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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

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.

PROGRESS CHECK (6 of 6)

1. How should firms choose and assess the efficacy

of influencers?

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Chapter 5

Analyzing the Marketing

Environment

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.

Exhibit 5.2: Understanding the Marketing Environment

Access the text alternative for slide images.

Exhibit 5.2: The Immediate Environment

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

Competitors

Know their strengths,

weaknesses, and likely

reactions to firm’s

marketing activities.

10'000 Hours/Getty Images 7

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

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

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.

PROGRESS CHECK (1 of 2)

1. What are the components of the immediate

environment?

Macroenvironmental Factors

EXHIBIT 5.4 The Macroenvironment

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.

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

Exhibit 5.5: Generational Cohorts

Generational

cohort Gen α Gen Z Gen Y Gen X

Baby

Boomers

Range of birth years2010–

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.

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

Education

Education is related to income, which determines

spending power.

Monkey Business Images/Shutterstock 17

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

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

Social Trends

Sustainability

Health and Wellness

Efficient Utilization and Distribution of Food

Sustainability

UN Sustainable

Development Goals

focus on social issues

for basic needs.

Certifications from

various agencies may

be important.

pixelliebe/Shutterstock 21

Health and Wellness

Child and adult obesity

New markets focused

on healthy living

Mobile apps that

support health and

wellness

Shutterstock/Rawpixel.com 22

Efficient Utilization and Distribution of Food

Diet-related Products

Reducing Hunger

Reducing Food Waste

Steve Cukrov / Alamy 23

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

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

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

Exhibit 5.6: Consumer Protection Legislation (1 of 2)

Year Law Description1906 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.

Exhibit 5.6: Consumer Protection Legislation (2 of 2)

Year Law Description1990 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.

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

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?

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Chapter 6

Consumer Behavior

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.

Exhibit 6.1: The Consumer Decision Process

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

Search for Information

Internal and external searches for information

Factors Affecting Consumers’ Search Processes

Perceived Benefits Perceived Costs

Shutterstock / bleakstar 7

The Locus of Control

Internal locus of control =

more search activities

External locus of control =

fate or external factors

Actual or Perceived Risk

Evaluation of Alternatives: Attribute Sets

Universal

Retrieval

Evoked

Evaluation of Alternatives

What are some of the features of a vacation

that would in your evaluative criteria?

Shutterstock / Juancat 11

Exhibit 6.2: Consumer Decision RulesCompensatory 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?

Choice Architecture

Impulse products Nudge

DefaultsLeft: stocking © 123RF.com; Right: Iakov Filimonov/Shutterstock; Bottom: Shutterstock/ever 13

Purchase and Consumption

Exhibit 6.3: Components of Post purchase Outcomes

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.

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

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

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

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?

Factors Influencing the Consumer Decision Process

EXHIBIT 6.4 Factors Affecting the Consumer Decision Process

Access the text alternative for slide images.

Psychological Factors: Motives

EXHIBIT 6.5 Maslow’s Hierarchy of Needs

Psychological Factors: Attitude

Cognitive.

Affective.

Behavioral.

Pixel-Shot/Shutterstock 23

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

Psychological Factors: Learning and Memory

Psychological Factors: Lifestyle

Lifestyle involves

decisions in spending

time and money.

Actual vs. Perceived

Lifestyle

Shutterstock/STUDIO DREAM 26

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

Social Factors: Reference Groups

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

Situational Factors

Purchase Situation.

Sensory Situation.

Temporal State.

Sensory Situation

Visual.

Auditory.

Olfactory.

Tactile.

Taste.

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).

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

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?

Involvement and Consumer Buying DecisionsExhibit 6.6: Elaboration Likelihood Model

Access the text alternative for slide images.

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

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?

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Chapter 7

Business-to-Business

Marketing

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.

Exhibit 7.1: B2B Markets

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

Resellers

Resellers are marketing intermediaries that resell manufactured products without significantly altering their form.

• Wholesalers

• Distributors

• Retailers

Syda Productions/Shutterstock 6

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

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

PROGRESS CHECK (1 of 4)

1. What are the various B2B markets?

The B2B Buying Process

EXHIBIT 7.2 Business-to-Business Buying Process

Access the text alternative for slide images.

Stage 1: Need Recognition

The B2B process begins

with need recognition.

