商学精要:Marketing Processes and Consumer Behavior

Chapter Overview

Many students think that marketing is merely sales or advertising. Actually, sales and advertising are just a small part of the overall marketing process. Think of a product that you buy often. You might not realize that everything about that product—from the time it is created, produced, packaged, and shipped to you—involves various facets of marketing.

This chapter explains the concept of marketing and discusses the five forces that constitute the external marketing environment. It also explains the purpose of a marketing plan, identifies the four components of the marketing mix, and discusses the necessity of identifying market segments. As the chapter unfolds, many variables surrounding both the consumer and organizational markets are discussed, as well as a focus on distinguishing features between products and services and the importance of branding and packaging. The chapter also discusses the consumer buying process, organizational markets, and key considerations in the new product development process. Finally, it looks at the challenges that arise in adopting an international marketing mix and the ways in which small businesses can benefit from an understanding of the marketing mix.

Learning Objectives

1. Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

2. Explain the purpose of a marketing plan and identify its main components.

3. Explain market segmentation and how it is used in target marketing.

4. Discuss the purpose of marketing research, and compare the four marketing research methods.

5. Describe the consumer buying process and the key factors that influence that process.

6. Discuss the four categories of organizational markets, and the characteristics of Business-to-Business (B2B) buying behavior.

7. Discuss the marketing mix as it applies to small business.

LIST OF IN-CLASS ACTIVITIES: AUTHOR’S CHOICE
Activity Description Time Limit
1. Ice-Breaker: Assessing the Marketing Environment
 Students consider various elements from the marketing environment that affect specific industries. 30 min.

2. Small-Group Discussion: Data Mining  Students consider all the valuable information they give to others about themselves. 20 min.
3. Up for Debate: Social Networking and Job Seeking  Students are divided into teams to debate the advantages and disadvantages of using Social Networking to find jobs 30 min.
4. Small-Group Discussion: Never Give a German a Yellow Rose Students consider what a foreign visitor might notice about the American marketplace. 30 min.

 
CHAPTER OUTLINE

Learning Objective 1:
Explain the concept of marketing and identify the five forces that constitute the external marketing environment.

What Is Marketing?
The American Marketing Association defines marketing as “a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”

A. Delivering Value
Consumers buy products that offer the best value when it comes to meeting their needs and wants.

1. Value and Benefits. Value compares a product’s benefits with its costs; benefits include the product’s functions and emotional satisfactions associated with owning, experiencing, or possessing it.

2.  Value and Utility. Products provide utility, which is the product’s ability to satisfy a human want or need. Marketing strives to provide four kinds of utility—form utility, time utility, place utility, and ownership utility.

B. Goods, Services, and Ideas
Consumer goods are tangible products that consumers purchase for final consumption; firms that sell these goods are engaged in consumer marketing. Industrial goods are products that are purchased by companies to be used in further production of goods; firms that sell products to other businesses are engaged in industrial marketing. Services are products with intangible (nonphysical) features, such as professional advice, improved safety procedures, timely information for decisions, or a resort vacation. Service marketing is the application of marketing for services.

C. Relationship Marketing
Relationship marketing focuses on building long-lasting relationships between customers and suppliers.

1.  Data Warehousing and Data Mining for Building Customer Relationships. Data warehousing is the compiling and storage of consumer data; data mining allows for the sifting, sorting, and searching for previously undiscovered customer information and preferences.

D.  The Marketing Environment
Marketing decisions are affected by various influences in the external environment.

1. Political and Legal Environment. Political activities may result in favorable laws and regulations that may open new international business opportunities.

2. Sociocultural Environment. Elements from this segment of the environment include changing demographics, values and religion, buying behaviors, preferences, and activities as well as many other factors.

3. Technological Environment. Technological change happens so quickly in some industries that existing products become obsolete very quickly, while new-product introductions replace them.

4. Economic Environment. Economic conditions affect many facets of marketing, including consumer spending patterns and marketers’ plans for product offerings, pricing, and promotional strategies.

