Chapter–by–chapter aids: Chapter 4
Instructor’s Manual to Accompany Basic Marketing IV-4-7
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 7: Invacare
The Invacare Corporation produces home medical equipment for the domestic market as well as select
global markets. Some of the manufacturing is in USA facilities, including a factory at the main
Video Case 8: Segway
This video tells the Segway story and discusses the marketing strategies pursued by Segway Inc. since
CHAPTER 4 – COMMENTS ON USE OF ETHICS QUESTION WITH THIS CHAPTER
Situation: My Favorite is a popular cereal brand that makes mostly sugary breakfast cereals aimed at
young children. It created a suite of online games that prominently feature cartoon characters associated
with its different cereal brands. A consumer group criticized My Favorite for its use of the online
advergames—games that contain advertising—because they target children. The group suggests that
advergames are worse for kids than TV advertising because 6– to 11–year–olds actively seek out these
Part IV
CHAPTER 4 – COMMENTS ON USE OF CREATING MARKETING PLANS WITH
THIS CHAPTER
The Marketing Plan Coach software on the text website includes a sample marketing plan for Hillside
Veterinary Clinic. Look through the “Customers” section.
a. How does the marketing plan segment the market?
b. Can you think of other segmentation dimensions that could be used?
c. What do you think of the approach Hillside used to determine the target markets? Are they using
a single–target market, multiple target market, or combined target market approach?
d. How does Hillside plan to differentiate and position its offering?
The segmentation approach used includes a geographic dimension (living within 10 miles of Wellington,
Colorado), demographic dimension (owner of a small animal/pet), and a behavioral dimension (purchase
relationship – current vs. not current customers).
The approach used also indirectly addresses other concepts:
1) forming submarkets – reasons for not pursuing more distant customers and owners of large animals
and
2) roughly estimating size and growth of the overall market.
CHAPTER 4 – SUMMARY OF CONNECT HOMEWORK EXERCISES
Exercise 4.1: Honda Comprehension Case
Question Type: Comprehension case
Exercise 4.2: Generic Markets and Product Markets
Question Type: Drag–and–drop
Chapter–by–chapter aids: Chapter 4
Exercise 4.3: Qualifying and Determining Dimensions
Question Type: Drag–and–drop
Learning Objectives: 4-4
Topic: What Dimensions Are Used to Segment Markets?
Exercise 4.1: Yum! Brands
Question Type: Video case
Exercise 4.5: Segmenting Markets: Best Practice Approach
Question Type: Drag–and–drop
Learning Objectives: 4–6
Chapter–by–chapter aids: Chapter 4
Chapter–by–chapter aids: Chapter 5
CHAPTER 5: FINAL CONSUMERS AND THEIR BUYING
BEHAVIOR
CHAPTER 5 – COMMENTS ON QUESTIONS AND PROBLEMS
5- 1. The “economic buyer” model of consumer behavior suggests that people know all the facts
(relevant to a purchase) and logically compare choices in terms of cost and value received to
get the greatest satisfaction from spending their time and money. Thus, its focus is often on
economic needs such as economy of purchase or use, convenience, efficiency in operation or
use, dependability in use, or improvement in earnings.
Some students may realize that “economic buyer” comparisons are usually easier to make
when the alternative ways of meeting a need are comparable. For example, it may be easier
to compare different brands of 13″ color television sets than to decide whether to buy a new TV
set or alternatively to spend the money on a ski weekend. Both may involve entertainment
needs, but really represent very different alternatives. (Sometimes it is not easy to do
5- 2. See section “Psychological Influences within an Individual” for a discussion of the PSSP
needs. Getting the students to illustrate these needs in their own particular cases will deepen
their understanding of this important concept. Then, going on to show that economic needs
may affect how they behave with respect to satisfying the four basic needs will round out this
discussion.
