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Critical ThinkingMax Marks-15 Reading required: - Read Chapter 10, 11, 15 and 17 carefully and then answer the following questions based on your understanding. Grocery chains such as Abdullah Al-Othaim Markets track consumers’ purchasing habits through store loyalty cards like Iktisab. These cards collect purchasing data and build consumer profiles. How can grocers like Abdullah Al-Othaim Markets use these data to create value for the firm and consumers? Chapter-10. (4 Marks) (Minimum 150 words) Identify a specific brand of your choice from the local market that has developed a high level of brand equity. What specific aspects of that brand establish its brand equity? Critically examine based on the concepts discussed in Chapter-11. Chapter-11 (4 Marks) (Minimum 150 words) Coupons and rebates benefit different distribution channel members. Which would you prefer if you were a manufacturer, a retailer, and a consumer and why? Explain based on the concepts discussed in Chapter-15.Chapter-15 (3 Marks) (Minimum 150 words) Some argue that retailers can be eliminated from the distribution channel because they only add costs to the final product without creating any value-added services in the process. Do you agree with this viewpoint? Are consumers likely to make most purchases directly from manufacturers in the near future? Provide justification for your answers based on the concepts discussed in Chapter-17. Chapter-17 (4 Marks) (Minimum 150 words) Important Notes: - For each question, you need to answer not in less than 150 Words. Support your answers with course material concepts, principles, and theories from the textbook and scholarly, peer-reviewed journal articles etc. Use APA style for writing references. Good Luck Requirements: 1200-1600 Department of Business Administration College of Administrative and Financial Sciences Assignment- 2 Marketing Management (MGT 201) Due Date: 18th February 2023 @ 23:59 For Instructor’s Use only General Instructions – PLEASE READ THEM CAREFULLY The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. Assignments submitted through email will not be accepted. Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. Students must mention question number clearly in their answer. Late submission will NOT be accepted. Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). Submissions without this cover page will NOT be accepted. Learning Outcomes: Outline an understanding of the global competitive environment and the changing marketing practices. (CLO-2) Demonstrate the ability to formulate marketing strategies that incorporate psychological and sociological factors which influence consumer’s decision. (CLO-3) Develop critical and analytical thinking necessary to overcome challenges and issues of marketing in the changing global environment. (CLO-4) Critical Thinking Max Marks-15 Reading required: - Read Chapter 10, 11, 15 and 17 carefully and then answer the following questions based on your understanding. Grocery chains such as Abdullah Al-Othaim Markets track consumers’ purchasing habits through store loyalty cards like Iktisab. These cards collect purchasing data and build consumer profiles. How can grocers like Abdullah Al-Othaim Markets use these data to create value for the firm and consumers? Chapter-10. (4 Marks) (Minimum 150 words) Identify a specific brand of your choice from the local market that has developed a high level of brand equity. What specific aspects of that brand establish its brand equity? Critically examine based on the concepts discussed in Chapter-11. Chapter-11 (4 Marks) (Minimum 150 words) Coupons and rebates benefit different distribution channel members. Which would you prefer if you were a manufacturer, a retailer, and a consumer and why? Explain based on the concepts discussed in Chapter-15. Chapter-15 (3 Marks) (Minimum 150 words) Some argue that retailers can be eliminated from the distribution channel because they only add costs to the final product without creating any value-added services in the process. Do you agree with this viewpoint? Are consumers likely to make most purchases directly from manufacturers in the near future? Provide justification for your answers based on the concepts discussed in Chapter-17. Chapter-17 (4 Marks) (Minimum 150 words) Important Notes: - For each question, you need to answer not in less than 150 Words. Support your answers with course material concepts, principles, and theories from the textbook and scholarly, peer-reviewed journal articles etc. Use APA style for writing references. Good Luck Answers 1. 2. 3. 4. Because learning changes everything.®Chapter 1Overview of MarketingCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 1.1Define the role of marketing.Learning Objective 1.2Describe the evolution of marketing over time.Learning Objective 1.3Describe how marketers create value for a product or service.3 © McGraw Hill LLCWater BottlesCD_works27/Shutterstock4 © McGraw Hill LLCWhat Is Marketing?Marketingis the activity, set of institutions, and processes for creating, capturing,communicating, delivering, and exchanging offerings that have valuefor customers, clients, partners, and society at large.Alejandro Rivera/Getty Images5 © McGraw Hill LLCExhibit 1.1 Core Aspects of MarketingAccess the text alternative for slide images.6 © McGraw Hill LLCMarketing Is about Satisfying Customer Needs and WantsHow does Dove offer value?•Dove added the Dove Men+Careline and expanded into products for babies.•In advertising to male consumers, Dove seeks to acknowledge and recognize modern men’s caregiving roles, so it can link these communications to its baby care products too.•Dove seeks to acknowledge and recognize modern men’s caregiving roles, so it can link these communications to its baby care products.Dove seeks to acknowledge and recognize modern men’s caregiving roles, so it can link these communications to its baby care products.Source: Unilever7 © McGraw Hill LLCExhibit 1.2: Exchange: The Underpinning of Seller-Buyer Relationships8 © McGraw Hill LLCExhibit 1.3: The Marketing MixSource: McGraw-Hill Global Education Holdings, LLC9 © McGraw Hill LLCMarketing Creates Value through Product, Price, Place, and Promotion DecisionsThe Marketing Mix:The controllable set of decisions or activities that the firm uses to respond to the wants of its target markets.•Product.•Price.•Promotion.•Place.10 © McGraw Hill LLCProduct: Creating ValueThe fundamental purpose of marketing is to create value by developing a variety of offerings, including goods, services, and ideas, to satisfy customer needs.•Goods.•Services.•Ideas.Marketing creates value by promoting ideas, such as bicycle safety.Source: Street Smart, a public safety campaign of Metro, the District of Columbia, Maryland, and Virginia.11 © McGraw Hill LLCPrice: Capturing ValuePrice is everything a buyer gives up (money, time, energy) in exchange for the product or service.If you don’t mind sitting in a middle seat and putting all your baggage under your seat, flying on low-cost carriers like Frontier is a good value.Kateryna Kukota/Alamy Stock Photo12 © McGraw Hill LLCPlace: Delivering the Value PropositionPlacerepresents all the marketing processes necessary to get the product to the right customer when that customer wants it. Place more commonly deals specifically with retailing and marketing channel management, also known as supply chain management.Hertz creates customer value by using biometrics to create a function that recognizes loyal customers using facial, iris, or fingerprint scans.Jeff Martin/AP Images13 © McGraw Hill LLCPromotion: Communicating the Value PropositionPromotion is communication by a marketer that informs, persuades, and remindspotential buyers about a product or service to influence their buying decisions and elicit a response.Babar books wanted to celebrate the 80th anniversary of the series. It initiated a $100,000 campaign, working in collaboration with toy stores and bookstores.BananaStock/AlamyImages14 © McGraw Hill LLCExhibit 1.4: Marketing Can Be Performed by Individuals and by Organizations15 © McGraw Hill LLCMarketing Impacts Various StakeholdersCustomers.Supply Chain Partners.Employees.Industry.Society.The Great American Milk Drive, run in conjunction with Feeding America, seeks to ensure that local food banks are sufficiently stocked with nutritious, frequently requested items.Source: America’s Milk Companies16 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.What is the definition of marketing?2.Marketing is about satisfying blankand blank.3.What are the four components of the marketing mix?4.Who can perform marketing?17 © McGraw Hill LLCExhibit 1.5 Marketing Evolution: Production, Sales, Marketing and ValueAccess the text alternative for slide images.Photos (left to right): Ryan McVay/Photodisc/Getty Images; Clement Mok/Photodisc/Getty Images; Lawrence Manning/Corbis/Getty Images; Ryan McVay/Photodisc/Getty Images; Mark Dierker/McGraw-Hill18 © McGraw Hill LLCValue-Based MarketingA Lipstick Option for Those Who Dream of a Hermès Bag© Justin Sullivan/Getty Images19 © McGraw Hill LLCValue-Based Marketing Era20 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.What are the various eras of marketing?21 © McGraw Hill LLCHow Does Marketing Create Value and How Do Firms Become More Value Driven?Build relationships with customers.Gather and analyze information.Balance benefits and costs.Connect with customers using social and mobile media.Access the text alternative for slide images.22 © McGraw Hill LLCValue Stems From Four Main ActivitiesAdding ValueUsing Marketing AnalyticsEmbracing Social and Mobile MarketingEthical and Societal Dilemma: Engaging in Conscious MarketingAccess the text alternative for slide images.23 © McGraw Hill LLCMarketing AnalyticsCompanies collect massive amounts of data about how, when, why, where, and what people buy.Kroger collects massive amounts of data about how, when, why, where, and what people buy and then analyzes those data to better serve its customers.© Daniel Acker/Bloomberg/Getty Images24 © McGraw Hill LLCConnecting With Customers Using Social and Mobile MarketingSocial media ad spending is growing, increasing by 32 percent in 2018 alone.3.26 billion people link to some social media sites through their mobile devices.Make travel arrangements online either through Facebook or hotels’ mobile app and check-in is a breeze.Erik Isakson/Blend Images/Getty Images25 © McGraw Hill LLCResolving Ethical and Societal DilemmasConscious MarketingSocially Responsible FirmsMaking socially responsible activities an integral component of corporate strategies.Too Good To Go is a UK-based app that has partnered with 1,381 food stores to match hungry customers to restaurants and stores with surplus food that would otherwise go to waste.Guillaume Payen/SOPA Images/LightRocket/Getty Images26 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.Does providing a good value mean selling at a low price?2.How are marketers connecting with customers through social and mobile media?27 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 2Developing Marketing Strategies and a Marketing PlanCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 2.1Define a marketing strategy.Learning Objective 2.2Describe the elements of a marketing plan.Learning Objective 2.3Analyze a marketing situation using SWOT analyses.Learning Objective 2.4Describe how a firm chooses which consumer group(s) to pursue with its marketing efforts.Learning Objective 2.5Outline the implementation of the marketing mix as a means to increase customer value.Learning Objective 2.6Summarize portfolio analysis and its use to evaluate marketing performance.Learning Objective 2.7Describe how firms grow their business.3 © McGraw Hill LLCPepsiCoThe development at PepsiCo reflects careful analysis of the market and efforts to ensure that it continues to attract a wide range of consumers.VStock/ Alamy, Shutterstock/VDB Photos4 © McGraw Hill LLCWhat is a Marketing Strategy?A marketing strategy identifies:•A firm’s target market.•A related marketing mix.•The bases on which the firm plans to build a sustainable competitive advantage.Shutterstock / SergZSV.ZP5 © McGraw Hill LLCExhibit 2.1: Macro Strategies for Developing Customer ValueAccess the text alternative for slide images.6 © McGraw Hill LLCCustomer ExcellenceRetaining loyal customers.Providing outstanding customer service.Disney’s My Magic system enables users to swipe their MagicBandwristbands to get on rides, make purchases, and open their hotel room doorparrysuwanitch/123RF7 © McGraw Hill LLCOperational ExcellenceEfficient operationsExcellent supply chain managementStrong relationship with suppliers8 © McGraw Hill LLCProduct ExcellenceProvide products with high perceived value and effective branding and positioning.Bloomberg Businessweek’s top global brands:•Apple, Google, Microsoft, Coca-Cola, Amazon, Samsung, Toyota, Facebook, Mercedes, IBM.© Jacek Lasa / Alamy9 © McGraw Hill LLCLocational ExcellenceEspecially important for retailers and service providers.Many say, “The three most important things in retailing are location, location, location.”Competitive advantage based on location is not easily duplicated. Starbucks makes it difficult for competitors to enter a market and find good locations.10 © McGraw Hill LLCMultiple Sources of AdvantageA single strategy (low prices or excellent service) is usually not enough to build a sustainable competitive advantage.Southwest Airlines •Provides good service at a good value (on-time flights that are reasonably priced).Carlos E. Santa Maria/Shutterstock11 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.What are the various components of a marketing strategy?2.List the four macro strategies that can help afirm develop a sustainable competitive advantage.12 © McGraw Hill LLCExhibit 2.2: The Marketing PlanAccess the text alternative for slide images.13 © McGraw Hill LLCStep 1: Define the Business MissionPepsiCo’s Mission Statement:“To provide consumers around the world with delicious, affordable, convenient and complementary foods and beverages from wholesome breakfasts to healthy and fun daytime snacks and beverages to evening treats.”Coke’s Mission Statement:“To refresh the world … To inspire moments of optimism and happiness … To create value and make a difference.”14 © McGraw Hill LLCStep 1: Conduct a Situation Analysis Using SWOT AnalysisInternal StrengthsExternalOpportunitiesInternalWeaknessesExternalThreats15 © McGraw Hill LLCExhibit 2.3: Examples of Elements in a SWOT Analysis (1 of 2)EnvironmentEvaluationPositiveNegativePepsiInternalStrengths•Diverse brand portfolio•Strong celebrity endorsers•Successful marketing campaigns with music industry•Commitment to social and environmental charitable causesWeaknesses•Lower brand awareness than rival Coca-Cola•Less market share than rival Coca-Cola•Environmentally unfriendly packagingExternalOpportunities•Expanding health food market •Growth in global market share •Acquisition of new brandsThreats•Water scarcity•Popularity of reusable water bottles•Soda taxes•Increasing competition in the snack food marketSources: BiteshBhasin, “SWOT Analysis of Pepsi—PepsiCo SWOT Analysis,” Marketing91, April 3, 2019; Hitesh Bhasin, “SWOT of Coca-Cola,” Marketing91, 2018.16 © McGraw Hill LLCExhibit 2.3: Examples of Elements in a SWOT Analysis (2 of 2)EnvironmentEvaluationPositiveNegativeCoca-ColaInternalStrengths•High market share•Strong brand•Strong global presence•Excellent customer loyalty •Supply chainWeaknesses•Low diversification•Few healthy beveragesExternalOpportunities•Emerging countries•Diversifying products•Bottled waterThreats•Water scarcity •Potential marketsaturation•Changes to labeling regulations•Increasing competitorsSources: BiteshBhasin, “SWOT Analysis of Pepsi—PepsiCo SWOT Analysis,” Marketing91, April 3, 2019; Hitesh Bhasin, “SWOT of Coca-Cola,” Marketing91, 2018.17 © McGraw Hill LLCStep 3: Identifying and Evaluating Opportunities Using STPSegmentationTargetingPositioning18 © McGraw Hill LLCExhibit 2.4: Hertz: Market Segmentation IllustrationSegment 1Segment 2Segment 3Segment 4Segment 5SegmentsSingle thrill seekers and gear heads on vacationAdrenaline CollectionBusiness customers and families who prefer a luxurious ridePrestige CollectionEnvironmentally conscious customersGreen Traveler CollectionFamiliesSUV/Minivan/4x4 CollectionCommercial customersCommercial Van/Truck CollectionCars OfferedCorvette ZHZChevrolet CamaroInfiniti QX56Cadillac EscaladeToyota PriusFord FusionToyota RAV4Ford ExplorerFord Cargo Van19 © McGraw Hill LLCMarket PositioningChoose which segments to pursue, then how to position within those segments.Define the marketing mix variables so target customers have a clear, distinctive, and desirable understanding of the product compared to competition.Hertz positions itself as a quality car and truck rental company that is the first choice for each target segment.Shutterstock/MuchMania20 © McGraw Hill LLCStep 4: Implement Marketing Mix and Allocate ResourcesProduct and Value Creation Place and Value Delivery Price and Value Capture Promotion and Value Communication21 © McGraw Hill LLCProduct and Value CreationSuccessful products and services are those that customers perceive as valuable enough to purchase.Dyson creates value with its innovative products (left). It can therefore charge significantly more than the price charged for conventional fans (right).Access the text alternative for slide images.(Left): Source: Dyson, Inc.; (right): Stockbyte/Getty Images22 © McGraw Hill LLCPrice and Value CapturePrice is what the customer is willing to pay for a product they perceive as good value.Shutterstock / RUBEN M RAMOS23 © McGraw Hill LLCPlace and Value DeliveryThe product must be readily accessible when and where the customer wants it. •Dyson provides product and place value.•Where are Dyson fans available?Top: Shutterstock/TotallyMJ, Bottom: Shutterstock/Maxx-Studio24 © McGraw Hill LLCPromotion and Value CommunicationAdvertisingPersonal sellingSales promotionPublic relationsDirect marketingOnline marketing (including social media)Integrated marketing communications (IMC)Access the text alternative for slide images.25 © McGraw Hill LLCStep 5: Evaluate Performance Using Marketing MetricsAmetricis a measuring system that quantifies a trend, dynamic, or characteristic.Metrics are used to explain why things happened and also project the future.Shutterstock / NicoElNino26 © McGraw Hill LLCEvaluating PerformanceWho is accountable for performance?•Performance Objectives, Marketing Analytics, and Metrics.•Financial Performance Metrics.•Portfolio Analysis.EXHIBIT 2.5Performance Metrics: Coke vs. PepsiAccess the text alternative for slide images.Source: MarketWatch, Inc.27 © McGraw Hill LLCExhibit 2.6 Boston Consulting Group MatrixPhotos (top left): DenPhotos/Shutterstock; (top right): Kicking Studio/Shutterstock; (bottom left): Sushiman/Shutterstock; (bottom right): David Caudery/Tap Magazine/Getty ImagesAccess the text alternative for slide images.P&G Website28 © McGraw Hill LLCWhich Quadrant?Whether a product is classified as a star or a question mark has profound implications on how it is treated and supported within the firm.Top: Ksander/Shutterstock; Bottom: Denis Rozhnovsky/ AlamyStock Photo29 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.What are the five steps in creating a marketing plan?2.What tool helps a marketer conduct a situation analysis?3.What is STP?4.What do the four quadrants of the portfolio analysis represent?30 © McGraw Hill LLCGrowth StrategiesExhibit 2.7: Markets/Products and Service StrategiesAccess the text alternative for slide images.31 © McGraw Hill LLCMarket PenetrationCurrentmarketing mix, CurrentcustomersMarvel used a market penetration strategy by expanding the distribution of its films:•Theaters.•Xfinity.•DVDs (in a variety of retail locations).Shutterstock/Nestor Rizhniak32 © McGraw Hill LLCMarket DevelopmentCurrentProducts or Services.NewMarkets.Marvel pursues such a market development strategy when it enhances the viewing of its movies by expanding into more global markets.Klaus Vedfelt/Getty Images33 © McGraw Hill LLCProduct DevelopmentNewproduct or service.Currenttarget market.Marvel launched several successful series on Netflix, includingJessica Jones,Daredevil, Iron Fist,andLuke Cage. •By developing series designed for this format, Marvel can connect with its customers in a new and important way.Left: Dragon Images/Shutterstock, Right: Makistock/Shutterstock34 © McGraw Hill LLCDiversificationNewproduct or service.Newmarket segment.Related vs. unrelated diversification.•Marvel has pursued relateddiversification with its home décor.