5. Competitive Environment. All marketers compete for the purchasing power of consumers. This sometimes occurs through product differentiation and consumer segmentation. Substitute products may not look alike or they may seem very different from one another, but they can fulfill the same need; brand competition occurs between similar products; international competition matches domestic products against foreign products.

KEY TEACHING TIPS

• Students often forget that marketing is more than just advertising and sales. It is a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships.

• Make sure that students grasp the concept of utility—the ability of a product to satisfy a human want or need—as it is a difficult concept for some students.

• Consumer marketing involves the sale of consumer goods and services to consumers; industrial marketing involves the sale of industrial goods and services to other companies.

• Relationship marketing emphasizes building lasting relationships with customers and suppliers. What do organizations hope to gain from relationship marketing?

• Make sure students understand the distinction between data warehousing and data mining.

• Reinforce that every marketer is faced with forces from the external environment, including the political-legal, sociocultural, technological, economic, and competitive environments.
• Reinforce that although price may be the easiest of the Four Ps to change, a price that is too high fails to attract buyers, and a price that is too low yields little profit.

• Make sure students understand that place is concerned with all of the activities involved in getting products from producers to consumers.

• Reinforce that promotion refers to techniques—advertising, personal selling, sales promotions, publicity, and PR—for communicating information about products.

• Remind students that the marketing mix consists of product, price, promotion, and placement. It is affected by variables such as consumer characteristics, consumer needs, emerging marketing, and competition.

• Stress that the elements of the marketing mix—the Four Ps—are treated similarly by small businesses and large businesses; only the implementation may change.

QUICK QUESTIONS

• How does a marketer create form utility, time utility, place utility, and ownership utility?

• What are some examples of consumer goods? What about industrial goods?

• Relationship marketing emphasizes building lasting relationships with customers and suppliers. What do organizations hope to gain from relationship marketing?

• Make sure students understand the distinction between data warehousing and data mining.

• What are some common political-legal factors that affect marketing?

• What are some common sociocultural factors that affect marketing?

• What are some common technological factors that affect marketing?

• What are some common economic factors that affect marketing?

• What are some examples of competing products?

• Why do marketers attempt to differentiate their products?

Use In-Class Activity 1: Ice-Breaker: Assessing the Marketing Environment
Time Limit: 30 minutes

Use In-Class Activity 2: Small-Group Discussion: Data Mining
Time Limit: 20 minutes

HOMEWORK

CRM and the Marketing Mix
Now is a good time to assign Application Exercise 9 from the end-of-chapter materials as homework This assignment is designed to get students thinking about how to use the different elements of the marketing mix to create an ongoing relationship with customers.

At-Home Completion Time: 30 minutes
 
Learning Objective 2:
Explain the purpose of a marketing plan and identify its main components.

The marketing plan—a detailed strategy for focusing marketing efforts on customers’ needs and wants. Therefore, marketing strategy begins when a company identifies a customer need and develops a product to meet it. Starbucks’s revised strategy in our opening case, for example, recognizes consumers’ needs for more affordable coffee products in a down-turned economy.

Every well founded plan should begin with objectives or goals setting the stage for everything that follows. Marketing objectives, the goals the marketing plan intends to accomplish, are the foundation that guides all of the detailed activities in the plan.

A. Marketing Strategy: Planning the Marketing Mix
A company’s marketing managers are responsible for planning and implementing all the activities that result in the transfer of goods or services to its customers. These activities culminate in the marketing plan—a detailed strategy for focusing marketing efforts on consumer needs and wants. The marketing mix consists of the “Four Ps” of marketing: product, pricing, place, and promotion.

1. Product. The product is a good, service, or idea designed to fill a consumer need. Meeting consumer needs often requires that marketers change existing products.

a. Product Differentiation. Product differentiation is the creation of a feature or image that makes a product differ enough from existing products to attract consumers.

2. Pricing. Pricing must be set to support a variety of costs, yet prices cannot be so high that consumers turn to competing products.

3. Place (Distribution). Distribution activities are concerned with getting the product from the producer to the consumer.

