This Document Contains Chapters 1 to 3 Chapter 1: Marketing in Today’s Economy Chapter Outline I. Introduction A. Beyond the Pages 1.1 reviews the challenges associated with marketing products in mature industries. Commoditization is a consequence of mature industries, where slowing innovation, extensive product assortment, excess supply, and fickle, price-conscious consumers force margins to the floor. B. All organizations—both for-profit and nonprofit—require effective planning and a sound marketing strategy to achieve their goals and objectives. Without these vital efforts, organizations will not be able to satisfy the needs and wants of their customers or other stakeholders. C. Organizations use sound marketing strategy to leverage their strengths and capitalize on opportunities that exist in the market. Every organization develops and implements marketing strategies. D. This chapter will review some of the major challenges and opportunities that exist in planning marketing strategy in today’s economy. It will also review the nature and scope of major marketing activities and decisions that occur throughout the planning process. Finally, the chapter looks at some of the major challenges involved in developing marketing strategy. II. The Challenges and Opportunities of Marketing in Today’s Economy A. Fundamental Changes to Marketing and Business Practice 1. Power Shift to Customers: The astounding growth of the Internet has shifted power to customers, not marketers. 2. Massive Increase in Product Selection: The variety and assortment of goods and services offered for sale on the Internet and traditional stores is staggering. This radical increase in product selection and availability has exposed marketers to inroads by competitors from every corner of the globe. 3. Audience and Media Fragmentation: Since the advent of cable television in the late 1970s, mass media audiences have become increasingly fragmented. Media audiences have become fragmented due to (1) the sheer number of media choices we have available today, and (2) the limited time we have to devote to any one medium. [Exhibit 1.1] 4. Changing Value Propositions: The speed and efficiency of commerce today has changed the way customers view value. The lesson for marketers is clear: In situations where customers see goods and services as commodities, customers will turn to the most convenient, least expensive alternative. 5. Shifting Demand Patterns: In some cases, changes in technology have shifted customer demand for certain product categories. The challenges faced by the movie rental industry bear this out. 6. Privacy, Security, and Ethical Concerns: Changes in technology have made our society much more open than in the past. As a result, these changes have forced marketers to address real concerns about security and privacy, both online and offline. For example, many well-known and respected companies have been fined for violating the standards of the Children’s Online Privacy Protection Act. [Exhibit 1.2] 7. Unclear Legal Jurisdiction: A final issue concerns the conflicting perspectives over legal jurisdiction when a company does business in more than one country. Another important issue involves the collection of sales tax for online transactions. B. Although the full effect of these changes will not be recognized for some time, circumstances have forced businesses to move ahead by adjusting their marketing activities at both the strategic and tactical levels. III. Basic Marketing Concepts A. Different Views of Marketing 1. Many people, especially those not employed in marketing, see marketing as a function of business. Other individuals, particularly those working in marketing jobs, tend to see marketing as a process of managing the flow of products from the point of conception to the point of consumption. 2. In 2005, the American Marketing Association changed the definition of marketing to better reflect the realities of competing in today’s marketplace: “Marketing is an organizational function and a set of business processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” This revised definition stresses two critical success factors in marketing today: value and customer relationships. The AMA changed the definition of marketing again in 2007. The definition now reads: "Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." 3. A final way to think about marketing relates to meeting human and social needs. This broad view links marketing with our standard of living, not only in terms of enhanced consumption and prosperity, but also in terms of society’s wellbeing. B. What Is a Market? 1. At its most basic level, a market is a collection of buyers and sellers. We tend to think of a market as a group of individuals or institutions that have similar needs that can be met by a particular product or product category. 2. This basic understanding of a market has not changed in a very long time. What has changed, however, is not so much the “what” but the “where” of a market; that is, the location of the buyers and sellers. 3. Technology mediates some of the fastest growing markets. The term marketspace has been coined to describe these electronic marketplaces unbound by time or space. The shift from marketplaces to marketspaces has significant ramifications for marketers. 4. Many consumers have been slow to embrace marketspaces because they lack the human element. In these cases, the design and implementation of the online experience is a serious challenge for marketspace operators. 5. Another shift is the advent of metamarkets (a cluster of closely related goods and services that center around a specific consumption activity) and metamediaries (a single access point where buyers can locate and contact many different sellers in the metamarket). [Exhibit 1.3] C. What Is Exchange? 1. Exchange is traditionally defined as the process of obtaining something of value from someone by offering something in return; this usually entails obtaining products for money. For exchange to occur, five conditions must be met: a) There must be at least two parties to the exchange. b) Each party has something of value to the other party. c) Each party must be capable of communication and delivery. d) Each party must be free to accept or reject the exchange. e) Each party believes that it is desirable to exchange with the other party. 2. In today’s economy, exchange has become all too easy. Opportunities for exchange bombard us virtually everywhere we go—even in our own homes. 3. The ease with which exchange can occur today presents a problem in that individuals who do not have the authority to exchange can still complete transactions. D. What Is a Product? 1. The primary focus of marketing is the customer and how the organization can design and deliver products that meet customers’ needs. 2. A product is something that can be acquired via exchange to satisfy a need or a want. This definition permits us to classify a broad number of “things” as products: goods, services, ideas, information, digital products, people, places, experiences and events, real or financial property, and organizations. 3. A customer’s decision to purchase one product or group of products over another is primarily a function of how well that choice will fulfill their needs and satisfy their wants. 4. Customers usually seek out exchanges with marketers who offer products that are high in one or more of the five types of utility: a) Form utility: Products high in form utility have attributes or features that set them apart from the competition. b) Time utility: Products high in time utility are available when customers want them. c) Place utility: Products high in place utility are available where customers want them, which is typically wherever the customer happens to be or where the product needs to be at that moment. d) Possession utility: Possession utility deals with the transfer of ownership or title from marketer to customer. e) Psychological utility: Products high in psychological utility deliver positive experiential or psychological attributes that customers find satisfying. 5. Beyond the Pages 1.2 discusses how Walmart, Procter & Gamble, and Hulu have managed to maintain creativity and innovation to satisfy customer needs in a weakened economy. IV. Major Marketing Activities and Decisions A. Strategic Planning 1. If an organization is to have any chance of reaching its goals and objectives, it must have a game plan or road map for getting there. 2. A strategy outlines the organization’s game plan for success. 3. Tactical planning concerns itself with specific markets or market segments and the development of marketing programs that will fulfill the needs of customers in those markets. 4. The marketing plan provides the outline for how the organization will combine product, pricing, distribution, and promotion decisions to create an offering that customers will find attractive. B. Research and Analysis 1. Strategic planning depends on the availability and interpretation of information. 