Get questions and answers for Marketing

GET Marketing TEXTBOOK SOLUTIONS

1 Million+ Step-by-step solutions
math books
Briefly describe the four major steps in designing a customer-driven marketing strategy.

Name and describe the four major sets of variables that might be used in segmenting consumer markets. Which segmenting variables does Starbucks use?

Discuss the factors marketers consider when choosing a targeting strategy.

Explain how micromarketing differs from differentiated and concentrated marketing and discuss the two types of micromarketing.

Explain how a company differentiates its products from competitors’ products.

Name and define the five winning value propositions described in the chapter. Which value proposition describes Walmart? Neiman Marcus? Explain your answers.

In a small group, visit a grocery store and examine the brands of breakfast cereal. Using the bases for segmenting consumer markets, identify the segmentation variables a specific brand appears to be using. Summarize the segmentation and targeting strategy for each brand. Identify brands with similar positioning strategies.

Assume you work at a regional state university whose traditional target market, high school students within your region, is shrinking. This segment is projected to decrease over the next ten years. Recommend other potential market segments and discuss the criteria you should consider to ensure that the identified segments are useful.

Form a small group and create an idea for a new business. Using the steps described in the chapter, develop a customer-driven marketing strategy. Describe your strategy and conclude with a positioning statement for your business.

What effect does very heavy usage by some customers have on other customers of broadband services? What are marketers of these services doing to counter the effect of heavy users?
Most companies want customers to be heavy users of its products or services. When it comes to the Internet and wireless broadband services, however, that’s not necessarily the case. Internet providers, such as Comcast, may block or slow down Internet traffic for some heavy users, such as those who watch a lot of videos on YouTube. In 2009, the Federal Communications Commission (FCC) banned Comcast from blocking video file sharing; this ban was overturned in 2010 by a court ruling that the FCC does not have authority to enforce its “network neutrality” rules. Google, once a champion for unfettered Internet access for all, is changing its tune now that it can profit from favoring some customers over others in the burgeoning wireless broadband arena. Google and Verizon have teamed up to lobby for laws that allow them to favor some Web services over others.

Are marketers to blame for increasing obesity rates among children? Should the government ban the advertising of food products to children ages 17 and younger? Discuss the consequences of imposing such a ban.
The obesity rate among children in the United States is 17 percent—triple what it was 30 years ago. Who’s to blame? One study reported that 76 percent of parents thought food advertising is a major contributor to childhood obesity but also found that over 80 percent blamed parents, not marketers. Yet, the federal government is homing its sights on marketers. Reminiscent of the 1970s when the FTC proposed banning advertising to children, a provision in the American Recovery and Reinvention Act of 2009 created an Interagency Working Group (IWG) on Food Marketing to Children. Although most regulations regarding marketing to children are limited to children ages 12 and younger, the current IWG guidelines include children up to 17 years old and propose restrictions on food marketing targeted to children. With $1.6 billion spent on food marketing and promotions targeted to children—$745 million of that on television—more than just marketers will be affected by marketing restrictions to this market segment.

What actions have food marketers taken to stem the threat of a ban on marketing to children?
The obesity rate among children in the United States is 17 percent—triple what it was 30 years ago. Who’s to blame? One study reported that 76 percent of parents thought food advertising is a major contributor to childhood obesity but also found that over 80 percent blamed parents, not marketers. Yet, the federal government is homing its sights on marketers. Reminiscent of the 1970s when the FTC proposed banning advertising to children, a provision in the American Recovery and Reinvention Act of 2009 created an Interagency Working Group (IWG) on Food Marketing to Children. Although most regulations regarding marketing to children are limited to children ages 12 and younger, the current IWG guidelines include children up to 17 years old and propose restrictions on food marketing targeted to children. With $1.6 billion spent on food marketing and promotions targeted to children—$745 million of that on television—more than just marketers will be affected by marketing restrictions to this market segment.

Identify an appropriate market segment for this product. Discuss variables the company should consider when estimating the potential number of buyers for the high-performance Fisker Karma sports car.
When you think of hybrid or electric automobiles, you probably think don’t think of the sports car. But the Fisker Karma is about to shatter that stereotype. It’s been called the hybrid with sex appeal and is often compared to a Mercedes-Benz roadster. In the increasingly crowded field of new-generation electric vehicles, Fisker Automotive wants to carve out a niche as a high-performance eco-car with lots of style. The Fisker Karma goes from 0 to 60 miles per hour in six seconds, can go up to 125 miles per hour, and can travel 50 miles on electric power and 300 miles on combined electric and gasoline power. All this performance and style does not come cheap; prices range from $87,900 to $106,000. Before bringing it to market, however, the company needs to identify its target market and estimate the market potential in this segment.

