CH-3 Analyzing the Marketing Environment – Marketing : Book Guide

Chapter Three: Analyzing the Marketing Environment TOOLS FOR INSTRUCTORS • Learning Objectives • Annotated Chapter Outline with Instructor’s Notes/Teaching Tips • Answers to End of Chapter Learning Aids Concept Review Marketing Application Questions Net Savvy Chapter Case Study • Video Activities Learning Objectives Outline how the factors in a firm’s microenvironment influence its marketing strategy Identify the factors in a firm’s macroenvironment and explain how they influence the overall marketing strategy Identify important social and natural trends that impact marketing decisions Annotated Chapter Outline PowerPoint Slides Instructor’s Notes Chapter 3 will focus on micro and macro-environmental factors that influence a firms marketing strategy. These questions are the learning objectives guiding the chapter and will be explored in more detail in the following slides. The opening vignette shows how Canadian Tire, an icon in Canadian retailing, has managed to not only survive but also to grow and successfully take on global giants from the US such as Home Depot, Lowe’s, Walmart, and others. Canadian Tire’s understanding of its changing external environment and its ability to manage the changes and leverage its internal capabilities are the keys to its success and longevity. Ask students: What factors in the business environment seemed to impact Canadian Tire’s business strategy?? As the opening vignette suggests, all of the external factors, CDSTEP, have impacted its strategy in one way or another. A Marketing Environment Analysis Framework The Consumer Rests at the Centre of All Marketing Efforts. - The firm must consider the entire business from the consumer’s point of view - Firms must monitor the macroenvironment to determine how various factors influence consumers and how firms should respond. In all marketing activities, the consumer is at the centre. Anything that affects consumers affects marketers. Any change in one of these environments likely requires an adjustment to the firm’s marketing mix. By identifying potential environmental trends, firms often can take proactive steps. The next two slides can be used to expand on the role of leveraging company capabilities and how corporate partners affect the analysis. LO1: Microenvironmental Factors - Outline how the factors in a firm’s microenvironment influence its marketing strategy This slide illustrates the factors affecting consumers’ microenvironment: the company (i.e. its capabilities), its competition, and its corporate partners. Instructors can use this single slide if pressed for time or can use additional detailed slides that follow. I. Successfully Leverage Company Capabilities - Successful marketing firms focus on satisfying customer needs that match their core competencies. - Firms should use information they gain from SWOT analyses to identify attractive opportunities that match existing competencies. Ask students: What are Apple Inc.’s core competencies? What do they do well? Answer: Their products are unique, with a design that encompasses the latest technology & is very appealing to consumers; they have a very strong customer-centric service model with a unique distribution model via their retail store outlets. Customers value these offerings and have come to expect them. Ask students: How did Apple Inc. capitalize on their core competencies in the face of changing market trends & emerging competitors? Answer: The trend toward tech-saavy consumers who expected the latest & the greatest meant that Apple had to continuously innovate in order to deliver on the things that their customers came to expect. As with all great things, competitors emerge with products & services that challenge the existing market offering. Apple must continuously innovate in order to stay ahead of the trend. Consider Competition and Competitive Intelligence. - A firm’s competitors can have significant impacts on the firm’s consumers. - By collecting and synthesizing information about its position with respect to rivals, a firm gains competitive intelligence (CI). - Using CI enables firms to develop proactive rather than reactive strategies. Firms gather CI through a variety of means but must be careful to avoid methods that are ethically or legally questionable. Information about competitors is available from many sources. The Market Share Reporter is an annual publication found in most libraries that students may use to analyse companies in a variety of industries. Group activity: Ask students to brainstorm a list of possible CI sources. Have them discuss what they can learn from each source. Do they know of any illegal sources? Insider information is a form of CI that often involves a grey area of legality. In some instances the line between sharing information and trading corporate secrets or other proprietary information is grey. Many firms resolve this by having employees sign a non-disclosure statement or confidentiality agreements that detail what information can be disclosed. Ask students: Consider the example noted of the two razor giants Gillette vs. Schick. Competitive wars continuously break out in order to ensure that one stays above the other competitor. Do you feel this is a never-ending cycle? Will further extreme measures by each competitor be used? II. Work with Corporate Partners - Few firms operate in isolation; instead, firms must work together with their partners to create an efficient manufacturing system. - Just-in-time (JIT) delivery systems minimize inventory levels. Firms must work together to create a seamless system that delivers goods and services to customers when and where they want them. Many attribute a key reason for Wal-Mart’s success to be because of their close relationships with their suppliers. Answer B; see page 80 LO2: Macroenvironmental Factors Macroenvironmental Factors Operate in the External Environment This slide can be used to review this topic instead of the following slides, which provide more in-depth discussions on each factor. A. Culture, Country Culture and Regional Subcultures refer to the shared meanings, beliefs, morals, values, and customs of a group of people. - Country culture involves the visible nuances of a country, such as artifacts, behaviour, dress, symbols, physical settings, ceremonies, languages, tastes, and food preferences, as well as more subtle differences. - Regional Subculture reflects the area in which people live and often affects how they refer to and their preferences for products and services. Regional Subculture - It's dinnertime, and two families, one in Quebec, the other in Ontario, are sitting