming for low volume. high variable structure. and that's enough to make the sale. Other customers. The lowest price a company can charge is the variable costs. for example. and so on. processing. The same garment might sell for $10. Lesson Eleven PRICING AND PERCEIVED VALUE The highest price a company can charge is the perceived value customers have for the product. but the perceived value of the shirts depends on the venue where the shopper finds them. so it's crucial for the airline to fill those seats. However. dark caves. staff. Gucci and other high-end fashion makers have no interest in winning a broad market. Psychological Pricing. are well-made. Odd-Even Pricing. since the key objective is to fly with a full aircraft.99 seems significantly less than $15. high-margin items distributed selectively to expensive boutiques. with today's computerized cash registers. a company can consider some different pricing strategies. and the airline still can make a profit.95. pay high ticket prices. That's why. Promotional Pricing. Another example: a T-shirt from a famous boutique might sell for $29. It also makes sense for companies introducing a new product that doesn't Introduction to Marketing: Student Guide — 169 . The expense of the planes. such as a seasonal offer or an introductory offer. promotional pricing in the form of price cuts.00. not exactly high-rent business premises. and personnel are high regardless of whether the airline's flights are full or empty. the profit on each seat sold is typically 90 percent over and above the variable cost of carrying the extra passenger. If market research shows a consistently “reasonable” price for a product among the consumers surveyed.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1999 Videos (box set contains entire 12-hour program) Introduction to Marketing Student Video Set Los Angeles. The Faculty Guide is reserved for faculty and instructors and is available only to licensees of University Access courseware.960. American Express and Discover are accepted. Please call 888.universityaccess. Box 445 ..com Students — To Order Online Textbook packages. New York: Irwin/McGraw-Hill. Video Rentals Students can rent course videos from RMI Media by calling 800. plus ordering information. Select the course name — Introduction to Marketing: Competing in the 21st Century — and follow the instructions.755.426.1700 to place an order. Please refer to the following listings or the Faculty Guide for ordering information. 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. 13th Edition. Student Guides. Jr.rmimedia. Textbook Package Perreault.5480.5645 Or to order the student guide only: Introduction to Marketing: Student Guide. prompt 3 Fax: 609. When ordering materials directly from University Access. Jerome McCarthy. 1999.Course Materials Information What follows is a comprehensive list of all the class materials needed for Introduction to Marketing: Competing in the 21st Century.5625 The McGraw-Hill Companies Phone: 800. Visa. Basic Marketing: A Global-Managerial Approach.962. and E.5645 The McGraw-Hill Companies College Division P O.com and proceed to the Telecourse Rental Program area.9950 clientservice@universityaccess.1700 or at clientservice@universityaccess.338. Textbook and ordering information is also available in the Faculty Guide. NJ 08520-1450 Phone: 800. and videos for the telecourse and teleweb course can be ordered online through the University Access Campus Store at www. If broadcast master videos of this course and/or other courses are needed.3987. University Access Sales Service Department Phone: 888.338.338. William D. go to www. please contact University Access directly at 888.745.com. To rent online.. Introduction to Marketing: Student Guide — 205 . a purchase order or check must be received before the materials can be shipped.3987 Fax: 614. Faculty and Campus Bookstores Faculty and campus bookstores can obtain textbook packages and student guides by contacting the publisher directly.1700 Fax: 323.755. MasterCard. 148 Princeton Road S-1 Hightstown.com. California: University Access.3987 Fax: 614.960.960.

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

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

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

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

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