Using the chain ratio method described in Appendix 2, estimate the market potential for the Fisker Karma sports car. Search the Internet for reasonable numbers to represent the factors you identified in the previous question. Assume each buyer will purchase only one automobile and that the average price of automobiles in this market is $100,000.
When you think of hybrid or electric automobiles, you probably think don’t think of the sports car. But the Fisker Karma is about to shatter that stereotype. It’s been called the hybrid with sex appeal and is often compared to a Mercedes-Benz roadster. In the increasingly crowded field of new-generation electric vehicles, Fisker Automotive wants to carve out a niche as a high-performance eco-car with lots of style. The Fisker Karma goes from 0 to 60 miles per hour in six seconds, can go up to 125 miles per hour, and can travel 50 miles on electric power and 300 miles on combined electric and gasoline power. All this performance and style does not come cheap; prices range from $87,900 to $106,000. Before bringing it to market, however, the company needs to identify its target market and estimate the market potential in this segment.

Using the full spectrum of segmentation variables, describe how Starbucks initially segmented and targeted the coffee market.
By now, you should be familiar with the Starbucks story. After a trip to Italy in the early 1980s, Howard Schultz was inspired to transform Starbucks—then just a handful of coffee shops in Seattle—into a chain of European-style coffeehouses. His vision wasn’t based on selling only gourmet coffees, espressos, and lattes, however. He wanted to provide customers with what he called a “third place”— a place away from home and work. As CEO of Starbucks, Schultz developed what became known as the Starbucks Experience, built around great coffee, personal service, and an inviting ambiance

What changed first—the Starbucks customer or the Starbucks Experience? Explain your response by discussing the principles of market targeting.
By now, you should be familiar with the Starbucks story. After a trip to Italy in the early 1980s, Howard Schultz was inspired to transform Starbucks—then just a handful of coffee shops in Seattle—into a chain of European-style coffeehouses. His vision wasn’t based on selling only gourmet coffees, espressos, and lattes, however. He wanted to provide customers with what he called a “third place”— a place away from home and work. As CEO of Starbucks, Schultz developed what became known as the Starbucks Experience, built around great coffee, personal service, and an inviting ambiance

Based on the segmentation variables, how is Starbucks now segmenting and targeting the coffee market?
By now, you should be familiar with the Starbucks story. After a trip to Italy in the early 1980s, Howard Schultz was inspired to transform Starbucks—then just a handful of coffee shops in Seattle—into a chain of European-style coffeehouses. His vision wasn’t based on selling only gourmet coffees, espressos, and lattes, however. He wanted to provide customers with what he called a “third place”— a place away from home and work. As CEO of Starbucks, Schultz developed what became known as the Starbucks Experience, built around great coffee, personal service, and an inviting ambiance

Will Starbucks ever return to the revenue and profit growth that it once enjoyed? Why or why not?
By now, you should be familiar with the Starbucks story. After a trip to Italy in the early 1980s, Howard Schultz was inspired to transform Starbucks—then just a handful of coffee shops in Seattle—into a chain of European-style coffeehouses. His vision wasn’t based on selling only gourmet coffees, espressos, and lattes, however. He wanted to provide customers with what he called a “third place”— a place away from home and work. As CEO of Starbucks, Schultz developed what became known as the Starbucks Experience, built around great coffee, personal service, and an inviting ambiance

Define product and the three levels of product.

Compare and contrast industrial products and consumer products.

Explain the importance of product quality and discuss how marketers use quality to create customer value.

Compare and contrast the four brand sponsorship options available to a manufacturer and give an example of each.

Discuss the brand development strategies marketers use to develop brands. Give an example of each strategy.

Describe the four characteristics of services that marketers must consider when designing marketing programs. According to these characteristics, how do the services offered by a massage therapist differ from those offered by a grocery store?

What do Betty Crocker, Pillsbury, Cheerios, and Hamburger Helper have in common? They are all familiar brands that are part of the General Mills product mix. Visit the General Mills Web site (www.generalmills.com) and examine its list of brands. Name and define the four dimensions of a company’s product mix and describe General Mills’ product mix on these dimensions.

