To introduce this section, you should include the Vision and mission statements of the business; an idea of what its goals are for customers, clients, employees and the consumer.
· Introduction about the business.
· Business vision and mission
· Business objective.
· Products and services offered
Conduct an environmental analysis that looks at and comments on your local area and your network of business contacts, competitors and customers.
Identify the target market, describing how the company will meet the needs of the consumer better than the competition does. List out the expectations consumers have for the product.
Product or Service– Identify the product or service by what it is, who will buy it, how much they will pay for it and how much it will cost for the company to produce it, why a consumer demand exists for your product, and where your product sits in comparison to similar products/services now available.
Place– Identify the location of your business, why it is located there (strategic, competitive, economic objectives), your expected methods of distribution, and timing objectives.
Promotion – Describe the type of promotional methods you will use to spread the word about your product. Identify techniques such as word of mouth, personal selling, direct marketing, sales promotion etc. television, radio, Social media and newspaper ads.
Price – The prices of your products or services that reflects the overall company strategy. Should be competitive as well as a reflection of the quality, costs and profit margin.
Guidelines
Solve these questions
the words between 600 to 700
it should have at least three (3) reference
Kingdomof Saudi Arabia
Ministry of Education
Saudi Electronic University
المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية الإلكترونية
College of Administrative and Financial Sciences
Assignment 3
Marketing Management (MGT 201)
Due Date: 30/04/2022 @ 23:59
|
Course Name: Marketing Management |
Student’s Name: |
|
Course Code: MGT201 |
Student’s ID Number: |
|
Semester: Second |
CRN: |
|
Academic Year:2021-22-2nd |
For Instructor’s Use only
|
Instructor’s Name: Abdullah Bubshait |
|
|
Students’ Grade: Marks Obtained/Out of 10 |
Level of Marks: High/Middle/Low |
General Instructions – PLEASE READ THEM CAREFULLY
· The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
· Assignments submitted through email will not be accepted.
· Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
· Students must mention question number clearly in their answer.
· Late submission will NOT be accepted.
· Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
· All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
· Submissions without this cover page will NOT be accepted.
Assignment-3 Marketing Plan
Learning Outcomes:
1. Develop critical and analytical thinking necessary to overcome challenges and issues of marketing in the changing global environment. (LO-4)
2. Use effective and collaborative interpersonal skills to carry out scientific analysis of consumers’ needs and wants to formulate a marketing Plan. (LO-5)
1. Introduction, Goals and Objectives
(2 Marks)
To introduce this section, you should include the Vision and mission statements of the business; an idea of what its goals are for customers, clients, employees and the consumer.
· Introduction about the business.
· Business vision and mission
· Business objective.
· Products and services offered
2. Environmental Analysis
(2 Marks)
Conduct an environmental analysis that looks at and comments on your local area and your network of business contacts, competitors and customers.
3. Target Market Analysis (2 Marks)
Identify the target market, describing how the company will meet the needs of the consumer better than the competition does. List out the expectations consumers have for the product.
4. SWOT Analysis – Conduct a Swot Analysis of the business to explain what actually are the strengths and weaknesses that the company has and the threats and opportunities. (2 Marks)
5. Marketing Mix Analysis (4 P’s Analysis) (2 Marks)
Product or Service- Identify the product or service by what it is, who will buy it, how much they will pay for it and how much it will cost for the company to produce it, why a consumer demand exists for your product, and where your product sits in comparison to similar products/services now available.
Place- Identify the location of your business, why it is located there (strategic, competitive, economic objectives), your expected methods of distribution, and timing objectives.
Promotion – Describe the type of promotional methods you will use to spread the word about your product. Identify techniques such as word of mouth, personal selling, direct marketing, sales promotion etc. television, radio, Social media and newspaper ads.
Price – The prices of your products or services that reflects the overall company strategy. Should be competitive as well as a reflection of the quality, costs and profit margin.
Guidelines
1. This is an individual Assignment
2. Word count should be between 600-700 words.
3. Avoid plagiarism
4. References from related sources is required to validate your Answers.
Answers
1.
2.
3.
4.
5.
Because learning changes everything.®
Chapter 1
Overview of
Marketing
Copyright
20
22
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 1.1 Define the role of
marketing.
Learning Objective 1.2 Describe the evolution of
marketing over time.
Learning Objective 1.
3
Describe how marketers
create value for a
product or
service.
3
© McGraw Hill LLC
Water Bottles
CD_works
2
7
/Shutterstock
4
© McGraw Hill LLC
What Is Marketing?
Marketing is the activity, set of institutions, and processes
for creating, capturing, communicating, delivering, and
exchanging offerings that have value for customers, clients,
partners, and society at large.
Alejandro Rivera/Getty Images
5
© McGraw Hill LLC
Exhibit 1.1 Core Aspects of Marketing
Access the text alternative for slide images.
6
© McGraw Hill LLC
Marketing Is about Satisfying Customer
Needs and Wants
How does Dove offer value?
• Dove added the Dove
Men+Care line and expanded
into products for babies.
• In advertising to male
consumers, Dove seeks to
acknowledge and recognize
modern men’s caregiving roles,
so it can link these
communications to its baby care
products too.
• Dove seeks to acknowledge
and recognize modern men’s
caregiving roles, so it can link
these communications to its
baby care
products.
Dove seeks to acknowledge and recognize
modern men’s caregiving roles, so it can link
these communications to its baby care
products.
Source: Unilever 7
© McGraw Hill LLC
Exhibit 1.2: Exchange: The Underpinning of
Seller-Buyer Relationships
8
© McGraw Hill LLC
Exhibit 1.3: The Marketing Mix
Source: McGraw-Hill Global Education Holdings, LLC
9
© McGraw Hill LLC
Marketing Creates Value through Product,
Price, Place, and Promotion Decisions
The Marketing Mix:
The controllable set
of decisions or
activities that the firm
uses to respond to
the wants of its target
markets.
• Product.
• Price.
• Promotion.
• Place.
10
© McGraw Hill LLC
Product: Creating Value
The fundamental purpose of
marketing is to create value
by developing a variety of
offerings, including goods,
services, and ideas, to
satisfy customer needs.
• Goods.
•
Services.
• Ideas.
Marketing creates value by promoting
ideas, such as bicycle safety.
Source: Street Smart, a public safety campaign of Metro, the District of Columbia, Maryland, and Virginia.
11
© McGraw Hill LLC
Price: Capturing Value
Price is everything a
buyer gives up (money,
time, energy) in
exchange for the
product or service.
If you don’t mind sitting in a middle seat and
putting all your baggage under your seat, flying on
low-cost carriers like Frontier is a good
value.
Kateryna Kukota/Alamy Stock Photo
12
© McGraw Hill LLC
Place: Delivering the Value Proposition
Place represents all the
marketing processes
necessary to get the product to
the right customer when that
customer wants it.
Place more commonly deals
specifically with retailing and
marketing channel
management, also known as
supply chain
management.
Hertz creates customer value by using biometrics to
create a function that recognizes loyal
customers
using facial, iris, or fingerprint scans.
Jeff Martin/AP Images
13
© McGraw Hill LLC
Promotion: Communicating the
Value
Proposition
Promotion is
communication by a
marketer that informs,
persuades, and reminds
potential buyers about a
product or service to
influence their buying
decisions and elicit a
response.
Babar books wanted to celebrate the 80th anniversary of the series.
It initiated a $100,000 campaign, working in collaboration with toy
stores and bookstores.
BananaStock/Alamy Images
14
© McGraw Hill LLC
Exhibit 1.4: Marketing Can Be Performed by
Individuals and by Organizations
15
© McGraw Hill LLC
Marketing Impacts Various Stakeholders
Customers.
Supply Chain Partners.
Employees.
Industry.
Society.
The Great American Milk Drive, run in conjunction
with
Feeding America, seeks to ensure that local food banks are
sufficiently stocked with nutritious, frequently requested items.
Source: America’s Milk Companies
16
© McGraw Hill LLC
PROGRESS CHECK (1 of 3)
1. What is the definition of marketing?
2. Marketing is about satisfying blank and
blank.
3. What are the four components of the marketing
mix?
4. Who can perform marketing?
17
© McGraw Hill LLC
Exhibit 1.5 Marketing Evolution:
Production, Sales, Marketing and Value
Access the text alternative for slide images.
Photos (left to right): Ryan McVay/Photodisc/Getty Images; Clement Mok/Photodisc/Getty Images; Lawrence Manning/Corbis/Getty Images; Ryan McVay/Photodisc/Getty Images;
Mark Dierker/McGraw-Hill
18
© McGraw Hill LLC
Value-Based Marketing
A Lipstick Option for Those Who Dream of a
Hermès Bag
© Justin Sullivan/Getty Images
19
© McGraw Hill LLC
Value-Based Marketing Era
20
© McGraw Hill LLC
PROGRESS CHECK (2 of 3)
1. What are the various eras of marketing?
21
© McGraw Hill LLC
How Does Marketing Create Value and
How Do Firms Become More Value Driven?
Build relationships with
customers.
Gather and analyze
information.
Balance benefits and costs.
Connect with customers using social and
mobile
media.
Access the text alternative for slide images.
22
© McGraw Hill LLC
Value Stems From Four Main Activities
Adding Value
Using
Marketing Analytics
Embracing Social and Mobile Marketing
Ethical and Societal Dilemma: Engaging in
Conscious Marketing
Access the text alternative for slide images.
23
© McGraw Hill LLC
Marketing Analytics
Companies collect massive amounts of data about
how, when, why, where, and what people buy.
Kroger collects massive amounts of data about how, when, why, where, and what people buy and
then analyzes those data to better serve its customers.
© Daniel Acker/Bloomberg/Getty Images
24
© McGraw Hill LLC
Connecting With Customers Using Social
and Mobile Marketing
Social media ad
spending is growing,
increasing by
32
percent
in 2018 alone.
3.
26
billion people link
to some social media
sites through their
mobile devices.
Make travel arrangements online either
through Facebook or hotels’ mobile app and
check-in is a breeze.
Erik Isakson/Blend Images/Getty Images
25
© McGraw Hill LLC
Resolving Ethical and Societal Dilemmas
Conscious Marketing
Socially Responsible
Firms
Making socially
responsible activities an
integral component of
corporate
strategies.
Too Good To Go is a UK-based app that has
partnered with 1,
38
1 food stores to match
hungry customers to restaurants and stores
with surplus food that would otherwise go to
waste.
Guillaume Payen/SOPA Images/LightRocket/Getty Images 26
© McGraw Hill LLC
PROGRESS CHECK (3 of 3)
1. Does providing a good value mean selling at a
low price?
2. How are marketers connecting with customers
through social and mobile media?
27
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Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
Because learning changes everything.®
Chapter 2
Developing
Marketing
Strategies and a Marketing
Plan
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 2.1 Define a marketing strategy.
Learning Objective 2.2 Describe the elements of a marketing plan.
Learning Objective 2.3 Analyze a marketing situation using SWOT
analyses.
Learning Objective 2.4 Describe how a firm chooses which consumer
group(s) to pursue with its marketing efforts.
Learning Objective 2.5 Outline the implementation of the marketing
mix as a means to increase customer value.
Learning Objective 2.6 Summarize portfolio analysis and its use to
evaluate marketing performance.
Learning Objective 2.7 Describe how firms grow their business.
3
© McGraw Hill LLC
PepsiCo
The development at PepsiCo reflects careful
analysis of the market and efforts to ensure that it
continues to attract a wide range of
consumers.
VStock / Alamy, Shutterstock/VDB Photos 4
© McGraw Hill LLC
What is a Marketing Strategy?
A marketing strategy
identifies:
• A firm’s
target
market.
• A related marketing
mix.
• The bases on which
the firm plans to build
a sustainable
competitive
advantage.
Shutterstock / SergZSV.ZP 5
© McGraw Hill LLC
Exhibit 2.1: Macro Strategies for Developing
Customer Value
Access the text alternative for slide images.
6
© McGraw Hill LLC
Customer Excellence
Retaining loyal
customers.
Providing outstanding
customer service.
Disney’s My Magic system enables users to
swipe their MagicBand wristbands to get on
rides, make purchases, and open their hotel
room door
parrysuwanitch/123RF 7
© McGraw Hill LLC
Operational Excellence
Efficient
operations
Excellent
supply chain
management
Strong
relationship
with
suppliers
8
© McGraw Hill LLC
Product Excellence
Provide products with high
perceived value and
effective branding and
positioning.
Bloomberg Businessweek’s
top global brands:
• Apple, Google,
Microsoft, Coca-Cola,
Amazon, Samsung,
Toyota, Facebook,
Mercedes, IBM.
© Jacek Lasa / Alamy 9
© McGraw Hill LLC
Locational Excellence
Especially important for retailers and service providers.
Many say, “The three most important things in retailing are
location, location, location.”
Competitive advantage based on location is not easily
duplicated. Starbucks makes it difficult for competitors to
enter a market and find good locations.
10
© McGraw Hill LLC
Multiple Sources of Advantage
A single strategy (low
prices or excellent service)
is usually not enough to
build a sustainable
competitive advantage.
Southwest Air
lines
• Provides good service
at a good value (on-
time flights that are
reasonably priced).
Carlos E. Santa Maria/Shutterstock 11
© McGraw Hill LLC
PROGRESS CHECK (1 of 3)
1. What are the various components of a marketing
strategy?
2. List the four macro strategies that can help a
firm develop a sustainable competitive
advantage.
12
© McGraw Hill LLC
Exhibit 2.2: The Marketing Plan
Access the text alternative for slide images.
13
© McGraw Hill LLC
Step 1: Define the Business Mission
PepsiCo’s Mission Statement:
“To provide consumers around the world with delicious,
affordable, convenient and complementary foods and
beverages from wholesome breakfasts to healthy and
fun daytime snacks and beverages to evening treats.”
Coke’s Mission Statement:
“To refresh the world … To inspire moments of optimism
and happiness … To create value and make a
difference.”
14
© McGraw Hill LLC
Step 1: Conduct a Situation Analysis Using
SWOT Analysis
Internal
Strengths
External
Opportunities
Internal
Weaknesses
External
Threats
15
© McGraw Hill LLC
Exhibit 2.3: Examples of Elements in a SWOT
Analysis (1 of 2)
Environment Evaluation
Positive Negative
Pepsi
Internal Strengths
• Diverse brand portfolio
• Strong celebrity endorsers
•
Successful marketing
campaigns with music
industry
• Commitment to social and
environmental charitable
causes
Weaknesses
• Lower brand awareness than
rival
Coca-
Cola
• Less market share than rival
Coca-Cola
• Environmentally unfriendly
packaging
External Opportunities
• Expanding health food market
• Growth in global market share
• Acquisition of new brands
Threats
• Water scarcity
• Popularity of reusable water
bottles
• Soda taxes
• Increasing competition in the
snack food market
Sources: Bitesh Bhasin, “SWOT Analysis of Pepsi—PepsiCo SWOT Analysis,” Marketing91, April 3, 2019; Hitesh Bhasin, “SWOT of Coca-Cola,” Marketing91, 2018.
16
© McGraw Hill LLC
Exhibit 2.3: Examples of Elements in a SWOT
Analysis (2 of 2)
Environment Evaluation
Positive Negative
Coca-
Cola
Internal Strengths
• High market share
• Strong brand
• Strong global presence
• Excellent customer loyalty
• Supply chain
Weaknesses
• Low diversification
• Few healthy beverages
External Opportunities
• Emerging countries
• Diversifying products
• Bottled water
Threats
• Water scarcity
• Potential market
saturation
• Changes to labeling
regulations
• Increasing competitors
Sources: Bitesh Bhasin, “SWOT Analysis of Pepsi—PepsiCo SWOT Analysis,” Marketing91, April 3, 2019; Hitesh Bhasin, “SWOT of Coca-Cola,” Marketing91, 2018.
17
© McGraw Hill LLC
Step 3: Identifying and Evaluating
Opportunities Using STP
Segmentation
Targeting
Positioning
18
© McGraw Hill LLC
Exhibit 2.4: Hertz: Market Segmentation
Illustration
Segment 1 Segment 2 Segment 3 Segment 4 Segment 5
Segments Single thrill
seekers and
gear heads on
vacation
Adrenaline
Collection
Business
customers
and families
who prefer a
luxurious ride
Prestige
Collection
Environmental
ly conscious
customers
Green
Traveler
Collection
Families
SUV/Mini
van/4×4
Collection
Commercial
customers
Commercial
Van/Truck
Collection
Cars
Offered
Corvette ZHZ
Chevrolet
Camaro
Infiniti QX56
Cadillac
Escalade
Toyota Prius
Ford Fusion
Toyota RAV4
Ford Explorer
Ford Cargo
Van
19
© McGraw Hill LLC
Market Positioning
Choose which segments to
pursue, then how to position
within those segments.
Define the marketing mix
variables so target customers
have a clear, distinctive, and
desirable understanding of the
product compared to competition.
Hertz positions itself as a quality
car and truck rental company that
is the first choice for each target
segment.
Shutterstock/MuchMania 20
© McGraw Hill LLC
Step 4: Implement Marketing Mix and Allocate
Resources
Product and Value
Creation
Place and Value
Delivery
Price and Value
Capture
Promotion and
Value
Communication
21
© McGraw Hill LLC
Product and Value Creation
Successful products and services are those that
customers perceive as valuable enough to
purchase.
Dyson creates value with its innovative products (left). It can therefore charge significantly more than
the price charged for conventional fans (right).
Access the text alternative for slide images.
(Left): Source: Dyson, Inc.; (right): Stockbyte/Getty Images 22
© McGraw Hill LLC
Price and Value Capture
Price is what the customer is willing to pay for
a product they perceive as good value.
Shutterstock / RUBEN M RAMOS 23
© McGraw Hill LLC
Place and Value Delivery
The product must be
readily accessible
when and where the
customer wants it.
• Dyson provides
product and place
value.
• Where are Dyson
fans available?
