END OF CHAPTER MATERIAL
Discussion and Critical Thinking
Discussion Questions
14.1. Discuss the benefits of direct and digital marketing to buyers and sellers. (AACSB:
Communication)
Answer:
For buyers, direct and digital marketing are convenient, easy, and private. They give buyers
anywhere, anytime access to an almost unlimited assortment of goods and a wealth of
product and buying information. Through direct marketing, buyers can interact with sellers
For sellers, direct marketing often provides a low-cost, efficient, speedy alternative for
reaching their markets. Direct and digital marketing also offer sellers greater flexibility. They
let marketers make ongoing adjustments to prices and programs, or create immediate, timely,
14.2. What are blogs and how are marketers using them to market their products and services?
What advantages and disadvantages do blogs pose for marketers? (AACSB:
Communication)
Answer:
Blogs (or Web logs) are online forums where people and companies post their thoughts and
other content, usually related to narrowly defined topics. Blogs can be about anything, from
As a marketing tool, blogs offer some advantages. They can offer a fresh, original, personal,
and cheap way to enter into consumer online and social media conversations. However, the
14.3. Discuss the advantages and challenges of social media marketing. (AASCB:
Communication)
Answer:
Using social media presents both advantages and challenges. On the plus side, social media
are targeted and personal—they allow marketers to create and share tailored brand content
with individual consumers and customer communities. Social media are interactive, making
them ideal for starting and participating in customer conversations and listening to customer
Social media marketing also present challenges. First, most companies are still
experimenting with how to use them effectively, and results are hard to measure. Second,
14.4. List and briefly describe the major traditional forms of direct marketing. (AACSB:
Communication)
Answer:
The major traditional forms of direct marketing are face-to-face or personal selling,
direct-mail marketing, catalog marketing, telemarketing, direct-response television (DRTV)
marketing, and kiosk marketing. We examined personal selling in depth in Chapter 13.
and more catalogs are going digital. However, despite the advantages of digital catalogs, as
your overstuffed mailbox may suggest, printed catalogs are still thriving. Telemarketing
involves using the telephone to sell directly to consumers and business customers.
14.5. What is phishing and how does it affect Internet marketing? (AACSB: Communication;
Reflective Thinking)
Answer:
One common form of Internet fraud is phishing, a type of identity theft that uses deceptive
emails and fraudulent online sites to fool users into divulging their personal data. For
example, consumers may receive an email, supposedly from their bank or credit card
Critical Thinking Exercises
14.6. In a small group, design and deliver a direct response television ad (DRTV) for a national
brand not normally associated with this type of promotion, such as an athletic shoe,
automobile, or food product. (AACSB: Communication; Reflective Thinking)
Answer:
Students’ answers will vary, but they should demonstrate an understanding that
direct-response television (DRTV) marketing takes one of two major forms:
direct-response television advertising and interactive TV (iTV) advertising. Using
14.7. Review the Telephone Consumer Protection Act and discuss a recent case in which a
marketer was fined for violating the Act. (AACSB: Communication; Use of IT;
Reflective Thinking)
Answer:
The Telephone Consumer Protection Act as enacted in 1991 before mobile phones were
ubiquitous. The law was updated in 2013 to encompass mobile phones (see
www.kleinmoynihan.com/new-tcpa-rules-effective-october-16-2013/). The law protects
consumers from annoying unsolicited calls from telemarketers. Calls or texts to mobile
14.8. Although mobile advertising makes up a small percentage of online advertising, it is one
of the fastest-growing advertising channels. But one obstacle is measuring return on
investment in mobile. How are marketers measuring the return on investment in mobile
advertising? Develop a presentation suggesting metrics marketers should use to measure
effectiveness of mobile advertising. (AACSB: Communication; Use of IT; Reflective
Thinking)
Answer:
Because this is a growing advertising medium, students should be able to find many sources
of information. For example, see “How Marketers Are Measuring Their Mobile Efforts,”
May 15, 2014,
Minicases and Applications
Online, Social Media, and Mobile Marketing: “Buy” Buttons
Amazon is the big gun in e-commerce that has disrupted traditional retailing. But now, it seems,
Amazon is in for some disruptive competition itself. With global e-commerce sales expected to
reach almost $2 trillion a year, Google and social media sites such as Facebook, Twitter,
Pinterest, and Instagram want to get in on the action. Several social media sites are
experimenting with “Buy” buttons on their sites that let consumers purchase directly through the
social medium. Google is experimenting with “Buy” buttons on search results to counter the
almost 40 percent of consumers who now start their shopping searches on Amazon instead of
search engines like Google. The biggest game changer, however, might be Pinterest. Pinterest
started in 1999 as a sharable bulletin board where participants “pin” pictures of things they like,.
It is now a multibillion dollar company with 70 million monthly visitors who have saved more
than 50 billion objects on a billion Pinterest bulletin boards. Lots of people would like to be able
to buy some of those pinned objects, so Pinterest has added a “Buy” button to its mobile app.