2. In addition to information about customers, the organization must also have access to three other types of information and analysis: a) Internal analysis involves the objective review of internal information pertaining to the firm’s current strategy and performance, as well as the current and future availability of resources. b) Competitive intelligence involves analyzing the capabilities, vulnerabilities, and intentions of competing businesses. c) Environmental scanning involves the analysis of economic, political, legal, technological, and cultural events and trends that may affect the future of the organization and its marketing efforts. C. Developing Competitive Advantage 1. To be successful, a firm must possess one or more competitive advantages that it can leverage in the market in order to meet its objectives. 2. A competitive advantage is something that the firm does better than its competitors that gives it an edge in serving customers’ needs and/or maintaining mutually satisfying relationships with important stakeholders. D. Marketing Strategy Decisions 1. An organization’s marketing strategy describes how the firm will fulfill the needs and wants of its customers. 2. A marketing strategy can be composed of one or more marketing programs; each program consists of two elements—a target market or markets and a marketing mix (sometimes known as the four Ps of product, price, place, and promotion). 3. Market Segmentation and Target Marketing a) Marketers engage in market segmentation when they divide the total market into smaller, relatively homogeneous groups or segments that share similar needs, wants, or characteristics. b) When a marketer selects one or more target markets, they identify one or more segments of individuals, businesses, or institutions toward which the firm’s marketing efforts will be directed. c) Beyond the Pages 1.3 discusses how many marketers use online social networking sites—such as Facebook, Twitter, Google+, or LinkedIn—to target specific market segments. 4. Marketing Program Decisions a) Successful marketing programs depend on a carefully crafted blend of the four major marketing mix elements. b) The importance of product decisions hinges on the connection between the product and the customers’ needs. c) Price is the only element of the marketing mix that leads to revenue and profit, has a direct connection with customer demand, is the easiest element of the marketing program to change, and is a major quality cue for customers. d) Distribution and supply chain issues are among the least apparent decisions made in marketing, particularly with customers. e) Modern marketing has replaced the term promotion with the concept of integrated marketing communication (IMC), or the coordination of all promotional activities (media advertising, direct mail, personal selling, sales promotion, public relations, packaging, store displays, website design, personnel) to produce a unified, customer-focused message. 5. Branding and Positioning a) In order to understand branding, the marketer must have a clear understanding of how the elements of the marketing program work together to create the brand. b) While product decisions (such as design, style, and features) play a prominent role in branding, so do other program elements such as price/value, availability/exclusivity, and image/reputation of both the firm and its offerings. E. Social Responsibility and Ethics 1. The role of social responsibility and ethics in marketing strategy has come to the forefront of important business issues in today’s economy. 2. Social responsibility refers to an organization’s obligation to maximize its positive impact on society, while minimizing its negative impact. 3. A major part of this responsibility is marketing ethics, or the principles and standards that define acceptable conduct in marketing activities. F. Implementation and Control 1. Marketing implementation, the process of executing the marketing strategy, is the “how” of marketing planning. 2. Adequate control of marketing activities is essential to ensure that the strategy stays on course and focused on achieving its goals and objectives. 3. The implementation phase of marketing strategy calls into play the 5th P of the marketing program: people. G. Developing and Maintaining Customer Relationships 1. Developing long-term customer relationships requires that markers shift away from transactional marketing and embrace a relationship marketing approach. 2. The goal of transactional marketing is to complete a large number of discrete exchanges with individual customers. In relationship marketing, the goal is to develop and maintain long-term, mutually satisfying arrangements where both buyer and seller focus on the value obtained from the relationship. [Exhibit 1.4] 3. Relationship marketing promotes customer trust and confidence in the marketer, who can then develop a deeper understanding of customers’ needs and wants. V. Taking on the Challenges of Marketing Strategy A. Challenges and opportunities in planning and developing marketing strategy include: 1. Change—Customers change, competitors change, and even the marketing organization changes. Strategies that are highly successful today will not work tomorrow. 2. People—Marketing strategy is inherently people-driven. It is about people (inside an organization) trying to find ways to deliver exceptional value by fulfilling the needs and wants of other people (customers, shareholders, business partners, society at large). The people-oriented nature of marketing makes marketing strategy a challenging task. 3. Lack of rules—There are very few rules for how to do marketing in specific situations. 4. Increasing customer expectations and declining satisfaction—American customers have a passion for instant gratification that is not being met. The American Customer Satisfaction Index indicates that customer satisfaction has only recently recovered since 1994. [Exhibit 1.5] 5. Mature markets (commoditization)—Many firms compete in markets where product offerings have become commoditized by a lack of differentiation (for example, airlines, wireless phone service, department stores, laundry supplies, household appliances). 6. Controlling costs—Businesses have been forced to cut expenses by eliminating products, lowering distribution costs, or downsizing in order to remain competitive. B. Even the most admired marketers in the world occasionally have problems meeting the demands of the strategic planning process and developing the “right” marketing strategy. Questions for Discussion 1. Increasing customer power is a continuing challenge to marketers in today’s economy. In what ways have you personally experienced this shift in power; either as a customer or as a business person? Is this power shift uniform across industries and markets? How so? For personal experiences, many students will use the example of buying a car. The unprecedented access to information gives customers a great deal of negotiating power when they enter a dealer’s showroom. From a business perspective, students may argue that customers have power due to the number of supplier options they have today. When a customer can quickly shift his/her business to a competitor, they are in a stronger power position. The power shift is not necessarily uniform across industries. Consumers lack negotiating power in most industries; hence, they exercise their power through their product choices. 