CH-1 An Overview of Marketing – MKTG: Principles of Marketing : Book Guide

CHAPTER 1 An Overview of Marketing This chapter begins with the learning outcome summaries, followed by a set of lesson plans for you to use to deliver the content in Chapter 1. • Lecture (for large sections) on page 2 • Company Clips (video) on page 4 • Group Work (for smaller sections) on page 6 Review and Assignments begin on page 7 • Review questions • Application questions • Application exercise • Ethics exercise • Video Assignment • Case assignment Great Ideas for Teaching Marketing from faculty around the country begin on page 15 LEARNING OUTCOMES 1-1 Define the term marketing 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. Marketing also requires all facets of a company to work together to pool ideas and resources. One major goal of marketing is to create an exchange. An exchange has five conditions, as listed below. Even if all five conditions are met, an exchange might not occur. People engage in marketing whether or not an exchange happens. Five conditions of exchange: 1 There must be at least two parties. 2 Each party has something that might be of value to the other party. 3 Each party is capable of communication and delivery. 4 Each party is free to accept or reject the exchange offer. 5 Each party believes it is appropriate or desirable to deal with the other party. 1-2 Describe four marketing management philosophies The role of marketing and the character of marketing activities within an organization are strongly influenced by its philosophy and orientation. A production-oriented organization focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace. A sales orientation is based on the beliefs that people will buy more products if aggressive sales techniques are used and that high sales volumes produce high profits. A market-oriented organization focuses on satisfying customer wants and needs while meeting organizational objectives. A societal marketing orientation goes beyond a market orientation to include the preservation or enhancement of individuals’ and society’s long-term best interests. 1-3 Discuss the differences between sales and market orientations First, sales-oriented firms focus on their own needs; market-oriented firms focus on customers’ needs and preferences. Second, sales-oriented companies consider themselves to be deliverers of goods and services, whereas market-oriented companies view themselves as satisfiers of customers. Third, sales-oriented firms direct their products to everyone; market-oriented firms aim at specific segments of the population. Fourth, sales-oriented organizations place a higher premium on making a sale, while market-oriented seek a long-term relationship with the customer. Finally, sales-oriented businesses pursue maximum sales volume through intensive promotion, whereas market-oriented businesses pursue customer satisfaction through coordinated activities. 1-4 Describe several reasons for studying marketing First, marketing affects the allocation of goods and services that influence a nation’s economy and standard of living. Second, an understanding of marketing is crucial to understanding most businesses. Third, career opportunities in marketing are diverse, profitable, and expected to increase significantly during the coming decade. Fourth, understanding marketing makes consumers more informed. TERMS customer relationship management (CRM) exchange production orientation market orientation relationship marketing customer satisfaction marketing sales orientation customer value marketing concept societal marketing orientation empowerment on-demand marketing teamwork LESSON PLAN FOR LECTURE Brief Outline and Suggested PowerPoint Slides: Learning Outcomes and Topics PowerPoint Slides LO1 Define the term marketing 1-1 What Is Marketing? 1: An Overview of Marketing 2: Learning Outcomes 3: What Is Marketing? 4: Marketing is… 5: American Marketing Association Definition of Marketing 6: Marketing… 7: Exchange 8: Exchange LO2 Describe four marketing management philosophies 1-2 Marketing Management Philosophies 9: Marketing Management Philosophies 10: The Four Marketing Management Philosophies 11: Production Orientation 12: Sales Orientation 13: Market Orientation 14: Achieving a Marketing Orientation 15: Societal Marketing Orientation 16. Who’s In Charge? 17: Questions That Help Determine Marketing Philosophy LO3 Discuss the differences between sales and market orientations 1-3 Differences between Sales and Market Orientations 18: Differences between Sales and Market Orientations 19: Comparing the Sales and Market Orientations 20: The Organization’s Focus 21: Customer Value Requirements 22: Customer Satisfaction 23: Relationship Marketing 24: Building Relationships 25: Defining a Firm’s Business 26: Knowing the Firm’s Business 27: Those to Whom the Product is Directed 28: Primary Goals 29: Tools the Organization Uses to Achieve Its Goals 30: Sales vs. Market Orientations LO4 Describe several reasons for studying marketing 1-4 Why Study Marketing? 31: Why Study Marketing? 32: Why Study Marketing? 33: Chapter 1 Video Suggested Homework: • This instructor manual contains assignments for the Geoffrey B. Small video and for the Walt Disney case. • This chapter’s online study tools include flashcards, visual summaries, practice quizzes, and other resources that can be assigned or used as the basis for longer investigations into marketing. LESSON PLANS FOR VIDEO Company Clips Segment Summary: Geoffrey B. Small Geoffrey B. Small is a super luxury fashion designer with an eye towards social justice and connecting with his buyers. In this video, Small discusses how he began designing clothes and deciding who and how to connect with his customers. He also discusses the nature of consumer behavior and beliefs in terms of how they purchase fashion and its effect on clothing prices. These teaching notes combine activities that you can assign students to prepare before class, that you can do in class before watching the video, that you can do in class while watching the video, and that you can assign students to complete on their own after watching the video. During the viewing portion of the teaching notes, stop the video periodically where appropriate to ask students the questions or perform the activities listed on the grid. You may even want to give the students the questions before starting the video and have them think about the answer while viewing the segment. That way, students will be engaged in active rather than passive viewing. PRE-CLASS PREP FOR YOU: PRE-CLASS PREP FOR YOUR STUDENTS: • Preview the Company Clips video segment for Chapter 1. This exercise reviews concepts for LO1, LO2, and LO3. • Review your lesson plan. • Make sure you have all of the equipment needed to show the video to the class, including the DVD and a way to project the video. • You can also stream the video HERE • Have students familiarize themselves with the following terms and concepts: marketing, production orientation, marketing concept, market orientation, and societal marketing orientation. • Have students search for Geoffrey B. Small and read some articles about him. Depending on the amount of controversy/discussion you would like to spark, Small’s articles on his forum at Style Zeitgeist (here) are very informative about his stance on clothing and politics, but can be highly divisive. VIDEO REVIEW EXERCISE ACTIVITY Warm Up Begin by asking students “What is marketing?” In-class Preview • Segue into a discussion of the marketing concept and the four marketing management philosophies. • Write the four marketing philosophies on the board. • Take an informal class poll to see which model resonates most with students. • Ask students, while writing it on the board: “What does a firm need to succeed in competitive markets?” • While listening to students’ insights, write the following points on the board. ○ a clear understanding of what customers want ○ focus to produce what the customer wants, rather than on what management thinks should be produced Write the following viewing questions on the board, or simply prompt students to think about them as they watch the video. Viewing (solutions below) 1. Is Geoffrey B. Small best described as having a market orientation or a societal-marketing orientation? 