Chapter–by–chapter aids: Chapter 2
Instructor’s Manual to Accompany Essentials of Marketing IV-2-9
is maintained). Or, if the original $2.00 per unit distribution cost is used in the spreadsheet, the profit
will increase to $50,000. This analysis shows that the target marketer who can really fine–tune his
marketing mix to the needs of the target market can increase his share of the business from that
target market, and his profitability. The spreadsheet shows that it is often better to get a larger share
P L U S – Spreadsheet
Targeting
Mass Marketing
PRODUCT: Production Cost per Unit
8.00
*
7.50
*
PLACE: Distribution Cost per Unit Sold
1.75
*
2.50
*
PROMOTION: Total Promotion Cost
12000.00
*
60000.00
*
PRICE: Selling Price per Unit
16.00
*
14.00
*
Overhead Costs
10000.00
*
20000.00
*
Number of People in the Market
25000
*
275000
*
Percent of People Who Will Buy
80.00
*
40.00
*
Firm’s Percent (share) of Purchases
60.00
*
20.00
*
Quantity Sold (Units)
12000
22000
Total Revenue (Price times Quantity)
192000.00
308000.00
Total Cost (Sum of Above Costs)
139000.00
300000.00
Total Profit (Revenue minus Costs)
53000.00
8000.00
CHAPTER 2 – COMMENTS ON USE OF SUGGESTED CASES WITH THIS
CHAPTER
Case 3: NOCO United Soccer Academy
This case can be used to introduce the marketing strategy planning process and customer equity – both
of which are discussed throughout the rest of the book. The NOCO United case provides an early
opportunity to use both of these frameworks. The marketing strategy planning process in Exhibit 2-9
might be shown on the board and used to help guide discussion. In fact, the shortage of information on
The options clearly address some of the alternative growth methods suggested in the section
“Recognizing Customer Lifetime Value and Customer Equity” in the text – acquisition of new customers,
retention of current customers, and increasing purchases by current customers. To dramatize the effects
of customer retention, ask your students what percentage of its customers NOCO United is likely to retain
each year. Despite kids moving, changing interests, and growing too old for training, the current retention
rate of 80% is really quite high. This means that of the 600 customers NOCO United currently serves, it
customers to take one additional program per year, then sales should increase by about 25%. These
numbers – or variations that you might create – help to dramatize the different customer equity options in
the NOCO United case. See case discussion in Part V.
Part IV
This case can be used to illustrate ideas related to marketing strategy planning, including S.W.O.T.
analysis. A young woman decides to go into business (doing computer service work) in a small town
where she is in direct competition with another established competitor who has a strong reputation and a
loyal following (and it’s a firm with which she had a summer job before going into military service). Her
choice of this business opportunity is influenced heavily by where she wants to live and what she has
done in the past. It is of course reasonable to use these as criteria in evaluating opportunities and
Case 5: Polystyrene Solutions
Used in this chapter, this case also illustrates a production–oriented company that has ignored potential
customers’ needs and the uncontrollable environment. It is easy to show the need for target marketing in
This video summarizes the marketing strategy of Chick–fil–A®, the second largest quick–service chicken
restaurant chain in the United States based on sales ($1.975 billion in 2005). It operates over 1,250
restaurants in 37 states and Washington, D.C. Its 2005 performance marks the 38th consecutive year of
system–wide sales gain. The case covers each of the 4 Ps, which are introduced in this chapter. 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).
Bass Pro Shops is the nation’s leading retailer of outdoor gear. It also is regarded as a master marketer
for a unique shopping experience that blends goods and services with theater and entertainment—a trend
in retailing called “destination development.” ” This case covers each of the 4 Ps, which are introduced in
this chapter. 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).
Chapter–by–chapter aids: Chapter 2
This 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. This case describes the marketing strategy planning process at BBBSA, a
concept that is introduced here in Chapter 2.. 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).
Situation: You have been working for a major online retailer in the entertainment products category and
have responsibility for DVD movie sales. You’ve been approached by a company that offers a behavioral
targeting software program. When a customer visits your website, this program can tell whether that
customer has been “shopping around”—it knows if the customer has looked at DVD movies at other
online stores. Assuming these customers are looking for a good deal, the new software allows you to
charge a lower price only to these “shopping around” customers. Higher, regular prices would be shown
Behavioral targeting is a controversial practice. Many privacy advocates are concerned about the
implications of behavioral targeting. The question also introduces the students to price discrimination.
Usually we find student less concerned about invasions of their privacy and more concerned about
“unfair” pricing. If a discussion trends in these directions, you might ask students whether they think
“ladies night pricing at a bar” or “student discounts” are “fair?” ” You might also ask how they would feel if
they walked into a bookstore and the salesperson came up and suggested books by authors they had
Part IV
In class discussion, the instructor may ask why HVC has chosen these target markets. Veterinarians
often specialize in small animals (cats, dogs, etc.) or large animals (cows, horses, etc.). Other vets may
choose to specialize in exotic small animals (monkeys, chinchillas, ferrets, etc.). The marketing strategy
process planning model might be referenced. Competitors in the area specialize in large animals – which
typically involve house (or ranch or farm) calls. A company factor is Doctor Hardy’s likely training in small
animals – and perhaps her innate interests. Also, there are many consumers in the fast–growing area that
As a transition to the second question, the instructor might ask the class, “Why does the marketing plan
differentiate between current customers and non–customers of HVC?” ” This allows for a discussion of the
two different targets. The former are already familiar with HVC and have an established relationship. The
marketing strategy for this group includes tactics that serve to remind customers and introduce them to
new products and services offered by the clinic. On the other hand, non–customers may not be aware of
HVC – so tactics here try to increase awareness and encourage customers to try the clinic.
