4

Министерство образования Российской Федерации

Хабаровская государственная академия экономики и права
Кафедра иностранных языков и межкультурной деловой коммуникации

Н. В. Лобастова

Международный маркетинг

Учебное пособие

Хабаровск 2002
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Unit I.
What is marketing?

Reading

Marketing touches everyone’s life. It is the means by which a standard of living

is developed and delivered to people. Many people confuse marketing with
selling, but in fact marketing occurs both before and after the selling effect.
Marketing actually combines many activities- marketing research, product
development, distribution, pricing, advertising, personal selling, and others-
designed to sense, serve, and satisfy consumer needs while meeting the
organization’s goal. Marketing begins and ends with the customer. Truly
successful marketing understands the customer so well that the product or
service satisfies his need so perfectly that the customer is desperate to buy it.
The product almost sells itself. Of course this will only happen if the product or
service is better than those of competitors. The core concepts of marketing are
needs, wants, demands, products, exchange, transactions, and markets.

Companies are always looking for marketing opportunities- possibilities of

filling unsatisfied needs in areas in which they are likely to enjoy a different
advantage, due to their particular competencies. Marketing opportunities are
generally isolated by market segmentation- dividing a market into submarkets or
segments according to customers’ requirements or buying habits. Once a target
market has been identified, a company has to decide what goods or services to
offer, always remembering the existence of competitors.

Marketers do not only identify consumer needs, they can anticipate them by
developing new products. They will then have to design marketing strategies
and plan marketing programs, and then organize, implement, and control the
marketing effort. Once the basic offer, for example a product concept, has been
established, the company has to think about the marketing mix- the set of
elements of a marketing program, their integration, and the amount of effort that
a company can expend on them to influence the target market. The best-known
classification of these elements is the Four P’s: Product, Price, Promotion and
Place or the marketing mix.

Aspects to be considered in marketing a product include its quality, its features,

style, brand name, size, packaging, services and guarantee, while price includes
consideration of things like the basic list price, discounts, the length of the
payment period, and possible credit terms. Place in a marketing mix includes
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such factors as distribution channels, coverage of the market, locations of points

of sale, inventory size, and so on. Promotion groups together advertising,
publicity, sales promotion, and personal selling.

The next stage is to create long-term demand, perhaps by modifying particular

features of the product to satisfy changes in consumer needs or market
conditions.
Marketing can also involve the attempt to influence or change consumers’ needs
and wants. Companies try to do this in order to sell their products; governments
and health authorities sometimes try to change people’s habits for their own
good or for the general good. In other words marketers must be good at
managing the level, timing and composition of demand, since actual demand can
be different from what the organization wants.

Marketing practices have a major impact on people in our society. Different

goals have been proposed for a marketing system, such as maximizing
consumption, consumer choice, or quality of life. Interest in marketing is
growing as more organizations in the business, international, and non-profit
sectors recognize the ways in which marketing can improve performance.

Understanding the main points

1. What activities does marketing combine? What are all these activities
aimed at? Who do the marketers principally focus their attention on?
2. What is meant under marketing opportunities of a company? How should
a company act to enjoy its advantages and keep control over this or that
market segment?
3. What is a marketing mix? Give the definition of each P.
4. Why is the creating of long-term demand so vital for marketing?
5. Why have many nonprofit organizations adopted marketing techniques in
recent years? For example, how does your academy market itself to attract
new students?
6. As college students, you and your friends sometimes discuss the various
courses you are taking. One of your friends says to you, “Marketing’s
nothing but selling stuff. Anybody can do that without taking a course.”
Another friend says, ”Yeah, all marketers do is write stupid ads.” As a
role- playing exercise, present your arguments against these statements to
your class.

Vocabulary focus
I. Look through the text and match the words in italics with their definitions
given below. Read and translate the sentences with these words.
1. mixture; a group of different things, people, etc
2. for smth that brings gain, advantage or improvement
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3. a limited group of people or area at which smth is especially directed

4. the most important or central part of anything
5. to be unable to tell the difference between; to mix up in one’s mind
6. to plan or develop for certain purpose
7. to discover; to detect
8. all the goods in one place; stock
9. to be eager for smth or to do smth
10.to possess; to have
11.the amount of space given by a company to a particular place
12.to change a plan, particularly slightly
13.demand lasting for a long time
14.to expect; to imagine in advance what will happen
15.to recognize; to discover
16.a type of product produced by a particular maker
17. to put into practice; to carry out
18. to have an effect/influence on

II. Read and translate the following sentences paying attention to the different
types of marketing.
1. Conversational marketing is the difficult task of reversing negative
demand, eg. for dental work, or hiring disabled people.
2. Stimulational marketing is necessary where there’s no demand, eg. which
often happens with new products and services.
3. Developmental marketing involves developing a product or service for
which there is clearly a latent demand, eg. a non-polluting and fuel-
efficient car.
4. Remarketing involves revitalizing falling demand, eg. for churches, inner
city areas, or ageing film stars.
5. Synchromarketing involves altering the time pattern of irregular demand,
eg. for public transport between rush hours, or for ski resorts in the
summer.
6. Maintenance marketing is a matter of retaining a current (maybe full)
level of demand, eg. in the face of competition or changing tastes.
7. Demarketing is the attempt (by governments rather than private
businesses) to reduce overfull demand, permanently or temporarily, eg.
for some roads and bridges during rush hours.
8. Countermarketing is the attempt to destroy unwholesome demand for
products that are considered undesirable, eg. cigarettes, drugs, handguns,
or extremist political parties.

reverse – change alter – make different

latent - not seen yet retain - keep
revitalize - to give new life unwholesome - harmful
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III. Match up these marketing actions with the eight tasks described above.
Tell under what circumstances we should use them.

a. Alter the pattern of demand through flexible pricing, promotion, and other
incentives.
b. Connect the benefits of the product with people’s needs and interests.
c. Find new target markets, change product features, develop more effective
communication.
d. Find out why people dislike the product, and redesign it, lower prices, and
use more positive promotion.
e. Increase prices, reduce availability, make people scared.
f. Keep up or improve quality and continually measure consumer satisfaction.
g. Measure the size of the potential market and develop the goods and
services that will satisfy it.
h. Raise prices, reduce promotion and the level of service.

IV. Rearrange the sentences below to make a complete text about

marketing and sales.

a. Consequently, senior management tends to set sales goals on the basis of

the economic and competitive situation, as well as the need to keep plants
running at or near capacity, and then tries to find ways to sell the output in
the short term.
b. Furthermore, sales departments generally resist the dominance of
marketing, as they have different objectives.
c. In capital intensive industries such as steel or chemicals, for example, it is
desirable to keep equipment operating as much as possible.
d. In other words, products are sold rather than bought.
e. In other words, you don’t sell what you make; you make what will be
bought, so that selling becomes almost superfluous, i.e. not needed or
wanted.
f. Most contemporary marketing theorists distinguish between the now out-
of-date ‘selling concept’ and the modern ‘marketing concept’.
g. Of course, this is a little utopian: the existence of competitors offering
comparable products will always make some selling necessary.
h. The former – the selling concept – assumes that resisting consumers have
to be persuaded by vigorous ( active and energetic) hard-selling
techniques to buy non-essential goods or services.
i. The marketing concept, on the contrary, assumes that the producer’s task
is to find wants and fill them.
j. They are generally interested in the short-term and in the achieving current
sales targets rather than planning the right products and marketing strategy
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to meet consumers’ long-term needs.

k. Yet although marketing tends to dominate in consumer goods companies,
there are still industries in which the production and sales departments
tend to be as important.

V. Complete the following collocations from the text above. Find the
sentences with them, read and translate.

1. hard selling …….

2. ……….. contrary
3. ……….. words
4. to keep plants ……
5. to sell the output ……….. term
6. ……….. selling concept
7. ……….. sales targets
8. ……….. sales goals
9. ……….. intensive …….
10. to meet consumers’ ………..

VI. Read the following sentences about the market structure. Choose the
correct alternative to complete each sentence:

1. In many markets there is a firm with a much larger market share than its
competitors, called a ………………… .
a. market leader b. monopolist c. multinational

2. A large company having business operations in many countries is called a

………..
a. market leader b. multinational c. monopolist

3. A company that is number two in a market, but which would like to

become number one- think of Pepsi vs. Coke, Reebok vs. Hertz – is known
as a ………
a. market challenger b. market competitor c. market follower
vs(BrE)-v(AmE)- versus (against)

4. A smaller company in a market, more or less content with its existing

market share and presenting no threat to the market leader, is called a ….
a. market challenger b. market follower c. market sharer

5. A small company that concentrates on one or more particular niches or

small market segments is called ……….
a. market failure b. market follower c. market nicher
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6. A market in which one single producer can fix an artificially high price is
called …………….. .
a. homogeneous market b. monopoly c. undifferentiated market

7. A market selling goods aimed at the widest possible number of consumers

(a famous example was selling the Model T Ford) is called ………….
a. undifferentiated market b. monopoly c. market nicher

8. A market dominated by a few large suppliers, and which it is hard for new
companies to break into, is called a/an ……………
a. conglomerate b. market concentration c. oligopoly

9. A large corporation or a group of companies marketing a large number of

different goods is called a …………….
a. conglomerate b. market nicher c. oligopoly

9. A group of companies which choose to collaborate by sharing out

markets, co-ordinating their prices, and so on, form a ………………
a. cartel b. conspiracy c. joint venture

11. A situation in which the market leader can determine the price that its
competitors can charge is called …………
a. dominant- firm oligopoly b. market failure c. monopoly

12. A market in which it is normal to have only one supplier – e.g. utilities
such as water, gas, electricity – is called a ………..
a. conglomerate b. natural monopoly c. pure monopoly

VII. It is very common to use military metafors in business: we talk

about management strategy and tactics, and takeover deals are often
described as coups and raids.

Listening. Listen to the marketing manager talking about her company.

Complete the passage below. (New Insights into Business p.125)

It’s true that we’ve been deeply affected by our competitor’s latest
s………… s………… . A new plan of action must be developed as soon as
possible.
L…………….. have been particularly high in every foreign c…………. . We
have lost m………. m………. in Russia and Venezuela. Even in the home
market we c………… c………. . However we are not going to g…… u… .
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We are developing a new m……… p…….. which will help us regain some
of our market share. The war will c……….. for some time yet but we are
confident that we can still win.

Replace the words and phrases you inserted in the text with military
expressions given below.
surprise attack, territory, casualties, surrender, are outgunned,
campaign, key strongholds, rage on.

Reading. Complete the texts by inserting the words below each text. Read and
translate the texts.

An Offensive strategy
We’ve been making successful ………. into their market share for 18
months, and now is the time for a change of ……….. . We’re going for a
frontal …….
We have an excellent product, and if we use all the ……… in our …….. , we
should be able to convince consumers of this fact. We will …… all our
resources and launch a media ………… . This will be the most expensive
…… in our history. We have also recruited twenty new sales reps and we
are going to send our ……… into the field, to …….. their market.

arsenal, attack, blitz, campaign, inroads, invade, mobilize, tactics,

troops, weapons.

A Defensive Strategy
We are going to dig in and defend our ……. . This is a suicide ….. by our
competitors. They probably expect us to ……. , and a small price cut won’t
………… them. We have enough cash reserves to win a price ……… , so I
suggest that we cut our price 20% immediately. The best form of …….. is
attack. You’ll see, they’ll …….. within two weeks. This is a ……..they’re going
to lose. There is no way they are going to …… our market.

capture, retaliate, defense, territory, deter, war, fight, withdraw,

mission.

A Takeover bid
bid- an offer to buy smth at a particular price; to make an offer
After striking the first blow with their unsuccessful dawn …… last month,
Wright & Bergkamp have now launched a takeover bid for their High Street
rivals Merson’s. A fierce …….. is expected for control of the electronics
retailer. For Merson’s chairman David Adams, the bid came as no surprise:
“They’ve been ….. our shareholders with propaganda for weeks, but they won’t
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succeed. We’re ready for ……. and we’re going to …….. them all the way.
“Indeed Merson’s have already launched their …….. , issuing a press release
which questions some of Wright & Bergkamp’s accounting methods. Yet City
analysts suggested yesterday that the ………’s hostile bid is likely to succeed
unless Merson’s ……… with another retailing group.

action, fight, aggressor, counter-offensive, battle, join forces,

bombarding, raid.

Unit 2. Marketing Strategies

Reading
Text 1.

A company’s marketing strategies – sets of principles designed to achieve long-

term objectives – obviously depend on its size and position in the market. Other
determining factors are the extent of the company’s resources, the strategies of
its competitors, the behavior of the consumers in the target market, the stage in
the product life-cycle of the products it markets, and the overall macro-
economic environment.

The aim of market leader is obviously to remain the leader. The best way to
achieve this is to increase market share even further. If this is not possible, the
leader will at least attempt to protect its current market share. A good idea is to
try to find ways to increase the total market. This will benefit everyone in the
field, but the market leader more than its competitors. A market can be increased
by finding new users for a product, by stimulating more usage of a product, or
by exploiting new uses, which can sometimes be uncovered by carrying out
market research with existing customers.
To protect a market share, a company can innovate in products, customer
services, distribution channels, cost reductions, and so on; it can extend and
stretch its product lines to leave less room for competitors; and it can confront
competitors directly in expensive sales promotion campaigns.

Market challengers can either attempt to attack the leader, or to increase their
market share by attacking various market followers. If they choose to attack the
leader, market challengers can use most of the strategies also available to market
leaders: product innovation, price reductions, cheaper or higher quality versions,
improved services, distribution channel innovations, manufacturing cost
reduction, intensive advertising, and so on.

Market followers are in a difficult position. They are usually the favorite target
of market challengers. They can reduce prices, improve products or services,
and so on, but the market leader and challenger will usually be able to retaliate
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successfully. A market follower that takes on a larger company in a price war

is certain to lose, given its lesser resources.

In many markets, market followers fall in the middle of a V-shaped curve

relating market share and profitability. Small companies focusing on specialized
narrow segments can make big profits. So can the market leader, with a high
market share and economies of scale. In between come the less profitable
market followers, which are too big to focus on niches, but too small from
economies of scale.

One possibility for followers is to imitate the leaders’ products. The innovator
has borne the cost of developing the new product, distributing it, and making
the market aware of its existence. The follower can clone this product depending
on patents and so on, or improve, adapt or differentiate it. Whatever happens,
followers have to keep their manufacturing costs low and the quality of their
products and services high.

Small companies that do not establish their own niche – a segment of a segment-
are in a vulnerable position. If their product does not have a “unique selling
proposition”, there is no reason for anyone to buy it. Consequently, a good
strategy is to concentrate on a niche that is large enough to be profitable and that
is likely to grow, that doesn’t seem to interest the leader, and which the firm can
serve effectively. The niche could be a specialized product, a particular group of
end-users, a geographical region, the top end of a market, and so on. Of course
unless a nicher builds up immense customer goodwill, it is vulnerable to an
attack by the market leader or another larger company. consequently, multiple
niching – developing a position in two or more niches – is a much safer strategy.

Understanding the main points

Read the statements, define whether they are true or false, speak on them.

1. If a market leader succeeds in increasing the size of the total market, its
competitors benefit.
2. The size of a market can be increased without attracting any new consumers.
3. Market challengers generally attack the leader and market followers.
4. Market challengers cannot use the same strategies as leaders.
5. Market leaders generally win price wars.
6. Market challengers can attack leaders by way of any of the four P’s of the
marketing mix.
7. Market followers generally achieve cost reductions through economies of
scale.
8. The most profitable companies are logically those with medium or high
market \ share.
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9. For a market nicher, product imitation can be as profitable as product

innovation.
10. A market nicher is never safe from an attack by a larger company.

Vocabulary focus
Look through the text and match italicized words with their definitions given
below. Translate the sentences with these words.

1. to carry the cost of

2. to face (with); to have to deal with
3. to start a quarrel or fight with
4. the length of smth
5. not well protected; be easily attacked
6. to do smth bad to so who has done smth bad to you
7. the market meeting the demands of the higher social groups
8. being able to manufacture things more cheaper by doing so in large quantities
9. to be useful or profitable to
10. to copy smth completely
11. to make changes; introduce new ideas
12. at some point between
13. space (territory) which can be filled with

Discuss the meaning of these strategies. Use a good dictionary such as the
Longman Business English Dictionary to help you.
cost cutting, a demerger, rationalization, a sell off, a disposal, acquisition,
an economy drive.

1. Which of the above strategies can be used by companies to:

a) get bigger? b) get smaller? c) become more efficient?

2. Which are likely to result in people losing their jobs?

The verbs and nouns below are often combined when talking about strategy.
Make word partnerships. Then use them to make up your own sentences.
Eg. The company has achieved its target of a 20% market share.
verb noun
achieve review develop goal plan objective target
implement set employ strategy tactics workers

Speaking
What is strategy? Which of these definitions do you prefer? Why?

1. Strategy is making predictions based on analysis.

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2. Strategy is having a clear plan, then putting it into action.

3. Strategy is continually adapting to change.

Innovation
The words below are often used when talking about innovation. What do they
mean?
R&D, brainwave, blueprint, prototype, setback, breakthrough, patent.

Reading Text 2. Innovation and the market

a. Discuss these questions. Then read the article.

1. Do you think it is better to innovate or imitate products and services ?
2. Can you name any companies which were a) innovators? b) imitators?

Why the last shall be first

By john Kay
Have you heard of Berkey or Ampex? Gablinger or Chux? Perhaps, you should
have, because each occupies an important place in the history of product
innovation. Berkey produced the first hand-held electronic calculators, Ampex
the first video recorders. Gablinger developed low-alcohol lager and Chux sold
the first disposable nappies.
Or perhaps you should not, because none of these companies made a
commercial success of their innovations. Today the calculators we use are
probably made by Casio, our video recorder comes from Matsushita, our low-
alcohol beer is Miller Lite, our nappies are made by Proctor & Gamble. In each
of these markets the innovator was swept away.
Xerox looks like an exception to this sorry catalogue. The company was first
into the photocopier market and, even if its dominance was ultimately
challenged by Canon, it remains a large and successful company today. But
Xerox was also a pioneer in fax machines and personal computers. Each of these
eventually proved to be a success – but not for Xerox Corporation.
As we all know, it was Apple that developed the personal computer market. But
Apple’s leadership quickly disappeared when IBM came on the scene.
Apple then jumped ahead by introducing the graphical user interface. Its
windows and mice brought personal computing within the reach of everyone.
But it is Microsoft that does this now.
The business world is not kind to pioneers. Even if you know how a market will
develop, timing is a matter of luck – or of quite exceptional skill. There are two
closely related lessons. One is that being first is not often very important. The
other is that innovation is rarely a source of competitive advantage on its own.
Individuals and small companies can make a great deal of money out of good
new ideas. The success of large established corporations – Matsushita, Philip
Morris, IBM or General Electric is generally based on other things: their depth
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of technical expertise, their marketing skills. And time and again these
characteristics enable them to develop the innovative concept far more
effectively than the innovators themselves.
This is not to say that there is no role in business for the great innovator. After
all, General Electric was built on the extraordinary creativity of Thomas
Edison’s mind, the Ford motor company on the abilities of its eponymous
founder. The imagination of Walt Disney created a company that is still without
parallel or rival. Perhaps Akio Morita of Sony occupies a similar place in the
annals of modern business.
( From the Financial Times)

Answer the questions

1. What is the main point made by the writer?
2. Several well-known companies are mentioned. What reasons are given for
their success?
3. What is the connection between Disney, Ford, General Electric and Sony?

Use words from each box to make word partnerships from the article

a) commercial competitive technical personal established

marketing
b) skills expertise success advantage computers corporation

Language review ( Passives)

A. Look through the text and find the sentences with passive structures.

B. The sentences below describe stages in the launch of a new drug. Use the
verbs in the box to complete the sentences. Then put them in a logical order.
develop test test publish apply for approve by
carry out train grant
1. The drug ………… on animals.
2. The drug ………… in the lab.
3. Market research …………….. .
4. The drug ……….. on humans.
5. The trials ……… the Ethics committee.
6. A licence ………………….. .
7. The results of the trials ……………. .
8. Approval …………… by the authorities.
9. The drug representatives ……………... .

C. Use the notes below to describe stages in the launch of a new car. Include
passive and active structures. Use words first, next, then and finally.
1. designer – choose
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2. design – produce
3. model – build
4. modifications – make – R&D/engineers
5. design – modify
6. prototype - build
7. new engine – use – or existing engine – develop – can be very
costly
8. new model – test – special tracks or roads
9. deal with problems – costly if problems serious
10. journalists – invite – test – drive model
11. reviews – write – by journalists – major newspapers and car
magazines
12. model – display – famous more exhibition – Geneva or Earls Court
Motor Show

Listening Presentation techniques ( Market Leader p.58)

Pamela Pickford trains business people to make presentations. Which of the

points below does she make? Listen and mark each one T(true) or F(false)

1. When preparing a presentation, try to find out what your audience already
knows.
2. Everyone in your audience should be at the same language level.
3. Visit the room in which you are presenting before you actually make the
presentation.
4. The first stage of your presentation is when you should get the full
attention of your audience.
5. If you memorize the introduction, you will be more confident when
making a presentation.
6. The whole text of your presentation should be written on post cards.
7. If you use an overhead projector, you should remember to turn it off when
you don’t need it.
8. Remember that the content of the presentation is much more important
than your presenting style.

Skills Presentations

Comment on the following statements. In your opinion are they :

a. essential b. helpful c. unhelpful for a successful presentation Why?
1. Tell a joke at the beginning.
2. Speak more slowly than you normally do.
3. Smile a lot.
4. Involve the audience.
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5. Invite questions during the presentation.

6. Always keep to your plan.
7. Move around during your presentation.
8. Use a lot of gestures to emphasize important points.
9. Read out your presentation from a script.
10.Stand up when giving your presentation.

b. Listen to a presentation to a company’s sales team about the launch of their

new chocolate bar. Tick the expressions in the Useful language box.

