CH-4 The Marketing Environment – MKTG: Principles of Marketing : Book Guide

CHAPTER 4 The Marketing Environment 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 3. • Lecture (for large sections) on page 3 • Company Clips (video) on page 4 Review and Assignments begin on page 5 • 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 16 LEARNING OUTCOMES 4-1 Discuss the external environment of marketing and explain how it affects a firm The external marketing environment consists of social, demographic, economic, technological, political and legal, and competitive variables. Marketers generally cannot control the elements of the external environment. Instead, they must understand how the external environment is changing and the impact of that change on the target market. Then marketing managers can create a marketing mix to effectively meet the needs of target customers. 4-2 Describe the social factors that affect marketing Within the external environment, social factors are perhaps the most difficult for marketers to anticipate. Several major social trends are currently shaping marketing strategies. First, people of all ages have a broader range of interests, defying traditional consumer profiles. Second, changing gender roles are bringing more women into the workforce and increasing the number of men who shop. Third, a greater number of dual-career families has created demand for time-saving goods and services. 4-3 Explain the importance to marketing managers of current demographic trends Today, several basic demographic patterns are influencing marketing mixes. Because the U.S. population is growing at a slower rate, marketers can no longer rely on profits from generally expanding markets. Marketers are also faced with increasingly experienced consumers among the younger generations such as tweens and teens. And because the population is also growing older, marketers are offering more products that appeal to middle-aged and older consumers. 4-4 Explain the importance to marketing managers of growing ethnic markets The minority population today is about 118 million. By 2050, around one in three U.S. residents will be Hispanic. The United States will flip completely to a majority-minority makeup in 2041. Many companies are now creating departments and product lines to effectively target multicultural market segments. Companies have quickly found that ethnic markets are not homogeneous. 4-5 Identify consumer and marketer reactions to the state of the economy In recent years, U.S. incomes have risen at a slow pace. At the same time, the financial power of women has increased, and they are making the purchasing decisions for many products in traditionally male-dominated areas. During a time of inflation, marketers generally attempt to maintain level pricing to avoid losing customer brand loyalty. During times of recession, many marketers maintain or reduce prices to counter the effects of decreased demand; they also concentrate on increasing production efficiency and improving customer service. 4-6 Identify the impact of technology on a firm Monitoring new technology is essential to keeping up with competitors in today’s marketing environment. The United States excels in basic research and, in recent years, has dramatically improved its track record in applied research. Innovation is increasingly becoming a global process. Without innovation, U.S. companies can’t compete in global markets. 4-7 Discuss the political and legal environment of marketing All marketing activities are subject to state and federal laws and the rulings of regulatory agencies. Marketers are responsible for remaining aware of and abiding by such regulations. Some key federal laws that affect marketing are the Sherman Act, Clayton Act, Federal Trade Commission Act, Robinson-Patman Act, Wheeler-Lea Amendments to the FTC Act, Lanham Act, Celler-Kefauver Antimerger Act, and Hart-Scott-Rodino Act. Many laws, including privacy laws, have been passed to protect the consumer as well. The Consumer Product Safety Commission, the Federal Trade Commission, and the Food and Drug Administration are the three federal agencies most involved in regulating marketing activities. 4-8 Explain the basics of foreign and domestic competition The competitive environment encompasses the number of competitors a firm must face, the relative size of the competitors, and the degree of interdependence within the industry. Declining population growth, rising costs, and shortages of resources have heightened domestic competition. TERMS applied research demography Millennials baby boomers environmental management inflation basic research Federal Trade Commission (FTC) purchasing power component lifestyles Food and Drug Administration (FDA) recession Consumer Product Safety Commission (CPSC) Generation X target market LESSON PLAN FOR LECTURE Brief Outline and Suggested PowerPoint Slides: Learning Outcomes and Topics PowerPoint Slides LO1 Discuss the external environment of marketing and explain how it affects a firm 4-1 The External Environment 1: The Marketing Environment 2: Learning Outcomes 3: Learning Outcomes 4: The External Marketing Environment 5: Target Market 6: Understanding the External Environment LO2 Describe the social factors that affect marketing. 4-2 Social Factors 7: Social Factors 8: Social Factors 9: American Values 10: The Influence of Values on Buying Habits 11: Component Lifestyles 12: The Role of Social Media in Communication 13: How Firms Use Social Media LO3 Explain the importance to marketing managers of current demographic trends 4-3 Demographic Factors 14: Demographic Factors 15: Demographic Factors 16: Tweens 17: Teens 18: Millennials 19: Generation X 20: Baby Boomers LO4 Explain the importance to marketing managers of growing ethnic markets 4-4 Growing Ethnic Markets 21: Growing Ethnic Markets 22: Growing Ethnic Markets 23: Marketing to Hispanic Americans 24: Marketing to African Americans 25: Marketing to Asian Americans LO5 Identify consumer and marketer reactions to the state of the economy 4-5 Economic Factors 26: Economic Factors 27: Economic Factors 28: Consumers’ Incomes 29: Purchasing Power is… 30: Inflation is… 31: A recession is… LO6 Identify the impact of technology on a firm 4-6 Technological Factors 32: Technological Factors 33: Research 34: Stimulating Innovation LO7 Discuss the political and legal environment of marketing 4-7 Political and Legal Factors 35: Political and Legal Factors 36: Political and Legal Factors 37: Federal Legislation 38: State Laws 39: Regulatory Agencies 40: Bureaus of the FTC 41: Consumer Privacy LO8 Explain the basics of foreign and domestic competition 4-8 Competitive Factors 42: Competitive Factors 43: Competitive Factors 44: Competitive Factors 45: Chapter 4 Video Suggested Homework: • The end of this chapter contains assignments on the GaGa’s Inc. video and One Direction 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: GaGa’s Inc. GaGa’s Inc. produces a frozen dessert called Sherbetter in a variety of flavors. GaGa’s is very small product line and Jim King, the founder and CEO, discusses the challenges his company faces in their product category. He also reveals other environmental challenges to his product. 