978-1259709074 Chapter 2 Solutions Manual

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Chapter 2 – Developing Marketing Strategies and a Marketing Plan Marketing 6th

Answers to End of Chapter Learning Aids

Marketing Digitally

1. The mission statement for The Estee Lauder Companies is “’Bringing the best to everyone

we touch’. By ‘The best’, we mean the best products, the best people and the best ideas.

These three pillars have been the hallmarks of our Company since it was founded by Mrs.

Estee Lauder in 1946. They remain the foundation upon which we continue to build our

success today.” Harley-Davidson, Inc.’s mission statement is more straightforward: “We fulfill

dreams through the experience of motorcycling, by providing to motorcyclists and to the

general public an expanding line of motorcycles and branded products and services in

selected market segments.” (both statements taken from:

https://www.missionstatements.com/fortune_500_mission_statements.html) These different

perspectives also reflect the quite different positioning adopted by each company. Visit the

websites of each manufacturer and review the descriptions of the company, its mission, and

its values. Do you believe these two disparate mission statements reflect what the firms do

and how they are portrayed in the media? Justify your answer.

Students should discuss the difference between the two mission statements and how they relate to both

Estee Lauder’s and Harley-Davidson’s company’s official descriptions.

About Estee Lauder

Our culture is often described as a rare mix of family values with a high-performing public company. This

About Harley-Davidson

2. More and more firms seem to be entering the dating service industry. Visit

www.eharmony.com and tour its website to find the types of activities and methods such

companies use to help match compatible couples. Then visit www.match.com and do the

same. What are the similarities and differences of these two online dating services? Pick one

and perform a SWOT analysis for it.

Positive Negative

Internal

STRENGTHS

At-home convenience factor

WEAKNESSES

No guarantee that matches will

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External

OPPORTUNITIES

Use matching criteria for

THREATS

Many no-charge opportunities

3. Black and Decker (www.blackanddecker.com) and DeWalt (www.dewalt.com) are owned by

the same parent company, and both sell similar products. Visit each of their websites and

identify what markets each brand targets. Next, discuss how the two companies use the

marketing mix differently to target these unique target markets.

Strategy DeWalt Black & Decker

Target Market Professional User Homeowner/DIYer

Merchandising

Marketing Applications

1 How have PepsiCo and Coca-Cola created sustainable competitive advantages for

themselves?

4. Perform a SWOT analysis for the company that made your favorite shoes.

Students’ answers will vary. Each answer should include strengths and weaknesses that are internal to

5. How does Coca-Cola segment its market? Describe the primary target markets for

Coca-Cola. How does it position its various offerings so that it appeals to these different

target markets?

Geographic segmentation

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Demographic segmentation

Age: 15-25 years old and 40 plus

Psychographics segmentation

People who are brand conscious will try to show their status by drinking Coca-Cola.

6. How does Hertz add value for business customers through the implementation of the four

Ps?

Hertz positions itself as a quality car and truck rental company that is top of mind for its target segments.

One of Hertz’s primary market segments is business customers. Hertz uses the four P’s to create value

for its business customers:

7. Dyson successfully sells its fans and heaters for $150 to $400, whereas most conventional

fans sell for around $25. Explain what is the value it creates and how this affects the price it

can charge.

8. Of the four growth strategies described in the chapter, which is the riskiest? Which is the

easiest to implement? Why?

Of the four growth strategies, diversification is the riskiest because it involves significant reallocation of

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9. Choose three companies. You believe the first builds customer value through product

excellence, the second through operational excellence, and the third through customer

excellence. Justify your answer.

Customer excellence is achieved when a firm develops value-based strategies for retaining loyal

10. You are in the job market and have received offers from three very different firms. Develop

a marketing plan to help market yourself to prospective employers.

Answers will vary based upon the three companies the student selects. The student should include details

in each of the following areas:

1. Executive summary

Quiz Yourself

1 After a firm has conducted a SWOT analysis, it would typically progress to the next step of marketing

planning, which is _______ and involves using STP (segmentation, targeting, and positioning).

a. defining the mission

b. conducting a situation analysis

c. identifying and evaluating opportunities

d. implementing the marketing mix

e. evaluating performance

11. Which of the following is a marketing metric that might be used to evaluate the performance of a

company’s implementation of its marketing plan?

a. Four Ps (price, product, promotion, place)

b. SWOT analysis (strengths, weaknesses, threats, opportunities)

c. STP (segmentation, targeting, positioning)

d. GM (gross margin)

e. SBU (strategic business unit)

Case Study: The Coffee Wars

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1 Perform a SWOT analysis for Starbucks and Dunkin’ Donuts. Based on your analysis, in

which company would you invest? Justify your answer.

SWOT analysis: Starbucks

Positive Negative

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

SWOT analysis: Dunkin’ Donuts

Positive Negative

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

12. Which growth strategies have been pursued by Starbucks and Dunkin’ Donuts in the past?

Which strategies do you believe will be most successful for the two firms in the future? Why?

