978-1337116800 Chapter 12 Solution Manual Part 2

Unlock access to all the studying documents.

View Full Document

Chapter 12: Services and Nonprofit Organization Marketing

Course Outcomes

Each student consulting group completes a written marketing research report for which they

collect primary data on a research question important to their client. Findings are utilized in

developing a marketing plan, which is provided to the service agency. An additional project

requirement is the production of at least one promotional item for the client, and the provision of

specific information about sourcing and costs for this item. A formal business presentation is

made by each group to their client organization.

Client Responsibilities

For this project, potential clients (local not-for-profit agencies) are contacted and asked to

participate. The client provides a one-page write-up with information about what the agency

does, which is used for preliminary assessment by the students. A representative of the agency

comes to class and does a brief presentation (limited to five minutes), covering what the agency

would want a marketing group to do for them. After selection by a student group, arrangements

are made to have the students visit on-site with the client for eight hours so that the students can

Student Responsibilities

Before enrolling in the course, students are advised that it is a service learning experience, which

will require a higher commitment of time and effort on their part than the standard marketing

course. The syllabus indicates the following information: course assignments will be tied to

client service organizations’ needs, and the project requires a tolerance for ambiguity,

adjustment, change, and group work.

Students in the marketing class are divided into groups of three or four. They are given written

client information prior to the clients’ visits to class, and the group makes a preliminary choice

of their preferred clients. Actual client choice is done following the clients’ presentations in

class, by a lottery system. Groups have previously drawn a number, and number one gets first

Chapter 12: Services and Nonprofit Organization Marketing

choice as to the client they want to work with. At this first meeting with the client representative,

contact information is exchanged, and a schedule to allow each student to be on-site at the

client’s place of business for eight hours is established. The hours do not need to be consecutive,

and the students can go individually at different times to accommodate their schedules. I build

two free class periods into the syllabus as “compensation time” to allow the groups to go

together for their first visit.

Student groups choose one of their members as the contact person. Groups are urged to have all

communications with the client go through this contact person, who maintains a contact log.

Record Keeping

On their initial visit, clients are given a folder with project information. Clients and the student

consulting groups keep logs (blank forms are provided), to ensure that a reasonable level of

Time Line

Week 1: Explain the project (expect a few students to drop when they hear the details).

Week 2: Select student consulting groups. Hand out client information. Show clients’

presentations in class.

Week 3: Have two free class periods for group on-site visits.

Week 4: Determine the client’s marketing research question.

Week 5: Develop questionnaire, and obtain client approval.

Week 6: Collect data (50 completed questionnaires).

Week 7: Code and enter data into statistical program.

Week 8: Analyze data, and prepare marketing research report.

Week 9: The marking research report is due.

Week 10: Begin work on a marketing plan based on marketing research, and discuss

promotional item(s) with the client.

Weeks 11–13: Develop a marketing plan and promotional items.

Week 14: Prepare a presentation.

Week 15: Present a marketing plan and promotional item(s) to the client.

Summary

We are fortunate in having a service learning center on campus, which helps with setting up the

Chapter 12: Services and Nonprofit Organization Marketing

clients initially. We also have college transportation available if needed, but it has not been

necessary to use it. The emphasis on the practical application of some marketing topics does

mean that some areas/chapters you would normally cover during a semester are slighted. I would

be happy to discuss this project’s positive and negative aspects with anyone who would like to

call me. I can also provide a sample syllabus, handouts, and forms so you don’t have to reinvent

the wheel.

Overall, my experiences with service learning projects have been positive. Service learning

projects do require more work on the professor’s part, but they have resulted in very positive

experiences and teaching evaluations. The students have almost uniformly felt that the extra

work is well worth it. Client agencies have been pleased with the results of the projects, and 99

percent have indicated that they would like to have another group work with them. If you have

small classes and some support, I recommend this project highly.