5- 3. The instructor might have several students discuss their ads in class – and then attempt to
develop some generalizations as to whether magazine or newspaper advertisers appeal more
to basic or economic needs. Chances are the magazine advertising will appeal more to basic
needs. Newspaper advertising, which is usually more concerned with immediate results, will
IV-5-2 Perreault, Cannon, & McCarthy
5- 4. See section “Psychological Influences within an Individual” with respect to the relation of
5- 5. Students can be expected to respond to this question in different ways – and that is part of the
purpose of the question. The point is to prompt each student to think more deeply about the
concepts involved: beliefs, attitudes, and intentions. For example, most students believe that
compact fluorescent light (CFL) bulbs save them money or are good for the environment, but
5- 6. Student answers to this question will vary. The purpose of the question, however, is to prompt
students to think more deeply about how satisfaction/dissatisfaction may be related to
expectations – and how such expectations are formed in the first place.
This question opens the door for an interesting discussion of how changing expectations can
5- 7. See section “Psychological Influences within an Individual” regarding definitions of
psychographics and lifestyle analysis. For understanding college students and planning a
marketing strategy to reach them, it might be possible to segment the college market based on
the activities, interests, opinions, and demographics of submarkets. Some might be easily
reached through mailing lists – for example, members of fraternities or sororities, or
engineering or science types (for expensive stereo equipment). As always, the more one
knows about potential target markets, the easier it is to build a marketing mix to satisfy each
market segment. And the AIO approach may help one learn more about potential customers
by asking many questions.
5- 8. Students will have varied responses to this question, perhaps in part because of differences in
Chapter–by–chapter aids: Chapter 5
activities such as grocery shopping. There are in fact a number of chains that have been
successful in targeting the growing Hispanic subculture in California (and other areas). Some
of the changes in “product” include more “familiar” brands imported from Mexico and different
5- 9. The restaurant owner would have to decide what class or classes he wishes to appeal to, i.e.,
his target market – and then determine his four Ps accordingly. A really excellent restaurant
(product) might seek a prestigious location and price its product accordingly. Further, the
promotion might seek to establish an image for the restaurant that would attract the desired
customers and discourage others. If the marketing mix were not carefully designed, another
type of clientele might be attracted and the original customers might become dissatisfied and
go elsewhere. Similarly, the local bar in a factory or university town would seek to develop a
different image and combination of the four Ps. For example, the university bar might provide
good hamburgers, and encourage singing and other activities that would make it an attractive
meeting place, whereas the neighborhood bar might seek a quieter atmosphere.
5-10. Reference groups are discussed in section “Social Influences Affect Consumer Behavior.”
Personal examples are required to deepen understanding. In reviewing students’ examples, it
5-11. Personal examples here will vary. But the purpose of the examples is to prompt students to
think about how purchase situation has influenced them personally. The text discussion of
purchase situation emphasizes the reason for a purchase, time factors (when a purchase is
made, time available to make the purchase), and surroundings. See section “Individuals Are
Affected by the Purchase Situation.”
5-12. Personal examples here will vary. But the purpose of the examples is to prompt students to
think about the varied information sources that might be used when making a purchase that
involves extensive problem–solving. The text discussion of extensive problem–solving (see
section “The Consumer Decision Process”) suggests that extensive problem–solving is more
Part IV
IV-5-4 Perreault, Cannon, & McCarthy
product brochures, company “hot–lines,” etc.) and “nonmarketing” sources (friends, parents,
opinion leaders, articles in Consumer’s Report, etc.). At the end of the discussion, it is useful
to “wrap up” by pointing out that many of the sources consulted are not controlled by marketing
management, and that means that word–of-mouth can be especially important for purchases
that involved extensive problem–solving.
5-13. This question raises many ideas which will be developed in later chapters. It especially
provides a lead–in to the consumer product classes – convenience, shopping, specialty, and
unsought products. The student should not be expected to use these terms. Rather, the
Chapter–by–chapter aids: Chapter 5
Product
How
consumers
would shop?
How far
would they
go?