Top: Shutterstock/TotallyMJ , Bottom: Shutterstock/Maxx-Studio 24
© McGraw Hill LLC
Promotion and Value Communication
Advertising
Personal
selling
Sales
promotion
Public
relations
Direct
marketing
Online
marketing
(including
social
media) Integrated
marketing
communications
(IMC)
Access the text alternative for slide images.
25
© McGraw Hill LLC
Step 5: Evaluate Performance Using
Marketing Metrics
A metric is a measuring
system that quantifies a
trend, dynamic, or
characteristic.
Metrics are used to
explain why things
happened and also
project the future.
Shutterstock / NicoElNino 26
© McGraw Hill LLC
Evaluating
Performance
Who is accountable for
performance?
• Performance
Objectives, Marketing
Analytics, and
Metrics.
• Financial Performance
Metrics.
• Portfolio Analysis.
EXHIBIT 2.5 Performance Metrics: Coke vs. Pepsi
Access the text alternative for slide images.
Source: MarketWatch, Inc. 27
© McGraw Hill LLC
Exhibit 2.6 Boston Consulting Group Matrix
Photos (top left): DenPhotos/Shutterstock; (top right): Kicking Studio/Shutterstock; (bottom left): Sushiman/Shutterstock;
(bottom right): David Caudery/Tap Magazine/Getty Images
Access the text alternative for slide images.
P&G
Website
28
http://www.pg.com/
http://www.pg.com/
© McGraw Hill LLC
Which Quadrant?
Whether a product is
classified as a star or
a question mark has
profound implications
on how it is treated
and supported within
the
firm.
Top: Ksander/Shutterstock; Bottom: Denis Rozhnovsky / Alamy Stock Photo
29
© McGraw Hill LLC
PROGRESS CHECK (2 of 3)
1. What are the five steps in creating a marketing
plan?
2. What tool helps a marketer conduct a situation
analysis?
3. What is STP?
4. What do the four quadrants of the portfolio
analysis represent?
30
© McGraw Hill LLC
Growth Strategies
Exhibit 2.7: Markets/Products and Service Strategies
Access the text alternative for slide images.
31
© McGraw Hill LLC
Market Penetration
Current marketing mix,
Current customers
Marvel used a market
penetration strategy by
expanding the distribution of
its films:
• Theaters.
• Xfinity.
• DVDs (in a variety of retail
locations).
Shutterstock/Nestor Rizhniak 32
© McGraw Hill LLC
Market Development
Current Products or
Services.
New Markets.
Marvel pursues such a
market development
strategy when it enhances
the viewing of its movies by
expanding into more global
markets.
Klaus Vedfelt/Getty Images
33
© McGraw Hill LLC
Product Development
New product or service.
Current target market.
Marvel launched several
successful series on Netflix,
including Jessica
Jones, Daredevil, Iron
Fist, and Luke Cage.
• By developing series designed
for this format, Marvel can
connect with its customers in a
new and important way.
Left: Dragon Images/Shutterstock, Right: Makistock/Shutterstock
34
© McGraw Hill LLC
Diversification
New product or service.
New market segment.
Related vs. unrelated
diversification.
• Marvel has pursued related
diversification with its home décor.
• If Marvel ventured into the child
day care service industry, it would
be an unrelated diversification
because it is so different from its
core business and therefore very
risky.
Photos (top): Interior Design/Shutterstock; (bottom): Ariel Skelley/Photodisc/Getty Images
35
© McGraw Hill LLC
PROGRESS CHECK (3 of 3)
1. What are the four growth strategies?
2. What type of strategy is growing the business
from existing customers?
3. Which strategy is the riskiest?
36
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Because learning changes everything.®
Chapter 3
Digital Marketing: Online,
Social, and Mobile
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 3.1 Describe the 4E framework of digital
marketing.
Learning Objective 3.2 Examine the seven critical elements of online
marketing.
Learning Objective 3.3 Understand the drivers of social media
engagement.
Learning Objective 3.4 Understand various motivations for using
mobile applications.
Learning Objective 3.5 Recognize and understand the components of
a digital marketing strategy.
Learning Objective 3.6 Understand the central factors in picking an
influencer partner.
3
© McGraw Hill LLC
Hilton
Regien Paassen/Shutterstock 4
© McGraw Hill LLC
Exhibit 3.1: The 4E Framework for Digital
Marketing
Access the text alternative for slide images.
5
© McGraw Hill LLC
Offer must be relevant
to its targeted
customer.
Relevancy can be
achieved by providing
personalized offers.
Marketers use many kinds of digital offers to excite customers,
and to excite them, an offer must be relevant to its targeted
customer. Lush Cosmetics encourages customers to post
pictures of themselves using its products on social media by
promising that if they use #LushLife, they might find
themselves featured on its official page.
Source: Lush Cosmetics/Instagram
6
Excite
the Customer
عروض
عروض مخصصه للعميل
© McGraw Hill LLC
product’s value
proposition and
communicate offered
benefits.
When marketing
ideas, the goal is to
improve people’s
well-being, along with
selling the underlying
concept.
To educate women about how to perform breast self-exams, the #KnowYourLemons
campaign posted pictures of a dozen lemons to teach people about 12 shapes and lumps
they should be looking for when they themselves for cancer each month.
Source: Worldwide Breast Cancer 7
Golden opportunity to
educate about the
Educate the Customer
© McGraw Hill LLC
Provide vivid information
about a firm’s goods and
services.
Simulate real experiences.
Sephora maintains its own YouTube channel with dedicated videos that
demonstrate how to use specific products like bright pink eyeshadow.
Source: Sephora USA, Inc. 8
Experience the Product or
Service
تقديم معلومات حية عن سلع وخدمات الشركة
محاكاة التجارب الحقيقية
© McGraw Hill LLC
Action, loyalty, and
commitment.
Positively engaged
consumers lead to more
profitability.
Engagement can also
backfire.
IKEA engages customers with its “Place” app that enables
customers to select an item from its catalog and then, by
using the camera within the app, visualize the item in their
home or office.
Source: IKEA Systems B.V. 9
Engage the Customer
© McGraw Hill LLC
PROGRESS CHECK (1 of 6)
1. What are the 4 Es?
2. What social media elements work best for each
of the 4 Es?
10
© McGraw Hill LLC
EXHIBIT 3.2: The 7C Online Marketing Framework
Access the text alternative for slide images.
11
© McGraw Hill LLC
1. Core Goals
The basis of any
marketing strategy is its
goals.
Determine specific
goals.
Align the goals with the
target market and align
the 7Cs with the goals. Hasbro has embraced online marketing to reflect its core goals. To
introduce this new brand called Hanazuki, it developed an entire
series that viewers can watch on YouTube. The Hanazuki page is
filled with animation, movement, and bright colors, encouraging
visitors to take their time exploring the different characters, watching
videos, downloading apps, and perhaps shopping too.
Source: Hasbro, Inc. 12
© McGraw Hill LLC
2. Context Elements
Design.
Navigation.
Must be in alignment
with the target market.
Because Walmart’s core goal is to encourage purchases, its commerce-
oriented website features a simple look and feel. Looking closely at the
design and color scheme, notice that Walmart’s home page aligns with its
adult target market. It is more traditionally focused on selling Hanazuki
merchandise than Hasbro, Inc. with little concern for the brand itself.
Source: Walmart Stores, Inc. 13
© McGraw Hill LLC
3. Content
Monitor to ensure
relevancy.
Devise appropriate
keywords to improve
organic search.
Implement SEM and
paid search.
The content of these messages must resonate with its target market, but
need not always showcase merchandise or services, as in the Facebook
post from the jewelry firm, Alex and Ani. The company is not showcasing its
jewelry per se, but rather providing a motivational quote that resonates with
young females, its primary target market.
Source: Alex and Ani, LLC 14
بحث مدفوع لمحركات البحث
عشان الشركة تطلع اول وحدة لما نبحث عن منتج
© McGraw Hill LLC
4. Community
Allow customers to
interact.
Use corporate and
professional blogs.
Engage in
Crowdsourcing.
Betabrand uses crowdsourcing by having its customers submit clothing
design ideas and feedback on items before they are manufactured.
Source: Betabrand 15
يسألو الناس شو بدهم منتجات, يشاركوهم االقتراحات
© McGraw Hill LLC
5. Communication
Clear, helpful, meaningful content enables effective
communication.
Enables interacting with, engaging, and educating
site visitors.
Provide a mechanism for customers to
communicate with the firm.
16
© McGraw Hill LLC
6. Commerce
Desktop usage is greater,
and conversion rates
higher, for online
purchases.
The most loyal customers
use multiple
channels.
Customers want a range of
online purchase options.
Through Sephora’s mobile app, Beauty Insider account holders can check their
loyalty points, access past purchase behavior, receive personalized
recommendations, scan items while in stores, and much more.
Source: Sephora USA, Inc. 17
© McGraw Hill LLC
7. Connection
Engage customers and
provide a call to
action.
Allow customers to
interact with the firm
continuously.
Enable positive
engagement.
A good website or blog engages customers and provides them with a
call to action. Warby Parker connects customers with four call-to-action
buttons inviting visitors to: get started, order frames to try on at home,
take a quiz, and shop on
line.
Source: Warby Parker 18
© McGraw Hill LLC
PROGRESS CHECK (2 of 6)
1. Describe the components of the 7C online
marketing framework.
2. Differentiate between organic and paid search.
19
© McGraw Hill LLC
Exhibit 3.3:
The Wheel of Social Media Engagement
20
© McGraw Hill LLC
The Information Effect
Outcome in which relevant
information is spread by
firms or individuals to other
members of the social
network.
BigTunaOnline/Shutterstock 21
© McGraw Hill LLC
The Connected Effect
Outcome that satisfies humans’ innate need to connect with
other people.
Source: William Perugini/Shutterstock 22
© McGraw Hill LLC
The Network Effect
Outcome in which every post is spread instantaneously
across social media.
Source: Shutterstock/Metamorworks 23
© McGraw Hill LLC
The Dynamic Effect
Information is exchanged to network participants through
back-and-forth communications.
Examines how people flow in and out of networked
communities as their interests change.
Rawpixel.com/Shutterstock 24
© McGraw Hill LLC
The Timeliness Effect
Firms must engage with the customer at the right
place and time.
Using beacon technology, Coca-Cola is able to engage customers in
a timely manner by offering moviegoers a free Coke at the moment
they walk into a movie theater.
Source: SeongJoon Cho/Bloomberg/Getty Images 25
© McGraw Hill LLC
PROGRESS CHECK (3 of 6)
1. What are the five drivers of social media
engagement described in the Wheel of Social
Media Engagement?
26
© McGraw Hill LLC
Going Mobile and Social
Exhibit 3.4: Seven Primary Motivations for Mobile App Usage
Need for “Me Time”
Need to Socialize
Need to Shop
(showrooming)
Need to Accomplish
Need to Prepare
Need to Discover
Need to Self-Express
With more than 3 billion downloads, Candy Crush Saga clearly fulfills for
many people an important need for unproductive “me time.”
Access the text alternative for slide images.
Source: Alexat25/Shutterstock 27
© McGraw Hill LLC
App Pricing Models
28
© McGraw Hill LLC
PROGRESS CHECK (4 of 6)
1. What are the seven types of customer
motivations for using mobile
apps?
2. What are the four options for pricing mobile
apps?
3. What are some of the most popular types of
mobile applications?
29
© McGraw Hill LLC
How Do Firms Engage Their Customers?
Exhibit 3.4: Social Media Engagement Process
Access the text alternative for slide images.
30
الصورة هنا افضل
© McGraw Hill LLC
Listening helps
determine digital
marketing objectives and
strategies.
Sentimental analysis
allows marketers to
analyze and determine
consumers attitudes and
preferences.
Other companies perform their own analyses, effectively leveraging their
existing capacities for listening to customers. Zappos is known for its
remarkable customer service and attracts plenty of buzz about its
offerings. It takes the information it gathers from listening to customers to
design strategies that emphasize what they like most.
Source: Zappos.com, Inc. 31
Listen ———
© McGraw Hill LLC
Analyze
32
© McGraw Hill LLC
Exhibit 3.5: How to Do a Digital Marketing
Campaign
Access the text alternative for slide images.
33
© McGraw Hill LLC
Do
Develop and implement
campaigns using social
media.
Effective implementation
based on social and
mobile media activity.
EXHIBIT 3.6 Example Facebook Targeting Choices
Source: Facebook 34
© McGraw Hill LLC
PROGRESS CHECK (5 of 6)
1. What are the components of a digital marketing
strategy?
35
© McGraw Hill LLC
Influencer Marketing
A marketing strategy that uses
opinion leaders, popular on social
media, to drive marketing
messages to a targeted
audience.
Firms hire (or encourage) these
well-known names to promote
brand messages to their networks
of followers.
Big-time influencers like
Ariana Grande have millions
of followers and can
command almost a mil-lion
dollars for a sponsored post.
Source: Lev Radin/Shutterstock 36
© McGraw Hill LLC
Assessing the Efficacy of Influencers
Relevance
Response
Reach
Return
Influencers like Selena Gomez can reach millions of potential
customers for Coca-Cola with an Instagram post like this one, which
depicts her drinking a Coke with the lyrics from one of her songs on
the bottle.
Source: Selena Gomez/Instagram
37
© McGraw Hill LLC
Exhibit 3.8: Influencer Marketing Chain of
Events
Access the text alternative for slide images.
38
© McGraw Hill LLC
Exhibit 3.9: Types of Influencers
Type of Influencer Definition Example Key Channels Average Cost per Post
Celebrity Large following, widely
recognized
Nespresso relies heavily on
George Clooney to promote its
products in marketing across
platforms, leveraging his cool
image to enhance its appeal but
also his reputation for
environmental sustainability to
promote its own efforts along these
lines
Social media, print,
television
$3,000–$500,000
Micro Modest following, niche
interest
NUX Active (athletic clothing
brand) worked with Sydney
Loveleigh Nelson, whose health
and fitness posts have earned her
about 21,000 followers
Posts on social media
sites, shared promo codes
$80–$500
Blog Writes for a blog and has
attracted readers and
subscribers with that
content
The FaceGym spa sponsored a
blog post by lifestyle blogger
Hannah Bronfman to provide
information about its services and
treatments
Reviews on blog, guest
blog posts
$
40
0–$5,500
Social media Popular on social platforms
(Instagram, YouTube,
Twitter) among followers in
specific target audiences
LaCroix worked with nutritionist
Joy Bauer to create a Twitter post
of a recipe she had created, using
the
product
Pictures posted with the
product, shared hashtags,
videos featuring the
product
$100–$500,000
Specialized Key opinion leader or
expert in a specific field
BoxyCharm, a subscription beauty
box service, worked with Kandee
Johnson, a professional makeup
artist, to make videos that
explained each product included in
a box
Social media, tutorials,
reviews, blog posts,
sponsored print articles,
articles in academic
journals
$500–$5,000
Source: Kristen Baker, “What Will Influencer Marketing Look Like in 2020?,” HubSpot, December 2, 2019, https://blog.hubspot.com/marketing/how-to-work-with-influencers
39
© McGraw Hill LLC
Ethical Considerations for Influencer Marketing
Fraudulent Influence
• The incentive to boost follower numbers accordingly has led to
various unethical behaviors.
Disclosing Advertising
• Intent if an influencer is being paid to promote a product, that
information should be clear in the post.
Sincerity
• Effective influence attempts require followers to believe that the
influencer actually likes and appreciates the
product.
40
© McGraw Hill LLC
PROGRESS CHECK (6 of 6)
1. How should firms choose and assess the efficacy
of influencers?
41
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Chapter 5
Analyzing the Marketing
Environment
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 5.1 Outline how customers, the
company, competitors, corporate partners, and the
physical environment affect marketing strategy.
Learning Objective 5.2 Explain why marketers must
consider their macroenvironment when they make
decisions.
Learning Objective 5.3 Identify various social trends that
impact marketing.
Learning Objective 5.4 Examine the technological
advances that are influencing marketers.
3
© McGraw Hill LLC
Exhibit 5.2: Understanding the Marketing
Environment
Access the text alternative for slide images.
4
© McGraw Hill LLC
Exhibit 5.2: The Immediate Environment
5
© McGraw Hill LLC
Company Capabilities
Successful marketing
firms focus on
satisfying customer
needs that match their
core competencies.
Corning initially made its name by producing the glass enclosure to encase
Thomas Edison’s lightbulb. But by successfully leveraging its core
competency in glass manufacturing while also recognizing marketplace
trends toward mobile devices, Corning shifted its focus.
Somchai Som/Shutterstock 6
© McGraw Hill LLC
Competitors
Know their strengths,
weaknesses, and likely
reactions to firm’s
marketing activities.
10’000 Hours/Getty Images 7
© McGraw Hill LLC
Corporate Partners
Parties that work
with the focal firm.
Nau works with
manufacturers to
develop clothing
from sustainable
materials.
Nau works with its corporate partners to develop socially
responsible outdoor (left) and urban (right) apparel.
(Left): Philipp Nemenz/Getty Images; (right): PeopleImages/Getty Images 8
© McGraw Hill LLC
Physical Environment
Sustainable development:
Includes land, water, air, and
living organisms.
Products and services are
influenced by how they are
used in the physical
environment, and in turn they
can also influence the physical
environment.
Examples:
• Energy Trends.
• Greener Practices and
Green Marketing.
• Greenwashing.
Caia Image / Image Source 9
© McGraw Hill LLC
17 Global Goals of Sustainable Development
EXHIBIT 5.3 Global Goals of Sustainable Development
From the United Nations, “Sustainable Development Goals: 17 Goals to Transform Our World,” Last Modified March 18, 2019. The content of this
publication has not been approved by the United Nations and does not reflect the views of the United Nations or its officials or Member States.
https://www.un.org/sustainabledevelopment/news/communications-material/.
Access the text alternative for slide images.
10
© McGraw Hill LLC
PROGRESS CHECK (1 of 2)
1. What are the components of the immediate
environment?