Useful language
Introducing yourself
Good morning everyone. Let me introduce myself. My name is ….. . I’m a
specialist in ….. .
Structuring the presentation
I’m going to divide my talk into four parts. First I’ll give you ….. ; after that
…. ; finally ……. .
Inviting questions
If you have any questions, don’t hesitate to ask. I’ll be glad to answer any
questions (at the end of my talk).
Giving background information
I’ll give you some background information. Let’s start with the background.
Referring to the audience’s knowledge
As you know….. As you are aware…… .
Changing the topic
Right, let’s now move on to ….. . OK, I’ll now look at …… .
Concluding
To sum up ……. . So to summarize…… .
Referring to visuals
If you look at the graph …… . Could I draw your attention to the chart? If you
take a look at the first year, you’ll see …… .
Ending
Thanks very much. Any questions? Well, that’s all I have to say. Thank you for
listening.

Case study International Leatherware

Background
The International Leatherware Association (ILA) represents leather goods
manufacturers and retailers. One of its main functions is to promote the use of
leather for new products. Each year the Association awards prizes to companies
with outstanding new ideas. Companies send a detailed product description and
a marketing plan, and the four best proposals are selected. These companies then
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present their product concepts to a panel of judges. The presentations and

awards are televised and the event is broadcasted worldwide.
Task
Your company is competing for the ILA’s top prize. You believe that you have
an outstanding idea for a new leather product. Read the Case study documents.
Then, prepare your product presentation and present it to the rest of the group.
Answer any questions they may have. When you are not making a presentation,
you are a member of the judging panel. Decide who should get top prize.

AIL guidelines to competitors

1. The purpose of the competition is to encourage innovation in the leather
goods industry. The competition aims to raise the profile of leather as a
material for producing goods.
2. Any product made with leather may be entered in the competition.
3. Product concepts should be very creative and have excellent sales
potential.
4. It will be an advantage if a company can offer a product showing a new
use for a leather.
5. Guidelines for the presentation are available upon request.

Guidelines for presenters

1. Introduce your team. Outline the structure of your presentation.
2. Describe the product design, features and consumer benefits.
3. Describe the product’s target market.
4. Mention other competing products.
5. Present your strategy for the new product. For example;
*branding, packaging, other product features (guarantee, etc.)
*pricing strategy
*distribution (What sales outlets will be used?)
*promotion (What advertising, product launch and sales promotion?)
6. Describe any ideas for television or radio commercials.

Change “There is nothing permanent except change.”

(Heraclitus of Ephesus (535-475 BC), Greek philosipher)

a. Which of these situations would you find the most stressful?

1. Divorce.
2. Going on holiday.
3. Moving house.
4. Moving to another country.
5. Losing your job.
6. A personality clash with your boss.
7. An annual health check-up.
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8. Being the victim of a robbery.

b. What has been the most significant change in your life?

c. Which of these business situations would worry you most? Why?

1. You read in the paper that your company will probably be merging with
another company.
2. You keep your job after a merger, but you are in a less powerful position.
3. Your company has to relocate to the other side of the city.
4. You are asked to relocate to an exotic foreign country.
5. You are promoted but are now in charge of a hostile workforce.
6. You have to decide who to make redundant in your new department after
a merger.

Reading Text 3. Managing Change

A. Jack Welch successfully led General Electric through a period of great

change. Do you think he sees change as a danger, an opportunity or a
challenge?
B. Read the quotations quickly. What is Welch’s general attitude to change?

1. “We want to be a company that is constantly renewing itself, leaving the

past behind, adapting to change. Managements that hang on to weakness
for whatever reason – tradition, sentiment, or their own management
weakness- won’t be around in the future.’
2. “How do you bring people into the change process? Start with reality. Get
all of the facts out. Give people the rationale for change, laying it out in
the clearest, most dramatic terms. When everybody gets the same facts,
they’ll generally come to the same conclusion”.
3. “The difference between winning and losing will be how the men and
women of our company view change. If they see it as a threat, we lose.
But if they are provided with the educational tools and are encouraged to
use them – to the point where they see change as an opportunity, then
every door we must pass through to win big around the world will swing
open to us.”
4. “Gradual change doesn’t work very well in the type of transformation
General Electric has gone through. If your change isn’t big enough, the
bureaucracy can beat you. Look at Winston Churchill and Franklin
Roosevelt. They said, “This is what it’s going to be”. And then they did it.
Big bold changes.”
5. “(GE leaders always) have enormous energy and the ability to energize
and invigorate others, to stimulate and relish change and not to be
 21

frightened or paralyzed by it, and to see change as an opportunity, not a

threat.”
6. “Most bureaucracies unfortunately still think in incremental terms rather
than in terms of fundamental change. Changing the culture means
constantly asking now how fast am I going, how well am I doing versus
how well I did a year or two years before? How fast and how well am I
doing compared with the world outside? Are we moving faster, and are
we doing better against that external standard?”

C. Write sentences about how companies should or shouldn’t react to change,

according to Jack Welch.
For example, Companies should adapt to change; they shouldn’t hang on to
weaknesses.

D. Find words or phrases in the quotations which mean:

1. the reasons for an action (quotation 2)
2. potential danger (quotation 3)
3. courageous (quotation 4)
4. to enjoy (quotation 5)

Listening Resistance to change

A. Why do people sometimes resist to change? Make a list of reasons.

B. Listen to the first part of an interview with Jeremy Keeley, an independent

management consultant.
Why do people resist change, in his opinion? List the points he mentions.

C. Listen to the second part of the interview. Jeremy talks about a situation in
which change was handled well.
Make notes under the headings below. Compare notes with a partner.
Situation Chief Executive Communication Difficult decisions

D. Complete these sentences from the interview. Use the words in the box. The
words in brackets will help you.
volume margins significantly lead vision segment
1. The client had to …………. (considerably) reduce its costs.
2. It was trying to compete with its major competitor on a basis of ……….
(production of large quantities).
3. The major competitor has a major ……… (a position ahead of all others).
4. Every single person in the organization knew this chap’s ……. (idea of
how the future will be).
5. They were going to …….. the market (divide the market into parts).
 22

6. The company was going to go for much larger ……….. (difference

between a product’s price and costs) and for much more ‘value added’.

E. Work in small groups. Describe a business or personal situation that

involved change. Was the situation handled well or badly?

Which groups below should be involved in deciding strategy? Why?

shareholders, middle and junior managers, suppliers, boards of directors,

government representatives, other employees, senior managers, customers,
trade union representatives.

Text 4 Competition

Vocabulary Describing competition

A. Match the phrase with the definitions

1. market leader: a. with the second largest market
share
2. market challenger: A company b. with the largest market share
3. market follower: or product…. c. that focuses on a small segment of
4. market nicher: the market
d. that is not a threat to the leader

B. Complete the chart with companies or products in your own country (for
example, cars, soft drinks, sports shoes, jeans). Compare your table with a
partner.

Product type….
market leader market challenger market follower market nicher
…. ….. ….. …...

C. Which products do you buy that are not market leaders or market
challengers? Why do you buy them?

D. Choose one adjective from each pair to make word partnerships with
competition. Then use them to comment on industries or companies.

For example, There is strong competition between Coke and Pepsi.

strong / hard
fierce / aggressive
dirty / unfair competition
 23

heavy /tough
intense / deep competition

E. Match the verbs with the prepositions (where necessary) to make phrases
with the competition. Then make sentences using some of the phrases.
For example, Our company welcomes competition – it keeps us alert.

respond cope face up to

ignore welcome adapt avoid with competition
to
Reading Competitive advantage

The text below presents three strategies for firms to achieve above-average
performance. Before you read it, discuss what strategies companies in the
following sectors might use to compete with the rivals:

a. supermarkets b. construction equipment c. luxury cars.

B. Read the first sentence only of each paragraph. What three strategies does
the text mention? Do you think they are similar to any of the ideas you
discussed?

C. Match the words below to the definitions. Then read paragraph one.

broad scope saving money by producing goods in large quantities

breadth wide range
segment width
economies of scale a section of market or industry

D. Match the words below to the definitions. Then read paragraph two and
three.

attributes something very unusual and special

perceive ability to last a long time
uniqueness see, realize
durability qualities

E. Match the words below to the definitions. Then read paragraph four and
five.
tailors making the best use of
to the exclusion of adapts
optimizing the opposite of wide
narrow not including
 24

Three strategies to gain a competitive advantage

Cost leadership is perhaps the clearest of the three strategies. In it, a firm sets
out to become the low-cost producer in its industry. The firm has a broad scope
and serves many industry segments, and may even operate in related industries;
the firm’s breadth is often important to its cost advantage. The sources of cost
advantage are varied and depend on the structure of the industry. They may
include the pursuit of economies of scale, technology, preferential access to raw
materials and other factors.

The second strategy is differentiation. In a differentiation strategy, a firm seeks

to be unique in its industry along some dimensions that are widely valued by
buyers. It selects one or more attributes that many buyers in an industry perceive
as important, and uniquely positions itself to meet those needs. It is rewarded for
its uniqueness with a premium price.

The means for differentiation are peculiar to each industry. Differentiation can
be based on the product itself, the delivery system by which it is sold, the
marketing approach, and a broad range of other factors. In construction
equipment, for example, Caterpillar Tractor’s differentiation is based on product
durability, service, spare parts availability, and an excellent dealer network.

The third strategy is focus. This strategy is quite different from the others
because it rests on the choice of a narrow competitive scope within an industry.
The focuser selects a segment or group of segments in the industry and tailors its
strategy to serving them to the exclusion of others. By optimizing its strategy for
the target segments, the focuser seeks to achieve a competitive advantage in its
target segments even though it does not possess a competitive advantage overall.

A firm that engages in each strategy but fails to achieve any of them is ‘stuck in
the middle’. It possesses no competitive advantage. This strategic position is
usually a recipe for below-average performance. A firm that is stuck in the
middle will compete at a disadvantage because the cost leader, differentiators, or
focusers will be better positioned to compete in any segment. In most industries,
quite a few competitors are stuck in the middle.
From Competitive Advantage,
By Michael Porter
F. Answer these questions about the text.

1. Which sentence best expresses the main idea in paragraph one.

A firm can get a competitive advantage by:
a. selling goods in many markets.
b. making as wide a range of goods as possible.
c. producing goods more cheaply than its rivals.
 25

2. Which sentence best expresses the main idea in paragraph two or three.
When a firm uses a differentiation strategy:
a. it tries to persuade consumers that its products have special
qualities.
b. it tries to reach a small group of loyal customers.
c. it wants to attract as many buyers as possible.

3. Which of these sentences best expresses the main idea in paragraph four.
If a firm chooses focus as its strategy, it tries to:
a. do better than its rivals in a small part of the market.
b. prevent other firms from entering the market.
c. do business in a large number of narrow markets.

4. In the final paragraph, does the writer say it is a good or bad thing for
firms to be stuck in the middle? Why?

G. Discuss these questions.

1. Can you think of companies which use one of the strategies in the text?
What about your own company or a company you know well?
2. Can you think of any companies which are stuck in the middle? What do
you think they could do to improve their competitive position?

Listening Competition and the market

Kevin warren, a Vice President of Coca-Cola and Schweppes Beverages (UK),

is talking about competition.
Answer the questions below. Then listen to the first part of the interview and
check your answers.
1. How many servings of Coca-Cola are sold worldwide?
a. one billion a day c. one billion a year
b. 47 billion a day d. 47 billion a year

2. Complete the chart.

To be successful you need:
-a portfolio of pr………
- an efficient manu……. g and dist……….. n operation
- the best br…………
- the most recognizable pack………

1. Choose the correct answer. Kevin thinks the way to stay ahead is to focus
on:
A. the actions of your competitor. B. your own products and customers.
 26

2. Listen to the second part of the interview. Which of the se statements more
accurately reflects Kevin’s views?

1. Price is the most important element when you are talking about value.
2. Value for money is not only about price. Cheaper is not always better.

3. Do you think competition always leads to better products and better value?

4. Listen to the third part of the interview. What changes in consumer habits
does Kevin predict?

Language review Talking about the future

The CEO and the Production Manager of a small but successful PC lap top
firm are discussing some sudden news from their sales manager, Steve
Andrews. Steve has been negotiating an important contract.
A. Read the conversation and find examples of different forms of future tense.

CEO I’ve got bad news from Steve about that contract he’s been
negotiating with Ambros plc. He’s heard that another company’s
putting in their own bid in three days’ time.
Manager Oh no! We’re counting on that contract. What can we do?
CEO Well, we are going to fight it. Our rivals say they’ll match us for price
and beat our deadlines so we’ll have to concentrate on those two
issues. Steve says we are going to beat them on every other detail, but
price and deadlines are the crucial items.
Manager Well, you can make the decision to cut prices but, in terms of
deadlines, our assembly lines are already working to capacity except
at the weekends.
CEO I know. I can cut prices slightly but do you think you can beat our
rivals’ deadlines?
Manager Well, the union meets later this afternoon for their regular monthly
meeting. I’ll raise this with them as a matter of priority.
CEO Can you persuade them to work extra hours at the weekend?
Manager Yes, I think so. Can you authorize overtime payment in advance so
it’s not an issue when I’m talking to the union?
CEO Yes, I’ll do that once we finish this meeting. What else?
Manager We have to contact Steve so he can tell Ambros that we are going to
respond with an improved bid. We’ve only got two days to prepare.
CEO All right. You prepare for the meeting. Tell the staff that we’re
relying on their cooperation. I’ll authorize the overtime payments.
 27

B. Work in pairs. Take turns to add comments to the sentences below. Use
will, going to, the present continuous, or the present simple.

1. I’m sorry, I can’t attend the sales meeting tomorrow ……………

2. We’ve decided how to cut costs next year …………..
3. The line’s engaged …………..
4. Don’t worry if you can’t drive me to the airport ……..
5. I’ve got the details about your flight to Turkey …..
6. Oh no, the computers have crashed again ……….
7. I’ve made up my mind …………
8. Oh John, you asked me about the time of your presentation
tomorrow…….

Discussion Competitive strategy

Read the two texts below. Discuss the questions that follow.

Blues Fight The Reds

In 1996, after over 100 years of rivalry, Pepsi launched ‘Project Blue’to
challenge Coca-Cola’s position as market leader in the soft drinks market. At a
cost of 330 million pounds, Pepsi changed the color of their can to blue as well
as painting a Concord airliner blue. They also used supermodels Claudia
Schiffer and Cindy Crawford, and tennis star Andre Agassi in the campaign. It
was felt that blue was a trendy, futuristic color which would differentiate Pepsi
from the red of Coca-Cola. However, the campaign failed to achieve its main
aim.
1. Why do you think the campaign was unsuccessful?
2. Can you suggest ways for Pepsi to compete more successfully with Coca-
Cola?

Fly Me, I’m Cheap

In autumn 1995 Easyjet and Ryanair, two small North European airlines,
introduced budget flights on UK domestic routes. Other carriers responded with
similar services but British airways decided not to. Later, British Airways
changed its mind and in May 1998 it launched its successful airline Go. This
offers low-cost flights with no on-flight food or entertainment on certain
domestic and European routes.
1. Why do you think British Airways changed its strategy?
2. How do you think its decision affected the small airlines? What can they
do to respond?
 28

Skills Negotiating
Useful language
Match the sentences on the left with the more diplomatic sentences on the
right

1. We must talk about price first.
2. There’s no way we can give you
any credit.
3. I want a discount.
4. I won’t lower my price.
5. Can you alter the specifications?
6. Your price is far too high.
a. Your price seems rather high.
b. Unfortunately, I can’t lower my price.
c. Could you give me a discount?
d. I’m afraid we can’t give you any credit.
e. I think we should talk about price first.
f. I wonder if you could alter the
specifications?

Being diplomatic often brings the best results when negotiating. It is important
not to be too aggressive. Think of other ways to express sentences 1-6 in the
Useful language box more diplomatically.

Role play the situation below. Be diplomatic.

A shop owner is placing an order with a chocolate manufacturer.
Shop owner Chocolate manufacturer
- You want to order 50 boxes of - You get a bonus if the order is
deluxe chocolate at the quoted price. over 100 boxes.
- You want a 20% discount. – You don’t give a discount for
- You want 30 days’ credit. orders of less than 100 boxes.
- You want delivery in two weeks. – You want payment on delivery.
- You can deliver in three weeks.

Case study City Plaza Hotel

Background
City Plaza Hotel is situated in downtown Toronto, Canada. A few years ago it
was the leader in its segment of the market. There is no official star system in
Toronto, but travel guides always place it in the four-star category. Nowadays
City Plaza has become a market follower instead. It has been losing money, and
its traditional customers have been going to rival hotels such as the Majestic and
Belvedere. Reasons for this include: competition; the increasing cost running the
hotel; the lack of capital to improve its accommodation and facilities (these have
fallen well below standard in recent years).
City Plaza needs a new strategy. Fortunately, the management now has
sufficient capital to finance that strategy. City Plaza was recently bought by the
dynamic hotel group, Price Inc., who have allocated C$2.75 million to make the
hotel more profitable and competitive. The Chief Executive of Price Inc.
 29

believes that City Plaza will make a good contribution to group profits if it
positions itself correctly in the market.

Facts and figures

The following tables give information about City Plaza Hotel and its rivals in
the area, Majestic, Belvedere and Mount Charlotte.

Table 1

Majestic ****
Description Market leader. 300 rooms. 5 large conference rooms.
Luxurious and very customer-orientated. A ‘yes I can’ attitude.
Target market High income. Tourists, business people, conventions and
special events, e.g. golf tournaments, concerts, etc.
Facilities A wide range including: bar and night club, 2 restaurants, swimming
pool, fitness center, gift shop and hairdresser. Guest rooms have many facilities,
e.g. coffee-maker, air conditioning, safe, minibar; fax machine and voice mail, if
required.

City Plaza****
Description Market follower. 250 rooms. 3 conference rooms. Needs to
redecorate, modernize and improve its service.
Target market Tourists, business people, group bookings and organizers of
conventions (as above).
Facilities one large restaurant and bar, shop, sauna; tour organizer. Guest
rooms have good basic facilities, e.g. coffee-maker, hair dryer, iron, minibar.

Belvedere ***
Description Market nicher. 190 rooms. 1 conference room. Inexpensive for
its three-star rating.
Target market Middle-income tourists. Package tour visitors.
Facilities One restaurant and bar, newsagent / gift shop. Health care studio and
small swimming pool. Guest rooms have similar facilities to City Plaza.

Mount Charlotte **
Description Budget hotel. 360 rooms. No conference room. A large
breakfast room. Cheap prices, friendly staff.
Target market People looking for cheap, ‘no frills’ accommodation.
Facilities No restaurant. A small bar. Comfortable rooms, with few facilities.
 30

Table 2. Convention facilities

Number of halls Capacity (each hall) Day rate per

person
Majestic 5 500 C$95
City Plaza 3 100 C$70
Belvedere 1 60 C$75
Mount Charlotte 0 _ _
(including equipment and meals)

Table 3 *Repeat Annual average **Average

Business occupancy rate room rate C$
Majestic 55% 75% 240
City Plaza 32% 35% 170
Belvedere 44% 72% 130
Mount Charlotte 35% 92% 90

* i.e. customers returning

** The rates exclude a charge for breakfast and sales tax.

Table 4: Financial information

5 Majestic

4
C$ Million (pre-tax profit)

Mount Charlotte
3

Belvedere
2

0
City Plaza

3 years ago 2 years ago 1 years ago

-1

Task
To choose the right strategy, the Chief Executive of Price Inc. has called in a
team of consultants, Maple Leaf Associates (MLA). The group will consider the
 31

options and advise Price Inc. on the correct positioning of the hotel. MLA has
formed small teams within its organization to study the problem.
You are one of MLA’s consultants. Work in teams and do the following:
1. Analyze and interpret the data. Decide what facts and figures are
important to help you work out a new strategy for City Plaza.
2. Discuss each option, considering its advantages and disadvantages. If you
wish, you may add other options.
3. Decide on a strategy for City Plaza and note down your reasons. Then
present your recommendations to the other groups.
4. Working as one group, agree on a strategy and action plan for City Plaza.

Options
The management are considering four options before deciding how to use the
C$2.75 million. They estimate that the cost of redecorating a room to ‘market
leader’ standard would be approximately C$12,000. The options are as follows:
1. Take City Plaza Hotel up-market so that it is clearly seen as market
leader.
2. Reposition the hotel as a budget hotel with either low prices and limited
service, or higher prices and a basic range of services.
3. Stay in its present position as a market follower, but improve the hotel.
4. Aim at a niche market, for example, middle- income older tourists, family
groups, or young visitors.

“Plan Well and Prosper”

Whether a firm is a major motorcycle manufacturer or a tiny, family-run
motorcycle repair shop, planning for the future is a key to prosperity. Planning is
an ongoing process of making decisions that guide the firm both in the short and
long term periods.
Strategic planning is the managerial decision process that matches the
organization’s resources (such as its manufacturing facilities, financial assets,
and skilled workforce) and capabilities ( the things it is able to do well because
of its expertise and experience) to its market opportunities for long-term growth.
In a strategic plan, top management, usually the chief executive officer (CEO),
president, and other top executives, define the firms purpose and specifies what
the firm hopes to achieve over the next five or so years. For example, a firm’s
strategic plan may set a goal of increasing the firm’s revenues by 10 or even 20
percent in the next five years.
Tactical planning ( sometimes called functional planning) is done by middle-
level managers- the vice presidents or department directors. Tactical planning
typically includes both a broad five-year plan to support the firm’s strategic plan
and a detailed annual plan for the coming year.
Firs-line or lower-level managers (a benefit manager, a safety director, a wage
and salary manager in the human resource department, a quality control
 32

manager, a marketing communications manager, a sales manager) are

responsible for a third level of planning, operational planning, which focuses
on the day-to-day execution of the tactical plans.
Business planning is an integrated activity. It means that all the organization’s
strategic, tactical and operational plans work together.
In the first stage of strategic planning, a firm’s top executives define the mission
of the organization, top management’s vision of why the firm exists, how it is
different from other firms, and the place in the market it wants to take. Decision
making in the strategic planning stage revolves around such “soul-searching”
questions as: What business are we in? What customers should we serve? What
kinds of products and benefits can we create for them? How should we develop
the firm’s capabilities and focus its efforts? In many firms, the answers to
questions such as these become the lead items in the organization’s strategic
plan. They become part of a mission statement, a formal statement that
describes the organization’s overall purpose and what it hopes to achieve in
terms of its customers, products, and resources.
The underlying goal of all marketing strategies and plans is to create a
competitive advantage for the firm- that is, to take what the company does
really well and outperform the competition, thereby providing customers with a
benefit the competition can’t. A competitive advantage gives consumers a
reason to choose one product over another again and again. Competitive
advantage is created through identifying a firm’s distinctive competency, a
firm’s capability that is superior to that of its competition. For example, Coca-
Cola’s success in global markets - Coke has 50 percent of the world’s soft-drink
business - is related to its distinctive competencies in distribution and marketing
communications. Coke’s distribution system got a jump on the competition
during World War II, when the firm decreed that every soldier would have
access to a five-cent Coke. The US government liked the morale-building effort,
and assisted Coke in building 64 overseas bottling plants. Coke’s skillful
marketing communications program (television commercials) is another
distinctive competency that has contributed to its global success.
The second step in creating a competitive advantage is to turn a distinctive
competency into a differential benefit. Differential benefits set products apart
from competitors’ products by providing something unique that customers want.
Differential benefits provide reasons for customers to pay a premium for a
firm’s products and exhibit a strong brand preference.
Note that a differential benefit does not necessarily mean simply offering
something different. Mennen marketed a deodorant with a distinctive feature: It
contained vitamin D. Unfortunately, consumers did not see any reason to pay for
the privilege of spraying vitamin D under their arms. Despite advertising claims,
they saw no benefit and the product failed. The moral: Effective product benefits
must be both different from the competition and wanted by customers.
 33

Examples of mission statements

AT&T: We aspire to be the most admired and valuable company in the world.
Our goal is to enrich our customers’ personal lives and to make their businesses
more successful by bringing to market exciting and useful communication
services, building shareowner value in the process.