down to eat. A hot meal is on the menu for both families but in Ontario, the meal is likely to be ready-to-eat purchased at the grocery store. In Quebec, the dinner is probably made from scratch at home. A Leger Marketing study found that Ontarians buy a hot prepared meal or meal they reheat at home two times per month on average, compared to 1.6 times for Quebecers. Quebecers, especially Quebec women, value themselves a lot through cooking and being directly involved in the feeding of their family. The survey also suggested Quebecers enjoy food more: 57% agreed that eating is one of the great joys of life, compared to 47% of Ontarians and 40% elsewhere in Canada. Quebecers prefer smaller (40,000- to 50,000- square- foot) grocery stores near their homes, (that’s why the supercentre store format hasn't taken off in the province.) Quebecers also tend not to choose stores on price as much as Ontarians. IGA and Metro, proximity-based retailers, are two of the top three favourite grocery store banners in Quebec. In Ontario, two of the top three are No Frills and Food Basics, which are price-based banners. - Demographics are the characteristics of human populations and segments. These characteristics are particularly valuable for identifying consumer markets. - Age, gender, and income demographics are readily available from a wide range of sources. Ask students: What are some typical demographics? Answer: age, gender, income, education. Demographic segmentation is probably the most common form of segmentation because the information is so widely available. Answer A; see page 85 A. Generational cohorts refer to groups of people of the same generation who have similar purchase behaviours because they have shared experiences and are in the same stage of life. Group activity: Have students brainstorm a list of the defining characteristics of their generation. Ask students: How does your generation differ from previous generations, such as their parents—the Baby Boomers. What macroenvironmental forces have had the most impact on your generation? A. Tweens a. Do everything at lightening fast speeds. B. Generation Y (also known as Millennials or Echo Boomers) a. Skeptical b. Web-savvy C. Generation X a. Considerable spending power. b. Astute. c. Cynical about advertising. d. Significant knowledge about products and services D. Baby Boomers a. Prioritize individualism and leisure time. b. Believe they will always be able to care for themselves. c. Youth obsessed. d. Love rock ’n roll. E. Seniors make up Canada’s fastest growing group. a. Loyal shoppers. b. Demand high quality. c. Prefer natural fibers, recognizable brand names, and classic styles. d. Purchase at about the same rates as other segments. Ask students: What does the phrase “generation gap” mean to you? How do you experience this gap between your generation and that of your parents or grandparents? In what ways do you believe your generation is similar to that of your parents or grandparents? Case-in-Point Series Products must be updated to attract a new market. But how can a firm update an established product for a new market? Case in Point: the example of Parker Brothers game of Monopoly. A great example of how a classic game has transcended the generations for many years & how Parker Brothers has been able to keep pace with the modern generation. B. Income has become increasingly polarized in the Canada. The wealthiest families are getting wealthier, while middle- and lower-income families are losing ground. Consumers therefore increasingly search for value. The “middle-class squeeze” is a very real global phenomenon. Many developing countries face similar income inequities to those found in North America. Pay gaps also cause problems for many new college graduates who find they cannot afford to live on their own and must move back in with their parents: 61% of recent graduates stated that they intend to live with their parents after graduating. C. Education matters, because higher levels of education lead to better jobs and higher incomes, especially among college graduates. In addition, a strong link connects income, occupation, and education. Ask students: Do you plan to continue your education after graduation? Many students believe they will never return to school after they finish their Bachelors’ degree, but modern conditions make this choice more and more unlikely. Lifelong learning of new skills and new knowledge has become key to survival in the global economy. D. Gender traditionally has had a significant impact, but the blurring of gender roles has led many firms to search for gender-neutral positioning strategies. Women now make up more than 60% of the college population. Ask students? How do you believe this will affect the workplace in the future? Ask students? Do you believe that there are still significant gender differences? What are they? E. Ethnicity The ethnic makeup of Canada has dramatically changed in the past 20 years. By 2025, 100 percent of Canada’s population growth will come from immigration. Various ethnic markets now offer lucrative segments, and marketers are responding with products and services to meet the specific needs/wants of those segments. Ask students: What steps can and should marketers take to respond to the changing ethnic mix in Canada? Ask for specific examples, e.g. fast food, consumer packaged goods companies, service providers. Many marketers already have adjusted their marketing mix to meet the needs of ethnically diverse segments better. F. Technological advances have accelerated greatly in the past few decades, affecting every aspect of markets. Arguably the single most important change in the way we live is the introduction of new technology. Ask students: Name some new products, new forms of communication, and new retail channels that have been introduced because of technological advances. Social and Mobile Marketing 3.1 Foursquare’s Promise and Facebook’s Response Almost all of the students will use Facebook. Ask students: How many of you use Foursquare? How does this social media platform change the way you shop? Does the prospect of a reward motivate you to use the technology? G. The Economic Situation comprises several elements. The most common being: 1. Inflation is the persistent increase in the prices of goods and services. 2. Foreign currency fluctuations highlight the discrepancy in value between the currencies used by different countries. 3. Interest rates represent the cost of borrowing money. 