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Name: ___________________________
Date: ___________________________
critical thinking exercise 13-4
THE MARKETING OPPORTUNITY
Suppose your roommate just invented an electronic pencil that senses when a word being written
is misspelled, beeps, and shows the correct spelling on a small screen on the side of the pencil. He figures
the pencil can be manufactured for about $5, since the cost of computer chips has dropped so low.
Your roommate comes to you for advice and money. He will make you a 40% owner if you help
manufacture and sell the pencils. He asks you to put up $500 for materials for the first 100 units. He asks
that you help make and sell the pencils after classes.
Since your roommate is studying electronic engineering, he knows about as much about market-
ing as you know about electronics. You agree to study the possibilities. You make a list of questions that
need to be answered before you commit your $500.
1. What need does this product fill?
2. What is the potential market for the product?
3. What are the target markets for such a product?
4. What type of consumer good is this product?
5. How will you distribute the product?
6. How could the consumer be convinced to purchase the product?
7. What are the other questions that need to be answered before a decision is made?
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notes for critical thinking exercise 13-4
1. What need does this product fill?
2. What is the potential market for the product?
3. What are the target markets for such a product?
4. What type of consumer good is this product?
5. How will you distribute the product?
Eventually you would want as wide a distribution as possible, including drugstore counters, busi-
6. How could the consumer be convinced to purchase the product?
Usually the best way to convince someone of the benefit of a new product is to have him or her
sample one. Such samples could be placed on the counters of the bookstores and business supply stores.
7. What are the other questions that need to be answered before a decision is made?
Can such a pencil really be made? Do you have a patent or are you getting one? What should the
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Name: ___________________________
Date: ___________________________
critical thinking exercise 13-5
CONSUMER OR B2B GOOD?
For each product below, indicate whether it is a consumer good, a B2B (industrial) good, or both.
Explain the reasons for your choices.
Item
Type of Good
Rationale
1. McDonald’s Big Mac
Consumer
B2B
Both
2. Xerox copy paper
Consumer
B2B
Both
3. 14-pound bag of
sugar
Consumer
B2B
Both
4. John Deere front-
end loader
Consumer
B2B
Both
5. Hewlett-Packard la-
ser printer
Consumer
B2B
Both
6. Band-Aid strips
Consumer
B2B
Both
7. Designer wedding
dress
Consumer
B2B
Both
8. 20-pound box of
framing nails
Consumer
B2B
Both
9. Craftsman 48-inch-
cut riding lawnmow-
er
Consumer
B2B
Both
10. TurboTax tax prepa-
ration software
Consumer
B2B
Both
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notes for critical thinking exercise 13-5
Item
Type of Good
Rationale
1. McDonald’s Big Mac
Consumer
B2B
Both
A McDonald’s Big Mac probably could not be
used to create another consumer product.
2. Xerox copy paper
Consumer
B2B
Both
An office could use the copy paper to create re-
ports for another customer (B2B good), but it
could also be sold to a customer for home use.
3. 14-pound bag of
sugar
Consumer
B2B
Both
A bag of sugar delivered to a restaurant would be
a B2B good because it is used to create baked
goods for sale. It can also be sold to a customer to
be used in his or her morning coffee.
4. John Deere front-
end loader
Consumer
B2B
Both
A front-end loader is a specialized piece of
equipment used in construction projects. Your
average homeowner doesn’t need one.
5. Hewlett-Packard la-
ser printer
Consumer
B2B
Both
Again, could be used in an office or in the home
of a consumer.
6. Band-Aid strips
Consumer
B2B
Both
In a hospital, Band-Aids would be a B2B good,
used to create a consumer service (health care). In
a buyer’s home, it is a consumer good.
7. Designer wedding
dress
Consumer
B2B
Both
The only product a designer wedding dress can
create is a marriage.
8. 20-pound box of
framing nails
Consumer
B2B
Both
If the question were about a 1-pound box of fram-
ing nails, it could be a consumer good, used in a
home renovation project. However, the size of this
product seems to indicate that a commercial con-
tractor will use it.
9. Craftsman 48-inch-
cut riding lawnmow-
er
Consumer
B2B
Both
The lawnmower could be used by a lawn-care ser-
vice (B2B) to create a service or by a homeowner
in his or her own yard (consumer).