2. How does Geoffrey B. Small implement the marketing concept? Follow-up • Have students reflect on their earlier research into Geoffrey B. Small and have them write a paragraph on how they think he uses social media to demonstrate his commitment to a societal marketing orientation. • Have students break into groups of up to four students and have each group brainstorm a marketing concept for one product, including their intended customer and marketing philosophy. • Outside of class, have students individually create a marketing concept for one product. Have them compose a brief paragraph, to be turned in later, discussing how they found out what the customer wanted. Solutions for Viewing Activities: 1. Is Geoffrey B. Small best described as having a market orientation or a societal-marketing orientation? Answer: Geoffrey B. Small would be best described as having a societal-marketing orientation because Small takes the basic market orientation focus—what do customers want and need?—and adds a societal, environmental focus—how can we benefit society? 2. How does Geoffrey B. Small implement the marketing concept? Answer: Geoffrey B. Small implements the marketing concept by creating clothing that satisfies his customers desire to have long-living clothing from a company that is driven to protect the environment and civil rights. Small discovered the small demographic of wealthy but socially motivated buyers and built clothing that they perceived as having a high value. As he says in the video, “you need to give the customer what they need and that they need badly enough that they are willing to give you money for it.” LESSON PLAN FOR GROUP WORK Class Activity – Marketing Is Not Just Advertising The objective of this exercise is to get students to think about what may be involved in marketing a product. They should construct plans that list the major variables in the marketing mix. This activity will emphasize that marketing is not just advertising. First, divide the class into small groups of four or five people. Then ask students to assume that they have just purchased a tennis racquet factory that has been shut down for the last few years. The automated equipment and computer system are in excellent shape, and the personnel needed to run the factory are readily available. But before jumping into production, what questions need to be asked and answered? What plans need to be made? Which of these plans concern marketing? The following suggested questions should be brought up after the students suggest theirs. All these questions are about marketing issues. 1. What are the needs of tennis players? Do they need more or different styles of tennis racquets? 2. How many different categories of tennis players are there? What kind of racquet does each category need? (Handles, sizes, shapes, weights, and prices are factors.) 3. Which category of player does this firm want to sell to? 4. Estimate how many people are in this chosen category. How many of them will be playing over the next five years? How often will they buy a new racquet? 5. When will these customers buy? (Are there seasons or trends?) 6. Where are these customers located? Where do they shop for tennis racquets? 7. What price are these customers willing to pay? Does this price leave a profit for the company? 8. How will the company communicate with potential customers? What type of promotion will reach them? 9. How will the racquets be packaged? What type of warranty will they carry? How will the firm provide customer service? 10. How many other companies are making racquets? What kinds and what prices of racquets do competitors offer? 11. What is the industry as a whole projected to do in the next five to ten years? All these questions must be answered before beginning production. As the students should now see, marketing strategy drives the business. REVIEW AND ASSIGNMENTS FOR CHAPTER 1 REVIEW QUESTION 1. Give an example of a company that might be successfully following a production orientation. Why might a firm in this industry be successful following a production orientation? Answer: A mature product, such as a small no-frills calculator, is sold basically on price. A production orientation of lowest cost would work for this. In addition, a production orientation may work in a developing country where consumers have fewer options. APPLICATION QUESTIONS 1. Your company president has decided to restructure the firm and become more market-oriented. She is going to announce the changes at an upcoming meeting. She has asked you to prepare a short speech outlining the general reasons for the new company orientation. Answer: Students’ answers should focus on 1) customer wants and needs, 2) distinguishing the company’s products and services from competitors’ offerings, and 3) the integration of all organizational activities to satisfy customer wants and needs. The latter point justifies the need for the restructuring. The speech can also contain some of the following topics: 1) the commitment of top management to the new market orientation, 2) the necessity of competitive intelligence, and 3) inter functional coordination needed to satisfy customer wants and needs. Ladies and Gentlemen, Today, I am excited to share some pivotal changes that will steer our company towards a more market-oriented approach. As we navigate an increasingly dynamic business environment, it's crucial for us to adapt and align more closely with our customers' needs and market trends. By focusing on market orientation, we aim to enhance customer satisfaction, drive innovation, and improve our competitive edge. This shift will enable us to better anticipate and respond to market demands, streamline our operations, and ultimately deliver greater value to our clients and stakeholders. These changes represent our commitment to growth and excellence, positioning us for long-term success in a rapidly evolving marketplace. Thank you for your continued support and dedication as we embark on this exciting new chapter. Thank you. 2. Donald E. Petersen, chairman of the board of Ford Motor Company, remarked, “If we aren't customer-driven, our cars won’t be either.” Explain how this statement reflects the marketing concept. Answer: Although students’ answers will vary, they should address some of these points. The marketing concept focuses on satisfying customer needs while meeting organizational objectives. Most prosperous firms, including Ford, have adopted this management philosophy because experience has taught them that customer satisfaction is crucial to their success. Donald E. Petersen’s statement, “If we aren’t customer-driven, our cars won’t be either,” underscores the essence of the marketing concept. This concept revolves around aligning a company’s products and strategies with the needs and preferences of its customers. By emphasizing that the company's focus should be on understanding and responding to customer demands, Petersen highlights that a customer-driven approach is essential for creating products that meet market expectations and drive success. In essence, the statement reflects the idea that customer satisfaction is central to achieving business excellence and competitiveness. 