4. Shifts in any of these elements make marketing either easier or harder for a firm. 5. Recession a period of economic downturn when the economic growth of the country is negative for at least a couple of quarters Depending on the time of year, discuss projections about Christmas shopping, vacation planning, or home buying. Various economic factors affect each of these areas. The Consumer Confidence Index takes into account how consumers feel about how the economy is doing. This economic indicator relates directly to spending. H. Political/regulatory environments comprise political parties, governmental organizations, and legislation and laws. Various laws ensure fair trade and competition by prohibiting activities that would damage a competitive marketplace. This list includes some legislation designed to ensure a competitive marketplace and clearly demonstrates the government’s long history of enacting laws that protect fair trade. Answer: D; see page 96 LO3: Identify important social and natural trends that impact marketing decisions I. Social and Natural Trends have dramatic Marketing Impacts. This graphic introduces three significant social trends (greener consumers, privacy concerns, time-poor society). All can be addressed using this slide or can be expanded on using the slides that follow. Greener consumers appreciate green marketing, the strategic effort by firms to supply customers with environmentally friendly merchandise. Greener consumers purchase products based on issues beyond the tangible product. These issues can include a variety of social causes such as environmental awareness, protection of animals, HIV/AIDS awareness and prevention, etc. Consumers who purchase these products do so to support these causes. Entrepreneurial Marketing 3.1 Growing City is turning office waste into cash by diverting organic food waste from landfills to be composted and resold. Show the Dragons’ Den video that accompanies this box. Ask Students: Do you think companies like Growing City will continue to be viable businesses in the future? Possible answer: Students’ opinions will be divided with some saying yes while others saying no. You could probe into the reasons why some companies would pay to have their organic waste taken away. Some students may suggest that if this is a good business, larger companies with national reach will be quick to enter the market with their own solutions. Privacy concerns plague many consumers. In recent years, firms have had to inform consumers of the steps they take to protect their privacy. The government also has instituted new rules for privacy protection. Ask students: Have you ever had a privacy problem with a credit card or when using the Internet? Time-poor society makes the job of marketers a major challenge. With more time spent at work, the amount of time available for home or leisure activities has shrunk. In turn, services that complete the tasks that people no longer have the time to do, such as housecleaning, errands, and cooking, have grown. As such, marketers are faced with the challenge of finding creative ways to get their messages out to the consumer. To find & develop methods to make life easier for many diverse consumers in a time-poor society, marketers often rely on technology, another macroenvironmental factor discussed in this section. Ask students: what other entrepreneurial marketing opportunities have a time-poor society provided? They will mention many food products, Blackberry’s, TiVo. Answer: A; see page 91 Concept Review: Generally, the concept questions are designed to achieve a single purpose – to encourage students to test their knowledge and understanding of the theoretical content of the chapter. These questions encourage recall and reflection, which will better prepare students to answer the marketing applications questions based on their understanding of the theory. 1. List the two elements a firm must assess before looking externally i.e. the microenvironmental factors. Answer: Before looking externally it is critical to assess the company’s capabilities (human, technical and financial skills, resources, talents and expertise skills, e.g., marketing talent, managerial experience, technical sophistication, and unique sustainable competitive advantage) and its relationships with its partners (suppliers, channel members, and even special interest groups, particularly those that relate tot their industry, e.g., Mothers Against Drunk Driving for the liquor industry) 2. List and describe the elements of a firm’s macroenvironment. Answer: The major elements of a firm’s macroenvironment are captured in the acronym – CDSTEP which refers to: cultural, demographic factors, social and natural issues, economic environment, technological advances, and the political and regulatory environment. 3. List five ways in which Baby Boomers, Generation X, and Generation Y are different. Answer: Year of birth Size of demographic Key traits Baby Boomers 1946 – 1965 10 million Individualistic Quest for youth Ability to spend Generation X 1966 – 1971 2.8 million Latchkey children Shopping savvy Cynical Generation Y 1972 – 1992 9 million Skeptics Tech savvy Starting families 4. If a store permanently offers extended shopping hours, what macroenvironmental factor(s) are they appealing to? Answer: They are appealing to many factors, including competitive environment, demographic factors, social and economic trends. For example, increase competition may force some companies extend their opening hours in order to serve a different target segment, provide more convenience or simply to differentiate themselves. Extended opening hours may work well for young professionals who work all day and want to do their shopping in the evening or at night or youths can visit the mall in the evenings. As well, if extended hours become an acceptable trend among consumers and they come to expect such hours as norms, then marketers will need to respond to this new social trend if they want to serve their customers. 5. List some of the important social and natural trends affecting the Canadian market. Answer: Some important social and natural trends include a shift towards greener marketing that considers environmental impact, increased privacy concerns, and growing time-pressure for society given extended work hours and multiple extracurricular activities. Other trends relate to the increased pressure on marketers when advertising, (especially food) to children as well as trend toward people of all ages being more concerned about health and wellness. 6. Besides language, explain why using the same advertisement for Ontario and for Quebec wouldn’t be equally successful. Answer: The advertisement needs to be customised to each market because of differences in culture, values and attitudes between Ontarians and Quebecers. For example, something acceptable in Ontario, like an ad featuring a family sitting down to a fast food meal, may be rejected in Quebec because their subculture reinforces home cooking. Here the focus is regional cultural differences or regional subcultures. 