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: • Review the Company Clips video segment from Chapters 2 and 3. 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. • Have students familiarize themselves with the following terms and concepts: competition, demography, and target market. VIDEO REVIEW EXERCISE ACTIVITY Warm Up Begin by asking students “How do businesses go about researching and determining a target market?” In-class Preview • Segue into a discussion of the external marketing environment and social factors as variables that marketing managers must integrate into their marketing plans. • Review how elements in the external environment create opportunities as well as threats to a firm’s marketing mix. • Ask students to volunteer the seven classifications, or factors, that marketing managers may attempt to manage or shape within the external environment. • Review the cohorts in present-day demography. Ask why demographic characteristics are important to know. Review the Company Clips questions with students. They should be prepared to answer them after viewing the video. Viewing (solutions below) 1. Explain how GaGa’s Inc. has used environmental management to help shape the external environment in which they are selling Sherbetter. 2. Values influence buying habits; in what way(s) does GaGa’s recognize its customers’ values? Follow-up . • Have students use the Internet or Yellow Pages to identify companies that pitch “sustainability” or other green marketing practices,. Students should then e-mail or call one of the companies and ask the manager or sales personnel to describe their clientele and the types of products they sell to them. Ask students to be prepared to share their research at the next class meeting. Solutions for Viewing Activities: 1. Explain how GaGa’s Inc. has used environmental management to help shape the external environment in which they are selling Sherbetter. Answer: GaGa’s manages its environment by targeting stores that have a lower slotting fee and have shoppers that fit the GaGa demographic. In addition, GaGa’s no longer sells Sherbetter through distributors that require the sherbetter to be shipped, which is too expensive for consumers. Basically, students should highlight the ways that GaGa’s evaluates weaknesses and leverages its strengths to make up for the numerous challenges the frozen dessert faces. 2. Values influence buying habits; in what way(s) does GaGa’s recognize its customers’ values? Answer: Student’s answers will vary, but it is important for them to understand that GaGa’s knows its customers value premium ingredients and (based on where they shop) value local products. GaGa’s recognizes its customers’ values by prioritizing sustainability, offering ethically sourced products, and promoting inclusivity through diverse representation in marketing. They also engage with customers through community initiatives and feedback channels, ensuring that their brand aligns with the values of their audience. REVIEW AND ASSIGNMENTS FOR CHAPTER 4 REVIEW QUESTIONS 1. What is the purpose of environmental scanning? Give an example Answer: Although students’ answers will vary, they should address some of the following points: Environmental scanning—the collection and interpretation of information about forces, events, and relationships that may affect the future of an organization—allows a company to constantly look for threats and opportunities before they are fully apparent. For example, an architectural firm in Denver may note that there has been an increase in local births in the last year. It may want to move into designing daycare centers and schools. The purpose of environmental scanning is to identify and analyze external factors that could impact an organization’s performance, such as market trends, competition, and regulatory changes. For example, a tech company might conduct environmental scanning to monitor advancements in AI technology, helping them adapt their product strategy to stay competitive. 2. Give an example of component lifestyles based on someone you know. Answer: A friend of mine has a component lifestyle where they prioritize sustainability, health, and technology. They drive an electric car, practice yoga, and use smart home devices to reduce energy consumption. This blend reflects their values in various aspects of life, from transportation to wellness and home management. 3. Explain how consumers’ buying habits may change during a recessionary period. Answer: An economic recession is a phase when income, production, and employment fall, and together reduce the demand for goods and services. During a typical recession, consumer confidence decreases; if consumers haven’t actually lost their jobs, they may feel insecure about keeping their jobs in the future, and spending will decrease as they weather the economic storm. Consumers will continue to spend on lower-priced products (stores such as Walmart typically do well during recessions) or on products that have good quality for the price (good value). Studies have shown, however, that consumers continue to purchase affordable luxuries—even if they can’t afford that Mercedes, they will treat themselves to Godiva chocolate. 