Would they
buy by
brand?
Would they
compare with
other brands?
Other factors
they’d
consider?
good solution
haircutter)
Digital
Camera
Search for
information
Far – if
needed
Brand might
be important –
quality
Yes
Might need
expert advice,
perhaps from
salesperson
Tennis
Racket
Extensive
Moderate
Probably
Yes
see intro to
Chapter 1!
Yes
Yes
Insurance
Unsought?
Not far
Perhaps – as
a way to
reduce risk
Yes
Not unsought
for young
parents, etc.
The “answers” provided in this template are a starting point, but they should not be taken as
“correct” or the only answer. In fact, it is very likely that different students will come up with
different notions on some of the items. Frequently this is due to the fact that they have
different target markets in mind or that their knowledge of consumer behavior is influenced by
their own experience only. Class discussion on this question brings out the differences and
enables the instructor to point out the need for explicitly stating the target consumers which the
student has in mind and then the value of doing a little consumer research on the behavior of
those consumers. The tennis racket, dress belt, cell phone, and digital camera probably are
shopping products for most consumers and this also affects the other three Ps. Haircuts and
checking accounts are services, and it is hard to evaluate the service in advance. Life
insurance is also a service, but it is probably an unsought product for many consumers – at
least for many college students. Of course, any of these products except life insurance might
IV-5-6 Perreault, Cannon, & McCarthy
5-14. We’ve written the case examples that appear at the beginning of each chapter in Basic
Marketing to illustrate and highlight, in an integrated way, many of the key concepts introduced
in each chapter (or related set of chapters). The iPod case is illustrative. It illustrates a wide
array of concepts related to consumer behavior that appear in Exhibit 5-2 and are expanded in
Exhibit 5-8. After students have highlighted some of the concepts that are illustrated in this
case it might be useful to encourage them to look for and think about the opening cases for
other chapters in a similar way.
Examples of some of the key terms and concepts illustrated in the iPod case that also appear
in Exhibits 5-2 and 5-8 are listed below:
the iPod. An advertising campaign also helped raise awareness
• Problem solving –
o Information search – word of mouth, blogs, e–mails, Internet reviews, salespeople in
stores, and advertising (all of these provided information)
o Identify alternatives – competitors’ advertising identified alternative models by Dell,
Sony, and Creative Labs
o Set criteria – style, longer battery life, greater capacity, availability of accessories
o Evaluate alternatives –
5-15. This exercise can help students in a couple different ways. It allows them to practice
interviewing skills and shows them how much they can learn about consumer behavior by
talking to someone about how and why he buys. The two purchase scenarios typically
demonstrate very different buying experiences.
This exercise works very well as a class discussion. The instructor may start by writing each of
the elements in Exhibit 5-8 horizontally across the board. On the far left side add two other
headings – student name and product purchased. Then call on a few students and walk them
Chapter–by–chapter aids: Chapter 5
DISCUSSION OF COMPUTER-AIDED PROBLEM 5: SELECTIVE PROCESSES
A marketing manager for a magazine subscription service is analyzing the direct mail promotion she uses
to sell subscriptions. She is using mailing lists to target her mail promotion. The different customers
reached with different lists respond to the mailing in different ways. In addition, the costs are different
with different lists. The problem emphasizes the importance of consumers‘ selective processes to
The initial spreadsheet for the problem is given below:
P L U S – SpreadSheet
List 1
List 2
Cost per Mail Promotion Piece
0.32
*
0.36
*
Revenue from Subscription
3.12
*
3.12
*
Number of Items Mailed
25000
*
25000
*
Percent Bad Addresses on Mail List
10.00
*
8.00
*
Number of Consumers Who Receive Mailing
22500
23000
Number of Consumers Who Read
20700
21390
Percent Lost–Selective Perception
70.00
*
*
Number of Consumers Who Understand
Percent Lost–Selective Retention
50.00
*
*
Number of Consumers Who Subscribe
Expected Profit
Answers to Computer–Aided Problem 5:
a. Based on the initial spreadsheet (above), List 2 appears to be the best choice. This list costs
more per initial mailing, but it also reaches a more “interested” target audience. The expected
profit from using this list is $2,678.16 per mailing of 25,000 items – as contrasted with on
$1,687.60 from the first list.