•If Marvel ventured into the child day care service industry, it would be an unrelateddiversification because it is so different from its core business and therefore very risky.Photos (top): Interior Design/Shutterstock; (bottom):Ariel Skelley/Photodisc/Getty Images35 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.What are the four growth strategies?2.What type of strategy is growing the business from existing customers?3.Which strategy is the riskiest?36 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 3Digital Marketing: Online, Social, and MobileCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 3.1Describe the 4E framework of digital marketing.Learning Objective 3.2Examine the seven critical elements of online marketing.Learning Objective 3.3Understand the drivers of social media engagement.Learning Objective 3.4Understand various motivations for using mobile applications. Learning Objective 3.5Recognize and understand the components of a digital marketing strategy.Learning Objective 3.6Understand the central factors in picking an influencer partner.3 © McGraw Hill LLCHiltonRegienPaassen/Shutterstock4 © McGraw Hill LLCExhibit 3.1: The 4E Framework for Digital MarketingAccess the text alternative for slide images.5 © McGraw Hill LLCOffer must be relevant to its targeted customer.Relevancy can be achieved by providing personalized offers.Marketers use many kinds of digital offers to excite customers, and to excite them, an offer must be relevant to its targeted customer. Lush Cosmetics encourages customers to post pictures of themselves using its products on social media by promising that if they use #LushLife, they might find themselves featured on its official page.Source: Lush Cosmetics/Instagram6Excite the Customerﺽﻭﺮﻋﻞﻴﻤﻌﻠﻟ ﻪﺼﺼﺨﻣ ﺽﻭﺮﻋ © McGraw Hill LLCproduct’s value proposition and communicate offered benefits.When marketing ideas, the goal is to improve people’s well-being, along with selling the underlying concept.To educate women about how to perform breast self-exams, the #KnowYourLemons campaign posted pictures of a dozen lemons to teach people about 12 shapes and lumps they should be looking for when they themselves for cancer each month.Source: Worldwide Breast Cancer7Golden opportunity toeducate about theEducate the Customer © McGraw Hill LLCProvide vivid information about a firm’s goods and services.Simulate real experiences.Sephora maintains its own YouTube channel with dedicated videos that demonstrate how to use specific products like bright pink eyeshadow.Source: Sephora USA, Inc.8Experience the Product or Serviceﺔﻛﺮﺸﻟﺍ ﺕﺎﻣﺪﺧﻭ ﻊﻠﺳ ﻦﻋ ﺔﻴﺣ ﺕﺎﻣﻮﻠﻌﻣ ﻢﻳﺪﻘﺗﺔﻴﻘﻴﻘﺤﻟﺍ ﺏﺭﺎﺠﺘﻟﺍ ﺓﺎﻛﺎﺤﻣ © McGraw Hill LLCAction, loyalty, and commitment.Positively engaged consumers lead to more profitability.Engagement can also backfire.IKEA engages customers with its “Place” app that enables customers to select an item from its catalog and then, by using the camera within the app, visualize the item in their home or office.Source: IKEA Systems B.V.9Engage the Customer © McGraw Hill LLCPROGRESS CHECK (1 of 6)1.What are the 4 Es?2.What social media elements work best for each of the 4 Es?10 © McGraw Hill LLCEXHIBIT 3.2: The 7C Online Marketing FrameworkAccess the text alternative for slide images.11 © McGraw Hill LLC1. Core GoalsThe basis of any marketing strategy is its goals.Determine specific goals.Align the goals with the target market and align the 7Cs with the goals.Hasbro has embraced online marketing to reflect its core goals. To introduce this new brand called Hanazuki, it developed an entire series that viewers can watch on YouTube. The Hanazukipage is filled with animation, movement, and bright colors, encouraging visitors to take their time exploring the different characters, watching videos, downloading apps, and perhaps shopping too.Source: Hasbro, Inc.12 © McGraw Hill LLC2. Context ElementsDesign.Navigation.Must be in alignment with the target market.Because Walmart’s core goal is to encourage purchases, its commerce-oriented website features a simple look and feel. Looking closely at the design and color scheme, notice that Walmart’s home page aligns with its adult target market. It is more traditionally focused on selling Hanazukimerchandise than Hasbro, Inc. with little concern for the brand itself.Source: Walmart Stores, Inc.13 © McGraw Hill LLC3. ContentMonitor to ensure relevancy.Devise appropriate keywords to improve organic search.Implement SEM and paid search.The content of these messages must resonate with its target market, but need not always showcase merchandise or services, as in the Facebook post from the jewelry firm, Alex and Ani. The company is not showcasing its jewelry per se, but rather providing a motivational quote that resonates with young females, its primary target market.Source: Alex and Ani, LLC14ﺚﺤﺒﻟﺍ ﺕﺎﻛﺮﺤﻤﻟ ﻉﻮﻓﺪﻣ ﺚﺤﺑﺞﺘﻨﻣ ﻦﻋ ﺚﺤﺒﻧ ﺎﻤﻟ ﺓﺪﺣﻭ ﻝﻭﺍ ﻊﻠﻄﺗ ﺔﻛﺮﺸﻟﺍ ﻥﺎﺸﻋ © McGraw Hill LLC4. CommunityAllow customers to interact.Use corporate and professional blogs.Engage in Crowdsourcing.Betabranduses crowdsourcing by having its customers submit clothing design ideas and feedback on items before they are manufactured.Source: Betabrand15ﺕﺎﺣﺍﺮﺘﻗﻻﺍ ﻢﻫﻮﻛﺭﺎﺸﻳ ,ﺕﺎﺠﺘﻨﻣ ﻢﻫﺪﺑ ﻮﺷ ﺱﺎﻨﻟﺍ ﻮﻟﺄﺴﻳ © McGraw Hill LLC5. CommunicationClear, helpful, meaningful content enables effective communication.Enables interacting with, engaging, and educating site visitors. Provide a mechanism for customers to communicate with the firm.16 © McGraw Hill LLC6. CommerceDesktop usage is greater, and conversion rates higher, for online purchases.The most loyal customers use multiple channels.Customers want a range of online purchase options.Through Sephora’s mobile app, Beauty Insider account holders can check their loyalty points, access past purchase behavior, receive personalized recommendations, scan items while in stores, and much more.Source: Sephora USA, Inc.17 © McGraw Hill LLC7. ConnectionEngage customers and provide a call to action.Allow customers to interact with the firm continuously.Enable positive engagement.A good website or blog engages customers and provides them with a call to action. WarbyParker connects customers with four call-to-action buttons inviting visitors to: get started, order frames to try on at home, take a quiz, and shop online.Source: WarbyParker18 © McGraw Hill LLCPROGRESS CHECK (2 of 6)1.Describe the components of the 7C online marketing framework.2.Differentiate between organic and paid search.19 © McGraw Hill LLCExhibit 3.3:The Wheel of Social Media Engagement 20 © McGraw Hill LLCThe Information EffectOutcome in which relevant information is spread by firms or individuals to other members of the social network.BigTunaOnline/Shutterstock21 © McGraw Hill LLCThe Connected EffectOutcome that satisfies humans’ innate need to connect with other people.Source: William Perugini/Shutterstock22 © McGraw Hill LLCThe Network EffectOutcome in which every post is spread instantaneously across social media.Source: Shutterstock/Metamorworks23 © McGraw Hill LLCThe Dynamic EffectInformation is exchanged to network participants through back-and-forth communications.Examines how people flow in and out of networked communities as their interests change.Rawpixel.com/Shutterstock24 © McGraw Hill LLCThe Timeliness Effect Firms must engage with the customer at the right place and time.Using beacon technology, Coca-Cola is able to engage customers in a timely manner by offering moviegoers a free Coke at the moment they walk into a movie theater.Source: SeongJoonCho/Bloomberg/Getty Images 25 © McGraw Hill LLCPROGRESS CHECK (3 of 6)1.What are the five drivers of social media engagement described in the Wheel of Social Media Engagement?26 © McGraw Hill LLCGoing Mobile and SocialExhibit 3.4: Seven Primary Motivations for Mobile App UsageNeed for “Me Time”Need to SocializeNeed to Shop (showrooming)Need to AccomplishNeed to PrepareNeed to DiscoverNeed to Self-ExpressWith more than 3 billion downloads, Candy Crush Saga clearly fulfills for many people an important need for unproductive “me time.”Access the text alternative for slide images.Source: Alexat25/Shutterstock27 © McGraw Hill LLCApp Pricing Models28 © McGraw Hill LLCPROGRESS CHECK (4 of 6)1.What are the seven types of customer motivations for using mobile apps?2.What are the four options for pricing mobile apps?3.What are some of the most popular types of mobile applications?29 © McGraw Hill LLCHow Do Firms Engage Their Customers?Exhibit 3.4: Social Media Engagement ProcessAccess the text alternative for slide images.30ﻞﻀﻓﺍ ﺎﻨﻫ ﺓﺭﻮﺼﻟﺍ © McGraw Hill LLCListening helps determine digital marketing objectives and strategies.Sentimental analysis allows marketers to analyze and determine consumers attitudes and preferences.Other companies perform their own analyses, effectively leveraging their existing capacities for listening to customers. Zappos is known for its remarkable customer service and attracts plenty of buzz about its offerings. It takes the information it gathers from listening to customers to design strategies that emphasize what they like most. Source: Zappos.com, Inc.31Listen--------- © McGraw Hill LLCAnalyze32 © McGraw Hill LLCExhibit 3.5: How to Do a Digital Marketing CampaignAccess the text alternative for slide images.33 © McGraw Hill LLCDoDevelop and implement campaigns using social media.Effective implementation based on social and mobile media activity.EXHIBIT 3.6Example Facebook Targeting ChoicesSource: Facebook34 © McGraw Hill LLCPROGRESS CHECK (5 of 6)1.What are the components of a digital marketing strategy?35 © McGraw Hill LLCInfluencer MarketingA marketing strategy that uses opinion leaders, popular on social media, to drive marketing messages to a targeted audience.Firms hire (or encourage) these well-known names to promote brand messages to their networks of followers. Big-time influencers like Ariana Grande have millions of followers and can command almost a mil-lion dollars for a sponsored post.Source: Lev Radin/Shutterstock36 © McGraw Hill LLCAssessing the Efficacy of InfluencersRelevanceResponseReachReturnInfluencers like Selena Gomez can reach millions of potential customers for Coca-Cola with an Instagram post like this one, which depicts her drinking a Coke with the lyrics from one of her songs on the bottle.Source: Selena Gomez/Instagram37 © McGraw Hill LLCExhibit 3.8: Influencer Marketing Chain of EventsAccess the text alternative for slide images.38 © McGraw Hill LLCExhibit 3.9: Types of InfluencersType of Influencer Definition Example Key Channels Average Cost per Post Celebrity Large following, widely recognized Nespresso relies heavily on George Clooney to promote its products in marketing across platforms, leveraging his cool image to enhance its appeal but also his reputation for environmental sustainability to promote its own efforts along these lines Social media, print, television $3,000–$500,000 Micro Modest following, niche interest NUX Active (athletic clothing brand) worked with Sydney LoveleighNelson, whose health and fitness posts have earned her about 21,000 followers Posts on social media sites, shared promo codes $80–$500 Blog Writes for a blog and has attracted readers and subscribers with that content The FaceGymspa sponsored a blog post by lifestyle blogger Hannah Bronfman to provide information about its services and treatments Reviews on blog, guest blog posts $400–$5,500 Social media Popular on social platforms (Instagram, YouTube, Twitter) among followers in specific target audiences LaCroix worked with nutritionist Joy Bauer to create a Twitter post of a recipe she had created, using the product Pictures posted with the product, shared hashtags, videos featuring the product $100–$500,000 Specialized Key opinion leader or expert in a specific field BoxyCharm, a subscription beauty box service, worked with Kandee Johnson, a professional makeup artist, to make videos that explained each product included in a box Social media, tutorials, reviews, blog posts, sponsored print articles, articles in academic journals $500–$5,000 Source: Kristen Baker, “What Will Influencer Marketing Look Like in 2020?,” HubSpot, December 2, 2019, https://blog.hubspot.com/marketing/how-to-work-with-influencers39 © McGraw Hill LLCEthical Considerations for Influencer Marketing Fraudulent Influence•The incentive to boost follower numbers accordingly has led to various unethical behaviors. Disclosing Advertising•Intent if an influencer is being paid to promote a product, that information should be clear in the post. Sincerity•Effective influence attempts require followers to believe that the influencer actually likes and appreciates the product.40 © McGraw Hill LLCPROGRESS CHECK (6 of 6)1.How should firms choose and assess the efficacy of influencers?41 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 5Analyzing the Marketing EnvironmentCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 5.1 Outline how customers, the company, competitors, corporate partners, and the physical environment affect marketing strategy.Learning Objective 5.2 Explain why marketers must consider their macroenvironment when they make decisions.Learning Objective 5.3 Identify various social trends that impact marketing. Learning Objective 5.4 Examine the technological advances that are influencing marketers.3 © McGraw Hill LLCExhibit 5.2: Understanding the Marketing EnvironmentAccess the text alternative for slide images.4 © McGraw Hill LLCExhibit 5.2: The Immediate Environment5 © McGraw Hill LLCCompany CapabilitiesSuccessful 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/Shutterstock6 © McGraw Hill LLCCompetitorsKnow their strengths, weaknesses, and likely reactions to firm’s marketing activities.10'000 Hours/Getty Images7 © McGraw Hill LLCCorporate PartnersParties 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 Images8 © McGraw Hill LLCPhysical EnvironmentSustainable 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.CaiaImage / Image Source9 © McGraw Hill LLC17 Global Goals of Sustainable DevelopmentEXHIBIT 5.3Global Goals of Sustainable DevelopmentFrom 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 officialsorMember States. https://www.un.org/sustainabledevelopment/news/communications-material/.Access the text alternative for slide images.10 © McGraw Hill LLCPROGRESS CHECK (1 of 2)1.What are the components of the immediate environment?11 © McGraw Hill LLCMacroenvironmental FactorsEXHIBIT 5.4The Macroenvironment12 © McGraw Hill LLCCultureShared meanings, beliefs, morals, values, and customs of a group of people transmitted by words, literature, and institutions. Country Culture•Subtler aspects can be difficult to navigate. •Sometimes best answer is to establish universal appeal within specific identities of country culture.Regional Culture•For national and global chains, particularly important to cater to regional preferences.•McDonald’s –slightly different variations of staple menu.13 © McGraw Hill LLCDemographicsCharacteristics 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.govShutterstock / asteldesign14 © McGraw Hill LLCExhibit 5.5: Generational CohortsGenerational cohortGen αGen ZGen YGen XBaby BoomersRange of birth years2010–20251997–20091981–19961965–19801946–1964Age in 20200–1011–2324–3940–5556–74Millennials and the Rise of the 'Experience Economy'Access the text alternative for slide images.15 © McGraw Hill LLCIncomePurchasing 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 Images16 © McGraw Hill LLCEducationEducation is related to income, which determines spending power.Monkey Business Images/Shutterstock17 © McGraw Hill LLCGenderMale/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/Shutterstock18 © McGraw Hill LLCEthnicityApproximately 80% of all population growth in the next 20 years is expected to come from minority communitiesBy 2030 the Hispanic population in the U.S. is expected to reach more than 72 million.Image Source/Getty Images19 © McGraw Hill LLCSocial TrendsSustainabilityHealth and WellnessEfficient Utilization and Distribution of Food20 © McGraw Hill LLCSustainabilityUN Sustainable Development Goals focus on social issues for basic needs.Certifications from various agencies may be important.pixelliebe/Shutterstock21 © McGraw Hill LLCHealth and WellnessChild and adult obesityNew markets focused on healthy living Mobile apps that support health and wellnessShutterstock/Rawpixel.com22 © McGraw Hill LLCEfficient Utilization and Distribution of FoodDiet-related ProductsReducing HungerReducing Food Waste Steve Cukrov/ Alamy23 © McGraw Hill LLCTechnological AdvancesTechnology impacts every aspect of marketing:•New products and services.•New forms of communication.•New retail channels.Growing importance of mobile devicesNew 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/Shutterstock24 © McGraw Hill LLCEconomic SituationAffects 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 counterConsumer Confidence Index Hiya Images/Corbis/Getty Images25 © McGraw Hill LLCPolitical/Legal Environment1Comprises political parties, government organizations, and legislation and laws.Firms must understand and comply withlegislation regarding:•Fair competition.•Consumer protection. •Industry-specific regulation.olegdudko© 123RF.com26 © McGraw Hill LLCExhibit 5.6: Consumer Protection Legislation (1 of 2)YearLawDescription1906Federal Food and Drug ActCreatedtheFoodandDrugAdministration(FDA);prohibitedthemanufactureorsaleof adulteratedorfraudulentlylabeledfoodanddrugproducts.1914Federal Trade Commission ActEstablishedtheFederalTradeCommission(FTC)toregulateunfaircompetitivepracticesand practices that deceive or are unfair to consumers.1966Fair Packaging and Labeling ActRegulatespackagingandlabelingofconsumergoods;requiresmanufacturerstostatethe contentsofthepackage,whomadeit,andtheamountscontainedwithin.1966Child Protection ActProhibitsthesaleofharmfultoysandcomponentstochildren;setsthestandardforchild-resistantpackaging.1967Federal Cigarette Labeling and Advertising ActRequirescigarettepackagestodisplaythiswarning:“Warning:TheSurgeonGeneralHas DeterminedThatCigaretteSmokingIsDangeroustoYourHealth.”1972Consumer Product Safety ActCreatedtheConsumerProductSafetyCommission(CPSC),whichhastheauthoritytoregulate safety standards for consumerproducts.27 © McGraw Hill LLCExhibit 5.6: Consumer Protection Legislation (2 of 2)YearLawDescription1990Children’s Television ActLimits the number of commercials shown during children’s programming.1990NutritionLabelingandEducationActRequires food manufacturers to display nutritional contents on product labels.1995Telemarketing Sales RuleRegulatesfraudulentactivitiesconductedoverthetelephone.Violatorsaresubjecttofines andactionsenforcedbytheFTC.2003Controlling the Assault of Non-SolicitedPornographyandMarketing Act of 2003 (CAN-SPAMAct)Prohibits misleading commercial e-mail, particularly misleading “subject” and “from” lines.2003Amendment to the Telemarketing Sales RuleEstablishesaNationalDoNotCallRegistry,requiringtelemarketerstoabstainfromcalling consumerswhoopttobeplacedonthelist.2003Do Not Spam LawCreated to reduce spam or unwarranted e-mails.2010Financial Reform LawCreatedtheConsumerFinancialProtectionBureau,whoseaimistoenforceappropriate consumer-orientedregulationsonanumberoffinancialfirmssuchasbanks,mortgage businesses,andpaydayandstudentlenders.ItalsosetuptheFinancialServicesOversight Counciltoactasanearlywarningsystem.28 © McGraw Hill LLCResponding to the EnvironmentImplement strategies that respond to multiple environmental forces.Marketers that succeed are the ones that respond quickly, accurately, and sensitively to consumers.t_kimura/Getty Images29 © McGraw Hill LLCPROGRESS CHECK (2 of 2)1.What are the six key macroeconomic factors?2.Differentiate between country culture and regional culture.3.What are some important social trends shaping consumer values and shopping behavior?30 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 6Consumer BehaviorCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 6.1 Articulate the steps in the consumer buying process.Learning Objective 6.2 Describe the difference between functional and psychological needs.Learning Objective 6.3 Describe factors that affect information search.Learning Objective 6.4 Discuss postpurchase outcomes.Learning Objective 6.5 List the factors that affect the consumer decision process.Learning Objective 6.6 Describe how involvement influences the consumer decision process.3 © McGraw Hill LLCExhibit 6.1: The Consumer Decision Process4 © McGraw Hill LLCNeed RecognitionWants 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 needsWhat needs does a BMW K1600 satisfy?Bill Pugliano/Getty Images5 © McGraw Hill LLCSearch for InformationInternal and external searches for information© Image Source, all rights reserved. 6 © McGraw Hill LLCFactors Affecting Consumers’ Search ProcessesPerceived BenefitsPerceived CostsShutterstock / bleakstar7 © McGraw Hill LLCThe Locus of ControlInternal locus of control = more search activitiesExternal locus of control = fate or external factors8 © McGraw Hill LLCActual or Perceived Risk9 © McGraw Hill LLCEvaluation of Alternatives: Attribute SetsUniversalRetrievalEvoked10 © McGraw Hill LLCEvaluation of AlternativesWhat are some of the features of a vacation that would in your evaluative criteria?Shutterstock / Juancat11 © McGraw Hill LLCExhibit 6.2: Consumer Decision RulesCompensatory Multi-Attribute Model for Buying CerealIf the consumer makes a decision using a compensatory decision rule, which cereal will they choose?TasteCaloriesNatural/Organic ClaimsPriceOverall ScoreCheerios108688.2Post89837.1Kashi681057.2If the consumer makes a decision based only on Natural or Organic claims, which cereal will they choose?12 © McGraw Hill LLCChoice ArchitectureImpulse productsNudgeDefaultsLeft: stocking © 123RF.com; Right: IakovFilimonov/Shutterstock; Bottom: Shutterstock/ever13 © McGraw Hill LLCPurchase and Consumption14 © McGraw Hill LLCExhibit 6.3: Components of Post purchase Outcomes15 © McGraw Hill LLCPost purchase Customer Satisfaction•Build realistic expectations, not too high and not too low.•Demonstrate correct product use—improper usage can cause dissatisfaction.•Stand behind the product or service by providing money-back guarantees and warranties.