11
© McGraw Hill LLC
Macroenvironmental Factors
EXHIBIT 5.4 The Macroenvironment
12
© McGraw Hill LLC
Culture
Shared meanings, beliefs, morals, values, and customs of a group of
people transmitted by words, literature, and institutions.
Country Culture
• Subtler aspects can be difficult to navigate.
• Sometimes best answer is to establish universal appeal within specific
identities of country culture.
Regional Culture
• For national and global chains, particularly important to cater to
regional preferences.
• McDonald’s – slightly different variations of staple menu.
13
© McGraw Hill LLC
Demographics
Characteristics of the human
population and segments,
especially those used to
identify consumer markets.
Provides an easily
understood snapshot of the
typical consumer in a specific
target market.
Marketers use data about
consumers to target offers.
census.gov
Shutterstock / astel design 14
http://www.census.gov/
http://www.census.gov/
© McGraw Hill LLC
Exhibit 5.5: Generational Cohorts
Generational
cohort Gen α Gen Z Gen Y Gen X
Baby
Boomers
Range of birth years
2010–
2025
1997–
2009
1981–
1996
1965–
1980
1946–
1964
Age in 2020 0–10 11–23 24–39 40–55 56–74
Millennials and the Rise of the ‘Experience Economy’
Access the text alternative for slide images.
15
© McGraw Hill LLC
Income
Purchasing power is tied
to income.
Marketing opportunities
exist across the broad
range of income
distribution.
SC Johnson targets the bottom of the
income pyramid by selling pest control
products in Ghana.
NNehring/iStock/Getty Images 16
© McGraw Hill LLC
Education
Education is related to income, which determines
spending power.
Monkey Business Images/Shutterstock 17
© McGraw Hill LLC
Gender
Male/female roles have
been shifting.
Marketing has changed
to reflect these shifts.
• Firms may need to be
careful about gender
neutrality in
positioning their
products.
Gorodenkoff/Shutterstock 18
© McGraw Hill LLC
Ethnicity
Approximately 80% of
all population growth in
the next 20 years is
expected to come from
minority communities
By 2030 the Hispanic
population in the U.S. is
expected to reach more
than 72 million.
Image Source/Getty Images 19
© McGraw Hill LLC
Social Trends
Sustainability
Health and Wellness
Efficient Utilization and
Distribution of Food
20
© McGraw Hill LLC
Sustainability
UN Sustainable
Development Goals
focus on social issues
for basic needs.
Certifications from
various agencies may
be important.
pixelliebe/Shutterstock 21
© McGraw Hill LLC
Health and Wellness
Child and adult obesity
New markets focused
on healthy living
Mobile apps that
support health and
wellness
Shutterstock/Rawpixel.com 22
© McGraw Hill LLC
Efficient Utilization and Distribution of Food
Diet-related Products
Reducing Hunger
Reducing Food Waste
Steve Cukrov / Alamy 23
© McGraw Hill LLC
Technological Advances
Technology impacts every aspect of marketing:
• New products
and services.
• New forms of communication.
• New retail channels.
Growing importance of mobile devices
New cutting-edge technology:
• Artificial Intelligence.
• Robotics.
• Internet of Things
(IoT).
• Privacy Concerns.
Pepper the robot is used in restaurants, hotels, and coffee shops.
Dani Metaz/Shutterstock 24
© McGraw Hill LLC
Economic Situation
Affects the way consumers buy products and services and
spend
money.
Monitor the economic situation in home country and abroad.
Major factors to monitor:
• Inflation.
• Foreign currency fluctuations.
• Interest rates.
Customers formed in line to bank counter
Consumer Confidence Index
Hiya Images/Corbis/Getty Images 25
http://www.conference-board.org/data/consumerconfidence.cfm
http://www.conference-board.org/data/consumerconfidence.cfm
© McGraw Hill LLC
Political/Legal Environment1
Comprises political parties,
government organizations,
and legislation and laws.
Firms must understand and
comply with
legislation regarding:
• Fair competition.
• Consumer protection.
• Industry-specific regulation.
olegdudko © 123RF.com 26
© McGraw Hill LLC
Exhibit 5.6: Consumer Protection Legislation
(1 of 2)
Year Law Description
1906 Federal Food and Drug Act Created the Food and Drug Administration (FDA);
prohibited the manufacture or sale of adulterated or
fraudulently labeled food and drug products.
1914 Federal Trade Commission Act Established the Federal Trade Commission (FTC) to
regulate unfair competitive practices and practices that
deceive or are unfair to consumers.
1966 Fair Packaging and Labeling Act Regulates packaging and labeling of consumer goods;
requires manufacturers to state the contents of the
package, who made it, and the amounts contained
within.
1966 Child Protection Act Prohibits the sale of harmful toys and components to
children; sets the standard for child- resistant
packaging.
1967 Federal Cigarette Labeling
and Advertising
Act
Requires cigarette packages to display this warning:
“Warning: The Surgeon General Has Determined That
Cigarette Smoking Is Dangerous to Your Health.”
1972 Consumer Product Safety Act Created the Consumer Product Safety Commission
(CPSC), which has the authority to regulate safety
standards for consumer products.
27
© McGraw Hill LLC
Exhibit 5.6: Consumer Protection Legislation
(2 of 2)
Year Law Description
1990 Children’s Television Act Limits the number of commercials shown during
children’s programming.
1990 Nutrition Labeling and Education
Act
Requires food manufacturers to display nutritional
contents on product labels.
1995 Telemarketing Sales Rule Regulates fraudulent activities conducted over the
telephone. Violators are subject to fines and actions
enforced by the FTC.
2003 Controlling the Assault of Non-
Solicited Pornography and
Marketing Act of 2003 (CAN-
SPAM Act)
Prohibits misleading commercial e-mail, particularly
misleading “subject” and “from” lines.
2003 Amendment to the
Telemarketing Sales Rule
Establishes a National Do Not Call Registry, requiring
telemarketers to abstain from calling consumers who
opt to be placed on the list.
2003 Do Not Spam Law Created to reduce spam or unwarranted e-mails.
2010 Financial Reform Law Created the Consumer Financial Protection Bureau,
whose aim is to enforce appropriate consumer-oriented
regulations on a number of financial firms such as banks,
mortgage businesses, and payday and student lenders.
It also set up the Financial Services Oversight Council to
act as an early warning system.
28
© McGraw Hill LLC
Responding to the Environment
Implement strategies
that respond to multiple
environmental forces.
Marketers that succeed
are the ones that
respond quickly,
accurately, and
sensitively to
consumers.
t_kimura/Getty Images 29
© McGraw Hill LLC
PROGRESS CHECK (2 of 2)
1. What are the six key macroeconomic factors?
2. Differentiate between country culture and
regional culture.
3. What are some important social trends shaping
consumer values and shopping behavior?
30
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Chapter 6
Consumer Behavior
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 6.1 Articulate the steps in the consumer
buying process.
Learning Objective 6.2 Describe the difference between functional and
psychological needs.
Learning Objective 6.3 Describe factors that affect information search.
Learning Objective 6.4 Discuss postpurchase outcomes.
Learning Objective 6.5 List the factors that affect the consumer
decision process.
Learning Objective 6.6 Describe how involvement influences the
consumer decision process.
3
© McGraw Hill LLC
Exhibit 6.1: The Consumer Decision Process
4
© McGraw Hill LLC
Need Recognition
Wants are goods or services that are not necessarily needed but are
desired.
• Regardless of the level of your hunger, your desire for ice cream will
never be satisfied by any type of salad.
Types of needs
• Function needs
• Psychological needs
What needs does a BMW K1600 satisfy?
Bill Pugliano/Getty Images 5
© McGraw Hill LLC
Search for Information
Internal and external searches for information
© Image Source, all rights reserved. 6
© McGraw Hill LLC
Factors Affecting
Consumers’ Search Processes
Perceived Benefits Perceived Costs
Shutterstock / bleakstar 7
© McGraw Hill LLC
The Locus of Control
Internal locus of control =
more search activities
External locus of control =
fate or external factors
8
© McGraw Hill LLC
Actual or Perceived Risk
9
© McGraw Hill LLC
Evaluation of Alternatives: Attribute Sets
Universal
Retrieval
Evoked
10
© McGraw Hill LLC
Evaluation of Alternatives
What are some of the features of a vacation
that would in your evaluative criteria?
Shutterstock / Juancat 11
© McGraw Hill LLC
Exhibit 6.2: Consumer Decision Rules
Compensatory Multi-Attribute Model for Buying Cereal
If the consumer makes a decision using a compensatory
decision rule, which cereal will they choose?
Taste Calories Natural/Organic
Claims
Price Overall
Score
Cheerios 10 8 6 8 8.2
Post 8 9 8 3 7.1
Kashi 6 8 10 5 7.2
If the consumer makes a decision based only on Natural or
Organic claims, which cereal will they choose?
12
© McGraw Hill LLC
Choice Architecture
Impulse products Nudge
Defaults
Left: stocking © 123RF.com; Right: Iakov Filimonov/Shutterstock; Bottom: Shutterstock/ever 13
© McGraw Hill LLC
Purchase and Consumption
14
© McGraw Hill LLC
Exhibit 6.3: Components of Post purchase
Outcomes
15
© McGraw Hill LLC
Post purchase Customer Satisfaction
• Build realistic expectations, not too high and not too
low.
• Demonstrate correct product use—improper usage
can cause dissatisfaction.
• Stand behind the product or service by providing
money-back guarantees and
warranties.
• Encourage customer feedback, which cuts down on
negative word of mouth and helps marketers adjust
their offerings.
• Periodically make contact with customers and thank
them for their support.
16
© McGraw Hill LLC
Post purchase Cognitive Dissonance
More likely for products that are:
• Expensive.
• Infrequently purchased.
• Do not work as intended.
• Associated with high levels
of risk.
Firms attempt to reduce
dissonance by reinforcing the
decision:
• Return policies.
• Thank-you letters.
• Congratulations letters.
• Tags on garments.
Shutterstock/Atstock Productions 17
© McGraw Hill LLC
Post purchase Customer Loyalty
Marketers attempt to
solidify a loyal
relationship.
Firms use analytics
software and customer
relationship
management (CRM)
programs to acquire and
retain loyal customers.
Marketers, such as Amazon, owners of Whole Foods, collect customer
information for their CRM programs from their loyalty cards.
Smith Collection/Gado/Getty Images 18
© McGraw Hill LLC
Post purchase
Undesirable Consumer Behavior
Negative word of mouth
• Personal blogs, Twitter,
corporate websites.
Companies use listening
software to identify negative
word of mouth.
If a customer believes a
complaint will result in
positive action, negative
word of mouth is less likely.
Whirlpool posts good as well as bad comments on Twitter. It
believes that posting negative comments opens up
discussions and emphasizes the proactive measures the
company is taking to remedy service or product failures.
Source: Whirlpool 19
© McGraw Hill LLC
PROGRESS CHECK (1 of 3)
1. Name the five stages in the consumer decision process.
2. What is the difference between a need and a want?
3. Distinguish between functional and psychological needs.
4. What are the various types of perceived risk?
5. What are the differences between compensatory and
noncompensatory decision rules?
6. How do firms enhance post purchase satisfaction and
reduce cognitive dissonance?
20
© McGraw Hill LLC
Factors Influencing the
Consumer Decision Process
EXHIBIT 6.4 Factors Affecting the Consumer Decision Process
Access the text alternative for slide images.
21
© McGraw Hill LLC
Psychological Factors: Motives
EXHIBIT 6.5 Maslow’s Hierarchy of Needs
22
© McGraw Hill LLC
Psychological Factors: Attitude
Cognitive.
Affective.
Behavioral.
Pixel-Shot/Shutterstock 23
© McGraw Hill LLC
Psychological Factors: Perception
Selection.
Organization.
Interpretation.
How has society’s perception of people with
tattoos changed in recent years?
A. and I. Kruk/Shutterstock 24
© McGraw Hill LLC
Psychological Factors:
Learning and Memory
25
© McGraw Hill LLC
Psychological Factors:
Lifestyle
Lifestyle involves
decisions in spending
time and money.
Actual vs. Perceived
Lifestyle
Shutterstock/STUDIO DREAM 26
© McGraw Hill LLC
Social Factors: Family
Firms must consider how
families make purchase
decisions and understand
how various family
members might influence
these decisions.
When families make
purchase decisions, they
often consider the needs
of all the family
members.
Peter Muller 27
© McGraw Hill LLC
Social Factors: Reference Groups
28
© McGraw Hill LLC
Social Factors: Culture
The shared meanings,
beliefs, morals, values, and
customs of a group of people.
Like reference groups,
cultures influence consumer
behavior.
A cultural group might be as
small as a reference group at
school or as large as a
country or religion.
Jacob Lund/Shutterstock 29
© McGraw Hill LLC
Situational Factors
Purchase Situation.
Sensory Situation.
Temporal State.
© Fancy / Alamy 30
© McGraw Hill LLC
Sensory Situation
Visual.
Auditory.
Olfactory.
Tactile.
Taste.
© Niall McDiarmid / Alamy 31
© McGraw Hill LLC
Purchase Situation
Situational factors may influence your purchase
decisions.
If you are buying jewelry for yourself, you might browse the clearance counter at Kay Jewelers (left). But
if you are buying a gift for your best friend’s birthday, you may go to Tiffany & Co (right).
© Niall McDiarmid / Alamy 32
© McGraw Hill LLC
Temporal State
A purchase situation may have different appeal
levels depending on time of day and the type of
person a consumer is.
Mood swings can alter consumer behavior.
oatawa/Shutterstock 33
© McGraw Hill LLC
PROGRESS CHECK (2 of 3)
1. What are some examples of specific needs
suggested by Maslow’s hierarchy of needs?
2. Which social factors likely have the most
influence on (a) the purchase of a new outfit for a
job interview and (b) the choice of a college to
attend?
3. What situational factors do firms use to influence
consumer purchase behavior?
34
© McGraw Hill LLC
Involvement and Consumer Buying Decisions
Exhibit 6.6: Elaboration Likelihood Model
Access the text alternative for slide images.
35
© McGraw Hill LLC
Involvement and Consumer Buying Decisions
Types of Buying Decisions
Extended Problem Solving
Limited Problem Solving
• Impulse Buying.
• Habitual Decision
Making.
Jeff Greenough/Blend Images/Getty Images 36
© McGraw Hill LLC
PROGRESS CHECK (3 of 3)
1. How do low- versus high-involvement consumers
process the information in an advertisement?
2. What is the difference between extended versus
limited problem solving?
37
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Because learning changes everything.®
Chapter 7
Business-to-Business
Marketing
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 7.1 Describe the ways in which
business-to-business (B2B) firms segment their
markets.
Learning Objective 7.2 List the steps in the B2B buying
process.
Learning Objective 7.3 Identify the roles within the buying
center.
Learning Objective 7.4 Describe the different types of
organizational cultures.
Learning Objective 7.5 Detail different buying situations.
3
© McGraw Hill LLC
Exhibit 7.1: B2B Markets
4
© McGraw Hill LLC
Manufacturers and Service Providers
Buy raw materials, components, or parts.
Manufacture their own goods and ancillary services.
German-based Volkswagen Group, the largest auto
manufacturer in Europe, owns and distributes numerous
brands.
rvlsoft/Shutterstock & Alexander Kirch/Shutterstock 5
© McGraw Hill LLC
Resellers
Resellers are marketing
intermediaries that resell
manufactured products
without significantly
altering their form.
• Wholesalers
• Distributors
•
Retailers
Syda Productions/Shutterstock 6
© McGraw Hill LLC
Institutions
Hospitals, educational
institutions, and
religious organizations
Examples of purchases
by institutions:
• Textbooks.
• Capital construction.
• Equipment.
• Supplies.
• Food.
• Janitorial services.
Witthaya Prasongsin/Moment/Getty Images 7
© McGraw Hill LLC
Government
In most countries,
government is one the
largest purchasers of goods
and services.
Local, state, and federal
governments.
The U.S. government
spends approximately $4
trillion annually; Department
of Defense works with
cybersecurity firms.
Wright Studio/Shutterstock 8
© McGraw Hill LLC
PROGRESS CHECK (1 of 4)
1. What are the various B2B markets?
9
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The B2B Buying Process
EXHIBIT 7.2 Business-to-Business Buying Process
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10
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Stage 1: Need Recognition
The B2B process begins
with need recognition.
Can be generated
internally or externally.
stockbroker/123RF 11
© McGraw Hill LLC
Stage 2: Product Specification
After recognizing the
need and considering
alternative solutions,
create a list of potential
specifications.
Used by
suppliers/vendors to
develop proposals.
Getty Images/Hero Images 12
© McGraw Hill LLC
Stage 3: RFP Process
Request for Proposal
Vendors or suppliers are invited to bid on supplying
required components and services.
Purchasing company may simply post its RFP
needs on its website, work through various B2B web
portals, or inform their preferred vendors directly.
Contracts Opportunities
13
https://beta.sam.gov/
https://beta.sam.gov/
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Step 4: Proposal Analysis, Vendor
Negotiation, and Selection
The buying organization
evaluates all the
proposals received in
response to an RFP.
Often several vendors
are negotiating against
each other.
Considerations other
than price play a role in
final selection.
Shironosov/Getty Images 14
© McGraw Hill LLC
Step 5: Order Specification
Firm places the order
with its preferred
supplier (or suppliers).
The exact details of the
purchase are specified,
including penalties for
noncompliance.
All terms are detailed
including payment.
Shutterstock / Bacho 15
© McGraw Hill LLC
Stage 6: Vendor Performance Assessment
Using Metrics
EXHIBIT 7.3: Evaluating a Vendor’s Performance
(1)
Key Issues
(2)
Importance
Score
(3)
Vendor’s
Performance
(4)
Importance ×
Performance
(2) × (3)
Customer Service 0.40 5 2.0
Issue Resolution 0.20 4 0.8
Delivery 0.10 5 0.5
Quality 0.30 3 0.9
Total 1.0 4.2
16
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PROGRESS CHECK (2 of 4)
1. Identify the stages in the B2B buying process.
2. How do you perform a vendor analysis?
17
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The Buying Center
Exhibit 7.4: Buying Center Roles
18
© McGraw Hill LLC
Example of Buying Center Roles for a Hospital
Initiator: Doctor
Influencer: Medical device supplier, pharmacy
Decider: Hospital
Buyer: Materials manager
User: Patient
Gatekeeper: Insurance company
19
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Organizational Culture
EXHIBIT 7.5 Organizational Buying Culture
20
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Building B2B Relationships
There are a multitude of ways to enhance B2B
relationships, including the following examples:
• Blogs and social media (LinkedIn, Twitter, Snapchat)
can:
• Build awareness.