Users had already been able to click-through to a marketer’s Web site, but now they can purchase
any of more than two million products from retailers such as Macy’s, Bloomingdales, and
Nordstrom directly through Pinterest without leaving the site. Payments are processed through
Pinterest’s partners Stripe, Brainstorm, or Apply Pay, but the seller provides the order fulfillment.
In the future, Pinterest users may see an appetizing recipe, click the “Buy” button to order the
ingredients from Fresh Direct, and have them delivered to their homes in less than an hour.
14.9. What competitive advantage does Pinterest (www.pinterest.com) have over other social
media that might make its “Buy” button more successful? (AACSB: Communication;
Reflective Thinking)
Answer:
Students’ responses will vary. One key difference between Pinterest and other social media
sites like Facebook is that Pinterest users use the site to share products—such as furniture,
14.10. Discuss advantages and disadvantages of “Buy” buttons for social media sites like
Pinterest and search engines like Google. What are the advantages and disadvantages for
marketers making their goods available through “Buy” buttons on these sites? (AACSB
Communication; Reflective Thinking)
Answer:
Students’ answers will vary. One disadvantage for social media and search engine sites of
becoming an e-commerce platform is that order fulfillment will be done by the marketer
selling the product. There could be concerns about counterfeit goods and consumers may
Pins,” of which the buying option is a part. In addition to incremental revenue generated
through purchase transactions, Google may win back consumers when they search for
information if they know they can easily purchase from the search results. One key reason for
Marketing Ethics: Tracking in “Meat Space”
By now, you know about behavioral targeting—marketers tracking consumers’ online behavior
in cyberspace to send them targeted advertising. Krux Digital reports that the average visit to a
Web page generated 56 instances of data collection, a five-fold increase in just one year. An
investigation by the Wall Street Journal found that the fifty most popular U.S. Web sites installed
more than 3,000 tracking files on the computer used in the study. The total was even higher—
4,123 tracking files—for the top fifty sites that are popular with children and teens. Many sites
installed more than 100 tracking tools each during the tests. Tracking tools include files placed
on users’ computers and on Web sites. Marketers use this information to target online
advertisements. But now, wearable and mobile devices allow marketers to track consumer
movements in the physical world. The term “meat space” refers to the physical world in which
our bodies move and do things, and marketers are using information obtained from wearable and
mobile devices to personalize offers while consumers move around their space. With the growing
trend in smartphone tracking and wearable technology such as smart watches, fitness bands, and
smart garments that are part of the “Internet of Things,” tracking consumers in meat space is only
going to grow.
14.11. Debate whether or not it is ethical to track consumers’ physical movements, especially
children’s movements. (AACSB: Communication; Ethical Reasoning)
Answer:
Students’ opinions will vary. Unlike behavioral targeting online, in which Internet users often
For an interesting discussion of Disney and meat space data collection, see John Foreman,
14.12. Discuss other ways marketers can track consumers in meat space. (AACSB:
Communication; Reflective Thinking)
Answer:
There are several examples of wearable devices and mobile apps that track behavior. For
example, Fitbit and Nike+ FuelBand fitness devices can track users’ physical activity and
Consumers can also be tracked within just about any environment if they have a smartphone,
particularly an iPhone because of Apple’s iBeacon technology. Apple’s operating system
allows anyone who installs a low-cost beacon that uses low-energy Bluetooth to connect to
Marketing by the Numbers: Field Sales vs. Telemarketing
Many companies are realizing the efficiency of telemarketing in the face of soaring sales force
costs. Whereas an average cost of a business-to-business sales call by an outside salesperson on
average costs $600, the cost of a telemarketing sales call can be as little as $20 to $30. And
telemarketers can make 20 to 33 decision maker contacts per day to a salesperson’s four per day.
This has gotten the attention of many business-to-business marketers, where telemarketing can
be very effective.
14.13. Refer to Appendix 3, Marketing by the Numbers, to determine the marketing return on
sales (marketing ROS) and return on marketing investment (marketing ROI) for
Company A and Company B in the chart below. Which company is performing better?
Explain. (AACSB: Communication; Analytical Reasoning; Reflective Thinking)
Company A
(sales force only)
Company B
(telemarketing only)
Net sales 1,000,000 $850,000
Cost of goods sold $500,000 $425,000
Sales expenses $300,000 $100,000
Answer:
net marketing contribution (NMC)
Marketing ROSA= ———————————
net sales
net marketing contribution (NMC)
Marketing ROIA= ———————————
marketing expenses
NMC = net sales cost of goods sold marketing expenses
In this case, the only marketing expenses considered are sales expenses.
So, for Company A:
For Company B:
Even though Company B’s net sales are lower than Company A, it realizes a higher net
marketing contribution, marketing ROS, and marketing ROI due to lower sales expenses,
which means that it is more efficient in its marketing efforts than is Company A.
14.14. Should all companies consider reducing their sales forces in favor of telemarketing?
Discuss the pros and cons of this action. (AACSB: Communication; Reflective Thinking)
Answer:
Students will likely agree that it may not be appropriate for all companies to carry out the
selling function solely by telemarketing. However, telemarketing can reduce selling costs by