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Chapter-by-chapter aids: Chapter 2
Instructor's Manual to Accompany Basic Marketing IV-2-11
Online Learning Center (www.mhhe.com/fourps).
Video Case 6: Big Brothers and Big Sisters of America
The video explores the processes by which Big Brothers Big Sisters of America (BBBSA) developed and
implemented its strategic marketing planning process. For more than a century Big Brothers and Big
CHAPTER 2 – COMMENTS ON USE OF ETHICS QUESTION WITH THIS CHAPTER
Situation: You have been working for a major online retailer in the entertainment products category and
have responsibility for DVD movie sales. You’ve been approached by a company that offers a behavioral
targeting software program. When a customer visits your website, this program can tell whether that
customer has been “shopping around”—it knows if the customer has looked at DVD movies at other
online stores. Assuming these customers are looking for a good deal, the new software allows you to
charge a lower price only to these “shopping around” customers. Higher, regular prices would be shown
to all other customers. The seller claims the software will double your profits in the DVD category. Would
you purchase this service? Explain your decision.
CHAPTER 2 – COMMENTS ON USE OF CREATING MARKETING PLANS
QUESTION WITH THIS CHAPTER
The Marketing Plan Coach software on the text website includes a sample marketing plan for Hillside
Veterinary Clinic. Skim through the different parts of the marketing plan. Look more closely at the
Marketing Strategy section.
a. What is the target market for this marketing plan?
b. What is the strategy Hillside Veterinary Clinic intends to use?
c. What are your initial reactions to this strategy? Do you think it will be successful? Why or why
not?
At this point in the introductory marketing class, students need to learn about the different parts of a
Part IV
IV-2-12 Perreault, Cannon, & McCarthy
The first question simply requires the student to recognize the target market. The HVC marketing plan
identifies two target markets: 1) Pet owners with small animals living within 10 miles of Wellington,
Colorado, who are not currently customers of HVC and 2) Pet owners with small animals living within 10
miles of Wellington, Colorado, who are currently customers of HVC.
As a transition into the second question, the instructor might also ask the class, “Why does the marketing
plan differentiate between current customers and non-customers of HVC?” This allows for a discussion
of the two different targets. The former are already familiar with HVC and have an established
relationship. The marketing strategy for this group includes tactics that serve to remind customers and
introduce them to new products and services offered by the clinic. On the other hand, non-customers
may not be aware of HVC – so tactics here try to increase awareness and encourage customers to try the
clinic.
CHAPTER 2 – SUMMARY OF CONNECT HOMEWORK EXERCISES
Exercise 2.1: Target Marketing and the 4 Ps at Campbell’s Soup
Question Type: Drag-and-drop
Exercise 2.2: The Marketing Strategy Process Planning Model
Question Type: Drag-and-drop
Exercise 2.3: Marketing Strategy Opportunities at Olive Garden Restaurant
Question Type: Decision generator
Exercise 2.4: Bass Pro Shops and the Marketing Strategy Planning Process
Question Type: Video case
Chapter-by-chapter aids: Chapter 3
CHAPTER 3: EVALUATING OPPORTUNITIES IN THE CHANGING
MARKETING ENVIRONMENT
CHAPTER 3 – COMMENTS ON QUESTIONS AND PROBLEMS
3- 1. The purpose of this question is to encourage students to think about the link between a
mission statement and the discussion of generic markets and product-markets in Chapter 4. A
mission statement should help set the course of the company and help managers understand
what types of opportunities are priorities for the company and which are beyond the scope of
what it is trying to do. In that sense, it is the most general (i.e., the first) qualitative screening
3- 2. Objectives should guide the search for – and evaluation of – opportunities. General objectives
(such as performing a socially and economically useful function, developing an organization to
carry on the business and implement its strategies, and earning enough profit to survive)
3- 3. Various company objectives might have an impact on the appropriate marketing strategy or
strategies and then the marketing mix or mixes. This particular example provides an
opportunity to introduce a discussion of the objectives that a giant company like Microsoft had
when the Internet opportunity became an issue versus the objectives of a smaller company
that was simply trying to become established. Thus, in the context of the specific question,
some objectives that the former programmer might pursue could include:
(1) Maximize profits in the next two years.
