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

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

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

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

be sure to contact your instructor. Box 445 . which is essentially about how to do a superior job of satisfying customers..338.5625 Getting Started You will receive a class syllabus from your instructor that will contain a complete overview of the course requirements.426. online content related to the textbook can be found at www. Basic Marketing: A Global-Managerial Approach.3987. Perreault. 8 — Introduction to Marketing: Student Guide . In addition.com/fourps. Jerome McCarthy’s text. If you have not received the syllabus by the first day of class.The Textbook This course is designed for use with William D. Thirteenth Edition.mhhe. 148 Princeton Road S-1 Hightstown. New York: Irwin:McGraw-Hlll. and E. prompt 3 Fax: 609. You can request a textbook desk copy by sending your request on institutional letterhead to: The McGraw-Hill Companies College Division P O. The text focuses not only on marketing but also on marketing strategy planning. Each video program is paired with a corresponding reading assignment. The unifying theme of the ideas presented in this text is how managers should make the marketing decisions that best satisfy customer needs. NJ 08520-1450 Phone: 800. Jr.

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

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

Completing Lesson One

Lesson One

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

Introduction to Marketing: Student Guide

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Lesson One Outline

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

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

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Introduction to Marketing: Student Guide

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

Lesson One

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

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

VI. ETHICS IN MARKETING

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

VIII. SUMMARY

Introduction to Marketing: Student Guide

13

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

Lesson One

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And whole industries have been supplanted by new ones as consumer preferences changed before the old industries could respond. 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. In prosperous times. and discretionary income from a variety of government and private sources that marketers watch with great care. government regulators typically focus on four areas: Industrial. of technological changes. Opportunities await companies that can get ahead of trends and spot an opportunity early. In the United States and developed countries. Introduction to Marketing: Student Guide — 31 . And this is just the beginning of such changes. to ensure fair business practices and competition. creating whole new businesses while making others nearly obsolete. The time and money spent bringing a “new” product to market can be wasted if a competitive product is already available. Lesson Two ECONOMIC ENVIRONMENT Consumer spending represents two-thirds of all economic activity in the United States. REGULATORY AGENCIES Marketers must appreciate the various rules and regulations overseen by federal. COMPETITIVE ENVIRONMENT Companies must pay close attention to the competitive climate in which they work. A company must know what business it’s in. to promote fair competition among businesses and fairness to consumers Health and Safety. quick-preparation foods. or meals that can be eaten on the run. The way a company runs itself. and even ahead. and second. disposable income. state.convenience in the form of delivered meals. These decisions all are vital to marketers. to protect consumers and their health and safety. to restrict marketing of such products to young people Consumer Protection. people feel confident in their ability to get and keep a good-paying job. 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. so the strength of the overall economy and the level of consumer confidence in the country are critical for marketers. Companies are responsible for knowing the regulatory climate in which they work and for observing the law. and they’re all reflected in hard data on such measurements as gross income. and how it markets its products may be governed under regulations designed to serve two key functions: first. Nevertheless. marketers must stay abreast. so they make more ambitious decisions about buying expensive items such as cars and homes. Know Your Business. and local regulatory agencies. It sounds simple. safety. to ensure the quality. and they take on debt more willingly.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lesson Five

