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Part V
V-24 Perreault, Cannon, & McCarthy
Keen student interest in the situation works to promote good ideas and good discussion, regardless of the
way in which the instructor focuses the discussion. In that regard, the case is quite flexible because it can
be used for some fruitful discussions of:
• what the product is that Jessica is selling,
• whether or not Jessica has a good strategy,
Jessica has done a reasonably good job of thinking about target markets (perhaps with the exceptions
noted below) and understands the relevant needs quite well. (Some students will not have explicitly
considered the fact that this is primarily because of her personal experience – both experience in getting
married and also experience in different promotion-related jobs. It’s useful to remind students that they
may be able to gain a competitive advantage in jobs, in which they have a real interest and relevant
experience, even if it is not necessarily business experience.) On the other hand, the marketing mix(es)
seem to falls short. That can lead to a fruitful discussion of whether this business really involves one
strategy or several strategies that all have to work together as an integrated whole. For example, a
marketing mix that appeals to engaged couples is not the same as a marketing mix that appeals to the
firms that pay for web pages.
It’s useful to think about the marketing mix that Jessica offers each of these target markets. For each
group:
What is the specific product (and what are its benefits)?
What is the price of obtaining those benefits?
How are the benefits promoted? and (to a lesser extent)
What is Jessica’s role in the place arrangements between the advertisers and their customers?
How does her current geographic focus come into play?
Comments on Cases in Basic Marketing
certainly pay for the services provided–if enough advertisers and customers can be attracted. It’s a
chicken and egg situation in that regard.
Further, the relationship with couples who do sign up needs to be a close one–even if for only a short
time period. Most couples are not going to be repeat customers! On the other hand, couples who are
about to get married often know others who are at the same life stage (especially among younger “first-
marrieds”). Jessica needs to think about how to stimulate word-of-mouth referrals so that people who do
sign up help to bring in additional customers. Since she doesn’t have a lot of money, one way to do this
is to think in terms of marginal revenue from new customers and what it might cost her to acquire a
customer. It might be better and cheaper to offer couples who recommend the service to a friend a $5 or
$10 “rebate” on the $20 fee – or perhaps she could enter them in a bimonthly drawing for some more
substantial prize – like a honeymoon trip.
Jessica is also being a bit production-oriented in the way she is thinking about her product. She designs
web pages in her other job, and so she is thinking about potential advertisers who need a web page. But
firms that already have a good web page might be more interested in something else, like a banner ad or
button ad at her website that would allow a net surfer to “click” over to get their existing message. Firms
that have already invested in a website know that they face the same problem that Jessica does–they
want to attract people to the site. So, for them the value of banner ads (perhaps at a lower cost, or even
with the fee based on the number of click-throughs from Jessica’s website) might be easier to see.
Jessica’s service in many ways operates with the same approach as a magazine – attracting an audience
and advertisers who want to reach that audience. Yet, most firms that sell advertising media time and
space rely on personal selling and/or offer incentives to advertising agencies or others that refer
business. Jessica hasn’t done much personal selling to advertisers, even after her “direct response”
mailing didn’t work. The case offers several hints why: she didn’t like the job she had doing personal
Part V
website she might be more successful in getting customers to tell the advertisers that “I am a
MyPerfectWedding” customer.
While Jessica doesn’t think that there is much competition for her idea, it is an idea that is easy to modify
or copy, and there are few competitive barriers to entry. Further, if she doesn’t make a greater effort soon
and start to build awareness and interest as “the” place for wedding listings, shopping, and advertising,
she is likely to lose out to another competitor.
Case 20: Blue Lagoon Marine & Camp
Jeffery Mauro is in a very competitive – almost purely competitive – market situation. Some of the
products he is selling are in the market growth stage – but most have reached the market maturity stage
where there are relatively small differences among products and all of the producers are trying to
out-promote each other and find more outlets. Blue Lagoon Marine & Camp happens to be one of the
support indicates that they are in a very competitive situation and must help the retailers move these
essentially homogeneous products. As noted above, this is characteristic of the market maturity stage.
Entry is very easy into this industry (witness how easy it was for Jeffery to get in) and a continual turnover
of small retailers is typical. And many manufacturers of such products are continually looking for new
outlets. Many of these manufacturers are very production-oriented and are continually trying to "push"
more goods on their retailers. Very aggressive sales reps can be quite "successful" – because many of
the retailers are relative newcomers and quite naive. "Hope springs eternal" in the minds of some new
businesspeople and they eagerly take on new lines as long as they have the capital or borrowing power.
