Management Chapter 12 Nathan Now Widower But Was Again Alone Performer Entertainment Did Not Forget

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Instructor’s Manual – Chapter 12

PPT 12.45

6. Sales promotion involves direct inducements offering added value

or some other incentive for buyers to enter into an exchange.

a. The major tools of sales promotion are store displays, premiums,

samples and demonstrations, coupons, contests and

sweepstakes, refunds, and trade shows.

b. Sales promotion stimulates customer purchasing and increases

dealer effectiveness in selling products.

c. It is used to enhance and supplement other forms of promotion.

down to their customers.

3. With a pull strategy, promotion creates consumer demand for the

product so that consumers will exert pressure on marketing channel

members to make the product available.

4. Exclusive use of advertising denotes a pull strategy, while personal

selling to marketing channel members indicates a push strategy. A

company can also use a combination of the two.

D. Objectives of Promotion

1. The marketing mix will vary depending on a company’s objectives

2. Promotion is only one element and must be tied to organizational

a. Typical objectives are stimulating demand, stabilizing sales, or

informing, reminding, and reinforcing consumers.

E. Promotional positioning uses promotion to create and maintain an

image of a product in buyers’ minds that persuades them to buy. It is a

A. Marketing creates value through the marketing mix

B. Creating an effective marketing mix requires carefully integrating the

marketing mix into an effective marketing strategy.

C. Firms that develop an effective marketing mix gain competitive

advantages

D. Advantages often come when a company excels at one or more

elements of the marketing mix

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LO 12-5

Evaluate an organization’s marketing strategy plans.

Key Terms:

PPT 12.50

PPT 12.51

V. Solve the Dilemma—Better Health with Snacks

A. Deluxe Chips’ Deluxos tortilla chips are the number-one selling brand in

North America and its Ridgerunner potato chips is also a market share

leader

B. Wants to stay on top of the market by changing marketing strategies to:

1. Match changing consumer need and preference

C. As middle-aged consumers modify their snacking habits, Deluxe Chips is

considering new product line of light snack food

1. With less fat and cholesterol

2. Targeted at 35-50 year-old consumers who want to be more health

D. New healthy chips:

1. Will succeed if taste good and consumers may be willing to pay more

2. More advertising to overcome competition

3. Possible to analyze customer profiles and retail store characteristics

5. Store-specific micromarketing spend promotional dollar more

efficiently

E. Discussion questions:

1. Design a marketing strategy for the new product line.

Students’ answers will vary but should reflect understanding of the

chapter material. Specifically, look for inclusion and correct use of

key terms such as test marketing, product line, branding, packaging,

should move from development of the new product line to full-scale

introduction.

2. Critique your marketing strategy in terms of its strengths and

Again, students’ answers will vary but should reflect comprehension

of the relevant chapter material.

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Instructor’s Manual – Chapter 12

B O X E D T E X T D I S C U S S I O N Q U E S T I O N S

ENTER THE WORLD OF BUSINESS–Corvette’s New Look and Message

Chevrolet is revamping its sports car image with the seventh-generation Corvette Stingray to appeal to a

1. How is Chevrolet attempting to bring new life to the Corvette Stingray?

2. Is the Corvette Stingray using a price skimming or penetration pricing strategy? Explain your answer.

3. Describe the different ways Chevrolet is using promotion to market the Chevy Stingray.

Chevy has been promoting the vehicle through more exclusive avenues such as auto shows, cover stories in

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Instructor’s Manual – Chapter 12

GOING GREEN—Plant-Based Food Products: The Future of Food?

Hampton Creek offers plant-based replacements for foods that traditionally use animal-based products.

Tetrick hopes his creation will be the solution to the problems he sees in food: animal cruelty, health, cost,

1. Describe the different ways Hampton Creek markets its plant-based food products.

2. Why do sampling and storytelling appear to be effective techniques for promoting Hampton Creek

products?

3. Why might an endorsement by Bill Gates add credibility to Hampton Creek products?

Bill Gates is a respected humanitarian who is intelligent and eco-conscious; therefore his endorsement gives

credibility to the Hampton Creek products.

RESPONDING TO BUSINESS CHALLENGES—Flying at a Higher Altitude: JetBlue Introduces Luxury Seating

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1. How has JetBlue positioned its brand in the past?

Historically, the airline offered only coach seating and, like Southwest Airlines, allowed bags to be checked

for free.

2. What is JetBlue doing to become more adaptable and gain more market share?

JetBlue is introducing premium seating on some of its cross-country flights. Flyers will have the option of

3. Do you think JetBlue can successfully transition from a low-cost carrier into a more high-end airline?

Students’ answers may vary.