Can be generated

internally or externally.

stockbroker/123RF 11

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

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

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

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

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

PROGRESS CHECK (2 of 4)

1. Identify the stages in the B2B buying process.

2. How do you perform a vendor analysis?

The Buying CenterExhibit 7.4: Buying Center Roles

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

Organizational CultureEXHIBIT 7.5 Organizational Buying Culture

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.

PROGRESS CHECK (3 of 4)

1. What are the six buying roles?

2. What are the types of cultures that exist in

buying centers?

Buying SituationsEXHIBIT 7.6 Buying Situations

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.

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

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.

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.

PROGRESS CHECK (4 of 4)

1. How do new buy, straight rebuy, and modified

rebuy differ?

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Chapter 8

Global Marketing

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.

Globalization

The processes by

which goods,

services, capital,

people, information,

and ideas flow

across national

borders.

deepblue4you/Getty Images 4

Assessing Global Markets

EXHIBIT 8.1 Components of a Country Market Assessment

Access the text alternative for slide images.

Evaluating the General Economic EnvironmentUsing Economic Metrics

Trade deficit or

surplus

Gross domestic product (GDP)

Purchasing power parity

(PPP)

Gross national income (GNI)

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

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.

McGraw-Hill Global Education Holdings, LLC 8

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

Analyzing Infrastructure and Technological Capabilities

Marketers are especially concerned with four

key elements of a country’s infrastructure:

• Transportation.

• Distribution Channels.

• Communications.

• Commerce.

Analyzing Governmental Actions

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.

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.

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

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

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

Geert Hofstede’s Cultural Dimensions

Power distance

Uncertainty avoidance

Individualism Masculinity

Time orientation

IndulgenceCulture

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

The Appeal of the BRIC Countries

Great potential for growth in the global community:

• Brazil.

• Russia.

• India.

• China.

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?

Exhibit 8.4: Global Entry Strategies

Access the text alternative for slide images.

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

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

Strategic Alliance

Collaborative

relationships between

independent firms.

The partnering firms do

not create an equity

partnership.

Xinhua/Alamy Stock Photo 24

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

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

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?

Choosing a Global Marketing Strategy: Segmentation, Targeting, and Positioning (STP)

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The Global Marketing Mix: Global Product or Service Strategies

Return to the parent-slide glossary term.

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The Global Marketing Mix: Global Pricing Strategies

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

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

PROGRESS CHECK (3 of 3)

1. What are the components of a global marketing

strategy?

2. What are the three global product strategies?

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Chapter 9

Segmentation, Targeting,

and Positioning

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.

The Segmentation, Targeting, and Positioning Process

EXHIBIT 9.1 The Segmentation, Targeting, and Positioning (STP) Process

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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

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

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

Demographic Segmentation

Most common

segmentation strategy.

Easy to identify.

Easy to measure (age,

gender, income,

education).

Shutterstock / astel design 8

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

Psychographic Segmentation

How consumers

describe themselves

in terms of:

• Self values.

• Lifestyle.

• Self-concept.

Shutterstock / Zoriana Zaitseva 10

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

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

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

PROGRESS CHECK (1 of 2)

1. What are the various segmentation methods?

Step 3: Evaluate Segment Attractiveness

EXHIBIT 9.5 Evaluate Segment Attractiveness

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

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

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

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

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

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

Exhibit 9.6: Profitability of Two Market Segments for Camillo’s Lawn Service

Homeowners Businesses

Segment size 75,000 1,000

Segment adoption

percentage1% 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

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.

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.

Exhibit 9.8: Circles for a Successful Value Proposition (1 of 2)

Part A. No Overlap with Competition

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.

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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.

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

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

Perceptual Maps (1 of 2)

EXHIBIT 9.10A Perceptual Map, Chart A EXHIBIT 9.10B Perceptual Map, Chart B

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Perceptual Maps (2 of 2)

EXHIBIT 9.10C Perceptual Map, Chart C EXHIBIT 9.10D Perceptual Map, Chart D

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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.

PROGRESS CHECK (2 of 2)

1. What is a perceptual map?

2. Identify the six positioning steps.

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Chapter 10

Marketing Research

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.

Marketing Research

Exhibit 10.1: The Marketing Research Process

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Step 1: Defining Objectives and Research Needs

What information is needed to answer specific

research questions?

How should that information be obtained?

Step 2: Designing the Research

Determine type

of research

needed to obtain

data.

Identify type of

data needed.

Shutterstock / Gorodenkoff 7

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.

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

What Insights Can You Develop by Analyzing this Data?