Branding is not just for products and services; states are getting in on the action, too, as you learned from reading about place marketing in the chapter. One of the most recent examples of state branding comes from Michigan with its “Pure Michigan” campaign, resulting in millions of dollars of tourism revenue. Other famous place branding campaigns include “Virginia is for Lovers,” “Florida—the Sunshine State,” and “What Happens in Vegas Stays in Vegas.” In a small group, develop a brand identity proposal for your state. Present your idea to the rest of the class and explain the meaning you are trying to convey.

How would you classify virtual goods—a tangible good, an experience, or a service? Discuss the technological factors enabling the growth of virtual goods.
Who would pay $330,000 for a virtual space station? Or $100,000 for an asteroid space resort? How about $99,000 for a virtual bank license? Players of Entropia Universe, a massively multiplayer online game (MMOG), did. Those players are making money, and so are the game developers. There’s a new business model—called “freemium”—driving the economics of these games. Under this model, users play for free but can purchase virtual goods with real money. Worldwide sales of virtual goods were $2.2 billion in 2009 and are predicted to reach $6 billion by 2013. Most virtual goods are inexpensive—costing about $1—such as the tractor you can buy in Farmerville or a weapon in World of Warcraft. That doesn’t seem like much, but when you consider that Zynga’s Frontierville had five million players within one month of launch, we’re talking real money!

How do players purchase virtual goods? Identify three virtual currencies and their value in U.S. dollars.
Who would pay $330,000 for a virtual space station? Or $100,000 for an asteroid space resort? How about $99,000 for a virtual bank license? Players of Entropia Universe, a massively multiplayer online game (MMOG), did. Those players are making money, and so are the game developers. There’s a new business model—called “freemium”—driving the economics of these games. Under this model, users play for free but can purchase virtual goods with real money. Worldwide sales of virtual goods were $2.2 billion in 2009 and are predicted to reach $6 billion by 2013. Most virtual goods are inexpensive—costing about $1—such as the tractor you can buy in Farmerville or a weapon in World of Warcraft. That doesn’t seem like much, but when you consider that Zynga’s Frontierville had five million players within one month of launch, we’re talking real money!

Compare and contrast the methodologies used by Interbrand (www.interbrand.com) and BrandZ (www.brandz.com) to determine brand value. Explain why there is a discrepancy in the rankings from these two companies.
What is a brand’s worth? It depends on who is measuring it. For example, in 2009, Google was valued to be worth $100 billion by one brand valuation company but only $32 billion by another. Although this variation is extreme, it is not uncommon to find valuations of the same brand differing by $20 to $30 billion. Interbrand and BrandZ publish global brand value rankings each year, but a comparison of these two companies’ 2009 ranking reveals an overlap of only six of the top ten brands.

In 2008, BrandZ ranked Toyota the number one brand of automobiles, valuing the brand at more than $35 billion. In 2010, however, it valued the Toyota brand under $22 billion. Discuss some of the reasons for the drop in Toyota’s brand value.
What is a brand’s worth? It depends on who is measuring it. For example, in 2009, Google was valued to be worth $100 billion by one brand valuation company but only $32 billion by another. Although this variation is extreme, it is not uncommon to find valuations of the same brand differing by $20 to $30 billion. Interbrand and BrandZ publish global brand value rankings each year, but a comparison of these two companies’ 2009 ranking reveals an overlap of only six of the top ten brands.

Given all the changes in the branding strategy for Las Vegas over the years, has the Vegas brand had a consistent meaning to consumers? Is this a benefit or a detriment to the city as it moves forward?
When you hear someone mention Las Vegas, what comes to mind? Sin City? Wholesome entertainment for the entire family? An indulgent luxury vacation? Or perhaps a value-oriented reward for hard-working Americans? If you answered “all of the above,” you wouldn’t necessarily be wrong. The truth: All of these have been characteristics associated with Las Vegas over the years. In recent times, the Las Vegas Convention and Visitors Authority (LVCVA) fielded several national ad campaigns. Tourism is Vegas’s biggest industry, and the LVCVA is charged with maintaining the city’s brand image and keeping visitors coming to one of the world’s most famous cities. Although the positioning of the Vegas brand has changed from time to time, the town will probably never entirely lose the “Sin City” label. That title was born when Las Vegas was young—an anything-goes gambling town full of smoke-filled casinos, bawdy all-girl revues, all-you-can-eat buffets, Elvis impersonators, and nowait weddings on the Vegas Strip. This was the Vegas epitomized by the Rat Pack, when Frank Sinatra, Dean Martin, Sammy Davis Jr., and the rest of the crew appeared nightly on stage to standing-room-only crowds at the Sands Hotel. Sinatra was even known for referring to anywhere that wasn’t Las Vegas as “dullsville.” But as the 1990s rolled around, many Las Vegas officials felt that the town needed to broaden its target audience. So they set out to appeal to—of all things—families. Some of the biggest casinos on the Las Vegas Strip built roller coasters and other thrill rides, worldclass water parks, and family-friendly shows like Treasure Island’s live-action swashbuckler spectacle, visible to everyone passing by on the street. Although this strategy seemed effective for a brief time, marketers came to realize that the family image just didn’t sync well with the classic vices that were still alive and well in Vegas.