•Encourage customer feedback, which cuts down on negative word of mouth and helps marketers adjust their offerings.•Periodically make contact with customers and thank them for their support. 16 © McGraw Hill LLCPost purchase Cognitive DissonanceMore 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/AtstockProductions17 © McGraw Hill LLCPost purchase Customer LoyaltyMarketers 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 Images18 © McGraw Hill LLCPost purchase Undesirable Consumer BehaviorNegative 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: Whirlpool19 © McGraw Hill LLCPROGRESS 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 noncompensatorydecision rules?6.How do firms enhance post purchase satisfaction and reduce cognitive dissonance?20 © McGraw Hill LLCFactors Influencing the Consumer Decision ProcessEXHIBIT 6.4Factors Affecting the Consumer Decision ProcessAccess the text alternative for slide images.21 © McGraw Hill LLCPsychological Factors: MotivesEXHIBIT 6.5Maslow’s Hierarchy of Needs22 © McGraw Hill LLCPsychological Factors: AttitudeCognitive.Affective.Behavioral.Pixel-Shot/Shutterstock23 © McGraw Hill LLCPsychological Factors: PerceptionSelection.Organization.Interpretation.How has society’s perception of people with tattoos changed in recent years?A. and I. Kruk/Shutterstock24 © McGraw Hill LLCPsychological Factors: Learning and Memory25 © McGraw Hill LLCPsychological Factors: LifestyleLifestyle involves decisions in spending time and money.Actual vs. Perceived LifestyleShutterstock/STUDIO DREAM26 © McGraw Hill LLCSocial Factors: FamilyFirms 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 Muller27 © McGraw Hill LLCSocial Factors: Reference Groups28 © McGraw Hill LLCSocial Factors: CultureThe 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/Shutterstock29 © McGraw Hill LLCSituational FactorsPurchase Situation.Sensory Situation.Temporal State.© Fancy / Alamy30 © McGraw Hill LLCSensory SituationVisual.Auditory.Olfactory.Tactile.Taste.© Niall McDiarmid/ Alamy31 © McGraw Hill LLCPurchase SituationSituational factors may influence your purchase decisions.If you are buying jewelry for yourself, you might browse the clearance counter at Kay Jewelers (left). But if you are buying a gift for your best friend’s birthday, you may go to Tiffany & Co (right).© Niall McDiarmid/ Alamy32 © McGraw Hill LLCTemporal StateA 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/Shutterstock33 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.What are some examples of specific needs suggested by Maslow’s hierarchy of needs?2.Which social factors likely have the most influence on (a) the purchase of a new outfit for a job interview and (b) the choice of a college to attend? 3.What situational factors do firms use to influence consumer purchase behavior?34 © McGraw Hill LLCInvolvementand Consumer Buying DecisionsExhibit 6.6: Elaboration Likelihood ModelAccess the text alternative for slide images.35 © McGraw Hill LLCInvolvement and Consumer Buying Decisions Types of Buying DecisionsExtended Problem SolvingLimited Problem Solving•Impulse Buying.•Habitual Decision Making.Jeff Greenough/Blend Images/Getty Images36 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.How do low-versus high-involvement consumers process the information in an advertisement?2.What is the difference between extended versus limited problem solving?37 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 7Business-to-Business MarketingCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 7.1Describe the ways in which business-to-business (B2B) firms segment their markets.Learning Objective 7.2List the steps in the B2B buying process. Learning Objective 7.3Identify the roles within the buying center.Learning Objective 7.4Describe the different types of organizational cultures. Learning Objective 7.5Detail different buying situations.3 © McGraw Hill LLCExhibit 7.1: B2B Markets4 © McGraw Hill LLCManufacturers and Service ProvidersBuy 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/Shutterstock5 © McGraw Hill LLCResellersResellers are marketing intermediaries that resell manufactured products without significantly altering their form. •Wholesalers•Distributors •RetailersSydaProductions/Shutterstock6 © McGraw Hill LLCInstitutionsHospitals, educational institutions, and religious organizationsExamples of purchases by institutions:•Textbooks.•Capital construction.•Equipment.•Supplies.•Food.•Janitorial services.WitthayaPrasongsin/Moment/Getty Images7 © McGraw Hill LLCGovernmentIn 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/Shutterstock8 © McGraw Hill LLCPROGRESS CHECK (1 of 4)1.What are the various B2B markets?9 © McGraw Hill LLCThe B2B Buying ProcessEXHIBIT 7.2Business-to-Business Buying ProcessAccess the text alternative for slide images.10 © McGraw Hill LLCStage 1: Need RecognitionThe B2B process begins with need recognition.Can be generated internally or externally.stockbroker/123RF11 © McGraw Hill LLCStage 2: Product SpecificationAfter recognizing the need and considering alternative solutions, create a list of potential specifications.Used by suppliers/vendors to develop proposals.Getty Images/Hero Images12 © McGraw Hill LLCStage 3: RFP Process Request for ProposalVendors or suppliers are invited to bid on supplying required components and services.Purchasing company may simply post its RFP needs on its website, work through various B2B web portals, or inform their preferred vendors directly.Contracts Opportunities 13 © McGraw Hill LLCStep 4: Proposal Analysis, Vendor Negotiation, and SelectionThe 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 Images14 © McGraw Hill LLCStep 5: Order SpecificationFirm 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 / Bacho15 © McGraw Hill LLCStage 6: Vendor Performance Assessment Using MetricsEXHIBIT 7.3:Evaluating a Vendor’s Performance(1)Key Issues(2)ImportanceScore(3)Vendor’sPerformance(4)Importance ×Performance(2) ×(3)Customer Service0.4052.0Issue Resolution0.2040.8Delivery0.1050.5Quality0.3030.9Total1.04.216 © McGraw Hill LLCPROGRESS CHECK (2 of 4)1.Identify the stages in the B2B buying process.2.How do you perform a vendor analysis?17 © McGraw Hill LLCThe Buying CenterExhibit 7.4: Buying CenterRoles18 © McGraw Hill LLCExample of Buying Center Roles for a HospitalInitiator: DoctorInfluencer: Medical device supplier, pharmacyDecider: HospitalBuyer: Materials managerUser: PatientGatekeeper: Insurance company19 © McGraw Hill LLCOrganizational CultureEXHIBIT 7.5 Organizational Buying Culture20 © McGraw Hill LLCBuilding B2B RelationshipsThere are a multitude of ways to enhance B2B relationships, including the following examples:•Blogs and social media (LinkedIn, Twitter, Snapchat) can:•Build awareness.•Provide search engine results.•Educate clients about products and services.•“Warm up” a seemingly cold corporate culture.•White papers prepared by B2B marketers provide information while not appearing as promotion.21 © McGraw Hill LLCPROGRESS CHECK (3 of 4)1.What are the six buying roles?2.What are the types of cultures that exist in buying centers?22 © McGraw Hill LLCBuying SituationsEXHIBIT 7.6 Buying Situations23 © McGraw Hill LLCNew BuyMost likely when purchasing for the first time.Usually quite involved.The buying center will probably use all six steps in the buying process and involve many people in the buying decision.24 © McGraw Hill LLCModified RebuyPurchasing a similar product but changing specifications such as price, quality level, customer service level, options, etc.Current vendors have an advantage.Shutterstock/BabLab25 © McGraw Hill LLCStraight RebuysBuying additional units of products that have been previously purchased.Most B2B purchases fall into this category.Usually, the buyer is the only member of the buying center involved.26 © McGraw Hill LLCIdentify the Type of Buying SituationThe 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) blanksituation.Denise is sharing with coworkers, “This customer just made another big order, and they just keep on coming.
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Critical ThinkingMax Marks-15 Reading required: - Read Chapter 10, 11, 15 and 17 carefully and then answer the following questions based on your understanding. Grocery chains such as Abdullah Al-Othaim Markets track consumers’ purchasing habits through store loyalty cards like Iktisab. These cards collect purchasing data and build consumer profiles. How can grocers like Abdullah Al-Othaim Markets use these data to create value for the firm and consumers? Chapter-10. (4 Marks) (Minimum 150 words) Identify a specific brand of your choice from the local market that has developed a high level of brand equity. What specific aspects of that brand establish its brand equity? Critically examine based on the concepts discussed in Chapter-11. Chapter-11 (4 Marks) (Minimum 150 words) Coupons and rebates benefit different distribution channel members. Which would you prefer if you were a manufacturer, a retailer, and a consumer and why? Explain based on the concepts discussed in Chapter-15.Chapter-15 (3 Marks) (Minimum 150 words) Some argue that retailers can be eliminated from the distribution channel because they only add costs to the final product without creating any value-added services in the process. Do you agree with this viewpoint? Are consumers likely to make most purchases directly from manufacturers in the near future? Provide justification for your answers based on the concepts discussed in Chapter-17. Chapter-17 (4 Marks) (Minimum 150 words) Important Notes: - For each question, you need to answer not in less than 150 Words. Support your answers with course material concepts, principles, and theories from the textbook and scholarly, peer-reviewed journal articles etc. Use APA style for writing references. Good Luck Requirements: 1200-1600 Department of Business Administration College of Administrative and Financial Sciences Assignment- 2 Marketing Management (MGT 201) Due Date: 18th February 2023 @ 23:59 For Instructor’s Use only General Instructions – PLEASE READ THEM CAREFULLY The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. Assignments submitted through email will not be accepted. Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. Students must mention question number clearly in their answer. Late submission will NOT be accepted. Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). Submissions without this cover page will NOT be accepted. Learning Outcomes: Outline an understanding of the global competitive environment and the changing marketing practices. (CLO-2) Demonstrate the ability to formulate marketing strategies that incorporate psychological and sociological factors which influence consumer’s decision. (CLO-3) Develop critical and analytical thinking necessary to overcome challenges and issues of marketing in the changing global environment. (CLO-4) Critical Thinking Max Marks-15 Reading required: - Read Chapter 10, 11, 15 and 17 carefully and then answer the following questions based on your understanding. Grocery chains such as Abdullah Al-Othaim Markets track consumers’ purchasing habits through store loyalty cards like Iktisab. These cards collect purchasing data and build consumer profiles. How can grocers like Abdullah Al-Othaim Markets use these data to create value for the firm and consumers? Chapter-10. (4 Marks) (Minimum 150 words) Identify a specific brand of your choice from the local market that has developed a high level of brand equity. What specific aspects of that brand establish its brand equity? Critically examine based on the concepts discussed in Chapter-11. Chapter-11 (4 Marks) (Minimum 150 words) Coupons and rebates benefit different distribution channel members. Which would you prefer if you were a manufacturer, a retailer, and a consumer and why? Explain based on the concepts discussed in Chapter-15. Chapter-15 (3 Marks) (Minimum 150 words) Some argue that retailers can be eliminated from the distribution channel because they only add costs to the final product without creating any value-added services in the process. Do you agree with this viewpoint? Are consumers likely to make most purchases directly from manufacturers in the near future? Provide justification for your answers based on the concepts discussed in Chapter-17. Chapter-17 (4 Marks) (Minimum 150 words) Important Notes: - For each question, you need to answer not in less than 150 Words. Support your answers with course material concepts, principles, and theories from the textbook and scholarly, peer-reviewed journal articles etc. Use APA style for writing references. Good Luck Answers 1. 2. 3. 4. Because learning changes everything.®Chapter 1Overview of MarketingCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 1.1Define the role of marketing.Learning Objective 1.2Describe the evolution of marketing over time.Learning Objective 1.3Describe how marketers create value for a product or service.3 © McGraw Hill LLCWater BottlesCD_works27/Shutterstock4 © McGraw Hill LLCWhat Is Marketing?Marketingis the activity, set of institutions, and processes for creating, capturing,communicating, delivering, and exchanging offerings that have valuefor customers, clients, partners, and society at large.Alejandro Rivera/Getty Images5 © McGraw Hill LLCExhibit 1.1 Core Aspects of MarketingAccess the text alternative for slide images.6 © McGraw Hill LLCMarketing Is about Satisfying Customer Needs and WantsHow does Dove offer value?•Dove added the Dove Men+Careline and expanded into products for babies.•In advertising to male consumers, Dove seeks to acknowledge and recognize modern men’s caregiving roles, so it can link these communications to its baby care products too.•Dove seeks to acknowledge and recognize modern men’s caregiving roles, so it can link these communications to its baby care products.Dove seeks to acknowledge and recognize modern men’s caregiving roles, so it can link these communications to its baby care products.Source: Unilever7 © McGraw Hill LLCExhibit 1.2: Exchange: The Underpinning of Seller-Buyer Relationships8 © McGraw Hill LLCExhibit 1.3: The Marketing MixSource: McGraw-Hill Global Education Holdings, LLC9 © McGraw Hill LLCMarketing Creates Value through Product, Price, Place, and Promotion DecisionsThe Marketing Mix:The controllable set of decisions or activities that the firm uses to respond to the wants of its target markets.•Product.•Price.•Promotion.•Place.10 © McGraw Hill LLCProduct: Creating ValueThe fundamental purpose of marketing is to create value by developing a variety of offerings, including goods, services, and ideas, to satisfy customer needs.•Goods.•Services.•Ideas.Marketing creates value by promoting ideas, such as bicycle safety.Source: Street Smart, a public safety campaign of Metro, the District of Columbia, Maryland, and Virginia.11 © McGraw Hill LLCPrice: Capturing ValuePrice is everything a buyer gives up (money, time, energy) in exchange for the product or service.If you don’t mind sitting in a middle seat and putting all your baggage under your seat, flying on low-cost carriers like Frontier is a good value.Kateryna Kukota/Alamy Stock Photo12 © McGraw Hill LLCPlace: Delivering the Value PropositionPlacerepresents all the marketing processes necessary to get the product to the right customer when that customer wants it. Place more commonly deals specifically with retailing and marketing channel management, also known as supply chain management.Hertz creates customer value by using biometrics to create a function that recognizes loyal customers using facial, iris, or fingerprint scans.Jeff Martin/AP Images13 © McGraw Hill LLCPromotion: Communicating the Value PropositionPromotion is communication by a marketer that informs, persuades, and remindspotential buyers about a product or service to influence their buying decisions and elicit a response.Babar books wanted to celebrate the 80th anniversary of the series. It initiated a $100,000 campaign, working in collaboration with toy stores and bookstores.BananaStock/AlamyImages14 © McGraw Hill LLCExhibit 1.4: Marketing Can Be Performed by Individuals and by Organizations15 © McGraw Hill LLCMarketing Impacts Various StakeholdersCustomers.Supply Chain Partners.Employees.Industry.Society.The Great American Milk Drive, run in conjunction with Feeding America, seeks to ensure that local food banks are sufficiently stocked with nutritious, frequently requested items.Source: America’s Milk Companies16 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.What is the definition of marketing?2.Marketing is about satisfying blankand blank.3.What are the four components of the marketing mix?4.Who can perform marketing?17 © McGraw Hill LLCExhibit 1.5 Marketing Evolution: Production, Sales, Marketing and ValueAccess the text alternative for slide images.Photos (left to right): Ryan McVay/Photodisc/Getty Images; Clement Mok/Photodisc/Getty Images; Lawrence Manning/Corbis/Getty Images; Ryan McVay/Photodisc/Getty Images; Mark Dierker/McGraw-Hill18 © McGraw Hill LLCValue-Based MarketingA Lipstick Option for Those Who Dream of a Hermès Bag© Justin Sullivan/Getty Images19 © McGraw Hill LLCValue-Based Marketing Era20 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.What are the various eras of marketing?21 © McGraw Hill LLCHow Does Marketing Create Value and How Do Firms Become More Value Driven?Build relationships with customers.Gather and analyze information.Balance benefits and costs.Connect with customers using social and mobile media.Access the text alternative for slide images.22 © McGraw Hill LLCValue Stems From Four Main ActivitiesAdding ValueUsing Marketing AnalyticsEmbracing Social and Mobile MarketingEthical and Societal Dilemma: Engaging in Conscious MarketingAccess the text alternative for slide images.23 © McGraw Hill LLCMarketing AnalyticsCompanies collect massive amounts of data about how, when, why, where, and what people buy.Kroger collects massive amounts of data about how, when, why, where, and what people buy and then analyzes those data to better serve its customers.© Daniel Acker/Bloomberg/Getty Images24 © McGraw Hill LLCConnecting With Customers Using Social and Mobile MarketingSocial media ad spending is growing, increasing by 32 percent in 2018 alone.3.26 billion people link to some social media sites through their mobile devices.Make travel arrangements online either through Facebook or hotels’ mobile app and check-in is a breeze.Erik Isakson/Blend Images/Getty Images25 © McGraw Hill LLCResolving Ethical and Societal DilemmasConscious MarketingSocially Responsible FirmsMaking socially responsible activities an integral component of corporate strategies.Too Good To Go is a UK-based app that has partnered with 1,381 food stores to match hungry customers to restaurants and stores with surplus food that would otherwise go to waste.Guillaume Payen/SOPA Images/LightRocket/Getty Images26 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.Does providing a good value mean selling at a low price?2.How are marketers connecting with customers through social and mobile media?27 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 2Developing Marketing Strategies and a Marketing PlanCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 2.1Define a marketing strategy.Learning Objective 2.2Describe the elements of a marketing plan.Learning Objective 2.3Analyze a marketing situation using SWOT analyses.Learning Objective 2.4Describe how a firm chooses which consumer group(s) to pursue with its marketing efforts.Learning Objective 2.5Outline the implementation of the marketing mix as a means to increase customer value.Learning Objective 2.6Summarize portfolio analysis and its use to evaluate marketing performance.Learning Objective 2.7Describe how firms grow their business.3 © McGraw Hill LLCPepsiCoThe development at PepsiCo reflects careful analysis of the market and efforts to ensure that it continues to attract a wide range of consumers.VStock/ Alamy, Shutterstock/VDB Photos4 © McGraw Hill LLCWhat is a Marketing Strategy?A marketing strategy identifies:•A firm’s target market.•A related marketing mix.•The bases on which the firm plans to build a sustainable competitive advantage.Shutterstock / SergZSV.ZP5 © McGraw Hill LLCExhibit 2.1: Macro Strategies for Developing Customer ValueAccess the text alternative for slide images.6 © McGraw Hill LLCCustomer ExcellenceRetaining loyal customers.Providing outstanding customer service.Disney’s My Magic system enables users to swipe their MagicBandwristbands to get on rides, make purchases, and open their hotel room doorparrysuwanitch/123RF7 © McGraw Hill LLCOperational ExcellenceEfficient operationsExcellent supply chain managementStrong relationship with suppliers8 © McGraw Hill LLCProduct ExcellenceProvide products with high perceived value and effective branding and positioning.Bloomberg Businessweek’s top global brands:•Apple, Google, Microsoft, Coca-Cola, Amazon, Samsung, Toyota, Facebook, Mercedes, IBM.