Then when things do not go well, they have "close-out" sales – or sell out to optimistic newcomers like
Jeffery.
Comments on Cases in Basic Marketing
Case 21: Global Chemical, Inc. (GCI)
Ford's previous approach to designing a car and specifying materials was production-oriented. But it also
gave purchasing agents a great deal of power as they asked competing suppliers to bid on standard
specifications. This quickly led to pure competition or oligopoly situations, depending upon how many
competitors could supply the specified homogeneous products.
Regardless of the nature of competition that develops, it is clear that the buying situation has changed.
Kenneth Shibata should develop a different promotion effort – probably a team of order getters and
supporting people who can work with the multiple buying influences while products are being designed.
This means that lead times of one to five years will become more common rather than order-by-order
bidding in the short run. This also means that Kenneth will have to build a team and organize GCI's
efforts so it will be seen as having a "serious commitment." This has already led to more plastic
Case 22: Bright Light Innovations
Bright Light Innovations is a real situation – the names, dates, and plans were correct at the time the case
was written. The case is based on an award winning business plan created by a team of students (mostly
undergraduates) and faculty advisers all of whose names are mentioned in the case. An instructor should
be aware that students might do an online search of the company and product and discover its latest
strategy. As of this writing, such a search only yields information about how the business plan fared in
various competitions.
The case may work best later in the course because it offers an opportunity to discuss many elements of
the marketing strategy planning process model. Let’s briefly walk through some of these elements and
possible discussion points.
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V-28 Perreault, Cannon, & McCarthy
• External environment. An instructor might discuss the impact of cultural values on aid for
developing countries. Traditionally, most aid to impoverished nations was in the form of grants,
government relief, and/or donations. But this approach has its pitfalls – as each form dries up
and tends not to motivate the recipients. More recently, many donor countries and philanthropists
emphasize aid that gives people a “hand up” instead of a “hand out.” Bright Light Innovations
reflects this approach.
• Company resources. It can be surmised that the company does not have extensive resources –
and is motivated to make at least some profit. Students might rightly question the company’s
experience – which is very limited.
• Marketing strategy. The target market is pretty much defined by the case, but the marketing mix
is left wide open.
• 4Ps. There can be a strategic discussion about pricing, margins for distributors, and how to
Rogers’ framework may help students to think about how to market the Starlight Stove in Nepal. Rogers
notes five characteristics of an innovation that influence its speed of adoption: 1) the relative advantage it
offers, 2) its compatibility with existing values and past experiences of adopters, 3) the complexity or
difficulty of understanding how a new product works or how the consumer will realize value, 4) triability or
the degree to which adopters can experiment with the product, and 5) observability or the extent to which
the results of the innovation can be seen by others.
Another way to stimulate discussion would be to remind students of the adoption process introduced in
Chapter 5. The six-step process involves:
1) Awareness (Would demonstrations or a traveling road show help generate awareness and interest?)
2) Interest (How could BLI or its distributors stimulate interest?)
Comments on Cases in Basic Marketing
Instructor’s Manual to Accompany Basic Marketing V-29
3) Evaluation (Where and how do consumers evaluate how the product might help them?)
4) Trial (see paragraph above)
5) Adoption (Would explaining microfinancing terms help overcome objections?)
6) Confirmation (How would buyers be reminded about the value of the process?)
Case 23: Carson Furniture
This case gives the student an opportunity to analyze some marketing research data that makes use of
social class. Renee Carson is obviously aiming at Groups C and D, while her salespeople are probably in
Group B or even in Group A – because good heterogeneous shopping products salespeople should be
more than clerks. If they are in Group A or B, then it is obvious that they have different attitudes than
their target markets. In particular, their target markets probably do less informal shopping than they
Case 24: Wireway
This company now produces component parts, but it wants to go into the seemingly profitable consumer
products market after experience with a product that it made for another company. The products they are
considering would probably be impulse or heterogeneous shopping products. Good products coupled
with appropriate distribution systems might be profitable. But really new items would be copied quickly
and the product life cycle would move quickly to the market maturity stage.
Shayla McGrorey has much more than a pricing problem. She has not even selected her target
market(s). All she has is a product. She has no idea about the demand for the product. She has no
patent protection or established brands. Thus, competition can be expected if the product is at all popular
– really the same kind of competition she will give the firm she is copying.
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V-30 Perreault, Cannon, & McCarthy
This company actually had a very profitable industrial business and was completely unfamiliar with the
consumer products market. This is a very common situation – that is, industrial producers wishing to
Case 25: Long Beach Plastics Mfg.