4. Give three examples of how technology has benefited marketers. Also, give several examples of how firms have been hurt because they did not keep up with technological change. Answer: Students’ answers will vary widely. For example, they may mention that the new technology in fake fats in foods has created a dramatic new market in foods. Another example would be the technology of shelf-stable packaging. Examples of firms hurt by technology would be the American steel industry (which is now catching up and investing in the new technologies) or companies that elected to continue to manufacture typewriters and not move into a new product market. Benefits of Technology for Marketers: 1. Data Analytics: Marketers can analyze consumer data to better understand preferences and behaviors, leading to more targeted campaigns. 2. Automation: Tools for email marketing and social media allow for automated, personalized communication, increasing efficiency and engagement. 3. Digital Advertising: Enhanced targeting options through platforms like Google and Facebook enable more effective ad placements and measurable ROI. Firms Hurt by Ignoring Technological Change: 1. Blockbuster: Failed to adapt to streaming services like Netflix, leading to its decline. 2. Kodak: Ignored digital photography advancements, which led to a significant loss in market share. 3. Nokia: Did not keep up with smartphone innovations, resulting in a drastic fall from market leadership. APPLICATION QUESTIONS 1. Form six teams. Each team is responsible for one of the uncontrollable elements in the marketing environment. Your boss, the company president, has asked each team to provide a one-year and a five-year forecast of what major trends the firm will face. The firm is in the telecommunications equipment industry. It has no plans to become a telecommunications service provider like, for example, Verizon and AT&T. Each team should use the library, the Internet, and other data sources to make its forecasts. Each team should examine a minimum of one data source. The team should then pool its data and prepare its recommendation. A spokesperson for each team should present the findings to class. Answer: Team Assignments and Forecasts 1. Economic Factors Team • One-Year Forecast: Moderate growth in telecom equipment spending due to economic recovery post-pandemic. • Five-Year Forecast: Increasing investment in 5G infrastructure, leading to robust demand for equipment. 2. Technological Factors Team • One-Year Forecast: Continued innovation in IoT and AI integration, pushing companies to upgrade equipment. • Five-Year Forecast: Rapid advancements in network technologies (e.g., 6G development) reshaping the industry landscape. 3. Sociocultural Factors Team • One-Year Forecast: Rising consumer demand for eco-friendly and sustainable telecom solutions. • Five-Year Forecast: Increased focus on digital inclusion and connectivity, leading to new market opportunities. 4. Political and Legal Factors Team • One-Year Forecast: Ongoing regulatory scrutiny regarding data privacy and cybersecurity, affecting product development. • Five-Year Forecast: Potential global trade tensions impacting supply chains and international markets. 5. Competitive Factors Team • One-Year Forecast: Increased competition from emerging players in the telecom equipment sector. • Five-Year Forecast: Consolidation trends leading to fewer, larger competitors dominating the market. 6. Environmental Factors Team • One-Year Forecast: Growing pressure for companies to adopt greener technologies and practices. • Five-Year Forecast: Stricter environmental regulations driving innovation in energy-efficient telecom equipment. Data Sources Each team should utilize sources such as industry reports, market research databases, and reputable news articles to support their forecasts. Presentation A spokesperson from each team will present their findings, emphasizing how these trends will impact the firm’s strategy and planning in the telecommunications equipment industry. 2. Every country has a set of core values and beliefs. These values may vary somewhat from region to region of the nation. Identify five core values for your area of the country. Clip magazine advertisements that reflect these values and bring them to class. Answer: This will vary depending upon the part of the country students are from. For example, students from the south may bring up more religion-based values, students from an area with a large national park or wilderness areas may mention environmental issues. Core Values for My Area (e.g., the Midwest, USA) 1. Community: Emphasis on local relationships and support for small businesses. 2. Work Ethic: Pride in hard work, dedication, and reliability. 3. Family: Importance placed on family gatherings and activities. 4. Sustainability: Growing focus on environmentally friendly practices and products. 5. Hospitality: Valuing friendliness and welcoming newcomers. Magazine Advertisements To reflect these values, look for ads that highlight local events, family-oriented products, sustainable practices, and community involvement. Clip examples that illustrate each value for presentation. 3. Baby boomers in America are aging. Describe how this might affect the marketing mix for the following: • Bally’s Health Clubs • McDonald’s • Whirlpool Corporation • The State of Florida • Target Stores Answer: • Bally’s Health Clubs: May increase demand as boomers try to avoid aging, but then it may decline if we give up the quest for the good body in great numbers. • McDonald’s: Down, as they eat more healthy foods and do not have small children in the household. • Whirlpool Corporation: Lower demand, few families in the part of the family life cycle that buys appliances. • The State of Florida: Buying property for eventual retirement may create a boom in the state. • Target Stores: It depends on their target market—an aging population usually spends less on clothing and accessories. 