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

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

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

Each video program is paired with a corresponding reading assignment.426. and E. You can request a textbook desk copy by sending your request on institutional letterhead to: The McGraw-Hill Companies College Division P O.mhhe.3987. NJ 08520-1450 Phone: 800. which is essentially about how to do a superior job of satisfying customers. New York: Irwin:McGraw-Hlll.com/fourps. be sure to contact your instructor. Jerome McCarthy’s text. Box 445 . 8 — Introduction to Marketing: Student Guide . Perreault.5625 Getting Started You will receive a class syllabus from your instructor that will contain a complete overview of the course requirements. Jr. The text focuses not only on marketing but also on marketing strategy planning. If you have not received the syllabus by the first day of class.. prompt 3 Fax: 609.338. The unifying theme of the ideas presented in this text is how managers should make the marketing decisions that best satisfy customer needs. 148 Princeton Road S-1 Hightstown. In addition. Thirteenth Edition.The Textbook This course is designed for use with William D. Basic Marketing: A Global-Managerial Approach. online content related to the textbook can be found at www.

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

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. you should be able to: • explain the concept of marketing and explain its importance. 10 — Introduction to Marketing: Student Guide . • 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. Examples from established companies such as Hilton Hotels Corporation and from nonprofit organizations such as the California Science Center are examined. • state key marketing challenges 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. By the end of the lesson.

Completing Lesson One

Lesson One

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

Introduction to Marketing: Student Guide

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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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

7. global buying behavior differs in the manner in which negotiations are conducted and in the way decisions are made. In organizational buying. climate. However. 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. 48 — Introduction to Marketing: Student Guide . organizational buying behavior is less culture-bound than individual buying behavior since business practices and decision-making criteria are pretty standardized across national boundaries. and customs. 9. Consumer global buying behavior differs depending on local culture.

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

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

Introduction to Marketing: Student Guide — 51 . according to his or her instructions.• Gathering data for marketing purposes is necessary. 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

along with directions on how to submit your answers. 3. Building Customer Loyalty). Take the quiz for Lesson Six. • The case study for Lesson Six. In addition. and be sure to check the Boards at least three times a week. Instead. If you are a Teleweb student (with an online component to your course). read: • The program summary for Lesson Six. complete the online exercises for Lesson Six and submit them to your instructor according to his or her instructions. ignore the assignments that are listed in the Student Guide. your instructor will deliver the quiz to you. Review the Expected Learning Outcomes for Lesson Six in the Student Guide. 5b. 2. In the Student Guide. Watch the video program for Lesson Six (Brand Management: Building an Image. 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. post any questions you have to the Discussion Boards. you will find the quiz online. Use the Lesson Six Outline in the Student Guide to help you follow the flow of the lecture. • The key points for Lesson Six. As with each lesson. if assigned by your instructor. 6. 5a. as indicated in the syllabus. If you are a Telecourse student. 1. Lesson Six Introduction to Marketing: Student Guide — 85 . Read the text assignment for Lesson Six.Completing Lesson Six In order to obtain the most out of this course. complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. If you are a Teleweb student. 4. the following steps should be taken in the sequence listed below.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lesson Seven

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

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

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

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

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

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Lesson Seven

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

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

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

Employee Incentives

4 Is of Marketing Services Franchising

Service

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

• 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 . according to his or her directions.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Product Awareness Promotional Mix Knowledge of the existence of the good or service. Pulsing Pattern Rational Appeal Reach Split-Cable Sales Test Splitting 30s Theater Unaided Recall Post-Test Wasted Coverage 160 — Introduction to Marketing: Student Guide . and public relations. Reaching an audience to whom the message of an advertisement is irrelevant. personal selling. 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. also known as “ratings” in television and radio. combined in various ways to communicate with the target market. 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. Use of cable technology to feed two different versions of an ad campaign into two sets of volunteer homes. Participants view previews of movies or TV shows that include advertisements. 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. The cost-saving practice of advertising in 30 seconds of television air time with two 15-second commercials.