2. How concerned are you about privacy and security in today’s economy? Why do so many people, particularly younger people, seem to be unconcerned about privacy? Will these issues still be important in 10 years? Explain. Most students will state that they are very concerned about privacy and security. However, younger people, unlike their parents, understand that the line between privacy and convenience is a fine one. If consumers want the conveniences of advanced technology, allowing access to personal information is unavoidable. In the future, most consumers won’t think too deeply about privacy and security as technology further penetrates our lives. There is also the potential for significant government regulation in this area. 3. The text argues that marketing possesses very few rules for choosing the appropriate marketing activities. Can you describe any universal rules of marketing that might be applied to most products, markets, customers, and situations? This is a very challenging question, as most students will have not considered this issue. Even generally accepted statements like “sales increase when you lower the price” are not necessarily true (see Chapter 6). An example that comes close to being a universal rule is “everyone loves a new product.” New products and sales are good ways to draw attention, but are not necessarily situations that increase revenue for the firm. Exercises 1. The pace of change in our economy was frenetic from 1999 to 2001 (the so called dot-com boom) because of rapidly expanding technology and the growth of the Internet. Shortly thereafter, the bubble burst and many dot-com pioneers disappeared. Conduct some research to determine the reasons for the collapse. Most experts contend that a similar type of shakeout is unlikely today. What is different about today’s technology and the Internet that points to this conclusion? How can firms prevent another collapse? This exercise makes an excellent midterm exam or a term project. In their research students will uncover many factors that led to the dotcom collapse. They will likely be drawn to the financial and management reasons for the problems that occurred. If they focus solely on marketing-related reasons for the collapse, five issues stand out: (1) lack of marketing planning, (2) lack of any real differentiating competitive advantage, (3) lack of backend distribution infrastructure to support operations, (4) lack of an offline brand image, and (5) misguided assumptions about consumer behavior. Most students will argue that a similar shakeout is unlikely because the Internet has evolved (increased interactivity, social networking, wireless, etc.) and that firms today see the Internet as one of several key channels (rather than THE channel). However, astute students will see that some firms are still likely to disappear; mainly because they do not offer a compelling reason for their existence (Yahoo! and AOL are good examples). Firms that are most likely to succeed are those that take a combined offline/online approach. 2. Logon to a metamediary in the automobile metamarket (e.g., www.edmunds.com, www.autos.msn.com, www.kbb.com, or www.carsdirect.com). What aspects of the car buying experience does the metamediary offer? Which aspects of the experience are missing? How does the metamediary overcome these missing aspects? These metamediaries offer everything needed to purchase a car. However, they do not provide a car buying experience. Many consumers actually enjoy taking test drives and haggling over price. These metamediaries overcome this by catering to the car buying public that prefers the sterile exercise of buying a car to the experience of buying a car. They also provide everything in one place, unlike the traditional experience. 3. Think about all of the exchanges that you participate in on a weekly or monthly basis. How many of these exchanges have their basis in long-term relationships? How many are simple transaction-based exchanges? Which do you find most satisfying? Why? Answers to this question will vary greatly. Many students will not consider their exchanges to be relational until you ask them how long they have been using the same company/provider. Many exchanges are relational by default (we use the same dry cleaner or gas station continuously without thinking about it). Whether students find transactional or relational exchanges more satisfying will depend on their likes and dislikes. Exercise 1.1 Cars Direct http://www.carsdirect.com 1. Explore the Cars Direct website, including pricing a vehicle of your choice. How successful is Cars Direct in reducing the hassles associated with buying an automobile? Students will likely note that car buyers can select any make or model and customize it within a range of options. Cars Direct will quote a price that is very close to any dealer’s invoice price, and will automatically include any rebates or other incentives. Customers can also arrange for financing. In all, Cars Direct customers can do everything but kick the tires. However, students may also note that the Cars Direct service is best for individuals who can narrow their vehicle choices. In other words, it helps to know what you are looking for before visiting the website. 2. Does the design of the Cars Direct website convey confidence and trust in the car buying process? How has Cars Direct answered consumers’ concerns over the lack of a human element in their marketspace? The site conveys confidence in a number of ways. First, customers can click a link to access live help. Second, Cars Direct offers a service guarantee, including live human interaction, upfront pricing, and a satisfaction guarantee. Third, the site proudly boasts that it is the #1 car-buying site of several widely respected publications. Students will likely argue that, despite the link to live help, the site does little to overcome the lack of a human element. However, this is actually the company’s competitive advantage. Many car buyers prefer to reduce or eliminate the human element from their car-buying transactions. Exercise 1.2 Daytona 500 http://www.daytonainternationalspeedway.com 1. What is the product offered by the Daytona International Speedway and the Daytona 500? How does the Daytona 500 create and deliver customer satisfaction through the five types of utility? Students will argue that the product is entertainment, excitement, or exhilaration. The speedway and its events are experiences created from a unique combination of goods, services, people, and geography. The Daytona 500 offers all five types of utility: form utility (racing celebrities, the track, the cars), time utility (several events throughout the year with the Daytona 500 occurring in late February), place utility (Daytona is a major tourist destination in its own right), possession utility (memories, souvenirs, collectables), and psychological utility (competitiveness, rivalry, excitement). 2. How does the Daytona 500 website enhance the marketing of the speedway and its events? In what sense does the website serve as a metamediary for all things NASCAR? The website enhances the entire Daytona 500 experience, both before and after the event. It permits fans to buy tickets and other items at any time of the year. In the truest sense, the site also serves as a metamediary for NASCAR as it links to other tracks and events. However, the site does little to promote other NASCAR events. Chapter 2: Strategic Marketing Planning Chapter Outline I. Introduction A. Beyond the Pages 2.1 discusses the history and phenomenal success of Redbox. B. Although the process of strategic marketing planning can be complex (a large multinational corporation) or relatively straightforward (a small single proprietor business), the planning process is the same in many ways. C. Large or small, all marketers strive to meet the needs of their customers while meeting their own business and marketing objectives. II. The Strategic Planning Process A. Whether at the corporate, business unit, or functional level, the planning process begins with an in-depth analysis of the organization's internal and external environments—sometimes referred to as a situation analysis. B. Planning efforts within each functional area will result in the creation of a strategic plan for that area. [Exhibit 2.1] C. A marketing plan is a written document that provides the blueprint or outline of the organization's marketing activities, including the implementation, evaluation, and control of those activities. The marketing plan serves a number of purposes: 1. It clearly explains how the organization will achieve its goals and objectives. 2. It serves as the "road map" for implementing the marketing strategy. 3. It instructs employees as to their roles and functions in fulfilling the plan. 4. It provides specifics regarding the allocation of resources and includes the specific marketing tasks, responsibilities of individuals, and the timing of all marketing activities. D. Marketing decisions must be made within the boundaries of the organization's overall mission, goals, and objectives. E. Organizational Mission versus Organizational Vision 1. A mission, or mission statement, seeks to answer the question "What business are we in?" It is a clear and concise statement (a paragraph or two at most) that explains the organization's reason for existence. 2. A vision, or vision statement, seeks to answer the question "What do we want to become?" An organization's vision tends to be future oriented, in that it represents where the organization is headed and where it wants to go. 3. Elements of the Mission Statement a) A well-devised mission statement for any organization, unit within an organization, or single-owner business should answer the same five basic questions: 1) Who are we? 2) Who are our customers? 3) What is our operating philosophy (basic beliefs, values, ethics, and so on)? 4) What are our core competencies or competitive advantages? 