4. You have been asked to address a local Chamber of Commerce on the subject of Millennials consumers. Prepare an outline for your talk. Answer: The outline should include the following elements: Millennials consumers are skeptical, having been bombarded with marketing messages since a young age; they are also less brand loyal; and they are more accepting of generic labels. This notoriously fickle consumer group is brand and fashion conscious, but marketers have to get the merchandise in front of them without being “in their face.” Otherwise, Gen Yers will tend to reject the product, unwilling to have a product foisted upon them. 5. How should Ford Motor Company market differently to Millennials, Generation X, and baby boomers? Answer: Millennials: Gen Yers have grown up in a media-saturated, brand-conscious world and love customized products. So, Ford should develop a car that is just for this generation alone and provide customized features that reflect the personality of the individual. This could include customized colors, stereos, seating, storage space, and other features. Ford should market the car not only on television (during shows that Millennials like to watch) but also on the Internet, as Millennials are very tech-savvy. The company could also allow Millennials to design and order their ideal car online. Generation X: Gen Xers are savvy but cynical consumers but don’t mind indulging themselves with services, such as dining and travel. They are in their late 30s and early 40s, and they are sending their kids off to school, are concerned with buying their own homes, and--now that they've begun to climb the corporate ladder--are demanding of their retailers. Since this is the first generation to grow up in the technological age, Ford should use technology in their products to entice this generation and in other aspects of marketing to reach this market. Baby boomers: Baby boomers are aging but see themselves as active. Since most baby boomers experienced loss during the Great recession, they are working longer than previous generations. Most baby boomers are married and have older children who have already left the home. Ford should offer a product line to younger baby boomers is highly designed yet affordable. Technology should be used, but only to provide convenience that saves time. Products should be flexible and serve multiple purposes, from a vehicle that can be driven to work to one that can be changed around to haul recreational equipment for this active group (think: Golf clubs). 6. Go to the library and look up a minority market such as the Hispanic market. Write a memo to your boss that details the many submarkets within this segment. Answer: Students’ answers will vary. Students should be invited to look at Web sites as well as at traditional books or periodicals. The submarkets within these cultural groups will probably include the following: 1) age submarkets (e.g., the “Gen Yers” of the Hispanic population); 2) regional submarkets (e.g., the Cuban-based Hispanic population in Florida versus the Mexican-based Hispanic population in southern California); 3) lingual submarkets (e.g., those that are primarily Spanish-speaking, those that are primarily English-speaking, and those that are completely bilingual); and 4) family life cycle (e.g., Hispanics that are married with children versus Hispanics that are single with professional careers). The point is that these minority markets are as diverse and segmented in their needs as the mainstream mass market in the United States. Memo To: [Boss's Name] From: [Your Name] Date: [Today’s Date] Subject: Overview of Submarkets within the Hispanic Market Dear [Boss's Name], I’ve researched the Hispanic market and identified several key submarkets that present unique opportunities for our business: 1. Mexican Americans: The largest Hispanic group in the U.S., with strong cultural ties and significant purchasing power, particularly in food and family-oriented products. 2. Puerto Ricans: Concentrated mainly in the Northeast and Florida, this group values community and brand loyalty, often favoring products that reflect their heritage. 3. Cuban Americans: Primarily located in Florida, they tend to have higher income levels and place importance on luxury and high-quality products. 4. Dominican Americans: A growing demographic, especially in urban areas, with distinct cultural preferences in food, fashion, and media. 5. Central and South Americans: This diverse group includes various nationalities, each with unique cultural traits and consumption patterns, particularly in music, food, and entertainment. Each submarket has its own preferences and behaviors, making targeted marketing strategies essential for effective engagement. Let me know if you need further details or a deeper analysis on any specific segment. Best, [Your Name] 7. Using the library and the Internet, find examples of large companies directing marketing mixes to each major ethnic group. Answer: Here are examples of large companies tailoring their marketing mixes to major ethnic groups: 1. Coca-Cola (Hispanic Market): Coca-Cola has launched targeted campaigns, such as "Por Tu Familia," emphasizing family values and cultural connections through Spanish-language advertisements. 2. Procter & Gamble (African American Market): P&G has created specific campaigns like "My Black is Beautiful," celebrating African American culture and addressing unique beauty needs. 3. Nike (Asian Market): Nike has released products and campaigns that resonate with Asian cultures, such as the Lunar New Year collections, featuring culturally relevant designs and messaging. 4. McDonald’s (Indian Market): McDonald’s India offers a unique menu that caters to local tastes, including vegetarian options and flavors like the McAloo Tikki burger, reflecting regional dietary preferences. 5. Target (LGBTQ+ Community): Target’s marketing mix includes pride-themed merchandise and campaigns during Pride Month, showcasing support and inclusivity for the LGBTQ+ community. These companies demonstrate how effective localized marketing strategies can resonate with specific ethnic and cultural groups. 8. Periods of inflation require firms to alter their marketing mix. Suppose a recent economic forecast expects inflation to be almost 10 percent during the next eighteen months. Your company manufactures hand tools for the home gardener. Write a memo to the company president explaining how the firm may have to alter its marketing mix. Answer: Inflation is a general rise in prices resulting in decreased purchasing power. Inflation generally causes consumers to do two things: decrease their brand loyalty, as they search for the lowest prices, and take advantage of coupons and sales to stock up on items. Your firm may need to cut costs as much as possible to avoid raising prices as much as the competition. You may want to plan a rebate program to promote the tools. Memo To: [Company President’s Name] From: [Your Name] Date: [Today’s Date] Subject: Adjustments to Marketing Mix in Response to Projected Inflation Dear [President’s Name], With the recent economic forecast predicting nearly 10% inflation over the next eighteen months, our company will need to adjust our marketing mix to maintain competitiveness and customer loyalty. Here are key considerations: 1. Product: We may need to emphasize value and durability in our hand tools. Highlighting features that enhance longevity can justify price increases. 