Chapter 11: Unique Marketing Issues
11-6.
What is a tagline? What is your favorite tagline? Why?
Answer: A tagline is a phrase that is used consistently in a company’s literature
and promotional material. An example of a tagline is Nike’s familiar tagline,
“Just do it.” Students should be asked to talk about their favorite taglines with
reasons as to why a specific one is their favorite.
11-7.
What is a brand? Provide an example of a brand that you buy frequently and
describe the mental image that pops into your mind when you hear or see the
brand’s name.
Answer: A brand is the set of attributes—positive or negative—that people
associate with a company. These attributes can be positive (such as trustworthy,
innovative, or easy to deal with) or negative (such as cheap, unreliable, or
difficult to deal with). Good brands to promote a class discussion could be:
FitBit, Chipotle Mexican Grill, and BMW.
11-8.
What is the purpose of brand management?
MyLab Question.
11-9.
What is meant by creating “buzz” for a company? Provide an example of a firm
that has created effective buzz for its product or service.
Answer: Creating buzz means creating awareness and a sense of anticipation
about a company and its offerings. The firms in the “Savvy Entrepreneurial
Firm” feature in this chapter have created effective buzz for their products and
services.
11-10.
What is meant by the term brand equity?
Answer: Brand equity is the term that denotes the set of assets and liabilities
that are linked to a brand and enable it to raise a firm’s valuation.
11-11.
What are the four elements of a firm’s “marketing mix”?
Answer: See below:
Product—is the good or service that a firm offers to its target market.
Price—is the amount of money a firm charges its customers for its
product or service.
Promotion—refers to the activities a firm takes to communicate the
merits of its product to its target market.
Place (or distribution)—encompasses all the activities that move a
firm’s product from its place of origin to the consumer.
11-12.
Describe the difference between a core product and an actual product.
Answer: The core product is the product itself, such as a CD that contains an
antivirus program. The actual product, which is what the customer buys, may
have as many as five characteristics: a quality level, features, design, a brand
name, and packaging. When first introducing a product to the market, an
entrepreneur needs to make sure that more than the core product is right.
Attention also needs to be paid to the actual product that constitutes the
collection of benefits that the customer ultimately buys.
11-13.
What is a reference account? How can having a reference account help a new
firm?
Answer: A reference account is an early user of a firm’s product who is willing
to give a testimonial regarding his or her experience with the product.
11-14.
Contrast cost-based pricing and value-based pricing.
Answer: In cost-based pricing, the list price is determined by adding a markup
percentage to a product’s cost. The markup percentage may be standard for the
industry or may be arbitrarily determined by the entrepreneur. In value-based
pricing, the list price is determined by estimating what consumers are willing to
pay for a product and then backing off a bit to provide a cushion. What a
consumer is willing to pay is determined by his or her perceived value of the
product and by the number of choices available in the marketplace.
11-15.
What is meant by the phrase “price–quality attribution”? How does an
understanding of this phrase help an entrepreneur know how to price a product?
Answer: The concept of price-quality attribution means that consumers
naturally assume that the higher-priced product is also the better-quality
product. What this concept helps an entrepreneur realize is that if a firm charges
a low price for its products, it sends a signal to its customers that the product is
low quality regardless of whether it really is.
11-16.
What is meant by the term guerrilla marketing? Provide an example of guerrilla
marketing not provided in the chapter.
Answer: Guerrilla marketing is a low-budget approach to marketing that relies
on ingenuity, cleverness, and surprise rather than traditional techniques. A
company that uses Street Art to promote its product or service is an example of
guerrilla marketing.
Chapter 11: Unique Marketing Issues
so the firm can spend its time and money pursuing the most likely buyers of its
products or services.
APPLICATION QUESTIONS
11-21.
Reread the Opening Profile. After doing this, make a list of all the things that
you think that Andrew Pohle, Jake Schaufeld, and Jordan Levy have done well
in building an effective marketing program for Real Time Cases.
Answer: The following is a list of the things that the three entrepreneurs did
right (and are still doing right) in building Real Time Cases’ marketing
program:
They used various forms of guerilla marketing.
They got the support of educators by going to conferences to interact
with them. Since educators are the ones making the adoption decision
(which cases to be used), they went to the decision makers.
They used press releases to talk constantly about their product.
To gain visibility, they attended every start-up and pitch competition.
They used their personal network to contact professors to tell them
about their product.
They built a professional website that was both informative and easy to
navigate.
They worked hard to establish their brand.
11-22.
If you decided to start a small-business consulting service in Columbus, OH,
how would you approach the following topics: market segmentation, selecting a
target market, and developing a positioning strategy?
Answer: The following is one approach for answering this question.