10. TurboTax tax prepa-
ration software
Consumer
B2B
Both
A tax preparation service would probably use a
professional tax preparation software service.
TurboTax is a stripped-down tax preparation pro-
gram aimed at individual taxpayers.
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bonus
cases
bonus case 13–1
CUSTOMER-ORIENTED MARKETING CONCEPTS AT THERMOS
Thermos is the company made famous by its Thermos bottles and lunch boxes. Thermos also
manufactures cookout grills. Its competitors include Sunbeam and Weber. To become a world–class com-
petitor, Thermos completely reinvented the way it conducted its marketing operations. By reviewing what
Thermos did, you can see how new marketing concepts affect organizations.
First, Thermos modified its corporate culture. It had become a bureaucratic firm organized by func-
tion: design, engineering, manufacturing, marketing, and so on. That organizational structure was replaced by
flexible, cross-functional, self–managed teams. The idea was to focus on a customer group—for example, buy-
ers of outdoor grills—and build a product development team to create a product for that market.
The product development team for grills consisted of six middle managers from various disci-
plines, including engineering, manufacturing, finance, and marketing. They called themselves the Life-
style Team because their job was to study grill users to see how they lived and what they were looking for
in an outdoor grill. To get a fresh perspective, the company hired Fitch, Inc., an outside consulting firm,
to help with design and marketing research. Team leadership was rotated based on needs of the moment.
For example, the marketing person took the lead in doing field research, but the R&D person took over
when technical developments became the issue.
The team’s first step was to analyze the market. Together, team members spent about a month on
the road talking with people, videotaping barbecues, conducting focus groups, and learning what people
wanted in an outdoor grill. The company found that people wanted a nice-looking grill that didn’t pollute
the air and was easy to use. It also had to be safe enough for apartment dwellers, which meant it had to be
electric.
As the research results came in, engineering began playing with ways to improve electric grills.
Manufacturing kept in touch to make sure that any new ideas could be produced economically. Design
people were already building models of the new product. R&D people relied heavily on Thermos’s core
strength—the vacuum technology it had developed to keep hot things hot and cold things cold in Thermos
bottles. Drawing on that technology, the engineers developed a domed lid that contained the heat inside
the grill.
Once a prototype was developed, the company showed the model to potential customers, who
suggested several changes. Employees also took sample grills home and tried to find weaknesses. Using
the input from potential customers and employees, the company used continuous improvement to manu-
facture what became a world-class outdoor grill.
No product can become a success without communicating with the market. The team took the
grill on the road, showing it at trade shows and in retail stores. The product was such a success that Ther-
mos is now using self-managed, customer-oriented teams to develop all its product lines.
Chapter 13 – Marketing: Helping Buyers Buy
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discussion questions for bonus case 13-1
1. How can Thermos now build a closer relationship with its customers using the Internet?
2. What other products might Thermos develop that would appeal to the same market segment that
uses outdoor grills?
3. What do you think the Thermos team would have found if it had asked customers what they
thought about having consumers put the grills together rather than buying them assembled? What
other questions might Thermos place on its website to learn more about customer wants and
needs?
notes for discussion questions for bonus case 13-1
1. How can Thermos now build a closer relationship with its customers using the Internet?
2. What other products might Thermos develop that would appeal to the same market segment that
uses outdoor grills?
In general, it might be said that more men than women use outdoor grills. Those men may be in-
3. What do you think the Thermos team would have found if it had asked customers what they
thought about having consumers put the grills together rather than buying them assembled? What
other questions might Thermos place on its website to learn more about customer wants and
needs?
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bonus case 13–2
FOOD MARKETING IN THE INNER CITY
In many cases, food marketers don’t even try to sell products for the health-conscious in low-
income neighborhoods. Businesses both big and small thus contribute to the cycle of poor nutrition in the
inner city. A spokesperson for Kraft General Foods said, “We aren’t a miniature Health and Human Ser-
vices Department. A company doesn’t have a social obligation to instruct consumers on the best way to
handle their health.”