5) What are our responsibilities with respect to being a good steward of our human, financial, and environmental resources? b) A mission statement that delivers a clear answer to each of these questions installs the cornerstone for the development of the marketing plan. [Exhibit 2.2] c) The mission statement should be included in annual reports and major press releases, framed on the wall in every office, and personally owned by every employee of the organization. 4. Mission Width and Stability a) In crafting a mission statement, management should be concerned about the statement's width. b) Overly broad missions can lead companies to establish plans and strategies in areas where their strengths are limited. c) Overly narrow mission statements that constrain the vision of the organization can prove just as costly. d) Mission stability refers to the frequency of modifications in an organization's mission statement. Of all the components of the strategic plan, the mission should change the least frequently. 5. Customer-Focused Mission Statements a) In recent years, mission statements have become much more customer oriented. People's lives and businesses should be enriched because they have dealt with the organization. b) A focus on profit in the mission statement means that something positive happens for the owners and managers of the organization, not necessarily for the customers or other stakeholders. F. Corporate or Business-Unit Strategy 1. All organizations need a corporate strategy, the central scheme or means for utilizing and integrating resources in the areas of production, finance, research and development, human resources, and marketing, to carry out the organization's mission and achieve the desired goals and objectives. 2. Larger firms often find it beneficial to devise separate strategies for each strategic business unit (SBU), subsidiary, division, product line, or other profit center within the parent firm. 3. Business-unit strategy determines the nature and future direction of each business unit, including its competitive advantages, the allocation of its resources, and the coordination of the functional business areas. 4. In small businesses, corporate strategy and business-unit strategy are essentially the same. 5. When a firm possesses capabilities that allow it to serve customers' needs better than the competition, it is said to have a competitive, or differential, advantage. 6. Competitive advantages cannot be fully realized unless customers see them as valuable. The key issue is the organization's ability to convince customers that its advantages are superior to those of the competition. G. Functional Goals and Objectives 1. Marketing and all other business functions must support the organization's mission and goals, translating these into objectives with specific quantitative measurements. 2. All functional objectives should be expressed in clear, simple terms so that all personnel understand what type and level of performance the organization desires. In other words, objectives should be written so that their accomplishment can be measured accurately. 3. It is also important for all functional objectives to be reconsidered for each planning period. H. Functional Strategy 1. Organizations design functional strategies to provide a total integration of efforts that focus on achieving the area's stated objectives. 2. In marketing strategy, the process focuses on selecting one or more target markets and developing a marketing program that satisfies the needs and wants of members of that target market. 3. Functional strategy decisions must: a) fit the needs and purposes of the functional area with respect to meeting its goals and objectives. b) be realistic given the organization's available resources and environment. c) be consistent with the organization's mission, goals, and objectives. I. Implementation 1. Implementation involves activities that actually execute the functional area strategy. 2. All functional plans have at least two target markets: an external market (customers, suppliers, investors, potential employees, the society at large) and an internal market (employees, managers, executives). 3. Even seemingly disconnected events in finance or human resources can have an effect on the firm's ultimate customers—the individuals and businesses that buy the firm's products. 4. In order for a functional strategy to be implemented successfully, the organization must rely on the commitment and knowledge of its employees—its internal target market. J. Evaluation and Control 1. Organizations design the evaluation and control phase of strategic planning to keep planned activities on target with goals and objectives. The critical issue in this phase is coordination among functional areas. 2. The key to coordination is to ensure that functional areas maintain open lines of communication at all times. 3. In some ways, the evaluation and control phase of the planning process is an ending and a beginning. On one hand, evaluation and control occur after a strategy has been implemented. On the other hand, evaluation and control serves as the beginning point for the planning process in the next planning cycle. III. The Marketing Plan A. The marketing plan provides a detailed formulation of the actions necessary to carry out the marketing program. Think of the marketing plan as the handbook for marketing implementation, evaluation, and control. 1. A marketing plan is not the same as a business plan. 2. A good marketing plan requires a great deal of information from many different sources. This requires looking at the marketing plan holistically rather than as a collection of related elements. B. Marketing Plan Structure [note also the Appendix] 1. There are many ways to structure a marketing plan. [Exhibit 2.3] 2. A good marketing plan outline is: a) comprehensive: to ensure that there are no omissions of important information. b) flexible: to ensure the plan will fit the unique needs of your situation. c) consistent: to ensure that the marketing plan and the planning process will be understood by executives and employees outside of marketing. d) logical: to ensure that the plan can be sold to top managers. 3. Executive Summary a) The executive summary is a synopsis of the overall marketing plan, with an outline that conveys the main thrust of the marketing strategy and its execution. b) Individuals both within and outside of the organization may read the executive summary for reasons other than marketing planning or implementation. c) The executive summary should always be the last element to be written because it is easier (and more meaningful) to write after the entire marketing plan has been developed. 4. Situation Analysis a) The situation analysis summarizes all pertinent information obtained about three key environments: the internal environment, the customer environment, and the firm’s external environment. b) A clear and comprehensive situation analysis is one of the most difficult parts of developing a marketing plan. 5. SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis a) SWOT analysis focuses on the internal factors (strengths and weaknesses) and external factors (opportunities and threats)—derived from the situation analysis in the preceding section—that give the firm certain advantages and disadvantages in satisfying the needs of its target market(s). b) Strengths and weaknesses are internal issues unique to the firm conducting the analysis. c) Opportunities and threats are external issues that exist independently of the firm conducting the analysis. A common mistake is to list the firm's strategic alternatives as opportunities. d) Beyond the Pages 2.2 discusses selling products at a loss to gain market share. 6. Marketing Goals and Objectives a) Marketing goals and objectives are formal statements of the desired and expected outcomes resulting from the marketing plan. b) This section of the marketing plan sets the performance targets that the firm seeks to achieve and it defines the parameters by which the firm will measure actual performance in the evaluation and control phase. 7. Marketing Strategy a) The strategy section of the marketing plan outlines how the firm will achieve its marketing objectives. b) In its broadest sense, marketing strategy refers to how the firm will manage its relationships with customers in a manner that gives it an advantage over the competition. 8. Marketing Implementation a) The implementation section of the marketing plan describes how the marketing program will be executed. This section also answers several questions: 1) What specific marketing activities will be undertaken? 2) How will these activities be performed? 3) When will these activities be performed? 4) Who is responsible for the completion of these activities? 5) How will the completion of planned activities be monitored? 6) How much will these activities cost? b) Without a good plan for implementation, the success of the marketing strategy is seriously jeopardized. For this reason, the implementation phase of the marketing plan is just as important as the marketing strategy phase. 