Sierra Club: To explore, enjoy, and protect the wild places of the Earth; to
practice and promote the responsible use of the Earth’s ecosystems and
resources; to educate and enlist humanity to protect and restore the quality of the
natural and human environment; and to use all lawful means to carry out these
objectives.

MADD: The mission of Mothers Against Drunk Driving is to stop drunk driving
and to support the victims of this violent crime.

First National Bank of Bowie: Our mission is to be a profitable, sound,

responsive, locally owned community bank that provides ultimate protection for
depositors’ funds. Our goals are to grow and create shareholder value.

Huff Realty, Inc.: Jim Huff Realty is a company dedicated to excellence; using
innovative real estate marketing skills and state-of-the-art technology to provide
the highest-quality services to our clients and customers; above all, preserving a
belief in people.

The Quaker Oats Company: To meet the needs of consumers through

innovative marketing and manufacturing of healthful, good-tasting products that
contribute to a healthy lifestyle and consumer well-being around the world,
yielding above-average return over time for our shareholders.

Pfizer Inc.: Over the next five years, we will achieve and sustain our place as
the world’s premier research-based health care company. Our continuing
success as a business will benefit patents and our customers, our shareholders,
our families, and the communities in which we operate around the world

Discuss the statements. Do you agree with them? Give your reasons.
1. Defining the mission for an organization is the first stage of strategic
planning.
2. Competitive advantage for the firm is the underlying goal for all
marketing strategies and plans.
3. Business planning is an ongoing and integrated process of making
decisions that guide the firm both in the short and long term periods.
4. Companies should focus on what they do best rather than diversify.
 34

diversify-become different in form, quality, activity

Marketing Practice:
1. Assume that you are a marketing director for a small local bank and that your
boss, the company president, has decided to develop a mission statement to add
to this year’s annual report. He’s admitted that he doesn’t know much about
developing a mission statement and has asked that you help guide him in this
process. Write a memo outlining what exactly a mission statement is, why firms
develop such statements, and your thoughts on what the bank’s mission
statements might be.
2. Assume you are the new marketing assistant in a small municipal hospital
whose market consists of the residents in the city district and the students and
faculty of a large nearby university. You have been asked for ideas that
organization might use in promotional activities to draw clients who might
otherwise choose a larger facility across town. Develop a list of the consumer
segments in the hospital’s market ( for example, elderly, children, college
athletes, international students, professors, and so on), and for each segment,
identify possible features and benefits the hospital might emphasize in its
promotions to attract that segment.

Listening – Developing a strategy

A. You will hear an interview with Marjorie Scardino, Chief Executive of the
media group Pearson plc. Before you listen, choose the best definition for
each of the italicized words below. (Market Leader p.98)
1. The assets of the company are
a. the customers they have.
b. the things they own.
c. the markets they are in.
2. If a company improves its cash generation
a. it increases its sales revenue.
b. it has cash available at all times.
c. it invests more in its business.
3. If a company disposes of an asset, it
a. values it.
b. keeps it.
c. sells it.
4. If companies have an authoritarian way of management
a. the management give responsibility to workers at lower levels.
b. the management keep tight control over everyone and everything.
c. the management have many ways of communicating with
employees.
 35

5. If you stitch two materials together, you

a. separate them.
b. cut them.
c. join them.

B. Listen to the first part of the interview and make notes. Then complete
the summary of what she says.

Developing a strategy

First, the management thought about five things:

1. The assets of the company.
2. What’s unique about these assts.
3. ……………………………
4. …………………………….
5. …………………………….
( They considered all these things, then they developed a strategy.)

Their strategy consisted of three simple steps:

1. The first step ……………..
2. The second step …………..
3. The third step …………….

C. Now listen to the second part of the interview. Which of the trends
below are mentioned.
1. Companies are becoming more international.
2. Employees are becoming more valued by management.
3. Employees are working more in teams.
4. Management are having more control over staff.
5. Management are changing their style.

D. Answer these questions.

1. What strategies impress Marjorie Scadino?
2. What three points does she make about Coca-Cola’s strategy?

E. Discuss these questions.

1. Is the trend towards globalizm that she mentions a good or bad thing?
2. Do you think Coca-Cola will have to change its strategy in the future?
How?
 36

Skills / Decision-making /
A. Discuss these questions
1. Is decision-making only about sensible, rational choices? Should emotion
play a part? What about when choosing the following?
a wife or husband, a present for someone, a new company logo,
a holiday destination, a new product to develop, someone for a job.
2. Think of an important decision that you have made. How did you decide?
3. Do men and women have different ways of making decisions?
4. Who makes the big decisions in your household? Why?

B. Which ideas below do you agree with? Which do you disagree with?
Why?
1. Before making a decision:
a) write down the pros and cons.
b) try to reduce stress.
c) take a long time.
d) have a sleep or a rest.
e) consult a horoscope.
f) ask as many people as possible.
2. If a choice has cost you a lot of time and money, stick to it.
3. Rely on the past.
4. Reduce all decisions to a question of money.
5. Be totally democratic in group decision-making.

C. Listen to the management of a retail group discussing problems at their

store in Paris. Tick the expressions in the Useful Language box that you
hear. ( Market Leader p.99)

Useful Language

Asking for the facts Can you bring us to date?

Can you give us the background?
Where do we stand with…?

Making a suggestion We should sell out as soon as possible.

Why don’t we sell out?

Disagreeing I don’t agree with that at all.

I totally disagree.

Identifying needs We’ve got to get more information.

We need more information about where we are going
wrong.
 37

Agreeing You’re absolutely right.

I totally agree with you.

Expressing doubt I am worried about the store’s location.

I’m not sure about it.

Making a decision The solution, then, is to keep the store going.

I think on balance we feel we should keep the store
going.

Stating future action So, the next thing to do is ….

What we’ve got to do now is …..

D. Marion Haynes, a well-known writer on decision-making, recommends

eight steps for making decisions. Use her approach to do the role play
below.
1. Discuss and analyze the situation.
2. Define the problem.
3. Set an objective.
4. State what is essential and desirable.
5. Think of alternatives.
6. Decide how to evaluate them.
7. Evaluate alternatives.
8. Choose among alternatives.

Rope play
You are board members in a manufacturing firm which employs 500 people. As
your company is making a loss, you must cut costs. Hold a meeting to choose
one of the following options. State what action you intend to take.
Cut factory workers’ wages by 10%
Reduce everyone’s salary by 8%
Make 50 employees redundant
Pay no end-of-year bonuses

Case study
Background
Texan Chicken was founded by Eva and Ramon Martinez. They had had no
previous experience in the restaurant industry. They opened their first restaurant
in West London, and within five years had built up a chain of 40 outlets, using a
franchising system.
The reason for their success was the quality of their product. Their delicious
fried chicken was based on a recipe that Ramon had discovered when traveling
in Texas. It was served with a sauce which varied from mild to very hot,
 38

depending on the customer’s taste. All the restaurants offered a take-out service,
which was popular with customers.
When Texan Chicken went public the share price rose by 12% within a week.
There seemed to be no limit to Texan Chicken profits and expansion.

Present situation
Unfortunately the company’s share price has fallen recently by over 80%. There
has also been strong pressure on Eva and Ramon Martinez to resign as co-
chairmen of the business. At present, they own 40% of the shares. The other
major shareholder is a South African businessman, Martin Webb, who owns
12%. Eva and Ramon Martinez have called in a team of management
consultants to advise them on their future strategy.

Listening

Listen to this interview on Business News, a daily radio program in which

experts comment on topical business items. Note down four problems facing
the business. ( Market Leader p. 100)
Texan Chicken recently did a survey to find out what its customers thought
about its restaurants. Here are the results.

Consumer survey (summary)

Customers
Age: 18-30 58%
30-40 32%
40+ 10%
Sex: Male 54%
Female 46%
Status: Single 65%
Married, no children 23%
Married, with children 12%

How often customers visit the restaurants

First visit 8%
More than once a week 5%
Once a week to once a fortnight 29%

Food products bought most often

1. Quarter chicken, salad and rice
2. Chicken breast burger
 39

Customers’ opinion (%) good OK poor

Quality/freshness of food 40 50 10
Value for money 10 30 60
Service 8 38 54
Cleanliness 6 14 80
Friendliness of staff 24 48 28
Décor 1 34 65

Task
You are members of management consultant team called in by Eva and Ramon
Martinez to advise them on their future strategy. Discuss the options below.
Consider any other ideas for improving profitability. Work out a plan of actions
which will turn the company round.

Options
The following options will be discussed by the management consultants at their
next meeting.
1. Persuade Eva and Ramon Martinez to resign. Appoint a new Chief
Executive with extensive experience of franchising in the food industry.
2. Seek opportunities to merge with a large fast food company which could
offer management expertise and financial resources.
3. Improve profits by extending in Europe through joint ventures. A German
supermarket chain has already shown interest in such a venture.
4. Make major changes in the business. For example:
a) Have more company-owned outlets. This would give greater
control over the restaurants.
b) Offer special promotions (e.g. huge discounts on certain meals).
c) Launch a major advertising campaign.

Unit 3. Corporate alliances and acquisitions

Listening. ( Insights into New Business p.116)

a) Listen and match the terms below with the definitions. Then use three of
the terms to complete the newspaper extracts.

1. a takeover a. combining two or more companies

2. a joint venture b. when two or more companies agree to work on a project
3. a merger c. an agreement between companies to cooperate in certain
business activities
4. an alliance d. buying enough shares in a company to get control of it
 40

Business in brief

Glaxo buys 80% stake in Polish drug group

Glaxo Wellcome, one of the world’s leading pharmaceutical companies, is
paying $220m ( to take an 80% stake in Polfa Poznan, Poland’s second largest
drugs group. The ……… is the biggest made by a western pharmaceutical
producer in east Europe.

Canal Plus and Pathe in film distribution link

Canal Plus and Pathe, two of France’s largest media and entertainment groups,
are joining forces to form a pan-European network of film distribution
companies. Their new ………. will negotiate the acquisition of cinema,
television and video rights for pictures across Europe, both with the Hollywood
studios and other European film producers.

ELF pays 528m dollars to take 5% stake in Russian group

ELF Aquitaine, the French company, is to form a strategic ……… with Yuksi of
Russia, paying $528m for a 5% stake in the country’s largest oil company.

b) Read the following extracts from the financial press. Decide whether each
one refers to a) a joint venture, b) a merger or c) an acquisition or a takeover.

1. Walt Disney Co., Hearst Corp and Peterson Publishing Co. are discussing a
deal that would combine their considerable influence in the publishing world
to launch a weekly magazine to compete with ‘Sports Illustrated’ next year.

2. General Motors is to start building its Chevrolet Blazer, a sports utility

vehicle, in the factories of Elabuga Avtomobilny Zavod (ELAZ) in Tatarstan,
an autonomous part of Russia. This business project will be owned by ELAZ
and GM, which plans to invest as much as $250 m in the plant.

3. Poland may call off talks on the sale of newsstand chain Ruch to France’s
Hachette distribution service if it fails to make a firm financial offer soon.

4. Bank Inicjatyw Gospodanczych (BIG) and Gdanski are planning to work

together on a new deal. They will form one new bigger and stronger bank and
together they will control 4% of Polish banking assets.

5. Just as Daewoo Electronics chairman Bae Soon-Hun thought he had agreed a

deal to buy Thomson Multimedia, the consumer electronics arm of Thomson,
he heard that it had refused his offer.
 41

Reading Company mergers

Discuss these questions.

1. Why do firms merge?
2. What problems can arise before and after a merger takes place?

In the interview below a Chief executive describes how he and his board
decided whether to merge with a larger company in the same industry.
Read the interview and note down the arguments for and against the
merger.

An interview with John T. Chambers, Chief Executive, Cisco Systems

A merger of equals had a lot of appeal. If you combine the Number 1 and
Number 2 players in an industry, by definition you are Number 1 in terms of
size. And when you are growing that fast, you have a number of key
management openings you have to fill. By combining two companies with good
management teams, you automatically build up the strength of your
management and you do it quickly. You can also widen your customer base and
have more distribution channels.
In addition, the merger automatically makes your remaining competition second
level. As a result, your competition must rethink its strategy. In the end, you
force a period of mergers and acquisitions on your competition. They have no
choice but to respond to the changes you initiated.
When we looked more closely, our concerns were raised. For example, 50
percent of large-scale mergers fail. Mergers can fail on a number of levels. They
can fail in terms of their benefit to the shareholders, customers, employees and
business partners. A decision has to be right with each of those groups, or we
would not go forward with it.
If you merge two companies that are growing at 80 percent rates, you stand a
very good chance of stopping both of them. That’s a fact. For a period of time,
no matter how smoothly they operate, you lose momentum.
Our industry is not like the banking industry, where you are acquiring branch
banks and customers. In our industry, you are acquiring people. And if you don’t
keep those people, you have made a terrible, terrible investment. We pay
between $500,000 and $2m per person in an acquisition. So you can understand
that if you don’t keep the people, you’ve done a tremendous disservice to your
shareholders. So we focus first on the people and how we incorporate them into
our company, and then we focus on how to drive the business.
From Thought leaders, Loel Kurtzman
 42

Choose the best answer.

3.When Cisco Systems buys another company it pays special attention to:
a. the money it has spent
b. the staff it acquires
c. the opinions of its shareholders
4. What is the most interesting point that Chambers makes, in your opinion?
Explain why.

Listening. You will hear Margareta Galfard, Director of Communication for

Volvo in France, talking about why the merger between the major automotive
companies, Renault and Volvo, failed. Listen and decide if the following
statements are true (T) or false (F). ( Insight into Business p.117)

1. The reason why the merger failed are very simple to understand.
2. The shareholders were afraid that Volvo would lose its Swedish identity.
3. The shareholders feared that Renault was trying to take over their
company.
4. The Swedish management were keen for the merger to go ahead.

Can you think of any other reasons why a merger might fail?

Read the text about failed mergers, which uses the Volvo-Renault deal as an
example, and see if it mentions any of your suggestions.

When egos collide ( In the acquisition jungle, alpha males are deal-
breakers)
Perhaps business schools should add anthropology to the curriculum; the
parallels between the behavior of corporate executives and that of great apes are
uncanny. The spectacular collapse of the supposed alliance of drug giants Glaxo
Wellcome and SmithKline Beecham is a textbook example.

There was a clear business logic to the union of the two pharmaceuticals giants.
The deal gave the companies a drugs research and development budget more
than twice the size of their closest rivals, Novarris and Merck, and the
combination of their complementary research technologies could have left them
streets ahead of the competition; cost-cutting alone could have saved $1bn. But
because these two great beasts of the jungle (the CEO’s of the corporations)
chose to throw sand in each other’s faces, the deal is off, at least for now.

Corporate egos cause problems but they seem to be inevitable in a business

culture that prizes drive, determination and leadership above all. Having the
strength of personality and the ability to outmanoeuvre others is a fundamental
 43

prerequisite to climb to the top of corporate ladder. So with a power-hungry

alpha male at the top of each company, it is not surprising that every time a
mega-merger is announced, there’s a high probability of a boardroom bust-up.
Nicholas Bates, head of Human Resources Management at the European
Business School, says many senior businessmen actually go off the top of the
scale on personality tests. “Some of them are almost psycho-pathological and
would have no hesitation taking everyone down with them. Some are verging on
paranoid. Nevertheless these are precisely the sorts of personalities that
companies want because they can transform a business; the problem only appear
when they have to get together with peers intheir organization who don’t share
their views. Then clashes are inevitable.

Europe’s most spectacular and public bust-up was between automotive giants
Volvo and Renault. In September 1993 Volvo and Renault announced they were
to tie the knot, with Volvo holding a minority 35% stake. However, three
months later Volvo shareholders and senior management rejected the marriage
plans because of concerns that the deal undervalued Volvo, and was turning into
a Renault takeover, without Renault paying the acquisition premium. Simmering
resentment over chairman Pehr Gyllenhammer’s dictatorial management style at
Volvo added spice to the management revolt. The divorce is reputed to have cost
Volvo several hundred million dollars and forced the resignation of
Gyllenhammer after more than two decades in the driving seat. Egos play such a
large role when two giant corporations come together that it is hard to make
them work unless one personality is prepared to take a back seat or step down.

The $26 bn. marriage between Swiss giants Ciba and Sandoz to form Novartis
in 1996 is often held up as a textbook example of how mega-mergers can
work.It is successful, but much of that success is dependent on the fact that key
personnel were ready for retirement, or were prepared to relinquish old roles in
favor of new opportunities in other scenarios.
Compromise is essential if mergers between two powerful corporations are to
work to the advantage of both parties and their shareholders. Otherwise friendly
discussions break down and can easily turn into all-out war. In the corporate
jungle, the question is now whether the imperatives of shareholders can control
the egos of managers, to force through deals that deliver them the financial
return they expect. This is where independent directors ought to play a part,
although they rarely do.

an ego - a person’s opinion about him/himself

alpha – the highest mark in an exam
anthropology – the study of people
uncanny – strange and difficult to explain
streets ahead of – much better than
 44

to outmanoeuvre – to gain an advantage by having a better plan

verging on – almost, nearly
simmering – just hidden below the surface
to relinquish – to let s.b. else take
compromise – agreeing, while accepting some things you don’t like

Reading

Read the text again and answer the questions.

1. According to the author, why should GlaxoWellcome and SmithKline
Beecham have gone ahead with their alliance.
2. Why didn’t the deal go through?
3. What does Nicholas Bates say about the personalities of many senior
businessmen?
4. What reason does the author give for the success of the Ciba-Sandoz
merger?
5. What according to the author makes a successful merger?

Vocabulary
1. Choose the best definition for the word in italics in the sentences from the
text.
1. The parallels between the behavior of corporate executives and that of
great apes are uncanny.
a. similarities b. differences c. distinctions

2. The spectacular collapse of the supposed alliance of drug giants

GlaxoWellcome and SmithKline Beecham is a textbook example.
a. unusual b. interesting c. perfect

3. The deal give the companies a drugs research and development budget
more than twice the size of their closest rivals.
a. competitors b. partners c. friends

4. Corporate egos cause problems but they seem to be inevitable in a

business culture that prizes drive, determination and leadership above all.
a. unavoidable b. impossible c. likely

5. Having the strength of personality and the ability to outmanoeuvre others

is a fundamental prerequisite to climb to the top of the corporate ladder.
a. step b. problem c. requirement

6. The problem only appear when they have to get together with peers in
their organization who don’t share their views.
 45

a. people who hold higher positions

b. b. people who hold lower positions
c. people who hold similar positions

7. Then clashes are inevitable.

a. solutions b. strong differences of opinion c. long discussions

8. In the corporate jungle, the question is now whether the imperatives of

shareholders can control the egos of managers.
a. urgent demands b. instructions c. strong personalities

2. Expressions normally associated with marriage are often used to describe

mergers. Read the text again and find three examples.

3. Find the following idioms in the text. In pairs, discuss what they mean.
1. to throw sand in each other’s faces
2. to climb to the top of the corporate ladder
3. a boardroom bust-up
4. in the driving seat
5. to take a back seat

Discussion
Read these profiles of some senior business people. Which of the
characteristics do you think are essential, useful and dangerous? Discuss your
answers.

Seven warning signs

1. Dominates conversations, commandeers meetings, interrupts and finishes
off sentences of others. Competitive in all aspects of life, not only
business but tennis, squash or drinking.
3. Bold, doesn’t worry about going into new situations and meeting new
people.
4. Has a high opinion of himself and his abilities and he always thinks he’s
right.
5. Loves pressure. He likes tight deadlines, is impatient to get ahead and
does several things at once.
6. Must be the center of attention at meetings, parties, social gatherings, and
can’t do without attention or flattery.
7. Loves power and the trappings. Couldn’t be without a chauffeur-driven
car, panelled office, secretaries and trips on Concorde.
8. Has abnormal energy level, is always on the go, needs little sleep, and is
constantly restless.
 46

Language review Dependent prepositions

When you learn a new verb it is important to know which prepositions can
follow it.
* Some verbs are regularly followed by one preposition:
You can depend on that.
* Other verbs may be followed by a number of prepositions:
agree with, agree on, agree to, agree about.