© Jacek Lasa / Alamy9 © McGraw Hill LLCLocational ExcellenceEspecially important for retailers and service providers.Many say, “The three most important things in retailing are location, location, location.”Competitive advantage based on location is not easily duplicated. Starbucks makes it difficult for competitors to enter a market and find good locations.10 © McGraw Hill LLCMultiple Sources of AdvantageA single strategy (low prices or excellent service) is usually not enough to build a sustainable competitive advantage.Southwest Airlines •Provides good service at a good value (on-time flights that are reasonably priced).Carlos E. Santa Maria/Shutterstock11 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.What are the various components of a marketing strategy?2.List the four macro strategies that can help afirm develop a sustainable competitive advantage.12 © McGraw Hill LLCExhibit 2.2: The Marketing PlanAccess the text alternative for slide images.13 © McGraw Hill LLCStep 1: Define the Business MissionPepsiCo’s Mission Statement:“To provide consumers around the world with delicious, affordable, convenient and complementary foods and beverages from wholesome breakfasts to healthy and fun daytime snacks and beverages to evening treats.”Coke’s Mission Statement:“To refresh the world … To inspire moments of optimism and happiness … To create value and make a difference.”14 © McGraw Hill LLCStep 1: Conduct a Situation Analysis Using SWOT AnalysisInternal StrengthsExternalOpportunitiesInternalWeaknessesExternalThreats15 © McGraw Hill LLCExhibit 2.3: Examples of Elements in a SWOT Analysis (1 of 2)EnvironmentEvaluationPositiveNegativePepsiInternalStrengths•Diverse brand portfolio•Strong celebrity endorsers•Successful marketing campaigns with music industry•Commitment to social and environmental charitable causesWeaknesses•Lower brand awareness than rival Coca-Cola•Less market share than rival Coca-Cola•Environmentally unfriendly packagingExternalOpportunities•Expanding health food market •Growth in global market share •Acquisition of new brandsThreats•Water scarcity•Popularity of reusable water bottles•Soda taxes•Increasing competition in the snack food marketSources: BiteshBhasin, “SWOT Analysis of Pepsi—PepsiCo SWOT Analysis,” Marketing91, April 3, 2019; Hitesh Bhasin, “SWOT of Coca-Cola,” Marketing91, 2018.16 © McGraw Hill LLCExhibit 2.3: Examples of Elements in a SWOT Analysis (2 of 2)EnvironmentEvaluationPositiveNegativeCoca-ColaInternalStrengths•High market share•Strong brand•Strong global presence•Excellent customer loyalty •Supply chainWeaknesses•Low diversification•Few healthy beveragesExternalOpportunities•Emerging countries•Diversifying products•Bottled waterThreats•Water scarcity •Potential marketsaturation•Changes to labeling regulations•Increasing competitorsSources: BiteshBhasin, “SWOT Analysis of Pepsi—PepsiCo SWOT Analysis,” Marketing91, April 3, 2019; Hitesh Bhasin, “SWOT of Coca-Cola,” Marketing91, 2018.17 © McGraw Hill LLCStep 3: Identifying and Evaluating Opportunities Using STPSegmentationTargetingPositioning18 © McGraw Hill LLCExhibit 2.4: Hertz: Market Segmentation IllustrationSegment 1Segment 2Segment 3Segment 4Segment 5SegmentsSingle thrill seekers and gear heads on vacationAdrenaline CollectionBusiness customers and families who prefer a luxurious ridePrestige CollectionEnvironmentally conscious customersGreen Traveler CollectionFamiliesSUV/Minivan/4x4 CollectionCommercial customersCommercial Van/Truck CollectionCars OfferedCorvette ZHZChevrolet CamaroInfiniti QX56Cadillac EscaladeToyota PriusFord FusionToyota RAV4Ford ExplorerFord Cargo Van19 © McGraw Hill LLCMarket PositioningChoose which segments to pursue, then how to position within those segments.Define the marketing mix variables so target customers have a clear, distinctive, and desirable understanding of the product compared to competition.Hertz positions itself as a quality car and truck rental company that is the first choice for each target segment.Shutterstock/MuchMania20 © McGraw Hill LLCStep 4: Implement Marketing Mix and Allocate ResourcesProduct and Value Creation Place and Value Delivery Price and Value Capture Promotion and Value Communication21 © McGraw Hill LLCProduct and Value CreationSuccessful products and services are those that customers perceive as valuable enough to purchase.Dyson creates value with its innovative products (left). It can therefore charge significantly more than the price charged for conventional fans (right).Access the text alternative for slide images.(Left): Source: Dyson, Inc.; (right): Stockbyte/Getty Images22 © McGraw Hill LLCPrice and Value CapturePrice is what the customer is willing to pay for a product they perceive as good value.Shutterstock / RUBEN M RAMOS23 © McGraw Hill LLCPlace and Value DeliveryThe product must be readily accessible when and where the customer wants it. •Dyson provides product and place value.•Where are Dyson fans available?Top: Shutterstock/TotallyMJ, Bottom: Shutterstock/Maxx-Studio24 © McGraw Hill LLCPromotion and Value CommunicationAdvertisingPersonal sellingSales promotionPublic relationsDirect marketingOnline marketing (including social media)Integrated marketing communications (IMC)Access the text alternative for slide images.25 © McGraw Hill LLCStep 5: Evaluate Performance Using Marketing MetricsAmetricis a measuring system that quantifies a trend, dynamic, or characteristic.Metrics are used to explain why things happened and also project the future.Shutterstock / NicoElNino26 © McGraw Hill LLCEvaluating PerformanceWho is accountable for performance?•Performance Objectives, Marketing Analytics, and Metrics.•Financial Performance Metrics.•Portfolio Analysis.EXHIBIT 2.5Performance Metrics: Coke vs. PepsiAccess the text alternative for slide images.Source: MarketWatch, Inc.27 © McGraw Hill LLCExhibit 2.6 Boston Consulting Group MatrixPhotos (top left): DenPhotos/Shutterstock; (top right): Kicking Studio/Shutterstock; (bottom left): Sushiman/Shutterstock; (bottom right): David Caudery/Tap Magazine/Getty ImagesAccess the text alternative for slide images.P&G Website28 © McGraw Hill LLCWhich Quadrant?Whether a product is classified as a star or a question mark has profound implications on how it is treated and supported within the firm.Top: Ksander/Shutterstock; Bottom: Denis Rozhnovsky/ AlamyStock Photo29 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.What are the five steps in creating a marketing plan?2.What tool helps a marketer conduct a situation analysis?3.What is STP?4.What do the four quadrants of the portfolio analysis represent?30 © McGraw Hill LLCGrowth StrategiesExhibit 2.7: Markets/Products and Service StrategiesAccess the text alternative for slide images.31 © McGraw Hill LLCMarket PenetrationCurrentmarketing mix, CurrentcustomersMarvel used a market penetration strategy by expanding the distribution of its films:•Theaters.•Xfinity.•DVDs (in a variety of retail locations).Shutterstock/Nestor Rizhniak32 © McGraw Hill LLCMarket DevelopmentCurrentProducts or Services.NewMarkets.Marvel pursues such a market development strategy when it enhances the viewing of its movies by expanding into more global markets.Klaus Vedfelt/Getty Images33 © McGraw Hill LLCProduct DevelopmentNewproduct or service.Currenttarget market.Marvel launched several successful series on Netflix, includingJessica Jones,Daredevil, Iron Fist,andLuke Cage. •By developing series designed for this format, Marvel can connect with its customers in a new and important way.Left: Dragon Images/Shutterstock, Right: Makistock/Shutterstock34 © McGraw Hill LLCDiversificationNewproduct or service.Newmarket segment.Related vs. unrelated diversification.•Marvel has pursued relateddiversification with its home décor.•If Marvel ventured into the child day care service industry, it would be an unrelateddiversification because it is so different from its core business and therefore very risky.Photos (top): Interior Design/Shutterstock; (bottom):Ariel Skelley/Photodisc/Getty Images35 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.What are the four growth strategies?2.What type of strategy is growing the business from existing customers?3.Which strategy is the riskiest?36 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 3Digital Marketing: Online, Social, and MobileCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 3.1Describe the 4E framework of digital marketing.Learning Objective 3.2Examine the seven critical elements of online marketing.Learning Objective 3.3Understand the drivers of social media engagement.Learning Objective 3.4Understand various motivations for using mobile applications. Learning Objective 3.5Recognize and understand the components of a digital marketing strategy.Learning Objective 3.6Understand the central factors in picking an influencer partner.3 © McGraw Hill LLCHiltonRegienPaassen/Shutterstock4 © McGraw Hill LLCExhibit 3.1: The 4E Framework for Digital MarketingAccess the text alternative for slide images.5 © McGraw Hill LLCOffer must be relevant to its targeted customer.Relevancy can be achieved by providing personalized offers.Marketers use many kinds of digital offers to excite customers, and to excite them, an offer must be relevant to its targeted customer. Lush Cosmetics encourages customers to post pictures of themselves using its products on social media by promising that if they use #LushLife, they might find themselves featured on its official page.Source: Lush Cosmetics/Instagram6Excite the Customerﺽﻭﺮﻋﻞﻴﻤﻌﻠﻟ ﻪﺼﺼﺨﻣ ﺽﻭﺮﻋ © McGraw Hill LLCproduct’s value proposition and communicate offered benefits.When marketing ideas, the goal is to improve people’s well-being, along with selling the underlying concept.To educate women about how to perform breast self-exams, the #KnowYourLemons campaign posted pictures of a dozen lemons to teach people about 12 shapes and lumps they should be looking for when they themselves for cancer each month.Source: Worldwide Breast Cancer7Golden opportunity toeducate about theEducate the Customer © McGraw Hill LLCProvide vivid information about a firm’s goods and services.Simulate real experiences.Sephora maintains its own YouTube channel with dedicated videos that demonstrate how to use specific products like bright pink eyeshadow.Source: Sephora USA, Inc.8Experience the Product or Serviceﺔﻛﺮﺸﻟﺍ ﺕﺎﻣﺪﺧﻭ ﻊﻠﺳ ﻦﻋ ﺔﻴﺣ ﺕﺎﻣﻮﻠﻌﻣ ﻢﻳﺪﻘﺗﺔﻴﻘﻴﻘﺤﻟﺍ ﺏﺭﺎﺠﺘﻟﺍ ﺓﺎﻛﺎﺤﻣ © McGraw Hill LLCAction, loyalty, and commitment.Positively engaged consumers lead to more profitability.Engagement can also backfire.IKEA engages customers with its “Place” app that enables customers to select an item from its catalog and then, by using the camera within the app, visualize the item in their home or office.Source: IKEA Systems B.V.9Engage the Customer © McGraw Hill LLCPROGRESS CHECK (1 of 6)1.What are the 4 Es?2.What social media elements work best for each of the 4 Es?10 © McGraw Hill LLCEXHIBIT 3.2: The 7C Online Marketing FrameworkAccess the text alternative for slide images.11 © McGraw Hill LLC1. Core GoalsThe basis of any marketing strategy is its goals.Determine specific goals.Align the goals with the target market and align the 7Cs with the goals.Hasbro has embraced online marketing to reflect its core goals. To introduce this new brand called Hanazuki, it developed an entire series that viewers can watch on YouTube. The Hanazukipage is filled with animation, movement, and bright colors, encouraging visitors to take their time exploring the different characters, watching videos, downloading apps, and perhaps shopping too.Source: Hasbro, Inc.12 © McGraw Hill LLC2. Context ElementsDesign.Navigation.Must be in alignment with the target market.Because Walmart’s core goal is to encourage purchases, its commerce-oriented website features a simple look and feel. Looking closely at the design and color scheme, notice that Walmart’s home page aligns with its adult target market. It is more traditionally focused on selling Hanazukimerchandise than Hasbro, Inc. with little concern for the brand itself.Source: Walmart Stores, Inc.13 © McGraw Hill LLC3. ContentMonitor to ensure relevancy.Devise appropriate keywords to improve organic search.Implement SEM and paid search.The content of these messages must resonate with its target market, but need not always showcase merchandise or services, as in the Facebook post from the jewelry firm, Alex and Ani. The company is not showcasing its jewelry per se, but rather providing a motivational quote that resonates with young females, its primary target market.Source: Alex and Ani, LLC14ﺚﺤﺒﻟﺍ ﺕﺎﻛﺮﺤﻤﻟ ﻉﻮﻓﺪﻣ ﺚﺤﺑﺞﺘﻨﻣ ﻦﻋ ﺚﺤﺒﻧ ﺎﻤﻟ ﺓﺪﺣﻭ ﻝﻭﺍ ﻊﻠﻄﺗ ﺔﻛﺮﺸﻟﺍ ﻥﺎﺸﻋ © McGraw Hill LLC4. CommunityAllow customers to interact.Use corporate and professional blogs.Engage in Crowdsourcing.Betabranduses crowdsourcing by having its customers submit clothing design ideas and feedback on items before they are manufactured.Source: Betabrand15ﺕﺎﺣﺍﺮﺘﻗﻻﺍ ﻢﻫﻮﻛﺭﺎﺸﻳ ,ﺕﺎﺠﺘﻨﻣ ﻢﻫﺪﺑ ﻮﺷ ﺱﺎﻨﻟﺍ ﻮﻟﺄﺴﻳ © McGraw Hill LLC5. CommunicationClear, helpful, meaningful content enables effective communication.Enables interacting with, engaging, and educating site visitors. Provide a mechanism for customers to communicate with the firm.16 © McGraw Hill LLC6. CommerceDesktop usage is greater, and conversion rates higher, for online purchases.The most loyal customers use multiple channels.Customers want a range of online purchase options.Through Sephora’s mobile app, Beauty Insider account holders can check their loyalty points, access past purchase behavior, receive personalized recommendations, scan items while in stores, and much more.Source: Sephora USA, Inc.17 © McGraw Hill LLC7. ConnectionEngage customers and provide a call to action.Allow customers to interact with the firm continuously.Enable positive engagement.A good website or blog engages customers and provides them with a call to action. WarbyParker connects customers with four call-to-action buttons inviting visitors to: get started, order frames to try on at home, take a quiz, and shop online.Source: WarbyParker18 © McGraw Hill LLCPROGRESS CHECK (2 of 6)1.Describe the components of the 7C online marketing framework.2.Differentiate between organic and paid search.19 © McGraw Hill LLCExhibit 3.3:The Wheel of Social Media Engagement 20 © McGraw Hill LLCThe Information EffectOutcome in which relevant information is spread by firms or individuals to other members of the social network.BigTunaOnline/Shutterstock21 © McGraw Hill LLCThe Connected EffectOutcome that satisfies humans’ innate need to connect with other people.Source: William Perugini/Shutterstock22 © McGraw Hill LLCThe Network EffectOutcome in which every post is spread instantaneously across social media.Source: Shutterstock/Metamorworks23 © McGraw Hill LLCThe Dynamic EffectInformation is exchanged to network participants through back-and-forth communications.Examines how people flow in and out of networked communities as their interests change.Rawpixel.com/Shutterstock24 © McGraw Hill LLCThe Timeliness Effect Firms must engage with the customer at the right place and time.Using beacon technology, Coca-Cola is able to engage customers in a timely manner by offering moviegoers a free Coke at the moment they walk into a movie theater.Source: SeongJoonCho/Bloomberg/Getty Images 25 © McGraw Hill LLCPROGRESS CHECK (3 of 6)1.What are the five drivers of social media engagement described in the Wheel of Social Media Engagement?26 © McGraw Hill LLCGoing Mobile and SocialExhibit 3.4: Seven Primary Motivations for Mobile App UsageNeed for “Me Time”Need to SocializeNeed to Shop (showrooming)Need to AccomplishNeed to PrepareNeed to DiscoverNeed to Self-ExpressWith more than 3 billion downloads, Candy Crush Saga clearly fulfills for many people an important need for unproductive “me time.”Access the text alternative for slide images.Source: Alexat25/Shutterstock27 © McGraw Hill LLCApp Pricing Models28 © McGraw Hill LLCPROGRESS CHECK (4 of 6)1.What are the seven types of customer motivations for using mobile apps?2.What are the four options for pricing mobile apps?3.What are some of the most popular types of mobile applications?29 © McGraw Hill LLCHow Do Firms Engage Their Customers?Exhibit 3.4: Social Media Engagement ProcessAccess the text alternative for slide images.30ﻞﻀﻓﺍ ﺎﻨﻫ ﺓﺭﻮﺼﻟﺍ © McGraw Hill LLCListening helps determine digital marketing objectives and strategies.Sentimental analysis allows marketers to analyze and determine consumers attitudes and preferences.Other companies perform their own analyses, effectively leveraging their existing capacities for listening to customers. Zappos is known for its remarkable customer service and attracts plenty of buzz about its offerings. It takes the information it gathers from listening to customers to design strategies that emphasize what they like most. Source: Zappos.com, Inc.31Listen--------- © McGraw Hill LLCAnalyze32 © McGraw Hill LLCExhibit 3.5: How to Do a Digital Marketing CampaignAccess the text alternative for slide images.33 © McGraw Hill LLCDoDevelop and implement campaigns using social media.Effective implementation based on social and mobile media activity.EXHIBIT 3.6Example Facebook Targeting ChoicesSource: Facebook34 © McGraw Hill LLCPROGRESS CHECK (5 of 6)1.What are the components of a digital marketing strategy?35 © McGraw Hill LLCInfluencer MarketingA marketing strategy that uses opinion leaders, popular on social media, to drive marketing messages to a targeted audience.Firms hire (or encourage) these well-known names to promote brand messages to their networks of followers. Big-time influencers like Ariana Grande have millions of followers and can command almost a mil-lion dollars for a sponsored post.Source: Lev Radin/Shutterstock36 © McGraw Hill LLCAssessing the Efficacy of InfluencersRelevanceResponseReachReturnInfluencers like Selena Gomez can reach millions of potential customers for Coca-Cola with an Instagram post like this one, which depicts her drinking a Coke with the lyrics from one of her songs on the bottle.Source: Selena Gomez/Instagram37 © McGraw Hill LLCExhibit 3.8: Influencer Marketing Chain of EventsAccess the text alternative for slide images.38 © McGraw Hill LLCExhibit 3.9: Types of InfluencersType of Influencer Definition Example Key Channels Average Cost per Post Celebrity Large following, widely recognized Nespresso relies heavily on George Clooney to promote its products in marketing across platforms, leveraging his cool image to enhance its appeal but also his reputation for environmental sustainability to promote its own efforts along these lines Social media, print, television $3,000–$500,000 Micro Modest following, niche interest NUX Active (athletic clothing brand) worked with Sydney LoveleighNelson, whose health and fitness posts have earned her about 21,000 followers Posts on social media sites, shared promo codes $80–$500 Blog Writes for a blog and has attracted readers and subscribers with that content The FaceGymspa sponsored a blog post by lifestyle blogger Hannah Bronfman to provide information about its services and treatments Reviews on blog, guest blog posts $400–$5,500 Social media Popular on social platforms (Instagram, YouTube, Twitter) among followers in specific target audiences LaCroix worked with nutritionist Joy Bauer to create a Twitter post of a recipe she had created, using the product Pictures posted with the product, shared hashtags, videos featuring the product $100–$500,000 Specialized Key opinion leader or expert in a specific field BoxyCharm, a subscription beauty box service, worked with Kandee Johnson, a professional makeup artist, to make videos that explained each product included in a box Social media, tutorials, reviews, blog posts, sponsored print articles, articles in academic journals $500–$5,000 Source: Kristen Baker, “What Will Influencer Marketing Look Like in 2020?,” HubSpot, December 2, 2019, https://blog.hubspot.com/marketing/how-to-work-with-influencers39 © McGraw Hill LLCEthical Considerations for Influencer Marketing Fraudulent Influence•The incentive to boost follower numbers accordingly has led to various unethical behaviors. Disclosing Advertising•Intent if an influencer is being paid to promote a product, that information should be clear in the post. Sincerity•Effective influence attempts require followers to believe that the influencer actually likes and appreciates the product.40 © McGraw Hill LLCPROGRESS CHECK (6 of 6)1.How should firms choose and assess the efficacy of influencers?41 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 5Analyzing the Marketing EnvironmentCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 5.1 Outline how customers, the company, competitors, corporate partners, and the physical environment affect marketing strategy.Learning Objective 5.2 Explain why marketers must consider their macroenvironment when they make decisions.Learning Objective 5.3 Identify various social trends that impact marketing. Learning Objective 5.4 Examine the technological advances that are influencing marketers.3 © McGraw Hill LLCExhibit 5.2: Understanding the Marketing EnvironmentAccess the text alternative for slide images.4 © McGraw Hill LLCExhibit 5.2: The Immediate Environment5 © McGraw Hill LLCCompany CapabilitiesSuccessful 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/Shutterstock6 © McGraw Hill LLCCompetitorsKnow their strengths, weaknesses, and likely reactions to firm’s marketing activities.10'000 Hours/Getty Images7 © McGraw Hill LLCCorporate PartnersParties 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 Images8 © McGraw Hill LLCPhysical EnvironmentSustainable 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.CaiaImage / Image Source9 © McGraw Hill LLC17 Global Goals of Sustainable DevelopmentEXHIBIT 5.3Global Goals of Sustainable DevelopmentFrom 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 officialsorMember States. https://www.un.org/sustainabledevelopment/news/communications-material/.Access the text alternative for slide images.10 © McGraw Hill LLCPROGRESS CHECK (1 of 2)1.What are the components of the immediate environment?11 © McGraw Hill LLCMacroenvironmental FactorsEXHIBIT 5.4The Macroenvironment12 © McGraw Hill LLCCultureShared meanings, beliefs, morals, values, and customs of a group of people transmitted by words, literature, and institutions. Country Culture•Subtler aspects can be difficult to navigate. •Sometimes best answer is to establish universal appeal within specific identities of country culture.Regional Culture•For national and global chains, particularly important to cater to regional preferences.