7. Why should marketers care about engaging tweens quickly and sincerely? Answer: The tweens market is a very lucrative market because they have tremendous buying power and substantial influences on family purchases. Tweens spend most of their money on food, consumer electronics, clothing and fashion. However, tweens are very connected and get bored quickly, therefore, marketers must engage them quickly and sincerely. They also spread good or bad news virally quickly. 8. How do changes in the value of the Canadian dollar vis-à-vis the US dollar affect Canadian companies that sell to American consumers? Answer: An increase in the Canadian dollar will make Canadian exports to the United States more expensive for US consumers, that is, it will make Canadian made goods less price competitive compared to goods produced in the US. On the other hand, goods imported from the US will be cheaper in Canada. As you may have seen, when the Canadian dollar is higher than the US dollar, many Canadians, especially in border towns, go across to the US to shop because it is cheaper to do so. A decline in the Canadian dollar will trigger the opposite effect to what was described above. 9. Why is understanding cultures and subcultures so important in marketing? Answer: Culture and sub-cultures are powerful influences in consumer buying decisions – what they buy, where they, how they buy, how much they spend, etc. Thus, in order to serve customers with the products and services they need and to communicate with these customers in an authentic manner, marketers must understand their cultures and sub-cultures – their values, beliefs, and ways of doing things. Marketing strategies that are based on a deep understanding of customers’ cultures are usually very effective. 10. The Chinese and South Asian consumer segment is rapidly growing in Canada. What opportunities and challenges does this trend pose for food and grocery retailers? What strategies could they use to market effectively to this segment of consumers? Answer: In terms of marketing opportunity, the South Asians and Chinese customer segment is typically young, educated, and wealthy. Currently, more than a quarter of all visible minorities in Canada are under 14 years; thus, they are likely to have considerable influence over the economy in the future. Generally, ethnic Canadians spend more than their white counterparts on big-ticket items such as cars, clothing, and home furnishings. Many also have an affinity for brand-name products because they equate them with quality. The challenge is for marketers to understand the culture, value, and spending patterns of the various groups and figure out the best way to communicate and serve them. Food and grocery retailers have to design store formats that closely match these customers’ expectations and carry products they are used to consume in their home countries. They also have to offer great value – excellent products at reasonable prices even if the level of services is a bit lower. FreshCo. and Food Basics are good examples of grocery stores that are successfully targeting these customers. Marketing Applications 1. Assume you are going to open a new store. Describe it. Who are your competitors? What would you do to monitor your competitors’ actions? Instructor’s Notes: This question asks students to think about the kind of business they might start, as well as the competitive environment in which that business might operate. In particular, the question challenges them to think about their potential competitors and how they might stay abreast and ahead of any competitive actions. Example answers: For a retail clothing store specializing in urban street wear, the competitors might include other clothing stores in the same town, clothing stores in shopping malls, large department store chains with youth-oriented clothing sections, and online retailers focused on the youth market. Staying ahead of these competitors would require monitoring newspapers and other periodicals to review their advertising and hiring, learning about the stores by shopping there, or surfing the Web to find their Web sites as well as other Web pages that mention these competitors, whether positively or negatively. Store Description: The new store, "Eco Trends," specializes in sustainable fashion and eco-friendly home products. It features a range of organic clothing, recycled accessories, and zero-waste household items, all sourced from ethical brands. The store offers a unique shopping experience with a focus on educating customers about sustainability through workshops and in-store events. Competitors: 1. Patagonia - Known for its eco-friendly clothing and commitment to environmental causes. 2. Whole Foods Market - Offers a range of organic and eco-friendly home products. 3. The Container Store - Provides sustainable organizational products. Monitoring Competitors’ Actions: 1. Social Media Tracking - Use tools like Hootsuite or Brand watch to monitor competitors' social media activity. 2. Competitive Analysis Tools - Utilize platforms like SEMrush or Spy Fu to track their online presence and marketing strategies. 3. Customer Reviews - Regularly review feedback on competitors’ products and services through sites like Yelp or Trustpilot. 4. Industry News - Subscribe to industry publications and newsletters for updates on trends and competitor movements. 2. In which generational cohort do you belong? What about your parents? How do you approach buying a car differently than your parents would? What about buying an outfit to wear to a party? How can firms use their knowledge of generational cohorts to market their products and services better? Instructor’s Notes: Students need to think about the characteristics of their own and their parents’ generations and apply those characteristics to understand the potential differences in purchasing behaviour and marketing responses. Example answers: I am in the Generation Y cohort, whereas my parents are Baby Boomers. When buying a car, I focus on price, customizable features, and sportiness, but my parents probably focus on safety, fuel economy, and performance. When buying an outfit for a party, I consider what my peers and celebrities are wearing far more than my parents do. In both cases, I shop online, unlike my parents. Firms can use their knowledge of generational cohorts to focus on key messages that will resonate with a particular targeted cohort, understand what information the cohorts care about most, and allocate marketing spending to the promotional channels that will reach the broadest number of people within the targeted cohort(s). Generational Cohort: • I belong to Generation Y (Millennials). • My parents are likely from Generation X or Baby Boomers. Buying a Car: • Mine: I focus on technology features, fuel efficiency, and eco-friendliness. I prefer researching online reviews and comparing options digitally. • Parents: They might prioritize brand reputation, reliability, and cost. They may rely more on in-person dealership experiences. Buying an Outfit: • Mine: I seek trendy, versatile pieces and often shop online for convenience and variety. • Parents: They might focus on classic styles and prefer shopping in-store for personal service. Using Generational Knowledge for Marketing: 1. Targeted Advertising: Tailor ads to resonate with the values and preferences of each generation. 