3. A friend of yours agrees with the adage, “People don’t know what they want—they only want what they know.” Write your friend a letter expressing the extent to which you think marketers shape consumer wants. Answer: Although students’ answers will vary, they should address some of the following points: Marketers cannot create demand or make people buy things that they don’t want or need. Marketing does, however, inform, persuade, and remind people about the availability, features, advantages, and benefits associated with new and existing products. One important task of marketing is to introduce people to products that they otherwise might not know about. Dear [Friend’s Name], I hope you’re doing well. I’ve been reflecting on the adage, “People don’t know what they want—they only want what they know,” and I think marketers play a significant role in shaping our wants. Marketers don’t just respond to existing desires; they actively create and influence them. Through innovative products, strategic advertising, and compelling storytelling, they introduce new concepts and solutions that consumers might not have previously imagined. By doing so, they broaden our preferences and expand our awareness of what’s possible. In essence, marketers help to shape and redefine our wants, making us aware of new options and trends. This influence goes beyond just presenting familiar choices; it actively creates new desires and possibilities. Best, [Your Name] 4. Your local supermarket uses the slogan is “It’s your store.” However, when you asked one of the stock people to help you find a bag of chips, he told you it was not his job and that you should look a little harder. On your way out, you noticed a sign with an address for complaints. Draft a letter explaining why the supermarket’s slogan will never be credible unless its employees carry it out. Answer: Students’ answers will vary widely, but they should explain that the marketing orientation, the concern for customers, must extend to every member of the organization. And this is very important when the customer has actual contact with a front-line employee. Dear [Supermarket Manager], I hope this message finds you well. I am writing to share my recent experience with your store and how it relates to your slogan, "It’s your store." During a recent visit, I asked a staff member for help finding a bag of chips. Unfortunately, I was told it was not his responsibility and was directed to search on my own. This experience was at odds with the supportive, customer-focused image conveyed by your slogan. For "It’s your store" to be credible, it must be reflected in how employees interact with customers. Ensuring that all staff are trained to assist and support shoppers effectively is crucial for living up to this promise. Thank you for considering this feedback. Best regards, [Your Name] 5. How does Philip Morris handle the sensitive issues associated with marketing tobacco? What kind of information does its Web site at http://www.philipmorris.com/ provide about smoking and its negative effects on health? How do you think Philip Morris is able to justify such marketing tactics? After checking around the site, do you think that approach makes the company more or less trustworthy? Answer: Philip Morris addresses sensitive issues related to tobacco marketing by emphasizing their commitment to providing information about smoking and health. Their website, http://www.philipmorris.com/, often includes content on the risks of smoking, such as health warnings and the company’s efforts in harm reduction through reduced-risk products. They may also highlight their regulatory compliance and support for anti-smoking initiatives. Philip Morris justifies its marketing tactics by promoting harm reduction and emphasizing that they are transparent about the risks associated with smoking. However, this approach can be seen as a way to mitigate negative perceptions while continuing to market tobacco products. The company’s approach may be perceived as less trustworthy by some consumers, as it can appear to be more about damage control than genuine concern for public health. 6. Write a letter to a friend or family member explaining why you think that a course in marketing will help you in your career in some field other than marketing. Answer: Students’ answers will vary, but they should include a discussion of market orientation to the success of the firm and the role of employees in the delivery of customer value. Dear [Friend/Family Member], I hope you’re doing well. I wanted to share why I think taking a marketing course will be beneficial for my career, even though I’m not pursuing a career directly in marketing. Understanding marketing principles can greatly enhance my skills in fields like business management, communications, or even non-profit work. Marketing teaches valuable insights into consumer behavior, strategic thinking, and effective communication—skills that are crucial for making informed decisions, promoting ideas, and driving success in any field. By grasping these concepts, I’ll be better equipped to understand market dynamics, create impactful strategies, and connect with audiences effectively. I believe this knowledge will significantly contribute to my professional growth and overall effectiveness. Best regards, [Your Name] APPLICATION EXERCISE Understanding the differences among the various marketing management philosophies is the starting point for understanding the fundamentals of marketing. From reading the chapter, you may be convinced that the market orientation is the most appealing philosophy and the one best suited to creating a competitive advantage. Not all companies, however, use the market orientation. And even companies that follow it may not execute well in all areas. Activities 1. Visit your local grocery store and go through the cereal, snack food, and dental hygiene aisles. Go up and down each aisle slowly, noticing how many different products are available and how they are organized on the shelves. 2. Count the varieties of product in each product category. For example, how many different kinds of cereal are on the shelves? How many different sizes? Do the same for snack food and toothpaste. 3. Now try to find a type of product in the grocery store that does not exhibit such variety. There may not be many. Why do you think there are enough kinds of cereals to fill an entire aisle (and then some), but only a few different types of, say, peanut butter? Can this difference be explained in terms of marketing management philosophy (peanut butter manufacturers do not follow the marketing concept) or by something else entirely? 