978-0077861049 Chapter 18 Solution Manual Part 1

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Chapter–by–chapter aids: Chapter 18

CHAPTER 18: ETHICAL MARKETING IN A CONSUMER–

ORIENTED WORLD: APPRAISAL AND CHALLENGES

CHAPTER 18 – COMMENTS ON QUESTIONS AND PROBLEMS

18– 1. This is basically a review question. See section “How Should Marketing Be Evaluated?” It is

somewhat open–ended, however, in that the students are allowed to select their own criteria

and defend their answers. Value judgments are involved here – and so many criteria could be

18– 2. Basically, most economic systems seek to satisfy their members – although some are willing to

put off immediate satisfaction for long–run satisfaction. Possible exceptions are military

dictatorships, or colonial or imperialistic economies that are attempting to achieve objectives

held by the military or other leaders. Achieving their objectives may preclude ever doing very

provided for some exceptions. The last question in this group is the most crucial, as it forces

the students to decide whom the sociologists or public officials should control. Some

sociologists or public officials feel that everyone should be controlled – except themselves, of

Many students take for granted the relative freedom that we (Americans) have and cannot

appreciate how another system might operate. A friend of one of the authors who lived under a

dictatorship was strongly in favor of allowing everyone a free choice. Based on his

observations (and he was well educated and intelligent), he was convinced that a group of

18– 3. This is a difficult question, but it provides an opportunity to present an argument for something

other than consumer satisfaction. Alternate objectives include: maximize production for

distribution to underdeveloped countries (global consumer satisfaction); development of

18– 4. There is conflict because of the way some businesses are organized. Very frequently (in

smaller businesses) there is no conflict, as the boss makes all the major decisions and he

knows which way he wants to go. When businesses get very large, however, the objectives

may be less definite and the various departments become quite large and may be headed by

This internal conflict may seriously reduce the efficiency of the individual business. It develops

because there is no concept that forces the integration of all the company’s activities toward

one objective. An attraction of the marketing concept is that it fills this void.

18– 6. Officially granting monopolies may be going too far – as it could lead to a static economy.

There would be relatively little incentive for innovation. Some competition is necessary to

encourage innovation – but then the successful innovator (not all innovations are successes)

must be allowed to reap some fruits to encourage others to do likewise.

Part IV

Allowing some industries to monopolize may not be too inhibiting if little innovation seems likely

and substantial gains are available from elimination of duplication of effort or facilities – as with

public utilities. But, in general, it probably would not be desirable to grant monopolies to

businesses if a dynamic economy is to be encouraged. On the other hand, it may be desirable

industries compete very effectively against public industries. Similarly, the nationalized

industries in some European countries have not done very well. And as noted in the text, the

Russian economic system has moved toward profit incentives to increase output.

the choice is based upon favoritism or some noneconomic criteria. This leads to shifting of

income to those favored. The effect on the economy of these grants depends upon the price

policies followed by the various monopolies. If prices are set very high, too few products may

be allocated to that particular industry – perhaps to the detriment of consumers. Further, if the

firms are allowed monopoly profits without the offsetting tendency of attracting new firms to

If the monopolist chooses the most profitable price (perhaps with marginal analysis), then the

effect will depend somewhat on how the economy was organized before the granting of this

monopoly. If there were many monopolistic competitors all maximizing profits, there may be no

difference in the economy. If the monopolist has lower costs – perhaps due to economies of

scale – the new price may be lower and output higher. If the monopolist sets a price below that

where he would maximize profits, then more products will be allocated to this industry –

If a monopoly develops just by winning out in the marketplace, then there is no assurance that

the firm will be able to hold its place – unless it continues to offer a satisfactory product at a

reasonable price. Economies of scale might make such a monopoly desirable, because it

might be in the producer‘s interest to maintain a low price to maximize profits. Such a market

would seem to offer a proper distribution of income and allocation of resources (based on

consumer response). The short–run level of income and employment might be below that in a

opportunity to invade the market and better satisfy consumers.