4. Promotion. Promotion refers to techniques of communicating information about products. Promotion includes a combination of personal selling and/or nonpersonal selling, including advertising, sales promotion, and public relations.
 
5.  Blending it all Together: Integrated marketing strategy ensures that the Four Ps blend together so that they are compatible with one another and with the company’s nonmarketing activities as well.

Learning Objective 3:
Explain market segmentation and how it is used in target marketing.

Target Marketing and Market Segmentation
Target markets are groups of people with similar wants and needs who can be expected to show interest in the same products. Market segmentation divides a market into categories of consumer types, based on geographic, demographic, and psychographic variables.

A. Identifying Market Segments
Members of a market segment must share common traits that will affect their purchasing decisions.

B. Geographic Segments
 Consumers in certain geographic regions exhibit characteristics and buying patterns that are typical of those regions. Geographic variables are the geographical units, from countries to neighborhoods that may be considered in a segmentation strategy.

C. Demographic Segments
 Demographic variables describe populations, including such traits as age, income, gender, ethnic background, marital status, race, religion, and social class.

D.  Geo-demographic variables
 Geo-demographic segmentation is a combination strategy. Geo-demographic variables are a combination of geographic and demographic traits and is becoming the most common segmentation tool.

E. Psychographic Segments
     Psychographic variables include life styles, opinions, interests, and attitudes.

F.  Behavioral Segmentation
 Behavioral segmentation uses behavioral variables to market items, including such areas as heavy users.

KEY TEACHING TIP

The consumer buying process consists of a series of steps taken by consumers when making purchases: (a) Problem/Need Recognition, (b) Information Seeking, (c) Evaluation of Alternatives, (d) Purchase Decision, and (e) Postpurchase Evaluation.

QUICK QUESTIONS

• What demographic variables would affect your purchase of a cell phone?
• How can psychographic variables—unlike geographic and demographic variables—be changed by marketing efforts?
• What factors might consumers consider when evaluating alternatives in the consumer buying process?

HOMEWORK

Target Marketing and Market Segmentation
Now is a good time to assign Application Exercise 10 from the end-of-chapter materials as homework. This assignment is designed to get students thinking about secondary data sources and how to apply it to target marketing and the basis upon which target markets are segmented.

At-Home Completion Time: 45 minutes
 
Learning Objective 4:
Discuss the purpose of marketing research, and compare the four marketing research methods.

Marketing research
Marketing research, the study of what customers need and want and how best to meet those needs and wants, is a powerful tool for gaining decision-making information.

A. The Research Process
 Market research can occur at almost any point in a product’s life cycle. Typically, however, it’s used in developing new or altered products.

1. Study the current situation. What is the need and what is being done to meet it?

2. Select a research method. In choosing from a wide range of methods, marketers must consider the effectiveness and costs of different options.

3. Collect data. We distinguish here two types of research data. Secondary data are already available from previous research. When secondary sources are unavailable or inadequate, researchers must obtain primary data, new data from newly performed research.

4. Analyze the data. Data are of no use until organized into information.

5. Prepare a report. This report should sum up the study’s methodology and findings. It should also identify solutions and, where appropriate, make recommendations on a course of action.

B. Research Methods
 The success of a research study often depends on the method a research team uses. There are four basic methods of market research.

1. Observation. Observation involves watching and recording consumer behavior.

2. Surveys . One way to get useful information is by taking surveys, a method of collecting data in which the researcher interacts with people to gather facts, attitudes, or opinions, either by mailing out or e-mailing questionnaires, by telephone calls, or by conducting face-to-face interviews.

3. Focus Group. In a focus group, participants are gathered in one place, presented with an issue, and asked to discuss it.

4. Experimentation. Experimentation compares the responses of the same or similar people under different circumstances.

Learning Objective 5:
Describe the consumer buying process and the key factors that influence that process.

Understanding Consumer Behavior
Consumer behavior is the study of the decision process by which people buy and consume products.

A. Influences on Consumer Behavior
Influences on consumer behavior can include psychological, personal, social, and/or cultural elements. When consumers exhibit brand loyalty, they regularly purchase products because they are satisfied with the products’ performance or benefits.