9. Evaluation and Control a) This section of the marketing plan details how the results of the marketing program will be evaluated and controlled. b) Marketing control involves establishing performance standards, assessing actual performance by comparing it with these standards, and taking corrective action if necessary to reduce discrepancies between desired and actual performance. c) The financial assessment of the marketing plan is also an important component of evaluation and control. Estimates of costs, sales, and revenues determine financial projections. d) A marketing audit—a systematic examination of the firm's marketing objectives, strategy, and performance—can be used to pinpoint potential causes for discrepancies. C. Using the Marketing Plan Structure 1. Plan ahead: Writing a comprehensive marketing plan is very time consuming, especially if the plan is under development for the first time. 2. Revise, then revise again: After the situation analysis, you will spend most of your time revising the remaining elements of the marketing plan to ensure that they mesh with each other. 3. Be creative: A marketing plan is only as good as the information it contains and the effort and creativity that go into its creation. 4. Use common sense and judgment: Writing a marketing plan is an art. Common sense and judgment are necessary to sort through all of the information, weed out poor strategies, and develop a sound plan. 5. Think ahead to implementation: As you develop the plan, you should always be mindful of how the plan will be implemented. 6. Update regularly: Once the marketing plan has been developed and implemented, it should be updated regularly with the collection of new data and information. 7. Communicate to others: One critical aspect of the marketing plan is its ability to communicate to colleagues, particularly top managers who look to the marketing plan for an explanation of the marketing strategy, as well as for a justification of needed resources, like the marketing budget. D. Purposes and Significance of the Marketing Plan 1. A good marketing plan will fulfill five purposes in detail: a) It explains both the present and future situations of the organization. This includes the situation and SWOT analyses and the firm's past performance. b) It specifies the expected outcomes (goals and objectives) so that the organization can anticipate its situation at the end of the planning period. c) It describes the specific actions that are to take place so that the responsibility for each action can be assigned and implemented. d) It identifies the resources that will be needed to carry out the planned actions. e) It permits the monitoring of each action and its results so that controls may be implemented. Feedback from monitoring and control provides information to start the planning cycle again in the next time frame. 2. These five purposes are very important to various persons in the firm. The most pressing concern for success, however, may lie in the fourth purpose. E. Organizational Aspects of the Marketing Plan 1. In many organizations, the marketing manager, brand manager, or product manager writes the marketing plan. 2. The authority to approve the marketing plan is typically vested in upper-level executives. These top managers ask: a) Will the proposed marketing plan achieve the desired marketing, business unit, and corporate goals and objectives? b) Are there alternative uses of resources that would better meet corporate or business unit objectives than the submitted marketing plan? 3. In most cases, final approval of the marketing plan lies with the president, chairman, or CEO of the organization. 4. Once a marketing plan has been approved, it still faces many obstacles before its marketing programs can come to fruition. [Exhibit 2.4] IV. Maintaining Customer Focus and Balance in Strategic Planning A. Many firms have changed the focus and content of their marketing plans. Of these changes, two stand out: (1) renewed emphasis on the customer, and (2) the advent of balanced strategic planning. B. These changes have required shifting focus from the company's products to the unique requirements of specific target market segments, as well as tighter integration with other functional areas. C. Customer-Focused Planning 1. Focusing on the customer has not been the hallmark of strategic planning throughout history. The emphasis in marketing planning has shifted from production (efficiency and quality), to selling, to the marketing concept. 2. The marketers of today focus on long-term, value-added relationships with customers, employees, suppliers, and other partners. The focus has shifted from customer transactions to customer relationships, and from competition to collaboration. 3. Market-oriented firms successfully generate, disseminate, and respond to market information. These firms focus on customer analysis, competitor analysis, and integrating the firm's resources to provide customer value and satisfaction, as well as long-term profits. 4. For an organization to be truly market oriented, it must instill a corporate culture that puts customers first. [Exhibit 2.5] 5. In today's business environment, an orientation towards customers also requires that the organization's suppliers and even competitors be customer-oriented as well. 6. Beyond the Pages 2.3 discusses how Amazon created the ecosystem necessary to support its highly popular Kindle Fire tablet. D. Balanced Strategic Planning 1. As firms approached the twenty-first century, they realized that traditional planning and measurement approaches could not capture value created by the organization’s intangible assets (customer relationships, processes, human resources, innovation, and information). 2. These assets are increasingly important to business success, but are not reported through traditional financial measures. 3. The balanced scorecard approach aligns strategic efforts by approaching strategy from four complementary perspectives: financial, customer, internal process, and learning and growth. [Exhibit 2.6] 4. The balanced scorecard has been used successfully by many organizations. These firms tend to adhere to five common principles: a) Translate the strategy into operational terms b) Align the organization to strategy c) Make strategy everyone’s everyday job d) Make strategy a continual process e) Mobilize change through executive leadership 5. The balanced scorecard doesn’t refute the traditional approach to strategic planning. It does, however, caution business leaders to look at strategy and performance as a multidimensional issue. Financial measures, though important, simply cannot tell the whole story. 6. The balanced scorecard forces organizations to explicitly consider during strategy formulation those factors that are critical to strategy execution. Issues within the balanced scorecard such as employee training, corporate culture, organizational learning, and executive leadership are critical to the implementation of any strategy. Questions for Discussion 1. In many organizations, marketing does not have a place of importance in the organizational hierarchy. Why do you think this happens? What are the consequences for a firm that gives little importance to marketing relative to other business functions? Student answers to this question will vary based on their professional experiences. One key issue deals with the background and training of the senior management team. Those that rise through the ranks from marketing have a stronger appreciation for marketing activities. Others tend to see the marketing function as an expense rather than an investment. Another reason is that some firms place more emphasis on shareholders than on customers. In these cases, financial issues, rather than marketing, rise to the top. The consequences of shirking marketing activities should be obvious. Firms without customers tend to have limited life spans. 2. Defend or contradict this statement: Developing marketing strategy is more important than implementing marketing strategy because, if the strategy is flawed, its implementation doesn’t matter. Students should recall from Chapter 1 that there are very few universal rules in marketing. Hence, it is difficult to determine if a strategy is flawed prior to its execution. Likewise, even perfect strategies can be poorly implemented. In the end, it is impossible to separate strategy from implementation—both are vitally important to business success. 