2. Product Features: Highlight features that appeal to specific age groups, such as tech for Millennials or reliability for Baby Boomers. 3. Communication Channels: Use preferred platforms for each generation—social media for younger cohorts and traditional media for older ones. 4. Personalization: Develop marketing strategies that align with the lifestyle and purchasing habits of each cohort. 3. How can firms use customer demographics like income, market size, education, and ethnicity to market to their customers better? Instructor’s Notes: Demographic data indicates more than just income distribution, levels of education, or ethnicity within a particular geographic area; as this question prompts students to recognize, these data can be used to improve marketing. Example answers: Firms can use demographic data to target their products or services toward the customer segment that gets the most benefit from it or offers the most lucrative profit opportunity for the firm. Market size data similarly could help a firm determine whether a potential market is worth pursuing; if insufficient customers exist in the market to justify the expenditure to serve it, a firm can avoid making a costly mistake by analyzing demographic data. Using Customer Demographics for Marketing: 1. Income: Tailor product offerings and pricing strategies to fit different income levels, offering premium options for higher-income segments and budget-friendly choices for lower-income groups. 2. Market Size: Focus marketing efforts on regions with larger target market sizes, optimizing resource allocation based on potential customer base. 3. Education: Create targeted content that aligns with the education level of customers, using simpler language for less-educated segments and more complex or technical details for higher-educated groups. 4. Ethnicity: Develop culturally relevant marketing messages and product offerings that resonate with diverse ethnic groups, incorporating cultural preferences and values into campaigns. 4. Identify some of the changes in the gender landscape. Describe how they might affect the marketing practices of (a) men’s apparel retailers, (b) do-it-yourself home improvement retailers, and (c) upscale salon services. Instructor’s Notes: This exercise challenges students to consider the implications of shifting gender attitudes and trends for retail and marketing organisations. The challenges to traditional considerations of gender force marketers to find ways to serve their customers better, regardless of their gender. Example answers: One of the biggest changes has been the relaxing of strict gender boundaries; traits traditionally attributed solely to one gender are no longer constrained in this way. Therefore, the following effects might ensue: • For men’s apparel retailers: More men are getting more sophisticated in their clothing purchases, demanding higher quality and more selection than ever before. In addition, more women shop men’s apparel retailers for themselves and the men in their lives. With more women in the retail environment, marketers might consider how best to sell men’s clothing to people of both genders. • Do-it-yourself home improvement retailers: Home improvement is no longer the sole bastion of men, as more and more women get in on the act. The old model of unattractive stores cluttered with items has become less viable because female shoppers expect more open floor plans, knowledgeable customer service agents, and more attractive shopping environments. • Upscale salon services: Previously, women went to salons and men went to no-frills barber shops. Now, more and more men are visiting salons and spas to express their greater affluence and appreciation for personal care. Salon owners should consider this new market when they organize their spaces, choose their color schemes, and determine which services to offer. Changes in the Gender Landscape: 1. Increased Gender Fluidity: Growing acceptance of diverse gender identities and expressions. 2. Evolving Gender Roles: Shift in traditional gender roles and expectations. 3. Focus on Inclusivity: Emphasis on representing all gender identities and breaking stereotypes. Impact on Marketing Practices: 1. Men’s Apparel Retailers: • Embrace Diversity: Offer a broader range of styles that cater to different gender expressions and avoid traditional gender stereotypes. • Inclusive Marketing: Use diverse models and inclusive language in advertising to appeal to a wider audience. 2. Do-It-Yourself Home Improvement Retailers: • Gender-Neutral Products: Promote products and tools as suitable for everyone, rather than targeting them based on gender. • Inclusive Workshops: Offer workshops and tutorials that appeal to all genders and challenge traditional DIY gender norms. 3. Upscale Salon Services: • Personalized Services: Tailor services to individual preferences rather than gender norms, such as gender-neutral pricing and service options. • Inclusive Branding: Use marketing that reflects and celebrates diverse gender identities and expressions, creating a welcoming environment for all customers. 5. Identify some recent technological innovations in the marketplace and describe how they have affected consumers’ everyday activities. Instructor’s Notes: Rather than just listing recent technological innovations, students must consider how they affect the way people live, whether positively or negatively. Example answers: ○ iPods: Consumers can to carry around and listen to a broad range of music without the inconvenience of bulky CDs and a CD player. However, the greater usage of earphones by iPod listeners may increase hearing problems among a young generational cohort. ○ Hybrid vehicles: Consumers save money by decreasing the cost of refuelling their vehicles compared with a normal, nonhybrid vehicle. Recent Technological Innovations and Their Effects: 1. Smartphones and Apps: • Impact: Enhanced connectivity and convenience, allowing for on-the-go communication, navigation, and access to services like banking and shopping. 