Stages of Product Development
The product development process has seven key stages. 1. Idea Generation. Good companies work continually to generate ideas from every possible source. Employees, customer research, feedback from customers, news about the competition, management retreats, even outside “creativity stimulation” firms. 2. Screening. Getting a lot of ideas can be easy, but they must be sifted like dirt to find those golden nuggets. Screening evaluates ideas against a number of criteria to sift out the useless ones and find the ones that companies will want to carry to the next step. 3. Concept Development. A select few ideas get carried into concept development, the stage where companies may build prototypes or talk with customers about how well they might like this proposed new product. Formal market research might be used here to evaluate the idea before it moves on to the next stage. 4. Business Analysis. How well would this new product fit with the company's other products, prices, promotions, and placement strategies? 5. Product Testing. If the product makes it to this stage, it's actually built or created and then actively tested. It may undergo vigorous, lengthy, and costly testing by agencies such as the Food and Drug Administration or the Underwriters
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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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Maintaining market share and adding product features are the focus in this phase. Typically sales increase. • Decline Phase. Sales and profits are declining often due to changes in environmental factors. Lesson Five Introduction to Marketing: Student Guide — 79 . having a different brand name in each country for an identical product. and profits peak. The product is first launched during this stage. competitors emerge. • Growth Phase. Sales are slow and profits are minimal. Brand differentiation is key in this stage. even though the formula is different or. • Maturity Phase. Creating consumer awareness and stimulating trial is the focus during this period.• Introductory phase. Another issue has to do with keeping the same brand name worldwide. 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. The company must decide whether to delete or harvest the product. Sales even out and less entrenched competitors leave. conversely.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

to a series of wholesalers. and Professor Quelch examines the different channels available to take a product from the factory to the user. The wholesalers break the bulk shipments into smaller lots for delivery to warehouses or individual retail stores. A seasoned marketer. A typical distribution channel starts with a manufacturer shipping goods in bulk via. and often the one requiring the most imagination. and encompasses all the intermediaries.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. 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 all the transactions among them. ROLE OF DISTRIBUTION Distribution simply means the movement of goods from one point to another. distribution channels perform three vital functions. truck or rail. Functions of Distribution Channels In order to make the exchanges between manufacturer and customers more efficient and costeffective. Supply chain management is examined. also known as Distribution. and the lecture closes with the distribution challenges inherent in the global marketplace. Distribution plays a central role in the marketing of any good or service. 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. An amazing new product doesn't help the company or the consumer unless the company can answer some key questions: • • • • • • • • • Should this be sold directly to the consumer. and so are distribution trends. The channel. Placement is a vital part of a successful marketing strategy. The term “distribution channels” is defined. starts with the producer at one end and ends with the customer at the other end. The retailers then stock the products in their shelves for the customer. Introduction to Marketing: Student Guide — 119 . then. How does a marketer select the optimal one? Channel selection and strategy are covered. for example. Lesson Eight discusses placement and the crucial role it plays in the overall marketing process. Professor Quelch examines the third P in the marketing mix: Placement. says Professor Quelch.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Introduction to Marketing: Student Guide — 149 Lesson Ten . Frequency is the average number of times a person is exposed to an ad during a particular planning period. VI. and paid hyperlinks. Effective if a viewer passes them repeatedly on a regular route. 2. Many advertisers use 15 second commercials. Includes billboards. 4. Program-length ads that combine education.S. Radio more segmented than TV. Inappropriate for products that must be seen to be appreciated. than television stations. 1.2. 4. 3. it accomplishes the company's objectives. 2. general and specialized. promotion. 4. Typically it competes for attention with other activities the listener is doing. F Outdoor . etc. 6. 25 percent of U. C. households have bought products advertised on infomercials. Other Media 1. Print helps consumers understand features and benefits of complicated products. 6.000 of the targeted individuals or households. 2. 2. 5. magazines and trade journals. EFFECTIVENESS OF ADVERTISING A. and entertainment. Visible trademarks and logos. during. explain.S. There are seven times more radio stations in the U. 2. Powerful advertising medium because of its reach. Print 1. Visual impact has to be instantaneous. 3. 2. 3. Television — Standard Commercials 1. 3. E. Options includes company sites. Nontraditional Media 1. D. 5. banners on other sites. B. due to high cost. bus banners. and how well. 3. CPM. Rapidly growing global medium. so wasted coverage is much less than on TV. Over 400 new magazines introduced every year in the United States. Marketer's own product is a form of advertising (Campbell's Soup). 2. Internet 1. Far cheaper than making an ad for television. I. national and local. Promotional video to promote. G. Reach multiplied by frequency yields gross rating points: R x F = GRP . Long. Radio 1. the cost of reaching 1. but expensive. posters. Wide range of options: newspapers. Number of readers of a magazine might far exceed its number of subscribers. called splitting 30s. and sell. complicated messages aren't appropriate for standard commercials. bench ads. and after an ad campaign to measure if. 3. Reach only the people on that route. or cost per thousand. Television — Infomercials 1. Testing is done before. many for niche audiences. neon signs. 4. Helps marketers target very specific markets. H. Infomercials have a full half-hour to inform and inspire a viewer to act. Reader can linger and reread something interesting and valuable. Radio can still convey powerful drama and illusion.