2. Price: Adjusting our pricing strategy will be essential. We should consider implementing smaller, incremental price increases rather than one large hike to avoid shocking consumers. 3. Promotion: Focus on value-driven messaging in our marketing campaigns. Emphasizing cost-effectiveness and the long-term savings of investing in high-quality tools can resonate with budget-conscious consumers. 4. Place: Strengthening our online sales channels will be crucial, as more consumers may seek convenience and competitive pricing. Partnerships with retailers that cater to value-driven shoppers could also be beneficial. By proactively adapting our marketing mix, we can better navigate the challenges posed by inflation and continue to meet customer needs. Best, [Your Name] [Your Position] 9. The Federal Trade Commission and other governmental agencies have been both praised and criticized for their regulation of marketing activities. To what degree do you think the government should regulate marketing? Explain your position. Answer: Governmental regulation that directly impacts marketing includes 1) pricing regulation, 2) advertising regulation, 3) anti-trust, and 4) intellectual property such as copyrights, trademarks, and patents. Students’ arguments for or against government regulation of marketing activities should address all those areas and provide recent examples to back up their opinions. Good examples would include the advertising regulation of the tobacco industry, the Microsoft anti-trust suit, and Disney’s dogged protection of intellectual property. 10. Can you think of any other areas where consumer protection laws are needed? Answer: Students’ answers will vary. [If you use this as an in-class discussion question, push students to think of the impact a new law would have on businesses, including nonprofit organizations. The goal here to be moving students to see that regulation is not just the effect related to a particular cause, but a cause itself, once enacted, that has its own effects.] Certainly! Here are a few areas where consumer protection laws are needed: 1. Online Privacy: Enhanced regulations for data collection and usage by online platforms to safeguard consumer information. 2. Subscription Services: Clearer guidelines on auto-renewals and cancellation policies to prevent deceptive practices. 3. Health and Wellness Products: Stricter regulations on misleading claims related to supplements and alternative therapies. 4. Elderly Consumer Protections: Laws specifically designed to prevent fraud and abuse targeting senior citizens. 5. Financial Services: Greater transparency in fees and terms related to loans and credit products to protect consumers from predatory practices. These areas can help ensure fair treatment and foster trust in the marketplace. 11. What topics are currently receiving attention in FDA News (http://www.fdanews.com)? What effect has the attention had on market share? Answer: Currently, FDA News is highlighting topics such as: 1. COVID-19 Vaccines and Treatments: Ongoing discussions around approvals and updates are impacting vaccine manufacturers' market positions. 2. Mental Health Medications: Increased focus on approvals and regulations for psychiatric drugs has led to a surge in interest from pharmaceutical companies. 3. Medical Device Regulations: Stricter guidelines for device approvals are affecting market dynamics, with companies scrambling to meet new standards. 4. Food Safety Initiatives: New regulations aimed at enhancing food safety are influencing consumer trust and market share for compliant brands. The attention on these topics often shifts market share, as companies that adapt quickly to regulatory changes can gain competitive advantages, while others may struggle to keep up. APPLICATION EXERCISE Demographic factors play a large role in shaping the external marketing environment. One of those demographic factors is culture. The importance of cultural understanding cannot be overstated, especially in today’s global marketplace and our own multicultural country. In general, Americans tend to be ethnocentric; that is, they are quick to prejudge other cultural norms as wrong (or of less significance) because they differ from American practices. One way to be exposed to another culture is by examining the foods typical of that culture. In this exercise, you will need to work in a team to create a guide to ethnic dining in your city or area. The finished guide will be descriptive in nature; it is not meant to be a rating guide. Activities 1. Identify ethnic dining categories for inclusion in your guide. Once you have identified categories for your area, make a list of restaurants for each category. 2. You will need to create a data collection form so that the same information is collected from each restaurant. For example, you will want to include the name, address, and phone number for each restaurant. Think of other information that would be helpful. 3. Divide up the restaurant list your team generated in activity 1 so that each team member is responsible for collecting information from a certain number of restaurants. Consider dividing the list geographically so that each team member can visit an assortment of ethnic restaurants. If your budget allows, eat at a few of the restaurants in addition to collecting the information. After you have all the information, meet to review and compare your findings. 