Marketing Course Guide | Marketing | Strategic Management

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

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

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

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

8 — Introduction to Marketing: Student Guide . The unifying theme of the ideas presented in this text is how managers should make the marketing decisions that best satisfy customer needs. You can request a textbook desk copy by sending your request on institutional letterhead to: The McGraw-Hill Companies College Division P O.com/fourps.The Textbook This course is designed for use with William D. The text focuses not only on marketing but also on marketing strategy planning. NJ 08520-1450 Phone: 800. In addition. Jr. Each video program is paired with a corresponding reading assignment.mhhe. which is essentially about how to do a superior job of satisfying customers. Jerome McCarthy’s text. be sure to contact your instructor.5625 Getting Started You will receive a class syllabus from your instructor that will contain a complete overview of the course requirements. 148 Princeton Road S-1 Hightstown. prompt 3 Fax: 609. Thirteenth Edition.426.3987. and E. New York: Irwin:McGraw-Hlll. Perreault.338.. online content related to the textbook can be found at www. If you have not received the syllabus by the first day of class. Basic Marketing: A Global-Managerial Approach. Box 445 .

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

Lesson One The Marketing Process Creating value Expected Learning Outcomes Lesson One introduces the topics to be covered in Introduction to Marketing: Competing in the 21st Century. • identify marketing’s function in both corporations and nonprofit organizations. • state key marketing challenges in the 21st century. you should be able to: • explain the concept of marketing and explain its importance. Examples from established companies such as Hilton Hotels Corporation and from nonprofit organizations such as the California Science Center are examined. establishing the terminology and principles used throughout the rest of the course. 10 — Introduction to Marketing: Student Guide . By the end of the lesson. • describe the marketing process. • 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Quantitative. Only by truly understanding the consumer’s wants. and women have relatively little influence. 46 — Introduction to Marketing: Student Guide . it needs that third leg: personal experience and insight on the part of a good marketer.” Quantitative research complements qualitative research by dealing with much larger groups. seasonal changes. They’re a good way for marketers to learn to think as the customer thinks. and it renders their feedback into percentages. attitudes. Good marketing takes the courage of a marketer’s convictions. not just between countries. and hear their comments. watch their behaviors. and emotional responses rather than yes or no answers. Focus groups sit and talk for ninety minutes to two hours and explore issues about a company in depth. Qualitative market research is “soft” — it comes from open-ended discussions that yield opinions. Quantitative market research is structured research that can be presented in numerical format — “hard data. all will affect a marketer’s approach.decisions around the world. Market research data is only as good as the questions being asked. if it’s not done well. The best way for marketers to understand their customers is by doing thorough market research. be warned: Market research can do more to throw a company off track than help it. MARKET RESEARCH Despite all the differences. and to hear exactly how consumers express their interests or opinions about what they like. Decision-Making Units may vary from culture to culture. To stand. Obviously. needs. averages. A good marketer makes the tripod stand by adding his or her own intuitions and questions. The problem with focus groups is that they’re too small. men make all the important buying decisions. Some vital questions don’t get asked in focus groups. ask them questions. so 50 percent of the market will like it. and sometimes the data fails to provide a deep understanding of the customer. Sometimes the best products get created after everyone has already confirmed they’d fail. It’s important for marketers to get out into the field. dislike. eight people don’t represent an entire market. Local economies. A common way to gather qualitative market research data is through focus groups. but between regions within them. based on — and this takes us back to the beginning — that passionate interest in consumer behavior. small gatherings of six to eight selected consumers moderated by a skilled leader (usually not a company employee). and combining the two can still be misleading. and motivations can a company create products that respond to those needs. Statistics and analyses may do more to obscure an opportunity than they do to reveal it. 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. Inspiration comes more often from hard work in the field than it does from reports in the corporate headquarters. Something else to consider is the makeup of the Decision-Making Unit. and other statistics that can be readily compared and measured. but each culture has its version of the family. see the customers. They can all offer special challenges to marketers. and some things can’t be measured statistically. holidays and giftgiving customs. Market research is a tripod with three legs. People will always have certain needs and seek certain benefits. want. so companies can’t extrapolate off the group and say. 50 percent of the focus group likes this feature. There are two kinds of market research: Qualitative. there are some fundamentals of consumer psychology and buying behavior that are more or less standard worldwide. Marketers. and don’t want. In many countries. Consider for example the different cuisines worldwide.

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

9. global buying behavior differs in the manner in which negotiations are conducted and in the way decisions are made. Consumer global buying behavior differs depending on local culture. However. organizational buying behavior is less culture-bound than individual buying behavior since business practices and decision-making criteria are pretty standardized across national boundaries. In organizational buying. and customs. Organizational buying behavior differs from consumer buying behavior in the following ways: • Smaller number of buyers • Sales involve higher dollar amounts • More complex buying behavior 8. 48 — Introduction to Marketing: Student Guide .7. climate.