18– 8. Consumers have a great deal to do with the high cost of marketing – but inefficient

management makes its contribution too.

18– 9. A marketing strategy consists of a target market and the associated marketing mix. Marketing

plans are strategies to which time-related details have been added. See section “The

Marketing Plan Brings All the Details Together.”

18–10. See section “How Far Should the Marketing Concept Go?” In our society, we generally decide

such issues by majority vote. This raises the issue whether the critics really represent the

majority – and how fast change should come, if it should.

18–11. This is a very difficult question. It probably should only be attempted with mature students –

unless the instructor expects to carry the bulk of the discussion. Most students have some

feelings on the matter, but relatively little “fiscal sense” about the impact on a firm‘s profit and

loss statement. So, their answers tend to be “gut reactions” based on feelings and opinions,

Chapter–by–chapter aids: Chapter 18

which may be related to their family upbringing or business experience – or more likely, the

most recent “consciousness–raising” instructor they have encountered. By careful probing of

various students’ answers and the reasons for their feelings – and then getting others to react

“good” does not set well with the typical business student – after the matter has been fully

considered. Still, some still have nagging doubts about not serving “poor” or otherwise

disadvantaged people. Some students may even suggest that is the government’s

that individual firms at the micro level should pursue their own interest, but at the macro level it

is necessary for the people (through their government) to see to it that the whole system works

to satisfy their collective wishes.

product, one with a safety device, restores freedom of choice, but at a price. If the safety

device is required on all such products by government action or collusion among producers,

the consumer is back to being choice less. In the first case, the firm may be giving up a profit

by not offering the product – and in the second case, it is probably giving up profit by offering

the product. In either case, it is not an attractive choice from a micro point of view. Different

There is not yet a socially accepted “right answer” to these questions. Some people feel that

businesses’ responsibility is to expand freedom of choice – not reduce it. Others feel that it is

not possible for consumers to fully evaluate all complex products, and therefore it is the

responsibility of producers to build “good” products. This latter approach seems admirable –

but if there are many competitors who do not see their responsibilities the same way, then the

Some firms have found “socially responsible” actions that do not contain the micro–macro

dilemma. For example, deeper analysis of consumers’ needs may show that adding new

products to expand consumer choice will not only satisfy more consumers, but also will

increase the firm‘s profits. Or, more attention to quality control might increase cost slightly, but

so improve consumers’ attitudes toward the product that demand for the firm’s products may

actually increase. These kinds of moves are clearly desirable, but they are also just

needs? Should any concern be given for the stockholders’ interests? Just how fast should the

firm’s resources be drained to satisfy some “unprofitable” customers’ needs? Note, in the

extreme, that the firm could give away its products in the short run – perhaps satisfying some

poor people – but it would be out of business and unable to satisfy others in the future. To the

extent that any “socially responsible” action leads to weakening a firm, is this “socially

Part IV

Chapter–by–chapter aids: Chapter 18

Instructor’s Manual to Accompany Essentials of Marketing IV–18-5

Case 27: Advanced Molding, Inc.

This case can be used for tying all of the materials in the text together. See case discussion.

Case 28: KCA Precision Tools

This case brings together several issues discussed throughout the text: competition, product classes,

product life cycle, wholesaling, personal selling, etc.

Case 30: Walker–Winkle Mills

This international case brings together segmentation, targeting, and strategy planning issues.

Case 31: Amato Home Health

This case can be used for integrating the materials in the text. As compared to the full case teaching note

in section IV, is that the case is in a nonprofit setting. Further, objectives must be set before or during the

strategy planning – and these are still being considered. This could be an “objectives” case too.

Case 32: Lever, Ltd.

This case can be used to tie all the text material together in an international setting. The discussion can

focus on market segmentation by a Canadian subsidiary of a U.S. multinational corporation. See case

discussion.