2. Voice Assistants (e.g., Amazon Alexa, Google Assistant): • Impact: Simplified daily tasks through voice commands, enabling hands-free control of smart home devices, information retrieval, and task management. 3. Wearable Technology (e.g., smartwatches, fitness trackers): • Impact: Provided real-time health monitoring and fitness tracking, helping consumers manage their health and daily activities more effectively. 4. Artificial Intelligence and Machine Learning: • Impact: Personalized user experiences through tailored recommendations in areas like online shopping, entertainment, and advertising. 5. Electric Vehicles (EVs): • Impact: Offered more sustainable transportation options, influencing consumer choices and promoting environmental consciousness. 6. Augmented Reality (AR): • Impact: Enhanced shopping experiences by allowing virtual try-ons for clothing and home furnishings, improving decision-making and reducing return rates. 6. Do you feel as if firms are invading or could invade your privacy? Why or why not? Instructor’s Notes: Can the students’ own privacy be influenced by the efforts of retailers and marketers? By personalizing this issue, the question causes students to consider specific privacy violations and the degree to which such violations are acceptable to them personally. Example answers: Firms invade my privacy in two major ways. First, despite the national Do-Not-Call list, I still get many annoying phone calls from telemarketers. Second, the amount of pop-up advertisements, spam e-mail, and spyware programs I encounter when I go online is outrageous! There appear to be very few places left where I can avoid being bombarded by marketing messages. Yes, firms could invade privacy through extensive data collection and tracking practices. They often gather personal information to target ads and customize content, which raises concerns about data security and consent. The extent of invasion depends on how transparently and ethically firms handle and protect this data. 7. Why should Canadian companies selling goods in the United States care about the value of the US dollar? Instructor’s Notes: In answering this question, students must address two different aspects: (1) how buyers in the US might purchase Canadian goods and (2) the value of goods produced in Canada to American buyers. In either case, the issues pertaining to raw material costs, production costs, freight, customs, and tariffs determine how a shoe retailer could be affected by a fluctuation in the foreign exchange rate. Example answers: • If the value of the Canadian dollar increases, Canadian goods might become more expensive for Americans, which could decrease its sales opportunities there. • If the value of the Hong Kong dollar increases and the shoe retailer buys some shoes produced in Hong Kong, the overall cost of doing business could go up for the retailer. • If the value of the Canadian dollar decreases, more U.S. consumers might purchase Canadian goods rather than American goods, because imports into the United States become more attractive. Canadian companies should care about the value of the US dollar because it affects the cost of their goods in the US market. A stronger US dollar makes Canadian products more expensive for American consumers, potentially reducing sales, while a weaker US dollar makes them cheaper, potentially boosting sales. 8. Time-poor consumers have adopted various approaches to “buy” themselves more time, such as (a) voluntarily simplifying their complex lives, (b) using new technologies for greater empowerment and control, (c) using their time productively when traveling or commuting, and (d) multi-tasking. Identify and describe some products and services that consumers use to implement each of these strategies. Instructor’s Notes: Students can reflect on how they manage their own time and business lives from the perspective of a consumer who uses products and services to save their precious time and energy. Example answers: ○ Voluntarily simplification: Netflix saves movie viewers the hassle of driving to increasingly hard to find video stores and allows them to stream it online at their convenience. ○ Using new technologies for greater empowerment and control: iPhones and BlackBerrys help keep a user organized and on schedule and provides a means to communicate with friends, family, classmates, and coworkers. ○ Productivity when traveling or commuting: A laptop computer can be used to do work or for leisure activities while commuting via train, or bus, or plane. ○ Multi-tasking: An iPod enables a user to listen to music while exercising, studying, cleaning, or walking to class. 1. Voluntarily Simplifying Lives: Minimalist apps (e.g., decluttering apps) help consumers organize and reduce possessions. 2. Using New Technologies: Smart home devices (e.g., voice assistants) automate household tasks, providing more control and efficiency. 3. Productively Using Time: Mobile learning apps (e.g., language apps) allow productive use of time during commutes. 4. Multi-tasking: Wireless earbuds enable hands-free calls and streaming while doing other activities, like exercising or cooking. 9. Identify a company that you believe does a particularly good job marketing to different cultural groups. Justify your answer. Instructor’s Notes: To consider cultural perspectives other than their own in the context of product marketing, students must think about not just the marketing messages they see but also how those messages and images might appeal to other groups. Example answers: McDonald’s markets to different cultural groups through its advertisements that show a variety of people enjoying its product, as well as group-specific advertising in areas with higher concentrations of a particular ethnic or cultural group (e.g., Chinese-language ads in predominantly Chinese neighbourhoods). Nike excels in marketing to different cultural groups by creating localized campaigns that resonate with diverse audiences. Their ads often feature athletes from various backgrounds, celebrate cultural events, and incorporate local languages and customs, ensuring that their message feels relevant and authentic to each cultural group. 