4. Have you ever wanted to see a particular kind of cereal or snack food on the shelf? Think of product varietals (like grapefruit-flavored toothpaste or peanut butter–covered popcorn) that you have never seen on the shelf but would be interested in trying if someone would make it. Write a letter or send an e-mail to an appropriate company, suggesting that it add your concept to its current product line. Purpose: The purpose of this application is to introduce the students to the marketing concept. This exercise sends students to the supermarket to evaluate the range of products and product categories and to draw conclusions about the marketing orientations of particular brands/companies based on what they find. Setting it up: You may want to assign this to pairs of students. That way they can discuss their observations as they move through the store. There is no single solution for this application. This exercise was inspired by the following Great Idea in Teaching Marketing: Deanna R.D. Mader, Marshall University Fred H. Mader, Marshall University GIVE THEM WHAT WE MAKE, OR GIVE THEM WHAT THEY WANT? The following simple in-class exercise can be used either to illustrate the differences between the sales orientation and the marketing orientation, or as an example of the importance of concept testing in new product development. Task: Divide the class into four groups. Have the groups separate as much as classroom space will allow to minimize interference. Tell two of the groups they are the “producers” and their job is to make a product for the other groups. Tell the remaining two groups they are the “consumers.” Give the two “producer” groups five sheets of paper (each a different color) and whisper instructions that they are to build one paper airplane. They must use one sheet of paper, but color selection and design must be group decisions. Give each “consumer” group one sheet of white paper. Whisper to these groups that they are to write, in detail, what kind of paper airplane they want. Upon task completion, compare the results. Outcomes: Invariably, the “producers” do not produce what the “consumers” had in mind. Products and concepts may come close, but they are never identical. Class discussion is typically spontaneous. Students laugh at the results. “Producers” complain that they were not given instructions as to what the “consumers” wanted and “consumers” defend themselves by stating they were never asked. The professor can then direct discussion depending on whether orientation or new product development is the focus of the class. ETHICS EXERCISE In today’s business environment, ethics are extremely important. In recent years, there have been numerous scandals and trials that stem from a lack of ethical judgment. For this reason, we are including an ethical exercise in every chapter. A brief scenario will present you with a situation in which the right thing to do may or may not be crystal clear, and you will need to decide the ethical way out of the dilemma. To help you with these decisions, we will often refer you back to the AMA’s Statement of Ethics, found online at http://www.marketingpower.com. This will give you a resource for the exercise and will also help reinforce the ethical standards that marketers should uphold. Rani Pharmaceuticals is the maker of several popular drugs used to treat high blood pressure and arthritis. Over time, the company has developed a positive relationship with many of the patients who use its medications through a quarterly newsletter that offers all the latest information on new medical research findings and general health and fitness articles. The company has just been acquired by a group of investors who also own Soothing Waters Hot Tubs and Spas. The marketing director for Soothing Waters would like to use Rani’s mailing list for a direct-mail promotion. Questions 1. What should Rani Pharmaceuticals do? Answer: In order to avoid the semblance of impropriety, it might be better for the marketing director of Soothing Waters to ask Rani to include an information piece about the hot tubs in the quarterly newsletter. The article could include a bounce-back card on which the patient could indicate his or her interest in receiving more information about the hot tubs directly from Soothing Waters. Although it is not unethical per se for a company to leverage its customer information across the organization, a company should always be mindful of how its customers will perceive its doing so. 2. Do you think it is ethical to use customer information across multiple divisions of the same company? Explain. Answer: This is a situation to be handled with caution. Rani’s should not simply hand over customer information. Although it is not unethical per se for a company to leverage its customer information across the organization, it could jeopardize the positive relationship that Rani’s has developed with its customers. One solution may be to include a note in the newsletter about Soothing Waters and customers can request more information. 3. To which marketing management philosophy do you think the marketing director for Soothing Waters subscribes? Explain. Answer: The marketing director for Soothing Waters seems to be taking a sales orientation marketing approach. This is an aggressive approach and it may be in Soothing Waters’ best interest to redirect and pursue a market orientation. 4. Does the AMA Statement of Ethics address using customer information by multiple divisions of the same company in its Statement of Ethics? Go to http://www.marketingpower.com and review the code. Then write a brief paragraph on how the AMA Code of Ethics relates to Rani Pharmaceuticals’ dilemma Answer: The AMA Code of Ethics does not provide specific guidelines for the use of information across an organization. In fact, the lack of principles relative to information collection, archiving, dissemination, and general use indicates that the area of marketing information has evolved more rapidly than the Code. [You may wish to have your students draft a sample code of ethics relating to the area of marketing information. This can be done as a group activity or as an individual assignment.] VIDEO ASSIGNMENT: Geoffrey B. Small Geoffrey B. Small is a super luxury fashion designer with an eye towards social justice and connecting with his buyers. In this video, Small discusses how he began designing clothes and deciding who and how to connect with his customers. He also discusses the nature of consumer behavior and beliefs in terms of how they purchase fashion and its effect on clothing prices. 1. Geoffrey B. Small takes great pride in offering a high level of handwork in his clothing because: A. it offers higher customer value. B. it is part of his marketing orientation. C. it is how he markets his clothing. D. he can employ more people that way. Answer: A Small says that the customers value handwork because it provides them a direct link with the people who made the clothes, something that most designers and clothing producers do not take the time or cost to offer their customer. 