Case 34: Chess Aluminum Worldwide

This case can be used here to discuss issues related to strategy planning for international markets. The

company is currently using very different approaches – and achieving quite different levels of success – in

different markets. The case can be used to highlight some of the difficulties of developing “global

strategies” – while at the same time making it clear that the strategy (or strategies) actually used must be

well planned and executed if they are to be successful. See case discussion in Part V.

Video Case 4: Potbelly Sandwich

This video summarizes the marketing strategy of Potbelly Sandwich Works, Inc. along with the 4Ps, and

features interview footage with Bryant Keil, Chairman and CEO of the company. Chicago–based Potbelly

Sandwich Works, Inc. is a chain of sandwich shops that competes in the Quick Serve segment of the

restaurant industry. Billed as a unique and “quirky” sandwich joint, Potbelly has strong appeal to young

urban professionals. The case provides an opportunity to discuss strategy planning as a wrap up. For

more details, see the Video Instructor’s Manual on the Instructor’s Resource CD or the instructor side of

the Online Learning Center (www.mhhe.com/fourps).

Video Case 6: Big Brothers and Big Sisters of America

The video explores the processes by which Big Brothers Big Sisters of America (BBBSA) developed and

implemented its strategic marketing planning process. For more than a century Big Brothers and Big

Sisters of America (BBBSA) has helped children reach their potential through professionally supported

one–on–one mentoring. With a network of about 400 agencies in all 50 states, BBBSA serves

approximately 260,000 children between the ages of six to 18. The case provides an opportunity to

discuss strategy planning as a wrap up. For more details, see the Video Instructor’s Manual on the

Instructor’s Resource CD or the instructor side of the Online Learning Center (www.mhhe.com/fourps).

Part IV

IV–18-6 Perreault, Cannon, & McCarthy

CHAPTER 18 – COMMENTS ON USE OF ETHICS QUESTION WITH THIS CHAPTER

Situation: Your firm has a new strategy that will make its established product obsolete. However, it will

take a year before you are ready to implement the new strategy. If you announce your plan in advance,

profits will disappear because many customers and intermediaries will delay purchases until the new

product is released. If you don’t announce the new plan, customers and intermediaries will continue to

buy the established product as their needs dictate, but some will be stuck owning the inferior product and

won’t do business with you again in the future. How would you decide what to do?

This is a very difficult issue facing many firms – especially in technology markets. Class discussion might

start with a focus on how to minimize the loss of short–term sales and profits. The answer that comes up

is likely to be “wait as long as possible before announcing the new strategy.” Then discuss how to

minimize the ill will that might come from new customers who purchase the product during the next year –

and feel burned by now owning the inferior product.

Once such a discussion comes to the forefront, the entire marketing mix should be re–examined for ways

to adapt the strategy to minimize these concerns. For example, offering some sort of “trade–in” program

that allows customers to trade in the older product for a discount on the new product. The firm might also

pre–announce the new products by six months while lowering prices on the old design. There are ways to

further modify the marketing mix in order to treat customers fairly and to build loyal long–term

relationships even following a significant strategy change. For example, some firms offer lower prices (or

free upgrades or accessories) before a product is about to be phased out. The firm may not explain that

this is really a “clearance” price but even so, it may be a way to give the customer a better deal—because

the price will go back up when the new model is introduced.

CHAPTER 18 – 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. Review the entire marketing plan.

a. How do the pieces fit together?

b. Does the marketing strategy logically follow from the target market dimensions?

c. Does the marketing strategy logically follow from the differentiation and positioning?

d. Does the plan appear reasonable given the stated objectives?

These questions require students to step back and consider the whole marketing plan. All semester they

have been learning about individual pieces of the marketing plan – with only modest discussion of how

the pieces fit together. While the marketing plan generally fits together pretty well, there are certainly

parts to criticize. An instructor may start with the questions above, but ask students who have critiques –

or even compliments – how they might have done a better job. Students should be encouraged to defend

their ideas by referring to information from the situation analysis. This keeps the discussion focused on

best practices.