•McDonald’s –slightly different variations of staple menu.13 © McGraw Hill LLCDemographicsCharacteristics 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.govShutterstock / asteldesign14 © McGraw Hill LLCExhibit 5.5: Generational CohortsGenerational cohortGen αGen ZGen YGen XBaby BoomersRange of birth years2010–20251997–20091981–19961965–19801946–1964Age in 20200–1011–2324–3940–5556–74Millennials and the Rise of the 'Experience Economy'Access the text alternative for slide images.15 © McGraw Hill LLCIncomePurchasing 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 Images16 © McGraw Hill LLCEducationEducation is related to income, which determines spending power.Monkey Business Images/Shutterstock17 © McGraw Hill LLCGenderMale/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/Shutterstock18 © McGraw Hill LLCEthnicityApproximately 80% of all population growth in the next 20 years is expected to come from minority communitiesBy 2030 the Hispanic population in the U.S. is expected to reach more than 72 million.Image Source/Getty Images19 © McGraw Hill LLCSocial TrendsSustainabilityHealth and WellnessEfficient Utilization and Distribution of Food20 © McGraw Hill LLCSustainabilityUN Sustainable Development Goals focus on social issues for basic needs.Certifications from various agencies may be important.pixelliebe/Shutterstock21 © McGraw Hill LLCHealth and WellnessChild and adult obesityNew markets focused on healthy living Mobile apps that support health and wellnessShutterstock/Rawpixel.com22 © McGraw Hill LLCEfficient Utilization and Distribution of FoodDiet-related ProductsReducing HungerReducing Food Waste Steve Cukrov/ Alamy23 © McGraw Hill LLCTechnological AdvancesTechnology impacts every aspect of marketing:•New products and services.•New forms of communication.•New retail channels.Growing importance of mobile devicesNew 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/Shutterstock24 © McGraw Hill LLCEconomic SituationAffects 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 counterConsumer Confidence Index Hiya Images/Corbis/Getty Images25 © McGraw Hill LLCPolitical/Legal Environment1Comprises political parties, government organizations, and legislation and laws.Firms must understand and comply withlegislation regarding:•Fair competition.•Consumer protection. •Industry-specific regulation.olegdudko© 123RF.com26 © McGraw Hill LLCExhibit 5.6: Consumer Protection Legislation (1 of 2)YearLawDescription1906Federal Food and Drug ActCreatedtheFoodandDrugAdministration(FDA);prohibitedthemanufactureorsaleof adulteratedorfraudulentlylabeledfoodanddrugproducts.1914Federal Trade Commission ActEstablishedtheFederalTradeCommission(FTC)toregulateunfaircompetitivepracticesand practices that deceive or are unfair to consumers.1966Fair Packaging and Labeling ActRegulatespackagingandlabelingofconsumergoods;requiresmanufacturerstostatethe contentsofthepackage,whomadeit,andtheamountscontainedwithin.1966Child Protection ActProhibitsthesaleofharmfultoysandcomponentstochildren;setsthestandardforchild-resistantpackaging.1967Federal Cigarette Labeling and Advertising ActRequirescigarettepackagestodisplaythiswarning:“Warning:TheSurgeonGeneralHas DeterminedThatCigaretteSmokingIsDangeroustoYourHealth.”1972Consumer Product Safety ActCreatedtheConsumerProductSafetyCommission(CPSC),whichhastheauthoritytoregulate safety standards for consumerproducts.27 © McGraw Hill LLCExhibit 5.6: Consumer Protection Legislation (2 of 2)YearLawDescription1990Children’s Television ActLimits the number of commercials shown during children’s programming.1990NutritionLabelingandEducationActRequires food manufacturers to display nutritional contents on product labels.1995Telemarketing Sales RuleRegulatesfraudulentactivitiesconductedoverthetelephone.Violatorsaresubjecttofines andactionsenforcedbytheFTC.2003Controlling the Assault of Non-SolicitedPornographyandMarketing Act of 2003 (CAN-SPAMAct)Prohibits misleading commercial e-mail, particularly misleading “subject” and “from” lines.2003Amendment to the Telemarketing Sales RuleEstablishesaNationalDoNotCallRegistry,requiringtelemarketerstoabstainfromcalling consumerswhoopttobeplacedonthelist.2003Do Not Spam LawCreated to reduce spam or unwarranted e-mails.2010Financial Reform LawCreatedtheConsumerFinancialProtectionBureau,whoseaimistoenforceappropriate consumer-orientedregulationsonanumberoffinancialfirmssuchasbanks,mortgage businesses,andpaydayandstudentlenders.ItalsosetuptheFinancialServicesOversight Counciltoactasanearlywarningsystem.28 © McGraw Hill LLCResponding to the EnvironmentImplement strategies that respond to multiple environmental forces.Marketers that succeed are the ones that respond quickly, accurately, and sensitively to consumers.t_kimura/Getty Images29 © McGraw Hill LLCPROGRESS CHECK (2 of 2)1.What are the six key macroeconomic factors?2.Differentiate between country culture and regional culture.3.What are some important social trends shaping consumer values and shopping behavior?30 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 6Consumer BehaviorCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 6.1 Articulate the steps in the consumer buying process.Learning Objective 6.2 Describe the difference between functional and psychological needs.Learning Objective 6.3 Describe factors that affect information search.Learning Objective 6.4 Discuss postpurchase outcomes.Learning Objective 6.5 List the factors that affect the consumer decision process.Learning Objective 6.6 Describe how involvement influences the consumer decision process.3 © McGraw Hill LLCExhibit 6.1: The Consumer Decision Process4 © McGraw Hill LLCNeed RecognitionWants 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 needsWhat needs does a BMW K1600 satisfy?Bill Pugliano/Getty Images5 © McGraw Hill LLCSearch for InformationInternal and external searches for information© Image Source, all rights reserved. 6 © McGraw Hill LLCFactors Affecting Consumers’ Search ProcessesPerceived BenefitsPerceived CostsShutterstock / bleakstar7 © McGraw Hill LLCThe Locus of ControlInternal locus of control = more search activitiesExternal locus of control = fate or external factors8 © McGraw Hill LLCActual or Perceived Risk9 © McGraw Hill LLCEvaluation of Alternatives: Attribute SetsUniversalRetrievalEvoked10 © McGraw Hill LLCEvaluation of AlternativesWhat are some of the features of a vacation that would in your evaluative criteria?Shutterstock / Juancat11 © McGraw Hill LLCExhibit 6.2: Consumer Decision RulesCompensatory Multi-Attribute Model for Buying CerealIf the consumer makes a decision using a compensatory decision rule, which cereal will they choose?TasteCaloriesNatural/Organic ClaimsPriceOverall ScoreCheerios108688.2Post89837.1Kashi681057.2If the consumer makes a decision based only on Natural or Organic claims, which cereal will they choose?12 © McGraw Hill LLCChoice ArchitectureImpulse productsNudgeDefaultsLeft: stocking © 123RF.com; Right: IakovFilimonov/Shutterstock; Bottom: Shutterstock/ever13 © McGraw Hill LLCPurchase and Consumption14 © McGraw Hill LLCExhibit 6.3: Components of Post purchase Outcomes15 © McGraw Hill LLCPost purchase Customer Satisfaction•Build realistic expectations, not too high and not too low.•Demonstrate correct product use—improper usage can cause dissatisfaction.•Stand behind the product or service by providing money-back guarantees and warranties.•Encourage customer feedback, which cuts down on negative word of mouth and helps marketers adjust their offerings.•Periodically make contact with customers and thank them for their support. 16 © McGraw Hill LLCPost purchase Cognitive DissonanceMore 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/AtstockProductions17 © McGraw Hill LLCPost purchase Customer LoyaltyMarketers 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 Images18 © McGraw Hill LLCPost purchase Undesirable Consumer BehaviorNegative 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: Whirlpool19 © McGraw Hill LLCPROGRESS 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 noncompensatorydecision rules?6.How do firms enhance post purchase satisfaction and reduce cognitive dissonance?20 © McGraw Hill LLCFactors Influencing the Consumer Decision ProcessEXHIBIT 6.4Factors Affecting the Consumer Decision ProcessAccess the text alternative for slide images.21 © McGraw Hill LLCPsychological Factors: MotivesEXHIBIT 6.5Maslow’s Hierarchy of Needs22 © McGraw Hill LLCPsychological Factors: AttitudeCognitive.Affective.Behavioral.Pixel-Shot/Shutterstock23 © McGraw Hill LLCPsychological Factors: PerceptionSelection.Organization.Interpretation.How has society’s perception of people with tattoos changed in recent years?A. and I. Kruk/Shutterstock24 © McGraw Hill LLCPsychological Factors: Learning and Memory25 © McGraw Hill LLCPsychological Factors: LifestyleLifestyle involves decisions in spending time and money.Actual vs. Perceived LifestyleShutterstock/STUDIO DREAM26 © McGraw Hill LLCSocial Factors: FamilyFirms 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 Muller27 © McGraw Hill LLCSocial Factors: Reference Groups28 © McGraw Hill LLCSocial Factors: CultureThe 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/Shutterstock29 © McGraw Hill LLCSituational FactorsPurchase Situation.Sensory Situation.Temporal State.© Fancy / Alamy30 © McGraw Hill LLCSensory SituationVisual.Auditory.Olfactory.Tactile.Taste.© Niall McDiarmid/ Alamy31 © McGraw Hill LLCPurchase SituationSituational factors may influence your purchase decisions.If you are buying jewelry for yourself, you might browse the clearance counter at Kay Jewelers (left). But if you are buying a gift for your best friend’s birthday, you may go to Tiffany & Co (right).© Niall McDiarmid/ Alamy32 © McGraw Hill LLCTemporal StateA 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/Shutterstock33 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.What are some examples of specific needs suggested by Maslow’s hierarchy of needs?2.Which social factors likely have the most influence on (a) the purchase of a new outfit for a job interview and (b) the choice of a college to attend? 3.What situational factors do firms use to influence consumer purchase behavior?34 © McGraw Hill LLCInvolvementand Consumer Buying DecisionsExhibit 6.6: Elaboration Likelihood ModelAccess the text alternative for slide images.35 © McGraw Hill LLCInvolvement and Consumer Buying Decisions Types of Buying DecisionsExtended Problem SolvingLimited Problem Solving•Impulse Buying.•Habitual Decision Making.Jeff Greenough/Blend Images/Getty Images36 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.How do low-versus high-involvement consumers process the information in an advertisement?2.What is the difference between extended versus limited problem solving?37 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 7Business-to-Business MarketingCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 7.1Describe the ways in which business-to-business (B2B) firms segment their markets.Learning Objective 7.2List the steps in the B2B buying process. Learning Objective 7.3Identify the roles within the buying center.Learning Objective 7.4Describe the different types of organizational cultures. Learning Objective 7.5Detail different buying situations.3 © McGraw Hill LLCExhibit 7.1: B2B Markets4 © McGraw Hill LLCManufacturers and Service ProvidersBuy 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/Shutterstock5 © McGraw Hill LLCResellersResellers are marketing intermediaries that resell manufactured products without significantly altering their form. •Wholesalers•Distributors •RetailersSydaProductions/Shutterstock6 © McGraw Hill LLCInstitutionsHospitals, educational institutions, and religious organizationsExamples of purchases by institutions:•Textbooks.•Capital construction.•Equipment.•Supplies.•Food.•Janitorial services.WitthayaPrasongsin/Moment/Getty Images7 © McGraw Hill LLCGovernmentIn 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/Shutterstock8 © McGraw Hill LLCPROGRESS CHECK (1 of 4)1.What are the various B2B markets?9 © McGraw Hill LLCThe B2B Buying ProcessEXHIBIT 7.2Business-to-Business Buying ProcessAccess the text alternative for slide images.10 © McGraw Hill LLCStage 1: Need RecognitionThe B2B process begins with need recognition.Can be generated internally or externally.stockbroker/123RF11 © McGraw Hill LLCStage 2: Product SpecificationAfter recognizing the need and considering alternative solutions, create a list of potential specifications.Used by suppliers/vendors to develop proposals.Getty Images/Hero Images12 © McGraw Hill LLCStage 3: RFP Process Request for ProposalVendors or suppliers are invited to bid on supplying required components and services.Purchasing company may simply post its RFP needs on its website, work through various B2B web portals, or inform their preferred vendors directly.Contracts Opportunities 13 © McGraw Hill LLCStep 4: Proposal Analysis, Vendor Negotiation, and SelectionThe 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 Images14 © McGraw Hill LLCStep 5: Order SpecificationFirm 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 / Bacho15 © McGraw Hill LLCStage 6: Vendor Performance Assessment Using MetricsEXHIBIT 7.3:Evaluating a Vendor’s Performance(1)Key Issues(2)ImportanceScore(3)Vendor’sPerformance(4)Importance ×Performance(2) ×(3)Customer Service0.4052.0Issue Resolution0.2040.8Delivery0.1050.5Quality0.3030.9Total1.04.216 © McGraw Hill LLCPROGRESS CHECK (2 of 4)1.Identify the stages in the B2B buying process.2.How do you perform a vendor analysis?17 © McGraw Hill LLCThe Buying CenterExhibit 7.4: Buying CenterRoles18 © McGraw Hill LLCExample of Buying Center Roles for a HospitalInitiator: DoctorInfluencer: Medical device supplier, pharmacyDecider: HospitalBuyer: Materials managerUser: PatientGatekeeper: Insurance company19 © McGraw Hill LLCOrganizational CultureEXHIBIT 7.5 Organizational Buying Culture20 © McGraw Hill LLCBuilding B2B RelationshipsThere are a multitude of ways to enhance B2B relationships, including the following examples:•Blogs and social media (LinkedIn, Twitter, Snapchat) can:•Build awareness.•Provide search engine results.•Educate clients about products and services.•“Warm up” a seemingly cold corporate culture.•White papers prepared by B2B marketers provide information while not appearing as promotion.21 © McGraw Hill LLCPROGRESS CHECK (3 of 4)1.What are the six buying roles?2.What are the types of cultures that exist in buying centers?22 © McGraw Hill LLCBuying SituationsEXHIBIT 7.6 Buying Situations23 © McGraw Hill LLCNew BuyMost likely when purchasing for the first time.Usually quite involved.The buying center will probably use all six steps in the buying process and involve many people in the buying decision.24 © McGraw Hill LLCModified RebuyPurchasing a similar product but changing specifications such as price, quality level, customer service level, options, etc.Current vendors have an advantage.Shutterstock/BabLab25 © McGraw Hill LLCStraight RebuysBuying additional units of products that have been previously purchased.Most B2B purchases fall into this category.Usually, the buyer is the only member of the buying center involved.26 © McGraw Hill LLCIdentify the Type of Buying SituationThe 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) blanksituation.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) blanksituation.27 © McGraw Hill LLCPROGRESS CHECK (4 of 4)1.How do new buy, straight rebuy, and modified rebuy differ?28 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 8Global MarketingCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 8.1Describe the components of a country market assessment.Learning Objective 8.2Understand the marketing opportunities in BRIC countries. Learning Objective 8.3Identify the various market entry strategies.Learning Objective 8.4Highlight the similarities and differences between a domestic marketing strategy and a global marketing strategy.3 © McGraw Hill LLCGlobalizationThe processes by which goods, services, capital, people, information, and ideas flow across national borders. deepblue4you/Getty Images4 © McGraw Hill LLCAssessing Global MarketsEXHIBIT 8.1Components of a Country Market AssessmentAccess the text alternative for slide images.5 © McGraw Hill LLCEvaluating the General Economic EnvironmentUsing Economic MetricsTrade deficit or surplusGross domestic product (GDP)Purchasing power parity (PPP) Gross national income (GNI)6 © McGraw Hill LLCEvaluating Market Size and Population Growth RatePopulation growth dispersal: strong demand in BRIC (Brazil, Russia, India, China) nationsDistribution of the population within a particular region: rural vs. urbanShutterstock / Pablo Scapinachis7 © McGraw Hill LLCExhibit 8.2 Big Mac IndexSource: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, LLC8 © McGraw Hill LLCEvaluating Real IncomeFirms 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 Studio9 © McGraw Hill LLCAnalyzing Infrastructureand Technological CapabilitiesMarketers are especially concerned with four key elements of a country’s infrastructure:•Transportation.•Distribution Channels.•Communications.•Commerce.10 © McGraw Hill LLCAnalyzing Governmental Actions11 © McGraw Hill LLCTariffsand QuotasTariffs•Tax on Imported good.•Artificially raises prices.•Lowers demand.Quotas•Minimum or maximum limit.•Reduces availability of imported goods.Both benefit domestically made products because they reduce foreign competition.12 © McGraw Hill LLCExchange ControlRegulation of a country’s currency exchange rate: the measure of how much one currency is worth in relation to another.In recent years, the value of the U.S. dollar has changed significantly compared with other important world currencies.Prices are nearly always lower in the country of origin because there are no customs or import duties to pay, and international transportation expenses are less than domestic ones.© Sean Pavone/ AlamyStock Photo13 © McGraw Hill LLCTrade AgreementsA 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.htm14 © McGraw Hill LLCAnalyzing Sociocultural FactorsUnderstanding 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 MexicoKobby Dagan/Shutterstock15 © McGraw Hill LLCEthical & Societal Dilemma 8.2: Dolce & Gabbana Faces Public Scrutiny in ChinaDolce & 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/Shutterstock16 © McGraw Hill LLCGeert Hofstede’s Cultural DimensionsPower distanceUncertainty avoidanceIndividualismMasculinityTime orientationIndulgenceCulture17 © McGraw Hill LLCExhibit 8.3: Country Clusters Power Distance and IndividualismAccess the text alternative for slide images.Source:Geert Hofstede, Gert Jan Hofstede, and Michael Minkov, Cultures and Organizations, Software of the Mind, Third Revised Edition, McGraw-Hill 2010, ISBN: 0-07-166418-1. © Geert Hofstede B.V. quoted with permission.18 © McGraw Hill LLCThe Appeal of the BRIC CountriesGreat potential for growth in the global community:•Brazil.•Russia.•India.•China.19 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.What metrics can help analyze the economic environment of a country?2.What types of governmental actions should we be concerned about as we evaluate a country?3.What are some important cultural dimensions?4.Why are each of the BRIC countries viewed as potential candidates for global expansion?20 © McGraw Hill LLCExhibit 8.4: Global Entry StrategiesAccess the text alternative for slide images.21 © McGraw Hill LLCExportingExporting 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.JeafishPing/Shutterstock22 © McGraw Hill LLCFranchisingA 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/Ecummings00/123RF23 © McGraw Hill LLCStrategic AllianceCollaborative relationships between independent firms.The partnering firms do not create an equity partnership.Xinhua/AlamyStock Photo24 © McGraw Hill LLCJoint VentureA 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. AtstockProductions/Shutterstock25 © McGraw Hill LLCDirect InvestmentDirect 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: Lenovo26 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.Which global entry strategy has the least risk and why?2.Which global entry strategy has the most risk and why?27 © McGraw Hill LLCChoosing a Global Marketing Strategy: Segmentation, Targeting, and Positioning (STP)Access the text alternative for slide images.28 © McGraw Hill LLCThe Global Marketing Mix: Global Product or Service StrategiesReturn to the parent-slide glossary term.Access the text alternative for slide images.29 © McGraw Hill LLCThe Global Marketing Mix: Global Pricing Strategies30 © McGraw Hill LLCThe Global Marketing Mix: Global Distribution StrategiesGlobal 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.VirojtChangyencham/Moment/Getty Images31 © McGraw Hill LLCThe Global Marketing Mix: Global Communication StrategiesLiteracy levels vary by country.Differences in language and customs affect communication.Cultural and religious differences also matter.Shutterstock / Pyty32 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.What are the components of a global marketing strategy?2.What are the three global product strategies?33 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 9Segmentation, Targeting, and PositioningCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 9.1Outline the different methods of segmenting a market.Learning Objective 9.2Describe how firms determine whether a segment is attractive and therefore worth pursuing.Learning Objective 9.3Articulate the difference among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing.Learning Objective 9.4Determine the value proposition. Learning Objective 9.5Define positioning and describe how firms do it.3 © McGraw Hill LLCThe Segmentation, Targeting, and Positioning ProcessEXHIBIT 9.1The Segmentation, Targeting, and Positioning (STP) ProcessAccess the text alternative for slide images.McGraw-Hill Global Education Holdings, LLC4 © McGraw Hill LLCStep 1: Establish the Overall Strategy or ObjectivesDerived from mission and objectivesConsistent with SWOTFood 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/svariophoto5 © McGraw Hill LLCStep 2: Use Segmentation MethodsEXHIBIT 9.2Methods for Describing Market SegmentsSegmentation MethodSample SegmentsGeographicContinent:North America, Asia,Europe, AfricaWithin the United States:Pacific, mountain, central, south, mid-Atlantic, northeastDemographicAge, gender, income, educationPsychographicLifestyle, self-concept, self-valuesBenefitConvenience, economy, prestigeBehavioralOccasion, loyaltyMcGraw-Hill Global Education Holdings, LLC6 © McGraw Hill LLCGeographic SegmentationMarket could be grouped by:Country.Region.