At the Friendly Pal supermarket in Brooklyn, the Continental Baking delivery person puts up lots
of Wonder Bread and two small loaves of whole wheat and another two of light wheat. The salesperson
says, “Whole wheat is for the old people, light wheat is for the skinny people, and all this white bread, it’s
for the fat people.” In low-income Bedford Stuyvesant, only 25 of 149 small grocers carry low-fat milk. A
store across the street from one of Chicago’s low-income housing projects offers only two cartons of low-
fat milk and two cartons of skim. The store sells lots of Snickers, Coke, and Frito Lay products, beer, and
cigarettes.
In Harlem, Little Debbie’s cupcakes sell like hotcakes. One Harlem storeowner tried stocking his
store with fresh fruits and vegetables and Del Monte fruit in light syrup. His peaches, grapes, lettuce, and
tomatoes were ignored. Now he sells just potatoes and bananas.
Although African Americans suffer more from hypertension, for which doctors prescribe low-salt
diets, the Special Request line of low-sodium soups from Campbell is hard to find in the inner city where
many African Americans live. Campbell soup says it is easier to fish where the fish are and doesn’t try to
promote its more nutritious soup to inner-city people.
Many supermarket chains have abandoned inner cities and have left the market to smaller stores
that charge between 10 and 20% more for the same food. This isn’t a rip-off of consumers as much as a
passing on of higher costs. Smaller stores simply can’t buy at the same low prices as larger supermarkets
can.
discussion questions for bonus case 13-2
1. Major food companies and smaller grocery stores in the inner city are applying the marketing
concept as they learned it. They are giving people what they want, as measured by store sales.
They are not making much of an effort to encourage people to buy products that are more nutri-
tious. Is this a problem as you see it?
2. Food costs more in the inner city than it does in the more affluent suburbs. Do marketers have
any responsibility to change the situation? If not, does the government have any responsibility, or
should people be free to buy, sell, and eat whatever they want at whatever cost, with no interfer-
ence from the outside?
3. Poor health costs all of us in higher medical bills and lower productivity of the workforce. If ma-
jor food companies will not promote nutrition to poor people, should that function be taken over
by nonprofit organizations such as churches, schools, and the government? What would you rec-
ommend?
4. Inner-city stores sell lots of snack items, soda, beer, and cigarettes, but little fruit and vegetables.
Would you try to do anything different if you were a grocery store owner? What would motivate
you to try to sell items that are more nutritious?
Chapter 13 – Marketing: Helping Buyers Buy
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notes for discussion questions for bonus case 13-2
1. Major food companies and smaller grocery stores in the inner city are applying the marketing
concept as they learned it. They are giving people what they want, as measured by store sales.
They are not making much of an effort to encourage people to buy products that are more nutri-
tious. Is this a problem as you see it?
This is an ethical problem and an economic problem of deep significance. Marketers today do not
see much of an obligation to guide consumers to purchase what is good for them. Rather, they give consum-
ers what they want. This satisfies consumers and sellers. The only people not satisfied are those who want to
2. Food costs more in the inner city than it does in the more affluent suburbs. Do marketers have
any responsibility to change the situation? If not, does the government have any responsibility, or
should people be free to buy, sell, and eat whatever they want at whatever cost, with no interfer-
ence from the outside?
“Free markets” means truly “free markets.” Food often costs more in the inner city because ex-
penses are higher, including rent, insurance, and storage. Furthermore, many inner-city stores are smaller
3. Poor health costs all of us in higher medical bills and lower productivity of the workforce. If ma-
jor food companies will not promote nutrition to poor people, should that function be taken over
by nonprofit organizations such as churches, schools, and the government? What would you rec-
ommend?
Yes, schools, nonprofit organizations, and the government should all try to educate people to eat
4. Inner-city stores sell lots of snack items, soda, beer, and cigarettes, but little fruit and vegetables.
Would you try to do anything different if you were a grocery store owner? What would motivate
you to try to sell items that are more nutritious?
It all depends on your goals. If your goal is to make money, then give consumers what they want
and stock soft drinks, beer, and so forth. If you also have social goals for your store, you might try to edu-
cate consumers to buy more nutritious drinks, such as bottled water or milk, especially for children or
Chapter 13 – Marketing: Helping Buyers Buy
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bonus case 13–3
LINING UP FOR FREE APPS
In this digital age of free information, it can be a chore to convince consumers, especially young
ones, to purchase some products. After all, for every Web app or program that isn’t already distributed
freely, there are about a dozen other ways to obtain it through easy but extralegal means. Nevertheless,
information and the ways in which it is transmitted will become no more restrained in five years than they
are now. Rather than react with higher prices and stringent policies, entrepreneurs must adapt and find
ways to integrate the free flow of information into their moneymaking schemes.