b. The firm will need to send out a mailing of about 32,665 items. The student should have selected
list 2 in the question above. Then, the What If analysis can be used to vary the number of items
mailed – to see what profit is produced by mailings of different sizes. Some students will not get
Part IV
IV-5-8 Perreault, Cannon, & McCarthy
P L U S – SpreadSheet
List 1
List 2
Cost per Mail Promotion Piece
0.32
*
0.36
*
Revenue from Subscription
3.12
*
3.12
*
Number of Items Mailed
25000
*
32665
*
Percent Bad Addresses on Mail List
10.00
*
8.00
*
Number of Consumers Who Receive Mailing
22500
30052
Percent Lost–Selective Exposure
8.00
*
7.00
*
Number of Consumers Who Read
20700
27948
Percent Lost–Selective Perception
70.00
*
*
Number of Consumers Who Understand
Percent Lost-Selective Retention
50.00
*
*
Number of Consumers Who Subscribe
Expected Profit
c. It would make sense to add the reply card. While it adds to the cost, it also increases the number
of customers who subscribe – and profit increases to $2,407.92 for List 1 and $3,598.16 for List
2. The table below summarizes the initial situation and what would happen with the addition of the
reply card.
Expected Profit
List 1
Expected Profit
List 2
Without reply card
$1,687.60
$2,678.16
With reply card
$2,407.92
$3,598.16
The spreadsheet for the analysis is given below:
P L U S – SpreadSheet
List 1
List 2
Cost per Mail Promotion Piece
0.33
*
0.37
*
Revenue from Subscription
3.12
*
3.12
*
Number of Items Mailed
25000
*
25000
*
Percent Bad Addresses on Mail List
10.00
*
8.00
*
Number of Consumers Who Receive Mailing
22500
23000
Percent Lost–Selective Exposure
8.00
*
7.00
*
Number of Consumers Who Read
20700
21390
Percent Lost–Selective Perception
70.00
*
*
Number of Consumers Who Understand
Percent Lost–Selective Retention
45.00
*
*
Number of Consumers Who Subscribe
Expected Profit
Chapter–by–chapter aids: Chapter 5
CHAPTER 5 – COMMENTS ON USE OF SUGGESTED CASES WITH THIS
CHAPTER.
Case 1: McDonald’s “Seniors” Restaurant
This case can be used here to show that various social and situation–related dimensions may be useful
for marketing strategy planning. Here, not only age and sex are relevant – but people’s attitudes towards
fast foods, and a friendly, social environment and bingo are important too. See case discussion.
Case 3: NOCO United Soccer Academy
This case can be used here to discuss different elements in the model of buyer behavior. To stimulate
discussion, the instructor might start by showing the students Exhibits 5-2 and 5-8. For example, family
Case 8: Besitti’s Restaurant
This case could be used here to show how careful definition of likely target markets – coupled with readily
available demographic data to estimate the size of markets – can be helpful in strategy planning. In this
case, the owner of the business was unclear about her target market(s) and how many people were in
these markets. As usual, a clear definition of target markets could lead to better marketing mix planning.
See case discussion.
Case 9: Peaceful Rest Motor Lodge
This case can be used to show how different customers‘ attitudes affect their shopping and buying
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. This case can be used here to show that stage in the
family life cycle, as well as other demographics like age and sex, are relevant to marketing strategy
planning. See case discussion.
Case 11: Running Room
This case provides an opportunity to discuss the importance of understanding various kinds of needs –
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Case 12: DrJane.com—Custom Vitamins
Case 30: Walker–Winkle Mills, Ltd.