•Northeast, Southeast.Areas within region.•State, city,neighborhoods, zipcodes.Most useful for companies whose products satisfy needs that vary by region.Shutterstock/tovovan7 © McGraw Hill LLCDemographic SegmentationMost common segmentation strategy.Easy to identify.Easy to measure (age, gender, income, education).Shutterstock / asteldesign8 © McGraw Hill LLCAdding Value 9.1 Dealing with Modern Life by Playing: LEGO PromisesLEGO 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 Photo9 © McGraw Hill LLCPsychographic SegmentationHow consumers describe themselves in terms of:•Self values.•Lifestyle.•Self-concept.Shutterstock / ZorianaZaitseva10 © McGraw Hill LLCBenefit SegmentationDividing 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/Shutterstock11 © McGraw Hill LLCBehavioral SegmentationOccasion segmentation:•Based on when a product or service is purchased or consumed.•Clothing, snack foods.Loyalty segmentation:•Loyal customers are themost profitable in the long term.•Hotels, airlines, restaurants (Starbucks).Shutterstock / JHershPhoto12 © McGraw Hill LLCUsing Multiple Segmentation Methods : Exhibit 9.4 Examples of TapestryTapestry ™ 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, LLC13 © McGraw Hill LLCPROGRESS CHECK (1 of 2)1.What are the various segmentation methods?14 © McGraw Hill LLCStep 3: Evaluate Segment AttractivenessEXHIBIT 9.5Evaluate Segment Attractiveness15 © McGraw Hill LLCIdentifiableWho is in their market?Are the segments distinct from one another?Does each segment require a unique marketing mix?estherpoon/Shutterstock.com16 © McGraw Hill LLCSubstantialHow 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 Images17 © McGraw Hill LLCReachableCan 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/faithie18 © McGraw Hill LLCResponsiveCustomers must react similarly and positively to the firm’s offering.If a firm cannot provide products and services tothe segment, it shouldn’t be targeted.If you are looking for a luxury sedan, General Motors hopes you will choose a Cadillac.Darren Brode/Shutterstock19 © McGraw Hill LLCProfitableAssess 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 Metzger20 © McGraw Hill LLCHow to Determine the Profitability of a SegmentSegment = 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 LLC21 © McGraw Hill LLCExhibit 9.6: Profitability of Two Market Segments for Camillo’s Lawn ServiceHomeownersBusinessesSegment size75,0001,000Segment adoption percentage1%20%Purchase behaviorPurchase priceFrequency of purchase$10012 times$50020 timesProfit margin percentage60%80%Fixed costs$400,000$1,000,000Segment profit$140,000$600,00022 © McGraw Hill LLCStep 4: Select a Target MarketThe key factor is the marketer’s ability to pursue the market.Four different targeting strategies can be used.23 © McGraw Hill LLCStep 5: Identify and Develop Positioning StrategyMarket positioning•Defining marketing mix variables so target customers have a clear, distinctive, desirable understanding of what the product does.Value proposition•Communicates the customer benefits to be received from a product or service.24 © McGraw Hill LLCExhibit 9.8: Circles for a Successful Value Proposition (1 of 2)Part A. No Overlap with Competition25 © McGraw Hill LLCExhibit 9.8: Circles for a Successful Value Proposition (2 of 2)Part B. Determining the Value Proposition#1: Firm’s value proposition.#2: Customer’s unmet needs (marketing opportunity).#3: Firm’s benefits that are not required—educate customer or redesign product.#4: Key benefits that both the firm and competitor provide that customers require—carefully monitor performance relative to competitor on these benefits.#5: Competitor’s value proposition—monitor and imitate if needed.#6: Benefits both firms provide that customers do not appear to need.#7: Competitor benefits that are not required.Access the text alternative for slide images.26 © McGraw Hill LLCExhibit 9.9: Value Proposition Statement Key ElementsGatorade7UPTarget marketAthletes around the worldNon-cola consumersOffering name or brandGatorade7UPProduct/service category or conceptSports drinkNon-caffeinated soft drinkUnique point of difference/benefitsRepresents 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 bodyLight, refreshing, lemon-lime flavored, and has a crisp, bubbly, and clean taste.27 © McGraw Hill LLCPositioning MethodsPositioning Methods•Value.•Salient Attributes.•Symbols.•Competition.KIND and PowerBarboth 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, LLC28 © McGraw Hill LLCPositioning Using Perceptional MappingA 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/123RF29 © McGraw Hill LLCPerceptual Maps (1 of 2)EXHIBIT 9.10APerceptual Map, Chart AEXHIBIT 9.10BPerceptual Map, Chart BAccess the text alternative for slide images.30 © McGraw Hill LLCPerceptual Maps (2 of 2)EXHIBIT 9.10CPerceptual Map, Chart CEXHIBIT 9.10DPerceptual Map, Chart DAccess the text alternative for slide images.31 © McGraw Hill LLCSix Positioning Steps to Derive a Perceptual Map1.Determine consumers’ perceptions and evaluations in relation to competitors’.2.Identify the market’s ideal points and size.3.Identify competitors’ positions.4.Determine consumer preferences.5.Select the position.6.Monitor the positioning strategy.32 © McGraw Hill LLCPROGRESS CHECK (2 of 2)1.What is a perceptual map?2.Identify the six positioning steps.33 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 10Marketing ResearchCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 10.1Identify the five steps in the marketing research process.Learning Objective 10.2Describe the various secondary data sources.Learning Objective 10.3Describe the various primary data collection techniques.Learning Objective 10.4Summarize the differences between secondary research and primary research.Learning Objective 10.5Identify the 5 Vs of big data.Learning Objective 10.6Examine the characteristics of marketing analytics.Learning Objective 10.7Examine the circumstances in which collecting information on consumers is ethical.3 © McGraw Hill LLCMarketing Research4 © McGraw Hill LLCExhibit 10.1: The Marketing Research ProcessAccess the text alternative for slide images.5 © McGraw Hill LLCStep 1: Defining Objectives and Research NeedsWhatinformation is needed to answer specific research questions? Howshould that information be obtained?6 © McGraw Hill LLCStep 2: Designing the ResearchDetermine type of research needed to obtain data.Identify type of data needed.Shutterstock / Gorodenkoff7 © McGraw Hill LLCStep 3: Collecting the DataSecondary Data•Collected prior to the start of the research project.•External as well as internal data sources.Primary Data•Collected to address specific research needs.•Examples: focus groups, in-depth interviews, surveys.•Sample: Choose a group of customers who represent the customers of interest and generalize their opinions to the market segment.8 © McGraw Hill LLCStep 4: Analyzing the Data and Developing InsightsConverting datainto informationthat is useful in making more effective marketing decisions.Tom Davenport Interview on Business AnalyticsGorodenkoff/Shutterstock9 © McGraw Hill LLCWhat Insights Can You Develop by Analyzing this Data?EXHIBIT 10.3Survey Results for McDonald’s and Wendy’sAccess the text alternative for slide images.McGraw-Hill Global Education Holdings, LLC10 © McGraw Hill LLCStep 5: Developing and Implementing an Action Plan11 © McGraw Hill LLCPROGRESS CHECK (1 of 7)1.What are the steps in the marketing research process?2.What is the difference between data and information?12 © McGraw Hill LLCSecondary DataA marketing research project often begins with a review of the relevant secondary data.Shutterstock / IakovFilimonov13 © McGraw Hill LLCExhibit 10.4: External Secondary DataSyndicated Data and Some of Their Services (1 of 2)NameServices ProvidedNielsen(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)InfoScanstore tracking provides detailed information about sales, share, distribution, pricing, and promotion across a wide variety of retail channels and accounts.JD. Power and Associates(http://www.jdpower.com)Widely known for its automotive ratings, it produces quality and customer satisfaction research for a variety of industries.NDP Group (www.npd.com)Based on detailed records consumers keep about their purchases (i.e., a diary), it provides information about product movement and consumer behavior in a variety of industries.Access the text alternative for slide images.14 © McGraw Hill LLCExhibit 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.NameServices ProvidedNOP World (http://www.nopworld.com)The mKidsUS research study tracks mobiletelephone ownership and usage, brand affinities,and entertainment habits of American youthbetween 12 and 19 years of age.Research and Markets(http://www.researchandmarkets.com)Promotes itself as a one-stop shop for marketresearch and data from most leading publishers, consultants, and analysts.Roper Center for Public Opinion Research(http://www.ropercenter.uconn.edu)The General Social Survey is one of the nation’s longest running surveys of social, cultural, and political indicators.15 © McGraw Hill LLCExternal Secondary Data Scanner DataData 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/123RF16 © McGraw Hill LLCPROGRESS CHECK (2 of 7)1.What is the difference between panel and scanner data?17 © McGraw Hill LLCPrimary Data Collection TechniquesEXHIBIT 10.5Qualitative versus Quantitative Data CollectionAccess the text alternative for slide images.18 © McGraw Hill LLCObservationExamining purchase and consumption behaviorsAccess the text alternative for slide images.19The Brave New World of Shopper-Tracking Technology © McGraw Hill LLCIn-Depth and Focus Group InterviewsIn-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 Images20 © McGraw Hill LLCPROGRESS CHECK (3 of 7)1.What are the types of qualitative research?21 © McGraw Hill LLCSurvey ResearchThe use of surveys or questionnaires.The most popular type of quantitative primary data collection method.A document that features a set of questions designed to gather information from respondents that will lead to more effective marketing decisions.22 © McGraw Hill LLCSurveyResearch Structured vs. Unstructured QuestionsEXHIBIT 10.6Structured versus Unstructured ResponseMcGraw-Hill Global Education Holdings, LLC23 © McGraw Hill LLCExhibit 10.7: What to Avoid When Designing a Questionnaire (1 of 2)IssueGood QuestionBad QuestionAvoid questions the respondent cannot easily or accurately answer.When was the last time you went to the grocery store?How much money did you spend on groceries last month?Avoid sensitive questions unless they are absolutely necessary.Do you take vitamins?Do you dye your gray hair?Avoid double-barreled questions, which refer to more than one issue with only one set of responses.1. Do you like to shop for clothing?2. Do you like to shop for food?Do you like to shop for clothing and food?24 © McGraw Hill LLCExhibit 10.7: What to Avoid When Designing a Questionnaire (2 of 2)IssueGood QuestionBad QuestionAvoid 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 contribute5: Main causeFast food is responsible for adult obesity: Agree/DisagreeSource: Adapted from A. Parasuraman, Dhruv Grewal, and R. Krishnan, Marketing Research, 2nd ed. (Boston: Houghton Mifflin, 2007), Ch. 10.25 © McGraw Hill LLCPanel‐and Scanner‐Based ResearchCan 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/Shutterstock26 © McGraw Hill LLCExperimental ResearchSystematically manipulates one or more variables to determine which variables have a causal effect on other variables.Can also be used on social media.State Bicycle Co. devised experiments to test the efficacy of several ads to determine which contests and offerings on its home page would attract visitors who were likely to buy.Source: State Bicycle Co.27 © McGraw Hill LLCHypothetical Pricing Experiment for McDonald’sEXHIBIT 10.8Hypothetical Pricing Experiment for McDonald’s12345MarketUnit PriceMarket 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$4200,000$800,000$750,000$100,00025150,000750,000600,000150,00036100,000600,000500,000100,0004750,000350,000400,000(50,000)28 © McGraw Hill LLCExhibit 10.9: Advantages and Disadvantages of Secondary and Primary Research (1 of 2)TypeExamplesAdvantagesDisadvantagesSecondary 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 maynot be timely.•Sources may not be original, and therefore usefulness is an issue.•Methodologies for collecting data may not be appropriate.•Data sources may be biased.29 © McGraw Hill LLCExhibit 10.9: Advantages and Disadvantages of Secondary and Primary Research (2 of 2)TypeExamplesAdvantagesDisadvantagesPrimary Research•Observation•Focus groups•In-depth interviews•Social media•Surveys•Experiments•Specific to the immediate data needs and topic at hand•Offers behavioral insights generally not available from secondary research•Costly•Time-consuming•Requires more sophisticated training and experience to design study and collect data.30 © McGraw Hill LLCPROGRESS CHECK (4 of 7)1.What are the types of quantitative research?31 © McGraw Hill LLCBig DataBig data incorporates multiple sources of data.Changes in marketing research because of:•Increase in amount of data.•Ability to collect data from transactions, CRM, social media, websites.•Ease of collecting and storing data.•Computing ability to manipulate data.•Access to software to convert data into decision-making insights (Amazon, SAP, Splunk, GoodData, Google Analytics. 32 © McGraw Hill LLCInternal Secondary Data33 © McGraw Hill LLCExhibit 10.10: The 5 Vs of Big DataAccess the text alternative for slide images.34 © McGraw Hill LLCPROGRESS CHECK (5 of 7)1.What are the 5 Vs of big data?35 © McGraw Hill LLCMarketing AnalyticsFirms can access big data that contain billions of pieces of customer information and purchase histories from many different sources in a variety of types and sizes.Marketing analytics is used to make sense out of these data. To make marketing mix decisions, HSN gathers data across a wide range of points of contact, including multiple televised channels, catalog and phone sales, and digital links.Source: HSN, Inc.36 © McGraw Hill LLCMarketing DecisionsMarketing analytics can be used to make marketing decisions that span all the elements of a firm’s current or planned marketing strategy, including the following.•How to Make Marketing Mix Decisions.•How to Determine Which Segments to Target.•How to Understand and Manage Those Customer Segment.•How to Create Micro-Segmentation Strategies at a Local Level.37 © McGraw Hill LLCTools and Methods (1 of 2) Descriptive Analytics ToolsHelp firms organize, tabulate, and depict their available data, usually in easy-to-understand reports, tables, and charts. Predictive Analytics ToolsRely on historically available data to forecast the future, such as what is predicted to happen to a firm’s product sales in the next month, next quarter, next year, and so on. 38 © McGraw Hill LLCTools and Methods (2 of 2) Prescriptive Analytics ToolsAnalyses 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 doActive Analytics ToolsArtificial intelligence algorithms used to analyze input gathered from various data bases including data from the Internet of Things (IoT).39 © McGraw Hill LLCPROGRESS CHECK (6 of 7)1.What decisions can be made using marketing analytics?2.What are the four broad categories of marketing analytics tools and methods?40 © McGraw Hill LLCThe Ethics of Using Customer Information41 © McGraw Hill LLCAMA Ethical Guidelines for Conducting Marketing Research 1.Prohibits selling or fund-raising under the guise of conducting research.2.Supports maintaining research integrity by avoiding misrepresentation or omission of pertinent research data.3.Encourages the fair treatment of clients and suppliers.Insights Association Code of Standards and Ethics 42 © McGraw Hill LLCWhat 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/123RF43 © McGraw Hill LLCThreats to Personal InformationFacial recognition softwareNeuromarketingAdapted from: Adam L. Penenberg, “NeuroFocusUses Neuromarketing to Hack Your Brain,” Fast Company, August 8, 2011, https://www.fastcompany.com/1769238/neurofocus-uses-neuromarketing-hack-your-brain Findings from neuromarketing studies by NeuroFocus.Access the text alternative for slide images.44 © McGraw Hill LLCPROGRESS CHECK (7 of 7)1.Under what circumstances is it ethical to use consumer information in marketing research?2.What challenges do technological advances pose for the ethics of marketing research?45 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 11Product, Branding, and Packaging DecisionsCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning Objectives (1 of 2)Learning Objective 11.1Describe the components of a product.Learning Objective 11.2Identify the types of consumer products.Learning Objective 11.3Explain the difference between a product mix’s breadth and a product line’s depth.Learning Objective 11.4Identify the advantages that brands provide firms and consumers.3 © McGraw Hill LLCLearning Objectives (2 of 2)Learning Objective 11.5Explain the various components of brand equity.Learning Objective 11.6Determine the various types of branding strategies used by firms.Learning Objective 11.7Distinguish between brand extension and line extension.Learning Objective 11.8Indicate the advantages of a product’s packaging and labeling strategy.4 © McGraw Hill LLCExhibit 11.1: Product ComplexityAccess the text alternative for slide images.5 © McGraw Hill LLCTypes of Products: ConsumersMcGraw-Hill Global Education Holdings, LLC6 © McGraw Hill LLCPROGRESS CHECK (1 of 5)1.Explain the three components of a product.2.What are the four types of consumer products?7 © McGraw Hill LLCProduct 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/123RF8 © McGraw Hill LLCExhibit 11.2: Abbreviated List of Daimler AG Product MixMercedes-Benz CarsMercedes-AMG CarsSmart CarsMercedes-Benz VansA-ClassA-ClassSmart ForTwoSprinterB-ClassC-ClassSmart ForTwoCabrioMetroC-ClassCLASmart ForFourMetroCLACLSGLSE-ClassG-ClassG-ClassE-ClassGLAGLAGLCGLCGLEGLSGTS-ClassS-ClassSLSLSLCSLCV-ClassX-Class9 © McGraw Hill LLCProduct Mix and Product Line Decisions (2 of 2)Access the text alternative for slide images.10 © McGraw Hill LLCChange Product Mix DepthIncrease Depth:•For Haagen-Dazs brand ice cream, adding new flavors such as Banana Peanut Butter Chip, Honey Salted Caramel Almond, and Midnight Cookies & Cream enables it to appeal to its variety-seeking customers.Decrease Depth:•Procter & Gamble announced it would be merging, eliminating, or selling many of its brands and keeping only the top-performing 70-80 brand names.11 © McGraw Hill LLCChange Product Mix BreadthIncrease Breadth:•Firms often add new product lines to capture new or evolving markets. For example, a firm adds a whole new line of yogurt.Decrease Breadth:•For example, a firm drops its line of protein bars and focuses on energy drinks and vitamin water.12 © McGraw Hill LLCProduct Mix ChangesEXHIBIT 11.3Changes to a Product MixAccess the text alternative for slide images.13 © McGraw Hill LLCPROGRESS CHECK (2 of 5)1.What is the difference between product line breadth and product line depth?2.Why change product mix breadth?3.Why change product line depth?14 © McGraw Hill LLCBrandingIncreases awareness and provides a way to differentiate from competitors.Oscar Mayer Wiener 1965 Commercial (one of America's Best Ads)Shutterstock / SergZSV.ZP15 © McGraw Hill LLCWhat Makes a Brand?16 © McGraw Hill LLCValue of Branding for the Customer and the Firm17 © McGraw Hill LLCBrand Equity for the OwnerExhibit 11.5: The World’s 10 Most Valuable Brands2019 Rank2017 RankBrandCountrySectorBank Value (in $ billions)1 5 Amazon United States Retail $315.5 2 1 Apple United States Technology $309.5 3 2 Google United States Technology $309 4 3 Microsoft United States Technology $251.2 5 N/A Visa United States Financial Services $177.9 6 8 Facebook United States Technology $159 7 N/A Alibaba China Retail $131.2 8 N/A Tencent China Technology $130.4 9 N/A McDonald’s United States Restaurant $130.4 10 N/A AT&T United States Communication $108.4 Source: Lucy Handley, “Amazon Beats Apple and Google to Become the World’s Most Valuable Brand,” CBS News, June 11, 2019, www.cnbc.com/2019/06/11/amazon-beats -apple-and-google-to-become-the-worlds-most-valuable-brand.html.18 © McGraw Hill LLCComponents of Brand Equity: Brand AwarenessHow 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, LLC19 © McGraw Hill LLCBrand Equity: Perceived ValueThe 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 / Thinglass20 © McGraw Hill LLCBrand Equity: Brand AssociationsThe mental and emotional links that consumers make between a brand and its key attributes.Brand associations are often the result of a firm’s advertising and promotional efforts.State Farm Insurance: “like a good neighbor, State Farm is there” 21 © McGraw Hill LLCBrand Equity: Brand LoyaltyAn important source of value for firms.Consumers are less sensitive to price.Marketing costs are much lower.Firms are insulated from the competition.TEA/123RF22 © McGraw Hill LLCPROGRESS CHECK (3 of 5)1.How do brands create value for the customer and the firm?2.What are the components of brand equity?23 © McGraw Hill LLCBranding StrategiesWhether to use manufacturer brands or retailer/store brands.How to name brands and product lines.Whether or not to extend the brand name to other products and markets.Should the brand name be used with another firm or licensed to another firm?Whether or not the brand should be repositioned.24 © McGraw Hill LLCBrand Ownership25 © McGraw Hill LLCNaming Brands and Product LinesFamily brands•Corporate name used across brands and product lines.