3. What are some of the potential difficulties in approaching strategic planning from a balanced perspective? Isn’t financial performance still the most important perspective to take in planning? Explain. Some students will argue for the importance of the financial perspective arguing that firms are in business to make money for shareholders. These students will favor stock price and market capitalization as the key indicators of success. However, in firms dominated by intangible assets, the financial perspective becomes less able to measure performance accurately. The use of less tangible, even somewhat subjective, measures of performance is the key difficulty in using the balanced approach. Many of today’s business leaders have a difficult time with the balanced approach because they are not trained in using it and their compensation packages are not tied to balanced measures. Hence, the dominance of financial measures is somewhat self-fulfilling. Exercises 1. Review each of the mission statements listed in Exhibit 2.2. Do they follow the guidelines discussed in this chapter? How well does each answer the five basic questions? What do you make of the changes or lack thereof in these mission statements over time? Most students will remark that these (and many other) mission statements do not fully adhere to the guidelines. This promotes an interesting discussion question: Are some firms successful in spite of their mission statements? The lack of changes in many of these mission statements is to be expected as infrequency of modification is a key issue in creating a mission statement. 2. Talk with a small-business owner about the strategic planning process he or she uses. Do they have a mission statement? Marketing goals and objectives? A marketing plan? What are the major issues the owner faces in implementing his or her marketing program? Students will be surprised to learn that many (most) small businesses do very little formal planning. Even fewer will have formal marketing plans. Most of these businesses are family-owned; hence, their focus is often on making a living rather than growing a company. The major issues faced by these companies are typically competition and customer retention. 3. Palo Alto Software maintains a website devoted to business and marketing plans. Log on to www.mplans.com/sample_marketing_plans.php and take a look at a few of the sample marketing plans available. Do these plans use the same framework discussed in this chapter? Students will note that many of these sample plans follow the same basic structure outlined in the chapter. The Palo Alto site provides examples for students to use in addition to those found on our website. Exercise 2.1 Viacom http://www.viacom.com 1. Identify Viacom’s strategic business units. What are the major competitive advantages of each SBU? Students are likely to be surprised by the vast number of SBUs owned by Viacom. Though each has many competitive advantages, their strongest advantages lie in branding, image, and positioning. An important competitive advantage that students may recognize is the synergy among all of Viacom’s business units. Though they are obviously related in terms of digital media, their synergy gives Viacom a breadth of product offerings that fits the needs of many different target segments. 2. Follow the links to the various MTV networks (MTV, MTV2, mtvU, and Tr3s) and read about their different audiences and marketing strategies. How do the MTV networks fit into Viacom’s strategic planning process? Students should be able to recognize that the marketing strategy for MTV networks is but one element of Viacom’s overall strategic planning process. The strategy of any one of Viacom’s SBUs should flow from the SBU’s goals, which should flow from Viacom’s overall mission, goals, and strategy. Some students may note that the breadth of offerings under the MTV brand makes MTV networks one of the crown jewels of the Viacom empire. Exercise 2.2 American Red Cross http://www.redcross.org 1. Based on the Red Cross’s website, can you discern the agency’s marketing strategy? Is this strategy consistent with its mission? Students should be able to articulate that marketing strategy requires that the agency choose a target market and develop an appropriate program of product, price, promotion, and distribution to satisfy that market. The Red Cross clearly has two major marketing objectives with respect to the website: public relations/promotion of their work and the solicitation of donations (money, goods, blood, etc.). Both objectives are clearly consistent with their mission. Students should also note that the Red Cross mission is one of the best in terms of answering the key questions required of all mission statements. 2. Does the Red Cross appear to be a customer-oriented agency? How is the company using its website to build relationships with customers? Students are likely to argue that the Red Cross is very customer-oriented. In addition to areas devoted to the agency and its services, the website also offers a “store” and information related to community-based activities. Chapter 3: Collecting and Analyzing Marketing Information Chapter Outline I. Introduction A. Beyond the Pages 3.1 discusses the challenges and opportunities of marketing to baby boomers. B. The purpose of the situation analysis is to describe current and future issues and key trends as they affect three key environments: the internal environment, the customer environment, and the external environment. C. Although staying abreast of trends in the marketing environment is one of several tasks performed by marketing managers, it is perhaps the most important, as practically all planning and decision making depends on how well this analysis is conducted. [Exhibit 3.1] II. Conducting a Situation Analysis A. Analysis Alone Is Not a Solution 1. While a comprehensive situation analysis can lead to better planning and decision making, analysis itself is not enough. 2. Situation analysis is a necessary, but insufficient, prerequisite for effective strategic planning. 3. A thorough situation analysis empowers the marketing manager because it encourages both analysis and synthesis of information. B. Data Is Not the Same as Information 1. Good, useful information is not the same as data. Data are easy to collect and store, but good information is not. 2. Data do not become informative until a person or process transforms or combines them with other data in a manner that makes them useful. C. The Benefits of Analysis Must Outweigh the Costs 1. Situation analysis is valuable only to the extent that it improves the quality of the resulting marketing plan. 2. Although the costs of acquiring data are easy to determine, the benefits of improved decisions are difficult to estimate. 3. Perpetually analyzing data without making any decisions is usually not worth the additional costs in terms of time or financial resources. D. Conducting a Situation Analysis Is a Challenging Exercise 1. Situation analysis is one of the most difficult tasks in developing a marketing plan. 2. The most important aspect of any situation analysis is that it must be an ongoing effort. 3. Tracking all three environments (internal, customer, and external) at the same time is challenging due to their interconnectedness. [Exhibit 3.2] III. The Internal Environment [Exhibit 3.3] A. Review of Current Objectives, Strategy, and Performance 1. A periodic assessment of marketing objectives is necessary to ensure that they remain consistent with the firm's mission and the changing customer and external environments. 2. The marketing manager should also evaluate the performance of the current marketing strategy with respect to sales volume, market share, profitability, and other relevant measures. 3. Poor or declining performance may be the result of: a) holding on to marketing goals or objectives that are inconsistent with the current realities of the customer or external environments. b) a flawed marketing strategy. c) poor implementation. d) changes in the customer or external environments beyond the control of the firm. B. Availability of Resources 1. This review includes an analysis of financial, human, and experience resources, as well as any resources the firm might hold in key relationships with supply chain partners, strategic alliance partners, or customer groups. 2. It is also important to gauge whether the availability or level of these resources is likely to change in the near future. C. Organizational Culture and Structure 1. One of the most important issues in this review involves the internal culture of the firm. 2. In some organizations, marketing does not hold a prominent position in the political hierarchy. 3. The internal culture also includes any anticipated changes in key executive positions within the firm. 4. Other structural issues to be considered include the overall customer orientation of the firm (or lack thereof), issues related to employee motivation and commitment to the organization (particularly among unionized employees), and the relative emphasis on long- versus short-term planning. 5. For most firms, culture and structure are relatively stable issues that do not change dramatically from one year to the next. IV. The Customer Environment [Exhibit 3.4] A. Who Are Our Current and Potential Customers? 