4. Was there a meal or type of food that you particularly liked? Disliked? Which type of ethnic restaurant seemed most foreign to you? Why do you think that was? Purpose: The purpose of this exercise is to allow those students who have had only minimal exposure to cultural differences an opportunity to experience those differences through the common element of food. Students will create a basic ethnic dining guide for restaurants in their area. The guide is not meant to be a rating guide. It is simply meant to be an informative guide. Setting It Up: If your college or university is in a larger metropolitan area, you will probably have a greater variety of ethnic restaurants nearby. If, however, you are in a more remote location, you can adapt the exercise for the Internet. Simply have students search for a variety of ethnic restaurants in a larger city, like New York, Atlanta, Chicago, or Los Angeles. Push students to look for restaurants outside the most common (i.e., Italian, Chinese). This application exercise is based on the following Great Idea in Teaching Marketing: Mark Andrew Mitchell University of South Carolina – Spartanburg THE GUIDE TO ETHNIC DINING Introduction The importance of cultural understanding cannot be overstated, especially in today’s global marketplace. Americans tend to be rather ethnocentric; that is, quick to prejudge other cultural norms as wrong (or of lesser significance) simply because they differ from American practices. Universities have a responsibility to develop the students’ appreciation of other cultures and their understanding of coupled global markets. Purpose of the Project The purpose of this project is to expose students to other cultures by examining the foods typical of that culture. Students identify and profile ethnic dining establishments in their local service area. Further, descriptions of each ethnic dining category are written to develop the student’s appreciation of the differences in diets and dining habits among cultures. The purpose is consistent with current university efforts to “internationalize” programs, personnel, and curriculum. The finished product (THE GUIDE TO ETHNIC DINING IN your area) is distributed across the region to your community partners, such as The Chamber of Commerce, Office of Travel and Tourism, Visitor’s Bureau, hospitality marketers, and your university’s office for international studies. This allows the institution to fulfill its service mission. It must be noted that the finished guide is meant to be descriptive and not a rating service for possible patrons. The development of a rating service may create adversarial relationships with some restaurateurs in your community—not an enviable position for the university. Student Application This project can be administered in a Principles of Marketing, International Marketing, Consumer Behavior, or Marketing Research course. This class provides professional services to area Chambers of Commerce, travel and tourism personnel, hospitality marketers, and university personnel. Proposed Process for Successful Completion of Project The following is an action plan to guide the preparation of “The Guide to Ethnic Dining” in your market: • Identify ethnic dining categories for analysis. • Profile ethnic dining habits within each category. • Identify ethnic restaurants in your area. • Develop a data collection form. • Divide the restaurant list among students. • Collect information from restaurants. • Compile collected information. • Report findings to community partners. • Enjoy personal use of the guide! • Take pride in the public distribution and use of your work! Information Collected As noted earlier, the guide is meant to be descriptive and not comparative. The following information is suggested for inclusion in your guide: • Name of establishment • Translation of name (if applicable) • Location and directions • Days/Hours of operation • Self-reported specialties • Price range • Availability of ethnic entertainment • Availability of children’s menu • Credit cards accepted • Availability of alcoholic beverages • An invitation from the owner or manager, possibly in native language Division of Labor After you categorize the types of ethnic dining available (i.e., Mexican, Italian, Greek) in your area, develop a list of applicable restaurants. (You can use the ethnic dining categories to construct specialized teams to conduct the project.) Each student is then assigned responsibility to contact particular restaurants to secure the desired information. This process allows you to avoid duplication of effort. Students submit the collected information using a common word processing software package supported by the institution. The students’ collective works are then compiled for printing and electronic distribution. ETHICS EXERCISE Gary Caplan has developed a new energy drink designed to burn calories while sleeping, which he intends to market to grossly overweight consumers. According the Centers for Disease Control and Prevention, 20 percent of Americans are obese. Gary’s mother, a doctor, argues that it’s unethical to target the obese—that they are as vulnerable a target market as much as the elderly and children. Questions 1. Is Gary targeting a “vulnerable” market? Answer: Students’ responses may vary. For example, some students might argue that Gary is not targeting a “vulnerable” market; he is simply targeting those to whom the product will appeal and benefit the most. Yes, if Gary is targeting a market segment that is economically disadvantaged, lacks access to information, or has specific needs (like seniors or low-income families), it could be considered a "vulnerable" market. Targeting such groups requires careful consideration to ensure ethical practices and avoid exploitation. 2. Does the AMA Statement of Ethics address this issue? Go to http://www.marketingpower.com and review the statement. Then write a brief paragraph on what it contains that relates to Gary Caplan’s marketing decision. Answer: The AMA Statement of Ethics does address this issue when it states, “we will recognize our special commitments to economically vulnerable segments of the market such as children, the elderly and others who may be substantially disadvantaged.” VIDEO ASSIGNMENT: GaGa’s Inc. GaGa’s Inc. produces a frozen dessert called Sherbetter in a variety of flavors. GaGa’s is very small product line and Jim King, the founder and CEO, discusses the challenges his company faces in their product category. He also reveals other environmental challenges to his product. 1. When Jim King says that “the health department” didn’t like him making Sherbetter out of his kitchen, he is referring to what? A. The Food and Drug Administration B. The Federal Trade Commission C. The Consumer Product Safety Commission D. His local health care organization Answer: A The FDA enforces manufacturing of food for retail and has specific guidelines. These are usually enforced on the state level, but the major guidelines come from the FDA. 2. Which of the following factors does GaGa’s discuss regarding who buys its product? A. EcoTech and ethnicity B. Inflation and age group C. Consumer incomes and purchasing power D. State laws and market share Answer: C GaGa’s inc. is a super-premium product that, because of the price, focuses on consumer income and purchasing power to determine its target market. 