Starbucks: Starbucks connects with fans through social marketing channels, including its popular

Dunkin’ Donuts: Through partnerships with sports teams (e.g., “Pats Win, You Win) Dunkin’ Donuts

13. Which marketing metrics would be most helpful for an executive in charge of developing

new products for a coffee chain?

Students will answer with different metrics. Some commonly used metrics to assess performance include

Additional Teaching Tips

In this chapter, the goal is to introduce students to an overview of the marketing plan, the concept of

customer value, and the utility of the SWOT matrix. It is important to teach students that the importance of

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the marketing plan is to communicate the value proposition to consumers and to provide direction on how

that will be achieved.

The utility of the marketing plan must be conveyed throughout the course. Teach students that the

marketing plan is a subset of the business plan that forms the foundational strategy of business.

Students come to realize the importance of the marketing plan when the instructor frequently makes

connections to its purpose not only on the day the concept is taught but also throughout the course.

Customer value is a difficult concept for students to grasp. Instructors may want to ask students to write

down something they find of value and what aspects lead to creating that value. The instructor can then

ask what they would trade for that value. It is important that instructors communicate that value is more

than monetary worth and can’t easily be measured. As a result, marketers must conduct target market

research in order to create the value proposition of their marketing strategy.

The SWOT matrix may be easily demonstrated by dividing your class into groups and having each group

contribute one item to each of the four quadrants using the college they are attending (common ground

for all students) or a major chain food (such as McDonald’s) so that all students are familiar with the

strengths, weaknesses, opportunities, and threats that may apply. Students can work as a group and then

each group may put their items on the whiteboard to form a collective classroom SWOT. Instructors

should then make the link that the opportunities and strengths should filter into the marketing message

delivered in advertising campaigns and other marketing tools. Online tip: Instructors may want to divide

their class by last name A-E Strengths, F-J Weaknesses, and so forth to answer a discussion board

question using the same concept. Students could then complete an individual SWOT as an assignment.

Another option would be to use the same concepts and integrate it as an online team assignment where

each team forms their respective completed SWOT.

Connect Activities

Activity Type Learning Objectives 02-

01 02 03 04 05 06 07

Disney and the Strategic Marketing Planning

Process Click & Drag X

Staples: Implementing the Marketing Mix Video Case X

Disney and the Strategic Marketing Planning Process

Activity Type: Click & Drag

Learning Objectives: 02-02

Difficulty: Medium

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Activity Summary: Students view a short case describing the Walt Disney Company’s use of

Activity

Introduction: Firms like Disney plan their marketing strategies to adjust to changes in the

environment, the competition, and their customers. Effective marketing doesn’t just happen.

Concept Review: The strategic marketing planning process represents a set of steps a marketer

Follow-Up Activity

Assign and discuss the following article: “At Disney Parks, a Bracelet Meant to Build Loyalty (and Sales),”

by Brooke Barnes, New York Times, published 1/7/2013:

Staples: Implementing the Marketing Mix

Activity Type: Video Case

Learning Objectives: 02-05

Difficulty: Medium

Activity Summary: This video case discusses the “Easy” retail strategy adopted by Staples, with

Activity

Introduction: The 4 Ps—product, price, promotion, and place—are functions retailers use to create

value for their customers. Staples, Inc. successfully integrates the 4 Ps with its “easy” brand promise.

Its ability to execute the 4 Ps seamlessly within the parameters of this brand promise helps to make

Staples successful.

Concept Review: The marketing mix consists of the four Ps—product, price, promotion, and place—

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Video: The video is presented to the student below the introductory information. The video plays

embedded on the page, after which questions are presented.

Follow-Up Activities

Discuss how the Staples “Easy” brand promise helps the company to compete with online-only sellers

Choose a successful restaurant chain (Chipotle or Chick-fil-A would be good selections in the U.S. as

Home Shopping Network

Activity Type: Video Case

Learning Objectives: 02-01, 02-04, 02-05

Difficulty: Medium

Activity Summary: This video case focuses on changes HSN made to its strategy starting in 2006 to

Activity

Introduction: HSN (Home Shopping Network) is a $2.8 billion multichannel retailer, using television,

Concept Review: A marketing strategy is the actions a firm intends to implement to appeal to

potential customers. A successful strategy identifies (1) a firm’s target markets; (2) a related

marketing mix—its 4 Ps; and (3) the basis on which the firm plans to build a sustainable competitive

Video: The video is presented to the student below the introductory information. The video plays

embedded on the page, after which questions are presented.

Follow-Up Activities

Students can research some of HSN’s recent initiatives to see how the company is currently using

lifestyle programming to attract attention to its products. As of this writing, there are two initiatives that

are very much consistent with HSN’s lifestyle strategy:

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oA multi-film agreement with Disney to hold shopping events promoting films of interest to HSN’s

oHSN’s “Live in Concert” series, featuring various artists in conjunction with sales of their music.