What is Las Vegas selling? What are visitors really buying? Discuss these questions in terms of the core benefit, actual product, and augmented product levels.
When you hear someone mention Las Vegas, what comes to mind? Sin City? Wholesome entertainment for the entire family? An indulgent luxury vacation? Or perhaps a value-oriented reward for hard-working Americans? If you answered “all of the above,” you wouldn’t necessarily be wrong. The truth: All of these have been characteristics associated with Las Vegas over the years. In recent times, the Las Vegas Convention and Visitors Authority (LVCVA) fielded several national ad campaigns. Tourism is Vegas’s biggest industry, and the LVCVA is charged with maintaining the city’s brand image and keeping visitors coming to one of the world’s most famous cities. Although the positioning of the Vegas brand has changed from time to time, the town will probably never entirely lose the “Sin City” label. That title was born when Las Vegas was young—an anything-goes gambling town full of smoke-filled casinos, bawdy all-girl revues, all-you-can-eat buffets, Elvis impersonators, and nowait weddings on the Vegas Strip. This was the Vegas epitomized by the Rat Pack, when Frank Sinatra, Dean Martin, Sammy Davis Jr., and the rest of the crew appeared nightly on stage to standingroom- only crowds at the Sands Hotel. Sinatra was even known for referring to anywhere that wasn’t Las Vegas as “dullsville.” But as the 1990s rolled around, many Las Vegas officials felt that the town needed to broaden its target audience. So they set out to appeal to—of all things—families. Some of the biggest casinos on the Las Vegas Strip built roller coasters and other thrill rides, worldclass water parks, and family-friendly shows like Treasure Island’s live-action swashbuckler spectacle, visible to everyone passing by on the street. Although this strategy seemed effective for a brief time, marketers came to realize that the family image just didn’t sync well with the classic vices that were still alive and well in Vegas.

Will the most recent efforts by the LVCVA continue to work? Why or why not?
When you hear someone mention Las Vegas, what comes to mind? Sin City? Wholesome entertainment for the entire family? An indulgent luxury vacation? Or perhaps a value-oriented reward for hard-working Americans? If you answered “all of the above,” you wouldn’t necessarily be wrong. The truth: All of these have been characteristics associated with Las Vegas over the years. In recent times, the Las Vegas Convention and Visitors Authority (LVCVA) fielded several national ad campaigns. Tourism is Vegas’s biggest industry, and the LVCVA is charged with maintaining the city’s brand image and keeping visitors coming to one of the world’s most famous cities. Although the positioning of the Vegas brand has changed from time to time, the town will probably never entirely lose the “Sin City” label. That title was born when Las Vegas was young—an anything-goes gambling town full of smoke-filled casinos, bawdy all-girl revues, all-you-can-eat buffets, Elvis impersonators, and nowait weddings on the Vegas Strip. This was the Vegas epitomized by the Rat Pack, when Frank Sinatra, Dean Martin, Sammy Davis Jr., and the rest of the crew appeared nightly on stage to standingroom- only crowds at the Sands Hotel. Sinatra was even known for referring to anywhere that wasn’t Las Vegas as “dullsville.” But as the 1990s rolled around, many Las Vegas officials felt that the town needed to broaden its target audience. So they set out to appeal to—of all things—families. Some of the biggest casinos on the Las Vegas Strip built roller coasters and other thrill rides, worldclass water parks, and family-friendly shows like Treasure Island’s live-action swashbuckler spectacle, visible to everyone passing by on the street. Although this strategy seemed effective for a brief time, marketers came to realize that the family image just didn’t sync well with the classic vices that were still alive and well in Vegas.