(2) Find strategies that would not prompt aggressive competition (“retaliation”) by
large, established firms in this market.
(3) Rapid growth of the firm.
(4) Build a reputation for reliable software and good technical support.
Part IV
IV-3-2 Perreault, Cannon, & McCarthy
(5) Offer a product that had clear advantages for at least some segment of the market
(6) Build a large enterprise.
Some of these objectives might be compatible with each other and lead to the use of the same
marketing strategy or strategies. However, some objectives would clearly be incompatible.
For example, trying to maximize profit in the next two years (ignoring what happens afterward)
3- 4. A firm's resources provide both strengths and weaknesses, and a smart marketing strategy
planner would try to make use of the strong points while avoiding weaknesses. Strengths may
come from a firm's functional areas (production, research and engineering, marketing, general
management, finance) as well as present products and markets. Other resources listed in the
text include financial strength, production capability and flexibility, sources of supply, and
marketing strengths such as patents, good relations with intermediaries, sales force skill, and
knowledge of the target market.
3- 5. Students will focus on a number of different aspects of how competitor analysis is useful in
avoiding situations that involve head-on competition. However, the thrust of the text discussion
3- 6. Students will have different opinions about the difficulty for the hardware store of planning for
the new competitive threat: a competing store to be opened by a big home improvement chain.
This scenario is in fact unfolding in smaller towns all over the country as big chains like Home
Depot, Lowe’s, and Home Quarters have aggressively expanded the number of stores that
they open.
Chapter-by-chapter aids: Chapter 3
3- 7. The impact of technological developments on marketing is discussed in section “The
Technological Environment.” This question can be interesting and thought provoking if the
instructor persists in asking whether anything in the student's "home town" must be produced
there. Generally, services which are performed directly for or on a person (e.g., haircuts, tooth
repair, etc.) must be produced locally. But beyond this, local and regional monopolies are
becoming increasingly vulnerable if their primary reliance has been upon the high cost of
moving goods.
3- 8. Some people think that the economic unification of Europe will make Europe a single, unified
market. That is very unlikely. It is true that the elimination of trade barriers and conflicting
intracountry rules and regulations will make trade much more efficient. However, it is not wise
to ignore the human side of the equation. Millions of people who have for hundreds of years
different submarkets.
3- 9. Basically, it is attempting to protect consumers – but sometimes efforts have been made to
protect individual competitors in the hope that this would preserve competition and help
consumers.
3-10. This question is not easy for students at this time. From reading the text, however, students
feel that most of the laws are in the consumers' interest. This question serves basically as a
vehicle for discussing each law and encouraging the students to think about each law's
implication. Most of these laws are discussed again later in the text, and especially in Chapter
16.
3-11. Developing an answer to this question should encourage students to think more carefully about
the data in Exhibit 3-5, and in particular to compare and contrast the data for different
countries. More specifically, the population of Romania is about 22.2 million (more than 4
times larger than Finland at 5.3 million), but it’s also significant that it has a higher negative
IV-3-4 Perreault, Cannon, & McCarthy
3-12. See section “The Cultural and Social Environment.” It is important for students to see that not
only GNI per capita but also income breakdowns ought to be studied when trying to determine
the size of various markets. There are many wealthy landowners and businesspeople in
3-13. The worldwide trend toward urbanization is having a dramatic effect on the opportunities for
international marketing. The concentration of population in major cities makes it easier to set
up channels of distribution and logistics facilities to reach foreign consumers. This is especially
true in light of the fact that major cities often develop near harbors (which make international
shipping easier).