1. Complete these sentences with one of the verbs paying attention to the
italicized preposition, translate the sentences.
agree apologize build respond think hear refer incorporate focus

1. The CEO thinks a joint venture is the best way to break into the Russian
market, but I don’t …….. with him.
2. Did you ……… about the alliance between Lufthansa and SIA?
3. If you ………. to the annual report it clearly sets out the facts.
4. What do you …… about the latest news on the proposed merger?
5. The Chairman had to ………. for misleading the shareholders at the AGM.
6. Combining two companies with good management teams, you automatically
…… up the strength of your management.
7. Good managers should …… on the people involved in company’s activity.
8. If you merge two companies, you have to think how to ……… people into
one company.
9. Good managers should ……… to all the changes taken place in business
environment.

2. Replace the words in italics with a verb from A and a preposition from B,
in the correct form.
A B
catch stand speak end get up(*2) on(*2) down ahead
go (*2) look by under

1. The company had hoped that the new sportswear designs would be a success
but in fact they never really became popular. ( caught on)
2. They finished by having to abandon the idea altogether.
3. Following the recent takeover of his company the chairman has announced
his intention to resign.
4. I’m afraid I can’t hear what you are saying. Could you talk louder please?
5. He’s new here, but he seems to be making progress.
6. Many businesses fail in their first year.
7. We need to think of the future and decide where we want to be in five years.
8. It’s a pity we let that opportunity pass; we need more orders like that.
 47

Complete the sentences below.

1. The Sales Director apologised ………

2. The R & D department succeeded ……..
3. We all agree ………
4. The safety inspector insists ……….
5. You can never rely …………
6. The Board’s job is to focus ……….
7. We are looking forward ………….
8. Several managers don’t approve …..

Complete this letter to shareholders. Use appropriate forms of these verbs.

rely on, combine with, consist of, advise on, succeed in, budget for,
spend on, account for, compete with, invest in.

Dear Shareholder,

I write to inform you that the Board has received information of a takeover
bid for your company. This ……….. an attempt by Thor Engeneering to acquire
a controlling interest by offering to purchase shares at a price of 650 dollars. We
have brought in a team of consultants to ………… the tactics we should use to
resist the bid.

Although the offer seems attractive, it does not reflect the true value of the
company or take into account our future prospects. We have ……. a major
program of expansion. During the next two years we plan to …….. new plant
and equipment. We have also allocated funds to ………. a new computerized
stock control system which will allow us to …………… our much larger rivals.
Furthermore, we plan to ………… a machine tool company in a joint venture in
China. We are confident this will allow the company to ……… opening up new
markets in Asia.

Policies like these ……… our success to date and contribute to our vision
of the future. Therefore, we strongly advise you not to accept Thor
Engineering’s offer. You can ………. the Board to keep you fully informed of
any future developments, but for the present we advise you to take no action in
relation to the offer.

Yours Faithfully
Derek Hammond
Chairman
 48

Unit 4 Market Research

Text 1. Read the following text about market research and fill the gaps
with the words given below
analyze annual concept data gather guesswork habits
inventory launch opinions packaging promotions respondents
significant statistics
We never develop and ……. a product solely on the basis of …….. . That’s
much too risky. You can’t just trust the intuition of senior managers or product
managers, you have to do market research or marketing research as they call it
in the States. We collect and …….. information about the size of a potential
market, about consumers’ tastes and ………. , their reactions to particular
product features, packaging features, and so on.

Lots of people think that market research just means going out and asking
consumers for their ……… of products, but that’s not true. Actually, talking to
consumers is a relatively minor market research tool, because it’s very
expensive. In fact, personal interviewing is the very last thing we’d do. We
usually find that our own accounts department, which keeps records of sales,
orders, ……….. size, and so on, is a far more important source of information.
Our sales representatives are another good source.

There are also a lot of printed sources of secondary …….. we can use, including
daily, weekly and monthly business newspapers, magazines and trade journals,
our competitors’ ……….. reports, official government ……… , and reports
published by private market research companies. We only engage in field work,
and ……… primary data from customers, middlemen, and so on, if both internal
research (analysis of data already available in the accounts and sales
departments) and secondary data ( available in printed sources) are inadequate.

If we do go out and do field work it’s usually a survey, which you can use to
collect information about product and ……… features, and to measure the
effectiveness of advertising copy, advertising media, sales …….. , distribution
channels, and so on.

An effective and relatively inexpensive method of survey research is the focus

group interview, where we invite several members of the target market (and pay
them a small amount of money) to meet and discuss a product …….. . The
interview is led by a trained market researcher who tries to find out the potential
consumers’ opinion and feelings about the product.

Focus group are informative, but they’re usually too small for us to be sure that
the chosen sample of consumers is statistically valid. Questionnaire research,
 49

involving many more …….. , is more likely to be statistically ………. , as long

as we make sure we select the appropriate sampling unit – whether it’s a random
sample of the population, or a sample of a selected category of people – and the
sample size is sufficiently large. When we’ve established a sample, we do the
interviews, normally by telephone or mail, sometimes by personal interviewing.

Text 2
Read and answer the questions

Marketing research is the process of collecting, analyzing, and interpreting data

about customers, competitors, and the business environment in order to improve
marketing effectiveness.
We can identify three types of information needed to make smart decisions.
Ongoing information: Marketing managers may use daily or weekly sales data
to analyze regional sales by brand or product line, and they may rely on monthly
sales reports to measure progress toward marketing’s sales goals and market
share objectives. For example, Kmart’s marketing managers use up-to-the-
minute sales information obtained from store cash registers around the country
so they can detect problems with products, promotions, and even the firm’s
distribution system.
Monitored information: Marketing managers need information about the firm’s
external environment. It is generally called marketing intelligence. This type of
information allows the firm to monitor conditions that effect demand for
existing products or create demand for new products. Marketing managers
typically use this intelligence on a regular basis to predict fluctuations in sales
due to economic conditions or political events. For example, knowledge of
demographic trends such as a declining birthrate and an aging population allows
a firm like Gerber that makes baby food to develop new nutritional products
aimed at the unique needs of the elderly.
Specific information: Sometimes marketing managers need more specific
information, such as immediate feedback on a brand’s sales performance, that
can’t be obtained from data sources that focus on broad social trends like
birthrates. Marketers use specific information to identify opportunities for new
products, to promote existing ones, or to provide data about the quality of their
products. For example, Procter & Gamble challenged rival Revlon’s claim that
its ColorStay line of cosmetics won’t rub off. In this case, P&G researchers
wanted to answer a specificquestion – was ColorStay’s claim true? Procter &
Gamble commissioned 270 women to provide the specific information needed to
supportits case against Revlon. The women rubbed their cheeks against their
shirts while wearing ColorStay, and reported that in fact most of the shirts did
get stained. Revlon countered that P&G’ test was flawed because women may
have been encouraged to rub too hard. They did their own test on 293 women
 50

who were told to use “the pressure they use when caressing someone else’s
face”. This time few stains were found.
This case proves that marketers must rely on several kinds of market
intelligence, including ongoing intelligence about the firm’s external
environment, monitored information about how the brand is doing in the
marketplace, and specific information to answer particular questions that may
arise about how consumers perceive and use the brand, in order to make
effective decisions.
The first step of marketing research is defining the problem.
Sometimes marketers cannot determine exactly what the problem is because
they are focusing on symptoms, such as declining sales, and not on the
underlying problem that’s causing sales to drop. For example , a drop in sales of
a suntan lotion may be due to a new competitor, lack of cooperation from
distributors, or perhaps to a fashion trend that emphasizes the pale look over a
deep tan.
Defining the problem has three components:
* Specifying the research objectives: What questions will the research attempt
to answer?
* Identifying the consumer population of interest: What are the characteristics
of the consumers involved in the problem situation?
* Placing the problem in an environmental context: What factors in the firm’s
internal and external business environment might be influencing the
situation?
The research objective could revolve around any number of possible questions:
Is the firm’s advertising failing to reach the right consumers? Do the firm’s cars
have a particular feature (or lack of one) that is turning customers away? Is there
a problem with the firm’s reputation for providing quality service? Do
customers believe the price is right for the value they get? The particular
objective chosen depends on a variety of factors, such as the feedback the firm is
getting from its customers, the monitored information it receives from the
marketplace, and sometimes even the intuition of the people designing the
research. For example, Mercedes-Benz monitors drivers’ perceptions of its car,
and when the company started getting reports from its dealers that people were
viewing the cars as “arrogant and unapproachable”, even to the point at which
they were reluctant to sit in the models on display in the showroom, a research
project was undertaken to better understand the reason for this perception.
The research objective determines the consumer population that will be studied.
The research might focus on current owners to find out what they especially like
about the car. Or the research might study nonowners to understand their
lifestyles, what they look for in a luxury automobile, or their beliefs about the
company itself that keep them from choosing the cars. For example, research
conducted for Mercedes-Benz showed that although people rated its cars very
highly on engineering quality and status, many were too intimidated by the
 51

elitist Mercedes image to consider buying one. Mercedes dealers reported that a
common question asked by visitors to showrooms was, “May I actually sit in the
car?” Based on this research, Mercedes took steps to soften its image by
changing the tone of its advertising to project a slightly more down-to-earth
impression.
Environmental conditions also provide a valuable perspective. Foe example,
when the economy is tight and sales of luxury cars are generally declining, the
population to be studied might be narrowed down to a select group of consumers
who are still willing and able to indulge in a luxury vehicle.
The second step in marketing research is determining the research techniques.
Research techniques can be different: interviews, focus groups, case studies and
ethnographies are exploratory research. They are used to generate insights for
the future, ideas for new strategies. Consumer interviews are one-on-one
discussion in which an individual share his or her thoughts in person with a
researcher.
The focus groups typically consist of five to nine recruited consumers who sit
together to discuss a product, ad, or some other marketing topic introduced and
led by a trained moderator.
Case study is a comprehensive examination of a particular firm or organization.
The goal is to identify the key decision makers, to learn what criteria they
emphasize when choosing among suppliers, and perhaps to learn something
about conflicts and rivalries among these decision makers that may influence
their choices.
An ethnography is a detailed report based on observations of people in their
own homes or communities and how people use the products bought. For
example, Warner-Lambert hired a firm to study how consumers actually use its
Fresh Burst Listerine mouthwash. The firm paid families who use Fresh burst
and families who use its competitor, Scope, to set up cameras in their bathrooms
so researchers watch how they used each product.
As we’ve seen marketers have many tools in their arsenal. There are interactive
surveys which can be made by mail or over the telephone. A short list of
questions is offered to the respondent. Face-to-face surveys, in which a live
interviewer asks questions of a respondent by going door-to-door, used to be a
common way to collect data. Nowadays on-line surveys are growing in
popularity as more and more consumers prefer answering questions about
products via computer. Passive observations can be personal or mechanical.
Personal observations are employed just to watch the consumers and
understand how they react to marketing activities. For example, “traffic
analysis” can pay off by pinpointing ”dead spots” in stores. After Frito-Lay
found that shoppers spend twice as much time in the coffee aisle as in the snack
food section, it began to advertise its chips near the coffee cans instead.
Mechanical observation relies on nonhuman devices to record behavior. For
 52

example, some grocery stores use infrared sensors in their ceilings to track the
movement of shopping carts.
Casual research helps to understand cause-and-effect relationships. In casual
research, marketers want to know if a change in something (for example, placing
cases of beer next to a diaper /nappy/ display) is responsible for a change in
something else (for example, a big increase in diaper sales).
The research tries to ensure that the data are valid and reliable and that responses
are representative of the target market. The final step is to implement the results
by integrating this feedback into long-term planning.

Answer the following questions

1. What types of information marketers need to make smart decisions?
Speak about ongoing, monitored and specific information in detail, give
examples.
2. What are the phases in the marketing research process?
3. Why is defining the problem to be researched so important?
4. What is the goal of exploratory research? What techniques are used to
gather data in exploratory research?
5. What kinds of surveys are used by marketers to ask potential customers
about their likes and preferences?
6. What is meant by reliability, validity and representativeness of research
results?
7. What is your attitude toward marketing research? Do you think it is a
beneficial activity from a consumer’s perspective? Or do you think it
merely gives marketers new insights on how to convince consumers to
buy something they really don’t want or need?

Exercise 1 Market Testing

Nine sentences in the text are unfinished. Choose the correct sentence
endings from a to i below

New products must obviously be extensively tested for safety and

performance. If they successfully pass these tests, they will then normally be
market tested, (1…..). Market tests are designed to inform a company how
many consumers will try a product and, unless it is a durable good, (2…..) .
Tests will also reveal which dealers want to handle the product.

Testing can be carried out by giving the product free to trial consumers, or by
a “mini-test”, which involves placing it, for a fee, in a number of stores
selected by a market research agency, or by selecting particular towns or
regions as full test markets. If a lot of people try and then re-purchase a new
product, (3….) .
 53

If there is a high trial rate but a low re-purchase rate, (4…..). If only a few
people try the product, but many of these re-purchase it, (5…..) .

For durable industrial goods, the most common form of testing is to offer the
new product (6…..) . Alternatively, a firm can display the product at a trade
fair or in distributors’ or dealers’ showrooms, and study customers’ reactions.
Some ideas reach the product development stage, perform adequately in test
marketing, but then fail to be commercially successful; (7…...) . Enthusiasm
for a new product may cause executives to misinterpret market research data
which should have told them that (8…..) . On the other hand, even good new
products can be destroyed by poor promotions or (9…..) .

a. by even better products developed by competitors.

b. how many will re-buy it and adopt it, and what the frequency of re-
purchase is.
c. it fails to offer a “unique selling proposition”, or that it is badly
designed or wrongly placed.
d. it will probably be necessary to increase advertising and sales
promotion spending to encourage more people to try the product.
e. something is clearly wrong with the product.
f. the company will probably go ahead and launch it in as large a
geographical area as they have the capacity to supply.
g. this may be due to a previous failure of market measurement or
forecasting or research.
h. to selected potential customers for trial.
i. unless, perhaps, the company is involved in a race with a
competitor’s product, in which case it might launch a product
immediately.

Exercise 2. Market Potential

Match up the terms with their definitions given below

1. marketing environment
2. market demand for a product
3. marketing program
4. sales response function
5. market potential
6. company potential
7. market share
8. market forecast
9. sales forecast
10.sales quotas
 54

a. a company’s plans regarding the marketing mix, including product

features, price, expenditure on promotions, the allocation of resources, and
so on
b. a company’s sales expressed as a percentage of the total sales of an
industry
c. figures set as goals for a company division, a product line, a sales team,
individual sales representatives, etc
d. the economic situation, and demographic, technological, political, cultural
changes, and so on
e. the expected level of company sales based on a selected marketing plan
and an assumed marketing environment
f. the limit approached by company demand as it increases its marketing
effort relative to its competitors
g. the limit approached by market demand, in a given environment, when
additional marketing expenditure no longer produces a significant return
h. the market demand that corresponds to a whole industry’s planned level of
marketing expenditure
i. the relationship between sales volume and a particular element of the
marketing mix
j. the total volume that would be bought by a particular customer group or
market segment in a particular geographical area and period of time, in a
defined marketing environment under a defined marketing program

Exercise 3
Complete the text using the words given below

competitive environment forecast monopoly opportunities

potential resistance returns sensitive share variables volume

In order to analyze market, ………… , and to plan their marketing activities,

companies have to measure current demand and ……….. future demand. This
will depend on the overall marketing ……… , which can of course change, but
so too can the company’s marketing program.
Market demand is not a single number but a function, which responds, to a finite
extent, to demand stimulating marketing expenditure. Some markets are
extremely ……….. to marketing expenditure. The market for many products, for
example, can usually be expanded quite easily. Other markets cannot, so the
level of marketing spending will hardly effect them. Here a company’s
marketing effort will be designed to increase its market ………. rather than the
size of the total market.

In a ……….. market, individual firms with an effective marketing program can

and do increase their market share. There is, therefore, a company demand
 55

function, or a sales response function which forecasts the likely sales ……..
during a specific time period associated with different possible levels of a
marketing mix element. But of course market …….. depends on many factors
in the marketing environment that a company cannot control, such as the general
health of the national economy. Furthermore, the sales response function
assumes that other ………. , such as competitors’ prices, remain constant,
whatever the company spends on marketing. This is obviously untrue, and so
has to be compensated for in calculations.

Marketing expenditure gives first increasing, then diminishing ……… , as there

tends to be an upper limit to the total potential demand for any particular
product. The easiest sales prospects are sold first, so that only more difficult
ones remain. Competitors are also likely to increase marketing effort at the same
time, so each company will experience increasing sales ………… . If sales did
not stop increasing at the same rate, the firm with the greatest level of marketing
effort would take over the whole industry, and create a natural ……… .

Make up partnerships with the word market or marketing

1. ………. activities 6. ……….. mix

2. ………. demand 7. ……….. opportunities
3. ………. effort 8. ……….. potential
4. ………. environment 9. ……….. program
5. ………. expenditure 10. ……… share

Exercise 4 Market Forecasting

Rearrange these sentences to make a complete text about market forecasting
by surveys and tests

a. An alternative to both surveys and market tests is to analyze existing data,

such as time series of past sales of a product, taking into account the business
cycle, and unpredictable events such as shortages, strikes, price wars, and
extreme weather conditions.

b. Consequently, market tests are often carried out for new products, for
products whose buyers do not carefully plan their purchases or who are highly
erratic in fulfilling their intentions, or for products that are being sold in new
areas or by new distribution channels.

c. Direct market tests, unlike surveys, enable a forecast to be made based on

what people actually do.
 56

d. Even though consumers do not always have clear intentions, or carry out their
original intentions, and they are not always prepared to disclose them, buyer-
intention surveys are often quite accurate for major consumer durables and
industrial goods.

e. Forecasts based on what people say are made from surveys of buyer
intentions, conducted by personal, telephone or postal interviews of a
statistically selected sample of consumers.

f. If surveying customers is too expensive, an alternative method is to get

estimates from sales representatives who are, after all, close to consumers,
especially those of highly specialized, technical products.

g. If this is done badly it can result in excessive inventories and costly price cuts,
or, on the contrary, lost sales due to insufficient production.

h. Surveys are also the only possible forecasting technique for new products for
which past data does not exist.

i. There are various methods of forecasting, but they all depend on one of three
factors: what people say, what they do (which is not always the same), and what
they have done in the past.

j. To estimate total market potential a company needs to forecast the number of

buyers, and the average quantity that they will purchase.

k. Where a company does not have its own sales force, distributors can
sometimes provide equivalent information.

1. j. 4….. 7….. 10…..

2…. 5….. 8….. 11….
3…. 6….. 9…..

Read the following text and make a list of the different techniques that
companies can use for market research

Hello to the good buys

A new marketing campaign promising hassle-free and faster fuel buying for
customers is under way in America. Suzanne Peck reports on the 18-month
research project which involves Shell Oil researchers ‘moving in’ with their
customers to test their buying habits.
 57

1. Three years ago when Sam Morasca asked his wife what could be done to
exceed her expectations when buying gasoline, her answer ‘that I would never
have to think about it any more’ made him pause and think. The marketing
people from Shell Oil Products, of which Sam is vice-president, were
desperately seeking ways to increase the business, and to come up with a
strategy which would put them clearly ahead of their competition by
differentiating the Shell Oil brands in the eyes of consumers. “We are big
business for Shell Oil, contributing US $7 bn of revenue, and the leading retailer
of gasoline, but it is a fragmented market and the mission was to profitably
expand the business”, said Sam.

2. Today, after 18 months of cutting edge research, Shell Oil is on track to make
buying fuel at their 8,900 service stations clearly different with a new brand
initiative. Its aim is to deliver through facilities, systems upgrades, and new
operating practices, a hassle-free fueling experience targeted at specific
customer segments.

3. Over the past few years, the company has been developing detailed
knowledge of consumer needs and attitudes, which formed the basis for the new
brand initiative. Team leader Dave Yard, manager of Strategy and Planning –
Marketing, picks up the story. “We began with a customer segment study of
55,000 people, who we stopped in the shopping malls in six cities for a 45-
minute interview into their attitudes, especially regarding driving and cars. The
result was that everyone wanted three things from a service station: competitive
price, a nearby location and good quality fuel – something they all believed was
already being delivered by the industry.

4. This meant their buying decisions were influenced by other factors – some
wanted full-service outlets like the old days, some chose a service station
depending on whether it looked safe or not. ‘There were ten different segments
with different needs, and we wanted a better understanding of each of these
audiences.

5. A focus group was set up for each segment; an anthropological study was
carried out, which involved team members spending waking hours with people
from each segment, watching them at home and accompanying them on
shopping trips to see their buying habits; and a clinical psychologist was hired to
create a psychological profile of each segment.

6. The study indicated that three groups, which comprised 30% of the driving
public, should be targeted:
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* Premium Speeders – outgoing, ambitious, competitive and detail oriented.

They drive upmarket cars which make a statement about them. Efficiency rules,
plus fast pumps, quick access and payment.
* Simplicity Seekers – loyal, caring and sensitive, frustrated with complexities
of everyday life. Want simple easy transactions.
* Safety Firsters – control oriented, confident people, like order and comfort of
the familiar. Higher value on relationships and go out of their way to stations
that make them feel comfortable. Prefer to stay close to cars.

7. “The common thread was that they all wanted a faster and easier service than
anything already available”, said Dave, “so the study ended and the launch
began”.