• Provide search engine results.
• Educate clients about
products and services.
• “Warm up” a seemingly cold corporate culture.
• White papers prepared by B2B marketers provide
information while not appearing as promotion.
21
© McGraw Hill LLC
PROGRESS CHECK (3 of 4)
1. What are the six buying roles?
2. What are the types of cultures that exist in
buying centers?
22
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Buying Situations
EXHIBIT 7.6 Buying Situations
23
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New Buy
Most likely when purchasing for the first time.
Usually quite involved.
The buying center will probably use all six steps in
the buying process and involve many people in
the buying decision.
24
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Modified Rebuy
Purchasing a similar
product but changing
specifications such as
price, quality level,
customer service level,
options, etc.
Current vendors have
an advantage.
Shutterstock/BabLab 25
© McGraw Hill LLC
Straight Rebuys
Buying additional units of products that have been
previously purchased.
Most B2B purchases fall into this category.
Usually, the buyer is the only member of the buying
center involved.
26
© McGraw Hill LLC
Identify the Type of Buying Situation
The manager for a Kroger supermarket considers re-
ordering items for his store. He will negotiate price
concession and quality improvements. The manager
is engaging in a(n) blank
situation.
Denise is sharing with coworkers, “This customer just
made another big order, and they just keep on
coming.” Denise is likely selling to a customer in what
kind of buying situation?
Benjamin, the new sales manager for Burns &
Company, was alarmed that the representatives used
paper to track customer information. He made a
decision to upgrade to a CRM system. For Benjamin,
this represented a(n) blank situation.
27
© McGraw Hill LLC
PROGRESS CHECK (4 of 4)
1. How do new buy, straight rebuy, and modified
rebuy differ?
28
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Because learning changes everything.®
Chapter 8
Global Marketing
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 8.1 Describe the components of a
country market assessment.
Learning Objective 8.2 Understand the marketing
opportunities in BRIC countries.
Learning Objective 8.3 Identify the various market entry
strategies.
Learning Objective 8.4 Highlight the similarities and
differences between a domestic marketing strategy
and a global marketing strategy.
3
© McGraw Hill LLC
Globalization
The processes by
which goods,
services, capital,
people, information,
and ideas flow
across national
borders.
deepblue4you/Getty Images 4
© McGraw Hill LLC
Assessing Global Markets
EXHIBIT 8.1 Components of a Country Market Assessment
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5
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Evaluating the General Economic Environment
Using Economic Metrics
Trade deficit or
surplus
Gross domestic
product (GDP)
Purchasing
power parity
(PPP)
Gross national
income (GNI)
6
© McGraw Hill LLC
Evaluating Market Size
and Population Growth Rate
Population growth dispersal: strong demand
in BRIC (Brazil, Russia, India, China) nations
Distribution of the population within a
particular region: rural vs. urban
Shutterstock / Pablo Scapinachis 7
© McGraw Hill LLC
Exhibit 8.2 Big Mac Index
Source: The Economist, “The Big Mac Index,” July 13, 2017,
www.economist.com/content/big-mac-index.
Access the text alternative for slide images.
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© McGraw Hill LLC
Evaluating Real Income
Firms can make
adjustments to an existing
product or change the price
to meet the unique needs of
a particular country market.
For the Chinese market,
Haier sells washing
machines that can wash
both clothes and vegetables.
Shutterstock/Africa Studio 9
© McGraw Hill LLC
Analyzing Infrastructure and
Technological Capabilities
Marketers are especially concerned with four
key elements of a country’s infrastructure:
• Transportation.
• Distribution Channels.
• Communications.
• Commerce.
10
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Analyzing Governmental Actions
11
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Tariffs and
Quotas
Tariffs
• Tax on Imported
good.
• Artificially raises
prices.
• Lowers demand.
Quotas
• Minimum or
maximum limit.
• Reduces availability
of imported
goods.
Both benefit domestically made products because
they reduce foreign competition.
12
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Exchange Control
Regulation of a country’s currency
exchange rate: the measure of how much
one currency is worth in relation to
another.
In recent years, the value of the U.S.
dollar has changed significantly
compared with other important world
currencies.
Prices are nearly always lower in the
country of origin because there are no
customs or import duties to pay, and
international transportation expenses are
less than domestic ones.
© Sean Pavone / Alamy Stock Photo 13
© McGraw Hill LLC
Trade Agreements
A trade agreement is an intergovernmental
agreement designed to manage and promote trade
activities for a specific region, and a trading bloc
consists of those countries that have signed a
particular trade agreement.
• There have been recent challenges to long-
established regional trade agreements (RTAs),
• Yet RTAs account for more than half of
international trade.
Source: Information about EU members is from http://europa.eu/about-eu/countries/./index_en.htm 14
http://europa.eu/about-eu/countries/index_en.htm
http://europa.eu/about-eu/countries/index_en.htm
http://europa.eu/about-eu/countries/index_en.htm
http://europa.eu/about-eu/countries/index_en.htm
http://europa.eu/about-eu/countries/index_en.htm
http://europa.eu/about-eu/countries/index_en.htm
© McGraw Hill LLC
Analyzing Sociocultural Factors
Understanding another culture is crucial to the
success of a global marketing initiative.
Exists on two levels:
• Visible artifacts.
• Underlying values.
Participants in a parade during the 23rd International
Mariachi & Charros festival in Guadalajara Mexico
Kobby Dagan/Shutterstock 15
© McGraw Hill LLC
Ethical & Societal Dilemma 8.2: Dolce &
Gabbana Faces Public Scrutiny in China
Dolce & Gabbana learned a tough lesson about the
importance of embracing and promoting a local
audience’s culture in a positive way.
An international fashion crisis ensued when designer Dolce & Gabbana released videos
satirizing the Chinese dialect and dining customs. Alibaba and JD.com, China’s two largest e-
commerce sites, retaliated by removing Dolce & Gabbana products from their online stores.
Davydenko Yuliia/Shutterstock 16
© McGraw Hill LLC
Geert Hofstede’s Cultural Dimensions
Power
distance
Uncertainty
avoidance
Individualism Masculinity
Time
orientation
IndulgenceCulture
17
© McGraw Hill LLC
Exhibit 8.3: Country Clusters
Power Distance and Individualism
Access the text alternative for slide images.
Source: Geert Hofstede, Gert Jan Hofstede, and Michael Minkov, Cultures and Organizations, Software of the Mind, Third Revised Edition, McGraw-Hill 2010, ISBN: 0-07-
166418-1. © Geert Hofstede B.V. quoted with permission.
18
© McGraw Hill LLC
The Appeal of the BRIC Countries
Great potential for growth in the global community:
• Brazil.
• Russia.
• India.
• China.
19
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PROGRESS CHECK (1 of 3)
1. What metrics can help analyze the economic
environment of a country?
2. What types of governmental actions should we
be concerned about as we evaluate a country?
3. What are some important cultural dimensions?
4. Why are each of the BRIC countries viewed as
potential candidates for global expansion?
20
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Exhibit 8.4: Global Entry Strategies
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21
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Exporting
Exporting means producing
goods in one country and
selling them in another.
This entry strategy requires
the least financial risk but
also allows for only a limited
return to the exporting firm.
Rolex exports its watches to countries all over the
world from its factory in Switzerland.
Jeafish Ping/Shutterstock 22
© McGraw Hill LLC
Franchising
A franchising contract allows the
franchisee to operate a
business—a retail product or
service firm or a B2B provider—
using the name and business
format developed and supported
by the franchisor.
Many of the best-known retailers
in the United States are also
successful global franchisors,
including McDonald’s, Pizza Hut,
Starbucks, Domino’s Pizza, KFC,
and Holiday Inn.
Elizabeth Cummings/Ecummings00/123RF 23
© McGraw Hill LLC
Strategic Alliance
Collaborative
relationships between
independent firms.
The partnering firms do
not create an equity
partnership.
Xinhua/Alamy Stock Photo 24
© McGraw Hill LLC
Joint Venture
A joint venture is formed
when a firm entering a
market pools its resources
with those of a local firm.
Ownership, control, and
profits are shared.
The local partner offers
the foreign entrant greater
understanding of the
market and access to
resources such as
vendors and real estate.
Atstock Productions/Shutterstock 25
© McGraw Hill LLC
Direct Investment
Direct investment requires a
firm to maintain 100 percent
ownership of its plants,
operation facilities, and offices
in a foreign country, often
through the formation of wholly
owned subsidiaries.
Requires the highest level of
investment and exposes the
firm to significant risks,
including the loss of its
operating and/or initial
investments.
China-based Lenovo purchased U.S.-based IBM’s PC division
and Motorola’s handset business unit and has parallel
headquarters in both Beijing and North Carolina.
Source: Lenovo 26
© McGraw Hill LLC
PROGRESS CHECK (2 of 3)
1. Which global entry strategy has the least risk
and why?
2. Which global entry strategy has the most risk
and why?
27
© McGraw Hill LLC
Choosing a Global Marketing Strategy:
Segmentation, Targeting, and Positioning (STP)
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28
© McGraw Hill LLC
The Global Marketing Mix:
Global Product or Service Strategies
Return to the parent-slide glossary
term.
Access the text alternative for slide images.
29
© McGraw Hill LLC
The Global Marketing Mix:
Global
Pricing Strategies
30
© McGraw Hill LLC
The Global Marketing Mix:
Global Distribution Strategies
Global distribution
networks form complex
value chains.
In developing countries
consumers may shop at
small, family-owned
stores.
Suppliers must be
creative in delivering to
these outlets.
Virojt Changyencham/Moment/Getty Images 31
© McGraw Hill LLC
The Global Marketing Mix:
Global Communication Strategies
Literacy levels vary by country.
Differences in language and customs affect
communication.
Cultural and religious differences also matter.
Shutterstock / Pyty 32
© McGraw Hill LLC
PROGRESS CHECK (3 of 3)
1. What are the components of a global marketing
strategy?
2. What are the three global product strategies?
33
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Chapter 9
Segmentation, Targeting,
and Positioning
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 9.1 Outline the different methods of
segmenting a market.
Learning Objective 9.2 Describe how firms determine
whether a segment is attractive and therefore worth
pursuing.
Learning Objective 9.3 Articulate the difference among
targeting strategies: undifferentiated, differentiated,
concentrated, or micromarketing.
Learning Objective 9.4 Determine the value proposition.
Learning Objective 9.5 Define positioning and describe
how firms do it.
3
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The Segmentation, Targeting, and
Positioning Process
EXHIBIT 9.1 The Segmentation, Targeting, and Positioning (STP) Process
Access the text alternative for slide images.
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Step 1: Establish the Overall Strategy
or Objectives
Derived from mission
and objectives
Consistent with
SWOT
Food marketers, for instance,
divide the traditional pasta sauce
landscape into with or without
meat. This segmentation method is
based on what consumers derive
from the products.
Shutterstock/svario photo 5
© McGraw Hill LLC
Step 2: Use Segmentation Methods
EXHIBIT 9.2 Methods for Describing Market Segments
Segmentation Method Sample Segments
Geographic
Continent: North America, Asia,
Europe, Africa
Within the United States: Pacific,
mountain, central, south, mid-
Atlantic, northeast
Demographic Age, gender, income, education
Psychographic Lifestyle, self-concept, self-values
Benefit Convenience, economy, prestige
Behavioral Occasion, loyalty
McGraw-Hill Global Education Holdings, LLC 6
© McGraw Hill LLC
Geographic Segmentation
Market could be grouped by:
Country.
Region.
• Northeast, Southeast.
Areas within region.
• State, city,
neighborhoods, zip
codes.
Most useful for companies whose
products satisfy needs that vary
by region.
Shutterstock/tovovan 7
© McGraw Hill LLC
Demographic Segmentation
Most common
segmentation strategy.
Easy to identify.
Easy to measure (age,
gender, income,
education).
Shutterstock / astel design 8
© McGraw Hill LLC
Adding Value 9.1 Dealing with Modern Life by
Playing: LEGO Promises
LEGO is targeting its
bricks and building sets
as the perfect respite for
this demographic
segment, frazzled adults
who just want a break
from modern life.
The casual adult builder
is the new demographic
segment for LEGO. LEGO’s latest market segment: frazzled adults seeking
to reduce stress with easy-to-build projects like this
25th anniversary set depicting the Central Perk coffee
shop from the TV sitcom Friends.
Ekaterina Minaeva/Alamy Stock Photo 9
© McGraw Hill LLC
Psychographic Segmentation
How consumers
describe themselves
in terms of:
• Self values.
• Lifestyle.
• Self-concept.
Shutterstock / Zoriana Zaitseva 10
© McGraw Hill LLC
Benefit Segmentation
Dividing the market into
segments whose needs
and wants are best
satisfied by the product’s
benefits can be a very
powerful tool.
How does the movie
industry use a benefit
segmentation strategy?
LI CHAOSHU/Shutterstock 11
© McGraw Hill LLC
Behavioral Segmentation
Occasion segmentation:
• Based on when a product or
service is purchased or
consumed.
• Clothing, snack foods.
Loyalty segmentation:
• Loyal customers are the
most profitable in the long
term.
• Hotels, airlines,
restaurants (Starbucks).
Shutterstock / JHershPhoto 12
© McGraw Hill LLC
Using Multiple Segmentation Methods :
Exhibit 9.4 Examples of Tapestry
Tapestry ™ uses a combination of geographic, demographic,
and lifestyle characteristics to classify consumers.
A table divided into four columns
summarizes the examples of the
Tapestry Segmentation System. The
column headers for columns 2 to 4 are
marked as: Segment 01-Top Rung;
Segemnet-18, Cozy and comfortable;
and Segment-52, Inner city tenants.
McGraw-Hill Global Education Holdings, LLC 13
© McGraw Hill LLC
PROGRESS CHECK (1 of 2)
1. What are the various segmentation
methods?
14
© McGraw Hill LLC
Step 3: Evaluate Segment Attractiveness
EXHIBIT 9.5 Evaluate Segment Attractiveness
15
© McGraw Hill LLC
Identifiable
Who is in their market?
Are the segments
distinct from one
another?
Does each segment
require a unique
marketing mix?
estherpoon/Shutterstock.com 16
© McGraw Hill LLC
Substantial
How large is the market
segment in terms of size
and buying power?
If a market segment is too
small, it won’t generate
sufficient profits.
If its buying power is
insignificant, despite its size,
the marketing mix cannot be
supported.
Photodisc/Getty Images 17
© McGraw Hill LLC
Reachable
Can the market be reached through persuasive
communication and product distribution?
The consumer must:
• Know the product exists.
• Understand what it can do.
• Recognize how to buy.
Shutterstock/faithie 18
© McGraw Hill LLC
Responsive
Customers must react similarly and positively to the
firm’s offering.
If a firm cannot provide products and services to
the segment, it shouldn’t be targeted.
If you are looking for a luxury sedan, General Motors hopes you
will choose a Cadillac.
Darren Brode/Shutterstock 19
© McGraw Hill LLC
Profitable
Assess potential profitability of each segment, both
current and future.
Key factors:
• Current market growth rate.
• Future growth rate.
• Market competitiveness.
• Market access costs.
Shutterstock/jeff Metzger 20
© McGraw Hill LLC
How to Determine the Profitability of a Segment
Segment = Children under 15
• Segment size = 60
million (<15 yrs).
• Segmentation Adoption
Percentage = 35%.
• Purchase Behavior =
$500
× 1 time purchase.
• Profit margin % = 10%.
• Fixed Cost = $50M.
Is this segment profitable?
Tanya Constantine/Blend Images LLC 21
© McGraw Hill LLC
Exhibit 9.6: Profitability of Two Market
Segments for Camillo’s Lawn Service
Homeowners Businesses
Segment size 75,000 1,000
Segment adoption
percentage
1% 20%
Purchase behavior
Purchase price
Frequency of purchase
$100
12 times
$500
20 times
Profit margin percentage 60% 80%
Fixed costs $400,000 $1,000,000
Segment profit $140,000 $600,000
22
© McGraw Hill LLC
Step 4: Select a Target Market
The key factor is the
marketer’s ability to
pursue the market.
Four different targeting
strategies can be used.
23
© McGraw Hill LLC
Step 5: Identify and Develop Positioning
Strategy
Market positioning
• Defining marketing mix variables so target customers
have a clear, distinctive, desirable understanding of
what the product does.
Value proposition
• Communicates the customer benefits to be received
from a product or service.
24
© McGraw Hill LLC
Exhibit 9.8: Circles for a Successful Value
Proposition (1 of 2)
Part A. No Overlap with Competition
25
© McGraw Hill LLC
Exhibit 9.8: Circles for a Successful Value
Proposition (2 of 2)
Part B. Determining the Value Proposition
#1: Firm’s value proposition.
#2: Customer’s unmet needs (marketing opportunity).
#3: Firm’s benefits that are not required—educate customer or redesign product.
#4: Key benefits that both the firm and competitor provide that customers require—
carefully monitor performance relative to competitor on these benefits.
#5: Competitor’s value proposition—monitor and imitate if needed.
#6: Benefits both firms provide that customers do not appear to need.
#7: Competitor benefits that are not required.
Access the text alternative for slide images.