Allan C. Reddy, Valdosta State University

A Live Project for Services Marketing Course

Teaching the Services Marketing course can be an interesting and rewarding experience with a

live class project included along with the typical lecture, test, and term paper format. A project

that involves student participation invariably creates more enthusiasm about the course among

the students. Also, it cultivates a group spirit or camaraderie in them.

As part of the learning process, students in my Services Marketing course evaluate two similar

service establishments in the area. For convenience, we choose any two identical restaurants in

the area—for example, Red Lobster and Ruby Tuesday or Applebee’s. The students will first

establish the goals for the project and then choose variables they wish to measure and the

measuring instrument they want to use. Once this is done, each student is equipped with two

copies of the measuring instrument—one for each restaurant.

Typically, the project goals center on measuring service quality, price, speed of service, and so

forth. Often, the measurement instrument is the Semantic Differential method with ten bipolar

adjectives reflecting potency (ambience), competency (service quality), and evaluative (food

quality) dimensions. The students visit these restaurants in two- or three-member groups and eat

there to evaluate the restaurants on ten determined semantic differential scales. They will include

items such as food quality, variety, price, service quality, atmosphere, furniture, location, layout,

speed of service, and cleanliness, to be ranked on a seven-point scale (1 being good and 7 being

bad).

These values are totaled in class followed by a good class discussion on what is wrong with each

Chapter 12: Services and Nonprofit Organization Marketing

of the restaurants and how they can possibly improve the quality of their service mix while

recognizing the fact that giving a perfect service is not practical and is expensive to do so.

As stated earlier, this mini-project is both entertaining and educative, and it helps to cultivate a

group spirit in the class (of 20 or more students). The students eat out together (the student pays

for his or her food) to evaluate two identical restaurants (preferably chains). Also, it helps

students to have a hands-on experience in setting objectives for the measurement, developing

scales of measurement, applying a method of measurement, and analyzing and interpreting the

data generated by this method. Thus, the major aim of the project is to educate students on

setting up measurement objectives and using a measurement instrument to compare two identical

service establishments. This measurement procedure is transferable to other applications, such as

evaluating any two similar types of businesses (dry-cleaning, auto service, hospitals, and so on).

Jacqueline K. Eastman, Valdosta State University

Nonprofit Marketing Plan Project

Marketing professors like to give their students the opportunity to do “real world” projects,

especially in a capstone undergraduate marketing course or an MBA marketing strategy course.

Working with for-profit businesses, however, can be problematic for a variety of reasons.

• Students are not given enough information by the firm to address issues thoroughly.

• Students are not taken seriously by the firm or not given enough of the manager’s time

• Competitors, who may even donate to the university, may get upset with other businesses

getting free advice.

• Students may feel they are doing the grunt work for a potential paid consulting project for

their professor.

One way to give the students the needed experience in creating a marketing plan while avoiding

the above problems is to work with nonprofit organizations. One’s local United Way Director

may be an excellent resource for steering marketing professors to those nonprofit organizations

who are willing to work with students and have more of a marketing orientation. The purpose of

this marketing plan project is to allow the students the opportunity to apply what they have

learned regarding marketing strategy, management, and planning. This project allows students

the chance to provide a real service to the community while practicing their marketing skills.

Chapter 12: Services and Nonprofit Organization Marketing

quarter, the directors return for the students’ oral presentations of the marketing plan, and they

receive a copy of the final plan, as do I.