•Example: Kraft cheeses.Individual brands•Products have individual identities.•Example: Kraft owns Velveeta, Classico, Jello.Kraft uses a family branding strategy in which several product lines are sold under one name.Kraft also uses an individual branding strategy because Velveeta, Classico, Jell-O, Grey Poupon, Heinz, and others are all marketed using separate names.Evelyn Nicole Kirksey/McGraw-Hill (top); Daniel Acker/Bloomberg/Getty Images (bottom)26 © McGraw Hill LLCBrand and Line ExtensionsBrand 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 Images27 © McGraw Hill LLCBrand DilutionNot 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 Images28 © McGraw Hill LLCCo-BrandingMarketing 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/Shutterstock29 © McGraw Hill LLCBrand LicensingThe NBA team, the New Orleans Pelicans (licensor), provides the right to use its brand to apparel manufacturers (licensee) in return for royalty payments.IakovFilimonov/Shutterstock30 © McGraw Hill LLCBrand RepositioningChange 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/123RF31 © McGraw Hill LLCPROGRESS CHECK (4 of 5)1.What are the differences between manufacturer and private-label brands?2.What is co-branding?3.What is the difference between brand extension and line extension?4.What is brand repositioning?32 © McGraw Hill LLCPackagingAn important brand element that has more tangible or physical benefits than other brand elements have.Primary vs. Secondary packageWhat packaging do you as a consumer find useful?33 © McGraw Hill LLCKey Roles of PackagingAttracts 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 & Gamble34 © McGraw Hill LLCProduct LabelingProvides information the consumer needs.Many labeling requirements stem from various laws.Is a communication tool.Spauln/Getty Images35 © McGraw Hill LLCPROGRESS CHECK (5 of 5)1.Why do firms change packaging? 2.What objectives do product labels fulfill?36 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 13Services: The Intangible ProductCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 13.1Describe how the marketing of services differs from the marketing of products.Learning Objective 13.2Discuss the four gaps in the Service Gaps Model.Learning Objective 13.3Examine the five service quality dimensions.Learning Objective 13.4Explain the zone of tolerance. Learning Objective 13.5Identify three service recovery strategies.3 © McGraw Hill LLCServiceAny 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 Ipadon display at the Apple Store in Bologna, Spain.Shutterstock / PriceM4 © McGraw Hill LLCThe Service-Product ContinuumDoctorDry cleanerRestaurantGrocery storeThese 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/AlamyStock Photo; Middle: McGraw-Hill Global Education Holdings, LLC; Right: Jacob Lund/Shutterstock; Bottom: Jeff Greenough/Blend Images/Getty Images5 © McGraw Hill LLCEconomic Importance of ServiceAccess the text alternative for slide images.6 © McGraw Hill LLCServices Marketing Differs from Product MarketingEXHIBIT 13.2Core Differences between Services and Goods7 © McGraw Hill LLCIntangibleServices 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 / bom8 © McGraw Hill LLCInseparable Production and ConsumptionProduction and consumption are simultaneous.Little opportunity for a consumer to test a service before use.Lower risk by offering guarantees or warranties.© McGraw-Hill Education9 © McGraw Hill LLCHeterogeneousThe more humans are needed to provide a service, the more likely there is to be heterogeneityor variability in the service’s quality. Solutions•Technology.•Training.•Automation.sonyaetchison/Shutterstock10 © McGraw Hill LLCPerishableServices 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 Images11 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.What are the four marketing elements that distinguish services from products?2.Why can’t we separate firms into just service or just product sellers?12 © McGraw Hill LLCProviding Great Service:The Service Gaps ModelEXHIBIT 13.3Service Gaps Model for Improving Retail Service QualitySources: 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 Marketing52, no. 2 (April 1988), 35-48.Access the text alternative for slide images.13 © McGraw Hill LLCKnowledge Gap:Understanding Customer ExpectationsAccess the text alternative for slide images.14 © McGraw Hill LLCUnderstanding Customer ExpectationsExpectations are based on knowledge and experience.Expectations vary according to type of service.Expectations vary depending on the situation.Nikada/Getty Images15 © McGraw Hill LLCEvaluating Service Quality Using Well-Established Marketing MetricsEXHIBIT 13.4Dimensions of Service QualityAccess the text alternative for slide images.16 © McGraw Hill LLCMarketing Research: Understanding CustomersVoice-of-customer (VOC) program:Collects customer inputs and integrates them into managerial decisions.Zone of tolerance:Refers to the area between customers’ expectations regarding their desired service and the minimum level of acceptable service.17 © McGraw Hill LLCZone of ToleranceUsed to Measure How Well Firms Perform on the Five Service Quality DimensionsAccess the text alternative for slide images.18 © McGraw Hill LLCExhibit 13.5: Customers’ Evaluation of Service Quality for Lou’s Local DinerEXHIBIT 13.5Customers’ Evaluation of Service QualityAccess the text alternative for slide images.19 © McGraw Hill LLCThe Standards Gap: Setting Service StandardsDifference 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.UpperCutImages/SuperStock20 © McGraw Hill LLCThe Delivery Gap:Delivering Service Quality21 © McGraw Hill LLCEmpowering Service ProvidersAllowing employees to make decisions about how service is provided to customers.Purestock/SuperStock22 © McGraw Hill LLCSupport and Incentives for EmployeesAccess the text alternative for slide images.23 © McGraw Hill LLCUse of TechnologyEXHIBIT 13.6How Technology Is Augmenting the Human EffortAccess the text alternative for slide images.McGraw-Hill Global Education Holdings, LLC24 © McGraw Hill LLCCommunications GapDifference between the Actual Service Provided and the Service the Firm PromisesManage customer expectations.Promise only what you can deliver.Communicate service expectations.Shutterstock/ALPA PROD25 © McGraw Hill LLCService Quality, Customer Satisfaction, and LoyaltyGood service quality leads to satisfied and loyal customers.PostpurchaseEvaluation leads to satisfaction, dissonance, or loyalty.26 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.Explain the four service gaps identified by the Service Gaps Model.2.List at least two ways to overcome each of the four service gaps.27 © McGraw Hill LLCService Recovery28 © McGraw Hill LLCListening to the Customers and Involving Them in Service RecoveryCustomers can get emotional over a service failure.Often customers just want someone to listen.leaf/123RF29 © McGraw Hill LLCFinding a Fair SolutionDistributive fairness.Procedural fairness.Andriy Popov/123RF30 © McGraw Hill LLCResolving Problems QuicklyThe longer it takes to resolve service failure, the more irritated the customer will become and the more people the customer will tell.It is in the firm’s best interest to solve problems quickly.31 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.Why is service recovery so important to companies?2.What can companies do to recover from a service failure?32 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 15Strategic Pricing Methods and TacticsCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 15.1 Identify three methods that firms use to set their prices.Learning Objective 15.2Describe the difference between an everyday low pricing (EDLP) strategy and a high/low strategy.Learning Objective 15.3Explain the difference between a price skimming and a market penetration pricing strategy.Learning Objective 15.4Identify tactics used to reduce prices to consumers. Learning Objective 15.5Identify tactics used to reduce prices to businesses. Learning Objective 15.6List the pricing practices that are illegal or unethical. 3 © McGraw Hill LLCConsiderations for Setting Price StrategiesEXHIBIT 15.1:Pricing Strategies4 © McGraw Hill LLCValue-Based MethodsSetting prices that focus on the overall value of the product offering as perceived by the consumer:Improvement Value MethodCost of Ownership MethodThese methods require a great deal of research to be implemented successfully.5 © McGraw Hill LLCValue-Based Methods:Improvement ValueEXHIBIT 15.2 Improvement ValueIncremental BenefitsImproved ValueBenefit WeightWeighted FactorClarity20%0.408%Range40%0.208%Security10%0.101%Battery life5%0.201%Ease of use30%0.103%Overall1.0021%6 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.What are the three different considerations for setting prices?2.How can you use value-based methods for setting prices?7 © McGraw Hill LLCPricing StrategiesEveryday low pricing (EDLP)High/Low Pricing8 © McGraw Hill LLCEveryday Low Pricing (EDLP) vs.High/Low PricingCreate value for consumers in different ways.EDLP reduces consumers’ search costs.High/low provides the thrill of the chase for the lowest price.9 © McGraw Hill LLCIn High/Low Pricing Consumers Use10 © McGraw Hill LLCNew Product Pricing StrategiesMarket Penetration PricingPrice SkimmingPrice skimming is often used for high-demand video games like Far Cry 6 because fans will pay a higher price to be one of the first to own the newest version.©Chesnot/Getty ImagesSource: Ubisoft Entertainment11 © McGraw Hill LLCPricing Tactics Aimed at Consumers (1 of 2)12 © McGraw Hill LLCPricing Tactics Aimed at Consumers (2 of 2)Leasing/RentalsPrice BundlingLeader PricingPrice Lining13 © McGraw Hill LLCBusiness Pricing Tactics and DiscountsEXHIBIT 15.3 Business-to-Business Pricing TacticsTacticDescriptionSeasonal discountsAn additional reduction offered as an incentive to retailers to ordermerchandise in advance of the normal buying season.Cash discountsAn additional reduction that reduces the invoice cost if the buyer paysthe invoice prior to the end of the discount period.AllowancesAdvertising 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 discountsProviding a reduced price according to the amount purchasedUniform delivered versus zone pricingUniform delivered price: shipper charges one rate, no matter where the buyer is located. Zone price: different prices depending on the geographic delivery area.14 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.What are some consumer-oriented pricing tactics?2.What are some B2B-oriented pricing tactics? 15 © McGraw Hill LLCLegal and Ethical Aspects of Pricing16 © McGraw Hill LLCDeceptive or Illegal Price AdvertisingDeceptive reference pricesLoss-leader pricingBait and switch©Alex Segre/Alamy Stock Photo©Alex Segre/AlamyStock Photo17 © McGraw Hill LLCPredatory Pricing18 © McGraw Hill LLCPrice DiscriminationIs this price discrimination illegal?Evelyn Nicole Kirksey/McGraw-Hill19 © McGraw Hill LLCPrice FixingHorizontal price fixingVertical price fixing20 © McGraw Hill LLCGray Market PricingUses irregular but not necessarily illegal methods.Gray market for luxury goods.Stefano Rellandini/Alamy Stock Photo21 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.What common pricing practices are considered to be illegal or unethical?22 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 17Retailing and Omnichannel MarketingCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning 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 17.4Describe the various types of retailers.Learning Objective 17.5 Describe the components of a retail strategy.Learning Objective 17.6 Identify the benefits and challenges of omnichannel retailing.3 © McGraw Hill LLCWhat 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 Publishing4 © McGraw Hill LLCExhibit 17.1: Factors for Establishing a Relationship with RetailersAccess the text alternative for slide images.5 © McGraw Hill LLCChoosing Retailing PartnersChannel Structure.Customer Expectations.Channel Member Characteristics.Distribution Intensity.Most manufacturers like Coach use retailers such as Macy’s.Shutterstock/Creative Lab6 © McGraw Hill LLCChannel StructureDegree 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/iStockphoto7 © McGraw Hill LLCExhibit 17.2: Coach and Cole HaanDistributionAccess the text alternative for slide images.8 © McGraw Hill LLCChannel Member CharacteristicsLarger firms:•Can gain more control, be more efficient, and save money.•Because Walmart is the world’s largest grocer, it buys direct from the manufacturer.© McGraw-Hill Education/John Flournoy9 © McGraw Hill LLCDistribution IntensityIntensive: 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/Shutterstock10 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.What issues should manufacturers consider when choosing retail partners?2.What are the differences among intensive, exclusive, and selective levels of distribution intensity?11 © McGraw Hill LLCExhibit 17.3 Types of RetailersAccess the text alternative for slide images.12 © McGraw Hill LLCFood RetailersSupermarketsSupercentersWarehouseClubsConvenienceStoresOnline Grocery RetailersLimited nonfoodSupermarket combined with a full-line discount storeLimited assortment and little service, low pricesLimited varietySpeedy check outCustomers willing to pay more to order online and have groceries deliveredDifferentiated by number of SKUsWalmart, Meijer, K-Mart, TargetCostco, Sams, BJ’sGood locationsInstacart, Amazon Prime FreshPeapod.com13 © McGraw Hill LLCOnline Grocery RetailersThe set of retailers providing online capabilities continues to expand.Companies seek to add value to the grocery channel by providing delivery.Shutterstock/RossHelen14 © McGraw Hill LLCGeneral Merchandise RetailersDepartment StoresBroad variety and deep assortmentFull-line DiscountBroad variety at low pricesSpecialtyLimited merchandise with service in small storeDrugstoresSpecialty for pharmaceutical and healthCategory SpecialistsBig-box or category killers with narrow but deep assortmentExtreme-valueFull line, limited, very low pricesOff-priceInconsistent assortment of brand-name merchandise at low pricesAccess the text alternative for slide images.15 © McGraw Hill LLCServices RetailersFirms that primarily sell services rather than merchandise are a large and growing part of the retail industry.Service retailers, like this nightclub, sell services rather than merchandise.© Lane Oatey/Blue Jean Images/Getty Images16 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.What strategies distinguish the different types of food retailers?2.What strategies distinguish the different types of general merchandise retailers?3.Are organizations that provide services to consumers retailers?17 © McGraw Hill LLCDeveloping a Retail Strategy Using the Six Ps: ProductProviding 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/Shutterstock18 © McGraw Hill LLCDeveloping a Retail Strategy Using the Six Ps: PricePrice defines the value of both the merchandise and the service provided.Shutterstock / Pearl Winchester19 © McGraw Hill LLCDeveloping a Retail Strategy Using the Six Ps: PromotionRetailers use a wide variety of promotions, both withintheir retail environment and through mass and social media.kaisorn/Getty Images20 © McGraw Hill LLCDeveloping a Retail Strategy Using the Six Ps: PlaceConvenient 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 Balajadia21 © McGraw Hill LLCDeveloping a Retail Strategy Using Two Additional Ps: Presentation and PersonnelPresentation:Lighting, color, and music are used to highlight merchandise and create a mood that will attract the store’s target markets.Personnel:Well-trained sales personnel can influence the sale at the point of purchase.22 © McGraw Hill LLCBenefits of the Internet and Omnichannel Retailing•Deeper and broader selection.•Personalization.•Expanded market presence.•Integrated CRM.•Brand Image.•Pricing.•Supply Chain.23 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.What are the components of a retail strategy?2.What are the advantages of traditional stores versus Internet-only stores?3.What challenges do retailers face when marketing their products through multiple channels?24 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 18Integrated Marketing CommunicationsCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning 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 18.4Explain the methods used to allocate the integrated marketing communications (IMC) budget.Learning Objective 18.5 Identify marketing metrics used to measure IMC success. 3 © McGraw Hill LLCIntegrated Marketing CommunicationsConsumerCommunication channelsResults of the communicationA Lot Of People/Shutterstock4 © McGraw Hill LLCCommunicating with Consumers: Exhibit 18.1: The Communication ProcessAccess the text alternative for slide images.5 © McGraw Hill LLCHow Consumers Perceive CommunicationReceivers 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/Newscom6 © McGraw Hill LLCExhibit 18.2: The AIDA ModelAccess the text alternative for slide images.Source: E. K. Strong, The Psychology of Selling(New York: McGraw-Hill Education Global Holdings, 1925)7 © McGraw Hill LLCThe AIDA Model: AwarenessSenders first must gain the attention of the consumer.Awareness metrics include:•Aided recall.•Top-of-mind awareness. Ljupco/Getty Images8 © McGraw Hill LLCThe AIDA Model: InterestAfter awareness comes interest.The customer must want to further investigate the product/service.Interest can also be sparked by a little controversyTo 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 Corporation9 © McGraw Hill LLCThe AIDA Model: DesireI like it.I want it.Burke/TrioloProductions/SuperStoc10 © McGraw Hill LLCThe AIDA Model: ActionThe 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 Professional11 © McGraw Hill LLCThe Lagged EffectMarketing 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 diamondsAccess the text alternative for slide images.ADragan/Shutterstock12 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.What are the different steps in the communication process?2.What is the AIDA model?13 © McGraw Hill LLCChannels Used in an IMC StrategyEXHIBIT 18.3Channels of an IMC StrategyAccess the text alternative for slide images.14 © McGraw Hill LLCAdvertisingMost 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 individualsShutterstock / vector_s15 © McGraw Hill LLCPublic Relations (PR)“Free” media attention.Importance of PR has grown as the cost of other media has increased.As consumers are becoming more skeptical about marketing, PR is becoming more important.16 © McGraw Hill LLCSales PromotionsCan 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.com17 © McGraw Hill LLCPersonal SellingA 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/123RF18 © McGraw Hill LLCDirect MarketingCommunicating 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 Images19 © McGraw Hill LLCEXHIBIT 18.4: Illustrative Mobile Marketing CampaignsCompany 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 Eeveeand Shiny Pikachu Pokémonsthat 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: ChiradeepBasuMallick, “Top 3 Viral Mobile Marketing Campaign Examples to Inspire You,” MarTechAdvisor, August 30, 2019; VanditaGrover, “Mobile Marketing Strategies & Tends: Key Learnings from the First Half of 2019,” MarTechAdvisor, 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-201720 © McGraw Hill LLCOnline MarketingWebsites.Blogs.Social Media.Rawpixel.com/Shutterstock21 © McGraw Hill LLCOnline Marketing: WebsitesWhich websites do you visit all the time? Why?Shutterstock / Fergus Coyle22 © McGraw Hill LLCOnline Marketing: BlogsBlogs 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/Shutterstock23 © McGraw Hill LLCOnline Marketing: Social MediaOne trend is combining advertising on podcasts with in-home voice assistants. •allows users to interact among themselves.