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

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

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

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

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

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

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

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

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

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

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

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

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. according to his or her directions.that it demonstrates. saying whether or not you feel this is the most appropriate method to use and why.

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

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

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

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

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

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

A skimming strategy means pricing high and aiming for low volume.99. That's why. $14. Some customers get bargain-fare tickets that run just slightly over the variable costs. for example. the profit on each seat sold is typically 90 percent over and above the variable cost of carrying the extra passenger. However. and the airline still can make a profit. dark caves.99 seems significantly less than $15. in the airline industry. Psychological Pricing. but the perceived value of the shirts depends on the venue where the shopper finds them. that's much less an issue that it used to be. The same garment might sell for $10. with today's computerized cash registers. The lowest price a company can charge is the variable costs. and that's enough to make the sale. or rebates can increase market share. Demand will not be greatly affected by changes within that range. Lesson Eleven PRICING AND PERCEIVED VALUE The highest price a company can charge is the perceived value customers have for the product. But the variable costs of labor. for example. so skimming works for them. For some consumers. Increasing sales volume doesn't necessarily help a mushroom company raise revenues. and so on. A mushroom grower is an example of a company with a low fixed. Perceived value is subject to the competitive environment.99. Odd-Even Pricing. so it's crucial for the airline to fill those seats. Gucci handbags. $25. In situations where pricing can stimulate demand. has a structure of high fixed costs and low variable costs.A firm's cost structure will likely be an important factor in setting prices. since the key objective is to fly with a full aircraft. Maximizing volume is the goal: After the breakeven point. PRICING STRATEGIES Having seen many of the variables that must be factored into pricing policies. but raising prices a little can make an enormous difference. The fixed cost for making the shirts is the same. Promotional Pricing. It also makes sense for companies introducing a new product that doesn't Introduction to Marketing: Student Guide — 169 . there can be wide variations in ticket prices. are well-made. Odd-Even pricing is the practice of setting a price one cent below a dollar level: $14.00 in a discount store two miles away. such as a seasonal offer or an introductory offer. staff. and distribution can be high. high-margin items distributed selectively to expensive boutiques. pay high ticket prices.00. such as business flyers or late purchasers. for example. For the airline. Sometimes a price just seems right to a consumer. Its fixed costs include rent on growing spaces — typically. that's the target price range to set. Skimming and Penetration. a company can consider some different pricing strategies. ground facilities. and the cost of serving an extra passenger is low. processing. both are desirable.95. not exactly high-rent business premises. promotional pricing in the form of price cuts. If market research shows a consistently “reasonable” price for a product among the consumers surveyed. and personnel are high regardless of whether the airline's flights are full or empty. Another example: a T-shirt from a famous boutique might sell for $29. Other customers. The expense of the planes. 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). coupons. An airline. high variable structure. Gucci and other high-end fashion makers have no interest in winning a broad market.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