10. You have recently been hired by a major department store in its marketing department. Your boss informs you that you are going to supervise a field research study being conducted. You arrive at your assigned store and find that the study consists of shadowing customers. The store has set up a "private" shopping event for store credit card holders, in which each person must swipe his or her card to receive a special discount coupon book. As the shadow shopper, you use a handheld device with a customer's information and past purchase behaviour loaded onto it. Thus, you and the other shadow shoppers know the name, address, income, family size, and spending patterns for each customer you observe. You begin to feel uncomfortable about this study, because the consumers have no idea they are being tracked or the amount of confidential information provided to strangers. You are also concerned that the Sha dowers are not regular employees or employees of an established marketing research provider. What, if anything, should you do about your concerns? Instructor’s Notes: This ethical scenario forces students to question the degree to which a field study of this nature might violate ethical standards of privacy and confidentiality. Using the ethical decision-making framework discussed in Chapter E, students should evaluate an appropriate course of action. Example answers: According to the framework for ethical decision making framework: • “Have you thought broadly of any ethical issues associated with the decision to be made?” In this case, I have concerns about keeping customers in the dark about the nature of the study, giving potentially noncredible agents access to customers’ confidential data, and having my customers followed, which may create a negative shopping experience. Therefore, I have thought broadly about the ethical issues. • “Have you involved as many possible people who might have a right to offer input into or have actual involvement in making this decision and action plan?” At this point, customers have not been involved at all, and they are likely the most important stakeholder to keep in mind. Also, a credible market research firm has not been engaged to conduct or give guidance on how the study could be improved to eliminate or mitigate some of the ethical issues. • “Does this decision respect the rights and dignity of the stakeholders?” Customers will likely feel their privacy has been violated if they find out that such confidential information has been shared with potentially noncredible sources. They also might object to being followed around the store, as if the store management expects them to act in some negative fashion. • “Does this decision produce the most good and the least harm to the relevant stakeholders?” The good produced (better marketing data) seems significantly outweighed by the bad (negative customer experience, potential identity theft). • “Does this decision uphold relevant conventional moral rules?” It likely violates the community’s standard for what is appropriate regarding privacy and information confidentiality. Although it does not violate any laws, it probably would offend the morals of the customers involved. • “Can you live with this decision alternative?” If the decision is to forgo the study or redesign it to be more confidential and less intrusive, then I can live with the alternative. The framework clarifies my discomfort with the study as it is currently designed. A better alternative might be to hire a credible market research firm that can conduct a more confidential study that does not require shadow shoppers to know the private details of the customers as they follow them around the store. You should raise your concerns with your boss or the appropriate ethics committee within the company. Emphasize the lack of informed consent from customers and the potential privacy violations involved. Suggest implementing stricter protocols for data protection and ensuring that all involved in the study are properly vetted and trained. Net Savvy 1. Seventh Generation is the leading brand of nontoxic, environmentally safe household products in Canada (e.g., at Home Depot). Visit its Web site (www.seventhgeneration.com), and review the philosophy behind the business. Next, review the site to identify the products that the company offers. Briefly summarize some of the consumer trends you note, and describe the ways in which its products address the wants and needs of its customers. Instructor’s Notes: To explore the topic of green marketing, this question uses a single company as an example. In addition to the company’s principles and products, students must consider larger trends that Seventh Generation attempts to address through its marketing efforts. Example answers: ○ In general, the focus of the company is being a responsible corporate citizen by offering environmentally friendly products, giving back to the community, and taking a leadership position in pursuing socially responsible business practices with both customers and suppliers. ○ Seventh Generation addresses such trends as product recycling, animal testing, and greater efficiency to mitigate humanity’s impact on the environment. These efforts also can save consumers money, because they can consume less by using products like Liquid Laundry Detergent, Dish Soap, and White Paper Towels. Consumer Trends: 1. Sustainability: Growing demand for eco-friendly products and sustainable practices. 2. Health Consciousness: Increased awareness of toxic chemicals in household products. How Products Address Wants and Needs: 1. Eco-Friendly: Products are made with biodegradable ingredients and recycled packaging, catering to environmentally conscious consumers. 2. Non-Toxic: Focus on safe, chemical-free formulations meets the needs of health-conscious buyers. 2. Visit The Cool Hunter (http://www.thecoolhunter.net/) and identify examples that would provide marketers with insights regarding social trends. Instructor’s Notes: From their review of the Cool Hunter site, they should see the difficulty in identifying and following trends that change very quickly. Example answers: Information on this website is constantly changing in order to highlight “all things creative.” The purpose of this website is to be a leading authority and a global hub for “what’s cool, thoughtful, innovative, and original.” The site showcases products, companies, and people from around the world that are doing innovative things. Many of the examples on Cool Hunter’s website will be symbolic of social trends. Students should be able to identify multiple examples of unique features on Cool Hunter’s website that are example of how changes in social trends are manifesting themselves. The Cool Hunter highlights several social trends: 1. Sustainable Design: Emphasis on eco-friendly and upcycled materials reflects growing environmental consciousness. 