1. Answering the "who" question requires an examination of the relevant characteristics that define target markets, such as demographic geographic, and psychographic characteristics. 2. The analysis must also assess the viability of potential customers or markets that may be acquired in the future. B. What Do Customers Do with Our Products? 1. The "what" question entails an assessment of how customers consume and dispose of the firm's products. 2. In the case of derived demand—where the demand for one product depends on (is derived from) the demand of another product—the marketer must also examine the consumption and usage of the complementary product. 3. Marketers have become increasingly interested in how customers dispose of products, such as whether customers recycle the product or its packaging. 4. Another post-consumption issue deals with the need for reverse channels of distribution to handle product repairs. 5. Beyond the Pages 3.2 examines the growing problem of e-waste, or obsolete and broken electronics. C. Where Do Customers Purchase Our Products? 1. The "where" question is mainly one of distribution and customer convenience. 2. The fastest growing form of distribution today is nonstore retailing—which includes vending machines; direct marketing through catalogs, home sales, or infomercials; and electronic merchandising through the Internet, interactive television, and video kiosks. D. When Do Customers Purchase Our Products? 1. The "when" question refers to any situational influences that may cause customer purchasing activity to vary over time. 2. The "when" question also includes subtler influences that can affect purchasing behavior, such as physical and social surroundings, time perceptions, and the purchase task. E. Why (and How) Do Customers Select Our Products? 1. The "why" question involves identifying the basic need-satisfying benefits provided by the firm's products. 2. The "how" part of this question refers to the means of payment that customers use when making a purchase. The availability of credit makes it possible for customers to take possession of high-priced products. 3. Barter—an exchange of goods and services for other goods and services—has reemerged in business markets. F. Why Do Potential Customers Not Purchase Our Products? 1. There are many potential reasons why customers might not purchase a firm's products: a) Noncustomers have a basic need that the firm’s product does not fulfill. b) Noncustomers perceive that they have better or lower-priced alternatives, such as competing substitute products. c) Competing products actually have better features or benefits than the firm’s product. d) The firm’s product does not match noncustomers’ budgets or lifestyles. e) Noncustomers have high switching costs. f) Noncustomers do not know that the firm’s product exists. g) Noncustomers have misconceptions about the firm’s product (weak or poor image). h) Poor distribution makes the firm’s product difficult to find. 2. The potential for converting noncustomers into customers must also be assessed. V. The External Environment [Exhibit 3.5] A. Competition 1. When a firm defines the target markets it will serve, it simultaneously selects a set of competing firms. 2. Most firms face four basic types of competition: [Exhibit 3.6] a) Brand competitors, which market products with similar features and benefits to the same customers at similar prices. b) Product competitors, which compete in the same product class, but with products that are different in features, benefits, and price. c) Generic competitors, which market very different products that solve the same problem or satisfy the same basic customer need. d) Total budget competitors, which compete for the limited financial resources of the same customers. 3. Brand competitors rightfully receive the greatest attention because customers see different brands as direct substitutes for each other. For this reason, strategies aimed at getting customers to switch brands are a major focus in any effort to beat brand competitors. 4. Competitive analysis has received greater attention recently for several reasons: a) more intense competition from sophisticated competitors b) increased competition from foreign firms c) shorter product life cycles d) dynamic environments, particularly in the area of technological innovation 5. Competitive intelligence involves the legal and ethical observation, tracking, and analysis of the total range of competitive activity; including competitors' capabilities and vulnerabilities with respect to sources of supply, technology, marketing, financial strength, manufacturing capacities and qualities, and target markets. B. Economic Growth and Stability 1. A thorough examination of economic factors requires marketing managers to gauge and anticipate the general economic conditions of the nation, region, state, and local area in which they operate. 2. General economic conditions include inflation, employment and income levels, interest rates, taxes, trade restrictions, tariffs, and the current and future stages of the business cycle (prosperity, stagnation, recession, depression, and recovery). 3. Consumers’ confidence, their overall impressions of the economy, and their ability and willingness to spend are also important. C. Political Trends 1. Most organizations should track political trends and attempt to maintain good relations with elected officials. 2. Elected officials who have negative attitudes toward a firm or its industry are more likely to create or enforce regulations unfavorable for the firm. D. Legal and Regulatory Issues 1. The simple existence of laws and regulations causes many firms to accept their influence as a predetermined aspect of market planning. 2. In reality, most laws and regulations are fairly vague, which often forces firms to test the limits of certain laws by operating in a legally questionable manner. 3. Managers should also examine recent court rulings, as well as the decisions of federal, state, local and self-regulatory trade agencies to determine their effects on marketing activities. E. Technological Advancements 1. Technology refers to the way we accomplish specific tasks or the processes we use to create the "things" we consider as new. 2. Some technologies assume a frontstage presence (advances that are most noticeable to customers) in creating new marketing opportunities. 3. Other technological changes can also assume a backstage presence when their advantages are not necessarily apparent to customers. F. Sociocultural Trends [Exhibit 3.7] 1. Sociocultural factors are those social and cultural influences that cause changes in attitudes, beliefs, norms, customs, and lifestyles. 2. One of the most important sociocultural changes taking place today is the shifting demographic makeup of the U.S. population. [Exhibit 3.8] 3. Changes in cultural values—the guiding principles of everyday life—can also create opportunities and challenges for marketers. 4. Beyond the Pages 3.3 provides an overview of the corporate affairs function in many different firms. VI. Collecting Marketing Data and Information A. Secondary Information Sources 1. Internal Data Sources—The firm's own records are the best source of data on current objectives, strategy, performance, and available resources. 2. Government Sources—The sheer volume of available information on the economy, population, and business activities is the major strength of most government data sources. Government sources are also easily accessible and low in cost. 3. Book and Periodical Sources—The articles and research reports available in books and periodicals provide a gamut of information about many organizations, industries, and nations. 4. Commercial Sources—These sources are almost always relevant to a specific issue because they deal with the actual behaviors of customers in the marketplace. B. Primary Data Collection 1. The situation analysis should always begin with an examination of secondary data sources due to their availability and low cost. 2. Since each secondary data source has its advantages and disadvantages, the best approach is one that blends data and information from a variety of sources. 3. Primary marketing research has the major advantages of being relevant to the specific problem, as well as trustworthy due to the control the manager has over data collection. 4. There are four major types of primary data collection: a) Direct observation, where the researcher records the overt behaviors of customers, competitors, or suppliers in natural settings. b) Focus groups, where the researcher moderates a panel discussion among a gathering of 6-10 people who openly discuss a specific subject. c) Surveys, where the researcher asks respondents to answer a series of questions on a particular topic. d) Experiments, where the researcher selects matched subjects and exposes them to different treatments while controlling for extraneous variables. 