B.  The Consumer Buying Process
Various models have been constructed to help marketers understand how consumers come to purchase products; marketers eventually use this information to develop marketing plans. The consumer buying process includes five steps:

1. Problem/Need Recognition. The consumer recognizes a problem or a need.

2. Information Seeking. Consumers seek information from personal sources, marketing sources, public sources, and experience.

3. Evaluation of Alternatives. Consumers compare products before deciding which one(s) meet their needs.

4. Purchase Decision. Ultimately, consumers make purchase decisions. Rational motives involve the logical evaluation of product attributes, such as cost, quality, and usefulness. Emotional motives involve nonobjective factors and include sociability, imitation of others, and aesthetics.

5. Postpurchase Evaluation. Only satisfied customers will likely make repeat purchases.

QUICK QUESTIONS

• What are some examples of psychological influences and personal influences on consumers? What about social influences and cultural influences?

• What is the difference between rational motives and emotional motives when consumers make a purchase decision? Are emotional motives related to psychographics?

Learning Objective 6:
Discuss the four categories of organizational markets, and the characteristics of Business-to-Business (B2B) buying behavior.

Organizational markets and buying behaviors are quite different from consumer markets and consumer behaviors.

A. Business Marketing
Organizational markets fall into three categories: industrial, reseller, and government/ institutional markets.

1. Services Market. The services companies market encompasses the many firms
that provide services to the purchasing public

2. Industrial Market. The industrial market includes businesses that buy goods that
are either converted into other products or goods that are used up during production.

3. Reseller Market. The reseller market consists of marketing intermediaries, such
as wholesalers and retailers that buy products and resell them.

3.  Government and Institutional Market. In addition to federal and state governments, the institutional market consists of nongovernment organizations, such as hospitals, churches, and museums, that also use supplies and equipment as well as legal, accounting, and transportation services.

B. B2B Buying Behavior
Organizational buying behavior bears little resemblance to consumer buying practices. Demand for industrial products is stimulated by differences in buyers and buyer-seller relationships.

1. Differences in Buyers. Industrial buyers are trained, professional, specialized, and expert.

2. Differences in the Buyer-Seller Relationship. Industrial buying situations often involve frequent, enduring buyer-seller relationships.

C.  Social Media and Marketing
 Social networking as used by marketers today refers to communications that flow among people and organizations interacting through an online platform that facilitates building social relations among its users.

1. Viral Marketing and Social Networking. Viral marketing is a form marketing that relies on social networking and the Internet to spread information like a “virus” from person to person.

2. Web-Driven Revenue with Social Networking. Although many major consumer companies have their own Facebook page, small businesses, too, use social media channels to increase revenues by networking with customers in target markets.

D. The International Marketing Mix
 Foreign consumers differ from domestic buyers in language, customs, business practices, and consumer behavior. Marketing products internationally means mounting a strategy to support global business operations.

1. International Products
Some products can be marketed internationally without modifications, whereas other products need to be modified to fit the needs of a local market.

2. International Pricing
Many factors that affect domestic pricing also affect international pricing; additional factors affecting global pricing are the costs of transportation and selling abroad.

3. International Distribution
Distribution networks in other countries may be costly. Many domestic marketers hire foreign agents to assist with selling, advertising, and providing information about local markets.

4. International Promotion
Many American promotional tactics do not succeed in other countries. Marketers must consider differences in language and culture when promoting products abroad.

KEY TEACHING TIP
In the consumer market, buying and selling transactions are visible to the public. Equally important, though far less visible, are organizational (or commercial) markets.

QUICK QUESTIONS

• How are farmers and manufacturers, for example, included in the industrial market?
• What are the roles of wholesalers and retailers in the reseller market?
• How are consumer-seller relationships different from buyer-seller relationships?
• Why is social media especially important to small businesses? Remind students that one consideration when determining the difference between domestic pricing and international pricing is the higher cost of transporting and selling products abroad.
• Reinforce that marketers face an extreme advantage when distributing products abroad if they can deliver through already-established networks.