S U P P L E M E N T A L L E C T U R E

Prolonging the Life Cycle of a Product

This is the story of a comedian and some of the techniques he used to survive many years in show business.

At the end of the tale, identify what there is in his life story that illustrates a point from this chapter in your

textbook.

In the early years of the 20th century, Nathan Birnbaum decided that he wanted to spend the rest of his life in

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Looking back on those days, Nathan admits that he probably was not the greatest comedian on the

vaudeville circuit, and there were managers who would agree with that assessment. As a consequence, once

Nathan had played a theater, the manager was often less than enthusiastic about bringing Nathan back a

Switching names would work for only so long, so Nathan added a partner. He lined up an attractive young

lady to feed him straight lines. The audience liked her straight lines so much (and did not laugh at Nathan’s

jokes) that Nathan changed the act—giving the humor to his partner and becoming the straight man himself.

The act was off and running. The couple moved from vaudeville to a long career in radio.

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Large firms may accomplish the same thing by declaring a product as “new and improved,” or make the

product in “7 new and exciting exotic flavors.” George Burns extended the product life cycle but altered the

product as it went along. Among his devices were

2. New partner.

4. Switch to television.

6. Switch to talk shows and “age” material.

Let’s use George for one more illustration. At the end of the decline stage, the company takes its product off

1. Was George (Nathan Birnbaum) Burns successful in stretching the product life cycle?

2. What stage of the product life cycle would you say George Burns was in during the final years of his

life?

3. If a firm is to prolong the life cycle of a product, what steps must be taken?

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C O N T R O V E R S I A L I S S U E

How Dare They Stop Our Ball Game?

It has been done in the past, and chances are good that it is still being done—stopping professional football

games for the insertion of a commercial. Upon learning of this, people have one of at least two possible

reactions—one favoring the practice and one condemning it.

On the other hand, one needs to keep in mind that the television networks have paid millions of dollars for

the rights to broadcast football games. The networks knew they could afford to pay for the rights as long as

they could sell advertising time to large national sponsors, and to sell time to such sponsors requires plenty

of slots for commercials. A part of the agreement between the National Football League and the networks is

that there will be sufficient moments in each game for commercials. If the regular flow of the game does not

provide enough such moments, then the National Football League has agreed that the networks may stop

action.

1. Should the networks be able to interrupt professional football games?

Students’ responses will vary.

2. What are the benefits of advertising for the television viewers? For the National Football League?

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3. If advertising was not permitted, what would be the alternative for football fans across the nation?

Students’ responses will vary.

S O Y O U W A N T T O B E A M A R K E T I N G M A N A G E R

What factors have made the job of marketing manager more challenging in recent years?

C H E C K Y O U R P R O G R E S S

1. What steps do companies generally take to develop and introduce a new product?

Introducing a new product involves a six-step process: (1) idea development, (2) screening new ideas, (3)

business analysis, (4) product development, (5) test marketing, and (6) commercialization.

2. What is the product life cycle? How does a product’s life cycle stage affect its marketing strategy?

Product life cycle refers to the life of a product in the marketplace. Like people, products are born and

they grow, mature, and eventually die—that is, they are pulled from the market. The four stages of the

product life cycle are introduction, growth, maturity, and decline.

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3. Which marketing mix variable is the most flexible? Why?

4. Distinguish between the two ways to set the base price for a new product.

Price skimming is setting the highest possible price that buyers will pay. This method allows a company

to generate revenue to offset research and development costs and guards against setting a price that

5. What is probably the least flexible marketing mix variable? Why?

6. Describe the typical marketing channels for consumer products.

There are four basic marketing channels for consumer products:

7. What activities are involved in physical distribution? What functions does a warehouse perform?

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8. How do publicity and advertising differ? How are they related?

Advertising is paid for by an identified sponsor and is usually directed to a mass market. The seller has

complete control over this form of promotion. Publicity is often viewed as being part of a public relations

program, a broad set of communication activities designed to maintain favorable relations between an

9. What does the personal selling process involve? Briefly discuss the process.

1. Prospecting is identifying potential buyers.

3. Presenting is making a presentation to get the prospect’s attention and to persuade the prospect to

buy.

5. Closing is asking the prospect to buy the product.

6. A good salesperson will follow up on a successful sale to make sure that the customer is satisfied

with the product.

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10. List the circumstances in which the push and pull promotional strategies are used.

In developing a promotion mix, marketers must decide whether to fashion a mix that pushes or pulls the

product. When using the push strategy, the marketer attempts to motivate these middlemen to push the

G E T I N V O L V E D

1. Pick three products you use every day (in school, at work, or for pleasure—perhaps one of each).

Determine what phase of the product life cycle each is in. Evaluate the marketer’s strategy (product,

price, promotion, and distribution) for the product and whether it is appropriate for the life cycle

stage.