EXHIBIT 10.3 Survey Results for McDonald’s and Wendy’s

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McGraw-Hill Global Education Holdings, LLC 10

Step 5: Developing and Implementing an Action Plan

PROGRESS CHECK (1 of 7)

1. What are the steps in the marketing research

process?

2. What is the difference between data and

information?

Secondary Data

A marketing research project often begins with a

review of the relevant secondary data.

Shutterstock / Iakov Filimonov 13

Exhibit 10.4: External Secondary DataSyndicated 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.

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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

The General Social Survey is one of the nation’s longest

running surveys of social, cultural, and political indicators.

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

PROGRESS CHECK (2 of 7)

1. What is the difference between panel and scanner

data?

Primary Data Collection Techniques

EXHIBIT 10.5 Qualitative versus Quantitative Data Collection

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Observation

Examining purchase and consumption behaviors

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The Brave New World of Shopper-Tracking Technology

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

PROGRESS CHECK (3 of 7)

1. What are the types of qualitative research?

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.

Survey Research Structured vs. Unstructured Questions

EXHIBIT 10.6 Structured versus Unstructured Response

McGraw-Hill Global Education Holdings, LLC 23

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?

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

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

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

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)

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.

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.

PROGRESS CHECK (4 of 7)

1. What are the types of quantitative research?

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.

Internal Secondary Data

Exhibit 10.10: The 5 Vs of Big Data

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PROGRESS CHECK (5 of 7)

1. What are the 5 Vs of big data?

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

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.

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.

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

Active Analytics Tools Artificial intelligence algorithms

used to analyze input gathered

from various data bases including

data from the Internet of Things

(IoT).

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?

The Ethics of Using Customer Information

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

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

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.

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?

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Chapter 11

Product, Branding, and

Packaging Decisions

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.

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.

Exhibit 11.1: Product Complexity

Access the text alternative for slide images.

Types of Products: Consumers

McGraw-Hill Global Education Holdings, LLC 6

PROGRESS CHECK (1 of 5)

1. Explain the three components of a product.

2. What are the four types of consumer products?

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

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

Product Mix and Product Line Decisions (2 of 2)

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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.

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.

Product Mix Changes

EXHIBIT 11.3 Changes to a Product Mix

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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?

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

What Makes a Brand?

Value of Branding for the Customer and the Firm

Brand Equity for the OwnerExhibit 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.

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

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

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”

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

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?

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.

Brand Ownership

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

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

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

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

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

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

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?

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?

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

Product Labeling

Provides information the

consumer needs.

Many labeling

requirements stem from

various laws.

Is a communication tool.

Spauln/Getty Images 35

PROGRESS CHECK (5 of 5)

1. Why do firms change packaging?

2. What objectives do product labels fulfill?

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Chapter 13

Services: The Intangible

Product

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.

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

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

Economic Importance of Service

Access the text alternative for slide images.

Services Marketing Differs from Product Marketing

EXHIBIT 13.2 Core Differences between Services and Goods

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

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.

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

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

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?

Providing Great Service:The Service Gaps ModelEXHIBIT 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.

Knowledge Gap:Understanding Customer Expectations

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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

Evaluating Service Quality Using Well-Established Marketing Metrics

EXHIBIT 13.4 Dimensions of Service Quality

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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.

Zone of ToleranceUsed to Measure How Well Firms Perform on the Five Service Quality Dimensions

Access the text alternative for slide images.

Exhibit 13.5: Customers’ Evaluation of Service Quality for Lou’s Local Diner

EXHIBIT 13.5 Customers’ Evaluation of Service Quality

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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

The Delivery Gap:Delivering Service Quality

Empowering Service Providers

Allowing employees to

make decisions about

how service is provided

to customers.

Purestock/SuperStock 22

Support and Incentives for Employees

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Use of Technology

EXHIBIT 13.6 How Technology Is Augmenting the Human Effort

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McGraw-Hill Global Education Holdings, LLC 24

Communications GapDifference 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

Service Quality, Customer Satisfaction, and Loyalty

Good service quality leads to satisfied and loyal

customers.

Postpurchase Evaluation leads to satisfaction,

dissonance, or loyalty.

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.

Service Recovery

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

Finding a Fair Solution

Distributive fairness.

Procedural fairness.

Andriy Popov/123RF 30

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.

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?

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Chapter 15

Strategic Pricing Methods

and Tactics

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.