CHAPTER 18 – SUMMARY OF CONNECT HOMEWORK EXERCISES

Question 1: Hooters, Inc.: A Macro–Marketing Evaluation

Question Type: Case Analysis

Learning Objectives: 18.1, 18.2, 18.3

Topic: Macro–marketing evaluation

AACSB: Reflective thinking, ethics

Bloom’s: Understand, apply, evaluate

Chapter–by–chapter aids: Chapter 18

Instructor’s Manual to Accompany Essentials of Marketing IV–18-7

Question 2: The Marketing Mix Revisited

Question Type: Click And DragLearning Objectives: 18.4

Topic: Marketing strategy planning process requires logic and creativity

AACSB: Reflective thinking

Bloom’s: Understand, apply

Question 3: The Marketing Plan: Structure and Design

Question Type: Click And Drag

Learning Objectives: 18.5

Topic: The marketing plan brings all the details together

AACSB: Reflective thinking

Bloom’s: Understand, apply

CHAPTER 18 – “CASE-STYLE” INTEGRATIVE CROSS-CHAPTERS TEST

QUESTIONS

We have found that many instructors like to provide an integrative final exam – requiring students to

recognize and apply the marketing concepts from across the first marketing course. To address these

needs, we have created a series of “case–style” questions that integrate material across chapters. In this

section, you will find five different “case–style” scenarios. Following each scenario, you will find 7–10

multiple–choice questions. These questions ask students to identify concepts from across the textbook.

Many instructors will find this format a useful way for students to demonstrate their understanding of

many of the concepts presented in the book.

Because these questions cut across chapters, they do not easily fit into the EZ Test online test bank.

Therefore, we have created the questions below. For instructors looking to use these questions for a final

exam, simply:

1. Go to the Word version of this chapter,

2. Cut and paste the material below into a separate document,

3. Remove the answers and other data unrelated to the questions,

4. Print the exam for your students.

A. Jewel Craft, Inc.

Use the following information to answer questions that refer to the Jewel Craft case.

Jewel Craft, Inc. is a leading producer of women’s costume jewelry and accessories in the United States.

Its brands are well–known and are sold by department stores and better women’s stores. Several stores in

a city may carry Jewel Craft’s brands because most of Jewel Craft’s customers will not consider any other

brand.

Jewel Craft’s sales force calls on one wholesaler in each state. Gemco, Inc., of Boston, Massachusetts, is

the Jewel Craft distributor in that state. Gemco stocks and sells women’s accessories (noncompeting

lines) for several manufacturers like Jewel Craft. Wholesalers are allowed a 20 percent markup by Jewel

Craft, but pay the freight charges to their warehouses. Jewel Craft’s policy of using one wholesaler per

state comes from its desire to control its distribution. Jewel Craft uses national magazine advertising and

it supports a cooperative ad program with retailers.

Jewel Craft’s prices allow for a 40 percent retail markup—an attractive percent when one considers that

Jewel Craft’s products require little in–store selling because of their well–established reputation.

Recently, Jewel Craft was approached by a watch producer with the idea of expanding to watches under

Part IV

the Jewel Craft name. The watchmaker argued that although national watch sales have leveled off, Jewel

Craft would enjoy growing sales for years to come because of the fine reputation the company has

achieved. If watches are added, Jewel Craft will use its present policies regarding distribution, pricing,

and advertising. Further, it will offer the wholesalers and retailers an attractive “package” deal as an

incentive to carry Jewel Craft watches. Intermediaries will be required to carry the watches if they wish to

handle the jewelry and accessories.

A-1. Given the information in the Jewel Craft case, jewelry and accessories would be in which product

class?

A) Homogeneous shopping product

B) Staple product

C) Convenience product

D) Impulse product

E) Specialty product

Answer: E

AACSB: Analytic

Level of Difficulty: 2 Medium

Learning Objective: 8.6

Blooms: Apply

Feedback: Specialty products are consumer products that the customer really wants and makes a special

effort to find. Any branded product that consumers insist on by name is a specialty product. Refer to

Chapter–by–chapter aids: Chapter 18

Part IV