26
© McGraw Hill LLC
Exhibit 9.9: Value Proposition Statement
Key Elements
Gatorade 7UP
Target market Athletes around the
world
Non-cola consumers
Offering name or brand Gatorade 7UP
Product/service category or concept Sports drink Non-caffeinated soft
drink
Unique point of difference/benefits Represents the heart,
hustle, and soul of
athleticism and gives
the fuel for working
muscles, fluid for
hydration, and
electrolytes to help
replace what is lost in
sweat before, during,
and after activity to
get the most out of
your body
Light, refreshing,
lemon-lime flavored,
and has a crisp,
bubbly, and clean
taste.
27
© McGraw Hill LLC
Positioning Methods
Positioning Methods
• Value.
• Salient Attributes.
• Symbols.
• Competition.
KIND and PowerBar both offer their respective target
markets good value. KIND bars (top) are made with natural
ingredients, all of which are pronounceable, thus supporting
a healthy lifestyle. PowerBars (bottom) are protein bars
designed to improve the performance of athletes.
What are the value propositions for Gatorade and 7UP?
McGraw-Hill Global Education Holdings, LLC 28
© McGraw Hill LLC
Positioning Using Perceptional Mapping
A perceptual map
displays, in two or more
dimensions, the position
of products or brands in
the consumer’s mind.
Ideal Points: Where a
particular market
segment’s ideal product
would lie on the map.
alphababy/123RF 29
© McGraw Hill LLC
Perceptual Maps (1 of 2)
EXHIBIT 9.10A Perceptual Map, Chart A EXHIBIT 9.10B Perceptual Map, Chart B
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30
© McGraw Hill LLC
Perceptual Maps (2 of 2)
EXHIBIT 9.10C Perceptual Map, Chart C EXHIBIT 9.10D Perceptual Map, Chart D
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31
© McGraw Hill LLC
Six Positioning Steps to Derive a Perceptual
Map
1. Determine consumers’ perceptions and
evaluations in relation to competitors’.
2. Identify the market’s ideal points and size.
3. Identify competitors’ positions.
4. Determine consumer preferences.
5. Select the position.
6. Monitor the positioning strategy.
32
© McGraw Hill LLC
PROGRESS CHECK (2 of 2)
1. What is a perceptual map?
2. Identify the six positioning steps.
33
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Because learning changes everything.®
Chapter 10
Marketing
Research
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 10.1 Identify the five steps in the marketing research
process.
Learning Objective 10.2 Describe the various secondary data sources.
Learning Objective 10.3 Describe the various primary data collection
techniques.
Learning Objective 10.4 Summarize the differences between secondary
research and primary research.
Learning Objective 10.5 Identify the 5 Vs of big
data.
Learning Objective 10.6 Examine the characteristics of marketing
analytics.
Learning Objective 10.7 Examine the circumstances in which collecting
information on consumers is ethical.
3
© McGraw Hill LLC
Marketing Research
4
© McGraw Hill LLC
Exhibit 10.1: The Marketing Research Process
Access the text alternative for slide images.
5
© McGraw Hill LLC
Step 1: Defining Objectives
and Research Needs
What information is needed to answer specific
research questions?
How should that information be obtained?
6
© McGraw Hill LLC
Step 2: Designing the Research
Determine type
of research
needed to obtain
data.
Identify type of
data needed.
Shutterstock / Gorodenkoff 7
© McGraw Hill LLC
Step 3: Collecting the Data
Secondary Data
• Collected prior to the start of the research project.
• External as well as internal data sources.
Primary Data
• Collected to address specific research needs.
• Examples: focus groups, in-depth interviews, surveys.
• Sample: Choose a group of customers who represent
the customers of interest and generalize their opinions
to the market segment.
8
© McGraw Hill LLC
Step 4: Analyzing the Data
and Developing Insights
Converting data into
information that is
useful in making more
effective marketing
decisions.
Tom Davenport Interview on Business Analytics
Gorodenkoff/Shutterstock 9
© McGraw Hill LLC
What Insights Can You Develop by
Analyzing this Data?
EXHIBIT 10.3 Survey Results for McDonald’s and Wendy’s
Access the text alternative for slide images.
McGraw-Hill Global Education Holdings, LLC 10
© McGraw Hill LLC
Step 5: Developing and Implementing an
Action Plan
11
© McGraw Hill LLC
PROGRESS CHECK (1 of 7)
1. What are the steps in the marketing research
process?
2. What is the difference between data and
information?
12
© McGraw Hill LLC
Secondary Data
A marketing research project often begins with a
review of the relevant secondary data.
Shutterstock / Iakov Filimonov 13
© McGraw Hill LLC
Exhibit 10.4: External Secondary Data
Syndicated Data and Some of Their Services (1 of 2)
Name Services Provided
Nielsen
(http://www.nielsen.
com)
With its Market Measurement Services, the company
tracks the sales of consumer packaged goods, gathered at
the point of sale in retail stores of all types and sizes.
IRI
(http://www.iriworldwide.com)
InfoScan store tracking provides detailed information about
sales, share, distribution, pricing, and promotion across a
wide variety of retail channels and accounts.
JD. Power and Associates
(http://www.jdpower.com)
Widely known for its automotive ratings, it produces quality
and customer satisfaction research for a variety of
industries.
NDP Group
(www.npd.com)
Based on detailed records consumers keep about their
purchases (i.e., a diary), it provides information about
product movement and consumer behavior in a variety of
industries.
Access the text alternative for slide images.
14
http://www.nielsen.com/
http://www.nielsen.com/
http://www.iriworldwide.com/
http://www.iriworldwide.com/
http://www.jdpower.com/
http://www.jdpower.com/
© McGraw Hill LLC
Exhibit 10.4: External Secondary Data
Syndicated Data and Some of Their Services (2 of 2)
Table divided into two columns summarizes continuation of syndicated
data providers and some of their services. The column headers are
marked from left to right as: name and services provided.
Name Services Provided
NOP World
(http://www.nopworld.com)
The mKids US research study tracks mobile
telephone ownership and usage, brand affinities,
and entertainment habits of American youth
between 12 and 19 years of age.
Research and Markets
(http://www.researchandmarkets.
com)
Promotes itself as a one-stop shop for market
research and data from most leading publishers,
consultants, and analysts.
Roper Center for Public Opinion
Research
(http://www.ropercenter.uconn.ed
u)
The General Social Survey is one of the nation’s longest
running surveys of social, cultural, and political indicators.
15
http://www.nopworld.com/
http://www.nopworld.com/
http://www.researchandmarkets.com/
http://www.researchandmarkets.com/
http://www.ropercenter.uconn.edu/
http://www.ropercenter.uconn.edu/
© McGraw Hill LLC
External Secondary Data
Scanner Data
Data from scanner readings
of UPC labels at checkout.
Provided and sold by
leading research firms:
• IRI.
• Nielsen.
Information helps firms
assess what is happening in
the marketplace.
jamie_cross/123RF 16
© McGraw Hill LLC
PROGRESS CHECK (2 of 7)
1. What is the difference between panel and scanner
data?
17
© McGraw Hill LLC
Primary Data Collection Techniques
EXHIBIT 10.5 Qualitative versus Quantitative Data Collection
Access the text alternative for slide images.
18
© McGraw Hill LLC
Observation
Examining purchase and consumption behaviors
Access the text alternative for slide images.
19
The Brave New World of Shopper-Tracking Technology
http://live.wsj.com/video/the-brave-new-world-of-shopper-tracking-technology/7503B9D6-2F0D-40B8-9684-E293BA3E9207.html#!7503B9D6-2F0D-40B8-9684-E293BA3E9207
http://live.wsj.com/video/the-brave-new-world-of-shopper-tracking-technology/7503B9D6-2F0D-40B8-9684-E293BA3E9207.html#!7503B9D6-2F0D-40B8-9684-E293BA3E9207
http://live.wsj.com/video/the-brave-new-world-of-shopper-tracking-technology/7503B9D6-2F0D-40B8-9684-E293BA3E9207.html#!7503B9D6-2F0D-40B8-9684-E293BA3E9207
© McGraw Hill LLC
In-Depth and Focus Group Interviews
In-Depth interviews
• Trained researchers ask questions
one-on-one with a customer.
• Expensive and time-consuming.
Focus group interviews
• Small group of 8 to 12 people with
a trained moderator.
• Now often take place online.
• Unstructured; qualitative data about
new or existing products or
services.
Although relatively expensive, in-depth interviews
can reveal information that would be difficult to
obtain with other
methods.
Wdstock/E+/Getty Images 20
© McGraw Hill LLC
PROGRESS CHECK (3 of 7)
1. What are the types of qualitative research?
21
© McGraw Hill LLC
Survey Research
The use of surveys or questionnaires.
The most popular type of quantitative primary data
collection method.
A document that features a set of questions
designed to gather information from respondents
that will lead to more effective marketing decisions.
22
© McGraw Hill LLC
Survey Research Structured vs.
Unstructured Questions
EXHIBIT 10.6 Structured versus Unstructured Response
McGraw-Hill Global Education Holdings, LLC 23
© McGraw Hill LLC
Exhibit 10.7: What to Avoid When Designing a
Questionnaire (1 of 2)
Issue Good Question Bad Question
Avoid questions the
respondent cannot easily
or accurately answer.
When was the last time
you went to the grocery
store?
How much money did
you spend on groceries
last month?
Avoid sensitive
questions unless they
are absolutely
necessary.
Do you take vitamins? Do you dye your gray
hair?
Avoid double-barreled
questions, which refer to
more than one issue with
only one set of
responses.
1.
Do you like to shop for
clothing?
2. Do you like to shop for
food?
Do you like to shop for
clothing and food?
24
© McGraw Hill LLC
Exhibit 10.7: What to Avoid When Designing a
Questionnaire (2 of 2)
Issue Good Question Bad Question
Avoid leading questions,
which steer respondents
to a particular response,
irrespective of their true
beliefs.
Please rate how safe
you believe a BMW is on
a scale of 1 to 10, with 1
being not safe and 10
being very safe.
BMW is the safest car on
the road, right?
Avoid one-sided
questions that present
only one side of the
issue.
To what extent do you
believe fast food
contributes to adult
obesity using a five-point
scale?
1: Does not contribute
5: Main cause
Fast food is responsible
for adult obesity:
Agree/Disagree
Source: Adapted from A. Parasuraman, Dhruv Grewal, and R. Krishnan, Marketing Research, 2nd ed. (Boston: Houghton Mifflin, 2007), Ch. 10. 25
© McGraw Hill LLC
Panel‐ and Scanner‐Based Research
Can be either
secondary or primary
data.
New Balance
encourages people to
join its panel known
as the “New Balance
Tester Community” to
help in the process of
designing new
sneakers.
WAYHOME studio/Shutterstock 26
© McGraw Hill LLC
Experimental Research
Systematically
manipulates one or more
variables to determine
which variables have a
causal effect on other
variables.
Can also be used on
social media.
State Bicycle Co. devised experiments to test the efficacy of
several ads to determine which contests and offerings on its
home page would attract visitors who were likely to buy.
Source: State Bicycle Co. 27
© McGraw Hill LLC
Hypothetical Pricing Experiment for
McDonald’s
EXHIBIT 10.8 Hypothetical Pricing Experiment for McDonald’s
1 2 3 4 5
Market Unit Price
Market Demand
at Price (in Units)
Total Revenue
(Col. 1 × Col.2)
Total Cost of Units Sold ($300,000
Fixed Cost + $2.00 Variable Cost)
Total Profits
(Col. 3 – Col. 4)
1 $4 200,000 $800,000 $750,000 $100,000
2 5 150,000 750,000 600,000 150,000
3 6 100,000 600,000 500,000 100,000
4 7 50,000 350,000 400,000 (50,000)
28
© McGraw Hill LLC
Exhibit 10.9: Advantages and Disadvantages of
Secondary and Primary Research (1 of 2)
Type Examples Advantages Disadvantages
Secondary
Research
• Census data
• Sales invoices
• Internet information
• Books
• Journal articles
• Syndicated data
• Saves time in
collecting data
because they are
readily
available.
• Free or inexpensive
(except for
syndicated data)
• May not be
precisely relevant to
information needs.
• Information may
not be timely.
• Sources may not be
original, and
therefore
usefulness is an
issue.
• Methodologies for
collecting data may
not be appropriate.
• Data sources may
be biased.
29
© McGraw Hill LLC
Exhibit 10.9: Advantages and Disadvantages of
Secondary and Primary Research (2 of 2)
Type Examples Advantages Disadvantages
Primary
Research
• Observation
• Focus groups
• In-depth interviews
• Social media
• Surveys
• Experiments
• Specific to the
immediate data
needs and topic at
hand
• Offers behavioral
insights generally
not available from
secondary research
• Costly
• Time-consuming
• Requires more
sophisticated
training and
experience to
design study and
collect data.
30
© McGraw Hill LLC
PROGRESS CHECK (4 of 7)
1. What are the types of quantitative research?
31
© McGraw Hill LLC
Big Data
Big data incorporates multiple sources of data.
Changes in marketing research because of:
• Increase in amount of data.
• Ability to collect data from transactions, CRM, social
media, websites.
• Ease of collecting and storing data.
• Computing ability to manipulate data.
• Access to software to convert data into decision-making
insights (Amazon, SAP, Splunk, GoodData, Google
Analytics.
32
© McGraw Hill LLC
Internal Secondary Data
33
© McGraw Hill LLC
Exhibit 10.10: The 5 Vs of Big Data
Access the text alternative for slide images.
34
© McGraw Hill LLC
PROGRESS CHECK (5 of 7)
1. What are the 5 Vs of big data?
35
© McGraw Hill LLC
Marketing Analytics
Firms can access big
data that contain billions
of pieces of customer
information and
purchase histories from
many different sources
in a variety of types and
sizes.
Marketing analytics is
used to make sense out
of these data.
To make marketing mix decisions, HSN gathers
data across a wide range of points of contact,
including multiple televised channels, catalog and
phone sales, and digital links.
Source: HSN, Inc. 36
© McGraw Hill LLC
Marketing Decisions
Marketing analytics can be used to make marketing decisions that
span all the elements of a firm’s current or planned marketing
strategy, including the following.
• How to Make Marketing Mix Decisions.
• How to Determine Which Segments to Target.
• How to Understand and Manage Those Customer Segment.
• How to Create Micro-Segmentation Strategies at a Local Level.
37
© McGraw Hill LLC
Tools and Methods (1 of 2)
Descriptive Analytics Tools Help firms organize, tabulate, and
depict their available data, usually
in easy-to-understand reports,
tables, and charts.
Predictive Analytics Tools Rely on historically available data to
forecast the future, such as what is
predicted to happen to a firm’s
product sales in the next month,
next quarter, next year, and so on.
38
© McGraw Hill LLC
Tools and Methods (2 of 2)
Prescriptive Analytics Tools Analyses that use simulations,
which ask a series of what if–type
questions, and optimization
techniques to find the most effective
or best result, which help firms
better understand what they should
do
Active Analytics Tools Artificial intelligence algorithms
used to analyze input gathered
from various data bases including
data from the Internet of Things
(IoT).
39
© McGraw Hill LLC
PROGRESS CHECK (6 of 7)
1. What decisions can be made using marketing
analytics?
2. What are the four broad categories of marketing
analytics tools and methods?
40
© McGraw Hill LLC
The Ethics of
Using Customer Information
41
© McGraw Hill LLC
AMA Ethical Guidelines for Conducting
Marketing Research
1. Prohibits selling or fund-raising under the guise of
conducting research.
2. Supports maintaining research integrity by avoiding
misrepresentation or omission of pertinent research
data.
3. Encourages the fair treatment of clients and
suppliers.
Insights Association Code of
Standards and Ethics
42
https://www.insightsassociation.org/issues-policies/casro-code-standards-and-ethics
https://www.insightsassociation.org/issues-policies/casro-code-standards-and-ethics
© McGraw Hill LLC
What Would You Do?
Aaron, a marketing
researcher:
• Just finished giving a
successful presentation to
a major client.
• The client has asked for a
list of companies that
participated in the study
and copies of all the
completed surveys.
ra2studio/123RF 43
© McGraw Hill LLC
Threats to Personal Information
Facial recognition software
Neuromarketing
Adapted from: Adam L. Penenberg, “NeuroFocus Uses Neuromarketing to Hack Your Brain,” Fast Company, August 8, 2011,
https://www.fastcompany.com/1769238/neurofocus-uses-neuromarketing-hack-your-brain Findings from neuromarketing studies
by NeuroFocus.
Access the text alternative for slide images.
44
© McGraw Hill LLC
PROGRESS CHECK (7 of 7)
1. Under what circumstances is it ethical to use
consumer information in marketing research?
2. What challenges do technological advances
pose for the ethics of marketing research?
45
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Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
Because learning changes everything.®
Chapter 11
Product, Branding, and
Packaging Decisions
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives (1 of 2)
Learning Objective 11.1 Describe the components of a
product.
Learning Objective 11.2 Identify the types of consumer
products.
Learning Objective 11.3 Explain the difference between a
product mix’s breadth and a product line’s depth.
Learning Objective 11.4 Identify the advantages that
brands provide firms and consumers.
3
© McGraw Hill LLC
Learning Objectives (2 of 2)
Learning Objective 11.5 Explain the various components
of brand equity.
Learning Objective 11.6 Determine the various types of
branding strategies used by firms.
Learning Objective 11.7 Distinguish between brand
extension and line extension.
Learning Objective 11.8 Indicate the advantages of a
product’s packaging and labeling strategy.
4
© McGraw Hill LLC
Exhibit 11.1: Product Complexity
Access the text alternative for slide images.
5
© McGraw Hill LLC
Types of Products:
Consumers
McGraw-Hill Global Education Holdings, LLC 6
© McGraw Hill LLC
PROGRESS CHECK (1 of 5)
1. Explain the three components of a product.
2. What are the four types of consumer products?
7
© McGraw Hill LLC
Product Mix and Product Line Decisions (1 of 2)
The complete set of all
products and services
offered by a firm is called its
product mix.
