Chapter–by–chapter aids: Chapter 15
communicates effectively with the target audience. Rather than considering the likely
effectiveness of the ad, they will instead focus on some aspect of the ad that they like (the
photo, a humorous headline, etc.). When one of these aspects surfaces, it is useful to point out
the potential hazards of marketing managers selecting ad campaigns that they like, but which
are unlikely to appeal to the real target market.
15–11. As noted in the text, the large agencies have an advantage with certain types of accounts,
especially ones for which international connections and expertise are important. However,
small agencies can give more personalized attention and better service – especially to a client
that may be viewed as “too small” by some of the big mega–agencies. Some experts believe
more personalized service. Of course, like other service businesses, the success of an agency
ultimately depends on the skill and motivation of its people – and how well they serve the
needs of the specific target clients with whom they work.
inefficiency in mass selling – but the increasing importance of marketing managers and use of
marketing research is tending to reduce this inefficiency. The value of a particular
15–13. The “fairness” of ads that criticize competitors has only recently become a key issue. In the
past, most advertisers avoided direct criticisms of competitors. Now, however, that has
become more common. While many ads that are critical of competitors do seem “unfair,”
negative advertising does seem to be effective in shaping opinions. That makes it all the more
required for comparative advertising claims. Yet there is a large “gray area” here and the
debate is likely to become more heated before it is resolved. This is an area where the “rules of
the game” seem to be shifting.
the issues. Some answers are more obvious – a company’s target customers should be on
Facebook. It also seems to make less sense for B2B firms. Companies that have passionate
15–15. This question also has no right or wrong answer, but is designed to get students to think about
different forms of publicity. These customers are likely to want information that will help them
become better farmers or save money. Commercial white papers or case studies posted on a
15–16. This question is a serious concern for many local newspapers. In recent years, many retailers
have moved toward use of “free–standing inserts” rather than regular newspaper advertising.
At first, the inserts were used because they provided an economical way to get two–color or
four–color advertising printed, and they were distributed as “inserts” in the paper. Now,
as well as paid advertising. The shopping papers are distributed to every household, not just
the ones who subscribe to the paper. In many small towns, this is a problem for the
newspaper. The ad revenue from local retailers has always been a significant contributor to
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IV–15-4 Perreault, Cannon, & McCarthy
profitability. Further, since many people are interested in the ads, subscriptions and readership
also fall when the advertisers switch.
Some newspapers have responded to this trend by lowering advertising rates. Others have
tried to provide local retailers with more marketing and advertising assistance. In general these
This question can be used as a stepping off point for a discussion of the way in which
advertising subsidizes public media. Many students have never really thought about the fact
that most broadcast TV, many magazines, and other media are as inexpensive as they are
because of the revenues that are earned from advertisers. People who criticize TV advertising
15–17. The basic concern here is that many short–term promotions (including most trade promotions)
have an effect similar to a short–term price discount – they are thought to increase price
sensitivity and brand switching rather than contribute to increased brand loyalty and higher
brand equity. There are other negative side effects as well. For example, a buy–one, get–one–
the part of the inventory that was not needed to another firm – perhaps even a distributor that
was not normally served by the manufacturer (i.e., “a gray channel of distribution”). That
unauthorized distributor might even buy the “leftovers” at a lower price than would be available
term positive effects should come from spending on advertising (to final consumers) and from
spending on personal selling (in the channels).
15–18. Many firms are trying to better integrate their sales promotion activities with their advertising
and personal selling activities – to get more “bang for the buck.” One general approach is to
use a direct–response promotion to help identify specific customers, who are then targeted with
other promotion. For example, an advertisement might inform customers about a sweepstakes
advertisements, price–off coupons, or even have a telemarketer call them. Alternatively, the
name might be passed along to a local retailer who then follows up with more promotion effort.
Another general approach is to use some a certain communication technique (say, a phrase or
visual image) that spreads across several messages. For example, Mobil – the petroleum
company – sells a premium synthetic oil aimed at commercial truckers. The firm’s promotion
uses the tagline “the million mile oil” – which reminds truckers that using this oil will help keep
15–19. (a) If the firm has developed an improved razor blade and obtained distribution, but consumers
are not motivated to buy it, the firm’s promotion objective should probably be to encourage trial.
