Use Critical Thinking Exercise 1-8 here.
END OF CHAPTER MATERIAL
Discussion and Critical Thinking
Discussion Questions
1.1. Define marketing and outline the steps in the marketing process. (AASCB:
Communication)
Answer:
Marketing as the process by which companies create value for customers and build
strong customer relationships in order to capture value from customers in return. Figure
1.2. Describe how the marketing concept differs from the other marketing management
orientations. (AACSB: Communication; Reflective Thinking)
Answer:
There are five alternative concepts under which organizations design and carry out their
The production concept holds that consumers will favor products that are available and
highly affordable, so marketers focus on improving production and distribution
The marketing concept holds that achieving organizational goals depends on knowing
the needs and wants of target markets and delivering the desired satisfactions better than
The societal marketing concept questions whether the pure marketing concept
overlooks possible conflicts between consumer short-run wants and consumer long-run
welfare. Is a firm that satisfies the immediate needs and wants of target markets always
1.3. What is customer-engagement marketing and how is it related to the surge in digital and
social media technologies? (AACSB: Communication; Reflective Thinking)
Answer:
Yesterday’s companies focused mostly on mass marketing to broad segments of
customers at arm’s length. By contrast, today’s companies are using online, mobile, and
social media to refine their targeting and to engage customers more deeply and
interactively. The old marketing involved marketing brands to consumers. The new
1.4. When implementing customer relationship management, why might a business desire
fewer customers over more customers? Shouldn’t the focus of marketing be to acquire as
many customers as possible? (AACSB: Communication; Reflective Thinking)
Answer:
In the broadest sense, customer relationship management is the process of building and
maintaining profitable customer relationships by delivering superior customer value and
satisfaction. Acquiring more customers does not always mean greater profits due to
Different types of customers require different customer relationship management
1.5. Discuss how technology is affecting marketing. (AACSB: Communication)
Answer:
The explosive growth in digital technology has fundamentally changed the way we live—
how we communicate, share information, access entertainment, and shop. The consumer
love affair with digital and mobile technology makes it fertile ground for marketers trying
Critical Thinking Exercises
1.6. Select three companies competing in the same product or service category. How does
each differentiate and position itself and how do they execute these strategies in their
marketing mixes? Which competitor is most successful? Which element(s) of the most
that competitor’s marketing mix has contributed to its success? (AACSB
Communication; Analytic Reasoning)
Answer:
Students’ responses will vary depending on the product/service category and companies
1.7. Go to a company, organization, or specific brand Web site that has a link to Facebook,
Google+, YouTube, Twitter, and/or Pinterest. Click on the links and describe how that
company is using social media to market its products or services. Evaluate its
effectiveness in creating customer engagement. (AACSB: Communication; Use of IT;
Reflective Thinking)
Answer:
Students’ examples will vary and instructors may want to assign specific companies or
organizations to get a broad array of examples. While some Web sites have links to social
1.8. In a small group, create a presentation about careers in marketing. Search the Internet for
information regarding the different career options available in marketing and the skills,
education, and experience necessary to advance in the field of marketing. Then select a
company and describe the marketing career opportunities available there. (AACSB:
Communication; Use of IT; Reflective Thinking)
Answer:
Students’ responses will vary. There are several useful sources on the Internet that result
Search results also feature several companies with marketing opportunities. For example,
marketing opportunities at Nike can be found at
Online, Mobile, and Social Media Marketing: Do Us A Flavor
Two Lay’s chip flavors – Cheesy Garlic Bread and Kettle Cooked Wasabi Ginger –were created
by consumers as part of Frito-Lay’s wildly successful “Do Us A Flavor” marketing campaign
(www.dousaflavor.com). Launched in July 2012 in a pop-up shop in New York’s Times Square,
the event took on new dimensions in 2015 by incorporating real-time marketing. In response to
interesting tweets during the 3-month-long submission period, digital shop Deep Focus produced
twenty 1-minute YouTube clips featuring two potato puppets named Marvin and Duncan (also
known as the Taste Spuds). Google has now developed the “Flavorcast Heat Map” showing
trending ingredients for each state, and consumers can see state-vs-state contests in the Flavor
Showdown Gallery on the Web site. Consumers submit their flavor’s name, up to three
ingredients, and a chip style. They can also vote online at the Web site or via social media, and
finalists’ flavors are developed and shipped to stores a few months later, where they can be
purchased and then voted upon. The creator of the winning flavor receives $1 million. But Lay’s
is the big winner of this campaign. The first contest’s goal was 1.2 million submissions but Lay’s
received 3.8 million submissions, 22.5 million Facebook visits a week, and a 12 percent increase
in sales.