The product mix typically
consists of various product
lines, which are groups of
associated items that
consumers tend to use
together or think of as part
of a group of similar
products or services.
sergeytikhomirov/123RF 8
© McGraw Hill LLC
Exhibit 11.2: Abbreviated List of Daimler AG
Product Mix
Mercedes-Benz Cars Mercedes-AMG Cars Smart Cars Mercedes-Benz Vans
A-Class A-Class Smart ForTwo Sprinter
B-Class C-Class Smart ForTwo Cabrio Metro
C-Class CLA Smart ForFour Metro
CLA CLS
GLS E-Class
G-Class G-Class
E-Class GLA
GLA GLC
GLC GLE
GLS GT
S-Class S-Class
SL SL
SLC SLC
V-Class
X-Class
9
© McGraw Hill LLC
Product Mix and Product Line Decisions (2 of 2)
Access the text alternative for slide images.
10
© McGraw Hill LLC
Change Product Mix Depth
Increase Depth:
• For Haagen-Dazs brand
ice cream, adding new
flavors such as Banana
Peanut Butter Chip, Honey
Salted Caramel Almond,
and Midnight Cookies &
Cream enables it to appeal
to its variety-seeking
customers.
Decrease Depth:
• Procter & Gamble
announced it would be
merging, eliminating, or
selling many of its brands
and keeping only the top-
performing 70-80 brand
names.
11
© McGraw Hill LLC
Change Product Mix Breadth
Increase Breadth:
• Firms often add new
product lines to capture
new or evolving markets.
For example, a firm adds a
whole new line of yogurt.
Decrease Breadth:
• For example, a firm drops its
line of protein bars and
focuses on energy drinks
and vitamin water.
12
© McGraw Hill LLC
Product Mix Changes
EXHIBIT 11.3 Changes to a Product Mix
Access the text alternative for slide images.
13
© McGraw Hill LLC
PROGRESS CHECK (2 of 5)
1. What is the difference between product line
breadth and product line depth?
2. Why change product mix breadth?
3. Why change product line depth?
14
© McGraw Hill LLC
Branding
Increases awareness and provides a way to differentiate
from
competitors.
Oscar Mayer Wiener 1965 Commercial (one of America’s Best Ads)
Shutterstock / SergZSV.ZP 15
© McGraw Hill LLC
What Makes a Brand?
16
© McGraw Hill LLC
Value of Branding for the Customer and the
Firm
17
© McGraw Hill LLC
Brand Equity for the Owner
Exhibit 11.5: The World’s 10 Most Valuable Brands
2019 Rank 2017 Rank Brand Country Sector
Bank Value (in $
billions)
1 5 Amazon United States Retail $315.5
2 1 Apple United States Technology $309.5
3 2 Google United States Technology $309
4 3 Microsoft United States Technology $251.2
5 N/A Visa United States
Financial
Services
$177.9
6 8 Facebook United States Technology $159
7 N/A Alibaba China Retail $131.2
8 N/A Tencent China Technology $130.4
9 N/A McDonald’s United States Restaurant $130.4
10 N/A AT&T United States Communication $108.4
Source: Lucy Handley, “Amazon Beats Apple and Google to Become the World’s Most Valuable Brand,” CBS News, June 11, 2019,
www.cnbc.com/2019/06/11/amazon-beats -apple-and-google-to-become-the-worlds-most-valuable-brand.html.
18
© McGraw Hill LLC
Components of Brand Equity: Brand
Awareness
How many consumers
in a market are familiar
with the brand?
The more aware
consumers are with a
brand, the higher the
chances of purchase. While Gatorade’s brand aware-ness is so strong that the brand name
is often used generically, its smaller competitors need to try harder.
WTRMLN WTR gains familiarity by highlighting Beyoncé as an
investor and supporter of the brand.
Source: World Waters, LLC 19
© McGraw Hill LLC
Brand Equity: Perceived Value
The relationship
between a product’s
benefits and its costs.
How do discount
retailers like Target, T.J.
Maxx, and H&M create
value for customers?
Shutterstock / Thinglass 20
© McGraw Hill LLC
Brand Equity: Brand Associations
The mental and emotional links that consumers
make between a brand and its key attributes.
Brand associations are often the result of a firm’s
advertising and promotional efforts.
State Farm Insurance: “like a good neighbor, State Farm
is there”
21
© McGraw Hill LLC
Brand Equity: Brand Loyalty
An important source of
value for firms.
Consumers are less
sensitive to price.
Marketing costs are
much lower.
Firms are insulated from
the competition.
TEA/123RF 22
© McGraw Hill LLC
PROGRESS CHECK (3 of 5)
1. How do brands create value for the customer
and the firm?
2. What are the components of brand equity?
23
© McGraw Hill LLC
Branding Strategies
Whether to use manufacturer brands or retailer/store
brands.
How to name brands and
product lines.
Whether or not to extend the brand name to other
products and markets.
Should the brand name be used with another firm or
licensed to another firm?
Whether or not the brand should be repositioned.
24
© McGraw Hill LLC
Brand Ownership
25
© McGraw Hill LLC
Naming Brands and Product Lines
Family brands
• Corporate name used
across brands and
product lines.
• Example: Kraft cheeses.
Individual brands
• Products have individual
identities.
• Example: Kraft owns
Velveeta, Classico, Jello.
Kraft uses a family branding strategy in which several
product lines are sold under one name.
Kraft also uses an individual branding strategy because
Velveeta, Classico, Jell-O, Grey Poupon, Heinz, and
others are all marketed using separate names.
Evelyn Nicole Kirksey/McGraw-Hill (top); Daniel Acker/Bloomberg/Getty Images (bottom) 26
© McGraw Hill LLC
Brand and Line Extensions
Brand extension: Same brand name in different product line.
Line Extension: Same brand name within the same product
line.
Ferrari has licensed its brand name to manufacturer-
related apparel that appeals to those who can’t afford
the automobile.
Alessia Pierdomenico/Bloomberg/ Getty Images 27
© McGraw Hill LLC
Brand Dilution
Not all brand extensions are successful:
• Evaluate the fit between the product class of
the core brand and the extension.
• Evaluate consumer perceptions of the
attributes of the core brand and seek out
extensions with similar attributes.
• Refrain from extending the brand name to too
many products.
• Is the brand extension distanced enough from
the core brand?
Zippo suffered brand dilution when it extended its brand by introducing a perfume for
women. It turns out that women don’t associate lighters with perfume.
Alessia Pierdomenico/Bloomberg/ Getty Images 28
© McGraw Hill LLC
Co-Branding
Marketing two or more
brands together.
Can enhance perceptions of
quality through links
between brands.
Example: Yum! Brands
• Combines two or more of
its restaurant chains
(A&W, KFC, Long John
Silver’s, Pizza Hunt, and
Taco Bell) into one store
space.
calimedia/Shutterstock 29
© McGraw Hill LLC
Brand Licensing
The NBA team, the
New Orleans Pelicans
(licensor), provides
the right to use its
brand to apparel
manufacturers
(licensee) in return for
royalty payments.
Iakov Filimonov/Shutterstock 30
© McGraw Hill LLC
Brand Repositioning
Change a brand’s focus.
Can improve the brand’s
fit with its target
segment.
Can boost vitality of old
brands.
Not without costs and
risks.
robynmac/123RF 31
© McGraw Hill LLC
PROGRESS CHECK (4 of 5)
1. What are the differences between manufacturer
and private-label brands?
2. What is co-branding?
3. What is the difference between brand extension
and line extension?
4. What is brand repositioning?
32
© McGraw Hill LLC
Packaging
An important brand element that has more tangible
or physical benefits than other brand elements have.
Primary vs. Secondary package
What packaging do you as a consumer find useful?
33
© McGraw Hill LLC
Key Roles of Packaging
Attracts the consumers’
attention.
Enables products to stand
out from their competitors.
Allows for the same product
to appeal to different
markets with different sizes.
A recent development is
sustainable packaging.
To answer consumers’ call for sustainable
packaging, P&G’s Head & Shoulders shampoo
bottles are fully recyclable and made from plastic
waste recovered from beaches.
Source: Procter & Gamble 34
© McGraw Hill LLC
Product Labeling
Provides information the
consumer needs.
Many labeling
requirements stem from
various laws.
Is a communication tool.
Spauln/Getty Images 35
© McGraw Hill LLC
PROGRESS CHECK (5 of 5)
1. Why do firms change packaging?
2. What objectives do product labels fulfill?
36
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Because learning changes everything.®
Chapter 13
Services: The Intangible
Product
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 13.1 Describe how the marketing of
services differs from the marketing of products.
Learning Objective 13.2 Discuss the four gaps in the
Service Gaps Model.
Learning Objective 13.3 Examine the five service quality
dimensions.
Learning Objective 13.4 Explain the zone of tolerance.
Learning Objective 13.5 Identify three service recovery
strategies.
3
© McGraw Hill LLC
Service
Any intangible offering
that involves a deed,
performance, or effort
that cannot be
physically possessed.
By providing good
customer service, firms
add value to their
products and services.
Pro Ipad on display at the Apple Store in Bologna, Spain.
Shutterstock / PriceM 4
© McGraw Hill LLC
The Service-Product Continuum
Doctor Dry cleaner Restaurant
Grocery store
These photos illustrate the continuum from
a pure service to a pure good. Most
offerings lie somewhere in the middle and
include some service and some good (i.e.,
a hybrid of the two).
Left: Viacheslav Iakobchuk/Alamy Stock Photo; Middle: McGraw-Hill Global Education Holdings, LLC; Right: Jacob Lund/Shutterstock; Bottom: Jeff Greenough/Blend Images/Getty Images 5
© McGraw Hill LLC
Economic Importance of Service
Access the text alternative for slide images.
6
© McGraw Hill LLC
Services Marketing Differs from
Product
Marketing
EXHIBIT 13.2 Core Differences between Services and Goods
7
© McGraw Hill LLC
Intangible
Services cannot be
touched, tasted, or
seen.
Requires using cues to
aid customers.
Atmosphere is important
to convey value.
Images are used to
convey benefit of value.
Because it is difficult to show a service, Amusement
park owners evoke images in their advertising of
happy families and friends enjoying a ride at one of
their parks.
Shutterstock / bom 8
© McGraw Hill LLC
Inseparable Production and Consumption
Production and
consumption are
simultaneous.
Little opportunity for a
consumer to test a
service before
use.
Lower risk by offering
guarantees or
warranties.
© McGraw-Hill Education 9
© McGraw Hill LLC
Heterogeneous
The more humans are
needed to provide a
service, the more likely
there is to be
heterogeneity or
variability in the service’s
quality.
Solutions
• Technology.
• Training.
• Automation.
sonya etchison/Shutterstock 10
© McGraw Hill LLC
Perishable
Services are perishable
in that they cannot be
stored for use in the
future.
Ski areas, airlines,
cruise ships, movie
theaters, and
restaurants must find
ways to deal with the
challenges of
perishability.
spinout/Getty Images 11
© McGraw Hill LLC
PROGRESS CHECK (1 of 3)
1. What are the four marketing elements that
distinguish services from products?
2. Why can’t we separate firms into just service or
just product sellers?
12
© McGraw Hill LLC
Providing Great Service:
The Service Gaps Model
EXHIBIT 13.3 Service Gaps Model for Improving Retail Service Quality
Sources: Valarie Zeithaml, A. Parasuraman, and Leonard Berry, Delivering Quality Customer Service. (New York: Free Press, 1990);
Valarie Zeithaml, Leonard Berry, and A. Parasuraman, “Communication and Control Processes in the Delivery of Service Quality,”
Journal of Marketing 52, no. 2 (April 1988), 35-48.
Access the text alternative for slide images.
13
© McGraw Hill LLC
Knowledge Gap:
Understanding Customer Expectations
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14
© McGraw Hill LLC
Understanding Customer Expectations
Expectations are based
on knowledge and
experience.
Expectations vary
according to type of
service.
Expectations vary
depending on the
situation.
Nikada/Getty Images 15
© McGraw Hill LLC
Evaluating Service Quality Using Well-
Established Marketing Metrics
EXHIBIT 13.4 Dimensions of Service Quality
Access the text alternative for slide images.
16
© McGraw Hill LLC
Marketing Research:
Understanding Customers
Voice-of-customer (VOC) program: Collects
customer inputs and integrates them into
managerial decisions.
Zone of tolerance: Refers to the area between
customers’ expectations regarding their desired
service and the minimum level of acceptable
service.
17
© McGraw Hill LLC
Zone of Tolerance
Used to Measure How Well Firms Perform on the Five Service Quality Dimensions
Access the text alternative for slide images.
18
© McGraw Hill LLC
Exhibit 13.5: Customers’ Evaluation of
Service Quality for Lou’s Local Diner
EXHIBIT 13.5 Customers’ Evaluation of Service Quality
Access the text alternative for slide images.
19
© McGraw Hill LLC
The Standards Gap: Setting Service
Standards
Difference between the
firm’s perceptions of
customer expectations
and the service
standards it sets.
Need to set standards
for quality.
Develop systems to
ensure the standards
are met.
UpperCut Images/SuperStock 20
© McGraw Hill LLC
The Delivery Gap:
Delivering Service Quality
21
© McGraw Hill LLC
Empowering Service Providers
Allowing employees to
make decisions about
how service is provided
to customers.
Purestock/SuperStock 22
© McGraw Hill LLC
Support and Incentives for Employees
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23
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Use of Technology
EXHIBIT 13.6 How Technology Is Augmenting the Human Effort
Access the text alternative for slide images.
McGraw-Hill Global Education Holdings, LLC 24
© McGraw Hill LLC
Communications Gap
Difference between the Actual Service Provided and
the Service the Firm Promises
Manage customer
expectations.
Promise only what you
can deliver.
Communicate service
expectations.
Shutterstock/ALPA PROD 25
© McGraw Hill LLC
Service Quality, Customer Satisfaction, and
Loyalty
Good service quality leads to satisfied and loyal
customers.
Postpurchase Evaluation leads to satisfaction,
dissonance, or loyalty.
26
© McGraw Hill LLC
PROGRESS CHECK (2 of 3)
1. Explain the four service gaps identified by the
Service Gaps Model.
2. List at least two ways to overcome each of the
four service gaps.
27
© McGraw Hill LLC
Service Recovery
28
© McGraw Hill LLC
Listening to the Customers and Involving
Them in Service Recovery
Customers can get
emotional over a service
failure.
Often customers just
want someone to listen.
leaf/123RF 29
© McGraw Hill LLC
Finding a Fair Solution
Distributive fairness.
Procedural fairness.
Andriy Popov/123RF 30
© McGraw Hill LLC
Resolving Problems Quickly
The longer it takes to resolve service failure, the
more irritated the customer will become and the
more people the customer will tell.
It is in the firm’s best interest to solve problems
quickly.
31
© McGraw Hill LLC
PROGRESS CHECK (3 of 3)
1. Why is service recovery so important to
companies?
2. What can companies do to recover from a
service failure?
32
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Chapter 15
Strategic Pricing Methods
and Tactics
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 15.1 Identify three methods that firms use to set their
prices.
Learning Objective 15.2 Describe the difference between an everyday
low pricing (EDLP) strategy and a high/low strategy.
Learning Objective 15.3 Explain the difference between a price
skimming and a market penetration pricing strategy.
Learning Objective 15.4 Identify tactics used to reduce prices to
consumers.
Learning Objective 15.5 Identify tactics used to reduce prices to
businesses.
Learning Objective 15.6 List the pricing practices that are illegal or
unethical.
3
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Considerations for Setting Price Strategies
EXHIBIT 15.1: Pricing Strategies
4
© McGraw Hill LLC
Value-Based Methods
Setting prices that focus on the overall value of the
product offering as perceived by the consumer:
Improvement Value
Method
Cost of Ownership Method
These methods require a great deal of research to
be implemented successfully.
5
© McGraw Hill LLC
Value-Based Methods:
Improvement Value
EXHIBIT 15.2 Improvement Value
Incremental Benefits Improved Value Benefit Weight Weighted Factor
Clarity 20% 0.40 8%
Range 40% 0.20 8%
Security 10% 0.10 1%
Battery life 5% 0.20 1%
Ease of use 30% 0.10 3%
Overall 1.00 21%
6
© McGraw Hill LLC
PROGRESS CHECK (1 of 3)
1. What are the three different considerations for
setting prices?
2. How can you use value-based methods for
setting prices?
7
© McGraw Hill LLC
Pricing Strategies
Everyday low
pricing (EDLP)
High/Low Pricing
8
© McGraw Hill LLC
Everyday Low Pricing (EDLP) vs.
High/Low Pricing
Create value for consumers in different ways.
EDLP reduces consumers’ search costs.
High/low provides the thrill of the chase for the lowest price.
9
© McGraw Hill LLC
In High/Low Pricing Consumers Use
10
© McGraw Hill LLC
New Product Pricing Strategies
Market Penetration Pricing
Price Skimming
Price skimming is often used for high-demand video
games like Far Cry 6 because fans will pay a higher
price to be one of the first to own the newest version.
©Chesnot/Getty Images
Source: Ubisoft Entertainment 11
© McGraw Hill LLC
Pricing Tactics Aimed at Consumers (1 of 2)
12
© McGraw Hill LLC
Pricing Tactics Aimed at Consumers (2 of 2)
Leasing/Rentals Price Bundling
Leader Pricing Price Lining
13
© McGraw Hill LLC
Business Pricing Tactics and Discounts
EXHIBIT 15.3 Business-to-Business Pricing Tactics
Tactic Description
Seasonal
discounts
An additional reduction offered as an incentive to retailers to order
merchandise in advance of the normal buying season.
Cash discounts An additional reduction that reduces the invoice cost if the buyer pays
the invoice prior to the end of the discount period.
Allowances Advertising or slotting allowances (additional price reductions) offered
in return for specific behaviors. Advertising allowances are offered to
retailers if they agree to feature the manufacturer’s product in their
advertising and promotional efforts. Slotting allowances are offered to
get new products into stores or to gain more or better shelf space.
Quantity discounts Providing a reduced price according to the amount purchased
Uniform delivered
versus zone
pricing
Uniform delivered price: shipper charges one rate, no matter where
the buyer is located. Zone price: different prices depending on the
geographic delivery area.