Once consumers have tried the improved razor then they are likely to purchase it again. Thus,
one feasible approach is to use sampling. Distribution of samples of razor blades might be
expensive if it requires developing a special (small quantity) package. And without special
packaging, sampling might be dangerous. Thus, another approach might be to offer
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Chapter–by–chapter aids: Chapter 15
Instructor’s Manual to Accompany Essentials of Marketing IV–15-5
(b) If a competitor is about to do a test market for a new brand and wants to track sales in test
market areas to fine tune its marketing mix, the firm may want to use promotion that
Note: It may be useful to ask students if they think that these approaches are ethical – because
some will think they are not (even if they don’t say so). On the other hand, some students will
do a good job arguing that there is no reason that the firm should sit back and let the
competitor “fine tune” its marketing strategy at the firm’s expense (when the firm has legitimate
tools to prevent it). This can lead to a useful discussion, even if the professor primarily serves
(c) The producer of the popcorn–based snack product might try sales promotion targeted at the
chain (push) or at final consumers (in the hope that stimulating demand will help pull the
product through the channel). For example, the producer might offer the chain credit for a free
case of product for each one it sells. This effectively becomes a discount, and the retailer has
the option of either passing along some of the discount to consumers – to stimulate demand
and promote trial – or alternatively to simply get more profit (from larger margins) by selling at
An alternative, that might also require some cooperation from the retailer, is to propose sales
promotion targeted at final consumers. For example, the producer might set up a program in
stores so that consumers could try the new product. The “taste trials” might help to stimulate
demand.
These are just a few examples of what the producer might do. Here, however, the instructor
might want to make the point that retailers increasingly are asking for “stocking allowances”
(slotting fees) to give a new product space on the store’s shelves – even if for only a limited
time. Small suppliers may not have the money to pay such slotting fees (in a sense, “renti” for
shelf space). Sometimes, however, a creative marketing mix proposed by the producer (other
than just paying slotting fees) will have the effect of reducing the retailer’s risk while, at the
off coupon rather than simply lower the price of its product. Most of these deal with the
administration of pricing in the channel of distribution. Specifically, the law typically prohibits a
manufacturer from requiring a retailer to charge consumers a certain price. Thus, if the
quantity. In such an instance, the retailer and producer may have different objectives and the
producer can’t use price alone to get control of the situation. However, the coupon allows the
producer to have some confidence that the final consumer in fact purchased the product at a
15–21. The point here is that advertising media and advertising specialists compete – just as
companies in other lines of business compete. Demand for media advertising is affected by the
cost. Thus, if firms continue to shift toward other methods of promoting products it is likely that
Part IV
there will be downward pressure on media prices. In the same vein, advertising agencies will
put more emphasis on developing skills in managing sales promotion – to serve that need
among clients. Actually, both of these trends are already well underway.
DISCUSSION OF COMPUTER-AIDED PROBLEM 15: SALES PROMOTION
A local PTA is thinking about using sales promotion to spark ticket sales for a fund–raising basketball
game. The student analyzes the costs of the promotion and what results it must produce to be beneficial.
This problem helps students to see how promotion can help both business and nonprofit organizations –
while making them more sensitive to the costs (and risks) of using promotion.
Because the sales promotion in this problem is being used by a nonprofit organization, the “competitive”
aspect of how sales promotion is sometimes used is not an issue. Rather, the focus here is on the
potential cost/benefit trade–offs of promotion. This can provide an interesting basis for some follow–up
class discussion of how this situation varies from a situation in which, for example, two competing
companies are both using sales promotion to attract customers (or intermediaries). Some critics argue
that sales promotion is overused in such situations – because it tends to stimulate short–term shifts in
purchases rather than encouraging longer–term brand insistence.