and military bases. Subway Restaurants Today the world's largest submarine sandwich franchise. casinos. Connecticut. Volvo became the first European car manufacturer to open a North American assembly plant in the post war era. the company’s first vehicle was completed in 1990. California. in 1965. and pricing of three new Toyota models for the years 1999 and 2000. based in Venice. Subway. Connecticut. design and engineering. 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. was conceived in 1982 and officially announced in 1985 as a response to the success of Japanese automakers in the United States. development.. and marine engines. Inc. customer satisfaction. In 1963. trucks. the Toyota Group consists of eight employees age thirty-five and under. Volvo Group companies in North America now include makers and dealers of cars. not only for product quality. but also for community relations. who played in venues across the United States before roughly 500. and is charged with increasing Toyota’s market share among buyers in the same demographic..000 restaurants in seventy countries. amusement parks. including the Echo. Women’s World Cup Women’s World Cup 1999 Organizing Committee. With over 14. Saturn has won numerous awards. bus and railroad terminals. labor relations. Toyota Motor Sales of America/Toyota Genesis Group Convened in 1998 by Toyota Motor Sales USA.000 ticket holders. Subway began as a storefront in Bridgeport. Rockleigh. Inc. a subsidiary of General Motors Corporation. and spare parts to hobbyists and retailers around the world. makes and sells model airplane and glider kits. and product design. durable products. based in Milford. Trick R/C was founded in 1996. Since then. arenas. truck stops. The company’s signature product is its Zagi line of radio-operated electronic aerobatic wings suitable for sport gliding or combat. The Genesis Group is credited with influencing the design.Saturn Corporation Saturn Corporation. Created to be a “clean slate” and to take innovative directions in technology. and marketing. and its twomillionth produced in 1999. Trick R/C Products Trick R/C Products. airports. and opened its first franchise in 1974. radio controllers. Two years of qualifying matches culminated in the final round of teams from sixteen nations. markets its sandwiches as healthy alternatives to other fast food. and makes a specialty of operating in non-traditional locations including convenience stores. Introduction to Marketing: Student Guide — 195 . Based on Jerry and Joe Teisan’s lifelong interest in model aviation. 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. Still owned by its co-founders. grocery stores. New Jersey-based Volvo has built a reputation for safe. Subway has more franchises than any other restaurant chain except McDonald's. when Internet-based global marketing permitted the Teisans to turn a handicraft with devoted local buyers into a business with customers worldwide. hospitals. the lowest-priced Japanese car on the market and the company’s first car in five years to start at under $10.000. buses.

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

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

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

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

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

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

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

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

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

California: University Access. MasterCard.960.. Please refer to the following listings or the Faculty Guide for ordering information. Select the course name — Introduction to Marketing: Competing in the 21st Century — and follow the instructions.1700 or at clientservice@universityaccess.755.com Students — To Order Online Textbook packages.960. Box 445 .1700 to place an order. NJ 08520-1450 Phone: 800.rmimedia.338. University Access Sales Service Department Phone: 888. plus ordering information. William D.338. and videos for the telecourse and teleweb course can be ordered online through the University Access Campus Store at www.745.5645 Or to order the student guide only: Introduction to Marketing: Student Guide.1700 Fax: 323.9950 clientservice@universityaccess. Faculty and Campus Bookstores Faculty and campus bookstores can obtain textbook packages and student guides by contacting the publisher directly.5480..3987 Fax: 614. When ordering materials directly from University Access.com. Introduction to Marketing: Student Guide — 205 . Please call 888. a purchase order or check must be received before the materials can be shipped. To rent online. Textbook and ordering information is also available in the Faculty Guide.5645 The McGraw-Hill Companies College Division P O.962. Student Guides.com. prompt 3 Fax: 609. New York: Irwin/McGraw-Hill. American Express and Discover are accepted.3987.3987 Fax: 614. Textbook Package Perreault. Basic Marketing: A Global-Managerial Approach.com and proceed to the Telecourse Rental Program area. 148 Princeton Road S-1 Hightstown. Jerome McCarthy.338. 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. Video Rentals Students can rent course videos from RMI Media by calling 800. 13th Edition. 1999 Videos (box set contains entire 12-hour program) Introduction to Marketing Student Video Set Los Angeles. Jr.960. The Faculty Guide is reserved for faculty and instructors and is available only to licensees of University Access courseware. go to www. please contact University Access directly at 888.755.5625 The McGraw-Hill Companies Phone: 800.426.universityaccess. If broadcast master videos of this course and/or other courses are needed.Course Materials Information What follows is a comprehensive list of all the class materials needed for Introduction to Marketing: Competing in the 21st Century. Visa. and E. 1999.

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

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

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

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