Finally, the marketing plan the students create needs to address the following areas:

I. Executive Summary (synopsis and major aspects of the marketing plan)

II. Situation Analysis (examine the environment)—SWOT Analysis

A. Internal strengths and weaknesses (recognized by customers—both those who use the

service and donors and critical internal concerns)

B. External opportunities and threats (external threats to marketing activities and

opportunity analysis)

III. Desired Outcomes/Marketing Objectives (Goals and Objectives)

IV. Marketing Strategies

A. Target market selection (either a specific target market of donors or users of the

nonprofit’s services)

B. Marketing mix (product, price, promotion, place)

V. Action Plans (Tactics)

VI. Implementation, Controls, and Evaluation

A. Measures of performance

B. Monitoring and evaluating performance

VII. Financial Projections and Budget

A. Delineation of costs

B. Estimates of sales (donations) and revenues

Part 3—Integrated Case Assignments

Marketing Miscues

McAfee Virus Protection Update Crashes Computers Worldwide

Headquartered in Santa Clara, California, McAfee was founded in the late 1980s and is now one

of the world’s largest dedicated security providers. McAfee’s customers range from individual

home users to large corporations to governments around the world. The company segments its

markets into home, small business, mid-sized business, and enterprise. Annual revenue has

grown to around $2 billion. The business market is about 60 percent of the company’s revenue,

with the remainder from the consumer marketplace. Geographically, approximately 60 percent of

revenue is derived from the North American marketplace. McAfee’s online subscription site,

http://home.mcafee.com, provides online software delivery to over two million paid subscribers,

making the site one of the largest paid subscription sites on the Internet.

Chapter 12: Services and Nonprofit Organization Marketing

The Botched Update

While the online software delivery has been a hallmark of McAfee’s product design and

delivery, it was almost the downfall of the company in early 2010. At that time, a faulty anti-

virus update file caused havoc for McAfee customers as computers worldwide were shut down

by the update file. Essentially, the anti-virus update misclassified a fundamental Windows XP

system file as a malicious program. As such, McAfee’s anti-virus program was instructed to

detect and delete the threat. Unfortunately, since this was an essential Windows XP program,

computers were rendered useless as many experienced the dreaded “blue screen of death.”

The extent of the impact upon McAfee’s customer base was never clearly disclosed. Media

reports and Twitter postings suggested that the affected users numbered in the thousands, while

the company suggested that the affected group was less than half of a percent of the company’s

customers. While the actual number of affected home and business customers might never be

known, there were notable shutdowns that were brought to the public’s attention. For example, it

was reported that a third of the hospitals in Rhode Island had to suspend treatment to non-trauma

emergency room patients, and state police patrol car computers in Kentucky were shut down.

One large U.S. multinational company reported that 50,000 personal computers could only be

repaired manually by a technician sitting at each computer.

The Aftermath

Chapter 12: Services and Nonprofit Organization Marketing

such as McAfee hinge on their ability to prevent problems, not cause them. Thus, the lack of

confidence in McAfee was exemplified by home customers who disparaged the company’s

quality control with blog comments such as “If this release of McAfee’s passed their quality

control, it seems to me they have no quality control” and “What a spectacular failure of QC.”

One software consultant noted that 75 percent of the company’s clients had been switched away

from McAfee prior to the disaster. The company was thankful it had done that since their

technicians were in a chaotic frenzy, running all over town and billing their clients for a software

glitch in a product that the consulting company had recommended to the client to start with. To

sum up the concerns, one customer noted that as a security protection product offering, McAfee

should not be on the list of risky software downloads!

Sources: McAfee website, www.mcafee.com; Barry McPherson, “McAfee Response to Current

False Positive Issue,” April 21, 2010; Larry Barrett, “McAfee Moves on Following Massive

Miscue,” eSecurity Planet, April 27, 2010, www.esecurityplanet.com/news/article.php/3878861

/McAfee-Moves-On-Following-Massive-Miscue.htm; Antone Gonsalves, “McAfee Bug Forces

Massive PC Cleanup,” InformationWeek, April 22, 2010,

http://www.informationweek.com/mcafee-bug-forces-massive-pc-cleanup/d/d-id/1088513?;

“McAfee to Compensate Home Users for Bad Update,” CNet, April 26, 2010,

https://www.cnet.com/news/mcafee-to-compensate-home-users-for-bad-update/; Larry Seltzer,

“Lessons of the McAfee False Positive Fiasco,” PCMag, April 23, 2010,

www.pcmag.com/article2/0,2817,2363018,00.asp; Lance Whitney, “McAfee Apologizes for

Antivirus Update Disaster,” CNet, April 23, 2010, http://news.cnet.com/8301-1009_3-20003247-

83.html.