The initial spreadsheet for the problem appears below:
P L U S – Spreadsheet
No Promotion
With Promotion
Number of Tickets at Regular Price
300
*
600
*
Regular Price per Ticket
5.00
*
5.00
*
Number of Tickets at Special Price
0
*
Special Price for Ticket with T–shirt
6.00
*
Total Tickets (Seats) Sold
300
600
Total Revenue from Ticket Sales
1500.00
3000.00
Number of T–shirts Ordered
500
*
Cost per T–shirt
2.40
*
Cost of the T–shirt Promotion
1200.00
No. Extra Tickets to Pay for T–shirts
240.00
Money Earned for the PTA
1500.00
1800.00
Change in Money Earned from Promotion
300.00
Shortage of Seats (if Tickets > 900 seats)
0
0
Answers to Computer–Aided Problem 15:
a. Based on the initial spreadsheet (given above), the promotion looks like a good idea – if ticket sales
increase as expected. Specifically, the money earned by the PTA would increase by $300.00 (from
b. The analysis for this question shows that the PTA would earn only $540 – not the $1,500 that might
be expected without the promotion – if only 300 tickets are sold and 400 t–shirts are ordered. From
the initial spreadsheet, we can see the cost of the T–shirt promotion would be $1,200 if 500 shirts are
ordered – as compared to $960 if only 400 are ordered. The cost of the extra 100 t–shirts ($240)
Chapter–by–chapter aids: Chapter 15
Part IV
This case can be used to discuss whether advertising can be expected to differentiate this retailer from
the many others in the community who are doing more or less the same thing – but with greater emphasis
on lower prices. It might be useful to discuss what advertising objectives are appropriate in this situation.
Basically, the company must develop a strategy before getting down to advertising objectives. But if they
plan to continue to implement their present strategy, the objective probably should be to inform –
communicating that the company carries certain brands and provides dependable service. This will permit
Case 36: Skyline Homebuilders
The Skyline Homebuilders case describes a builder of semi–custom homes who recently built his first
LEED–certified “green” home. The home is the first of five in a small development – and Skip Patterson
estate agents – and the house has not sold. Skyline Homebuilders’ previous promotion efforts have been
minimal – listing houses on the multiple listing service to attract and inform real estate agents and
customers. Now Skip must decide whether to engage in a higher level of promotional activity – and if so,
what activities should be used.
CHAPTER 15 – COMMENTS ON USE OF ETHICS QUESTION WITH THIS CHAPTER
Situation: A software company offers its useful program as a free download. Few downloaders ever read
the license agreement, but it states that the program is paid for by advertising; specifically, it explains that
when the program is installed, another “adware” program is also installed that helps advertisers serve up
targeted ads. Assume that you own a small online flower business that is struggling to get started. A firm
with an adware system like the one described above contacts you about buying Internet ads. You pay
only when someone clicks–through to your site from an ad. You try the ads for a month and your online
An article in Fortune magazine, “Flowers That Pop” (December 1, 2003), inspired this scenario . The
article can be found with a Google search on the title. This scenario raises interesting questions. It does
not appear that the owner of the flower shop has done anything unethical. On the other hand, the
company that serves up his ads may be deceiving customers who unwittingly download adware along
with a useful software program. If that is the case, is knowingly using a deceptive vendor unethical?
Students are likely to make arguments on both sides of this issue.
Chapter–by–chapter aids: Chapter 15
This situation says that the license agreement explains the adware. Thus, the customer who doesn’t want
the ads has the opportunity to not install the software. Some students will say that nothing deceptive has
taken place because the customer has been informed. This may lead to a related discussion. Clearly,
many firms install adware, cookies, and other material on consumers’ computers without asking.
Certainly, we don’t give permission for firms to send most of the spam that shows up in our email boxes.
CHAPTER 15 – COMMENTS ON USE OF CREATING MARKETING PLANS
QUESTION WITH THIS CHAPTER
The Marketing Plan Coach software on the text website includes a sample marketing plan for Hillside
Veterinary Clinic. Look through the “Marketing Strategy” section.
Advertising objectives can be inferred by reviewing the marketing strategy section. With customers who
are not currently using HVC, one of the primary objectives should be is to increase awareness. This is
especially true for people new to the area – a very important market in the fast growing community where
HVC is located. Another apparent objective is to introduce new products (e.g., the dental services and
geriatric pet care packages) to specific target markets.
As with many small retail businesses, HVC’s advertising budget is limited. For HVC, traditional advertising
relies completely on the Yellow Pages. The marketing plan proposes the development of a website that
provides more information about service offerings. The development of a customer database will allow for
e-mail advertising. Brochures also operate as a form of advertising – with information about particular
services. If the brochures are only taken by interested customers, the cost per contact would be quite low.
Chances are other forms of media – television, newspaper, and radio – would be too expensive for the
Part IV