3-14. If education is considered as a "business," then fewer babies affects the need for teachers and
classroom use in the grade schools and eventually in the high schools and colleges. At the
same time, leisure activities that depend on young people may be affected. Piano lessons,
dance classes, ice skating lessons, etc., may not be in as much demand. Similarly, the
equipment that would be used in these various activities may not sell as well as in the past. An
3-15. As shown in Exhibit 3-7, between 2005 and 2015 the 20-29 age group increases significantly in
size. But in the following decade (2015-2025) this age group will grow by only a small
percentage. These increases (large, then small) may have an important impact on marketing
strategy planning. The growth from 2005-2015 increased the demand for college education
and certain types of housing – apartments, for example. This age group is also more likely to
purchase certain types of clothing, music, and video games, and go to particular types of
restaurants. But the smaller increase from 2015-2025 in the number of people in this age
Chapter-by-chapter aids: Chapter 3
group will require careful planning. For example, building an apartment complex is a
significant investment which may require a long-term return. A developer may find demand
high in the short-term but softer in the long term. Makers of other products may want to have a
longer term plan to evolve their product lines as this group ages. This group is made up of
many Millennials (Gen Y) and as they move into the age when they set up homes, they will be
an attractive market for industries like housing, appliances, furniture, and electronics. This
group grew up with technology, so they rely on cell phones for voice and text communications,
they connect with friends via social networking tools, and they actively avoid advertising. Their
digital lifestyles will have an important influence on marketing.
3-16. Answers here will vary significantly. However, examples of firms that are appealing to senior
citizens include: financial services firms (mutual fund companies, banks, brokerage houses)
who are offering a variety of retirement planning products; companies in the health care
3-17. See section “Using Screening Criteria to Narrow Down to Strategies.” A set of product-market
screening criteria should include both quantitative and qualitative components. The
3-18. See section “Planning Grids Help Evaluate a Portfolio of Opportunities.” The GE approach
uses a nine-box matrix and tries to work with many more variables. The thing which makes
this practical is that many of the variables are interrelated – and using many of them helps to
DISCUSSION OF COMPUTER-AIDED PROBLEM 3: COMPETITOR ANALYSIS
In this problem, a marketing manager is evaluating a new opportunity. He wants to see who will have the
competitive advantage. The student analyzes competition, competitive advantage, marketing strengths,
pricing, and how changes in technology may result in new opportunities. The problem ties directly to
many of the ideas discussed in Chapter 3 of the text. This spreadsheet could also be used in the chapter
dealing with personal selling – since much of Mediquip's advantage here is based on its sales force
strength.
Part IV
IV-3-6 Perreault, Cannon, & McCarthy
The initial spreadsheet for the problem is presented below:
P L U S - SpreadSheet
Mediquip
Laser Tech
Total Units All Hospitals Likely to Buy
200
*
200
Each Supplier's Share (percent) of Total
50.00
*
50.00
*
Each Supplier's Likely Unit Sales
100
100
"Front-end" Design Costs
28000.00
*
19000.00
*
Cost of Producing One Unit
7000.00
*
5875.00
*
Answers to Computer-Aided Problem 3:
a. It appears that Mediquip does have a competitive advantage. Assuming that Mediquip can capture a
50 percent share of the market (that is, it could sell 100 units), Mediquip would be able to make a
target profit of $1,000 and charge only $9,530.00 per unit. This could give the firm a significant price
b. This analysis shows the student that a firm's assumptions can make a big difference in how attractive
an opportunity appears to be. The two spreadsheets below summarize the different market share
situations discussed in the question. In this case, Mediquip appears to have a price advantage over
Laser Tech even at a lower sales volume. The implication is that Mediquip should be able to
compete effectively – perhaps even able to keep Laser Tech out of the market – by offering a price
that earns a good profit for Mediquip but which would not be profitable for Laser Tech. The costs for
the two firms in the two different situations are summarized below – and more detail can be found in
the spreadsheets for the problem – which follow:
Chapter-by-chapter aids: Chapter 3
P L U S - SpreadSheet
Mediquip
Laser Tech
Total Units All Hospitals Likely to Buy
200
*
200
Each Supplier's Share (percent) of Total
45.00
*
55.00
*
Each Supplier's Likely Unit Sales
90
110
"Front-end" Design Costs
28000.00
*
19000.00
*
Cost of Producing One Unit
7000.00
*
5875.00
*
Similarly, the spreadsheet showing a 55 percent share for Mediquip and a 45 percent share for Laser
Tech is next:
P L U S - SpreadSheet
Mediquip
Laser Tech
Total Units All Hospitals Likely to Buy
200
*
200
Each Supplier's Share (percent) of Total
55.00
*
45.00
*
Each Supplier's Likely Unit Sales
110
90
"Front-end" Design Costs
28000.00
*
19000.00
*
c. The spreadsheet for this analysis (below) reveals that in this situation customers get a better product
at a lower price, Mediquip's costs are lower, and it also makes more money. Everybody wins! Being
able to identify attractive new market opportunities where a firm can successfully meet customers'
needs can help both the firm and customers. It can also give the firm a "pioneer's advantage"; by
being first in the market it can do such a good job that it is hard for other competitors to catch up.