Open-ended questions

1. What is the role of quality assurance in McAfee’s product development process?

Quality assurance should be an integral component of McAfee’s product development

process since a faulty product release can virtually shut someone’s computer down. It is

Chapter 12: Services and Nonprofit Organization Marketing

ANS: T

PTS: 1 OBJ: 10-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Product MSC: BLOOMS Level I Knowledge

Multiple Choice

1. Perhaps more than any other product or service, antivirus software is subject to the

following—almost on a daily basis.

Quality assurance

Planned obsolescence

Product modification

Functional modification

Perishability

2. McAfee has antivirus products designed for its consumer and enterprise segments.

However, the corrupted data and quality assurance problem affected all market segments.

Which of the following seems a likely reason?

Standardized components

Research & development

Windows XP

Package uniformity

Mass customization

3. The McAfee antivirus program illustrates what aspect of the classic definition of a

product?

A product need not be delivered in a package.

A product includes both its favorable and unfavorable characteristics.

A product is an item in a product line.

A product consists of the equity it produces.

A product is anything that satisfies an individual’s personal wants.

4. The remedies that McAfee took to placate subscribers impacted by its failure in quality

control were intended to __________.

reposition its virus program as reliable

improve an existing product

invest in brand loyalty

ultimately protect its brand equity

address each gap in the gap model

5. The 36-hour delay in responding to the defective security upload on the part of McAfee’s

executive vice president is __________.

the gap between the service that customers receive and the service they want

to do “whatever it takes” to stay in business

an external communication gap

Chapter 12: Services and Nonprofit Organization Marketing

the inability of management and employees to do what needs to be done

all of the above

6. What kind of protection best describes McAfee’s response to those customers

inconvenienced by its software update?

Express warranty

Implied warranty

Free repairs of computers

Subscription extensions

Limited warranty

Critical Thinking Case

Prestige Brands, Inc.: Transforming the Business

Prestige Brands markets, sells, and distributes over-the-counter healthcare and household

cleaning products to retail outlets in the United States, Canada, and certain international markets.

In September of 2010, the company’s over-the-counter (OTC) healthcare products included:

• Chloraseptic® Sore Throat Relief

• Clear Eyes®

• Cloverine®

• Compound W®

• Compoz®

• Dermoplast®

Chapter 12: Services and Nonprofit Organization Marketing

• Ezo®

• Freezone®

• Kerodex®

Household brands included:

Shareholder Value Creation Strategy

Shareholder value creation at Prestige Brands follows a three-pronged strategic approach:

driving core organic growth, a merger-and-acquisition effort focusing exclusively on OTC, and

strategic portfolio management. To drive organic growth, the company focuses on five key areas:

Chapter 12: Services and Nonprofit Organization Marketing

Three, the company looks closely at the financial characteristics of all potential acquisitions: the

accretion of growth and earnings, a prudent capital structure, and economics driven by the

brand’s ability to enhance potential shareholder value. The third prong of the corporate strategy

is to effectively manage the portfolio of products and brands over time. Specifically, this prong

involves periodically reassessing which brands are the best in the long term from a portfolio

standpoint and then adjusting the portfolio accordingly.