2. Geoffrey B. Small believes that one function of advertising is to make the customer believe what companies say. Therefore, he doesn’t advertise, and lets the clothes speak for themselves. True False Answer: True Geoffrey B. Small says that corporate advertising has taught customers that the lower the price the better the bargain. However, he argues that actually costs the customer more, and that he has to re-educate his customers to understand that value comes in longevity, eco-friendly , and politically friendly products that work. 3. How would Geoffrey B. Small answer the question “what is this firm’s business?” A. Making clothes for environmentally aware customers. B. Offering a great product and great service by honestly communicating with the customer. C. Showing people how clothes should be made--locally. D. Giving the customer something they need badly enough that they will pay for it. Answer: B Small says that he doesn’t like the word marketing, and that he focuses on offering a great product and great service by honestly communicating with the customer, which is the business he is in. Part of that business involves making clothes which are purchased by environmentally aware customers, but the business is larger than that. 4. To which marketing management philosophy does Geoffrey B. Small subscribe? A. Production Orientation B. Marketing Orientation C. Sales Orientation D. Societal Orientation Answer: D Small’s focus on local, sustainable culture, as well as his civil rights focus suggests that he has a societal marketing orientation, which is the idea that an organization exists to not only satisfy customer wants and to meet organizational goals, but also to preserve or enhance individuals’ and society’s long-term best interests. Production orientation occurs when the internal capabilities of the firm drive business decisions, rather than the wants and needs of the market. 5. When Small describes how his customers choose to purchase his clothes (by evaluating that his brand is environmentally conscientious, whereas most other brands are not), which condition of exchange is being met? A. Each party has something of value to the other party. B. Each party is capable of communication and delivery. C. Each party is free to accept or reject the exchange offer. D. Each party believes it is appropriate or desirable to deal with the other party. Answer: D By evaluating Small’s brand based on aspects such as environmental concerns, customers are choosing to buy from Small because it is desirable to deal with him, since he has similar values as the customer. Both parties do have something of value, but this particular aspect of the evaluation process does not apply to that condition of exchange. 6. When Small discusses how customers crave personal interaction, knowledge of the person who created the garment, and want unique, humanness in their clothing, what is he describing? A. Avoiding unrealistic pricing B. Having a strong sales team C. Building relationships D. Building trust Answer: C Small is discussing building relationships with his customers by increasing the handwork on his clothing. 7. Which aspect of customer value is Small discussing when he refers to cost cutting, dividing the cost of a garment over the years it is worn, and the money invested in the company? A. Avoiding unrealistic pricing B. Empowering customers C. Using the marketing concept D. Increasing customer satisfaction Answer: A Despite having high initial prices, Small’s work is designed to be worn for more than twenty years, making it an, ultimately, less expensive garment than one purchased at Target that has to be replaced every six months. 8. Small’s focus on the longevity of his garments suggests that he is: A. empowering his customers. B. decreasing customer satisfaction. C. offering products that perform. D. harming his business model. Answer: C If a pair of pants or a coat lasts 25 years, that is a product that performs. 9. By providing the customer the top-quality product that lasts for 25 years, Geoffrey B. Small is A. placing a premium on making a sale. B. providing customer satisfaction. C. using the marketing concept. D. developing a deeper understanding of his customers. Answer: B This is the type of quality and longevity desired by Small’s customers, so he is providing them customer satisfaction. 10. Small’s refusal to give in to the pressure to make more, to change methods, to lower prices, in order to keep using local products and maintain a high level of quality indicates A. a shift to a production orientation. B. a shift in the firm’s primary goal. C. a refusal to use the tools at his disposal. D. his commitment to the societal marketing orientation. Answer: D Small believes that his methods for creating clothing are in people’s and society’s best long-term interests, and by refusing to change his methods, he is demonstrating his commitment to the societal marketing orientation. Chapter 1 Case: Walt Disney The Walt Disney Company recently announced that it will be implementing firm advertising rules on its television channels, radio stations, and its Web sites. Disney will ban all ads for junk food on its media networks, hoping to get kids to eat better by removing the temptation of junk food advertising. The new rules will make Disney a pioneer in recognizing the force of advertising on consumer behavior. Disney will evaluate a company's broad offerings, beyond the specific product it hopes to advertise on one of Disney's channels. Products such as Kraft’s Capri Sun and Oscar Meyer Lunchables do not meet Disney's nutrition standards. Capri Sun has too much sugar, and Lunchables has high sodium content. Cereal with more than 10 grams of sugar or a meal with more than 600 calories will not meet nutrition standards and cannot be advertised. Companies like McDonald's, which is involved in the advertising initiative as part of its support for First Lady Michelle Obama's campaign to curb childhood obesity, may not make Disney's cut. The rules take effect in 2015, and until then, Disney hopes that with the desire to keep kids interested in their products through advertising, companies will reformulate products to meet nutrition standards. “Disney's New Diet for Kids: No More Junk Food Ads,” Yahoo, June 5, 2012, http://finance.yahoo.com/news/disneys-diet-kids-no-more-junk-food-ads-222602295.html (Accessed March 25, 2013). TRUE/FALSE 1. Disney’s decision to implement new rules banning junk food advertisements suggests a societal marketing orientation. Answer: True 2. The junk food companies that want to advertise on Disney’s television channels likely have a sales orientation. Answer: True 3. The type of advertisements a company chooses to broadcast on its television stations is inconsequential because marketing does not play a very large role in society. Answer: False Disney’s decision is consequential because marketing plays a large role in society. 4. The goal of junk food advertisers to encourage marketing, whereby people giving up something (money) in order to receive something they would rather have (junk food). Answer: False This defines an exchange. 5. Because it is sold at a low price, junk food provides high customer value. Answer: False Customer value is not simply a matter of low cost. A low-quality good selling for a low price does not necessarily provide value. MULTIPLE CHOICE 1. Which of the following was likely not one of Disney’s considerations when determining its marketing concept? A. Do our customers want to see junk food advertisements on our channels and Web sites? B. How do junk food advertisements affect our long-term goals? C. Will new stricter advertising rules distinguish us from our customers? D. How do our television shows and Web sites affect our bottom line? E. What do customers picture when they think about our television channels? Answer: D What a business thinks it produces is not of primary importance to its success. Instead, what customers think they are buying—the perceived value—defines a business. 2. If Disney allowed customers to choose which types of advertising they saw on its Web sites, it would be engaging in: A. realistic pricing. B. co-creation. C. offering products that perform. D. giving the buyers facts. E. providing after-sales support. Answer: B Co-creation allows customers to help create their own experiences. 