This manufacturer of very slightly differentiated installations is in close to oligopolistic competition in the
U.S. market. The competitors have tended to use nonprice competition. All machines have similar
prices, but each firm uses F.O.B. shipping point pricing, so this has led to "geographic monopolies"
around the various shipping points, which are dispersed around the country.
Generally speaking, price cutting in monopoly situations (with inelastic demand) or oligopoly situations
should be avoided – and this may apply here also. If Long Beach Plastics began to absorb freight and its
competitors followed immediately, then it might find that it had eleven other competitors in its local market
and everywhere else. This might increase the difficulty and cost of the sales job and ultimately lead to
selective price cutting. The more prudent course would be to try to expand sales through promotion
effort. But this too may not work if potential customers really do see these products as basically
homogeneous and Long Beach Plastics' delivered price is higher.
Case 26: Abundant Harvest
A production-oriented manufacturer of staples in market maturity has been selling the bulk of its output as
dealer brands (in almost pure competition) through food brokers to wholesalers and retailers outside its
local area. Abundant Harvest does use its own brand locally, but this is a minor part of total volume.
Declining profits have led to a "desperation" move – trying to bypass the food broker. This move helps
reinforce the judgment that Abundant Harvest is production oriented, because it did not appreciate one of
the important roles being filled by the brokers – that is, to combine the output of several packers such as
Abundant Harvest into sufficient volume to meet the demands of their dealer-brander customers. These
food brokers are adjusting discrepancies of quantity – a function that Abundant Harvest is not trying to
handle (really, doesn't even understand!).
Comments on Cases in Basic Marketing
Instructor’s Manual to Accompany Basic Marketing V-31
Case 27: Advanced Molding, Inc.
Anya Winrow's major problem is whether this new company can develop some marketing strategies that
will be more profitable than those now being implemented by the company. Her salary will not rise by
changing jobs, so she must decide whether profits will rise and lead to a bonus (2 percent of profit) and
an attractive return on her investment.
Success with proprietary products depends upon almost continual successful innovation. Product life
cycles (to market maturity) are short new products are copied quickly by other companies, just as this
company has been doing. These competitors can be expected to cut price until there is no profit. One
way to beat this cutthroat competition is to bring out new products continually (at a cost for dies,
promotion, etc., of course) and command a price premium for a short time.
Anya's decision must consider the caliber of the other "new people" as well as Joseph's plans. After all,
Anya gets only a 5 percent interest in the business and thus is not much more than an employee.
Further, a 5 percent share of a "zero-profit" business isn't worth much – even if it has modern equipment.
The lawyer (Joseph O’Sullivan) will probably keep a 51 percent interest and thus his thinking will
dominate. If he is primarily concerned with internal problems rather than with marketing problems, there
may be little point in Anya joining in this venture to acquire a factory. The major problem is marketing. If
this is solved, perhaps the necessary products can be purchased from some factory like this one –
instead of buying this business! This would leave more time and money for profit-making activities.
V-32 Perreault, Cannon, & McCarthy
Case 28: KCA Precision Tools (KCA)
This manufacturer of operating supplies is facing almost pure competition for its standard items. The
product life cycle for these homogeneous items probably has reached the market maturity stage – and
conditions cannot be expected to improve. Recognizing this, the company has sought to develop and sell
"special-purpose" operating supplies. It has decided to use its regular general merchandise (or single
line) merchant wholesaler to introduce and sell these special-purpose tools. This decision makes some
sense in that customers buy only small quantities and the market is widespread. Unfortunately, however,
some new specialty merchant wholesalers have developed in this product market – and also many small
producers are selling direct. The greater sales effort (order getting) that they give these items – including
technical assistance – cannot and will not be matched by KCA's present merchant wholesaler. It is in a
different business entirely – carrying a large assortment of items, but not aggressively promoting any of
them. Order taking – not order getting – is its strong point. (The reference to the large catalog should
The "right" answer depends on the needs and attitudes of the various cutting tool customers and the size
of the various markets. If some buyers will routinely continue buying from the present merchant
wholesaler – no matter what the specialty wholesalers do – then a substantial sales volume may continue
to be sold through these outlets. The specialty wholesalers may already have switched all those
customers they can serve profitably. On the other hand, if the "switch" is just starting, then perhaps KCA
should move soon – before all of the good specialty wholesalers have made arrangements with other
manufacturers and KCA must watch its share of the market slowly decline as the market shifts from the
general merchant wholesaler to specialty wholesalers. Any such shift would not occur overnight, and this
is the dilemma facing a company like KCA. Should it give up its established channel and all of the
volume that flows through the channel to position itself correctly for the future? If it makes a move now, it
may lose sales in the short run and benefit in the long run. On the other hand, if it doesn't move now, it
may lose in the long run.