8. The field organization and Shell Oil retailers combined forces to determine
how to eliminate the little hassles that customers sometimes face, such as
improved equipment and clear instructions on the pump. The innovations are
currently being test marketed. A new advertising campaign was launched and a
sophisticated measurement system introduced to monitor satisfaction, behavior
and perception of the brand. ‘Fueling a car is a necessity of life and I believe we
are ahead of the game- but we won’t allow ourselves to stop and be caught up’.

hassle – problem
gasoline (US) – petrol (GB)
to differentiate – to show how products are different from each other
an upgrade – making something work better, and do more
to make a statement about s.b. – to show what kind of person s.b. is
to go out of one’s way – to make an effort
fueling up (US) – filling up (GB)

Read the text again and number the different stages in the research project in
the correct order.
a. They analyzed the results, which showed that there were 10 different
consumer segments.
b. Focus group studied the 10 segments.
c. Shell Oil’s marketing team decided to differentiate the Shell brand from the
other brands on the market.
d. Shell launched a new advertising campaign.
e. They interviewed 55,000 people about their attitudes to driving and cars in
general.
f. Work started on improving products and services.
g. They carried out a detailed study on the market over 18 months.
h. Three groups were chosen as the target markets.
 59

Vocabulary focus
1. Match the words from the text with their corresponding definitions
1. to exceed a. a part or section
2. a mission b. a group or interested people
3. an initiative c. an important new plan with a particular aim
4. a segment d. an assignment or task
5. an audience e. to find out / to discover
6. a profile f. to check at regular intervals
7. to determine g. to be more than
8. to monitor h. a description of characteristics of someone
or something

2. Find words and expressions in the text which correspond to the following
definitions.
1. Many different types of consumer who buy the same product (para 1)
f________ m________
2. The most advanced and up to date (para 2)
c______ e________
3. Conclusions people reach about which products to purchase (para 4)
b_________ d________
4. An informal discussion group used for market research (para 5)
f_______ g_______
5. A shared characteristic (para 7)
c________ t_______
6. A method of evaluation (para 8)
m_________ s_______

3. Complete the passage using words from Vocabulary 1 and 2. Change the
form of the words where necessary.
As more and more industries are making products specifically adapted to
particular 1.segments of the market, market researchers are being asked to
conduct studies and to compile more detailed 2.……….. of consumer groups.
Broad classifications based on sex, age and social class are not sufficient for
companies operating in highly competitive and 3.………. .……… .
Questionnaires are carefully designed to 4………. the exact needs and
demands of consumers as well as establishing what effects consumer
5………… ……….. when they choose one product instead of another.
Advertising campaign can then be targeted to appeal to the identified
6…………. . Finally, marketing people must 7……… the success of the
campaign and modify it if necessary.
 60

4. Some compound adjectives can be formed by combining two words with no

hyphen, in the text “Hello to the good buys”, upmarket means ‘for the richer
section on the market’.
Replace the words in italics with a compound noun made of a word from A
and a word from B. Use some words more than twice.

A B
up down over due drawn market staffed
under out worked priced paid dated

1. The invoice still hasn’t been paid. It’s now two weeks late. ( overdue)
2. Some of our customers are complaining that our products are too
expensive.
3. Our latest policy is to introduce more luxury products. This means that we
will phase out our less sophisticated brands.
4. During the Christmas period many employees will be on vacation and as a
result the company will be short of personnel.
5. The only catalogue I could find is from last year but I’m afraid that the
information in it is no longer valid.
6. For the last few weeks I’ve been staying late to get everything finished; I
really feel that I’ve been doing too much.
7. The database is two years old and needs to be changed to include the
latest information.
8. The workers claim that they are not earning enough.
9. My bank account has been in debit for the last two months.

Discussion
1. What are the advantages of the research made by Shell Oil over the more
conventional data collecting processes?
2. Would you agree to participate (as a potential consumer) in this type of
research? Why (not)?
3. Why do you think some people do accept?

Read this description of a Shell TV ad called ‘Stealth’ and discuss the

questions.
‘Stealth’ – A driver in a sporty Jaguar presses a button to avoid road
obstacles, and refueled by a Draken jet aircraft while traveling at speed
between skyscrapers.
1. Which of the target profiles described in the text would it appeal to most?
Premium Speeders, Simplicity Seekers or Safety Firsters?
2. What sort of advertisements do you think would appeal to the other two
target profiles?
 61

Skill focus Reading

Direct mail marketing involves sending publicity material to people directly

by mail. It is highly successful for selling magazine subscriptions, insurance and
financial services. The letters contain:
a very personalized first sentence designed to ensure that
the reader continues reading.
a persuasive and clear sales message, adapted to a specific
market segment.
direct and convincing language, intended to appeal to a
chosen audience.

1. The profiles below are based on the results of several hundred interviews
conducted in a shopping center by a major insurance company. Following the
survey, the company decided to concentrate its direct marketing sales efforts on
two specific products: a life insurance plan for young couples and a pension plan
for slightly older couples. Read the profiles and match the letter extracts below
to the profiles.

1. Profile for the insurance

Young married couples who have just had their first baby. They are aged
between 25 and 30 and have fairly good salaries but are very careful about their
spending. They have never considered insurance before and are put off by the
complicated documents. They are suspicious of insurance sales people and
would not agree to spending hours going over figures with them. They would
respond if the insurance plan was inexpensive and looked easy to take out.

2. Profile for private pension

Couples aged between 35 and 45 who are just beginning to have some financial
stability. They have never considered pensions until now because they felt they
couldn’t afford it and that they were too young to think about retirement. They
are a little anxious as they realize that they have left it very late, and would like
to discuss their financial situation with ‘an expert’ who could advise them on the
best plan.

a. Our new policy is guaranteed to give you the best value for money currently
available. There is no red tape, just a simple application form which takes two
minutes to complete.

b. It’s still not too late to join the club and dream about the future. Just pick up
the phone and make an appointment and you can start saving straightaway. The
sooner you start the more you have to look forward to!
 62

c. Of course most parents recognize that it is important to provide insurance

cover for the family, but many of the schemes around are confusing and too
expensive.

d. Offered direct to you – no sales commission, no insurance broker to pay and

no pushy sales people in your living room.

e. Act now and enjoy later is our policy and it’s possible without giving up
luxuries in the meantime. Our policy adviser will take all the time you need to
draw up a plan specifically adapted to your financial situation.

f. They have no worries about whether they will be able to afford holidays,
presents for their grandchildren and all those little extras that make life easy and
comfortable in later years.

g. Just return the attached enquiry card. There’s no postage to pay and we will
send full details to your home address so you can read at your leisure.

Complete the two letters, using the extracts a – g.

Letter 1
Dear Parent
The arrival of a new baby is such an important time, it is almost impossible to
think about the practical side of being a parent ….. however, I know that you’ll
agree that nothing matters more than your baby’s future.
1c
We feel that now is the right time to tell you about a plan which has been
designed especially for young people like you. Interested? Read on.
2
So you see it really is your type of plan.
3
4
Don’t miss the opportunity to provide financial protection for your family at a
low cost. I look forward to receiving your enquiry card.

Yours faithfully

Letter 2
Dear John and Mary
Have you ever wondered how lucky you really are? Have you ever wondered
what the future has in store? Our policy holders are looking forward to the future
and planning how they will spend all the money they have saved.
 63

5
6
So relax, the situation is under control.
7
Looking forward to hearing from you very soon,

Sincerely ….

Marketing Practice
1. Your marketing research firm is planning to conduct surveys to gather
information for a number of clients. Your boss has asked you and a few
other new employees to do some preliminary work. He’s asked each of
you to choose three of the topics that will be included in the project and to
prepare an analysis of the advantages and disadvantages of mail surveys,
telephone surveys, face-to-face surveys, or observation for each.
a. The amount of alcoholic beverages consumed in a city
b. Young adults’ use of illegal drugs
c. Why a local bank has been losing clients
d. How heavily the company should invest in manufacturing and
marketing home fax machines
e. Reader recall of magazine advertisements
f. What local doctors would like to see changed in the hospitals in the
city
g. Consumers’ attitudes toward several sports celebrities

2. Marketing Mini-Project

You are planning to conduct a marketing research.

1. With a group of two or tree students select a small retail business, fast-food
restaurant or a student canteen in your academy to use as a “client” for your
project.
Choose a topic from among the following possibilities to develop a study
problem:
* employee-customer interactions
* the busiest periods of customer activity
* customer perception of service
* customer likes and dislikes about offerings
* customer likes and dislikes about the environment in the place of
business
* the benefits customers perceive to be important
* the age group that frequent the place of business
* the buying habits of a particular age group
* how customer complaint are handled
 64

2. Develop a plan for the research:

j. Define the problem as you will study it
k. Choose the type of research you will use
l. Select the techniques you will use to gather data
m. Develop the mode and format for data collection
3. Conduct the research
4. Write a report and that includes four parts.
a. Introduction: a brief overview of the business and the problem
studied
b. Methodology: the type of research used, the techniques used to
gather data (and why they were chosen), and the instruments and
procedures used, the number of respondents, duration of the study,
and other details that would allow someone to replicate your study
c. Results: a compilation of the results (perhaps in table form) and the
conclusions drawn
d. Recommendations: a list of recommendations for actions
management might take based on the conclusions drawn from the
study.
Unit 5
Sharpening the Focus: Target Marketing Strategies

Selecting and Entering a Market

The goal of the marketer is to satisfy needs, but in our modern, complex society
it is naive to assume that everyone’s needs are the same. Even a ‘weighty’
decision like what type of fast food to eat depends on many factors.

Understanding these factors gets even more complex today because

technological and cultural advances in modern Western society have created a
condition of market fragmentation. Market Fragmentation occurs when
people’s diverse interests and backgrounds have divided them into different
groups with distinct needs and wants. Because of this diversity, the same
product or service will not appeal to everyone.

Consider, for example, the effects of fragmentation in the fast-food industry.

Back in the days when a McDonald’s hamburger was still a novelty (with less
than a million sold!), people were happy to order just plain burgers, fries, and a
Coke. Today’s consumers would be very unhappy if they didn’t get to select
from many types of burgers, or if salads, chicken, or even specialty sandwiches
like McRibs disappeared from the menu. Marketers must balance the efficiency
of serving the same items to everyone with the effectiveness of offering each
individual exactly what he or she wants.
 65

Instead of trying to sell something to everyone, modern marketers often select a

target marketing strategy in which they divide the total market into different
segments based on customer characteristics, select one or more segments, and
develop products to meet the needs of those specific segments. So, target
marketing strategy is a three step process: segmentation, targeting and
positioning.

Segmentation is the process of dividing a target market into smaller pieces

based on one or more meaningful, shared characteristics. Segmentation is a way
of marketing life. The truth: You can’t please all the people all the time, so you
need to take your best shot. The marketer must decide on one or more useful
segmentation variables that divide the total market into fairly homogeneous
subsets of customers or groups, each with different needs and preferences.
Segmentation variables play a significant role in purchasing decisions. They can
include geographical factors – region, population density (urban, suburban,
rural), size of town, and climate; demographic factors such as age, sex, family
size, or stage in the family life cycle; and other variables including income,
occupation, education, social class, life style, and personality.

Targeting is the next step in target marketing. Marketers evaluate the

attractiveness of each potential segment and decide which of these groups they
will try to turn into customers. The customer group or groups selected are the
firm’s target market. To determine which segment will be profitable to enter
and which target segment will be viable, the firm tries to forecast each
segment’s market potential – the maximum demand expected among consumers
in that segment for a product or service. To determine market potential, the firm
must weigh the number of consumers in the segment and how much they spend
in the product category.
Undifferentiated targeting strategy is appealing to a broad spectrum of people,
having the same needs and wants so that the same product and message will
appeal to many customers.
Differentiated targeting strategy develops one or more products for each of
several distinct customer groups and makes sure these offerings are kept
separate in the marketplace. A differentiated strategy is called for when
consumers are choosing among brands that are well known, and each brand has
a distinctive image in the marketplace.

Positioning The final stage of the target marketing process is to provide

consumers who belong to a targeted market segment with a product or service
that meets their unique needs and expectations. Positioning means developing a
marketing strategy aimed at influencing how a particular market segment
perceives a product or service in comparison to the competition.
 66

The success of a target marketing strategy depends on marketers’ abilities to

identify and select an appropriate market segment; on designing a product or
service to meet a segment’s needs; and on developing a marketing mix that will
create a competitive advantage in the minds of the selected target market.
Besides, marketers must evaluate responses to the marketing mix selected, and
continually monitor changes in the market that might indicate a need to
reposition the product.

Analyze competitors’ position: Marketers must understand the current situation

on the market. What competitors are out there? How are they perceived by the
target market? Are there other products or services that provide the same
benefits people are seeking? For example, when a company such as Coca-Cola
develops a new drink, it must consider how to compete against many
alternatives in addition to those offered by Pepsi. The surprised success of Jolt,
which is fortified with caffeine, led Coca-Cola to develop Surge in order to
target students, athletes, and people who don’t like the taste of coffee but who
need to “Feed the Rush”.

Identify competitive advantage: The next task is to offer a product or service

with a competitive advantage, to provide a reason why consumers will perceive
the product as better than the competition. Such advantages can be: a superior
image such as status of luxury (Kelvin Llein), a unique product feature (Levi’s
501 button-fly jeans), better service (Cadillac’s roadside assistance program), or
even better-qualified people (the legendary salespeople at Nordstrom’s
department stores).

Finalize the marketing mix: Once a positioning strategy is set, marketers

must put all of the pieces of the marketing mix into place. When McDonald’s
decide to target African Americans, it had to be sure that a good number of its
restaurants were located in areas where African Americans live and that these
consumers would respond to its advertising messages and other promotions.
The elements of the marketing mix must match the selected segments. This
means that the product or service must deliver benefits the segment values, such
as convenience or status. Besides, marketers must price this offering at a level
these consumers will pay, make the offering available at places consumers are
likely to go, and correctly communicate the offering’s benefits in locations
where consumers are likely to take notice.

Evaluate the target market’s responses and modify the strategy: The target
marketing process is ongoing. Over time the firm may find that it needs to
change which segments it targets, and the needs of people in these chosen
segments may change as well. Marketers need to monitor these changes and
 67

adjust their positioning strategies when necessary. Sometimes marketers redo a

product’s position to respond to marketplace changes.
A classic example of such a makeover, a strategy called repositioning, is
Marlboro cigarettes. Believe it or not, this brand was positioned as a women’s
cigarette when it was first introduced – complete with a red-tipped filter to hide
lipstick stains. The brand really took off, however, when Marlboro “adjusted” its
image as a male product, complete with “macho” Marlboro cowboy.
Defining the service to customers

Positioning is the process of creating a specific image for a product that

differentiates it from competitors. High quality is the goal of every successful
service organization. Researchers have identified five dimensions that
successfully position a service, whether it’s a theatre troupe, or an auto repair
shop.

Services often rely heavily on physical evidence, i.e. apparel (fine and special
clothes), facilities, graphics, and other visible signals of product quality, to
communicate a desired position. Such cues as the facility ( modern décor versus
traditional), distinctive colors, logos ( the lion of the Dreyfus Corporation versus
the bull of Merrill Lynch) all communicate the underlying characteristics of the
service organization.

Responsiveness: Some services emphasize the speed and care with which they
respond to customers’ requests. For example, print shops such as Kinko’s and
PIP promote their 24-hour service and their preservation of the client’s valuable
documents. Domino’s Pizza was known for its promise to deliver a pizza within
30 minutes.

Empathy: An organization that says that it understands its customers’ needs and
genuinely cares about their welfare often gains and edge on the competition.
Recall the long-standing motto of State Farm insurance: “Like a good neighbor,
State Farm is here”.

Assurance: An organization can emphasize the knowledge or competence of its

employees. This is a good strategy to minimize risk, especially for services in
which the customer finds it difficult to evaluate the quality of service received.
For years Texaco proudly proclaimed, “You can trust your car to the man who
wears the star”.

One of the most powerful ways to create physical evidence for a service is to
adopt a branding strategy. Service marketers such as McDonald’s, the tax
preparation firm H&R Block, the Carolina Panthers, and the Century 21 realty
company have essentially branded their services to create a unique identity for
 68

themselves. By developing a clear image for a brand name, consumers feel as if

they “know” the service. Brands are like people in that we can often describe
them in terms of personality traits. These descriptions might include words like
cheap, elegant, sexy, bold, wimpy. A brand personality for a product or service
is a distinctive image that captures its character and benefits. A recent
advertisement for Elle magazine says: “She is not a reply card. She is not a
category. She is not shrink-wrapped. Elle is not a magazine. She is a woman.”

If there is only one brand in a market, it is likely to be positioned in the center,

so as to attract the most consumers possible. Appealing to all groups from the
center with undifferentiated product gives a company the largest potential
market, while minimizing production, inventory, market research and product
management costs. A new competitor can either situate its product next to the
existing one, in a straightforward battle for market share, or try to find a corner
of the market in order to gain the loyalty of a consumer group not satisfied with
the center brand.

If there are several brands in the market, they are likely to position themselves
fairly evenly throughout the space and show real differences to match
differences in consumer preferences. If, on the other hand, several producers are
competing for the largest center segment, new entrants onto the market will
probably find that smaller segments with less competition are more profitable. In
fact, targeting a particular market segment is often the only realistic strategy for
firms with limited resources, although it can be risky, as the segment might get
smaller or even disappear, or be attacked by a larger competitor.

At the beginning of a product’s life cycle, companies often produce only one
version, and attempt to develop demand by undifferentiated marketing, before
switching to differentiated marketing in the product’s maturity stage.
Differentiated marketing involves developing several brands, each positioned in
a different segment. This obviously maximizes total sales, but equally increases
R&D, planning, market research, forecasting, production, promotion,
administration and inventory costs.

Match the terms with their definitions

1. segmentation a. providing products to meet the needs of
different consumer groups in different market
segments
2. subset b. to situate

3. variable c. dividing

4. to position d. to aim at
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5. inventory e. a person who enters a profession or

competition

6. entrant f. a part/ a group/ a piece of something

7. to target (at) g. marketing a product aimed at the widest

possible market

8. differentiated market h. something which can vary in quantity and

size
9. undifferentiated market i. the stock of any item or resource used in an
organization ( raw materials, supplies, work
in process and finished products)

10. market fragmentation j. knowledge or competence of a company’s

employees

11. target market k. the maximum demand expected among

consumers in a segment for a product or
service

12. market potential l. group or groups that a firm selects to turn

into customers as a result of segmentation
and targeting

13. positioning m. redoing a product’s position to respond to

marketplace changes

14. physical evidence n. a distinctive image that captures a product

or service’s character and benefits

15. empathy o. apparel, facilities, graphics, logos

16. assurance p. the ability to react to customers’ needs

17. responsiveness q. developing a marketing strategy aimed at

influencing how a particular market
segment perceives a product or service
in comparison to the competition

18 repositioning r. the ability to understand customers’ needs

and to care about their welfare
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19. brand personality s. creation of many consumer groups due to

a diversity of distinct needs and wants in
modern society

Answer the following questions

1. What is market segmentation and why is it and important strategy in

today’s marketplace?
2. What can be regarded as segmentation variables?
3. What is the difference between undifferentiated marketing and
differentiated one?
4. What is product positioning? What does the success of target marketing
strategy depend on?
5. List the steps in developing and implementing a positioning strategy.
6. What criteria do you use to judge a good service positioning?
7. Where can we position our product on the market if there is the only one
brand on it? Why?
8. Where can a competitor place his product in the similar circumstances and
why?
9. Where should a company position their product if there are several brands
on the market? Why?
10.Why is it sometimes risky for a new entrant to target a smaller segment
with less competition?

Unit 6 Marketing mix - Products

Use the following terms to complete the definitions below. Translate the
sentences.
brand product
product line product mix
line-stretching line-filling
product elimination convenience goods
shopping goods speciality goods

1. A ………. is a name ( or sometimes a sign, symbol or design) used to

identify the goods or services of a particular manufacturer, seller or
supplier, and to differentiate them from the goods or services of
competitors.
2. A ……...is defined by marketers as anything capable of satisfying a need
or want (including services such as bank loan, a haircut, a meal in a
restaurant, or a skiing holiday).
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3. A …….. is a group of closely related products, which usually have the

same function and are sold to the same customer groups through the same
outlets.
4. A ……. is the set of all the product lines and items offered by a company.
5. ……….. are cheap and simple “low involvement” products which people
use regularly and buy frequently with little effort, without comparing
alternatives.
6. ……….. are durable goods with unique characteristics that informed
consumers have to go to a particular store to buy.
7. ………… are “high involvement” products for which consumers
generally search for information, evaluate different models, and compare
prices, and take time to make a selection.
8. ………. is the process of withdrawing products from the market when
they are no longer profitable.
9. ……….. means adding further items in that part of a product range which
a line already covers, in order to compete in competitors’ niches, to utilize
excess production capacity, and so on.
10.……… means lengthening a company’s product line, either moving up
market or down market in order to reach new customers, to enter growing
or more profitable market segment, to react to competitors’ initiatives,
and so on.

Branding

“The most distinctive skill of professional marketers is their ability to create,

maintain, protect and enhance brands”
P. Kotler, American marketing guru

Read the text and select the appropriate expression to complete the text

In a market containing several similar competing products, producers can

augment (increase, add) their basic product with additional services and benefits
such as customer advice, delivery, credit facilities, a warranty or guarantee,
maintenance, after-sales service, and so on, (1)……….. distinguish it from
competitors’ offers.

Most producers also differentiate their products by branding them. Some

manufacturers, such as Yamaha, Microsoft, and Colgate, use their name (the
“family name”) for all their products. Others market various products under
individual brand names, (2)……… many customers are unaware of the name of
the manufacturing company. (3)……… , Unilever and Proctor & Gamble, the
major producers of soap powders, famously have a multi-brand strategy which
allows them to compete in various market segments, and to fill their space in
 72

shops, (4)……… leaving less room for competitors. (5)………. also gives them
a greater chance of getting some of the custom of brand-switchers.

(6)……….. famous manufacturers’ brands, there are also wholesalers and

retailers’ brands. (7)………… , most large supermarket chains now offer their
“own-label” brands, many of which are made by one of the better-known
manufacturers.

Brand names should (8)………. be easy to recognize and remember. They

should also be easy to pronounce and, especially for international brands, should
not mean something embarrassing in a foreign language!

(9)………… a name and a logo, many brands also have easily recognizable
packaging. Of course packaging should also be functional: (10)…….. , the
container or wrapper should protect the product inside, be informative,
convenient to open, inexpensive to produce, and ecological (preferably
biodegradable).

1. a. as a result of b. in order to c. thus

2. a. although b. since c. so that
3. a. Consequently b. Despite c. For instance
4. a. for example b. however c. thus
5. a. There b. That c. This
6. a. As a result of b. In addition to c. Owing to
7. a. For example b. Furthermore c. However
8. a. i.e. b. of course c. therefore
9. a. As well as b. Despite c. So as to
10. a. although b. in other words c. on account of

Complete the following collocations

1. to augment ……… 4. multi-brand ………….