Use In-Class Activity 4:
 Small-Group Discussion: Never Give a German a Yellow Rose
Time Limit: 30 minutes
 
 
Learning Objective 8:
Discuss the marketing mix as it applies to small business.

Small Business and the Marketing Mix
Far more small businesses fail than succeed. The successful small businesses have learned skillful application of the marketing mix and careful consideration of each element in the marketing mix.

A. Small-Business Products
Understanding the target market and the targeted group’s wants is critical.

B. Small-Business Pricing
Profits are often determined by accurately assessing costs from the start. Haphazard pricing can sink a firm with a good product.

C. Small-Business Distribution
The most critical aspect of distribution for small businesses is facility location.

D. Small-Business Promotion
Understanding promotional costs, as well as benefits of chosen promotional tools, may be the most critical steps involved.

KEY TEACHING TIP

Students need to understand that establishing the Marketing Mix is especially critical for Small Businesses. 

 
IN-CLASS ACTIVITIES

In-Class Activity 1: Ice-Breaker
Assessing the Marketing Environment

Activity Overview:
This activity asks students to consider various elements from the marketing environment that affect specific industries.

Time Limit: 30 minutes

What to Do:
1.  Divide the class into five-member groups and assign an industry to each group. For example, you may use the automotive industry, fast-food industry, apparel industry, airline industry, and the banking industry. (5 minutes)

2.  Ask each group to discuss how variables from each of the five environments highlighted in the textbook—the political-legal, sociocultural, technological, economic, and competitive environments—affect their assigned industry. (10 minutes)

3.  Reassemble the class and discuss each group’s input. (15 minutes)

Don’t Forget:
With groups of five students, you can assign each student to analyze one of the environments. After this activity is completed, you can ask students to further research their assigned industry to find additional environmen¬tal variables that are currently affecting it.

Wrap-Up:
Review the five marketing environments presented in the textbook and some of the common variables that come from each. Remind students that, in many cases, the same variables from each respective environment affect a number of different industries.
 
In-Class Activity 2: Small-Group Discussion
Data Mining

Activity Overview:
This activity asks students to think about all the valuable information about themselves that they give to others.

Time Limit: 20 minutes

What to Do:
1.  Divide students into small groups and ask them to discuss and make a list of all the locations where they freely give valuable personal information. (10 minutes)

2.  Reassemble the class and compile the groups’ lists. Are the lists similar? For what purposes is this information used by others? (10 minutes)

Don’t Forget:
You can also use this activity as an in-class debate with students considering the pros and cons of data mining.

Wrap-Up:
Bring the activity to a close by briefly discussing the purpose of data mining and its advantages and disadvantages from a consumer’s perspective.

 
In-Class Activity 3: Up for Debate
Social Networking and Job Seeking

Activity Overview:
This activity asks students to debate the advantages of social networking to find job opportunities.

Time Limit: 30 minutes

What to Do:
1.  Divide the class into three-member groups and ask them to read the Entrepreneurship and New Ventures feature on page 291 of the textbook. (5 minutes)

1. Ask each group to discuss the following questions: (15 minutes)

a. What are the advantages and disadvantages of using a social networking site like LinkedIn to find jobs?

b. What would you say to a friend of suspect character who asked you to introduce him/her to one of your LinkedIn connections? Would you introduce him/her even if it might reflect badly on you or damage your own LinkedIn network?

3.  Bring the class together and debate the groups’ answers. (10 minutes)

Don’t Forget:
To ask students how much time they spend on MySpace of Facebook each week. Do they regard these social networking sites as having any potential for finding jobs?

Wrap-Up:
Bring the activity to a close by encouraging students to continually build up their network of contacts as they are a great source of information for potential job openings.
 
In-Class Activity 4: Small-Group Discussion
Never Give a German a Yellow Rose

Activity Overview:
This activity asks students to consider what a foreign visitor might notice about the American marketplace.

Time Limit: 30 minutes

What to Do:
1.  Divide students into small groups and ask them to assume that they will be receiving a foreign visitor. At this point, individual groups can select the home country of their visitor if it will help with the assignment.