Considerations for Setting Price Strategies

EXHIBIT 15.1: Pricing Strategies

Value-Based Methods

Setting prices that focus on the overall value of the

product offering as perceived by the consumer:

Improvement Value

MethodCost of Ownership Method

These methods require a great deal of research to

be implemented successfully.

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%

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?

Pricing Strategies

Everyday low

pricing (EDLP)High/Low Pricing

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.

In High/Low Pricing Consumers Use

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.

Source: Ubisoft Entertainment 11

Pricing Tactics Aimed at Consumers (1 of 2)

Pricing Tactics Aimed at Consumers (2 of 2)

Leasing/Rentals Price Bundling

Leader Pricing Price Lining

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.

PROGRESS CHECK (2 of 3)

1. What are some consumer-oriented pricing

tactics?

2. What are some B2B-oriented pricing tactics?

Legal and Ethical Aspects of Pricing

Deceptive or Illegal Price Advertising

Deceptive reference

prices

Loss-leader pricing

Bait and switch

Predatory Pricing

Price Discrimination

Is this price discrimination illegal?

Evelyn Nicole Kirksey/McGraw-Hill 19

Price Fixing

Horizontal price fixing Vertical price fixing

Gray Market Pricing

Uses irregular but not

necessarily illegal

methods.

Gray market for luxury

goods.

Stefano Rellandini/Alamy Stock Photo 21

PROGRESS CHECK (3 of 3)

1. What common pricing practices are considered

to be illegal or unethical?

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Chapter 17

Retailing and Omnichannel

Marketing

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.

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

Exhibit 17.1: Factors for Establishing a Relationship with Retailers

Access the text alternative for slide images.

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

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

Exhibit 17.2: Coach and Cole Haan Distribution

Access the text alternative for slide images.

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.

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

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?

Exhibit 17.3 Types of Retailers

Access the text alternative for slide images.

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

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

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 SpecialistsBig-box or category killers with narrow but deep

assortment

Extreme-value Full line, limited, very low prices

Off-priceInconsistent assortment of brand-name

merchandise at low prices

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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.

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?

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

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

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

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

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.

Benefits of the Internet and Omnichannel Retailing

• Deeper and broader selection.

• Personalization.

• Expanded market presence.

• Integrated CRM.

• Brand Image.

• Pricing.

• Supply Chain.

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?

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Chapter 18

Integrated Marketing

Communications

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.

Integrated Marketing Communications

Consumer

Communication

channels

Results of the

communication

A Lot Of People/Shutterstock 4

Communicating with Consumers: Exhibit 18.1: The Communication Process

Access the text alternative for slide images.

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

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

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

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

The AIDA Model: Desire

I like it.

I want it.

Burke/Triolo Productions/SuperStoc 10

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

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

PROGRESS CHECK (1 of 3)

1. What are the different steps in the

communication process?

2. What is the AIDA model?

Channels Used in an IMC Strategy

EXHIBIT 18.3 Channels of an IMC Strategy

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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

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.

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

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

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

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

Online Marketing

Websites.

Blogs.

Social Media.

Rawpixel.com/Shutterstock 21

Online Marketing: Websites

Which websites do you visit all the time? Why?

Shutterstock / Fergus Coyle 22

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

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

PROGRESS CHECK (2 of 3)

1. What are the different elements of an IMC

program?

Planning for and Measuring IMC Success: Goals

Access the text alternative for slide images.

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.

Planning for and Measuring IMC Success: Setting and Allocating the IMC Budget

Rule-of-thumb methodsObjective-and-task

method

Left: Shutterstock/Zodar; Right: Shutterstock / Yukikae4B 28

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).

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.

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

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

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

store110 $10/day $70/day $35/day $25 250%

New York

City

sneakers

40 $25/day $80/day $40/day $15 60%

Exhibit 18.8: Program Effectiveness Results

Communication Objective QuestionBefore

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

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?

Because learning changes everything.®

www.mheducation.com

Because learning changes everything.®

Chapter 19

Advertising, Public Relations,

and Sales Promotions

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.

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.

Exhibit 19.1: Steps in Planning and Executing an Ad Campaign

Access the text alternative for slide images.

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

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

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

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

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

Focus of Advertisements (1 of 2)

Product-focused

advertisements inform,

persuade, or remind

consumers about a

product or service

Institutional

Marketing-MGT-slides-book.pdf

PH3120.HW8.docx

Skolnik_Chapter2REquired.pdf

Marketing-MGT-slides-book.pdf

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