But, of course, markets are dynamic – so a firm can't rest on its successes. Competition, markets,
and opportunities change over time.
Part IV
IV-3-8 Perreault, Cannon, & McCarthy
P L U S - SpreadSheet
Mediquip
Laser Tech
Total Units All Hospitals Likely to Buy
200
*
200
Each Supplier's Share (percent) of Total
100.00
*
100.00
*
Each Supplier's Likely Unit Sales
200
200
"Front-end" Design Costs
28000.00
*
19000.00
*
CHAPTER 3 – COMMENTS ON USE OF SUGGESTED CASES WITH THIS
CHAPTER
Case 2: Golden Valley Foods, Inc.
This case can be used here to discuss the nature of competition in an almost purely competitive market –
and the need for target marketing and perhaps new-product development to avoid this unattractive
market situation. See case discussion.
Case 6: Applied Steel
Case 22: Bright Light Innovations
This case can be used primarily to demonstrate the challenges of marketing in a developing country. The
depth of discussion is likely to be relatively shallow, given that students have only limited knowledge of
marketing strategy (at this point). But this does not stop students from being fascinated by the
Case 33: Kennedy & Gaffney
This case can be used to provide a good vehicle for discussion of competitor analysis and how a
S.W.O.T. analysis can be helpful in evaluating potential opportunities or planning new strategies.
Differences between physical goods and services are not explicitly discussed until Chapter 8. However,
Chapter-by-chapter aids: Chapter 3
Instructor's Manual to Accompany Basic Marketing IV-3-9
Video Case 4: Potbelly Sandwich
This video summarizes the marketing strategy of Potbelly Sandwich Works, Inc. along the 4Ps and
features interview footage with Bryant Keil, Chairman and CEO of the company. Chicago-based Potbelly
Video Case 5: Suburban Regional Shopping Malls
This video focuses on the current problems of suburban regional and superregional shopping centers.
Southdale Center located in suburban Minneapolis is considered to be the prototype for most of the
CHAPTER 3 – COMMENTS ON USE OF ETHICS QUESTION WITH THIS CHAPTER
Situation: You are a salesperson for a company that manufactures industrial lighting used in factories.
During a recent sales call, an engineer at your customer firm comments about a new lighting product that
his company is testing for a competing supplier. Your company was not aware of the competitor’s new
product—which you think may make one of your product lines obsolete. Should you pass this competitive
intelligence to your sales manager? Should you question the engineer or others at the customer firm to
learn more? If you gather more information, should you share that with your company?
CHAPTER 3 – COMMENTS ON USE OF CREATING MARKETING PLANS
QUESTION WITH THIS CHAPTER
The Marketing Plan Coach software on the text website includes a sample marketing plan for Hillside
Veterinary Clinic. The situation analysis section of the marketing plan includes sections labeled
“Competitors” and “External Market Environment.” Review those sections and answer the following
questions.
Part IV
IV-3-10 Perreault, Cannon, & McCarthy
a. In the Competitors section, what dimensions were used to analyze competitors? What other
dimensions might have been examined?
b. How was competitor information gathered? How else could Hillside have gathered information
about its competitors?
c. What aspects of the External Market Environment are included in the marketing plan? What do
you think is the most important information in this section?