2.  Tell each group to assume that the visitor wants to know what he or she might be able to observe about the American marketplace. In general, the visitor is curious about the various elements of the marketing mix. For example, in considering products, you might mention product assortment and the use of brands; for promotion, you might mention the most popular media options used for specific products and what consumers are attracted to in an advertisement. Ask each group to come up with some suggestions. (15 minutes)

3.  Regroup the class and have each group share some of their suggestions. (15 minutes)

Don’t Forget:
Parts of the marketing mix can often be quite similar from one culture to the next; however, elements of the marketing mix can also vary, depending on the product and the culture into which the product is being sold.

Wrap-Up:
Close the activity with a short discussion of the elements of the marketing mix and how these elements can change from one culture to the next, depending on the product and the culture into which the product is being sold.
 
ANSWERS FOR END OF CHAPTER ACTIVITIES

QUESTIONS FOR REVIEW

1.   Five outside factors comprise a company’s external environment and influence its marketing programs: (1) the political and legal environment (2) the sociocultural environment (3) the technological environment  (4) the economic environment and (5) the competitive environment.  (Learning Objective 1 – AACSB – application of knowledge)

2. Answers will vary, but students should focus on the benefits versus costs, since a value package is a combination of all the product features and benefits—all bundled together—that are found to be attractive to the consumer. Benefits include not only the functions of the product, but also the emotional satisfaction but this has to be compared to the costs of the product. Students should recognize that “cost” isn’t just the out-of-pocket expenditure but includes the emotional cost and buyer’s time in making the purchase. A satisfied customer perceives the benefits derived from the purchase to be greater than its costs.
      (Learning Objective 1 – AACSB – application of knowledge)

3. Market segmentation is a method of breaking consumers into mutually exclusive groups based on similar characteristics that are likely to affect consumption. By identifying and targeting segments that are most likely to purchase its products, an organization can tailor its marketing efforts in terms of product features and benefits, pricing, packaging, promotion, and distribution.
(Learning Objective 3 – AACSB – application of knowledge)

4. Both deal with the way people purchase and consume products. However, organizational buyers are professional, specialized, and expert, relying less on product image. Buyer-seller relationships tend to be longer lasting. 
     (Learning Objective 5 – AACSB – application of knowledge)

QUESTIONS FOR ANALYSIS

5.  Answers will vary, but should include how students will tailor their marketing efforts in terms of product features and benefits, pricing, packaging, promotion, and distribution.
     (Learning Objective 2 – AACSB – application of knowledge, reflective thinking)

6. Although answers will vary, using the five-step process, including: need recognition, search for information, evaluation of information, purchase decision, and post-purchase evaluation, students will explore how such a major and expensive decision of choosing a college occurs.
     (Learning Objective 5 – AACSB – application of knowledge, reflective thinking)

7.  Students should at the minimum cite the economic and socio-cultural differences and how those differences will impact everything from the product itself (the look of the hotel, customer service expectations, etc.) price, place (location based on customer needs and wants), and promotion. (Learning Objectiv 6 – AACSB – application of knowledge, reflective thinking)

8. Students will select a wide variety of goods and services so the marketing campaign kits will vary. However, the kits should contain information on why the product is “fashionable” and its value proposition so that the buzz can begin.
     (Learning Objective 6 – AACSB – application of knowledge, reflective thinking)

APPLICATION EXERCISES

9.   The students should focus on meeting customer’s needs and wants and ensuring the product meets customer’s expectations to create an ongoing relationship. The product and pricing strategies should reinforce the customer’s perceptions. The place and promotion strategies should reinforce the product and customer connection.
 (Learning Objective 1 – AACSB – application of knowledge, reflective thinking)

10. Answers will vary, but students should focus on data mining to build stronger enterprise-client relationships. If a company has a clearer picture of a consumer’s preferences they can better tailor the product itself, its price, promotion, and distribution to fit the customer’s needs and preferences.
 (Learning Objective 1, 4 – AACSB – application of knowledge, reflective thinking)

BUILDING A BUSINESS: CONTINUING TEAM EXERCISE ASSIGNMENT 11-12-15
(Learning objectives 2, 3, 4, 5 - AACSB interpersonal relations and teamwork, analytical and reflective thinking, application of knowledge)
This assignment gives students an opportunity to design a complete marketing plan for their business.  They should use the framework referenced in “Developing the Marketing Plan” and formulate an appropriate marketing strategy focused on the needs and wants of potential customers.
 