2. ………. facilities 5. to fill …………
3. after-sales ……… 6. ………… chains

Exercise 1 Product Lines

Match up the following words with the italicized words in the text:
additional goal production stoppages continual handling seeking
discontinuing phases unchanging expand present weaken
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Most manufacturing companies have a product mix made up of a number of

products, often divided into product lines. Since different products are always at
different stages of their life cycles, with growing, stable or declining sales and
profitability, and because markets, opportunities and resources are in constant
evolution, companies are always looking to the future, and re-evaluating their
product mix.

Companies pursuing high market share and market growth generally have long
product lines. Companies whose objective is high profitability will have shorter
lines, including only profitable items. Yet most product lines tend to lengthen
over time, as companies produce variations on existing items, or add extra items
to cover further market segments. Established brands can be extended by
introducing new sizes, flavours, models, and so on.

There are, however, dangers with both line-filling and line-stretching. Adding
more items within the current range of a product line can lead to cannibalization
if consumers cannot perceive the difference between products, i.e. the new
product will just eat into the sales of existing products. Stretching a line to the
lower end of a market will generally dilute a company’s image for quality, and a
company at the bottom of a range may not be able to convince dealers and
customers that it can produce quality products for the high end.

Consequently companies occasionally have to take the decision to prune or

shorten their product lines. Quite simply, a product line is too short if the
company could increase profits by adding further items, and it is too long if they
could increase profits by dropping certain items.
Adding items to a product line results in a variety of costs, in design and
engineering, carrying inventories, changing over manufacturing processes,
processing orders, transporting goods, promoting the new items, and so on.
Producing fewer items generates savings because it allows companies to have
longer production runs with less downtime because of changovers, it requires
less plant and equipment, it reduces inventory, it simplifies planning and control,
and it allows more concentrated activity in development, design, selling, after-
sales service, and so on. But of course companies must be careful not to cut loss-
leaders from their lines.

Exercise 2
Without looking at the previous information, complete the sentences in the
sentences below. Translate the sentences into Russian.

1. Many companies have a ……….. consisting of a number of products.

2. These products can have growing, ……. , or declining sales, depending
on where they are in their ………… .
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3. Companies looking for high ………… generally have long product lines,
while companies seeking high …….. will have shorter lines.
4. Yet most product lines tend to ……… over time, as companies add extra
items to cover more …………. .
5. …………. can lead to ……… , if the items are too similar.
6. A product line can be ……… in two directions, both up-market and
down-market, although going down-market can damage a company’s
image for ………. .
7. Companies also occasionally ……….. their product lines.
8. Sometimes you can increase profits by …………. certain items.
9. Adding items to a product line results in a variety of ……….. ; for
example, you will need to carry more …………. .
10.On the contrary, producing fewer items generates …………. .
11.With fewer products you have longer ……….. with less ……….. caused
by changeovers.
12.But of course companies mustn’t abandon …………….. .

Exercise 3.
Match up the phrasal verbs on the left with the verbs that have a similar
meaning on the right

1. account for (the rise in products) a. accept

2. bring out (a new product)
3. carry on (in the same old way)
4. carry out (a market survey)
5. come up with (a new idea)
6. do without (a pay rise)
7. (production levels) drop off
8. give up (production of the 320s)
9. go along with (the decision)
10. kill off (a silly project)
11. look ahead to (the future)
12. look for (a new solution)
13. make room for (further expansion)
14. take off (after performing less well)
15. throw away (some good ideas)
16. weed out (uneconomic departments)
b. decrease, become fewer or less
c. begin to be successful
d. continue
e. destroy or abandon
f. find space to give smth else
g. get rid of, discard (because
unwanted)
h. have, create ideas
i. make up, constitute a figure
j. perform, undertake or do
k. produce, launch
l. remove (from smth larger)
m. agree to stop or discontinue
n. survive or live while
lacking smth
o. think about, prepare or plan
the future
p. try to find
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Exercise 4
Complete the text using the correct form of the phrasal verbs above

Most companies regularly (1) ……….. new items, stretching and filling their
product lines, (2)………… opportunities to increase sales and earn more profits.
But these additions are not always successful. Some items just don’t (3)……… ,
and are insufficiently profitable. So the company has to (4)………. regular cost
and sales analyses of the entire product line, taking account of opportunity costs,
and then (5)……….. poorly performing products. Obviously the brand managers
and the other people involved aren’t happy to see their products (6)……… , and
may consider that months or years of work are just being (7)……….. , but no
company can (8)………. profits. The same is true of products that were once
successful but are now no longer profitable: if sales have (9)…….. , a company
that is (10)………. will abandon them to (11)……. new items.

It’s quite often the case that about 20% of a firm’s products (12)……… most of
its sales, so there are lots of products that could be abandoned. Their managers
probably won’t (13)……. without a fight, but they have no choice but to
(14)…….. the financial imperatives. On the other hand, it is more difficult to
(15)……… ideas for new products than to (16)………. producing poorly selling
ones.

Exercise 5
Product Life Cycles

Sales

SALES
and
PROFITS

Profit

Introduction Growth Maturity Decline

 76

Read the text , and then decide whether the statements given below are True
or False.

The sales of most products change over time, in a recognizable pattern which
contains distinct periods or stages. The standard life cycle includes introduction,
growth, maturity and decline stages.

The introduction stage, following a product’s launch, generally involves slow

growth. Only a few innovative people will buy it. There are probably no profits
at this stage because of the heavy advertising, distribution and sales promotions
expenses involved in introducing a product onto the market. Consumers must be
made aware of the product’s existence and persuaded to buy it. Some producers
will apply a market-skimming strategy, setting a high price in order to recover
development costs. Others will employ a market-penetration strategy, selling a
product at as low a price as possible, in order to attain a large market share.
There is always a trade-off between high current profit and high market share.

During the growth period, ‘early adopters’ join the ‘innovators’ who were
responsible for the first sales, so that sales rise quickly, producing profits. This
generally enables the producer to benefit from economies of scale. Competitors
will probably enter the market, usually making it necessary to reduce prices, but
the competition will increase the market’s awareness and speed up the adoption
process.

When the majority of potential buyers have tried or accepted a product, the
market is saturated, and the product reaches its maturity stage. Sales will
stabilize at the replacement purchase rate, or will only increase if the population
increases. The marketing manager has to turn consumers’ brand preference into
brand loyalty.

Most products available at any given time are in the maturity stage of the life
cycle. This stage may last many years, and contain many ups and downs due to
the use of a succession of marketing strategies and tactics. Product managers can
attempt to convert non-users, search for new markets and market segments to
enter, or try to stimulate increases usage by existing users. Alternatively they
can attempt to improve product quality and to add new features, sizes or models,
or simply to introduce periodic stylistic modifications. They can also modify the
other elements of the marketing mix, and cut prices, increase advertising,
undertake aggressive sales promotions, seek new distribution channels, and so
on, although here additional sales generally come at the cost of reduced profits.

A product enters the decline period when it begins to be replaced by new ones,
due to advances in technology, or to changes in fashions and tastes. When a
 77

product has clearly entered its decline stage, some manufacturers will abandon it
in order to invest their resources in more profitable or innovative products.
When some competitors choose to withdraw from a market, those who remain
will obviously gain a temporary increase in sales as customers switch to their
product.
Not all products have this typical life cycle. Some have an immediate rapid
growth rather than a slow introductory stage. Others never achieve the desired
sales, and go straight from introduction to maturity, although of course this
should have been discovered during test marketing before a full-scale launch.
Fads and gimmicks – for example, toys people buy once and once only to stick
on car windows- have distinct life cycles, both rising and declining very quickly.

Agree or disagree with the statements, speak on them, translate them into
Russian
1. The introduction stage of a new product is not usually profitable.
2. During the introduction stage, marketers are trying to create brand
preference.
3. A producer seeking maximum profits will apply a market –penetration
strategy.
4. The entry of competitors onto the market will make more consumers
aware of the product and stimulate them to try it.
5. At the maturity stage, producers begin to benefit from economies of scale.
6. The maturity stage is generally the longest.
7. Once the maturity stage is reached, marketers concentrate on finding new
customers.
8. A product enters the decline stage when it begins to become obsolete.
9. A product can experience temporary sales increases during the decline
stage.
10. Gimmicks and fads have a particularly long life cycle.

Time Sequences
The expressions below can be used to describe sequences of actions taking
place over extended periods of time.
At first….. Then………..
Initially….. Later…………
To start with……. Later on……….
Secondly, thirdly, etc……. Afterwards……..
Subsequently…….. Eventually…..
At this point of stage………. In time……
During this time……… Ultimately…….
Meanwhile……………
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Re-read the text on Product Life Cycles, and then choose expressions from the
list above to begin the following sentences.

1. ……… companies have to advertise and promote heavily.

2. ……… companies have to choose between high profit and high market
share strategies.
3. ………… competitors will probably enter the market.
4. …………. economies of scale begin to lower costs.
5. ………… growth is slow and expenses are high.
6. ………… marketers have to build up brand loyalty.
7. ………… marketers have to turn this awareness into a desire to purchase
the product.
8. ………… new products will appear and begin to replace the existing one.
9. ………… sales begin to rise quickly.
10.………… sales will only increase if marketers can expand the whole
market, or find new uses or users for the product.
11.………… the company will choose to abandon the product.
12. ………… the market will become saturated.

Unit 7 Marketing mix - Pricing

Complete the text using these words

competitive components market leader market segments market share

monopolist overheads plant sensitive substitute target volumes

The price of a product should logically cover its production and distribution
costs, including a proportion of the company’s fixed costs or (1)………. , such
as rent and interest payments, and leave a small profit. But prices are also
influenced by the level of demand, the prices of (2)…….. products, and the
prices charged by competitors.

High quality products made with expensive (3)……… and requiring a lot of
craftsmanship are obviously expensive. They also generally require “prestige
pricing” as the consumers in their (4)…….. market would not buy them if they
thought the price was too low. The market for most other goods are generally
price (5)………, i.e. the lower the price, the greater the sales.

But for new products for which there is a sufficiently high demand, companies
may choose to set the highest possible price so as to maximize profits. This is
known as market-skimming. The price can later be reduced in order to reach
further (6)…….. . The opposite strategy is market-penetration, which means
 79

setting as low a price as possible so as to increase sales volume and (7)…….. ,

leading to lower unit production and distribution costs and higher long-run
profit. The low price will also discourage competition.

Companies with overcapacity, intensive competition, a large inventory, or a

declining market are likely to cut the prices of established products. They are
more concerned with keeping the (8)…….. going and staying in business than
making a current profit. On the contrary, firms facing rising costs, or in need of
cash in the short term, tend to raise prices. A company faced with demand that
exceeds supply is also likely to raise its prices, like a (9)………… .
Firms in perfectly (10)………. Markets, or homogeneous-product markets, or
small firms in an industry with a strong (11)……… , are likely to use going –
rate pricing, i.e. they will charge more or less the same price as everyone else,
rather than set a price based on estimates of costs or projected demand.

But of course, all prices can be adapted. Most companies offer cash discounts to
customers who pay immediately, and quantity discounts to buyers of large
(12)………. . Many products and services are sold at a lower price during an
off-season. Retailers often offer some loss-leader prices: they cut the prices of
selected products to cost price or below in order to attract customers who also
buy other goods. Companies are also often obliged to react to price changes by
competitors. They might try to avoid a price war by modifying other elements of
the marketing mix. Similarly, they have to anticipate competitors’ reaction if
they change their own prices.

Vocabulary Market Metaphors

Many of the verbs and some nouns and adjectives commonly used to talk
about markets and marketing are, in fact, metaphors. For example, a product
can be launched – like a ship; or it can die – like a person.

Exercise 1.
This exercise gives the literal meanings of the following words. Can you
match them?
collapse prune target launch saturate flood skim dry up blitz
penetrate shrink push

1. ……… send a rocket into space or a new ship into water for the first time
2. ……… aim at something – when shooting at something
3. ……… remove something from the surface of something – cream from
milk
4. ……… go into something – a bullet into a body
5. ……… cover with water – when a river bursts its banks
 80

6. ……… move something away from you

7. ……… drop a lot of bombs on one area
8. ……… when some soft substance is full of water so that it cannot absorb
any more
9. ……… fall down suddenly – a building during an earthquake
10. .…….. when something gets smaller – clothes when they are washed
11. ……… when all the liquid in something disappears – perhaps because of
too much heat
12. ……… when you cut branches off a tree so that it will grow better in the
future

Exercise 2
Use the correct form of the words above, in the same order, to complete the
text below.
We (1)……. the product two years ago, after doing a lot of research and
testing. We were (2)……. young people, the 18s to 25s, but a lot of older
people bought it too. Since this was a new product, and we were the first
company to produce it in Britain, the finance people, as always, wanted to
charge a high price and (3)……. the market. But we argued with them and
finally got our way. We charged a low price hoping to (4)……. the market.
Unfortunately, it turned out that one of our competitors was also making the
same product in Taiwan, and soon the market was (5)…… with even cheaper
imports.

So we decided we really had to (6)…… our “British made” version. We

spent about half a million on an advertising (7)…… . Sales did go up for a
while, but now they are falling. Maybe the market is nearly (8)…… . We
don’t expect it to (9)……. , but it does seem to be (10)……. as young people
switch to other sports. Yet the market for our expensive top-of-the-range
models has almost (11)……. , so it’s probably time we (12)……. our product
line.

Exercise 3 Collocations – consumer

All the words in the box form strong collocations with the word consumer.
Match up the terms in the box with the definitions below.
consumer behavior consumer boycott
consumer confidence consumer credit
consumer durables consumer goods
consumer market consumer panel
consumer profile consumer spending

1. A description of the characteristics of the consumers of a particular

product, in terms of age, class, income, and so on.
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2. A group of shoppers who record their purchases of all selected products,

for use in market research.
3. Goods in every day use, such as food, clothing, household goods, and
services such as hairdressing, retail banking, and so on.
4. Goods that last a long time, such as cars, ‘white goods’ (fridges, cookers),
‘brown goods’ (televisions, stereos), and so on.
5. How people in general feel about their job security, future economic
prospects, and so on.
6. How different people react to marketing stimuli, depending on their
psychology, their cultural and social background, and their economic
situation.
7. The amount of money being spent on consumer goods and services,
which fluctuates with recessions and booms.
8. The amount of money borrowed by people to buy goods and services,
depending on confidence and the economic cycle.
9. The individuals and households that buy products for their own personal
consumption.
10. When customers refuse to buy the products of a company they
disapprove of for ethical or political reasons.

Exercise 4
Complete the paragraph with collocations from exercise 3.
A government spokesman yesterday insisted that the latest figures showed that
(1)……… was returning , and (2)……. was increasing. Several retailers
disagreed, and suggested that sales of (3)……. had only increased in January
because all the major stores had had extended Winter Sales and discounted
prices by up to 20%. The High Street banks say that the level of (4)…….
Remain low, with many people paying off earlier debts, and afraid to take on
new ones.

Speaking

A. List some of your favourite brands. Then answer these questions.

1. Are they international or national brands?

2. What image and qualities does each one have?
3. Do the products have anything in common?
Are they all high priced?
4. How loyal are you to the brands you have chosen?
For example, when you buy jeans, do you always buy Levis?
5. If you don’t buy branded goods, explain why.
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B. What are the advantages of branded goods for:

a) the manufacturer? b) the consumer?

C. A recent survey named the brands below as the world’s top ten.
Which do you think is number one? Rank the others in order.
Marlboro AT&T Ford General Electric Intel IBM
Microsoft
Coca-Cola McDonald’s Disney

Vocabulary
a. Look at the eight word partnerships with the word brand. Match them
with the definitions below.
luxury brand; classic brand; brand awareness; brand image;
brand stretching; brand loyalty; brand leader; brand manager.

1. A brand associated with expensive, high quality products.

2. The person responsible for planning and managing a branded product.
3. The brand with the largest market share.
4. A famous brand with a long history.
5. The ideas and beliefs which consumers have about a brand.
6. The tendency of a customer to continue buying a particular product.
7. Using a successful brand name to launch a product in a new category.
8. The knowledge which consumers have of a brand.

b. Complete these sentences with word partnerships from the list.

1. Levis, which has been established for over a 100 years and is world
famous, is a ……………….. .
2. The aim of the advertising campaign is to enhance ………… so that
consumers become more familiar with our coffee products.
3. Volvo’s …………. is that of a well-engineered, upmarket, safe car.
4. Suchard is a ……………… of Swiss chocolate.

c. Make four sentences of your own using the remaining word partnerships

Listening What is branding?

a. Lynne Fielding, a marketing specialist, is talking about branding. Complete

these extract from the interview with the words below. Then listen to the
firs part of the interview and check your answers.

money name differentiate synergy quality competitors’

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‘What is branding and why do we need brands?’

‘A brand can be a .…1… , a term or a symbol. It is used to …2….. a product

from ……3….. products. The brands guarantee a certain ….4….. level. Brands
should add value to products. It’s a …5….. effect whereby one plus one equals
three. But customers must believe they get extra value for … 6…. .

b. Listen to the second part of the interview and complete the chart
Stand-alone or……….. brands Corporate or ……….. brands
… Ariel. ….Heinz..
……….. ………..
c. Listen to the last part and complete the summary below.
1. Customers want:
a. …………. b. ……………. C. …………….

2. Customers like to:

a. rely on the ……… guaranteed by the company.
b. …………… products. C. …………. with brands.

Reading Fashion piracy

a. Discuss these questions before you read the article.

1. Do you own a product which is illegal copy of a well-known brand? If so,

what is it? Where did you buy it? How much did it cost?
2. How can manufacturers protect their brands from piracy (illegal coping)?

b. Match these words and phrases with the definitions

1. global offensive a. plans of a company to achieve its objectives

2. counterfeiter b. agreements which allow a company to make and sell
a registered product locally
3. copyright abuse c. taking strong action all over the world
4. a network d. a person who copies goods in order to trick people
5. merchandise e. to copy someone else’s work, for example their
designs, without permission
6. corporate strategy f. a large number of people or organizations working
together as a system
7. logo g. goods for sale
8. licensing rights h. to change the way something is organized
9. to rip off i. the symbol of a company or other organization
10. restructure j. to sell illegal copies of a brand as if they are the
real thing
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c. Read the article quickly to find out:

1. which Calvin Klein products are commonly copied.

2. why the problem is getting worse.
3. how the company is dealing with it.

d. Read the article again and answer these questions.

1. What was Calvin Klein’s attitude to counterfeiting in the past?

2. Why has the company changed its way of dealing with counterfeiters?
3. What has the company done to change the way its business operates and
to increase its size?

Calvin Klein is tired from piracy, says Alice Rawsthorn, and has started a
global offensive against counterfeiters
Fashion victim fights back

Walk into a street market anywhere from Manila to Manchester, and someone
will be selling T-shirts branded with the distinctive CK logo of Calvin Klein, the
New York fashion designer.
If the price is very low, the T-shirts are probably fakes. Calvin Klein, like most
other internationally-known fashion designers, has, for a long time, had
problems with counterfeiters selling poor-quality merchandise bearing his brand
name. Now he is doing something about it. ‘As the Calvin Klein brand has
become well-known, we’ve seen a big increase in counterfeit activity’, says
Gabriella Forte, chief executive of Calvin Klein. “The better- known the brand
name, the more people want to rip it off”.

In the past Calvin Klein took a relatively passive approach to the counterfeit
problem. The company has now got tougher by establishing a network of
employees and external specialists to uncover copyright abuse.

The move began with a general change in corporate strategy whereby Calvin
Klein has aggressively expanded its interests outside North America. Calvin
Klein has been one of the leading fashion designers in the North American
market since the mid-1970s. Now Calvin Klein is building up its fashion
business in other countries. It has increased its investment in advertising, and
restructured its licensing arrangements by signing long-term deals with partners
for entire regions such as Europe or Asia, rather than giving licensing rights to
individual countries. But as sales and brand awareness have risen, Calvin Klein
has become an increasingly popular target for Asian and European
counterfeiters, alongside other luxury brands such as Gucci, Chanel and Ralph
Lauren.
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The fake goods, mostly T-shirts, jeans and baseball caps, not only reduce the
company’s own sales but damage its brand image by linking it to poor quality
merchandise. ‘You’d be amazed at how many people pay $5 for a T-shirt
without realizing it’s counterfeit’, said one executive.
From the Financial Times

Work in pairs.
Role play either the fashion designer or the general manager.

Fashion designer
You are a self-employed young fashion designer at the start of your career. A
large store is selling T-shirts which look exactly the same as some of your new
designs which you haven’t sold yet. You meet the general manager of the store
to make your complaint and ask for financial compensation.

General manager
You are going to meet a young designer who thinks you have stolen their
designs. It is quite common for the store’s design team to get ideas for products
from student fashion shows and art school exhibitions. Be sympathetic, but
admit nothing.

Unit 8 Marketing mix - Promotion and Placement

Reading
Rearrange the sentences below to make a complete text about marketing
channels
a. If there is only one intermediary, it could be a dealer or retailer for consumer
goods, or a sales agent or broker for industrial goods.
b. In other words, decisions about the location of manufacturing and assembly
plants and warehouses, inventory levels, and transport methods should ideally
begin with the needs of customers.
c. More complex channels add further intermediaries such as transport
companies, wholesalers, and independent distributors.
d. Most producers, however, use a marketing channel involving one or more
specialized intermediaries.
e. Of course, the choice of which physical distribution channels to use should
not come at the end of the marketing process.
f. On the contrary, according to the logic of marketing, companies should begin
with considerations such as location of target customers, and work back to raw
material sources and manufacturing.
g. Some manufacturers do direct marketing, selling their goods directly to
the end - users.
h. These are essentially a short delivery time and a guarantee that products arrive
in good conditions.
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i. They can reach these consumers with their own door-to-door sales reps; by
direct mail (sending catalogues, leaflets, brochures, order forms, and so on by
post); by telephone selling; or by advertising and receiving orders via the
Internet.
j. Yet the demands of retailers and customers clearly also have to be balanced
against excessive inventory costs, as large inventories tie up capital and
increase the risk of spoilage or obsolescence.