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

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

according to his or her instructions. Introduction to Marketing: Student Guide — 51 . How are your responses different than when answered from a consumer’s point of view? Submit your responses to the questions raised by this dilemma to your instructor.• Gathering data for marketing purposes is necessary. 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

They use uniform procedures and standards to give the customer spotless premises. an error by an accountant all are examples of very common service inconsistencies. In general. The consumer can’t separate the deliverer of the service from the actual service itself. a mixed-up order in a restaurant. So again. Because most services are intangible and don’t have an associated product component. branding is vitally important. A customer buying Campbell's Tomato Soup at the market is several steps removed from the Campbell company. McDonald's is a great example of this. The seasons. fast service that's nearly 100 percent consistent from restaurant to restaurant. and that affects the total service experience — and whether the customer would buy that service again. A bad haircut. Most services tend to be produced and consumed simultaneously. They need to train employees extensively. McDonald's invests heavily in training employees. and the results help them keep a high level of acceptance and trust among their customers. Knowing what customers need. HOW DO THE 4 Ps APPLY TO SERVICE MARKETING? Product. and friendly. For both. the 4 Ps of product marketing still apply to services. Inventory is the third I. or financial advisors. banks. As mentioned. Timing is crucial. want. the customer is talking directly with a McDonald's employee when making the purchase. 1. even the letterhead. whether it's Jeeps or Cokes. Most of the product marketing principles discussed in earlier lectures apply as well. but at McDonald's. Service offerers need to pay close attention not only to what they're offering. but also in their interactions with the customer. customers are more involved in service transactions than they are in buying products. doctors. 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. not only in the tasks they do. they are more 104 — Introduction to Marketing: Student Guide . Services are perishable. even the time of day. Do their clean. any tangible aspects of it must be emphasized. with some variations. Demand fluctuates. But services can be inconsistent. Consider the offices and appearances of law firms. and a consistently good experience for the customer. Consistency is expected for tangible goods. and value is the key to success. but an airline that flies with empty seats on Tuesday can't sell those seats on Wednesday.intangible. They deliver more than food. Companies offering services must try to stop inconsistency before it starts by creating internal standards of conduct and quality control. but when. training is critically important. Effective branding for a service means delivering consistent quality and satisfaction. Manufacturers of hairbrushes can store those products for future sale. and service offerers must keep that in mind. offices. affect demand. SERVICE MARKETING MIX Notwithstanding the differences between marketing products and marketing services. Inseparability is the fourth I. They're useful only at the time they're offered. must carry a message that reassures the customer. The company's address. furnishings. a familiar menu.

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

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

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

Lesson Seven

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

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

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

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

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

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Key Points

Lesson Seven

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

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

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

Employee Incentives

4 Is of Marketing Services Franchising

Service

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

• 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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. However.500.000 items. You have just been given a promotion. Within one year. according to his or her directions. where experts volunteered to put on demonstrations of various home improvement projects. Assignment Two: The Cost of Salty Snacks In the past. 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. has always based its pricing solely on cost. Once you have completed this one-page assignment. your company. In addition. You don’t feel that your company’s pricing policy should be based strictly on cost. each with a hardware supply section. send it to your instructor. They employed a knowledgeable and personable staff. Their goal was not to only sell hardware supplies but also to serve as a resource to their small community. Salty Snack Foods. you are now the marketing manager. make a recommendation for a pricing policy that is sounder.000 per year and they carried more than 20.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. Send your assignment to your instructor according to his or her directions. a Super Wal-Mart and a Super Kmart opened within five miles of their store. Their sales peaked at about $1. 174 — Introduction to Marketing: Student Guide . Bob and Betty could no longer sustain their business. The store held 100 free “How-To” seminars per year.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

5645 Or to order the student guide only: Introduction to Marketing: Student Guide..755.3987. Visa.426.1700 Fax: 323.960.960. MasterCard. prompt 3 Fax: 609.com. Select the course name — Introduction to Marketing: Competing in the 21st Century — and follow the instructions.. 1999. Faculty and Campus Bookstores Faculty and campus bookstores can obtain textbook packages and student guides by contacting the publisher directly. New York: Irwin/McGraw-Hill 1999 and Introduction to Marketing: Student Guide Requests for textbook desk copies must be made on institutional letterhead and sent to: The McGraw-Hill Companies Phone: 800.5625 The McGraw-Hill Companies Phone: 800.338. University Access Sales Service Department Phone: 888. Textbook Package Perreault. Introduction to Marketing: Student Guide — 205 . When ordering materials directly from University Access.com Students — To Order Online Textbook packages. To rent online.1700 to place an order. The Faculty Guide is reserved for faculty and instructors and is available only to licensees of University Access courseware.rmimedia. and videos for the telecourse and teleweb course can be ordered online through the University Access Campus Store at www. Textbook and ordering information is also available in the Faculty Guide.com. Jerome McCarthy.755. go to www. Basic Marketing: A Global-Managerial Approach. Please refer to the following listings or the Faculty Guide for ordering information. a purchase order or check must be received before the materials can be shipped. American Express and Discover are accepted.338.Course Materials Information What follows is a comprehensive list of all the class materials needed for Introduction to Marketing: Competing in the 21st Century. William D.universityaccess. plus ordering information. Box 445 . 1999 Videos (box set contains entire 12-hour program) Introduction to Marketing Student Video Set Los Angeles. 148 Princeton Road S-1 Hightstown.338. New York: Irwin/McGraw-Hill. Jr. California: University Access.1700 or at clientservice@universityaccess.9950 clientservice@universityaccess. If broadcast master videos of this course and/or other courses are needed. Video Rentals Students can rent course videos from RMI Media by calling 800.5480.com and proceed to the Telecourse Rental Program area. Student Guides.745.960. and E. 13th Edition. NJ 08520-1450 Phone: 800. please contact University Access directly at 888.3987 Fax: 614. Please call 888.5645 The McGraw-Hill Companies College Division P O.3987 Fax: 614.962.

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

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

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

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

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