3. Requiring such large slotting fees: A. Decreases inflation. B. forces competition for market share to be among large companies with significant capital. C. decreases the work that FDA inspectors have to do. D. increases innovation by allowing new products to pay to be displayed. Answer: B Huge slotting fees forces smaller companies (like GaGa’s Inc.) to seek out alternative outlets for products, which leaves only large companies vying for market share at larger chains 4. When Jim King discusses the factors involved in NOT using wholesale distributor CISCO or direct sales to the consumer, which category of external environment factors is he discussing? A. social B. demographic C. economic D. competitive Answer: C Economic factors, such as cost were the major factors in deciding not to sell through CISCO and direct selling. 5. Seasonal factors preventing Jim King opening a scoop shop in New England fall into which category? A. social B. demographic C. economic D. competitive Answer: B Location (which affects what is seasonal and what isn’t, particularly in New England where it is very cold much of the year) is part of demography. 6. That GaGa’s has been able to stay in business and keeps searching for ways to reach its customer speaks to what American Value? A. Self-sufficiency B. Upward Mobility C. Work Ethic D. Conformity Answer: C Jim King and his wife have a strong work ethic that drives them to continue working despite the many external factors working against them. CASE ASSIGNMENT: One Direction In 2011, pop music sensation One Direction became the first English music group to reach the number one spot on the Billboard 200 chart with a debut album. Assembled by Simon Cowell in 2010 and introduced on Cowell’s The X Factor television series, One Direction quickly amassed tween fans in England and the United States through a unique interactive marketing campaign. According to the campaign’s narrative, a One Direction superfan who went by the moniker “1DCyberpunk” stole the band’s laptop, promising only to give it back when fans proved their support by completing a series of social media–based challenges. Active participants were rewarded with exclusive content and events, culminating in a massive online album listening party during which the laptop was finally returned. The fifty-day campaign was developed by marketing firm AIS in conjunction with One Direction’s record label, Syco. According to AIS Creative Director Richard Coggin, “Syco had a lot of great content—videos, merchandise, singles, albums, lyrics, running orders, signed photos, radio and TV appearances—and our brief was to glue it all together and engage the fans on a daily basis. Filtered through 1DCyberpunk, the content became more valuable and sought-after.” Though complex and often difficult to manage, the campaign was a success, netting 200,000 participants, twelve trending topics on twitter, and more than 2.5 million views on YouTube. Perhaps most importantly, it laid the foundation for a passionate U.S. fan base that was desperate to see the band in their home country, buy the debut album, and send One Direction to the top of the charts. Emma Hall, “U.K. Boy Band One Direction Rises Via Social Media,” Advertising Age, April 12, 2012, http://adage.com/article/global-news/u-k-boy-band-direction-rises-social-media/234105 (Accessed March 25, 2013). TRUE/FALSE 1. Tween girls who are interested in popular music and are tuned into social media comprise a likely target market for One Direction’s 1DCyberpunk campaign. Answer: True 2. Basing an advertising campaign on social media-based challenges was a gamble for AIS and Syco because even the most active users do not spend more than 6 hours on social media every month. Answer: False The most active users—those ages 18 to 24—spend more than twenty-one hours on social networking sites every month. 3. One Direction’s 1DCyberpunk campaign utilized one of the two key strategies used to effectively market to Generation X—engaging them through promotions that get them involved. Answer: False This, along with making the product modern and convenient, is one of the two key strategies used to effectively market to teens. 4. In 2003, the U.S. Congress passed the CAN-SPAM Act, which imposes regulations on social media advertising campaigns like One Direction’s 1DCyberpunk campaign. Answer: False In 2003, the U.S. Congress passed the CAN-SPAM Act in an attempt to regulate unsolicited e-mail advertising. The act prohibits commercial e-mailers from using false addresses and presenting false or misleading information, among other restrictions. 5. If Syco and AIS wanted to target the burgeoning Hispanic youth market in America, they should have advertised the 1Direction campaign on Spanish-only television stations. Answer: False With such a large number of Hispanic children being raised inside the United States, it should come as little surprise to researchers that 80 percent of the Latino population prefers English or bilingual programming. MULTIPLE CHOICE 1. Suppose that before launching the 1DCyberpunk campaign, Syco attempted to garner as many Facebook fans, Twitter followers, and other social media supporters as possible. This would be an example of: A. Inflation. B. Environmental management. C. Basic research. D. Recession. E. Applied research. Answer: B When a company implements strategies that attempt to shape the external environment within which it operates, it is engaging in environmental management. 2. Which of the following is a value that affects the success of One Direction’s social media campaigns? A. People in the United States today are piecing together component lifestyles. B. Today’s consumers are inquisitive and appreciate entertaining marketing efforts. C. Tweens are directly or indirectly responsible for sales of over $180 billion annually. D. A very slow economic recovery began in July 2009 and continues to this day. E. All of these. Answer: B A value is a strongly held and enduring belief. 