1 –g 2- 3- 4- 5- 6- 7- 8- 9- 10 -

Vocabulary
Exercise 1 Add appropriate words from the text to these sentences.
1. We do …… marketing, by mail and telephone.
2. Last year we mailed our 160-page …….. to over 10 million homes.
3. Obviously most ……. goods are sold through retailers.
4. Producers of ……. goods often have a large network of sales agents.
5. It’s logical to store finished products close to your ……. customers.
6. This is a key element in choosing the ……. of a warehouse.
7. Both retailers and customers generally demand a short …… time.
8. The trouble with having a large ……… is that it immobilize a lot of
money.

Exercise 2
Down
1 2 1. I’m a …… (11). I stock and resell car
3 parts to half the garages in this city.
4
2. He’s an ……… (5) for three German
companies. He’s responsible for selling
their products in Britain.
5 3. (and 8 Down) I’m a …….. (5, 3) for a
clothing manufacturer. I’m part of a
6
team, but I have my own territory and
try to sell to customers in this district.
7. See 4 Across.
7 8
8. See 3 Down.
9

Across
1. She’s an art ……. (6) . She buys
paintings from artists and sells them
in her gallery.
4. (and 7 Down) We don’t use any intermediaries, but sell directly to the
…….. (3 –4).
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5. Look, I’m a ……. (8), and these are my prices. I can’t give you a
wholesale price, even if you buy my entire stock.
6. I’m an insurance ……. (6) . I advise customers where they can get the
best deal. In other words, I bring together sellers and customers, and the
seller pays me a commission.
9. This warehouse is owned by a big ……. (10) which stocks goods from lots
of suppliers, and distributes them to retailers when they place orders.

Text Promotional Tools

Read the text and translate it. Decide which of the three summaries on the
next page most fully and accurately expresses its main ideas.

Marketing is often defined as a matter of identifying consumer needs and

developing the goods and services that satisfy them. This involves
developing the right product, pricing it attractively, and making it available
to the target customers, by persuading distributors and retailers to stock it.
But it is also necessary to inform potential consumers of the product’s
existence, its features, and its advantages, and to persuade them to try it.
There are generally several stages involved in a consumer’s decision to buy a
new product. A well-known acronym for this process is AIDA, standing for
Attention, Interest, Desire, and Action. According to the familiar “4 Ps”
formulation of the marketing mix – product, price, place and promotion –
attracting attention, arousing interest, and persuading the consumer to act are
all part of promotion. Marketing textbooks conventionally distinguish four
basic promotional tools: advertising, sales promotion, public relations, and
personal selling, which together make up the marketing communications
mix.

For consumer goods, the most important tool is generally advertising. As

well as advertising particular brands, companies also carry out prestige or
institutional advertising, designed to build up the company’ name or image.
Advertising is often combined with sales promotions, such as free samples,
coupons and competitions.
For industrial goods, particularly specialized ones, the most important tool is
often personal selling. Sales reps can build up relationships with company
buyers, and can be very useful in persuading them to choose a particular
product.

The fourth promotional tool is public relations (frequently abbreviated as

PR): activities designed to improve or maintain or protect a company’s or a
product’s image. Public relations include things like company publications,
most notably the annual report, sponsorship, community relations programs,
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the lobbying of politicians, and the creation of new stories, all designed to get
publicity for the company or a particular product. Unlike paid advertising,
publicity is any (favorable) mention of a company’s products that is not paid
for, in any medium received by a company’s customers or potential
customers. Companies often attempt to place information in news media to
draw attention to a product or service. Quite apart from financial
considerations, the advantage of publicity is that it is generally more likely to
be read and believed than advertising. It can have a great impact on public
awareness that could not even be achieved by a massive amount of
advertising.

Within the limits of their budget, marketers have to find the optimal
communications mix of advertising, sales promotion, personal selling, and
publicity, without neglecting the other elements of the marketing mix, i.e. the
possibility of improving the product, lowering its price, or distributing it
differently.

First summary
Marketing involves making a good, cheap product and convincing customers
to buy it by way of a good communications mix. For consumer goods, this is
generally done with advertising and sales promotions. For specialized
industrial goods, this is done by personal selling. Publicity, such as
favourable mentions of a company products in news media, is also useful.

Second summary
Marketing involves four basic elements: advertising, sales promotion, public
relations, and personal selling. The first three of these are used for consumer
goods, the last for industrial goods. These tools, along with product
improvement, price reductions, and distribution channel innovations, make
up the communications mix.

Third summary
Marketing involves producing the right product, pricing it attractively,
making it available to potential customers, and promoting it. With consumer
goods, this largely involves advertising and sales promotions. For industrial
goods, personal selling is often more important. Publicity is also a useful tool
as it is cheaper and generally more credible than advertising. Marketers have
to combine these tools to create the best possible communications mix.

Match up the following verb-noun collocations from the text

1. to satisfy a. an impact
2. to develop b. attention
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3. to inform c. consumers
4. to build up d. needs
5. to lobby e. politicians
6. to draw f. products
7. to believe g. publicity
8. to have h. relationships

Discussion Three promotions

Read the three case studies below. Then discuss the questions that follow each
one.
Case 1. McDonald’s
The famous fast food company, McDonald’s, launched campaign 55 to help it
compete against rivals like Burger King and Wendy’s. They had a six-week
promotion costing $320 million. McDonald’s offered a Big Mac (a type of
hamburger) for 55 cents instead of $1.90. When customers were at the cash
register, they found that they had to buy French fries and a drink at the full price
to get the cheap burger.

1. Why do you think this promotion was unpopular with McDonald’s

customers?
2. How do you think McDonald’s dealt with the situation?

Case 2. Pepsi
The Pepsi Cola company had the idea of offering a Harrier jump jet (an air liner)
as a ‘joke’ promotion. The advertisement was first shown in the Seattle area in
the US. It showed a teenager modelling some merchandise available as part of
the Pepsi Stuff promotion. At the end, a Harrier jet landed outside the school and
the boy came out of the cockpit saying, “It sure beats taking the bus to school”.
The promotion rules allowed customers to save up Pepsi Stuff points by
collecting labels from Pepsi drinks or buying them directly for 10 cents each.
The advert stated- jokingly- that 7million points were needed for someone to
claim the jet. A business student, John Leonard, intends to take Pepsi Cola to
court regarding the promotion because he thinks they should give him the prize.

1. What prize do you think John Leonard is claiming from Pepsi Cola?
2. What did he do to claim the prize?
3. Why do you think Pepsi Cola have described his claim as frivolous (not
serious)?
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Case 3 Irish Tourist Board

The Irish Tourist Board used to have the shamrock as its symbol. Recently it
spent 100,000 pounds developing a new logo to attract tourists to Ireland. The
logo showed two people with their arms outstretched in welcome. A tiny
shamrock can be seen between the two bodies.
The new logo was part of a campaign to promote Ireland as a modern country
offering good food and company. It was put on all the Tourist Board’s
promotional material. The television and advertising campaign included music
by the well-known group The Cranberries and showed pictures of a romantic,
fun-loving Ireland. It was very successful abroad. Tourism increased by 14% in
four months.
Unfortunately the Irish people didn’t like the new logo. The Minister of Tourism
ordered the Tourist Board to get rid of the logo and bring back the shamrock –
or something similar.

1. Why do you think the Irish people disliked the logo so much?
2. Was the Minister right to get rid of the logo?
3. Which logo do you prefer?

Skills Taking part in meetings

a. You work for a marketing agency representing a well-known chain of book
shops. Answer the questionnaire below, inventing the information you need.

Questionnaire
1. What is the name of your client’s company?
3. Who are their target customers ( age, social class, etc.)?
4. Do they specialize in any particular type of book?
5. Do they sell any other products?
6. Do they offer discounts or other special services?
7. What is their brand image?
8. What is their share of the market?
9. Who is their main competitor?
10.Where are their shops located (city centers, suburbs, train stations and
airports, etc.)?

b. Recently sales have fallen. Hold a meeting to discuss the possible reasons.
Make suggestions to improve your client’s sales and its brand awareness
amongst its target consumers. Use phrases from the useful language box.

Useful language

Interrupting Hold on…..

Could I just say something? Sorry, but…..
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Asking for opinions How do you feel about…..?

What do you think? What’s your opinion?
Giving opinions I think….. In my opinion…….

Agreeing That’s true. I agree. I totally agree.

Disagreeing I’m sorry, I don’t agree.

I’m totally disagree.
I’m afraid I don’t agree. Maybe, but……

Making suggestions I think we should……

How about….? Why don’t we ……?

Rejecting suggestions I don’t think it’s a good idea.

I’m not keen on it.

Case Study Caferoma

Background
Caferoma, a well-known brand of coffee, is owned by the Pan European Food
and Drink Company (PEFD), based in Turin, Italy. It is promoted as an
exclusive ground coffee for gourmets. Its image is that of an Italian-style coffee.
It has a strong full-bodied flavour and a slightly bitter taste. It costs more per
100 grams than almost every other ground coffee product on the supermarket
shelves.

Problems
In the last two years, Caferoma’s share of the European quality ground coffee
market has declined by almost 25%. There are several reasons for this:
Brand loyalty: Consumers have become less loyal to brands and are more
willing to trade down to lower-priced coffee products.
Price: Supermarkets have been producing, under their own label, similar
products to Caferoma at much lower prices.
‘Copycat’ products: Competing brands of Italian-style ground coffee at prices
30% to 40% lower than Caferoma’s price have cut into Caferoma’s market
share.
Brand image: Consumer surveys show that the Caferoma brand no longer
conveys a feeling of excitement and enthusiasm, and that it does not give the
impression of being up-to-date and contemporary.
 92

Task
You are members of PEFD’s European marketing team. Hold an informal
meeting to discuss Caferoma’s problems. Decide what actions are necessary to
halt the decline in the product’s market share and to increase profits.

Possible solutions
Repositioning the product Change Caferoma’s image to appeal to a different
market segment. (Which segment, and what changes should they make to taste,
quality, packaging, logo, labeling, etc?)
Pricing Reduce the price by, say, 20% to 30% to make it more competitive.
Advertising Devise a new advertising campaign. (The new message, kind of
campaign, and any special promotions need to be considered)
Multiple brands Sell Caferoma, with minor product changes, under different
brand names at lower prices.
Own label products Sell Caferoma coffee for supermarkets to package and sell
under their own labels (but continue to market the Caferoma brand at the same
time).
A new product Bring out an instant coffee or decaffeinated product under the
Caferoma brand.
Stretching the brand Allow selected manufacturers of coffee equipment
(cafetieres, percolators, coffee machines, etc ) to use the brand on their goods –
for a licensing fee, of course.

Personal selling
Complete the text using these words

advertising channel closing collaborate communicating

salary competitors customers diversified gathering maximizing
quota

What do I do? I’m a salesman. Well, actually, because there are several women
in our sales force, I guess I should say I’m a salesperson or a sales
representative, or a sales rep for short. My job is to contact existing and
prospective (1)……… . Some salespeople are based in companies’ offices, but
I’ve always worked “in the field”, traveling and visiting customers.

You know, sales reps are often the only person from a company that customers
ever see, so we are an extremely important (2)…….. of information. Someone
calculated a long time ago that the majority of new product ideas come from
customers, via sales reps. So our tasks include prospecting for customers,
(3)……. information to them about our company’s products and services,
selling these products and services, helping the customers with possible
technical problems, and (4)………… market research information. Since we
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have to be able to recognize customers’ needs and problems, we often

(5)……….. with engineers, particularly for technical products, and with market
researchers.

The trouble with personal selling is that it’s the most expensive element in the
marketing mix, so most firms only use it sparingly, often as a complement to
(6)………… . Sales reps like me are more often necessary for (7)……… deals
than for providing initial information.

But these days we think about more than making a single deal. I mean, head
office keep reminding us of “the marketing concept”, and telling us not to think
about making short-term sales but about solving customers’ problems, bringing
back information, achieving long-term sales, and (8)……… profits. We have to
know all about the company and its products, about the customers, and about
(9)…….. . Of course, we also have to know how to give an effective sales
presentation!

In this company, each salesperson is allocated a particular territory in which to

represent our entire range of products. This allows us to cultivate personal
contacts, and means we don’t have to travel too much. But I know other
companies with highly (10)……. products or customers that prefer to have
different sales reps for different products, or for different sets of customers.

Like most salesmen, I receive a fixed (11)……. plus commission on the quantity
I sell. I’m also set a quarterly sales (12).……. that I’m expected to meet , as part
of the company’s annual marketing plan.

Exercise 1.
Complete the following collocations:
1. prospective……… 6. to solve a ………….
2. a channel of …….. 7. to achieve long-term ….
3. new product……… 8. to give a sales …………
4. to recognize customers’…….. 9. to cultivate personal…….
5. to close a …………. 10. to meet a sales…….

Exercise 2. Sales promotions

Match the terms on the left with the definitions on the right:

1. brand switcher a. a certificate offering consumers a price

reduction on a particular product
2. brand image b. a consumer who shows no loyalty to a
particular brand, but changes among competing
products
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3. brand loyalty c. a popular product sold with no profit, in order

4. free sample
5. industrial buyer
6. initial trial
7. loss leader
8. price-conscious (adj.)
9. purchasing cycle
10.redeemable coupon
to attract customers to a store
d. a small amount of a new product given to
consumers to encourage them to try it
e. someone who purchases goods or services
that will be used in the production or supply of
other goods or services
f. strongly influenced by the price when buying
goods or services
g. the average length of time between a
consumer’s repeat purchases of the same
product
h. the commitment of consumers to a particular
brand
i. the first time a consumer buys a product to
see what it’s like
j. the public’s beliefs and perceptions about a
particular product

Exercise 3
Match up the following collocations:

1. to attract a. a competitor’s promotion

2. to counter b. a price reduction
3. to maintain c. a new product
4. to offer d. customers
5. to stimulate e. market share
6. to try out f. sales

Exercise 4
Insert the ten terms from Exercise 1 in the gaps in the text below. You may
need the plural.

Sales promotions such as free samples, price reductions, redeemable coupons,

and competitions, are short-term tactics designed to stimulate either earlier or
stronger sales of a product. (1)…….. , for example, combined with extensive
advertising, may generate the (2)……….. of a newly launched product. Price
reductions or (3)………. can be used to attract (4)……… brand-switchers to try
a mature brand, or to reward regular users for their (5)……… and to maintain
market share.
But brand-switchers being brand-switchers, sales promotions are only likely to
produce a short-term response, unless the brand has good qualities that non-
brand users did not know about.
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Apart from attracting new users, price cuts in supermarkets can be used to
counter a promotion by a competitor, or to sell excessive inventories, while the
company reduces production. Retailers, rather than manufacturers, also often
regularly reduce the prices of specific items as (6)………. which bring
customers into the shop where they will also buy other goods. Manufacturers’
sales promotions are generally temporary, lasting the average length of the
(7)……. , because a product on offer too often appears to be cheap and therefore
of low quality, which can seriously damage its (8)……… .

Sales promotions can also be used to encourage distributors and dealers to stock
new items or larger volumes, or to encourage off-season buying. Companies can
aim promotions at their own sales force, encouraging them to sell a new product
or model, or to increase their activities in selling an existing one.

Sales promotions can also be used in the business market, by suppliers of

components and supplies, for example. Yet, (9)……… are generally more
interested in high quality and reliable delivery; unlike (10)……… , they tend not
to be attracted by occasional price reductions.

Exercise 5
Now complete the following sentences about your own shopping habits:

I ……………. buy ……………. if the price is reduced.

I ………….. enter competitions, especially if you can win …………. .
I remember buying ……………. after receiving a free sample.
I ……………… use coupons because ………………………………. .
I am loyal to various brands, including ………………………………. .
On the other hand, for ………………………. I often switch between brands.

Unit 9 Product and Corporate Advertising

Exercise 1. Read the text. Select the correct alternatives to complete the text.
Translate it.

Advertising informs consumers about the existence and benefits of products and
services, and attempts to persuade them to buy them. The base form of
advertising is free (1)………... advertising, which occurs when satisfied
customers recommend products or services to their friends, but very few
companies rely on this alone.
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Large companies could easily set up their own advertising departments, but they
tend to hire the services of a/an (2)……… . A contract to produce the
advertisements for a specific company, product or service is known as a/an
(3)……. . The client company generally decides on its advertising (4)……. , the
amount of money it plans to spend in developing its advertising and buying
media time or space. It also provides a (5)………. , or a statement of the
objectives of the advertising, as well as an overall advertising strategy
concerning what (6)……… is to be communicated. The choice of how and
where to advertise (newspapers and magazine ads, radio and television
commercials, cinema ads, posters on hoardings (GB) or billboards (US), point-
of-purchase displays in stores, mailings of leaflets, brochures or booklets, and so
on), and in what proportions, is called a (7)……. . The set of customers whose
needs a company plans to satisfy, and therefore to expose to an advertisement
are known as the (8)………. market. The advertising of a particular product or
service during a particular period of time is called an advertising (9)……….. .

Favourable mentions of a company’s products or services, in any medium read,

viewed or heard by a company’s customers or potential customers, that are not
paid for, are called (10)…….. .

1. a. mouth-to mouth b. mouth-to-ear c. word-of-mouth

2. a. advertising agency b. advertising company c. public relations
company
3. a. account b. arrangement c. deal
4. a. campaign b. budget c. effort
5. a. brief b. dossier c. message
6. a. facts b. message c. opinions
7. a. medium plan b. medias plan c. media plan
8. a. aimed b. segmented c. target
9. a. campaign b. mix c. plan
10. a. promotions b. publicity c. public relations

Exercise 2. Complete the following collocations

1. to persuade ………. 4. to communicate a …………

2. to hire ……….. 5. to satisfy ………
3. to buy ………… 6. a target ……..

Exercise 3 Listening ( New Insights into Business Unit 14 p.134)

Listen, define the following terms and answer the questions

product advertising media target corporate advertising brand

image public relations (PR) publicity
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1. What is the difference between product advertising and corporate

advertising?
2. What other methods of advertising do you know?
3. As consumers get more used to advertising, companies have to come up
with better ways of ensuring that people pay attention to their ads. What
do you think of these recent experiments in advertising. Can you think of
any new and innovative ways to advertise?
Interrupting telephone conversations with advertising messages (in
exchange for free phone calls).
Talking ads at bank cash machines.
Ads on toilet walls.
Advertising on small television screens on supermarket shopping
trolleys.

Exercise 4
Many advertisements contain a slogan or short phrase to attract the
consumers’ attention. Effective slogans are usually short, easy to remember,
easy to repeat and easy to translate for international markets

1. Read the text about translations of slogans and brand names, and note
the problem in each case.
a. In Taiwan, the translation of the Pepsi slogan ‘Come alive with the
Pepsi generation’ came out as ‘Pepsi will bring your ancestors back
from the dead’
b. When Parker marketed a pen in Mexico, its ads were supposed to say
‘It won’t leak in your pocket and embarrass you.’ However the
company translated ‘embarrass’ as ‘embarazar’, which means ‘to
become pregnant’. So the ads said ‘it won’t leak in your pocket and
make you pregnant.’
c. In Italy , a campaign for Schweppes Tonic Water translated the name
as Schweppes Toilet Water.
d. Colgate introduced a toothpaste in France called Cue, the name of a
French pornographic magazine.
e. When Braniff Airlines translated a slogan for its comfortable seats, ‘fly
in leather’ it came out in Spanish as ‘fly naked’.

In groups, write down five popular slogans in your language. Try to translate
them into English. Read them out to the other groups and see if they can
guess which products your translated slogans refer to.
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Listen to five people describing their favourite advertisements.

( Market Leader p.31)

Listen and make notes. Use the following two headings:

* Product * Reasons for liking the advertisements

Discussion Good and bad advertisements

A. What makes a good advertisement? Use some of the words below.

clever interesting funny inspiring eye-catching

powerful humorous shocking informative sexy

B. Do you think that the advertising practices described below are acceptable?
Are there any other types of advertisement that you find offensive?

1. Using children in advertisements

2. Using nudity in advertisements
3. Promoting alcohol on TV
4. Comparing your products to your competitors’ products
5. An image flashed onto a screen very quickly so that people are affected
without noticing it (subliminal advertising)

C. Which of the following statements do you agree with?

1. People remember advertisements not products.
2. Advertising raises prices.
3. Advertising has a bad influence on children.

Show some advertisement taken from magazines to your classmates, discuss

them:
What is it advertising? What do you think of it? Does it shock you? Do
you think it was a successful advertising campaign? Why? Why not?

Reading Sacrilege /by Stephen Armstrong/

Read the text about controversial advertising. Do you think the VW campaign
was successful? Discuss whether the company was right to launch such a
controversial campaign?

Is Volkswagen bold or stupid? Across France, workmen have been busy

scraping off 10,000 billboard advertisements for its new Golf following furious
complaints from the Catholic Church. In a series of posters, the German
 99

carmaker’s model was likened to a religious revelation; one that showed Jesus at
the last supper recommending the car to his disciples.

VW’s agency DDB Needham doubtless thought its advertising was ironic and
extremely up-to-date. After all, the admen presumably figured, if outrageous
advertising worked for the likes of Benetton, it could work to revive the image
of the Golf, which is frankly rather old-fashioned.

After the Catholic Church threatened to sue for Ffr 3.3m ($550,000) to obtain
reparation for the damage suffered by Christians, the agency and the carmaker
confessed to their sins and agreed to remove the ads. ‘We have no disrespect for
the fundamental values of society nor for the beliefs of the faithful’, said a
spokesperson for DDB Needham. ‘We decided to retract the posters
immediately in order to show our respect for the faith and the feelings expressed
by certain believers.’ The agency’s penance has included making a substantial
donation to a Catholic charity.

European consumers are exposed to hundreds of commercial messages a day,

but the vast majority of these are ignored, so ads which shock have become
more popular with advertisers. It is believed that these ads force consumers to
listen to their message. But some adland thinkers argue that it’s a little more
complicated than that.

Virginia Valentine, director of advertising’s foremost cultural analysis company,

Semiotic Solutions, argues that brands can no longer expect consumers to take
sales messages at face value. Consumers challenge everything they are told, she
believes, and will prefer brands that give them something back, rather than the
old- style ‘here’s our product ain’t it great!’ philosophy which has dominated
advertising since its inception. Thus ads can deal with social issues and refer to
the news agenda these days. Inevitably, though, it can go horribly wrong. ‘The
risk is, and I think this is true in the case of Volkswagen, that if you use images
of faith and prostitute them, people will take offence. It’s all very well if you
give them something back, but it is clear that Jesus could not have benefited
from that poster campaign.