This case can be used to discuss market segmentation by the Canadian subsidiary of a U.S. multinational
corporation. The emphasis can be on planning alternative strategies in possible submarkets versus
moving towards a “global strategy.” See case discussion.
CHAPTER 5 – COMMENTS ON USE OF ETHICS QUESTION WITH THIS CHAPTER
Situation: You are a marketing assistant for Auntie Em’s Cookie Company, which makes and distributes
packaged cookies through grocery stores. Your company recently ran a test market for a new brand of
low–fat cookies called Tastee DeeLites. The new brand meets government standards to be labeled and
advertisied as “low fat,” so the ads and package used in the test market highlighted that benefit. Test–
market sales were very promising. However, now a consumer activist group has created a website
(www.TasteeDeLIES.com) that claims Tastee DeeLites package and ads are misleading because the
product’s high calories make it even more fattening than most other cookies. Your boss has asked you to
recommend how Auntie Em’s should handle this situation. Drawing on what you’ve learned about
consumer behavior, do you think consumers would be misled? Does your company have any
responsibility to respond to these charges? Should changes be made to the product, package, or
promotion?
This scenario raises questions about consumer attitudes and beliefs. Do consumers that read “low fat”
assume “low calorie”? If so, would that make the ads and packaging deceptive? The AMA Statement of
CHAPTER 5 – 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. Look through the “Customers” section and consider the following questions.
a. Based on the marketing plan, what do we know about the consumer behavior of the target
market?
b. What additional information do you think would be helpful before developing a marketing strategy
for Hillside?
This chapter includes consumer behavior models that evaluate the consumer behavior process and
influences on it. Influences include the following: 1) economic needs, 2) psychological variables, 3)
social influences, and 4) purchase situation. An instructor might ask why the marketing plan provides so
Chapter–by–chapter aids: Chapter 5
customers. Animal health care services are largely driven by situational factors – a new puppy requires
shots, a sick cat requires a vet visit, or a dog’s injured paw needs attention.
Dr. Hardy would like to sell more preventative services – like dental care. It might help to know more
about consumer attitudes for services – and their interest in these services. It might also be helpful to
know how consumers make decisions on elective (as opposed to required) treatment for their pets. Does
the purchase process differ? Is there a time of year when such services might be more affordable? What
information would be helpful to consumers before making these decisions?
CHAPTER 5 – SUMMARY OF CONNECT HOMEWORK EXERCISES
Exercise 5.1: Nintendo and Stages of the Family Life Cycle
Question Type: Decision Generator
Exercise 5.2: The PSSP Hierarchy of Needs
Question Type: Drag–and–drop
Exercise 5.3: Psychological Influences Within An Individual
Question Type: Drag–and–drop
Exercise 5.4: Retirement Options and Older Consumers
Question Type: Video case
Exercise 5.5: Consumer Solve Problems
Question Type: Drag–and–drop
IV-5-12 Perreault, Cannon, & McCarthy
Chapter–by–chapter aids: Chapter 6
CHAPTER 6: BUSINESS AND ORGANIZATIONAL CUSTOMERS
AND THEIR BUYING BEHAVIOR
CHAPTER 6 – COMMENTS ON QUESTIONS AND PROBLEMS
6- 1. The answer to this question is discussed in section “Organizational Customers Are Different”
but the basic ideas are simple. Specifically, while there are some important differences in
6- 2. This question can be used to highlight the similarities between buying processes of final
consumers and organizational buyers, to highlight the differences, or both. The behavioral
influences discussed in the previous chapter may apply equally to final consumers and
organizational buyers. But, in most cases the organizational buying process is likely to put
6- 3. It is important for a marketing manager to think about who is likely to be involved in the buying
center for a business or organizational purchase because each person may influence the
purchase – and perhaps influence it different ways. The marketing manager needs to see if all
6- 4. The fact that the hospital is a nonprofit organization is not very central as an issue in this
question, but students should see that. As contrasted with the types of multiple influence in a
purchase by a manufacturing concern, the specific titles of some of the people involved might
certainly be different (for example, doctors, nurses and imaging technicians rather than
“production” workers in a factory might be the “users”), but the fact remains that such a “high
ticket” purchase would be treated seriously and a number of different people might be involved
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IV-6-2 Perreault, Cannon, & McCarthy
with financial matters or with physical facilities (who would have to arrange for power supplies,
safety considerations, security, etc.) might also have inputs.