For instance, in 2006 Eric Alder and Julien Chabbott graduated from college with an idea for a
smartphone app that would provide regular updates on the wait times of lines around town. The app was
to be driven by social media with individual users providing the app with the estimated length of the lines
they were standing in. But the pair of young entrepreneurs faced a quandary. Without accurate line times
built in, nobody would use the app. And if nobody used the app, there wouldn’t be enough reliable data to
formulate accurate line times.
In order to get the app off the ground, Alder and Chabbott first distributed Line Snob for free on
the iPhone marketplace. Then the pair rewarded users who reported wait times with points that could be
redeemed for coupons. And rather than rely solely on word of mouth, Line Snob ingratiated itself with
popular venues that uploaded data on their own lines and posted fliers about the app around their queues.
Once Chabbott and Alder established their user base, they began making money by charging companies a
monthly fee for using the app. Line Snob is especially popular in Las Vegas, where hotels use it to an-
nounce which buffet or club lines are the shortest. The app remains free for regular users, and the compa-
ny hopes to unveil soon a new feature that can predict line waits before they occur.vii
discussion questions for bonus case 13-3
1. What key entrepreneurial characteristics seemed to drive Alder and Chabbott?
2. What’s the major challenge for Line Snob going forward?
notes for discussion questions for bonus case 13-3
1. What key entrepreneurial characteristics seemed to drive Alder and Chabbott?
As described in Chapter 6, both entrepreneurs seemed to be self-nurturing and action-oriented.
2. What’s the major challenge for Line Snob going forward?
The flow of information continues to move unrestrained at a fast pace with competition forever
Chapter 13 – Marketing: Helping Buyers Buy
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bonus case 13-4
MARKETING TO THE BABY BOOM GENERATION
The nation’s 78 million baby boomers, born between 1946 and 1964, are the wealthiest group of
Americans. They have an estimated $1 trillion in annual disposable income and three-quarters of the na-
tion’s financial assets, but only 10% of advertising dollars are directed specifically at the 50-plus market.
Marketers aim for the “sweet spot,” the demographic group between 18 and 49. But as the aging boomers
hurdle toward retirement, some marketers are realizing the commercial potential of such a huge, affluent
market.
The baby boom generation has transformed every age and stage it has passed through. As chil-
dren, boomers created a market for disposable diapers and strained peas in jars. As teenagers, they intro-
duced the nation to long hair, rock-and-roll music, tie-dyed clothes, and skateboards. As the generation
became parents, they demanded organic baby food, quality health care, and SUVs. Today market re-
searchers are looking at the marketing opportunities for the wealthiest generation steadily moving into
retirement. Almost 8 million Americans turned 60 in 2006. By 2010, one in three adults will be 50 or old-
er. This huge demographic group will not go gently into retirement like earlier generations have done.
The conventional wisdom among marketers is that you have to get consumers to commit to your
brand early in life and once they commit they will be loyal to your brand forever. However, a study con-
ducted by AARP showed that consumers aged 45 and older switch brands just as readily as younger gen-
erations. This has tremendous implications for savvy marketers.
Half of all boomers live in households without kids. Companies like General Mills changed the
packaging for its Pillsbury dinner rolls and Green Giant vegetables to resealable freezer bags that allow
for several smaller portions instead of family-sized portions.
Boomer retirees will leave their primary career near age 62 to 65, but most will not completely
leave the job market. Many will pursue volunteer opportunities, take a low-stress part-time job, or start a
completely new business. A study by Merrill Lynch found that 76% of boomers said they will probably
hold down a job in retirement, and a majority of that group said they expect to shift back and forth be-
tween leisure and work.
Savvy entrepreneurs can capitalize on the unique qualities of this generation. Take Re/Max agent
Kathy Sperl-Bell. Sperl-Bell is a Senior Real Estate Specialist (SRES), 1 of more than 14,000 real estate
agents nationwide with an SRES designation, up from 5,000 in 2002. Agents go through a two–day train-
ing program, which includes analysis of the different generational needs and attitudes of those 55 and
older, as well as the types of housing options available for that market. SRES agents specialize in dealing
with this growing market segment that have specific needs—taxes, elder care, estate sales, health care
availability—and also a large amount of disposable income to meet them.