The ad agency, however, may well have done. The VW campaign might look
like a marketing disaster, but increasingly ad agencies are selling to clients not
simply their ability to write ads but their ability to write ads that generate PR.
Some clients ask all agencies pitching for their business to demonstrate their
ability to garner extra publicity.
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A deliberately shocking ad is the simplest way to get additional media coverage,

and even if the media coverage is negative, it can still help to sell the product as
advertisers like Benetton have already proved.

One supporter of Benetton’s work is Leon Jaume, Deputy Creative Director of

ad agency Ogilvy & Mather, who believes its success lies in knowing its target.
‘In marketing terms the only real taboo is upsetting the people you want to buy
your product,’ he says. ‘As long as it’s legal and the client is OK with it, you can
offend anyone else and in many ways you should. I’d normally see outrageous
advertising as a youth proposition though, and I think VW’s mistake may have
been in selling a product that isn’t a youth product with this kind of style. Young
people are receptive to taboo-breaking as they are more open-minded than older
people. I think they positively welcome advertising that annoys their parents.’
Some agency creatives argue that young people today are fundamentally
different from previous generations in their internationalism, and young
consumers in Tel Aviv are closer to their counterparts in Paris, New York and
Sydney than they are to their parents.

As this generation grows up, the argument goes, they will continue to be more
broad-minded than their parents and will see the shattering of taboos as the
norm. So outrageous advertising will no longer be limited to those products
which target youth.

Perhaps Volkswagen was just ahead of its time, advertising to a market that
wasn’t broad-minded enough in a country that still gets nervous when Church
and State are challenged. Or perhaps VW’s collision with Catholics shows that
for all their claimed acumen, ad agencies are less in touch with the public mood
than they claim.
/The European/
outrageous – very shocking
disciple – a follower of any great teacher (esp. of a religious teacher)
to revive – to recover – to become healthy again
reparation – repayment for loss or wrong
to retract – to withdraw
to sue – to claim money because you have been harmed
penance – suffering to show you are sorry
to take smth at face value – to accept smth without thinking
inception – the beginning
to garner – to collect
a counterpart – a similar person in a different place
collision - disagreement
acumen – the ability to make good judgment
to be in touch with – to understand
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Read the text in more detail and choose the best answer

1. Which of the following is least likely to be one of the reasons why

Volkswagen ran a deliberately provocative campaign?
a. to generate media coverage of the campaign
b. to shock some members of society
c. to show their lack of respect for the Catholic church.

2. Using taboo images in advertising has become popular with advertising

executives mainly because
a. they only want to target young people.
b. consumers have stopped paying attention to conventional
advertising.
c. products are becoming more international and sophisticated.

3. According to the text, shocking advertising is

a. always damaging for the advertiser.
b. always damaging for the ad agency.
c. the simplest way to get media coverage.

4. According to Leon Jaume, the young generation of consumers like ads

a. with an international flavor.
b. that offend them.
c. that offend their parents.

5. The author of the text suggests that

a. perhaps Volkswagen isn’t broad-minded enough.
b. admen are not doing enough market research before running
campaigns.
c. Volkswagen wanted to break taboos in France.

Vocabulary
1. Find words or expressions in the text which correspond to the following
definitions.
1. a public space reserved for advertisers to put their ads on (para 1)
b…………
2. large pictures or notices put up in a public place to advertise something
(para 1) p………..
3. human interest subjects (para 5)
s…………
4. people or companies who pay for a professional service (para 6)
c………………..
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5. try to win a business deal (para 6)

to p…………..
6. time and space given by the media to a particular news item (para 7)
c……………..
7. the person in charge of developing ideas for advertising campaign (para 8)
C………… D………..
8. a social custom which means a particular activity or subject must be
avoided (para 8)

2. RXV, a major electronics company, has decided to advertise its latest digital
camera. It has asked several advertising agencies to submit proposals for a
campaign. An executive at one of these agencies has made a list of tasks to be
completed before submitting its proposal to RXV.

Complete the executive’s list using words from Key vocabulary and
Vocabulary.
1. Change the form of the words where necessary.

* Obtain complete market information about the (1)………. ‘s product;

advantages, disadvantages, competitors, which groups of consumers the
advertiser wants to (2)………….. . Define marketing objectives and plan an
overall advertising strategy.
* Meet with the media department to select the most appropriate means of
advertising: media or posters on (3)………… .
* Meet with the (4)………….. …………. to work on the design and ideas of
the campaign. Point out that these should fit in with the overall (5)………
……… the company wants to project. Explain that we must be careful not to
generate any negative (6)……………. by offending anyone.

Vocabulary development : uses of like

Look at the following examples from the text.
a. The German carmaker’s model was likened to a religious
revelation. (para 1)
b. … if outrageous advertising worked for the likes of Benetton, it
could work to revive the image of the Golf. (para 2)
c. The VW campaign might look like a marketing disaster….. (para 6)
d. ….. it can still help to sell a product as advertisers like Benetton
have already proved. (para 7)

1. In which of the examples above are the words in bold used:

a. as a synonym for ‘to appear’?
b. to give an example?
c. to refer to a type of person or group of people?
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d. as a verb to compare one thing to another?

2. Complete the sentences using the correct form of the expressions with
like.
1. TV advertising is too expensive for small computer software
companies, only ………….. IBM can afford it.
2. Aggressive bosses are sometimes …………. great apes by the
media.
3. Advertising for products …………. alcohol is banned in some
countries.
4. The new perfume bottle is designed to ………… a sculpture.

Advertising media and methods

1. Newspapers and TV are two advertising media. Can you think of others?
2.Complete the table with the words in the box. Can you think of other words?
Use a good dictionary to help you.

directories run commercials exhibition point-of-sale target

press persuade mailshots public transport billboards/hoardings
posters endorsement jingles promote place launch slogans
word-of-mouth research sponsorship cinema free samples
leaflets radio sponsor television publicize

Advertising

Media Methods Verbs

radio jingles persuade

Reading Outdoor advertising

a. What do you understand by outdoor advertising? Give examples.

b. Before you read the article below, match these words with their
definitions

1. segments a. a place in a television schedule

2. soaring b. rising quickly
3. mass market c. small open-fronted shop in the street for
selling newspapers, etc
4. TV slot d. concerned with non-luxury goods that sell in
large quantities
5. kiosks e. parts of larger market or category of customers
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c. Complete the statements with four of the words above.

The cost of a prime-time (1)………… is (2)………… . However, advertising

on (3)……………. is cheap. Outdoor advertising is one of the fastest growing
(4)………… in the market.

d. Read the article. Then answer the questions given below.

Outdoor advertising – A breath of fresh air

The world of outdoor advertising billboards, transport and ‘street furniture’

(things like bus shelters and public toilets) – is worth about $18 billion a year,
just 6% of all the world’s spending on advertising. But it is one of the fastest –
growing segments, having doubled its market share in recent years.

Outdoor advertising’s appeal is growing as TV and print are losing theirs. The
soaring costs of TV are prompting clients to consider alternatives. Dennis
Sullivan, boss of Portland Group, a media buyer, calls outdoor advertising the
last true mass-market medium. It is also cheap. In Britain, a 30-second prime-
time TV slot costs over 60,000 pounds ($100,000); placing an ad on a bus
shelter for two weeks out at about 90 pounds.

Adding to its attractions has been a revolution in the quality of outdoor displays.
Famous architects such as Britain’s Sir Norman Foster are designing arty bus
shelters and kiosks with backlit displays. Backlighting, introduced in Europe by
Decaux and More, and plastic poster skins have vastly improved colour and
contrast.

Movement is possible too. Smirnoff used new multi-image printing to make a

spider, seen through a vodka bottle, appear to crawl up a man’s back. And
Disney advertised its ‘101 Dalmatians’ video on bus shelters with the sound of
puppies barking.

This sort of innovation has attracted a new class of advertiser. Recent data from
Concord, a poster buyer, shows that in Britain, alcohol and tobacco have been
replaced by entertainment, clothing and financial services as the big outdoor
advertisers, like car makers, are using it in new ways. BMW ran a ‘teasers’
campaign in Britain exclusively on bus shelters.

Particularly attractive to the new advertisers is street furniture, the fastest

growing segment of the outdoor market. It accounts for some 20% in Europe
and about 5% in America.
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Answer the following questions.

1. What do these numbers in the article refer to?
18 6 30 60,000 100,000 90 20 5
2. Why has outdoor advertising become more popular? List the reasons.
3. Which industries are becoming more involved in outdoor advertising?

Discuss these questions.

1. Outdoor advertising is increasing in many countries. Is this a good thing?
2. What products do you think are suitable for outdoor advertising?

Choose one of the advertising media below. Make a short presentation on its
advantages and disadvantages.
television billboards newspapers street furniture

Listening Successful advertising campaign ( Market Leader p.33)

Andrew Pound, a marketing manager for Kraft Jacobs Suchard, talks about
successful advertising. Before you listen, answer these questions.

1. What kind of products do you think Kraft Jacobs Suchard make?

2. Andrew mentions two successful advertising campaigns. What reasons do
you think he will give for their success?

4.2 Listen to the first part of the interview. Check your answers.
Answer the questions.
1. Who was the target consumer in each campaign?
2. What advertising media did Andrew use in each campaign?

4.3 In the second part of the interview Andrew explains why advertising is not
a waste of money. What reasons do you think he will give? Do you agree with
Andrew?

Match words from each box to form word partnerships. Then make a sentence
for each word partnership.

advertising techniques
marketing promotions
public outlets
retail campaign
price relations
promotional mix
 106

Language review Articles

Read the advertisement for BP Solarex, part of the leading international

petrochemical company, BP Amoco. What brand image is BP Solarex trying
to project?

BP Solarex Solar energy from BP Amoco

Power for Rural Communities

Nearly two billion people in the world have no electricity; 70% of them have
difficulty obtaining clean drinking water. Many live in widely scattered and
remote rural communities, with little hope of connection to national electricity
grids. Their need is not simply for electricity, but for stand alone power systems
that are long-lasting, reliable and simple to maintain. Above all, they need a
constant and cheap source of fuel, like the sun.

BP Solarex – Meeting the need

BP Solarex has over twenty-five years experience working in remote areas, not
only in developing countries but also in the developed world. This experience
has allowed us to build an unrivalled understanding of local needs. We have put
that experience to good use, to build a range of packaged products designed to
enhance living standards anywhere grid-connected electricity is unavailable.

Read the advertisement again and identify which form of the article is used
with each of the nouns below. Can you explain why?

1. power 2. world 3. electricity 4. sun 5. need 6. difficulty

7. range 8. living standards

Complete the following passage about the mineral water company Perrier,
putting in the correct form of the article where necessary.

In February 1990, Perrier, one of ……. most famous mineral water companies,
faced ……. serious image problem when small quantities of benzene were found
in some bottles.
……… company decided to take 160 million bottles, worth $70m, off the
market.
…….. spokesperson from ……. communications department made …..
statement to the press saying that this did not present ……. health problem but
he did admit that for …… product known for purity, it was definitely …..
mistake.
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……. independent environmental consultant carried out …… inspection at the

Perrier plant and identified and corrected ….. fault.
……. same consultant said that a person spilling one drop of ….. lead-free petrol
on their hand would absorb more benzene than if they drank a bottle of Perrier
every day for a year.
In this instance Perrier’s policy of ….. honesty and its concern for …..
consumers saved its image and good name.

Language focus - Gerund and Infinitive

Complete the following passage using a gerund or infinitive. Use the verbs
given below
A. build put make set up bring transform
B. decide appear reflect create
C. return expand drink change launch

Coca-Cola and its advertising

A. John’s S. Pemberton invented Coca-Cola in 1886. His partner suggested

(1)……….. an advertisement for the drink in The Atlanta Journal that very
year. In 1888, Asa Chandler bought the Coca-Cola business and decided
(2)………. the product known through signs, calendars and clocks. The
company began (3)……… its global network when Robert Woodcruff was
elected president of the company in 1923. He succeeded in (4)……….. Coca-
Cola into a truly international product by (5)………… a foreign department,
which exported Coca-Cola to the Olympic games in Amsterdam in 1928. During
World War Two, he promised (6)……… Coca-Cola to every soldier in every
part of the world.

B. Coca-Cola’s advertising has always attempted (7)………. changing

contemporary lifestyles. (8)……….. an international advertising campaign
requires the talents of professionals in many areas, and extensive testing and
research are always done before (9)……….. which advertisements will finally
be used. Celebrity endorsements have featured heavily – Cary Grant, Ray
Charles and Whitney Houston are just three of the big name stars who have
agreed (10)………. in Coca-Cola commercials.

C. After (11)……… Diet Coke in 1982, the company saw its sales grow
quickly. The drink is now the third most popular in the world. In 1985, the
company tried (12)……….. the secret formula of Coca-Cola, but realized that
Americans were very attached to the original recipe. The company listened to its
consumers and quickly responded by (13)…………. the original formula to the
market as ‘Coca-Cola Classic’. Today, people in more than 160 countries
 108

around the globe enjoy (14)……….. Coca-Cola. It is asked for more than 524
million times a day in more than 80 languages. The company intends
(15)………. its global presence even further in the twenty-first century,
particularly in developing markets.

Skills Making presentations

Decide whether each sentence in the Useful language box is formal or
informal
.
Useful language
Introducing yourself
* On behalf of myself and Focus Advertising, I’d like to welcome you.
My name’s Larsen.
* Hi, I’m Dominique Lagrange, Good to see you all.

Introducing the topic

* This morning, I’d like to outline the campaign concept we’ve developed for
you.
* I’m going to tell you about the ideas we’ve come up with for the ad campaign.

Giving background information

* I’ll give you the background and talk you through the results of the market
study.
* I’ve divided my presentation into three parts.

Inviting questions
* If you have any questions, please don’t hesitate to interrupt me.
* If you are not clear about anything, go ahead and ask any questions you want.

Listening
4.4 Listen to the opening of one formal presentation and one informal
presentation. Check your answers to Exercise A.
Presenters can use different techniques to get their audience’s attention at the
start of the presentation. Match the techniques below to the examples.

a. tell a story c. ask a question

b. offer an amazing fact d. state a problem

1. I wonder if any of you here know the answer to this question: what’s the
most popular holiday destination in Europe for people under the age of
25?
 109

2. When I was on holiday a few years ago in Greece, the owner of a taverna
told me that in 20 years’ time, the little village where he lived would be a
popular tourist resort.
3. Let me give you a statistic: 92% of Americans do not own a passport.
Consider the opportunity this presents to the travel industry.
4. We’re facing a crisis with our market share. What are we going to do
about it?

Choose one of the presentation situations below. Prepare four different

openings using the techniques above. Practise the openings with a partner.

1. Your company is developing a small car aimed at women.

Audience: a group of car dealers.
2. Your bank wishes to encourage young people to save money.
Audience: a group of students.
3. Your has produced a new lamp which has unique features.
Audience: a group of buyers at a trade fair.

Focus Advertising

Background
Focus, a large advertising agency based in Paris, has a reputation for creating
imaginative and effective campaigns. Recently however, Focus’s reputation was
damaged when two major clients changed to rival agencies. Focus now needs to
convince potential clients that it still has plenty of creative ideas to offer.
At present, Focus is competing against some well-known agencies for several
contracts. It has been asked to present ideas for advertising campaigns to the
managements of the companies concerned. Concepts are required for the
following advertising campaigns:

A sports car A high-priced, hand-finished model with a classic design. The car
was popular in the 1950s and 60s. An American firm now wants to re-launch it.
(Target consumers will be high-income executives with a sense of fun and
style.)
Aim: An international campaign, with advertising adapted to local markets.

A perfume A unisex perfume, with bio-degradable packaging. Produced by a

well-known up-market manufacturer. The company now wishes to enter the
lower end of the market.
Aim: Launch the perfume in an English-speaking country.
 110

A chain of eight London restaurants The restaurants (specializing in your

national cuisine) are in prime position and offer extensive menus. They are
reasonably priced, but are not attracting enough customers.
Aim: A creative campaign to improve sales.

A major bank The bank (in an English-speaking country) wants to advertise the
following new services:
1. Competitive low-interest mortgages
2. Direct telephone banking
3. A foreign travel service
It has also asked your agency to suggest others.
Aim: Develop loyalty among existing customers and attract new ones.

Task
You are members of advertising team at Focus. Prepare an advertising campaign
for one of the products or services. Use the Key questions below to help you.
Then present your campaign to the management of the company concerned. (At
this stage, you have not been asked to prepare a budget).
When you are not presenting your campaign, play the role of the company’s
management. Listen and ask questions. Use the Assessment sheet below to
choose: a. the best campaign concept
b. the most effective presentation.

Key questions (advertising team)

1. What is campaign’s key message?
2. What special features does the product or service have?
3. What are its USPs (Unique Selling Points)?
4. Who is your target audience?
5. What media will you use? Several, or just one or two?
If you use:
an advertisement – write the text and do rough art work.
a TV commercial – use a story board to illustrate your idea.
a radio spot – write the script, including sound effects and music.
other media – indicate what pictures, text, slogans, etc. will be used.
6. What special promotions will you use at the start of the campaign?

Assessment sheet (managers)

Give a score of 1-5 for each category: 5-outstanding 1- poor
Campaign concept Presentation
1.Will it get the target audience’s 1. Was it interesting? Did it impress
attention? you?
2. Will it capture their imagination? 2. Was it clear?
 111

3. Does it have a clear, effective 3. Was there enough eye contact?

message?
4. Will it differentiate the product
or service?
5. Will it persuade the target audience
to buy the product or service?
6. Will the target audience remember
the campaign?
4. Was the pace too quick, too slow, or
or just right?
5. Was the language fluent, accurate
and appropriate?
6. Was the voice clear enough? Was it
varied in pitch or monotonous?

Total: 30 Total: 30

Reading
Read the following article and choose the best sentence (A-J) from the list
below to complete each gap.

Would you call your friends if it meant hearing ads every three minutes –
er, make that free minutes?

You pick up the telephone, dial the number and before it rings a cheerful voice
says, “Hello! This call is sponsored by…..”

1… . We’ve come to tolerate (maybe) TV ads that cut into movies just at the
dramatic moment, or intrude on soccer matches right when a crucial play begins.
In American football, referees even halt play for commercials. But how many
people would be willing to have a phone call repeatedly interrupted for a “brief
word from our sponsor”?
Answer: plenty.

That’s the verdict from Sweden, where an outfit called Gratistelefone is offering
free, advertising-supported calls in a two-month trial. Lines are overloaded.
2….. . They are not it seems.

A caller dials a toll-free number, then dials any other number in Sweden. 3….. .
There’s no charge for as long as the caller – or the person called – wants to talk,
or is willing to have conversation punctuated by chirpy jingles.

4……. . But giveaways know no age barrier, says Broden. “We were a bit
amazed, But we are getting lots of middle-aged and older people. For them it’s
no bother”. He wouldn’t confirm published reports that the system is getting
30,000 callers a day, but did say it is so popular that on some evenings the
circuits are jammed.
 112

And what’s in it for advertisers in this brave new medium. 5….. . “Because the
ad is only 10 seconds long and your friend is waiting on the line, you can’t
really go to the bathroom,” says Broden. “It’s very cost – efficient”. A handful
of organizations, including a movie theatre chain, a radio station, a snacks
company and a charity, are already running ads, which cost about 13 cents per
spot, and dozens more have expressed interest.

Gratistelefone has bigger, not to mention Big Brother-like plans. 6….. . Then,
different callers might hear different ads, tailored to the advertisers’ needs.
There’s even the technology to play separate ads to each person on the line – the
caller from the rural north might hear a pickup truck pitch, while the recipient in
Stolkholm could listen to one for a local restaurant. The company plans to
extend the service nationwide in Sweden in the next few months, and it has been
deluged by inquiries from other countries. If the (READ TIME!) idea catches on
and (READ TIME!) consumers elsewhere prove tolerant (READ TIME!) of
such interruptions, who knows where it may lead?
By Jay Branegan / Time./
freephone (Br.) cinema (Br)
toll-free (Am.) movie theatre (Am.)

a. Each ad has a very small – but equally captive – audience.

b. Gratistelefone leases capacity from other telephone operators at
bulk rates.
c. “We were afraid consumers would be annoyed by the breaks,”says
Peter Broden, the marketing director.
d. Future customers will have to provide a telephone number and all-
important demographic data – age, sex, marital status, address and
so on.
e. We put up with commercials between songs on the radio.
f. They hope to make profits by charging advertisers for the chance to
reach the world’s most narrowly targeted audience.
g. Not surprisingly, young people and the students have been the
biggest users in the test.
h. Although Sweden’s telephone market has been competitive for
some time, long-distance charges can still be high.
i. The caller hears one 10-second ad while the connection is made,
another in a minute, and then one spot every three minutes.
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CONTENTS

1. Unit 1. What is Marketing ………………………………………………4

2. Unit 2.Marketing………………………………………………………..11
Text1 Marketing Strategies………………………………………11
Text 2 Innovation and the Market ……………………………….14
Text 3 Managing Change ………………………………………..20
Text 4 Competition ………………………………………………22
Plan Well and Prosper ……………………………………………31
3. Unit 3. Corporate Alliances and Acquisitions..…………………………39
4. Unit 4.Market Research ………………………………………………...47
5. Unit 5. Target Marketing Strategies ……………………………………64
6. Unit 6. Marketing mix-Products ………………………………………. 71
7. Unit 7. Marketing mix-Pricing …………………………………………79
8. Unit 8. Marketing mix-Promotion and Placement ……………………. 86
9. Unit 9. Product and Corporate Advertising ……………………………96
10.Advertising Media and Methods ………………………………………104

SOURCES

1. Philip Kotler, Gary Armstrong “Marketing”, 1997

2. E. Jerome Mc Cartly, William D. Perreault “Basic Marketing, 1996
3. Michael R. Solomon, Elnora W. Stuart « Marketing. Real People. Real
Choices”, 2000
4. David Cotton, David Falvey “Market Leader”, 2000
5. Graham Tullis, Tanya Trappe “New Insight into Business”, 1999