•provide feedback to their community members.Halfpoint/Shutterstock24 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.What are the different elements of an IMC program?25 © McGraw Hill LLCPlanning for and Measuring IMC Success: GoalsAccess the text alternative for slide images.26 © McGraw Hill LLCExamples of Marketing Goals and the Related CampaignsEXHIBIT 18.5Illustrative Marketing Goals and Related CampaignsCompany and CampaignGoalTarget MarketMedia UsedOutcomeNike “Believe in Something” Connect with customers who care about social justice issues by running ads featuring ex-NFL quarterback Colin Kaepernick Millennials and Gen ZersSocial media, billboard, television, print 31% increase in sales RXBAR (Kellogg Co.) “No B.S.” Increase awareness of the brand Everyone Online video advertising, interactive hotline Brand awareness rose from 8% to 15.3% Gillette “The Best Men Can Be” Appeal to traditional male customers while also gaining a new audience among women Men and women Twitter post Over 30 million views, and 51% of women who engaged with the ad expressed joy Sources: Deep Patel, “8 Controversial Marketing Campaigns That Paid Off,” Entrepreneur, June 5, 2019; “Marketer A-List 2018 Standouts,” Ad Age, December 3, 2018; Jane Zupan, “The Data behind Gillette’s Ad Shows It Had the Biggest Impact with Women,” Adweek, January 22, 2019.27 © McGraw Hill LLCPlanning for and Measuring IMC Success: Setting and Allocating the IMC BudgetRule-of-thumb methodsObjective-and-task methodLeft: Shutterstock/Zodar; Right: Shutterstock / Yukikae4B28 © McGraw Hill LLCExhibit 18.6: Rule-of-Thumb Methods(1 of 2)MethodDefinitionLimitationsCompetitive parityThe 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-salesThe communication budget is a fixed percentage of forecasted sales.Assumes the same percentage used in the past, or by competitors, is still appropriate for the firm. Does not take into account new plans (e.g., to introduce a new line of products in the current year).29 © McGraw Hill LLCExhibit 18.6: Rule-of-Thumb Methods(2 of 2)MethodDefinitionLimitationsAvailable budgetMarketers forecast their sales and expenses, excluding communication, during the budgeting period. The difference between the forecast sales and expenses plus desired profit is reserved for the communication budget. That is, the communication budget is the money available after operating costs and profits have been budgeted.Assumes communication expenses do not stimulate sales and profit.30 © McGraw Hill LLCPlanning for and Measuring IMC Success: Measuring Success Using Marketing MetricsTraditional Media•Frequency•Reach•Gross rating points (GRP)Web-Based Media•Web-tracking software31 © McGraw Hill LLCPlanning, Implementing, and Evaluating IMC Programs—An Illustration of Google AdvertisingTransit is an upscale sneaker store in New York City modeled after vintage New York City subway trains.Shutterstock / Cincinart32 © McGraw Hill LLCExhibit 18.7: Transit ROMI Assessment1. Keyword2. Clicks3. Marketing Expenditure4. Sales5. 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 100Sneaker store110$10/day$70/day$35/day$25250%New York City sneakers40$25/day$80/day$40/day$1560%33 © McGraw Hill LLCExhibit 18.8: Program Effectiveness ResultsCommunication ObjectiveQuestionBefore CampaignSix Months AfterOne Year AfterAwareness (% 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?91724Attitude (% first choice)On your next shopping trip for sneakers, which store would you visit first?131519Visit (% visited store)Which of the following stores have you been to?8151934 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.Why is the objective-and-task method of setting an IMC budget better than the rule-of-thumb methods?2.How do firms use GRP to evaluate the effectiveness of traditional media?3.How would a firm evaluate the effectiveness of its Google advertising?35 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 19Advertising, Public Relations, and Sales PromotionsCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 19.1Describe the steps in designing and executing an advertising campaign.Learning Objective 19.2Identify three objectives of advertising.Learning Objective 19.3Describe the different ways that advertisers appeal to consumers.Learning Objective 19.4Identify the various types of media.Learning Objective 19.5Identify agencies that regulate advertising.Learning Objective 19.6Describe the elements of a public relations toolkit.Learning Objective 19.7Identify the various types of sales promotions.3 © McGraw Hill LLCWhat is Advertising?A paid form of communication delivered through media from an identifiable source about an organization, product, service, or idea designed to persuade the receiver.The most visible form of marketing communications.Many actions take place before an ad is seen by the target audience.4 © McGraw Hill LLCExhibit 19.1: Steps in Planning and Executing an Ad CampaignAccess the text alternative for slide images.5 © McGraw Hill LLCStep 1: Identify Target AudienceConduct research to identify target audience.The information is used to set the tone and to select the media.oneinchpunch/Shutterstock6 © McGraw Hill LLCStep 2: Set Advertising ObjectivesThe objectives of an ad campaign are derived from the overall objectives of the marketing program.ConsumersPull strategy-get consumers to pull the product into marketing channelWholesalers, Retailers, SalespeoplePush strategy-increase demand by focusing on wholesalers, retailers, salespeople7 © McGraw Hill LLCInformative AdvertisingUsed 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 studio8 © McGraw Hill LLCPersuasive AdvertisingGenerally, 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 Winchester9 © McGraw Hill LLCReminder AdvertisingCommunication used to remind, or prompt repurchases.Occurs after the products have gained market acceptance and are in the maturity stage.Mark Steinmetz/McGraw-Hill Education10 © McGraw Hill LLCFocus of Advertisements (1 of 2)Product-focused advertisementsinform, persuade, or remind consumers about a product or serviceInstitutional advertisementspromote a company, corporation, business, institution (e.g. PSAs)11 © McGraw Hill LLCFocus of Advertisements (2 of 2)Public Service Advertising (PSA)•Under Federal Communication Commission rules, broadcasters must devote a specific amount of free airtime to PSAs.© YAY Media AS / Alamy12 © McGraw Hill LLCStep 3: Determine the Advertising BudgetConsiderations:Role that advertising plays in their attempt to meet their overall promotional objectivesExpenditures vary over the course of the Product Life CycleNature of the market and the product influence the size of the budgetAccess the text alternative for slide images.13 © McGraw Hill LLCStep 4: Convey the MessageAccess the text alternative for slide images.14 © McGraw Hill LLCThe AppealInformational appeal•Helps consumers make purchase decisions by offering factual information.Emotional appeal•Aims to satisfy consumers’ emotional desires rather than their utilitarian needs.Westend 61/Getty Images15 © McGraw Hill LLCExhibit 19.2: Emotional Appeals in AdvertisingEmotional AppealCompanyExampleFear/safetyNational Highway Transportation Safety Administration (NHTSA)“Secure his future. Always seat him in the correct car seat.”HumorOrbit Gum“Don’t Let Lunch Meet Breakfast”HappinessInstagram“Stories Are Everywhere”Love/sexMr. Clean“You GottaLove a Man Who Cleans”ComfortCharmin Ultra Soft“Embrace Your Softer Side—The Softer, More Cushiony Way to Get Clean”NostalgiaHeinz“Pass the Heinz”16 © McGraw Hill LLCStep 5: Evaluate and Select MediaMedia planning Media mixMedia buy Shutterstock / Sergey Mironov17 © McGraw Hill LLCMass and Niche MediaNichemedia:•More focused•Reach narrower segments•Target unique demographics or interests•HGTV, TransWorldSkateboarding, Popstar! Magazine.Massmedia:•Ideal for reaching large, anonymous audiences.•Include outdoor/billboards, newspapers, magazines, radio, and television.Paul Salmon / Alamy18 © McGraw Hill LLCExhibit 19.3: Types of Media Available for Advertising (1 of 2)MediumAdvantagesDisadvantagesTelevisionWide reach; incorporates sound and video.High cost; several channel and program options; may increase awareness of competitors’ products.RadioRelatively inexpensive; can be selectively targeted; wide reach.No video, which limits presentation; consumers give less focused attention than TV.; exposure periods are short.MagazinesVery targeted; subscribers pass along to others.Relatively inflexible; takes some time for the magazine to be available.NewspapersFlexible; timely; able to localize.Can be expensive in some markets; advertisements have short life span.19 © McGraw Hill LLCExhibit 19.3: Types of Media Available for Advertising (2 of 2)MediumAdvantagesDisadvantagesInternet/mobileCan be linked to detailed content; highly flexible and interactive; allows for specific targeting.Becoming cluttered; the ad may be blocked by software on the computer.Outdoor/billboardRelatively inexpensive; offers opportunities for repeat exposure.Is not easily targeted; has placement problems in some markets; exposure time is very short.Direct marketingHighly targeted; allows for personalization.Cost can vary depending on type of direct marketing used; traditional media, like mail, will be more expensive than newer media.20 © McGraw Hill LLCDetermining the Advertising ScheduleContinuousruns steadily throughout the yearFlightingis implemented in spurtsPulsingcombines continues and flighting with a base schedule with increased intensity during certain periods21 © McGraw Hill LLCStep 6: Create AdvertisementsAccess the text alternative for slide images.22 © McGraw Hill LLCStep 7: Assess Impact Using Marketing MetricsEXHIBIT 19.4Hypothetical Sales History for Red Bull in a Grocery Store ChainPretestingTrackingPosttestingAccess the text alternative for slide images.23 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.What are the steps involved in planning an ad campaign?2.What is the difference between informational, persuasive, and reminder advertising?3.What are the pros and cons of the different media types?4.How can the effectiveness of advertising be evaluated?24 © McGraw Hill LLCRegulatory and Ethical Issues in Advertising (1 of 2)EXHIBIT 19.5Federal Agencies That Regulate AdvertisingFederal AgenciesGeneral PurposeSpecific JurisdictionFederal Trade Commission (FTC) (1914)Enforces federal Consumer protection laws.Enforces truth in advertising laws; defines deceptive and unfair advertising practices.Federal Communications Commission (FCC) (1934)Regulates interstate and international communications by radio, television, wire, satellite, and cable.Enforces restrictions on broadcasting material that promotes lotteries (with some exceptions); promotes cigarettes, little cigars, or smokeless tobacco products; or that perpetuates a fraud. Also enforces laws that prohibit or limit obscene, indecent, or profane language.Food and Drug Administration (1930)Regulates food, dietary supplements, drugs, cosmetics, medical devices (including radiation-emitting devices such as cell phones), biologics (biological issues), and blood products.Regulates package labeling and inserts, definition of terms such as light and organic, and required disclosure statements (warning labels, dosage requirements, etc.).25 © McGraw Hill LLCRegulatory and Ethical Issues in Advertising (2 of 2)EXHIBIT 19.5Federal Agencies That Regulate AdvertisingFederal AgenciesGeneral PurposeSpecific JurisdictionThe U.S. Postal Service (USPS) (1971)Delivers mail and packages.Regulates advertising that uses the mail and that involves fraud, obscenity, or lotteries.Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) (1972)Regulates manufacturing and sales of alcohol, tobacco, firearms, and explosives.Regulates the advertising for alcohol, including warning labels, and determines what constitutes false or misleading advertising.26 © McGraw Hill LLCPufferyLegal exaggeration of praise, stopping just short of deception, lavished on a product.When you go to purchase a product, do you think of the advertisement’s promises?27 © McGraw Hill LLCPublic RelationsPublic relations involves managing communications and relationships to achieve various objectives such as:•Building and maintaining a positive image of the firm.•Handling unfavorable stories or events.•Maintaining positive relationships with the media.Shutterstock / ESB Professional28 © McGraw Hill LLCPopular PR ToolsCause-related marketingEvent sponsorshipRealistic Reflections29 © McGraw Hill LLCExhibit 19.6: Elements of a Public Relations ToolkitPR ElementFunctionPublications: brochures, special-purpose single-issue publications such as booksInform various constituencies about the activities of the organization and highlight specific areas of expertise.Video and audio: programs, public service announcementsHighlight the organization or support cause-related marketing efforts.Annual reportsGive required financial performance data and inform investors and others about the unique activities of the organization.Media relations: press kids, new releases, speeches, event sponsorshipsGenerate news coverage of the organization’s activities or products/services.Electronic media: websites, e-mail campaignsWebsites can contain all the previously mentioned toolbox elements; e-mail directs PR efforts to specific target groups.30 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.Why do companies use public relations as part of their IMC strategy?2.What are the elements of a public relations toolkit?31 © McGraw Hill LLCSales PromotionsCan be targeted at either the end user consumers or channel members.Can be used in either push or pull strategies.32 © McGraw Hill LLCTypes of Sales Promotion(1 of 2)PromotionAdvantagesDisadvantagesCoupons • Stimulates demand.• Allows for direct tracking of sales.• Low redemption rates.• High cost.Deals• Encourages trial. • Reduces consumer risk.• May reduce perception of value.Premiums • Builds goodwill.• Increases perception of value. • Consumers buy for premium, not product.• Has to be carefully managed.Contests• Increases consumer involvement. • Generates excitement. • Requires creativity.• Must be monitored.Sweepstakes • Increases involvement with the product. • Sales often decline after the sweepstakes is over.33 © McGraw Hill LLCTypes of Sales Promotion(2 of 2)PromotionAdvantagesDisadvantagesSamples • Encourage trial. • Offer direct involvement.• High cost to the firm.Loyalty Programs • Create loyalty. • Encourage repurchase.• High cost to the firm.POP Displays • Provide high visibility. • Encourage brand trial. • Difficult to get a good location in the store.• Can be costly to the firm.Rebates • Stimulate demand. • Increase value perception.• Easily copied by competitors.• May just advance future sales.Product Placement • Displays products nontraditionally. • Demonstrates product uses. • Firm often has little control over display.• Product can be overshadowed.34 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.What are various forms of sales promotions?2.What factors should a firm consider when evaluating a sales promotion?35 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Because learning changes everything.®Chapter 20Personal Selling and Sales ManagementCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. © McGraw Hill LLCLearning ObjectivesLearning Objective 20.1Describe the value added of personal selling.Learning Objective 20.2Define the steps in the personal selling process.Learning Objective 20.3Describe the key functions involved in managing a sales force.Learning Objective 20.4Describe the ethical and legal issues in personal selling.3 © McGraw Hill LLCThe Scope and Nature of Personal SellingInternet.Face-to-face.Telephone.Video Teleconference.Jacobs Stock Photography/Getty Images4 © McGraw Hill LLCPersonal Selling as a CareerPeople love the lifestyle.There is a lot of flexibility.There is a lot of variety in the job.Can be very lucrative. Very visible to management and good for promotions.Many salespeople now rely on virtual offices, which enable them to communicate via the Internet with colleagues and customers.Salesjobs.com©Perfectlab/Shutterstock5 © McGraw Hill LLCThe Value Added by Personal SellingSalespeople provide information and advice.Salespeople save time and simplify buying.Salespeople build relationships.A salesperson’s product knowledge and ability to facilitate the sale can make buying a car easy and possibly even enjoyable.©Kristian Sekulic/Getty Images6 © McGraw Hill LLCExhibit 20.1: The Personal Selling ProcessAccess the text alternative for slide images.7 © McGraw Hill LLCStep 1: Generate and Qualify Leads8 © McGraw Hill LLCGenerate LeadsTrade shows.Cold calls.Telemarketing.Shutterstock/AndreyPopov9 © McGraw Hill LLCStep 2: Preapproachand the Use of CRM SystemsEstablish goals for meeting with the customer.Conduct additional research and develop plans for meeting with the customer.Salespeople input customer information into their tablets to develop a customer database for CRM systems.Jamie Grill/JGI/Blend Images/Getty Images10 © McGraw Hill LLCStep 3: Sales Presentation and Overcoming ReservationsThe presentation.Handling reservations.limonzest© 123RF.com11 © McGraw Hill LLCExhibit 20.2: Aligning the Personal Selling Process with the B2B Buying ProcessAccess the text alternative for slide images.12 © McGraw Hill LLCStep 4: Closing the SaleObtain a commitment from the customer to make a purchase.Often this is the most stressful part of the sales process.A “no” one day may be the foundation for a “yes” another day.joakimbkk/Getty Images13 © McGraw Hill LLCStep 5: Follow-UpThe follow-up therefore offers a prime opportunity for a salesperson to solidify the customer relationship through great service quality.•Reliability. The salesperson and the supporting organization must deliver the right product or service on time.•Responsiveness. The salesperson and support group must be ready to deal quickly with any issue, question, or problem that may arise.•Assurance. Customers must be assured through adequate guarantees that their purchase will perform as expected.•Empathy. The salesperson and support group must have a good understanding of the problems and issues faced by their customers.•Tangibles. Their influence is subtler than that of the other four service quality dimensions.14 © McGraw Hill LLCPROGRESS CHECK (1 of 3)1.Why is personal selling important to an IMC strategy?2.What are the steps in the personal selling process?15 © McGraw Hill LLCManaging the Sales ForceAccess the text alternative for slide images.16 © McGraw Hill LLCSales Force StructureCompany sales force•Employees•Established product linesManufacturer’s representatives (independent agents)•New markets •Not employees•Smaller firms17 © McGraw Hill LLCSalesperson DutiesOrder getting.Order-taking.Sales support personnel.Selling teams.McGraw-Hill18 © McGraw Hill LLCRecruiting and Selecting SalespeoplePersonalityEmpathySelf-motivationResilienceOptimism19 © McGraw Hill LLCRecruiting for SuccessHow does a firm that focuses on a fun product recruit salespeople who exhibit fun?Shutterstock / Pressmaster20 © McGraw Hill LLCSales TrainingAccess the text alternative for slide images.21 © McGraw Hill LLCMotivating and Compensating SalespeopleFinancial rewards•Salary.•Commission.•Bonus.•Sales Contest.Nonfinancial rewards•Recognition from peers and management.•Plaques, pens, rings.•Free trips or days off.•Given at sales meeting and publicized in the company newsletter.22 © McGraw Hill LLCEvaluating Salespeople by Using Marketing MetricsTied to the reward structure.Evaluation measures can be either objective or subjective.Shutterstock/Zodar23 © McGraw Hill LLCPROGRESS CHECK (2 of 3)1.What do sales managers need to do to manage their sales force successfully?2.What is the difference between monetary and nonmonetary incentives?24 © McGraw Hill LLCEthical and Legal Issues in Personal SellingThe Sales Manager and the Sales ForceThe Sales Force and Corporate PolicyThe Salesperson and the CustomerShutterstock / 3D_creation25 © McGraw Hill LLCIssues for the Sales Manager and the Sales Force•Hiring.•Promotion.•Supervision.•Training.•Assigning Duties. •Quotas.•Compensation. •Firing.Access the text alternative for slide images.26 © McGraw Hill LLCIssues for the Sales Force and Corporate PolicyThe firm may have a policy to sell goods or services to people who cannot afford them or to people who should not have them. Should insurance salespeople disclose inadequate hurricane coverage and risk not making the sale?Robert Szymanski/Shutterstock27 © McGraw Hill LLCIssues for the Salesperson and the CustomerHave you ever felt that you were treated unethically by a salesperson?What happened?ximagination/123RF28 © McGraw Hill LLCPROGRESS CHECK (3 of 3)1.What are three areas of personal selling in which ethical and legal issues are more likely to arise?29 Because learning changes everything.®www.mheducation.comCopyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

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