Market segmentation: The market for small business consulting services
can be segmented in a number of ways, including product type, price point,
and customers served. I would segment the market by product type (or
industry type in this case). There would be three segments: technology
firm, consumer or retail firm, and non-high-tech manufacturing firm.
Target market. Once the market has been segmented, the next step is to
select a target market. By focusing on a clearly defined target market, a
firm can become an expert in that market and then be able to provide its
customers with high levels of value and service. I would select technology
firm that helps small technology firms plan their advertising and public
relations strategies.
Point out to your students that the value of going through this process is that it
helps a firm (1) clearly define itself in the marketplace and (2) develop core
competencies that are consistent with its position.
11-23.
Imagine you’re opening a tutoring service near the campus of the college or
university you attend. What would be the characteristics of a comprehensive
social media strategy that you can employ to build your brand, engage
customers, and generate leads and sales revenue?
Answer: This is a good question for an individual or group assignment. The
strategy should include both blogs and social media platforms, such as
Facebook and Twitter. It should also include how to use social media platforms
such as Facebook and Twitter. For example, the use of social plugins can be
very effective for online retailer companies.
11-24.
Spend some time looking at Red Bull’s website (www.redbull.com). Comment
on each element of Red Bull’s marketing mix (product, price, promotion, and
place in terms of distribution and sales). If you need additional information,
conduct Internet or library research to obtain it. On a scale of 1 to 10 (10 is
high), what rating would you use to assess the strength of Red Bull’s overall
marketing plan? What evidence would you provide to support your rating?
Answer: Most students will be very impressed with Red Bull’s marketing mix
and will have plenty to say about each element. In terms of product, Red Bull
does not have a complicated line of products. In terms of price, the company
clearly pursues value-based pricing, which most students will see as
appropriate. In terms of promotion, Red Bull is exemplary in its efforts. It
utilizes a number of innovative marketing techniques and sponsorships, as
illustrated on the Web site. In terms of distribution, Red Bull has done a good
job getting shelf space for its products in specialty stores as well as mainstream
convenience and grocery stores. As far as the scoring goes, doing additional
research on Red Bull’s 4 Ps would be a good topic for a student team
presentation.
11-25.
Shannon Garza has developed a new type of space heater that is quieter and
safer than previous generations of space heaters and is specifically geared to
people who live in small spaces, such as apartments or dorm rooms. Shannon
doesn’t know how to price this product. Describe to Shannon the two most
common methods of pricing as explained in this chapter. Which of these pricing
methods would you suggest Shannon use, and why?
Chapter 11: Unique Marketing Issues
Answer: Shannon has two choices.
In cost-based pricing, the list price is determined by adding a markup
percentage to a product’s cost. The markup percentage may be standard
for the industry or may be arbitrarily determined by the entrepreneur.
In value-based pricing, the list price is determined by estimating what
consumers are willing to pay for a product and then backing off a bit to
provide a cushion.
Given that the product is new in that it provides a new benefit, Shannon should
use value pricing.
11-26.
Read the “You Be the VC 11.2” feature that deals with Eatsa. What actions
would you suggest that this firm take to develop a guerilla marketing campaign?
Answer: Eatsa can do a number of things by way of guerilla marketing. Given
that they are a tech-enabled restaurant chain, it is likely that they have an
identifiable target market of people who are comfortable with technology AND
who want to eat healthy. A robust social media-driven marketing strategy is
probably the best and most cost effective way to reach this market.
11-27.
KaZAM, the company producing a bike that teaches kids how to ride without
training wheels in a safe, enjoyable, and confidence-building manner, is the
subject firm described in the “You Be the VC 9.2” feature (from Chapter 9).
Reread that feature. What types of public relations activities, from among those
considered in this chapter, would you recommend this company undertake to
successfully promote the firm?
Answer: This is a good question for an individual or group assignment.
Examples include:
Press release
Media coverage
Articles in local press and periodicals
Articles in industry press and periodicals
Monthly newsletter to customers and potential customers
YOU BE THE VC 11.1
Company: Barnana (www.barnana.com)
Business Idea: Produce a healthy snack that consists of bite-sized morsels of partially
dehydrated bananas, which are easy to carry and are potassium-rich.
Chapter 11: Unique Marketing Issues
241
You Be the VC Scorecard
Barnana
(www.barnana.com)
Score/Comments
1 2 3 4 5
Barnana was founded by Caue Suplicy, Nik Ingersoll
and Matt Clifford. Suplicy is a former professional
triathlete and founder of Suplicy Bicycles. Ingersoll is
the former CIO and co-founder of Canday Lab, an
interactive marketing firm. Clifford is the former
executive of Pinance for BUMP Network, a venture-
backed enterprise software firm.
Barnana has an active four-member board of directors.