Product

Life Cycle Stage

Marketing Strategy

Coca-Cola

Maturity

Heavily advertising; looking into

expanding into different countries or

continents such as Africa, which is

requiring the firm to build factories and

distribution systems; releasing smaller

sizes of product and experimenting with

different formulas in response to health

concerns; expanding into other product

lines such as juices

Apple iPad

Growth

Releasing a new “improved” iPad each

year; generating substantial word-of–

mouth marketing before release; pricing

iPads high; distributing in Apple stores

and some retailers; many parts of iPad

are made in Chinese factories to take

advantage of lower labor and materials

costs; making known benefits such as

latest advances in technology

Pontiac vehicle

Decline

Phased out by GM; now sold by

individual owners; prices likely to be

lower as they are used models

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2. Design a distribution channel for a manufacturer of stuffed toys.

Sample Distribution Channel:

Producer

Wholesaler

Retailer

Consumer

Creates stuffed animals

Stores stuffed animals and

ships to various toy retailers

Displays and sells stuffed

animals to consumers

Buys stuffed animals

or

Producer

Consumer

Creates stuffed animals

Sells on Internet

Buys stuffed animals

3. Pick a nearby store and briefly describe the kinds of sales promotions used and their effectiveness.

Students’ answers will vary.

B U I L D Y O U R S K I L L S

Answer Key

1. b. (pleasure travelers on a budget; business travelers looking to get the most for their dollar)

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2. Here are some possible answers:

Marketing Mix Variable

Current Strategy

5-Year Strategy

Product

Clean, comfortable rooms.

In appealing to business travelers,

Motel 6 should provide rooms that

keep pace with the increased

dependence of business travelers on

communication technology.

Price

The lowest price of any

national motel chain.

This strategy should continue to

work well for them for the next five

years.

Distribution

Motel 6 location sites are

selected based on whether they

provide convenient access to

the highway system and

whether they are close to areas

such as shopping centers,

tourist attractions, or business

districts.

It makes sense to continue

constructing new sites at places

where people need overnight

lodging. Motel 6 should look for

opportunities to provide low-cost

lodging in high-traffic recreational

and entertainment areas (theme

parks, casinos, ski resorts, etc.)

where lodging might normally be

higher.

Promotion

The company’s national

spokesperson, Tom Bodett, is

featured in radio and television

commercials that use

humorous stories to show why

it makes sense to stay at Motel

6 rather than a pricey hotel.

Explore other avenues for

advertising—the Internet and other

forms of electronic communication.

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B U I L D Y O U R B U S I N E S S P L A N

Encourage students to consider developing a short survey instrument to ascertain demand for their business,

especially if the business will primarily serve the needs of college students. The questionnaire could help

S E E F O R Y O U R S E L F V I D E O C A S E:

R E D B O X S U C C E E D S B Y I D E N T I F Y I N G M A R K E T N E E D

Case Overview

Groupon partners with businesses to offer subscribers daily deals. Groupon deals are similar to coupons, but

with one major catch. A certain number of people (a group) must agree to purchase the deal. If enough

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1. How has Groupon effectively used personal selling, advertising, and public relations to market its

products and services?

Groupon has used personal selling to contact businesses in the major cities in which it does business. Its

sales force will phone or send e-mails to businesses to tell them about the benefits of posting deals

through the Groupon site. The sales force often looks at review websites such as Yelp and Citysearch to

2. Is there a difference in how Groupon markets itself to consumers versus how it markets itself to

businesses? If so, describe these differences.

3. Groupon had to adapt the personal selling component of the promotion mix. Why is it sometimes

necessary for businesses to adapt the promotion mix?

T E A M E X E R C I S E

Students will form groups and search for examples of convenience products, shopping products, specialty

products, and business products. They should discuss how these products are marketed. Students will

provide examples of any ads that they can find to show examples of the promotional strategies for these

products. They will then report their findings to the class.

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T E R M P A P E R O R P R O J E C T T O P I C S

These topics may be assigned as individual or collaborative projects:

1. The Importance of Generic Products in the Marketplace

3. A Comparison of Research and Development for Japan and the United States

G U E S T S P E A K E R S U G G E S T I O N S

1. A representative from a local firm to speak on any of the following topics:

a. Research and Development

2. A representative of a distribution center to speak about the distribution process.

3. A representative of a wholesaler or other marketing intermediary to talk about the way his or her

T E A C H I N G S U G G E S T I O N S

2. “Check Your Progress” is especially helpful for understanding the concepts of this chapter. To save time,

3. As time permits, use the discussion of boxed material.

5. Have students view the video case.