978-0077861049 Chapter 18 Solution Manual Part 1

subject Type Homework Help
subject Pages 9
subject Words 5386
subject Authors E. Jerome Mccarthy, Joseph Cannon, William Perreault Jr.

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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 hereand 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 controlledexcept 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 faras it could lead to a static economy.
There would be relatively little incentive for innovation. Some competition is necessary to
encourage innovationbut then the successful innovator (not all innovations are successes)
must be allowed to reap some fruits to encourage others to do likewise.
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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 facilitiesas 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 industryperhaps 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 costsperhaps due to economies of
scalethe 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 marketingbut 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
majorityand 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,
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Chapter-by-chapter aids: Chapter 18
which may be related to their family upbringing or business experienceor more likely, the
most recent "consciousness-raising" instructor they have encountered. By careful probing of
various students' answers and the reasons for their feelingsand then getting others to react
"good" does not set well with the typical business studentafter 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 productand 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 choicenot 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 runperhaps satisfying some
poor peoplebut 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
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Part IV
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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 planningand 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 approachesand achieving quite different levels of successin
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).
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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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 dealbecause
the price will go back up when the new model is introduced.
CHAPTER 18COMMENTS 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
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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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
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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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
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Part IV

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