Appendix B of the Hillside Veterinary Clinic marketing plan provides a competitor matrix – that includes a
comparison of four major competitors with HVC. The different dimensions examined include: 1) target
CHAPTER 3 – SUMMARY OF CONNECT HOMEWORK EXERCISES
Exercise 3.1: Competition, Economics, and Technology in the World Market
Question Type: Comprehension case
Exercise 3.2: Radio Daze (The Graying of America)
Question Type: Video Case
Exercise 3.3: Understanding Company Resources
Question Type: Drag-and-drop
Exercise 3.4: Technology Modifies the 4 Ps
Exercise 3.5: The m-Banking Revolution
Question Type: Comprehension case
Learning Objectives: 3-5
Chapter-by-chapter aids: Chapter 3
Chapter-by-chapter aids: Chapter 4
CHAPTER 4: FOCUSING MARKETING STRATEGY WITH
SEGMENTATION AND POSITIONING
CHAPTER 4 – COMMENTS ON QUESTIONS AND PROBLEMS
4- 1. A generic market is a market with broadly similar needs and sellers offering various often
diverse ways of satisfying those needs, while a product-market is a market with very similar
4- 2. Market segmentation is a two-step process of (1) naming broad product-markets and (2)
segmenting these broad product-markets in order to select target markets and develop suitable
marketing mixes. Naming a broad-product market involves "breaking apart" – disaggregating –
4- 3. This is a very difficult question, because there is much interaction among these dimensions
and a great deal of intuition and judgment is required to find the "right" dimensions. The
question is intended to force a review of the types of dimensions listed in the text. The
students probably will want to use geographic dimensions first, and this would be reasonable
for a national or international marketer. After that, however, it is not possible to single out the
"obvious" second- and third-place candidates. The authors' preferences are to try to use the
needs that potential customers want satisfied and the benefits that are offered by the firm's
4- 4. First-time segmentation efforts can be disappointing because the analysts naively start with the
whole "mass market" and try to find one or two demographic characteristics that will explain
the behavior of submarkets. Basically, they stop at the stage of disaggregating markets.
Research shows that this approach has at least two major shortcomings. It often leads to
trying to work with too few and probably the wrong dimensions. Second, perhaps as a result of
4- 5. Most colleges do attempt to develop reasonably homogeneous student bodies, at least with
respect to scores on entrance exams or grade point averages achieved elsewhere. Some do
Part IV
IV-4-2 Perreault, Cannon, & McCarthy
attempt to recruit students from various ethnic groups and regions to provide better "balance"
among their students, and others do appear to be aiming at the "mass market." Admissions
officers and counselors attempt to select "good" students for their particular "marketing mix."
4- 6. This is clearly an "open-ended" question, but students do have some feelings about watches
4- 7. Useful class discussion can center on how each student is slightly different with respect to
determining dimensions. This can sometimes be summarized neatly on the chalkboard by
drawing several markets and submarkets within the same generic market area. This can be
4- 8. This question may involve some "field research" – which the students enjoy. Some are so
involved with their own interests, however, that they have difficulty seeing how and why others
choose to live where (and how) they do. Further, the fact that each student may, at different
times, be in different submarkets seems to elude them. Nevertheless, this can be a very useful
exercise because the focus is on an area where they are making decisions and therefore
should be familiar with some of the relevant dimensions. A group project or at least class
discussion can be useful to ensure that they see that other students have quite different points
4- 9. Positioning approaches show where proposed and/or present brands are located in a market –
as seen by customers. This information can help marketing managers in a number of ways.
First, it can help a marketing manager to decide whether he wants to leave his product where it
Chapter-by-chapter aids: Chapter 4
DISCUSSION OF COMPUTER-AIDED PROBLEM 4: SEGMENTING CUSTOMERS
The questions for this problem are intended to deepen students' understanding of ideas related to
segmenting, clustering, and related concepts. The spreadsheet for this problem is different from the ones
for most of the other problems because it is not oriented toward costs, revenue, and profits. Rather, for
this problem the spreadsheet values are the "inputs" and "results" for a (simplified) cluster analysis
technique. Because the "style" of this spreadsheet is different from some of the other spreadsheets,
some instructors may wish to wait and use it later in the course – after students have had more
experience with the more "typical" problems. This problem, could, for example, be used with the
marketing research chapter.