3. Disney customers’ evaluations of the company’s Web sites and television channels in terms of whether those products meet their needs and expectations is called: A. customer gratification. B. customer fulfillment. C. customer approval. D. customer agreement. E. customer satisfaction. Answer: E The customers’ evaluation of a good or service in terms of whether that good or service has met their needs and expectations is called customer satisfaction. 4. Which of the following describes a Disney customer service representative who has been given the authority to respond to a complaint about junk food advertisement by pulling the advertisement in question and flagging it for review by Disney’s marketing team? A. The employee is empowered. B. The employee is improving Disney’s customer relationship management. C. The employee is working in a teamwork-oriented environment. D. The employee is operating under a sales orientation. E. The employee is opposed to junk food advertisements. Answer: A Empowerment is delegation of authority to solve customers’ problems quickly—usually by the first person the customer notifies regarding a problem. 5. Who at Disney needs to both be aware of and understand the company’s decision to impose strict junk food advertising rules? A. The CEO. B. The CEO and his chief advisors. C. The CEO, his chief advisors, and the marketing team. D. The CEO, his chief advisors, the marketing team, and the financial team. E. Every businessperson at the company. Answer: E All businesspeople, regardless of specialization or area of responsibility, need to be familiar with the terminology and fundamentals of accounting, finance, management, and marketing. GREAT IDEAS FOR TEACHING CHAPTER 1 Rich Brown, Freed-Hardeman University HOW SHOULD SERVICE MAKE YOU FEEL AND WHY IS THAT IMPORTANT? A problem in teaching people to be good service providers, or effective managers of them, is many people don’t know how intrinsically rewarding it is to truly be of service to another person. Many students have experience in service-related jobs but not so many have worked in great service environments. Most have experienced, accepted, and expect mediocre service in a great variety of service environments. In the classroom, it is fairly easy to point out the mediocrity of past experiences and communicate the nuts and bolts of delivering good service. What is difficult is finding a way to impact students so they develop more than the ability to recognize and explain good service, but additionally to develop the desire to serve and to get others to as well. The purpose of this exercise is to develop that desire to serve by getting students to think about a time when they were of real service to someone then helping them realize the intrinsic rewards that come from serving well. This assignment has two parts. First, you must get the students to think of situations in which they really served another person either at work or in everyday life. Second, discuss the situations in class to see what individuals felt and experienced before, during, and after providing the service. A list of discussion questions is at the end of this entry. You could ask the students to write about their experiences, but I have found the discussion format to be extremely beneficial. Most students will have had positive experiences and most will still feel good about what they have done; this tends to snowball, and the reality that providing good service is intrinsically rewarding becomes very clear. It is often hard for individual students to get started with ideas for ways typical service jobs can be made more rewarding. In a group setting, even if I have to get things started, they are soon helping each other come up with useful strategies to help service providers see how they really can be of help to their customers in their specific situations. Here is a list of questions to use in starting discussion. James S. Cleveland, Sage College of Albany DISCUSSION BOARD TOPICS TO ENCOURAGE PARTICIPATION Discussion board questions provided to students to encourage them to engage in thinking and writing about the content of the Principles of Marketing course usually take the form of a provocative statement to which students are asked to respond. An example of this would be: All PR is good PR. Discussion topics such as this one are abstract and often require that the instructor provide an initial reply to show students what is expected of them in their own replies. For students with limited work experience, this approach may be quite appropriate. For adult students with extensive experience as employees and consumers, however, the abstract nature of such topics can be frustrating. I have developed, therefore, a series of discussion board questions to use with experienced, adult students. These questions are designed to encourage them to use their experiences as employees and consumers as doorways to better understand the course material, and to make their own responses more interesting to themselves and to the other students in the class who will read and comment on them. Each question has three parts: 1. First, there is a sentence or two from the students’ textbook introducing the topic. By using the text author’s own words, students are enabled to locate relevant material in the text more easily, the text content is reinforced, and confusion resulting from use of variant terms or expressions is minimized. 2. Second, there is a reference to text pages the student should review before proceeding. Since the goal of the exercise is for students to apply the course content to their own experiences, reviewing the content first is important. 3. Third, there is a request for the student to think about or remember some specific situation in their experience to which they can apply the text material, and a question or questions for them to address in their reply. The following example is for Chapter 1 of MKTG10. The three parts have been separated here so they are more readily visible. 1. Four competing philosophies strongly influence an organization’s marketing activities. These philosophies are commonly referred to as production, sales, market, and societal marketing orientations. 2. Review these four philosophies in section 1-2 of your text. 3. Then describe an experience you’ve had recently as a customer or employee that illustrates one of these philosophies. Stephen Baglione, Saint Leo University RELATIONSHIP MARKETING MADE EASY Before discussing the impact of packaging, I bring a bag of dirt to class, and tell the students that it’s cake mix. It is a clear plastic bag that has a piece of paper taped to it that indicates the brand name and basic information like nutritional value, address and telephone number of the manufacturer, a suggested retail price, etc. I then place the bag on a student’s desk and ask him or her whether he or she would buy this mix. Few students will. I then tell them that it will cost 25% less than a boxed mix because it is in a plastic bag instead of a fancy box. Still few, if any, will buy it. We then discuss their perceptions of the bag: it is poor quality, it does not show what the product can do (i.e., the promise to bloom into an enticing cake), it can be tampered with, etc. Assuring them that tampering is not possible, I ask again how many would buy it. What if it was the brand you currently