2. Tech Integration: Innovations blending technology with daily life, such as smart home devices, show a trend towards increased convenience and connectivity. 3. Urban Gardening: Trends in urban agriculture and DIY projects indicate a rising interest in self-sufficiency and local food production. Chapter Case Study: Will e-books replace print books? Questions: 1. Briefly explain what are the competitive advantages of Kobo’s e-book system. Are these advantages sustainable over time? Instructor’s Notes: This question encourages students to think about what strategic competitive advantage is and how important it is in ensuring the long-term growth and survival of the company. Example answers: Kobo has entered the market with a vastly different approach that it hoped would forever change the way people buy and read books. Its goal is to enable e-book consumers to be able to read any book, anytime, anywhere, and on any device of their choice. Kobo’s open, cross-platform application allows consumers to read e-books on any e-reader, which is in stark contradiction to the industry norm of using a closed or propriety system. In the closed system, e-readers can only plug into their respective owners' e-book stores. For example, only the Kindle e-reader can plug into Amazon’s e-book store and download titles. Unfortunately, this particular advantage is not sustainable since it can be easily copied if the idea were to take off. A second competitive advantage is its extensive partner network, distribution network, and growing global customer based, which cannot be easily copied. Competitive Advantages of Kobo’s E-Book System: 1. Wide Selection: Extensive library of e-books and support for various formats. 2. Cross-Platform Compatibility: Integration across multiple devices and operating systems. 3. Customization: Features like adjustable fonts and lighting enhance user experience. Sustainability: These advantages are sustainable as long as Kobo continues to innovate in user experience and maintains strong partnerships with publishers. However, competition and technological advances could challenge these benefits over time. 2. What factors in Kobo’s microenvironment do you think are responsible for Kobo’s success? Instructor’s Notes: This question asks students to identify the relevant microenvironment factors that explain Kobo’s’ success. Given its small size, students should focus on the company and its partners. Example answers: Company – Kobo has the backing of Indigo Books and several major backers such as Music, Borders, RED group Retail, and Cheung Kong Holdings. It also has a wide distribution network and a global consumer base. Also, Kobo’s e-book reader is an innovative product that offers a lot of value relative to competing products (especially its lower price points) although this can be easily copied. In addition, Indigo Books has a long history of the book business in Canada and the US. Factors in Kobo’s Microenvironment Responsible for Success: 1. Strong Partnerships: Collaborations with major publishers and bookstores enhance content availability. 2. Technological Innovation: Continuous updates and improvements in e-reader technology and software. 3. Customer Focus: Understanding and addressing user needs with customizable features and cross-platform integration. 4. Effective Marketing: Targeted promotions and a strong online presence build brand awareness and attract users. 3. Identify and describe the macroenvironmental factors that could influence the success of Kobo’s business in the future. Instructor’s Notes: This question is designed to get students to identify and apply the various macroenvironmental factors that are applicable to a particular business case. Example answers: ○ Demographics – Kobo’s e-reader and e-books can be purchased from anywhere in the world through the internet. As consumers of all age, income, and education groups become more familiar with e-books and the numerous benefits of e-books, they are likely to increase their purchases of books. This could be a good opportunity for Kobo. ○ Social Trends – time poverty – Kobo’s e-readers allow consumers to purchase not only e-books but magazines and newspapers at competitive prices. Also, consumers can store hundreds, if not thousands of books, magazines, and newspapers, which they can read at their convenience. These benefits may encourage those consumers that prefer to read online to subscribe to Kobo’s service – most consumers are increasingly comfortable reading e-books– a major change in attitude. Note that there are many competitors that offer similar advantages. ○ Economics - e-books and e-readers offer greater flexibility and reading capability as well as storage capability and with it being paperless, it may appeal to environmentally conscious consumers. Also, the prices for most e-books are lower than printed books and can be delivered immediately. ○ Technology – As the technology for e-readers improve, so will the quality of e-readers and this may be a big incentive to get more consumers to switch to e-books. ○ Culture, Political/Legal – No info Macroenvironmental Factors Influencing Kobo’s Future Success: 1. Technological Advances: Rapid changes in technology could impact e-reader functionality and competition. 2. Economic Conditions: Economic downturns may affect consumer spending on non-essential items like e-books and e-readers. 3. Regulatory Changes: New regulations on digital content or privacy could impact operations. 4. Cultural Trends: Shifts in reading habits or preferences for physical versus digital books can influence demand. 5. Competitive Landscape: Actions by competitors like Amazon and Apple could affect market share and pricing strategies. Video Activities Video: Growing City - Turning Trash into Cash (CBC’s Dragon’s Den) Learning Objective: LO3 Description: This video provides a real world pitch by an entrepreneur on CBC’s Dragons’ Den. Lisa von Sturmer was successful in attracting investment from the Dragons. The video demonstrates how changing social and natural trends can lead consumers and corporations to change their behaviour when dealing with organic food waste. Key Words: Social/natural, environmental regulations and standards, consumer perception. Activity: Ask students to view the video and them if they think Growing City is a growing concern or if it will be a trend that is abandoned in the future. Get them to calculate how many companies they would have to sign up to be profitable. Ask how difficult/easy it would be to expand this concept across Canada. Solution Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9781259030659, 9781259104312