1.9. Some have argued that real-time marketing success is luck-based, whereas responsive
marketing is more strategy-based. Research these two concepts and support or refute this
statement. (AACSB: Communication; Reflective Thinking)
Answer:
Some real-time marketing is luck-based because it responds to occurrences that cannot be
known ahead of time, such as Arby’s tweeting, “Hey @Pharrell, can we have our hat
For a discussion on the similarities and differences between real-time and responsive
marketing, see
1.10. Select a brand in a different product category and create a responsive campaign that
incorporates online, mobile, and social media to create customer engagement. How
would you measure the success of your campaign? (AACSB: Communication; Reflective
Thinking)
Answer:
Students’ responses will vary. The elements of the campaign will influence the success
Marketing Ethics: Extreme Baby Monitoring
Every parent’s fear when they put an infant to sleep is Sudden Infant Death Syndrome (SIDS)—
the sudden unexplainable death of an otherwise healthy baby. In the United States, about 2,000
infants die each year of SIDS, the third leading cause of infant death. For $199, parents can buy
monitors that track babies’ vital signs, such as respiration, heart rate, skin temperature, sleeping
position, and quality of sleep. The Mimo Smart Baby Monitor is a cute clip-on turtle that
attaches to a special organic cotton onesie, and the Owlet Baby Monitor is a smart sock that
looks like a little toeless boot. If parents don’t want to attach these devices on their little ones,
they can opt for the SafeToSleep Breathing Monitor sheet with a built in monitor. All of these
devices stream data to parents’ smart phones. Manufacturers of these devices promote them to
parents for “your baby’s health” or “gives you that extra assurance” to protect against SIDS.
However, several government agencies such as the Food and Drug Administration, the Consumer
Product Safety Commission, the Center for Disease Control, and the National Institute of Health
as well as the American Academy of Pediatrics all agree that these devices cannot protect a baby
from SIDS. But fear sells, and most of these manufacturers cannot keep up with the demand for
their products.
1.11. Is it right for marketers to play on parents’ fear to sell products that experts conclude are
not necessary or effective? (AACSB: Communication; Ethical Reasoning; Reflective
Thinking)
Answer:
Students’ responses will vary. Some may argue that these companies are offering a value
1.12. Discuss other examples of marketers using emotion to sell products. Are they ethical?
(AACSB: Communication; Ethical Reasoning)
Answer:
Students’ opinions will vary. Fear can be subtle and include the fear of being rejected.
Many health and beauty aids are sold using this appeal. For example, some people fear
Marketing by the Numbers: What’s a Customer Worth?
How much are you worth to a given company if you continue to purchase its brand for the rest of
your life? Many marketers are grappling with that question, but it’s not easy to determine how
much a customer is worth to a company over his or her lifetime. Calculating customer lifetime
value can be very complicated. Intuitively, however, it can be a fairly simple net present value
calculation, which incorporates the concept of the time value of money. To determine a basic
customer lifetime value, each stream of profit (C, the net cash flow after costs are subtracted) is
discounted back to its present value (PV) and then summed. The basic equation for calculating
net present value (NPV) is:
Where,
t – time of the cash flow
N – total customer lifetime
r – discount rate
Ct – net cash flow (the profit) at time t (The initial cost of acquiring a customer would be
a negative net cash flow at time 0.)
NPV can be calculated easily on most financial calculators or by using one of the calculators
available on the Internet, such as the one found at
www.investopedia.com/calculator/NetPresentValue.aspx.
1.13. Assume that a customer shops at a local grocery store spending an average of $200 a
week, resulting a retailer profit of $10 each week from this customer. Assuming the
shopper visits the store all 52 weeks of the year, calculate the customer lifetime value if
this shopper remains loyal over a 10-year lifespan. Also assume a 5 percent annual
interest rate and no initial cost to acquire the customer. (AACSB Communication;
Analytic Reasoning)
Answer:
This customer yields $520 per year in profits for this retailer ($10 x 52 weeks = $520 per
year). Over a 10-year life-span of shopping at this store, with a 5 percent annual interest
1.14. Describe ways marketers can increase the lifetime value of a customer. (AACSB
Communication; Reflective Thinking)
Answer:
One obvious way is to take actions to ensure the customer remains loyal, such as
initiating a loyalty program. That way the customer will generate profits for the company