buy at the same price? Students unanimously refrain from buying what they perceive as an inferior product. This serves as a springboard into discussing what function a package serves. I also show them a real box of cake mix to simulate their thinking by contrasting the two. Ira S. Kalb, University of Southern California EFFECTIVE STRATEGIES USING A UNIVERSAL MARKETING STRUCTURE The Universal Marketing Structure (UMS)™ is designed to teach students and clients to create consistent and competent marketing. The System has worked since student teams have been consistently creating excellent marketing campaigns for organizations in the Los Angeles area. Most recently, the students created an advertising campaign for the City of Los Angeles to attract businesses and tourists to Los Angeles after a period of civil unrest. They received a Certificate of Commendation for their efforts on this project. The Universal Marketing Structure™ is displayed in this table and on the following page. Because five times as many people read the headline as the rest of the piece, the greatest effort and thought should go into creating the headline. The structure of a good ad (or any marketing piece) follows the UMS™. Headline — Contains the main message(s) of the piece or hooks the reader into reading the main message(s). Studies show that five times as many people read or pay attention to the headline as the rest of the piece. Body text should not be thought of as filler. It should be limited to what is essential to explain your main messages and to tell a good story. A good rule of thumb is when in doubt, cut it out. Body Text — Supports, clarifies, and explains the headline for those readers who want more information. Concentrates on benefits over features since 1) benefits are what really matter to the reader, 2) the ad does not have enough space or time to do justice to all product features, and 3) the best most ads can hope for is to begin the courtship rather than prompt the marriage (if it is love at first sight, all the better, but this does not typically happen with high-tech or more expensive products). The last point left with the reader should include the main message. Close — Reinforces the headline (the main point(s) of the ad), ends the ad, solicits action, and provides system for measuring response. Similar to your signature on a letter or petition. Signature — Proudly takes responsibility for the ad by signing the company's name, logo and/or attaching its corporate slogan. A picture is worth 1,000 words. Make sure the graphic enhances the words, rather than detracts from your main message(s). Photo/Graphic — Reinforces the headline and main points of the piece. Makes the product more tangible and shows it in the best light possible, and serves to break up the text so it is easier to read. The best messages can be lost forever and never be read if the format isn’t good. Even if they are read, bad formats dilute or work against them. Format — Facilitates reading the ad. Allows busy readers to quickly pick out the main point(s) without reading the entire ad. Makes the ad attractive and inviting to read. Intangibles — Creativity and uniqueness. They give the ad something special that make the ad more attractive, entertaining, and enjoyable to read. Marketing Principles The seven main principles are the building blocks of marketing: the Five Ps, Corporate Image, and the Marketing Information System. The Five Ps • Positioning — Finding a unique image for the product (or a window) in the minds of prospects (market targets). • Product — The goods and services developed to meet target market needs. • Pricing — The amount of money for which the product is sold to most target market needs to fit the product's position and achieve company goals. • Place (Distribution) — Providing the product to the marketplace in a way which makes it convenient for prospects to find, buy, and use the product. • Promotion — Communicating the benefits of the product to market targets to trigger a buying action. Keeping Corporate Image and Positioning of the product separate proved important to Procter & Gamble when rumor circulated that their corporate logo is a satanic symbol. Corporate Image Unlike positioning, which relates to the image of the product, Corporate Image relates to the image of the company. While positioning and corporate image are closely related and affect each other, they should be considered separately. If they are not, the following problems could result: (1) A tarnished company image could adversely affect sales of the product and vice versa. (2) A strong identification with one product will limit the company’s ability to sell other products. Not keeping them separate proved to be a problem for Suzuki with negative reports about the Samurai, and for Dow Corning with reports of breast implant leakage. Marketing Information System (includes Market Research) Market Intelligence — Complaints, compliments, competition, market needs and wants. Measure Performance — Performance of marketing strategies, programs, ads, marketing pieces, etc. Corrective Action — Take action to improve performance. Nancy Ryan McClure, University of Central Oklahoma James L. Thomas, Jacksonville State University MARKETING IN ACTION Marketing majors and non-majors alike persist in thinking that marketing is selling. To overcome this misperception, a marketing course was developed that took students out of the classroom and into the real world. A study tour was offered between semesters that took the students to a major metropolitan area (Dallas/Ft. Worth, Texas) for two purposes: 1) to see the variety of activities involved in the marketing discipline, and 2) to expose students to multiple career opportunities. The tour was designed to provide students with maximum exposure to some of the best in the field of marketing. Each of the organizations involved developed extensive presentations within their particular area of marketing specialization. The organizations that participated included The Texas Rangers (sports marketing), Baylor Medical Center (health care marketing), Chili’s Grill and Bar (hospitality marketing), Dallas Market Center and World Trade Center (apparel and home furnishings wholesaling), DDB Needham (advertising agency), Frito-Lay (snack food manufacturing), Neiman-Marcus (upscale retailing), Randall’s/Tom Thumb (grocery distribution center), and the West-End Association (non-profit organization). This course was offered for two hours of either undergraduate or graduate credit (with Fundamentals of Marketing as a prerequisite). The students stayed in the Dallas area Monday through Friday in January between semesters. Upon returning to the university, students were required to write thank-you notes to each of the organizations and to take a final exam. One of the questions, naturally, was “Marketing is selling. Discuss.” It was evident from the students’ responses that they had clearly learned that marketing is much more than selling. While there is nothing novel about field trips, the combination of organizations and the class format permitted a more in-depth learning experience for the students than they could ever have had just reading a book. Unfortunately, the way most courses are designed, field trips are untenable due to classes scheduled before and after the course in which you would like to take advantage of a field trip. The students appreciated having an elective opportunity presented between the two terms. This tour