Notable participants include Patrick Finn, Managing
Partner at Finn Capital Partners and Jeffrey Campbell,
former SVP of Brand Development at PepsiCo and
Former Chairman and CEO of Burger King.
1 2 3 4 5
The opportunity is strong. Barnana has grown beyond
the health food niche, and is now making its way into
mainstream stores, such as Safeway and HyVee.
Barnana’s products take advantage of the societal trend
toward healthier eating. It also dovetails nicely with an
increased participation nationwide in recreational
activities such as running and biking.
Both of the authors of the book have tasted Barnana’s
products. They are delicious. Barnana is in the food
category, so taste is important.
1 2 3 4 5
The $35.2 billion-dollar snack food industry is expected
to grow at a rate of 3.4 percent per year over the next
several years, which is strong growth. The organic or
“better for you” portion of the industry is growing even
faster.
1 2 3 4 5
Chapter 11: Unique Marketing Issues
242
Barnana has a simple retail business model. Its products
are sold in food stores, on its Web site, and via sites
such as Amazon.com.
4.00/5.00
Decision: We would fund Barnana. We like the management team, the manner in which
the product has made its way into multiple retail channels, and the industry that it is in.
We also like the taste of the product. Both of the authors of the book have tasted
YOU BE THE VC 11.2
Company: Eatsa (www.eatsa.com)
Business Idea: Create a highly-automated, fast-casual restaurant that allows customers to
order a customized meal via an app and then retrieve the meal from a cubbyhole-like slot.
Customers tap twice to open a door and extract their meal.
You Be the VC Scorecard
Eatsa
(www.eatsa.com)
Item
Score/Comments
1 2 3 4 5
Eatsa was founded in 2015 by Scott Drummond and
Tim Young in San Francisco.
At the time this assessment was written (October 2017),
as per the website Crunchbase, the founders don’t
appear to be involved with the start-up. Instead, three
new top management members are indicated.
Chapter 11: Unique Marketing Issues
1 2 3 4 5
Unclear. As of late October 2017, the company closed
all its non-San Francisco locations. It currently has only
two locations. While the company’s tag line is to change
fast food forever, it is not clear if the market has
responded to their differentiation feature.
1 2 3 4 5
Hard to assess. Eatsa is part of the fast food industry
which is a large industry with pockets of high growth
but overall slow growth. Eatsa’s offerings are more of a
healthy kind (such as Quinoa) and so they appear to be
in a niche.
1 2 3 4 5
Strict retail business model. This means the company
has to open retail outlets to serve their customers. If they
don’t franchise, they have to raise capital to grow their
restaurant count. As indicated above, they have closed
some of their existing restaurants – i.e., they have
contracted rather than grown.
2.25/5.00
CASES
Case 11.1
Nest Labs
DISCUSSION QUESTIONS
11-32.
Critique Nest’s segmentation strategy, its selection of a target market, and its
positioning strategy. To what degree are these elements of Nest’s market strategy
complementary and effective?
Answer: Nest had a clear segmentation strategy. Unlike traditional thermostat
makers, first, they focused on the “after” market – i.e., when consumers buy
Chapter 11: Unique Marketing Issues
thermostats at retail channels, rather than go after the home builders’ market.
Within the consumer market, they were after people with a certain income level
and were in a specific age category. They positioned themselves well in this
market by pushing what the product does rather than emphasizing its technology.
This made Nest’s market strategy both complementary (with respect to target
market and positioning) and effective.
11-33.
Describe Nest’s brand. In what ways does Nest practice brand management?
Answer: The Nest brand stands for convenience, cost savings, and control. They
stand for taking “unloved” products (such as the smoke detector) and converting
them to “loved” products. The company practices brand management by
reiterating the message of their brand in everything they do. In addition, they
promote their brand via social media to better appeal to their target market.
11-34.
Identify other “unloved” products in the home that Nest could convert into “loved”
products and continue working toward its mission of creating a more thoughtful
home.
Answer: This is a good question for a team project that forces students to think
creatively. They should be urged to take an inventory of their home and come up
with a list of “unloved” products that could be converted to “loved” products.
11-35.
Of the challenges facing Nest, which one do you think is the most threatening?
Explain your answer.
Answer: This is a good question for an individual or group assignment. They
should focus on competition and imitation.
Case 11.2
Proactiv: How Three Critical Marketing Decisions Shaped a New Venture’s Future
DISCUSSION QUESTIONS
11-36.
How has Proactiv gone about establishing its brand? To what degree do you
believe Proactiv is important in its customers’ lives?
Answer: Proactiv has established a brand by providing acne sufferers a quality
product to help free themselves of acne. Proactive is very important in its
customers’ lives. Most people are sensitive to their personal appearance, and acne
can be an embarrassing malady. If Proactiv can help people eliminate acne, it will
hold a position of high importance in their lives.