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

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

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

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

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

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

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

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

Maximizing volume is the goal: After the breakeven point. but raising prices a little can make an enormous difference. The fixed cost for making the shirts is the same. and the cost of serving an extra passenger is low. In situations where pricing can stimulate demand. A skimming strategy means pricing high and aiming for low volume. for example. since the key objective is to fly with a full aircraft. Psychological Pricing. The same garment might sell for $10. ground facilities. the profit on each seat sold is typically 90 percent over and above the variable cost of carrying the extra passenger.A firm's cost structure will likely be an important factor in setting prices. promotional pricing in the form of price cuts. and the airline still can make a profit. Skimming and Penetration. and that's enough to make the sale. However. The expense of the planes. coupons. Increasing sales volume doesn't necessarily help a mushroom company raise revenues. and personnel are high regardless of whether the airline's flights are full or empty. a company can consider some different pricing strategies. so skimming works for them. 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). Other customers. pay high ticket prices. are well-made. Odd-Even pricing is the practice of setting a price one cent below a dollar level: $14. Demand will not be greatly affected by changes within that range. For the airline. Another example: a T-shirt from a famous boutique might sell for $29. and distribution can be high.99.99. such as a seasonal offer or an introductory offer. PRICING STRATEGIES Having seen many of the variables that must be factored into pricing policies. such as business flyers or late purchasers. staff. processing. in the airline industry. Odd-Even Pricing.99 seems significantly less than $15.00 in a discount store two miles away. $25. dark caves. Its fixed costs include rent on growing spaces — typically. $14. that's the target price range to set. high variable structure. For some consumers. Gucci and other high-end fashion makers have no interest in winning a broad market. but the perceived value of the shirts depends on the venue where the shopper finds them. Lesson Eleven PRICING AND PERCEIVED VALUE The highest price a company can charge is the perceived value customers have for the product. for example. for example. An airline. high-margin items distributed selectively to expensive boutiques. not exactly high-rent business premises. Promotional Pricing. has a structure of high fixed costs and low variable costs. with today's computerized cash registers. But the variable costs of labor. so it's crucial for the airline to fill those seats. The lowest price a company can charge is the variable costs.95. or rebates can increase market share. It also makes sense for companies introducing a new product that doesn't Introduction to Marketing: Student Guide — 169 . A mushroom grower is an example of a company with a low fixed. and so on. That's why. both are desirable. that's much less an issue that it used to be. If market research shows a consistently “reasonable” price for a product among the consumers surveyed. Some customers get bargain-fare tickets that run just slightly over the variable costs.00. there can be wide variations in ticket prices. Sometimes a price just seems right to a consumer. Gucci handbags. Perceived value is subject to the competitive environment.

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

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

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

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

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

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

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

as indicated in the syllabus. 5a. As with each lesson. if assigned by your instructor. If you are a Teleweb student. Read the text assignment for Lesson Twelve. 3. If you are a Telecourse student. • The case study for Lesson Twelve. the following steps should be taken in the sequence listed below. you will find the quiz online. 1. Take the quiz for Lesson Twelve. In the Student Guide. along with directions on how to submit your answers. post any questions you have to the Discussion Boards. 6. read: • The program summary for Lesson Twelve • The key points for Lesson Twelve. Watch the video program for Lesson Twelve (International Marketing: Competing in a Global Marketplace). Introduction to Marketing: Student Guide — 177 .Completing Lesson Twelve Lesson Twelve In order to obtain the most out of this course. In addition. 2. please check the syllabus for additional or altered instructions from your professor. 4. 5b. ignore the assignments that are listed in the Student Guide. Review the Expected Learning Outcomes for Lesson Twelve in the Student Guide. Use the Lesson Twelve outline in the Student Guide to help you follow the flow of the lecture. 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. Instead. If you are a Teleweb student (with an online component to your course). complete the assignments in the Student Guide and submit them to your instructor according to his or her directions. your instructor will deliver the quiz to you. complete the online exercises for Lesson Twelve and submit them to your instructor according to his or her instructions.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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) at the most appropriate time. • comprehend how students interact with the courseware. making full use of both the synchronous and asynchronous features of the courseware. discussion groups. 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 continues to support instructors during the academic term. Introduction to Marketing: Student Guide — 207 . • correct and submit grades for online tests and homework assignments effectively. University Access trains them to administer online courses effectively. etc. faculty should be able to: • interact with students in a chat room. and traditional video.University Access’s broadband content can be offered through almost any distribution channel including the Internet. • Use of our pre-produced. Training and Support University Access provides training and support to instructors as they adapt to the online teaching environment. • Customizing courses. online testing.1700 or corporate@universityaccess. high caliber courseware.com. • understand the ways students interact with the professor. corporate Intranets. • utilize each feature and function (such as announcements. private satellite networks. please contact the Corporate Sales Department at 888.960. providing feedback to improve their techniques. After the training. For more information. • customize the courseware to meet specific teaching needs.

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

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

210 — Introduction to Marketing: Student Guide .com. Throughout the course and up to thirty days after completion of the semester or quarter. all University Access students may purchase a copy of the video series from the course(s) they completed or are currently taking at the discounted student rate of $69 (plus tax and shipping. 6% NC) Total Price Limit one series at $69 plus tax and shipping. So that you may continue to enjoy its value long after the semester ends. Now you can buy the entire twelve-hour video series for just $5. 6255 Sunset Blvd. CA 90028. where applicable).960. and just mention the following special offer code: SVG1. Suite 801. we are extending this special discount offer. University Access. BILLING ADDRESS Name ________________________________________ Address ______________________________________ City __________________________________________ State Zip ________________________________________ __________________________________________ S H I P P I N G A D D R E S S (if different) Name ________________________________________ Address ______________________________________ City __________________________________________ State Zip ________________________________________ __________________________________________ Phone ________________________________________ (include area code) Phone ________________________________________ (include area code) E-Mail ________________________________________ E-Mail ________________________________________ Pricing t Current Student Price: $69 t Regular Price: (limit one) School _________________________________________ Semester ____________________ $295 Payment Method t Check (make payable to University Access) t Credit Card # _____________________________________ Expiration Date _________________ Name on Card _________________________ Signature ____________________________________ Quantity Video Title/Series Introduction to Marketing (home use only) Subtotal Shipping ($8 per series) Sales Tax (8. where applicable. or by email at videoorders@universityaccess.1700.75 per hour — more than a 75 percent discount off the retail price of $295! For more information.25% CA. Submit order form by fax: (323) 960-1707 Or mail to: Video Sales Department. please contact our video sales department by phone at 888.Video Order Form University Access would like to thank you for enrolling in one of our courses. Los Angeles.

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