6- 5. When a producer of pickup trucks first designs a new truck, it is likely to go through a new task
buying process. A number of different people in different roles in the firm may influence the
specification of the lightweight bumper (appearance, materials, crash resistance, finishes used,
etc.) and the selection of one or more vendors who are capable of providing not only the right
6- 6. The most basic reason that a business buyer would want to get competitive bids is to try to
stimulate price competition among different possible suppliers. Of course, there might also be
a company policy that requires that bids be obtained. Competitive bids can be used when the
same basic product is available from different vendors, or if they offer different products when
6- 7. Any of the organizations might rely on the use of competitive bids as part of the purchase
process – although the “bidding process” or collection of “bids” might be more informal in some
cases than in others. However, a hardware store that wants to add a new lawnmower line
would probably be less likely to use competitive bids – as the overall relationship with a
potential supplier might be influenced by many factors that would be hard to anticipate in
setting up bid specifications.
Chapter–by–chapter aids: Chapter 6
(c) the hardware retailer might first check with its wholesale suppliers to see if one of them
could provide an acceptable line of mowers at a reasonable price; the retailer is more likely to
want to learn about the available alternatives and then make a decision based on the overall
marketing mix (including the reputation of the brand with consumers) that its supplier/channel
partner could provide, not just on price; however, a large hardware chain that wanted to offer a
6- 8. From the buyer’s point of view, “just–in–time” delivery systems are likely to result in a lower total
cost of working with a supplier, especially if it means that lower levels of inventory can be
maintained. On the other hand, the close working relationship and coordination required
between the buyer and seller means that the buyer must provide the seller with a significant
amount of information about its operations, needs, and the like. The buyer may not want a
6- 9. The idea of a customer building a closer working relationship with a supplier is discussed in
section “Buyer–Seller Relationships in Business Markets.” Basically, however, there are a
number of functions that can be done better or at lower cost if there is cooperation between the
buyer and seller. For example, a buyer that is able to trust and work closely with a supplier
6-10. A tool manufacturer would in all likelihood need a different strategy for dealing with a big retail
chain than for a single hardware store run by its owner. The large chain might employ buying
specialists for each specific line of tools. The large chain might be very concerned not only
about price and adequate availability but also issues such as computer–ordering compatibility
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6-11. This question anticipates the discussion in Chapter 8 on business product classes. Possible
topics are: methods of buying, average quantity purchased, attention to quality, price–
6-12. Although business and organizational customers are not as numerous as final consumers,
there are many obviously different types and varieties of them. And then within these groups
there are many of the more subtle groupings that we discussed in the previous chapters.
Therefore, target marketing is just as (or maybe even more) important here.
6-13. NAICS codes are especially useful as a way of getting additional information about potential
6-14. This question anticipates the discussion of Promotion in later chapters. Here, the student
should be led to consider the relative importance of personal selling and advertising in relation
to the nature of the products being handled and the target markets. Large chain buyers might
have to be approached with a carefully worked out presentation that might have to be on paper
6-15. One reason some firms tend to ignore the government market is because of the great number
of heterogeneous target markets which have different procedures for announcing their
requirements, bidding, and awarding bids. Further, specifications must be read carefully to
determine the lowest cost item which will meet the minimum specification. Then it may be
necessary to meet one or more city employees to explain how or why the firm’s product does
meet the specifications. Also, sales and service effort which may help the government
employees obtain satisfaction from the firm’s products may not be awarded if a bidding system