resulted in two internships offered. It should be noted that the first time such a course is offered, a great deal of time and planning must be devoted to the development of the course. The authors found that the process of simply contacting the appropriate individuals, much less completing the details with these individuals, requires an extensive number of telephone calls, faxes, emails, etc. In order to ensure the efficient coordination of the class, it is highly recommended that instructors allow roughly six months for development prior to the beginning of the course. For future iterations of the course, less time is likely to be required; however, the authors advise against continually asking the same organizations to participate due to the commitment of time and human resources required of the organizations involved. Rich Brown, Freed-Hardeman University AN ASSIGNMENT THAT TIES THE PRINCIPLES OF MARKETING COURSE TOGETHER The purpose of this assignment is to cause students to connect the different parts of the Principles of Marketing course. The assignment is a three- to five-page paper. It begins with identification of a target market and ends with the student assuming the role of marketing consultant making suggestions for ways to improve the effectiveness of the marketing mix being used to attract it. Feedback from students is overwhelmingly positive and indicates that completing the assignment really helps them to “put it all together.” My written instructions to the students are as follows: 1. Choose an organization that does marketing. Make it easy on yourself and choose an organization that you can observe the marketing efforts of and are familiar with. If you choose a very large organization that markets many different products, focus your paper on one product or product line. For example, if you choose Chevrolet, do not address trucks (or even a particular model of truck), or Corvettes. You may choose any organization you wish, as long as it is in good taste and markets something. If you have trouble choosing an organization, go to the mall, surf the net, or look in the yellow pages, you are surrounded by marketing organizations. 2. After choosing an organization, your next step is to identify and describe the target market for the products(s) about which you are writing. Do not say something like “young, mid-to-upper class women who wash their hair,” but consider the target market identified and described. Try to pinpoint the thing(s) that makes the target market respond to the firm’s marketing mix in ways that are different from people who are not members of it. For example, “young mid-to-upper class women who wash their hair, perceive that they might have a dandruff problem, are motivated by prestige and glamour, and like to pamper themselves and are willing to pay a little extra to do it.” A good statement lets you say who is in the target market and who is not. It is very difficult to do a good job on this paper if you do a poor job of defining the target market. I will look at your definition of the target market if you like. 3. After discussing the target market, you should then discuss the marketing-mix (the four Ps) the firm is using to attract the chosen target market. You should describe each of the four Ps, then discuss and analyze how each one is being used to attract members of the target market. You should also address the synergy of the four Ps together, especially if you see that one or more does not fit the others. 4. After discussing the firm’s marketing mix, you should assume the role of marketing consultant and make specific suggestions for improving the firm’s effectiveness. These suggestions can be in the form of changes to any part of the current marketing mix to fix problems you identified. If you did not identify problems, you should make suggestions for additional marketing activities. It is important that you say why you make the suggestion and how it will result in better appeal to the target market. These suggestions should be specific and not generic. Generic suggestions are “advertise more” or “improve the sales force.” A specific suggestion is “improve effectiveness of the sales force by starting a training program that emphasizes closing and presentation skills.” Remember that your suggestions should be addressed at specific problems or opportunities so that you can justify them. Sheri Carder, Lake City Community College LEMONADE FROM LEMONS MARKETING – CONSUMERISM EXERCISE As a consumer, you expect quality products and good service. But sometimes things go wrong. If you’re unhappy with your purchase or the service you received, do you know how to obtain satisfaction? Consider yourself an active consumer. Choose a company or service with which you’ve recently been disappointed. Write them a letter, using the following guidelines, to explain the problem and what you would like to see happen. Make two copies—one to mail to the company and one to put in our class file as we compare responsiveness rates among the various companies. When you receive a reply, share it with the class. We will make this a research project, measuring how responsive companies are to their customers. Are companies really concerned with total quality? We will note the amount of time it took for companies to respond and the companies’ efforts to satisfy their customers. Writing the initial letter is the assignment; bringing the reply in is for extra points. You may certainly write more than one letter if you wish. You might try writing a letter of praise for one product as well as a letter of disappointment for another. You’ll get better results if they believe you’re an adult consumer, so type the letter rather than writing in pencil on notebook paper. 1. Describe the problem and what (if anything) you’ve already done to resolve it. List pertinent information including date and place of purchase, serial or model number, etc. 2. Send sales receipts, repair orders, warranties, etc. (copies, not originals) to make your case. 3. Don’t be angry or sarcastic. In fact, begin your letter with a compliment to the company, e.g., “Colgate Palmolive products are central to any household. I have used you’re _____ for the five years and have been completely satisfied. That is why I was disappointed when they _____ didn’t live up to the Colgate Palmolive standards I expected.” 4. State what would be a fair resolution from your point of view. Do you want the product repaired or exchanged? Do you want your money back? Say exactly what you want done. 5. Include an inside return address and phone number in your letter so that they may contact you. (Many students forget and leave this bit of information off.) 6. Have someone proofread your letter before your mail it. You’re less likely to be taken seriously if your letter is littered with grammar and spelling errors. 7. Be sure to sign your letter. 8. Have the correct, full mailing address for the company. “Gillette Company, New York City, NY” won’t do it. 9. If you don’t receive resolution, decide if you want to pursue it. Keep a record of everyone to whom you talk or write, and when. You can appeal to the higher-ups. You can approach the Better Business Bureau, a trade association related to the business, arbitration agencies (in some states), small claims court, or the attorney general’s office of consumer affairs. Solution Manual for MKTG: Principles of Marketing Charles W. Lamb, Joe F. Hair, Carl McDaniel 9781305631823, 9781285860145, 9781337116800