Case 29: Quality Iron Castings, Inc.
Mallory Rizocki, the marketing manager, is certainly correct that the proposed hydraulic jack line would
get the firm into entirely different strategies. Currently, they are selling component parts directly to
manufacturers – and are relying heavily on their ability and willingness to make product changes as
Comments on Cases in Basic Marketing
He may actually have fairly high costs. His production flexibility may come from running a "high cost" job
shop rather than a mass production operation.
Tim Kingston, the production manager, does not appear to have any new ideas – preferring instead to try
estimate the potential in each market and Quality Iron Castings' likely share – given the strength of
entrenched competitors. This sales estimate could be matched against the cost of setting up and
maintaining the necessary distribution systems to obtain the estimated sales. Even reasonable estimates
would show how much would probably be lost by going ahead with the proposal.
The fact that the company has excess capacity is driving this situation. It will be desirable for the firm to
from making a bad mistake – but she may not succeed unless she assembles some numbers that show
the implications of what is being proposed.
This case illustrates the fairly typical situation where there is poor understanding of marketing and the
manager drifts into decisions because no one has a clear understanding of where they are going or what
they have been doing or could do. This case is placed near the end to provide a convenient way of
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 market-oriented strategies discussed in Chapter 4 – within an "international"
market – i.e., Canada. The basic question is just how different is the Quebec market. A philosophy of
this book is that different marketing mixes may be needed if there are distinct submarkets within a broad
V-34 Perreault, Cannon, & McCarthy
Case 31: Amato Home Health (AHH)
Maribeth Amato is wrestling with an objectives problem. She would like to spend her time ensuring that
AHH does "good things" and retains its professional image – that would probably mean working only with
well-trained nurses and not getting involved with paraprofessionals and relatively unskilled aides to be
able to offer "care and comfort" services. At the same time, she is coming to recognize that the market
may want more than just nursing services – and that if she and AHH are to survive they may have to
satisfy these market needs or find themselves losing business to competitors. Until recently, AHH
neglected "profit-oriented matters" – that accounts for its up and down history. But now it is increasingly
clear that a more business-like approach will be necessary – although she refers to earning a "surplus"
rather than a "profit."
Case 32: Lever, Ltd.1
The regional disparities evident in the bar soap market and in Guard's regional development often occur
in a country as diverse as Canada. French-English Canadian differences are the ones most commonly
encountered.
Comments on Cases in Basic Marketing
Once an hypothesis has been developed as to why a market is underdeveloped, a corrective course of
action must be laid out. This may involve new advertising, higher spending levels or, in rare cases, even
changes to the product or packaging.
Case 33: Kennedy & Gaffney (K&G)
Kennedy & Gaffney is selling business products (professional services) to several product markets. It
appears that the "municipal market" should be split into (at least) two markets: according to "in-house"
sophistication which corresponds roughly to size. Perhaps they could be nicknamed "Small" and "Large"
to avoid offending with "Unsophisticated."
Case 34: Chess Aluminum Worldwide (CAW)
In the U.S., Chess Aluminum Worldwide sells a variety of consumer and business products through
merchant hardware wholesalers and buying groups who have helped CAW grow (perhaps in spite of itself
if its foreign efforts illustrate its strategy planning abilities!).
In "foreign" markets, CAW's strategy in each country is set by the first creditworthy firm that orders.
Some U. S. wholesalers probably sell the full line, so CAW hopes these foreign buyers will too.
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V-36 Perreault, Cannon, & McCarthy
CAW doesn't seem to understand strategy planning or what different kinds of wholesalers can and will do.
It has been opportunistic and illustrates typical "foreign market" export planning by U.S. firms.
Just trying to outline a "global strategy" would be useful, because CAW would have to get more explicit
about what it is doing in the U.S. And this could serve as a basis for the "bigger" strategy(ies). If the
same kinds of wholesalers aren't available in other counties, then CAW may have to develop many
Case 35: Rizzuto’s Pizzeria
Note: some numbers in Table 1 are rounded.
The Ann Arbor and Southfield stores seem to be doing well with home and office markets. The Flint
store's future, however, seems to depend on catering to the "plant market" for delivered pizza at "lunch"
breaks. No pizza competition for this market exists now. But there are mobile food vendors, so the plant
customers are not dependent on pizza from the Flint store. Place is very important – while price and
even product quality may not be as important.