14
© McGraw Hill LLC
PROGRESS CHECK (2 of 3)
1. What are some consumer-oriented pricing
tactics?
2. What are some B2B-oriented pricing tactics?
15
© McGraw Hill LLC
Legal and Ethical Aspects of Pricing
16
© McGraw Hill LLC
Deceptive or Illegal Price Advertising
Deceptive reference
prices
Loss-leader pricing
Bait and switch
©Alex Segre/Alamy Stock Photo
©Alex Segre/Alamy Stock Photo 17
© McGraw Hill LLC
Predatory Pricing
18
© McGraw Hill LLC
Price Discrimination
Is this price discrimination illegal?
Evelyn Nicole Kirksey/McGraw-Hill 19
© McGraw Hill LLC
Price Fixing
Horizontal price fixing Vertical price fixing
20
© McGraw Hill LLC
Gray Market Pricing
Uses irregular but not
necessarily illegal
methods.
Gray market for luxury
goods.
Stefano Rellandini/Alamy Stock Photo 21
© McGraw Hill LLC
PROGRESS CHECK (3 of 3)
1. What common pricing practices are considered
to be illegal or unethical?
22
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Chapter 17
Retailing and Omnichannel
Marketing
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 17.1 Discuss the four factors manufacturers
should consider as they develop their strategies for working
with retailers.
Learning Objective 17.2 Outline the considerations associated with
choosing retail partners.
Learning Objective 17.3 List the three levels of distribution intensity.
Learning Objective 17.4 Describe the various types of retailers.
Learning Objective 17.5 Describe the components of a retail strategy.
Learning Objective 17.6 Identify the benefits and challenges of
omnichannel retailing.
3
© McGraw Hill LLC
What is Retailing?
The set of business
activities that add value
to products and services
sold to consumers for
their personal or family
use.
Estée Lauder’s
subsidiary brand M·A·C
is introducing a new line
of mascara.
Ingram Publishing 4
© McGraw Hill LLC
Exhibit 17.1: Factors for Establishing a
Relationship with Retailers
Access the text alternative for slide images.
5
© McGraw Hill LLC
Choosing Retailing Partners
Channel Structure.
Customer Expectations.
Channel Member
Characteristics.
Distribution Intensity.
Most manufacturers like Coach use retailers
such as Macy’s.
Shutterstock/Creative Lab 6
© McGraw Hill LLC
Channel Structure
Degree of vertical
integration.
Strength of
manufacturers’ brand.
Relative power of
manufacturer and
retailer. Because M·A·C is made by Estée
Lauder, when the new mascara is
introduced, the stores receive the new
line automatically.
Getty Images/iStockphoto 7
© McGraw Hill LLC
Exhibit 17.2: Coach and Cole Haan Distribution
Access the text alternative for slide images.
8
© McGraw Hill LLC
Channel Member Characteristics
Larger firms:
• Can gain more
control, be more
efficient, and save
money.
• Because Walmart is
the world’s largest
grocer, it buys direct
from the
manufacturer.
© McGraw-Hill Education/John Flournoy 9
© McGraw Hill LLC
Distribution Intensity
Intensive: outs products in
as many places as
possible.
Selective: relies on a few
selected retail customers
in a territory.
Exclusive: grants
exclusive geographic
territories.
Sheila Fitzgerald/Shutterstock 10
© McGraw Hill LLC
PROGRESS CHECK (1 of 3)
1. What issues should manufacturers consider
when choosing retail partners?
2. What are the differences among intensive,
exclusive, and selective levels of distribution
intensity?
11
© McGraw Hill LLC
Exhibit 17.3 Types of Retailers
Access the text alternative for slide images.
12
© McGraw Hill LLC
Food Retailers
Supermarkets Supercenters
Warehouse
Clubs
Convenience
Stores
Online
Grocery
Retailers
Limited
nonfood
Supermarket
combined with
a full-line
discount store
Limited
assortment
and little
service, low
prices
Limited
variety
Speedy check
out
Customers
willing to pay
more to order
online and
have groceries
delivered
Differentiated
by number of
SKUs
Walmart,
Meijer,
K-Mart, Target
Costco,
Sams, BJ’s
Good
locations
Instacart,
Amazon Prime
Fresh
Peapod.com
13
http://www.peapod.com/
http://www.peapod.com/
© McGraw Hill LLC
Online Grocery Retailers
The set of retailers
providing online
capabilities continues to
expand.
Companies seek to add
value to the grocery
channel by providing
delivery.
Shutterstock/RossHelen 14
© McGraw Hill LLC
General Merchandise Retailers
Department Stores Broad variety and deep
assortment
Full-line Discount Broad variety at low prices
Specialty Limited merchandise with service in small store
Drugstores Specialty for pharmaceutical and health
Category Specialists
Big-box or category killers with narrow but deep
assortment
Extreme-value Full line, limited, very low prices
Off-price
Inconsistent assortment of brand-name
merchandise at low prices
Access the text alternative for slide images.
15
© McGraw Hill LLC
Services Retailers
Firms that primarily sell
services rather than
merchandise are a large
and growing part of the
retail industry.
Service retailers, like this nightclub, sell services
rather than
merchandise.
© Lane Oatey/Blue Jean Images/Getty Images 16
© McGraw Hill LLC
PROGRESS CHECK (2 of 3)
1. What strategies distinguish the different types of
food retailers?
2. What strategies distinguish the different types of
general merchandise retailers?
3. Are organizations that provide services to
consumers retailers?
17
© McGraw Hill LLC
Developing a Retail Strategy
Using the Six Ps: Product
Providing the right mix
of merchandise and
services that satisfies
the needs of the target
market.
Private-label or store
brands help retailers
distinguish themselves
from competition. Target has about one dozen private-label lines in
its stores.
Jonathan Weiss/Shutterstock 18
© McGraw Hill LLC
Developing a Retail Strategy
Using the Six Ps: Price
Price defines the value of both the merchandise and
the service provided.
Shutterstock / Pearl Winchester 19
© McGraw Hill LLC
Developing a Retail Strategy
Using the Six Ps: Promotion
Retailers use a wide variety
of promotions, both within
their retail environment and
through mass and social
media.
kaisorn/Getty Images 20
© McGraw Hill LLC
Developing a Retail Strategy
Using the Six Ps: Place
Convenient location is a
key ingredient to
success.
Many customers choose
stores on the basis of
where they are located.
Great locations can
create a competitive
advantage.
Shutterstock/Lester Balajadia 21
© McGraw Hill LLC
Developing a Retail Strategy Using Two
Additional Ps: Presentation and Personnel
Presentation: Lighting, color, and music are used
to highlight merchandise and create a mood that will
attract the store’s target markets.
Personnel: Well-trained sales personnel can
influence the sale at the point of purchase.
22
© McGraw Hill LLC
Benefits of the Internet and
Omnichannel Retailing
• Deeper and broader selection.
• Personalization.
• Expanded market presence.
• Integrated CRM.
• Brand Image.
• Pricing.
• Supply Chain.
23
© McGraw Hill LLC
PROGRESS CHECK (3 of 3)
1. What are the components of a retail strategy?
2. What are the advantages of traditional stores
versus Internet-only stores?
3. What challenges do retailers face when
marketing their products through multiple
channels?
24
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Because learning changes everything.®
Chapter 18
Integrated Marketing
Communications
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 18.1 Identify the components of the
communication process.
Learning Objective 18.2 Explain the four steps in the AIDA model.
Learning Objective 18.3 Describe the various integrative
communication
channels.
Learning Objective 18.4 Explain the methods used to allocate the
integrated marketing communications (IMC) budget.
Learning Objective 18.5 Identify marketing metrics used to measure
IMC success.
3
© McGraw Hill LLC
Integrated Marketing Communications
Consumer
Communication
channels
Results of the
communication
A Lot Of People/Shutterstock 4
© McGraw Hill LLC
Communicating with Consumers:
Exhibit 18.1: The Communication Process
Access the text alternative for slide images.
5
© McGraw Hill LLC
How Consumers Perceive Communication
Receivers decode
messages differently.
Senders adjust
messages according to
the medium and
receivers’ traits.
Consumers will perceive this giant billboard differently depending
on their level of knowledge and attitude toward the brand.
Qi Heng Xinhua News Agency/Newscom 6
© McGraw Hill LLC
Exhibit 18.2: The AIDA Model
Access the text alternative for slide images.
Source: E. K. Strong, The Psychology of Selling(New York: McGraw-Hill Education Global Holdings, 1925) 7
© McGraw Hill LLC
The AIDA Model: Awareness
Senders first must
gain the attention of
the consumer.
Awareness metrics
include:
• Aided recall.
• Top-of-mind
awareness.
Ljupco/Getty Images 8
© McGraw Hill LLC
The AIDA Model: Interest
After awareness comes
interest.
The customer must
want to further
investigate the
product/service.
Interest can also be
sparked by a little
controversy
To peak interest in the meatless Impossible Whopper, Burger
King advertising featured regular customers, noting that they
could not tell the difference between a conventional Whopper
and the Impossible version.
Source: Burger King Corporation 9
© McGraw Hill LLC
The AIDA Model: Desire
I like it.
I want it.
Burke/Triolo Productions/SuperStoc 10
© McGraw Hill LLC
The AIDA Model: Action
The ultimate goal of any
form of communications
is to drive the receiver to
action.
But purchase is just one
type of action.
What other actions can
IMC ask consumers to
take?
Shutterstock / ESB Professional 11
© McGraw Hill LLC
The Lagged Effect
Marketing
communications do not
always have an
immediate impact.
Multiple exposures are
often necessary.
It is difficult to determine
which exposure led to
purchase.
The recurrent presence of De Beers’ advertising
campaign for diamond jewelry resonates with
consumers over time. So, when the occasion arises to
buy jewelry for oneself or for a loved one, the
consumer will think of diamonds
Access the text alternative for slide images.
ADragan/Shutterstock 12
© McGraw Hill LLC
PROGRESS CHECK (1 of 3)
1. What are the different steps in the
communication process?
2. What is the AIDA model?
13
© McGraw Hill LLC
Channels Used in an IMC Strategy
EXHIBIT 18.3 Channels of an IMC Strategy
Access the text alternative for slide images.
14
© McGraw Hill LLC
Advertising
Most visible element of an
IMC strategy.
Placement of
announcements and
persuasive messages in
time or space purchased
by business firms,
nonprofit organizations,
government agencies,
and individuals
Shutterstock / vector_s 15
© McGraw Hill LLC
Public Relations (PR)
“Free” media attention.
Importance of PR has grown as the cost of other
media has increased.
As consumers are becoming more skeptical about
marketing, PR is becoming more important.
16
© McGraw Hill LLC
Sales Promotions
Can be aimed at both end user consumers or
channel members.
Used in conjunction with other forms of IMC.
Can be used for both short-term and long-term
objectives.
retailmenot.com
17
https://www.retailmenot.com/
https://www.retailmenot.com/
© McGraw Hill LLC
Personal Selling
A two-way
communication
between the buyer and
seller to influence
buying decisions.
Salespeople can add
significant value, which
can make the expense
worth it.
agencyby/123RF 18
© McGraw Hill LLC
Direct Marketing
Communicating directly with
target customers to generate a
response or transaction.
Growing element of IMC.
Improvements in database
technology have contributed to
the rapid growth.
Ability to carefully target
consumers.
Includes e-mail and mobile
marketing.
Warchi/Getty Images 19
© McGraw Hill LLC
EXHIBIT 18.4: Illustrative Mobile Marketing
Campaigns
Company Campaign
Domino’s
Points for Pies
Domino’s introduced a new rewards program in which customers could earn points on
any pizza—not just a Domino’s pizza. By downloading the Domino’s app, users could
scan any pizza and earn points toward a free Domino’s product. The promotion helped
attract attention to Domino’s and its rewards program.
Burger King
Geofencing
Burger King used location-based marketing to great effect when it targeted consumers in
close proximity to local McDonald’s locations. Consumers in these locations would
receive a special discount voucher designed to convince them to change their plans and
head to Burger King instead. Plus, the campaign provided a great incentive for
consumers to download the Burger King app.
Target
Pokémon Pass
Target partnered with the provider of the augmented reality (AR) game Pokémon Pass to
increase foot traffic in its stores. Addicted players were encouraged to visit their local
Target store to collect Shiny Eevee and Shiny Pikachu Pokémons that were available
only in the retail locations.
Behr Paint
IBM’s Watson
Behr Paint and IBM created a mobile website through which Watson, IBM’s AI bot, helps
customers choose the right color for their rooms. Watson provides advice based on
information customers provide, such as how they feel about each room and their reasons
for renovating or repainting.
Sources: Chiradeep BasuMallick, “Top 3 Viral Mobile Marketing Campaign Examples to Inspire You,” MarTech Advisor, August 30, 2019;
Vandita Grover, “Mobile Marketing Strategies & Tends: Key Learnings from the First Half of 2019,” MarTech Advisor, August 29, 2019.
Adapted from “5 Best Mobile Campaigns of 2017,” Digital Marketing Institute, https://digitalmarketinginstitute.com/blog/2017-12-18-5-best-mobile-campaigns-of-2017 20
© McGraw Hill LLC
Online Marketing
Websites.
Blogs.
Social Media.
Rawpixel.com/Shutterstock 21
© McGraw Hill LLC
Online Marketing: Websites
Which websites do you visit all the time? Why?
Shutterstock / Fergus Coyle 22
© McGraw Hill LLC
Online Marketing: Blogs
Blogs can:
• communicate trends.
• announce special events create positive
word-of-mouth.
• connect customers.
• allow the company to respond to
customers.
• encourage customers to develop a long-
term relationship with the company.
Blogs are becoming more interactive as the
communication between bloggers and
customers has increased.
Blogs can be linked to other social media.
Rawpixel.com/Shutterstock 23
© McGraw Hill LLC
Online Marketing: Social Media
One trend is combining
advertising on podcasts
with in-home voice
assistants.
• allows users to
interact among
themselves.
• provide feedback to
their community
members.
Halfpoint/Shutterstock 24
© McGraw Hill LLC
PROGRESS CHECK (2 of 3)
1. What are the different elements of an IMC
program?
25
© McGraw Hill LLC
Planning for and Measuring IMC Success:
Goals
Access the text alternative for slide images.
26
© McGraw Hill LLC
Examples of Marketing Goals and the
Related Campaigns
EXHIBIT 18.5 Illustrative Marketing Goals and Related Campaigns
Company and Campaign Goal Target Market Media Used Outcome
Nike
“Believe in Something”
Connect with
customers who care
about social justice
issues by running
ads featuring ex-NFL
quarterback Colin
Kaepernick
Millennials and
Gen Zers
Social media,
billboard,
television, print
31% increase in
sales
RXBAR (Kellogg Co.)
“No B.S.”
Increase awareness
of the brand
Everyone Online video
advertising,
interactive
hotline
Brand awareness
rose from 8% to
15.3%
Gillette
“The Best Men Can Be”
Appeal to traditional
male customers while
also gaining a new
audience among
women
Men and women Twitter post Over 30 million
views, and 51%
of women who
engaged with the
ad expressed joy
Sources: Deep Patel, “8 Controversial Marketing Campaigns That Paid Off,” Entrepreneur, June 5, 2019; “Marketer A-List 2018 Standouts,” Ad Age, December 3, 2018; Jane Zupan,
“The Data behind Gillette’s Ad Shows It Had the Biggest Impact with Women,” Adweek, January 22, 2019.
27
© McGraw Hill LLC
Planning for and Measuring IMC Success:
Setting and Allocating the IMC Budget
Rule-of-thumb methods
Objective-and-task
method
Left: Shutterstock/Zodar; Right: Shutterstock / Yukikae4B 28
© McGraw Hill LLC
Exhibit 18.6: Rule-of-Thumb Methods
(1 of 2)
Method Definition Limitations
Competitive
parity
The communication budget is set
so that the firm’s share of
communication expenses equals
its share of the market.
Does not allow firms to exploit the
unique opportunities or problems they
confront in a market. If all competitors
use this method to set communication
budgets, their market shares will stay
approximately the same over time.
Percentage-
of-sales
The communication budget is a
fixed percentage of forecasted
sales.
Assumes the same percentage used in
the past, or by competitors, is still
appropriate for the firm. Does not take
into account new plans (e.g., to
introduce a new line of products in the
current year).
29
© McGraw Hill LLC
Exhibit 18.6: Rule-of-Thumb Methods
(2 of 2)
Method Definition Limitations
Available
budget
Marketers forecast their sales
and expenses, excluding
communication, during the
budgeting period. The difference
between the forecast sales and
expenses plus desired profit is
reserved for the communication
budget. That is, the
communication budget is the
money available after operating
costs and profits have been
budgeted.
Assumes communication expenses do
not stimulate sales and profit.
30
© McGraw Hill LLC
Planning for and Measuring IMC Success:
Measuring Success Using Marketing Metrics
Traditional Media
• Frequency
• Reach
• Gross rating points (GRP)
Web-Based Media
• Web-tracking software
31
© McGraw Hill LLC
Planning, Implementing, and Evaluating IMC
Programs—An Illustration of Google Advertising
Transit is an upscale sneaker store in New York
City
modeled after vintage New York City subway trains.
Shutterstock / Cincinart 32
© McGraw Hill LLC
Exhibit 18.7: Transit ROMI Assessment
1. Keyword 2. Clicks
3. Marketing
Expenditure 4. Sales
5. Gross Margin
= Sales X Gross
Margin % = Sales
X 50 %
6. Gross Margin
($) (Col. 5) –
Marketing
Expenditure
(Col 3)
7. ROMI = (Col.
6/Col. 3) X 100
Sneaker
store
110 $10/day $70/day $35/day $25 250%
New York
City
sneakers
40 $25/day $80/day $40/day $15 60%
33
© McGraw Hill LLC
Exhibit 18.8: Program Effectiveness Results
Communication Objective Question
Before
Campaign
Six Months
After
One Year
After
Awareness (% mentioning
store)
What stores sell
sneakers?