Chapter–by–chapter aids: Chapter 3
mission statement and the forthcoming discussion of generic markets and product–markets in
Chapter 4. A mission statement should help set the course of the company and help managers
understand what types of opportunities are priorities for the company and which are beyond
product the firm currently produces is that it might indirectly discourage the firm from thinking
about new or better ways to meet customer needs. For instance, using the example given in
the question, in recent years many of the industrial applications of electric motors have
will be applied). A firm could do a great job of creating motors but lose its market to a
competitor that offers customers an electric drive that does a better job of meeting their needs.
In this example, the two products seem quite similar, but that may not always be the case. For
of products rather than in terms of customer needs and how those needs might be met by
alternative product offerings. On the other hand, many firms do reference specific product
types in their mission statements, perhaps to delimit the types of businesses they want to be
3- 2. Objectives should guide the search for – and evaluation of – opportunities. General objectives
(such as performing a socially and economically useful function, developing an organization to
carry on the business and implement its strategies, and earning enough profit to survive)
provide a basis for screening some possible opportunities. But, hopefully, the firm will have
considered than if top management were seeking to preserve the status quo. For more detail,
see section “Company Resources May Limit Search for Opportunities.”
strategies and then the marketing mix or mixes. This particular example provides an
opportunity to introduce a discussion of the objectives that a giant company like Microsoft had
when the Internet opportunity became an issue versus the objectives of a smaller company
that was simply trying to become established. Thus, in the context of the specific question,
some objectives that the former programmer might pursue could include:
Part IV
IV-3-2 Perreault, Cannon, & McCarthy
Some of these objectives might be compatible with each other and lead to the use of the same
marketing strategy or strategies. However, some objectives would clearly be incompatible. For
example, trying to maximize profit in the next two years (ignoring what happens afterward)
would probably rule out the development of a large–scale software application that would
attempt to compete with Microsoft’s Internet Explorer, for example. That kind of effort would
require much more time (to secure capital, hire a large number of qualified programmers, and
the higher quality browser (i.e., more specific to their needs) because it helped them earn more
money.
3- 4. A firm’s resources provide both strengths and weaknesses, and a smart marketing strategy
planner would try to make use of the strong points while avoiding weaknesses. Strengths may
come from a firm’s functional areas (production, research and engineering, marketing, general
marketing strengths such as patents, good relations with intermediaries, sales force skill, and
knowledge of the target market.
avoiding situations that involve head–on competition. However, the thrust of the text discussion
is that the competitor analysis encourages the marketing manager to think in terms of whole
similar with respect to one dimension (i.e., the product that they offer), but who are very
different with respect to other aspects of the strategy (channel of distribution, promotion
3- 6. Students will have different opinions about the difficulty for the hardware store of planning for
the new competitive threat: a competing store to be opened by a big home improvement chain.
This scenario is in fact unfolding in smaller towns all over the country as big chains like Home
Depot, Lowe’s, and Home Quarters have aggressively expanded the number of stores that
Even though the question doesn’t reveal much about the small store that is currently in the
town, the question is quite clear in suggesting that the current store has a monopoly of sorts. It
is also reasonable to expect that the new home improvement store will be very much like other
stores in the chain. Thus, it might also be possible for the owner of the store to determine what
and more specialized services for building contractors–such as rental tools or small engine
repairs. The chain could offer lower prices on general home building items, but the smaller
store had success maintaining good margins and profits by having a very good assortment of
represented in the product line of the chain store.
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter–by–chapter aids: : Chapter 3
Part IV
appliances. On the other hand, the competition in such a market is likely to be strong already,
and thus the new opportunity may be limited.
only GNI per capita but also income breakdowns ought to be studied when trying to determine
the size of various markets. There are many wealthy landowners and businesspeople in Brazil,
for example, and these middle and upper classes might be very attractive markets for some
such as GNI per capita. Regarding income, at the very least it would be desirable to have
income distribution.
3-13. The worldwide trend toward urbanization is having a dramatic effect on the opportunities for
international marketing. The concentration of population in major cities makes it easier to set
up channels of distribution and logistics facilities to reach foreign consumers. This is especially
true in light of the fact that major cities often develop near harbors (which make international
The concentration of people can also simplify promotion strategy decisions. This is especially
the case for consumers in high–income countries with an advanced standard of living. Some
people think that the “urban lifestyle” leads consumers to have very similar needs and interests
– even if they are from cultures that are traditionally very different.
Further, consumers concentrated in urban areas can’t be self–sufficient in the same way that
rural farmers can be self–sufficient. Urban consumers must rely on marketers to provide for
their needs. On the other hand, it is important to keep in mind that much of the urban
population around the world lives in terrible conditions – and with little or no discretionary
3-14. If education is considered as a “business,” then fewer babies affects the need for teachers and
classroom use in the grade schools and eventually in the high schools and colleges. At the
same time, leisure activities that depend on young people may be affected. Piano lessons,
dance classes, ice skating lessons, etc., may not be in as much demand. Similarly, the
smaller families have more discretionary income to spend on their children.
The text presents examples of the possible impact on producers and retailers. In addition,
smaller automobiles and houses may be acceptable to smaller families. Unmarried persons
3-15. As shown in Exhibit 3-6, between 2005 and 2015 the 20–29 age group increases significantly in
size. But, in the following decade (2015–2025), this age group will grow by only a small
percentage. These increases (large, then small) may have an important impact on marketing
strategy planning. The growth from 2005–2015 increased the demand for college education
group will require careful planning. For example, building an apartment complex is a significant
investment that may require a long–term return. A developer may find demand high in the