This generation also has the income and leisure time to become doting grandparents. Disney has
targeted this trend with TV commercials showing multiple generations enjoying theme-park attractions.
Retiring boomers don’t want to look like retirees. From Botox to cosmetic peels to plastic sur-
gery, the race is on to profit from the generation’s desire to be forever young. Every cosmetic company
from Avon to L’Oreal is rolling out wrinkle creams and serums to halt sagging skin and wrinkles.
But marketers must tailor their marketing carefully. According to one researcher, “Anything mar-
keting to silver hair is bad marketing. Don’t talk to their chronological age; talk to their self-image.” That
50-year-old boomer probably still feels like a 30-something.viii
Chapter 13 – Marketing: Helping Buyers Buy
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discussion questions for bonus case 13-4
1. Based on this upcoming, large spending group, what other types of products/services might be
popular and attention getting to this market? Why would these products/services be a good fit to
this group?
2. Is there a segment of the baby boomers who are more conservative and not interested in buying
products that speak to a younger living lifestyle as portrayed in this case study? If so, how would
you define this segment and what potential would there be to sell products and services to them?
3. For those baby boomers who would like to become entrepreneurs, what might be types of busi-
nesses that they would be good fits to operate? What would be their motivation to own and oper-
ate their own business?
notes for discussion questions for bonus case 13-4
1. Based on this upcoming, large spending group, what other types of products/services might be
popular and attention getting to this market? Why would these products/services be a good fit to
this group?
Students will have lots of ideas to share about these questions. Some of the obvious areas to con-
2. Is there a segment of the baby boomers who are more conservative and not interested in buying
products that speak to a younger living lifestyle as portrayed in this case study? If so, how would
you define this segment and what potential would there be to sell products and services to them?
Without question, there will be opportunities to do more traditional marketing to the baby boomer
generation and have successful results. Some segments of this generation will not be as well-off and have
3. For those baby boomers who would like to become entrepreneurs, what might be types of busi-
nesses that they would be good fits to operate? What would be their motivation to own and oper-
ate their own business?
Business ideas for baby boomers might be a growing, yet-to-be-determined market opportunity.
Potential business ideas might range from craft and antique shops to other retail ventures. Baby boomers
Chapter 13 – Marketing: Helping Buyers Buy
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endnotes
i Source: Brian L. Clark, “Pat Croce’s Secret,” Fortune Small Business, November 13, 2001.
ii Source: Jason Ankeny, “Setting Sale on Smartphones,” Entrepreneur, December 2010.
iii Sources: Elaine Walker, “Beware of Calorie Counts in Secret Menu Items,” The Miami Herald, March 19, 2013;
Shareen Pathak and Maureen Morrison,” Ad Age, March 11, 2013.
iv Sources: Hiroko Tabuchi, “Black Friday Fatigue? Thanksgiving Weekend Sales Slide 11 Percent,” The New
York Times, November 30, 2014; Akane Otani, “Why China’s Singles Day Won’t Become an American Shop-
ping Holiday,” Bloomberg BusinessWeek, November 11, 2014.
v Source: Mehul Srivastava, “For India’s Consumers, Pepsi Is the Real Thing,” Bloomberg Businessweek, Septem-
ber 16, 2010.
vi Source: Juile Schlosser, “DeWalt, Lesson: Know Your Customer,” Fortune, October 31, 2005.
vii Source: Joel Howard, “Your Wait Is Over,” Entrepreneur, November 2010.
viii Sources: Kristin Davis, “Oldies but Goodies,” U.S. News & World Report, March 14, 2005; Farrell Kramer, “Af-
fluent Baby Boomers Don’t Expect to Retire Like Their Parents; Three-Quarters of Working Baby Boomers Plan to
Remain in Workforce When They Hit Retirement Age,” PR Newswire, November 17, 2004; Pete Bach, “Aging Ba-
by Boomers Will Have a Wide-Reaching Economic Impact,” The Post-Crescent [Appleton, Wisconsin], March 6,
2006; Sally Stich, “Special Agents,” Time, August 2006.