BUILDING YOUR BUSINESS SKILLS: DEALING WITH VARIABLES 11-16 -24
(Learning objectives 2 - AACSB interpersonal relations and teamwork, analytical and reflective thinking, application of knowledge)

21. Answers will vary, but students should include specific information for each of the market segmentation factors.

22. Answers will vary. Students may identify low competition and seasonality for heating and air conditioning use as being important factors. For example, mild year-round temperatures place less emphasis on the need for either heating or air conditioning.

23. Answers will vary, though demographic and psychographic variables have little influence on the need for heating and air conditioning in climates with extreme weather conditions.

24. These ads are likely targeted to middle- to higher-income owners of older homes who need to replace heating or air conditioning systems or are willing to pay for upgraded equipment for greater comfort. They may also target affluent buyers who are building a home.

EXERCISING YOUR ETHICS: WEIGHING THE ODDS
(Learning objectives 2 - AACSB analytical and reflective thinking, ethical understanding and reasoning)

25. The key ethical issues are integrity, product safety, and communication. The company has invested enormous effort in information collecting and evaluating the safety and effectiveness of the product.

26. Since there is a possibility that the product is harmful to some potential users and there could be liability issues if consumers are injured, the two managers are obligated to share the new data with company executives.

27. Answers will vary but most students will probably recommend postponement of the launch. Students will want to consider the negative impact and again the legal liability if further studies are not conducted on this product.

TEAM EXERCISE: HOME AWAY FROM HOME 11- 28 – 32
(AACSB –Interpersonal relations and teamwork, reflective thinking)

The students’ responses to the Action Steps may vary dramatically due to the different perspectives. Students should be encouraged to explore all the issues including: the target market (students and their parents), the environmental factors, political-legal, economic, competitive, etc. Students should also review the consumer buying behavior model and the market segmentation variables that will impact the purchase.  Finally, the students should create a marketing mix plan based on their target market.

CASES:
STARBUCKS BREWS A NEW MARKETING MIX- 33– 37
(Learning objectives 1, 2, 3, 4 - AACSB analytical and reflective thinking, application of knowledge)

33. Economic and competitive forces resulting from the recession have resulted in the realignment of the Starbuck’s marketing strategy.

34. The changes in the marketing strategy have impacted all aspects of the marketing mix including: the products offered, the price, promotion, and distribution.

35. The new strategy has helped Starbucks create a better customer relationship program and helped Starbucks focus more on its core business which should lead to continue success.  At the time there was a concern that there would be a backlash from current customers that would lead to failure of this new strategy.

36.  The new strategy has continued to help Starbucks boost sales and the costs are the reduced revenue from the new promotions.
37.  The Starbucks marketing strategy does impact its established luxury products because it permits Starbucks to continue positioning itself as the “home of affordable luxury” and serve a variety of demographics.

WHERE HAS ALL THE MIDDLE GONE?
(Learning objectives 1, 2, 3, 4 - AACSB analytical and reflective thinking, application of knowledge)
38. P & G’s new marketing strategy is to reposition its products and target new market segments including the lower income and wealthier customers.

39. Most students will cite the economic, competitive environment, and the socio-cultural forces as having the main impact on P & G’s new strategic plan.

40. Most students will probably conclude that face-to-face interviews would be most effective because it might be difficult to contact low-end customers and they want to gain the trust of the potential customers to gather in-depth info.

41. P & G is using demographic, psychographic, and behavioral variable to determine its target market and better meet the customers’ needs and wants.

42.  Most students will state that all of the components of the marketing mix: product, price, place, and promotion have been effected by the changes in the customer base for P & G.