38% 46% 52%
Knowledge (% giving
outstanding rating for sales
assistance)
Which stores would
you rate outstanding
on the following
characteristics?
9 17 24
Attitude (% first choice)
On your next
shopping trip for
sneakers, which
store would you visit
first?
13 15 19
Visit (% visited store)
Which of the
following stores have
you been to?
8 15 19
34
© McGraw Hill LLC
PROGRESS CHECK (3 of 3)
1. Why is the objective-and-task method of setting
an IMC budget better than the rule-of-thumb
methods?
2. How do firms use GRP to evaluate the
effectiveness of traditional media?
3. How would a firm evaluate the effectiveness of
its Google advertising?
35
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Chapter 19
Advertising, Public Relations,
and Sales Promotions
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 19.1 Describe the steps in designing and executing
an advertising campaign.
Learning Objective 19.2 Identify three objectives of
advertising.
Learning Objective 19.3 Describe the different ways that advertisers
appeal to consumers.
Learning Objective 19.4 Identify the various types of media.
Learning Objective 19.5 Identify agencies that regulate advertising.
Learning Objective 19.6 Describe the elements of a public relations
toolkit.
Learning Objective 19.7 Identify the various types of sales promotions.
3
© McGraw Hill LLC
What is Advertising?
A paid form of communication delivered through media
from an identifiable source about an organization, product,
service, or idea designed to persuade the receiver.
The most visible form of marketing communications.
Many actions take place before an ad is seen by the target
audience.
4
© McGraw Hill LLC
Exhibit 19.1: Steps in Planning
and Executing an Ad Campaign
Access the text alternative for slide images.
5
© McGraw Hill LLC
Step 1: Identify Target Audience
Conduct research to
identify target audience.
The information is used
to set the tone and to
select the media.
oneinchpunch/Shutterstock 6
© McGraw Hill LLC
Step 2: Set Advertising Objectives
The objectives of an ad campaign are derived from
the overall objectives of the marketing program.
Consumers
Pull strategy- get
consumers to pull the
product into marketing
channel
Wholesalers, Retailers, Salespeople
Push strategy- increase
demand by focusing on
wholesalers, retailers,
salespeople
7
© McGraw Hill LLC
Informative Advertising
Used to create and build
brand awareness.
Push the consumer
through the buying cycle
to a purchase.
Inform customers about
upcoming sales events
or arrival of new
merchandise.
Shutterstock / WAYHOME studio 8
© McGraw Hill LLC
Persuasive Advertising
Generally, occurs in the
growth and early
maturity stages of the
PLC when competition
is most intense.
May be used to
reposition an
established brand in the
later stage of the PLC.
Shutterstock / Pearl Winchester 9
© McGraw Hill LLC
Reminder Advertising
Communication used to
remind, or prompt
repurchases.
Occurs after the products
have gained market
acceptance and are in
the maturity stage.
Mark Steinmetz/McGraw-Hill Education 10
© McGraw Hill LLC
Focus of Advertisements (1 of 2)
Product-focused
advertisements inform,
persuade, or remind
consumers about a
product or service
Institutional
advertisements
promote a company,
corporation, business,
institution (e.g. PSAs)
11
© McGraw Hill LLC
Focus of Advertisements (2 of 2)
Public Service Advertising (PSA)
• Under Federal Communication
Commission rules, broadcasters
must devote a specific amount of
free airtime to PSAs.
© YAY Media AS / Alamy 12
© McGraw Hill LLC
Step 3: Determine the Advertising Budget
Considerations:
Role that advertising plays in their attempt
to meet their overall promotional objectives
Expenditures vary over the course of the
Product Life Cycle
Nature of the market and the product
influence the size of the budget
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13
© McGraw Hill LLC
Step 4: Convey the Message
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14
© McGraw Hill LLC
The Appeal
Informational appeal
• Helps consumers make
purchase decisions by
offering factual
information.
Emotional appeal
• Aims to satisfy
consumers’ emotional
desires rather than their
utilitarian needs.
Westend 61/Getty Images 15
© McGraw Hill LLC
Exhibit 19.2: Emotional Appeals in Advertising
Emotional Appeal Company Example
Fear/safety National Highway
Transportation Safety
Administration (NHTSA)
“Secure his future. Always
seat him in the correct car
seat.”
Humor Orbit Gum “Don’t Let Lunch Meet
Breakfast”
Happiness Instagram “Stories Are Everywhere”
Love/sex Mr. Clean “You Gotta Love a Man Who
Cleans”
Comfort Charmin Ultra Soft “Embrace Your Softer Side—
The Softer, More Cushiony
Way to Get Clean”
Nostalgia Heinz “Pass the Heinz”
16
© McGraw Hill LLC
Step 5: Evaluate and Select Media
Media planning
Media mix
Media buy
Shutterstock / Sergey Mironov 17
© McGraw Hill LLC
Mass and Niche Media
Niche media:
• More focused
• Reach narrower segments
• Target unique demographics or interests
• HGTV, TransWorld Skateboarding, Popstar! Magazine.
Mass media:
• Ideal for reaching large, anonymous audiences.
• Include outdoor/billboards, newspapers, magazines, radio,
and television.
Paul Salmon / Alamy 18
© McGraw Hill LLC
Exhibit 19.3: Types of Media Available for
Advertising (1 of 2)
Medium Advantages Disadvantages
Television Wide reach;
incorporates sound
and video.
High cost; several channel and
program options; may increase
awareness of competitors’ products.
Radio Relatively inexpensive;
can be selectively
targeted; wide reach.
No video, which limits presentation;
consumers give less focused
attention than TV.; exposure
periods are
short.
Magazines Very targeted;
subscribers pass along
to others.
Relatively inflexible; takes some
time for the magazine to be
available.
Newspapers Flexible; timely; able to
localize.
Can be expensive in some markets;
advertisements have short life span.
19
© McGraw Hill LLC
Exhibit 19.3: Types of Media Available for
Advertising (2 of 2)
Medium Advantages Disadvantages
Internet/mobile Can be linked to
detailed content; highly
flexible and interactive;
allows for specific
targeting.
Becoming cluttered; the ad may be
blocked by software on the
computer.
Outdoor/billboard Relatively inexpensive;
offers opportunities for
repeat exposure.
Is not easily targeted; has
placement problems in some
markets; exposure time is very
short.
Direct marketing Highly targeted; allows
for personalization.
Cost can vary depending on type of
direct marketing used; traditional
media, like mail, will be more
expensive than newer media.
20
© McGraw Hill LLC
Determining the Advertising Schedule
Continuous runs steadily throughout the year
Flighting is implemented in spurts
Pulsing combines continues and flighting with a
base schedule with increased intensity during
certain periods
21
© McGraw Hill LLC
Step 6: Create Advertisements
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22
© McGraw Hill LLC
Step 7: Assess Impact Using Marketing Metrics
EXHIBIT 19.4 Hypothetical Sales History for Red Bull in a Grocery Store Chain
Pretesting Tracking Posttesting
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23
© McGraw Hill LLC
PROGRESS CHECK (1 of 3)
1. What are the steps involved in planning an ad
campaign?
2. What is the difference between informational,
persuasive, and reminder advertising?
3. What are the pros and cons of the different
media types?
4. How can the effectiveness of advertising be
evaluated?
24
© McGraw Hill LLC
Regulatory and Ethical Issues in Advertising
(1 of 2)
EXHIBIT 19.5 Federal Agencies That Regulate Advertising
Federal Agencies General Purpose Specific Jurisdiction
Federal Trade
Commission (FTC) (1914)
Enforces federal Consumer
protection laws.
Enforces truth in advertising laws; defines
deceptive and unfair advertising practices.
Federal Communications
Commission (FCC)
(1934)
Regulates interstate and
international communications by
radio, television, wire, satellite,
and cable.
Enforces restrictions on broadcasting
material that promotes lotteries (with some
exceptions); promotes cigarettes, little
cigars, or smokeless tobacco products; or
that perpetuates a fraud. Also enforces
laws that prohibit or limit obscene,
indecent, or profane language.
Food and Drug
Administration (1930)
Regulates food, dietary
supplements, drugs, cosmetics,
medical devices (including
radiation-emitting devices such as
cell phones), biologics (biological
issues), and blood products.
Regulates package labeling and inserts,
definition of terms such as light and
organic, and required disclosure
statements (warning labels, dosage
requirements, etc.).
25
© McGraw Hill LLC
Regulatory and Ethical Issues in Advertising
(2 of 2)
EXHIBIT 19.5 Federal Agencies That Regulate Advertising
Federal Agencies General Purpose Specific Jurisdiction
The U.S. Postal Service
(USPS) (1971)
Delivers mail and packages. Regulates advertising that uses the mail
and that involves fraud, obscenity, or
lotteries.
Bureau of Alcohol,
Tobacco, Firearms and
Explosives (ATF) (1972)
Regulates manufacturing and
sales of alcohol, tobacco, firearms,
and explosives.
Regulates the advertising for alcohol,
including warning labels, and determines
what constitutes false or misleading
advertising.
26
© McGraw Hill LLC
Puffery
Legal exaggeration of praise, stopping just short of
deception, lavished on a product.
When you go to purchase a product, do you think
of the advertisement’s promises?
27
© McGraw Hill LLC
Public Relations
Public relations involves
managing communications
and relationships to achieve
various objectives such as:
• Building and maintaining
a positive image of the
firm.
• Handling unfavorable
stories or events.
• Maintaining positive
relationships with the
media.
Shutterstock / ESB Professional 28
© McGraw Hill LLC
Popular PR Tools
Cause-related marketing
Event sponsorship
Realistic Reflections 29
© McGraw Hill LLC
Exhibit 19.6: Elements of a
Public Relations Toolkit
PR Element Function
Publications: brochures, special-
purpose single-issue publications such
as books
Inform various constituencies about the
activities of the organization and
highlight specific areas of expertise.
Video and audio: programs, public
service announcements
Highlight the organization or support
cause-related marketing efforts.
Annual reports Give required financial performance data
and inform investors and others about
the unique activities of the organization.
Media relations: press kids, new
releases, speeches, event
sponsorships
Generate news coverage of the
organization’s activities or
products/services.
Electronic media: websites, e-mail
campaigns
Websites can contain all the previously
mentioned toolbox elements; e-mail
directs PR efforts to specific target
groups.
30
© McGraw Hill LLC
PROGRESS CHECK (2 of 3)
1. Why do companies use public relations as part
of their IMC strategy?
2. What are the elements of a public relations
toolkit?
31
© McGraw Hill LLC
Sales Promotions
Can be targeted at either the end user consumers
or channel members.
Can be used in either push or pull strategies.
32
© McGraw Hill LLC
Types of Sales Promotion
(1 of 2)
Promotion Advantages Disadvantages
Coupons
• Stimulates demand.
• Allows for direct tracking of
sales.
• Low redemption rates.
• High cost.
Deals
• Encourages trial.
• Reduces consumer risk.
• May reduce perception of
value.
Premiums
• Builds goodwill.
• Increases perception of
value.
• Consumers buy for
premium, not product.
• Has to be carefully
managed.
Contests
• Increases consumer
involvement.
• Generates excitement.
• Requires creativity.
• Must be monitored.
Sweepstakes
• Increases involvement with
the product.
• Sales often decline after the
sweepstakes is over.
33
© McGraw Hill LLC
Types of Sales Promotion
(2 of 2)
Promotion Advantages Disadvantages
Samples
• Encourage trial.
• Offer direct involvement.
• High cost to the firm.
Loyalty
Programs
• Create loyalty.
• Encourage repurchase.
• High cost to the firm.
POP Displays
• Provide high visibility.
• Encourage brand trial.
• Difficult to get a good
location in the store.
• Can be costly to the firm.
Rebates
• Stimulate demand.
• Increase value perception.
• Easily copied by
competitors.
• May just advance future
sales.
Product
Placement
• Displays products
nontraditionally.
• Demonstrates product
uses.
• Firm often has little control
over display.
• Product can be
overshadowed.
34
© McGraw Hill LLC
PROGRESS CHECK (3 of 3)
1. What are various forms of sales promotions?
2. What factors should a firm consider when
evaluating a sales promotion?
35
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Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
Because learning changes everything.®
Chapter 20
Personal Selling and Sales
Management
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
© McGraw Hill LLC
Learning Objectives
Learning Objective 20.1 Describe the value added
of personal selling.
Learning Objective 20.2 Define the steps in the
personal selling process.
Learning Objective 20.3 Describe the key functions
involved in managing a sales force.
Learning Objective 20.4 Describe the ethical and
legal issues in personal selling.
3
© McGraw Hill LLC
The Scope and Nature of Personal Selling
Internet.
Face-to-face.
Telephone.
Video Teleconference.
Jacobs Stock Photography/Getty Images 4
© McGraw Hill LLC
Personal Selling as a Career
People love the lifestyle.
There is a lot of flexibility.
There is a lot of variety in
the job.
Can be very lucrative.
Very visible to management
and good for promotions.
Many salespeople now rely on virtual offices,
which enable them to communicate via the Internet
with colleagues and customers.
Salesjobs.com
©Perfectlab/Shutterstock 5
http://www.salesjobs.com/
http://www.salesjobs.com/
© McGraw Hill LLC
The Value Added by Personal Selling
Salespeople provide
information and advice.
Salespeople save time
and simplify buying.
Salespeople build
relationships.
A salesperson’s product knowledge and ability to
facilitate the sale can make buying a car easy and
possibly even enjoyable.
©Kristian Sekulic/Getty Images 6
© McGraw Hill LLC
Exhibit 20.1: The Personal Selling Process
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7
© McGraw Hill LLC
Step 1: Generate and Qualify Leads
8
© McGraw Hill LLC
Generate Leads
Trade shows.
Cold calls.
Telemarketing.
Shutterstock/AndreyPopov 9
© McGraw Hill LLC
Step 2: Preapproach and the Use of
CRM Systems
Establish goals for
meeting with the
customer.
Conduct additional
research and develop
plans for meeting with
the customer.
Salespeople input customer information into their
tablets to develop a customer database for CRM
systems.
Jamie Grill/JGI/Blend Images/Getty Images 10
© McGraw Hill LLC
Step 3: Sales Presentation and
Overcoming Reservations
The presentation.
Handling reservations.
limonzest © 123RF.com 11
© McGraw Hill LLC
Exhibit 20.2: Aligning the Personal Selling
Process with the B2B Buying Process
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12
© McGraw Hill LLC
Step 4: Closing the Sale
Obtain a commitment
from the customer to
make a purchase.
Often this is the most
stressful part of the
sales process.
A “no” one day may be
the foundation for a
“yes” another day.
joakimbkk/Getty Images 13
© McGraw Hill LLC
Step 5: Follow-Up
The follow-up therefore offers a prime opportunity for a
salesperson to solidify the customer relationship through
great service quality.
• Reliability. The salesperson and the supporting organization must
deliver the right product or service on time.
• Responsiveness. The salesperson and support group must be ready
to deal quickly with any issue, question, or problem that may arise.
• Assurance. Customers must be assured through adequate
guarantees that their purchase will perform as expected.
• Empathy. The salesperson and support group must have a good
understanding of the problems and issues faced by their customers.
• Tangibles. Their influence is subtler than that of the other four service
quality dimensions.
14
© McGraw Hill LLC
PROGRESS CHECK (1 of 3)
1. Why is personal selling important to an IMC
strategy?
2. What are the steps in the personal selling
process?
15
© McGraw Hill LLC
Managing
the Sales Force
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© McGraw Hill LLC
Sales Force Structure
Company sales force
• Employees
• Established product
lines
Manufacturer’s
representatives
(independent agents)
• New markets
• Not employees
• Smaller firms
17
© McGraw Hill LLC
Salesperson Duties
Order getting.
Order-taking.
Sales support
personnel.
Selling teams.
McGraw-Hill 18
© McGraw Hill LLC
Recruiting and Selecting Salespeople
Personality
Empathy
Self-
motivation
Resilience
Optimism
19
© McGraw Hill LLC
Recruiting for Success
How does a firm that
focuses on a fun
product recruit
salespeople who
exhibit fun?
Shutterstock / Pressmaster 20
© McGraw Hill LLC
Sales Training
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21
© McGraw Hill LLC
Motivating and Compensating Salespeople
Financial rewards
• Salary.
• Commission.
• Bonus.
• Sales Contest.
Nonfinancial rewards
• Recognition from
peers and
management.
• Plaques, pens, rings.
• Free trips or days off.
• Given at sales
meeting and
publicized in the
company newsletter.
22
© McGraw Hill LLC
Evaluating Salespeople by Using Marketing
Metrics
Tied to the reward
structure.
Evaluation measures
can be either objective
or subjective.
Shutterstock/Zodar 23
© McGraw Hill LLC
PROGRESS CHECK (2 of 3)
1. What do sales managers need to do to manage
their sales force successfully?
2. What is the difference between monetary and
nonmonetary incentives?
24
© McGraw Hill LLC
Ethical and Legal Issues in Personal Selling
The Sales Manager and
the Sales Force
The Sales Force and
Corporate Policy
The Salesperson and
the Customer
Shutterstock / 3D_creation 25
© McGraw Hill LLC
Issues for the Sales Manager and the
Sales Force
• Hiring.
• Promotion.
• Supervision.
• Training.
• Assigning Duties.
• Quotas.
• Compensation.
• Firing.
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© McGraw Hill LLC
Issues for the Sales Force and
Corporate Policy
The firm may have a policy to
sell goods or services to
people who cannot afford
them or to people who should
not have them.
Should insurance salespeople
disclose inadequate hurricane
coverage and risk not making
the sale?
Robert Szymanski/Shutterstock 27
© McGraw Hill LLC
Issues for the Salesperson and the Customer
Have you ever felt that
you were treated
unethically by a
salesperson?
What happened?
ximagination/123RF 28
© McGraw Hill LLC
PROGRESS CHECK (3 of 3)
1. What are three areas of personal selling in
which ethical and legal issues are more likely to
arise?
29
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