5. As with secondary data, often the best approach to primary data collection is to use a combination of data sources. C. Overcoming Problems in Data Collection 1. One of the most common problems in data collection is an incomplete or inaccurate assessment of the situation that the gathering of data should address. 2. Another common difficulty is the expense of collecting environmental data. Although there are always costs associated with data collection (even if the data are free), the process need not be prohibitively expensive. 3. A third issue is the time it takes to collect data and information. 4. It can also be challenging to find a way to organize the vast amount of data and information collected during the situation analysis. Questions for Discussion 1. Of the three major environments in a situation analysis (internal, customer, external), which do you think is the most important in a general sense? Why? What are some situations that would make one environment more important than the others? Student responses will vary and there are really no right or wrong answers to this question. Obviously, all three environments are important. Many students will argue that the external environment is the most important because it contains the most factors that can have an effect on a firm’s marketing activities. In mature markets, the customer environment is likely to be more important. In emerging markets, the external environment will likely be in the spotlight. 2. Understanding the motivations of a firm’s noncustomers is often just as important as understanding its customers. Look again at the reasons why an individual would not purchase a firm’s products. How can a firm reach out to noncustomers and successfully convert them into customers? In their excellent book, Blue Ocean Strategy, Professors Kim and Mauborgne discuss this issue. They stress eliminating noncustomers’ pain points (issues that prevent them from buying), creating value innovation (low cost and differentiation), and identifying a price that compels the mass of customers to consider the product. We address some of these issues in the next chapter; hence, this is an excellent question in preparation for that discussion. 3. Do you think the Internet has made it easier or more difficult to collect marketing data and information? Why? How might the major data collection issues of today compare to the issues that occurred in the pre-Internet era? The Internet has made data collection easier and more demanding. The issue today is information overload and the ability of the manager to sort through data and information to determine its relevance. This is an excellent opportunity to stress to students that Google should not be their major source of information. Exercises 1. Choose a specific product that you use on a daily basis (such as food items, toiletries, or your car) and apply the 5W model in Exhibit 3.4 to yourself: a. Who are you (demographics, psychographics, etc.)? b. What do you do with the product (consumption, storage, disposal, etc.)? c. Where do you purchase the product? Why? d. When do you purchase the product? Why? e. Why and how do you select the product? f. Why do you not purchase competing products? Assume your responses are similar to millions of other consumers. Given this profile, how would you approach the marketing strategy for this particular product? Responses will vary dramatically. Most students will find this to be an interesting exercise because they have not thought of these issues before. 1. Who are you? • Demographics: 25-40 years old, middle-class, health-conscious, urban dweller. • Psychographics: Value convenience, personal hygiene, and oral health. Interested in products with natural ingredients and ethical branding. 2. What do you do with the product? • Consumption: Brush teeth twice daily using the toothpaste. • Storage: Keep it in the bathroom, typically in a cupboard or on a shelf. • Disposal: Dispose of the empty tube once it's used up. 3. Where do you purchase the product? • Purchasing location: Grocery stores, pharmacies, and online (Amazon or brand website). • Why: Convenient location, trusted quality, and sometimes better prices (online discounts). 4. When do you purchase the product? • Timing: Every 1-2 months, when the tube is nearing empty. • Why: Regular need based on usage rate. 5. Why and how do you select the product? • Selection criteria: Preference for trusted brands with natural ingredients, strong focus on oral health benefits, and favorable reviews. • How: Compare options in-store or online, check ingredient lists, and consider recommendations from dentists or reviews. 6. Why do you not purchase competing products? • Reason: Competing products may contain artificial ingredients, or the brand may not be as trusted or offer the same level of quality or effectiveness. Marketing Strategy Approach: To market toothpaste to consumers like myself, the strategy should emphasize: • Health benefits (natural ingredients, dentist-recommended). • Convenience (easy availability in stores and online). • Trust and brand reputation (emphasize reliability and positive reviews). • Price promotions (target discounts for bulk purchases or subscriptions). 2. Consider the last purchase you made (maybe it was lunch or a soft drink). List all of the brand, product, generic, and total budget competitors for that product. In a general sense, what would it take for you to switch to another type of competitor? Are there situations that would encourage you to switch to a generic competitor? When would total budget competitors become more relevant to your decision making process? Responses will vary. Undergraduates will have different responses than graduate or corporate students—likely due to their varying levels of resources. The notion of switching is a good time to discuss brand loyalty. 3. Review the sociocultural trends in Exhibit 3.7. What other trends could be added to the list? What trends are specific to your generation that cannot be universally applied to all Americans? Responses to this question will vary based on the age of each student. One issue that is omitted from the Exhibit is the need for instant gratification that is a characteristic of most American consumers. Ask students why we have this need. What makes us want things now rather than later? Exercise 3.1 R.J. Reynolds Tobacco Company http://www.rjrt.com 1. Describe the internal, external, and customer environments that influence R.J. Reynolds’ marketing strategies. Which issues seem to be perennial problems for the company? To answer this question fully, students will have to delve into the inner pages of the website. However, the firm’s perennial problems are easy to spot: They all deal with the social, political, and legal ramifications of selling tobacco products. At the time of this writing, promotion issues are highlighted by prominent links on the site’s homepage. 2. How has R.J. Reynolds used its marketing strategy to counteract negative influences within its operating environments? The company is actively involved in many social awareness campaigns aimed at reducing tobacco use among younger consumers, as well as the public in general. Students are likely to point to the company’s compliance with several mandates of the Master Settlement Agreement. Some students will argue that R.J. Reynolds’ website strongly implies that its compliance and other activities are simply a result of this agreement. This begs the question of how much of the company’s effort is proactive rather than simply reactive in nature. Exercise 3.2 Ben & Jerry’s http://www.benjerry.com 1. Based on Ben & Jerry’s website, can you determine the characteristics of the firm’s customers? How are these customer groups related to selling ice cream? It is obvious from the website that Ben and Jerry’s is about more than selling ice cream. The company is an ardent proponent of research and awareness on global warming and other social issues. Consequently, the firm’s customers range from ice cream consumers, to government agencies, to advocacy groups, and society at large. Students should be encouraged to identify the company’s primary product: ice cream or activism. Connections between the company’s activism concerns and ice cream should also be explored. 2. How is Ben & Jerry’s website used to collect customer information? Aside from its ability to collect customer information such as names, locations, and emails, simply tracking visitors’ site usage would tell the company a great deal about the types of people using the site. Ben & Jerry’s also collects information from its frequent contests. Instructor Manual for Marketing Strategy, Text and Cases O. C. Ferrell, Michael Hartline 9781285073040, 9781285170435
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