SWOT Analysis: Domino’s Pizza

Activity Type: Click & Drag

Learning Objectives: 02-03

Difficulty: Medium

Activity Summary: This activity presents information about Domino’s franchise stores possibly

Activity

Introduction: Recently, a Domino’s pizza franchise in southwest Ohio made the strategic decision to

stay open 24 hours a day. The manager, Steve Martin, made this decision about a month ago in

response to increased demand for Domino’s pizza. Other Domino’s franchise owners are now

considering adopting a similar strategy. In this activity, you will categorize a set of statements

regarding activities in the internal and external environments as they relate to Domino’s pizza, and a

potential initiative of staying open 24 hours a day. These statements will identify either a Strength,

Weakness, Opportunity, or Threat.

Concept Review: Developing a marketing plan consists of five steps. The second step in the

The Netflix Rollercoaster: How a Strategy Can Fail

Activity Type: Case Analysis

Learning Objectives: 02-01, 02-02, 02-05, 02-06, 02-07

Difficulty: Medium

Activity Summary: This case deals with Netflix’s 2011 decision to split its service into DVD rental

Activity

Introduction: The letter arrived in millions of e-mail boxes simultaneously in November of 2010.

Reed Hastings, the CEO of Netflix, announced in excited tones the latest innovation by the company

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that had revolutionized the movie rental industry. But the response was not quite what he, or Netflix

shareholders, had expected. Since that time, Netflix has recovered and gone on to renewed success

and new challenges; however, the series of events, before and after, offers a clear lesson in how a

failure to sufficiently plan for marketing strategy changes can backfire on even the most successful of

companies.

Concept Review: A marketing strategy identifies (1) a firm’s target market(s), (2) a related marketing

Follow-Up Activity

Netflix recovered quickly from its misstep; it’s worth reviewing what has happened since the end of the

case write-up, and then discussing the challenges Netflix faces in the future. Students could be asked to

research this topic themselves, or you can use these articles:

“How Netflix Reinvented Itself,” by Peter Cohan, Forbes, 4/23/13.

Spirit Airlines: Home of the Bare Fare

Activity Type: Video Case

Learning Objectives: 02-01, 02-02, 02-03, 2-04, 2-05, 2-07

Difficulty: Medium

Activity Summary: This video case explains the marketing strategy pursued by Spirit Airlines. After

the video ends, students are asked questions about the video and related course concepts.

Activity

Introduction: Spirit Airlines competes as an ultra-low-cost carrier (ULCC), and does so by

“unbundling” extra services from its basic fare. As a result, things that other airlines include in their

prices (for example, carry-on bags) cost extra on a Spirit flight. This approach allows Spirit Airlines to

keep prices low, attracting a different type of customer who values price above comfort and amenities.

Video: The video is presented to the student below the introductory information. The video plays

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Follow-Up Activity

Review a section of the Spirit Airlines website to learn more about their strategy and how the website

reflects it. Two suggestions based on the website as it exists when I’m writing this:

SWOT Analysis:

Ford Motor Company & Fiat Chrysler Automobiles

Activity Type: Click & Drag

Learning Objectives: 02-03

Difficulty: Medium

Activity Summary: This activity presents information about Ford Motor Company, focusing on

Activity

Introduction: SWOT stands for strengths, weaknesses, opportunities, and threats. SWOT analysis

evaluates what a firm is good at, where it could improve, where in the marketplace it might excel, and

what events in the marketplace could potentially harm the firm. This activity is important because it

demonstrates how integral SWOT analysis is to the strategic planning process.

The Coffee Wars

Activity Type: Case Analysis

Learning Objectives: 02-01, 02-03, 02-07

Difficulty: Medium

Activity Summary: This case compares and contrasts the marketing strategies Starbucks and

Activity

Introduction: Starbucks and Dunkin’ Donuts are the two largest competitors in the coffee and

breakfast retail market. Their approaches to competing in this market are described in the case. This

activity is important because a strong marketing strategy—one that helps to build a sustainable

competitive advantage—is the basis for all marketing activities.

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Follow-Up Activity

iSeeIt Video Case:

Marketing Strategy and the Marketing Plan

Activity Type: Video Case

Learning Objectives: 02-02, 02-03, 2-04, 2-06

Difficulty: Easy

Activity Summary: This video case views marketing strategy from the perspective of the owner of an

independent coffee shop, as she considers working through the different phases of a marketing plan

for her shop.

Activity

Introduction: Strategic marketing is an approach where an organization effectively leverages its

resources to reach its target market. The marketing plan is how organizations operationalize their

strategies by planning how to reach their markets, implementing their marketing activities, and

measuring marketing performance. Take for instance the Coffee Collective and how it has

successfully marketed its unique coffee experience. Martha, the owner, knows that the 4 P’s are only

one key aspect of effective marketing—the implementation phase. She realizes that before she can

implement a marketing strategy, she must first understand the environment in which her coffee shop

exists. She also understands the importance of evaluating marketing effectiveness as the final

component of the marketing plan. Success, after all, is more than selling just one cup of coffee and

can be measured using a range of outcomes from revenue to customer loyalty.

Video: The video is presented to the student below the introductory information. The video plays

embedded on the page, after which questions are presented.

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