3. Which of the following hypothetical results of the 1DCyberpunk campaign would likely be most concerning to the FTC? A. One Direction fans may purchase tour posters printed with hazardous ink. B. California may levy a tax on online advertising like the 1DCyberpunk campaign. C. Fans may purchase expired One Direction-branded foods. D. Online data may be collected on unsuspecting One Direction fans. E. One Direction-branded debit cards may face new regulations. Answer: D In 2012, the FTC called for online data collectors to adopt better privacy policies and asked Congress to pass comprehensive privacy legislation. 4. Which of the following statements about social networking is not true? A. Because Facebook is the world’s most popular social networking site, it is a good launching point for a social media campaign like 1DCyberpunk. B. Only about 20 percent of those 45 and older say the information on social networking sites is very valuable or extremely valuable to them, so a campaign like 1DCyberpunk might not be so successful among baby boomers. C. Four minutes out of every five spent on the Internet are dedicated to social networking, so 1DCyberpunk might even make up the majority of a fan’s time spent online. D. Social media have changed the way we communicate about bands like One Direction and purchase their merchandise and music. E. 54 percent of Facebook users who “like” a brand’s Facebook page are much more likely to purchase that brand, so a social media campaign like 1DCyberpunk can have a significant effect on One Direction’s sales. Answer: C Only one minute out of every five spent on the Internet is dedicated to social networking. 5. Of the following social media platforms, where would Syco and AIS have the smallest degree of success if it wanted to reach tweens? A. FashionPlaytes.com. B. Twitter. C. Ever loop. D. Walt Disney’s Club Penguin. E. Viddy. Answer: B Although they are too young to participate on social media sites such as Facebook and Twitter, tweens have their own social media outlets. GREAT IDEAS FOR TEACHING CHAPTER 4 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. Here are additional such discussion board questions. Each is written to fit the same text cited above but could easily be rewritten and revised to fit another text. Series A 1. No single business is large or powerful enough to create major change in the external environment. 2. Review what the assumption this is true means for marketing in section 4-1b of your text and review what the textbook means by the external environment. 3. Then describe a) whether you agree or disagree based on b) personal experience with a large company being able to change the external environment or not. Series B 1. By the beginning of 2012, one minute out of every five spent on the Internet worldwide was dedicated to social networking. 2. Review the material in section 4-2c of your text. 3. Then describe how this trend affects the how you are see advertising material, and how the time you spend online affects your purchasing decisions. Felicia G. Lassk, Western Kentucky University UTILIZING AN INTERNET PERSONALITY TEST IN THE CONSUMER BEHAVIOR COURSE An interactive assignment that integrates personality testing and the Internet is the use of the Keirsey Temperament Sorter in a class presentation on personality. You can find The Keirsey Temperament Sorter by searching for "Keirsey Temperament Sorter and accessing the sorter on the Keirsey.com Web site. The 70-item personality test is based on Carl Jung’s psychological types. The class is held in the computer lab. Each student accesses the URL and completes the personality test in approximately 20 minutes. This assignment enables students to learn about their own personality type. The Web site includes information about each personality type including leadership styles, career recommendations, and celebrities that are categorized under each personality type. After the students print out the information, like personalities are grouped together. These students then discuss the appropriate marketing strategies that would be successfully utilized in marketing a product to someone with their personality type. Each group presents their results to the class. Kim McKeage, University of Maine STUDENTS PRACTICE MAKING MARKET/PRODUCT GRIDS ON THEMSELVES This in-class project has students use a segmentation scheme that they have already studied. This could include: • VALS • Lifestyle • Price Sensitivity • Quality Sensitivity • Attributes/Features Desired • Involvement • Demographics • Geographic region • Product Usage (Heavy vs. Light Users) If students wish to use VALS, I instruct them ahead of time to get on the internet and access the VALS survey online so that they can determine their type. On the day when we do this exercise, students form groups of five to eight persons. The group is instructed to pick a product category. I recommend the following categories to them as items they might be familiar with: • Automobiles (cars, trucks, SUVs, etc.) • Athletic shoes • Recreational products (sports equipment, hiking gear, etc.) • Entertainment products (movies, CDs, etc.) • Food (packaged, grocery, or restaurants) • Computer software/hardware • Clothing Students then have to describe which market segments are represented in their group according to the segmentation scheme(s) they choose to use. They must also develop a market/product grid to describe how to target different products (within their chosen category) toward the different market segments represented within their group. The product positions can be for existing products or imagined products (especially if no existing product fits a position they want). Students must discuss the general, overall “position” of the product and, for fantasy products, how they would accomplish that positioning. For example, if they want to position an athletic shoe as a “performance” (overall position) shoe, they might show advertisements with sports professionals using the shoe under demanding circumstances. To get credit on the exercise, students must write up a complete market/product grid with their accompanying notes. Some of the groups present their solution to the class. This exercise quickly shows students the limitations of using only demographics to describe their customers, and really clarifies the process of segmentation and positioning for them. Solution Manual for MKTG: Principles of Marketing Charles W. Lamb, Joe F. Hair, Carl McDaniel 9781305631823, 9781285860145, 9781337116800