A Transformational Acquisition: Blacksmith Brands

With core organic growth and strategic portfolio management in mind, Prestige Brands acquired

Blacksmith Brands in the fall of 2010. Blacksmith Brands owned five leading consumer OTC

brands:

• Efferdent® Denture Cleanser

• Effergrip® Denture Adhesive

• Luden’s® Throat Drops

• NasalCrom® Nasal Allergy Spray

• PediaCare® Children’s OTC Medicines

OTC Category

Brands

Cough/Cold

Chloraseptic®, Luden’s®, Pediacare®, Little Remedies®, Nasalcrom®

Oral Care

Efferdent®, Effergrip®, The Doctor’s® Night Guard™, Ezo®

Eye & Ear Care

Clear Eyes®, Murine®

Skin & Foot Care

Compound W®, Wartner®, New-Skin®, Dermoplast®

Other

Percogesic®, Compoz®

Increased support of the core OTC healthcare franchise after the acquisition of Blacksmith

Brands focused on innovative advertising and promotional campaigns and new product launches.

The commitment to equity-building brand support of the acquired brands was reflected in a

national television campaign and digital marketing for PediaCare®; a radio campaign, digital

marketing, sampling, and free-standing inserts (FSIs) for Luden’s®; and bonus packs and FSIs

Chapter 12: Services and Nonprofit Organization Marketing

for Efferdent® and Effergrip®.

A Major Milestone

Prestige Brands’ net revenue for the first nine months of fiscal 2011 grew by 8 percent to $240.1

million. As a result of the increased advertising and support behind the core OTC health-care

franchise, the core OTC portfolio significantly outperformed their respective categories for the

2011).

Open-ended questions

1. What role can acquisitions play in building a product portfolio?

At Prestige Brands, acquisitions played a critical role in the development of the company’s

product portfolio. For example, the acquisition of Blacksmith Brands was considered a

transformational acquisition for the company, as it was a meaningful step in its long-term

2. Outline the product line depth, product mix width, and individual product items at

Prestige Brands.

Students should be directed to go to www.prestigebrands.com to learn more about each of

the company’s product offerings. The product mix is comprised of five major product

Chapter 12: Services and Nonprofit Organization Marketing

categories: oral care, eye and ear care, skin care, cough/cold/allergy/sinus, and house and

home.

Oral Care is five deep:

• The Doctor’s® Brush Picks®

Eye & Ear Care is five deep:

• Clear Eyes®

Skin Care is ten deep:

• Cloverine®

• Compound W®

• Dermoplast®

Cough/Cold/Allergy/Sinus is five deep:

• Chloraseptic® Sore Throat Relief

The company also has two brands that do not fit easily into any of the major product

categories:

• Compoz®

• Momentum®

Naturally, the pace at which company management is acquiring brands means that this

categorization is changing quickly. For example, soon after this case was written, Prestige

Brands acquired Dramamine®, which fits nicely with the Compoz® product offering—

suggesting that the company has plans for that product category.

Close-ended questions

True/False

1. Looking at its list of OTC healthcare products, Prestige Brands did not improve its

positioning in eye care products.

2. The acquisition of Blacksmith left Prestige’s depth in household brands unchanged.

3. Given some redundancy in its product mix, Prestige is not immune from cannibalization.

3. The acquisition of Blacksmith is called a “transformational acquisition” for what reason?

It made Prestige an even larger niche marketer of minor brands.

It addressed stockholder concerns about a lack of focus.

It eliminated a competitor.

It provided more product line depth to a core business.

It evened out a sales pattern that had been dependent on the cough, cold, and flu

season.

4. The third prong of Prestige’s corporate strategy involves periodically reassessing which

brands are the best for the company in the long term from a portfolio standpoint and then

adjusting the portfolio accordingly. Peter Drucker gave this a name. What is it?

Product demixing

Product line attrition

Organized abandonment

Periodic audit

Organized delisting

5. Which of the following expenses does Prestige most likely not eliminate by its reliance on

acquisition over new product development?

R&D

Chapter 12: Services and Nonprofit Organization Marketing

Test marketing

Commercialization

Business analysis

None of the above

6. Venerable brands such as Luden’s (cough drops originally formulated over a century ago)

and Efferdent (virtually synonymous with denture adhesive since the days of early

television) give Prestige what important attribute?

Brand equity

A major position in both segments

Two brand marks

Household words

Manufacturing brands to go with its private brands