Exhibit A. Estimates of Possible Revenues Per Day (350 day years)**
Current
Daily
Proposed
Daily
Estimated
Daily
Comments on Cases in Basic Marketing
Capacity
Capacity
Demand*
Pizza units
144
300
320
Contribution margin/pizza
$7.50
$7.50
$7.50
Exhibit B. Estimates of Contribution to Overhead and Profit from Plant Market
Alternative
1
2
3
Potential Daily Gross Margin
$1,230
$2,562
$2,733
Daily Fixed Costs:
(0
)
Delivery Car
(5.71
)
(5.71
)
Case 36: Skyline Homebuilders
The Skyline Homebuilders case describes a builder of semi-custom homes that recently built his first
LEED-certified “green” home. The home is the first of five in a small development – and Skip Patterson is
building the other four which will also be “green.” A LEED certified home adds a number of energy saving
features and is built using sustainable practices. This raises a builder’s costs, so Skip has priced the
Discussion Questions
What do you think of Skip Patterson’s marketing strategy so far?
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The current strategy is not clearly focused. Little effort was put into defining the target market – beyond
What promotion objectives should Skip Patterson set for his marketing strategy?
The text outlines three general types of promotion objectives – informing, persuading, and reminding.
The case scenario suggests that while some customers and real estate agents may have some general
awareness and interest in greener homes – they are not very knowledgeable about the specific costs and
benefits of these options. The AIDA model and Adoption Process track these promotion objectives – and
it might be useful to remind students about this exhibit from the text.
What are the advantages and disadvantages of targeting communications at consumers as compared to
real estate agents?
One of the interesting questions in the case is whether to engage in more “push” or “pull” promotion. An
instructor might start this part of the discussion by using this terminology – “Should Skip use more of a
push or a pull approach – or both?” Pushing would direct the promotional efforts at the real estate agents
– and pulling focuses on promoting directly to consumers.
Comments on Cases in Basic Marketing
What would you recommend as a promotion blend?
The relatively low cost of preparing brochures and putting signage around the house suggests this as a
good initial strategy. Brochures can highlight both financial benefits – and possibly through imagery – the
societal benefits of a green home. The more complex financial benefits may be more easily explained in
As noted previously, making real estate agents aware of the green benefits would be helpful. If agents
are able to explain the benefits of relatively higher-priced homes, they will be more amenable to showing
them. The posting of informative signs in the home could educate real estate agents as well as potential
customers. An open house or tour for real estate agents – one that highlights the green benefits – might
also be of interest. A seminar is another idea, but as the case notes, it may be difficult to get real estate
agents to come to a presentation. Students might be asked, “How could they make the presentation
more appealing?” For example, Skip might offer a meal or refreshments—or partner with a local real
estate agency to make such a presentation part of another regularly attended meeting.
Teaching the case
The case may be taught after the first promotion chapter – but is probably most effective as a wrap-up of
all the promotion chapters. The case could focus on particular elements of promotion – for example,
questions about the copy thrust or the personal selling process.
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One teaching approach involves jumping to the discussion questions at the end of the case. Of course,
there should be reference to other aspects of the situation analysis (customers, external market
environment, competitors, and company – as well as differentiation and segmentation). Instructors
should press students about why they are making particular recommendations – and then be sure they
are referencing the situation.
• External market environment. Different issues apply to each element:
o Economic environment – interest rates. The case notes that the new homes are being
built at a time of rising interest rates. On a $275,000 home (the mid-range of Skip’s new
home prices), with 20% down (leaving a $220,000 mortgage) a one percent increase in
interest rates (from 6.25% to 7.25%) on a 30-year mortgage increases monthly payments
by $146 (almost 11% higher monthly payment). An instructor might share these details
to help students understand the dramatic impact of interest rates on the cost of buying a
home.
• Customers. While the current trend is toward consumers having a greater concern for the
environment, many consumers remain reluctant to pay a premium price. Yet the utility cost
savings from Skip’s homes may offset the premium price.
• Competitors. The case provides no information about competitors; although it implies that there
may be few if any other builders offering green homes in the Asheville market at this time.
• Segmentation and targeting. One question is whether the target market is those customers who
value the environmental benefits of owning a green home, those who want economic benefits, or
an overlapping set that covers both segments. Obviously many consumers would value both sets
of benefits, but communications may choose to emphasize one message or the other.
Comments on Cases in Basic Marketing
• Differentiation and positioning. The decision about differentiation and positioning ties closely to
the selection of a target market. Skyline Homebuilders may want to position itself as offering
green benefits, so that potential customers will feel good about buying a home that has a smaller