The technical idea underlying this exercise is similar to the notion of "positioning" segments based on
their "ideal" product features, and then seeing which are close and which are not. This point is not
developed in the student materials. But, instructors who emphasize positioning approaches in class
might want to develop this logic in discussing the exercise. The questions also show what can happen
when a company tries to develop an "average" product in a shotgun approach to satisfying everyone –
rather than more homogeneous segments.
The key point to emphasize – perhaps before students start this exercise – is the notion of a distance
measure. The lower the computed score, the more like (closer) the potential customer is to the segment
"ideal."
The value of this exercise will be enhanced with some in-class discussion. The key points to bring out in
the discussion are covered below. Because the "answers" for the different questions are developed from
across several different spreadsheets, summary tables (like those in the exercise) will be used here –
rather than repeating all the individual spreadsheets. The initial spreadsheet for this problem is presented
next:
Part IV
IV-4-4 Perreault, Cannon, & McCarthy
P L U S - SpreadSheet
Segmenting
Data
CUSTOMER'S RATING OF NEEDS:
Importance of Special Features
8.0
*
Importance of Ease of Use
4.0
*
Importance of Ease of Learning
7.0
*
Answers to Computer-Aided Problem 4:
a. The customer (represented on the initial spreadsheet) would be aggregated (clustered) into the
Specialists segment. From the initial spreadsheet (above), you can see that the similarity score for
this segment is very small compared to the similarity score for the other two segments. One effective
approach here for in-class discussion is to put the "average" scores for the three segments on the
board – -along with the scores for this specific customer (i.e., the scores would be 8, 4, and 7). Then,
b. The similarity scores for the different customers with each of the different segments are as follows:
Chapter-by-chapter aids: Chapter 4
Importance of need:
Similarity Scores
Segment
Cust-
Omer
Com-
puter
Feature
Easy to
Use
Easy to
Learn
Fearful
Power
Specialist
A
Dell
8
1
2
123
2
33
Power
Note that each customer is "aggregated" into the segment for which that customer has the lowest
similarity score – i.e., the segment to which that customer is most similar. From the above, it can be
seen that there are 2 customers in the Power User Segment, 2 in the Professional Specialist
segment, and 3 in the Fearful Typist segment.
c. A glance at the table above suggests that the Fearful Typists prefer Apple computers. More
generally, the instructor can make the point that this is the type of analysis that is often used to
identify segmenting dimensions. For example, if other information were available for each customer
(demographics like age, sex, income, etc.), we could also develop profiles of what each segment was
like on other dimensions – not just what computer the customer uses.
CHAPTER 4 – COMMENTS ON USE OF SUGGESTED CASES WITH THIS
CHAPTER
Case 3: NOCO United Soccer Academy
This case can be used here to demonstrate making target market decisions. The four options presented
in the NOCO United case focus on distinct target markets. The best practice approach to market
segmentation might be used to guide discussion:
1. Name the broad target market. The product-market definition should include product type,
customer needs, customer types, and geographic area. It’s important to strike a balance between
Part IV
advanced level), staying in shape, or getting a scholarship. Other factors might include the desire
of parents to have a place for their kids to go after school, or for fun or social opportunities – a
chance to hang out with or meet friends, or simply a way to keep their kids active.
See case discussion in Part V.
Case 7: Omarama Mountain Lodge
This case can be used here to illustrate a marketing mix that is focused on a very small, but potentially
Case 10: Cooper’s Ice Center
Cooper’s Ice Center is an ice-skating rink that is faced with the challenge of trying to appeal to different
target market groups. It deals with this challenge by offering different programs to different market
segments at different times and days of the week. See case discussion in Part V.
Case 30: Walker-Winkle Mills, Ltd.
This case presents a good opportunity to discuss market segmentation, target marketing, and the three
basic ways of developing marketing-oriented strategies discussed in Chapter 4. The case is set in
Canada and the basic question centers on: How different is the consumer market in Quebec and what
should the company do about it? See case discussion in Part V.
Video Case 2: Bass Pro Shops
Bass Pro Shops is the nation’s leading retailer of outdoor gear. It also is regarded as a master marketer
for a unique shopping experience that blends goods and services with theater and entertainment—a trend