What types of products are burial plots and prepurchased funeral services? Explain.
“Meet us before you need us”—that’s the motto of a cemetery in Denver. Facing decreasing demand as more Americans choose cremation, cemeteries across the country are marketing to the living in hopes they will become customers in the future. Although funeral homes and cemeteries have long urged customers to prepurchase funeral services before they are needed, it’s the new marketing that is drawing criticism. Some activities are low-key, such as poetry workshops, art shows, and nature walks, but some are downright lively. One cemetery staged a fireworks show and sky divers. Other festivities include concerts, outdoor movies, and clowns. Cemetery directors pine for the old days when, more than a century ago, cemeteries were a place for social gatherings where families visited and picnicked near a loved one’s grave. Although many of the new activities are staged in the evening, some occur during the day, so directors must use discretion to avoid interrupting a funeral.

Are these marketing activities appropriate for this product?
“Meet us before you need us”—that’s the motto of a cemetery in Denver. Facing decreasing demand as more Americans choose cremation, cemeteries across the country are marketing to the living in hopes they will become customers in the future. Although funeral homes and cemeteries have long urged customers to prepurchase funeral services before they are needed, it’s the new marketing that is drawing criticism. Some activities are low-key, such as poetry workshops, art shows, and nature walks, but some are downright lively. One cemetery staged a fireworks show and sky divers. Other festivities include concerts, outdoor movies, and clowns. Cemetery directors pine for the old days when, more than a century ago, cemeteries were a place for social gatherings where families visited and picnicked near a loved one’s grave. Although many of the new activities are staged in the evening, some occur during the day, so directors must use discretion to avoid interrupting a funeral.

Define marketing and discuss how it is more than just “telling and selling.

Marketing has been criticized because it “makes people buy things they don’t really need.” Refute or support this accusation.

Discuss the two important questions a marketing manager must answer when designing a winning marketing strategy. How should a manager approach finding answers to these questions?

What are the five different marketing management orientations? Which orientation do you believe Apple follows when marketing products such as the iPhone and iPad?

Explain the difference between share of customer and customer equity. Why are these concepts important to marketers?

Discuss trends impacting marketing and the implications of these trends on how marketers deliver value to customers.

Talk to five people, varying in age from young adult to senior citizen, about their automobiles. Ask them what value means to them with regard to an automobile and how the manufacturer and dealer create such value. What you learned about customer value.

Select a retailer and calculate how much you are worth to that retailer if you continue to shop there for the rest of your life (your customer lifetime value). What factors should you consider when deriving an estimate of your lifetime value to a retailer? How can a retailer increase your lifetime value?

Discuss the advantages and disadvantages of consumer-generated marketing.
In only a few short years, consumer-generated marketing has increased exponentially. It’s also known as consumer-generated media and consumer-generated content. More than 100 million Web sites contain user-generated content. You may be a contributor yourself if you’ve ever posted something on a blog; reviewed a product at Amazon.com; uploaded a video on YouTube; or sent a video from your mobile phone to a news Web site, such as CNN.com or FoxNews.com. This force has not gone unnoticed by marketers—and with good reason. Nielsen, the TV ratings giant, found that most consumers trust consumer opinions posted online. As a result, savvy marketers encourage consumers to generate content. For example, Coca-Cola has more than 3.5 million fans on Facebook, mothers can share information at Pampers Village (www.pampers.com), and Dorito’s scored a touchdown with consumer-created advertising during the past several Super Bowls. Apple even encourages iPhone users to develop applications for its device. However, consumer-generated marketing is not without problems—just search “I hate (insert company name)” in any search engine!

Given the extreme health risks, should marketers stop selling cigarettes even though they are legal and demanded by consumers? Should cigarette marketers continue to use marketing tactics that are restricted in one country in other countries where they are not restricted?
Sixty years ago, about 45 percent of Americans smoked cigarettes, but now the smoking rate is less than 20 percent. This decline results from acquired knowledge on the potential health dangers of smoking and marketing restrictions for this product. Although smoking rates are declining in most developed nations, however, more and more consumers in developing nations, such as Russia and China, are puffing away. Smoker rates in some countries run as high as 40 percent. Developing nations account for more than 70 percent of world tobacco consumption, and marketers are fueling this growth. Most of these nations do not have the restrictions prevalent in developed nations, such as advertising bans, warning labels, and distribution restrictions. Consequently, it is predicted that one billion people worldwide will die this century from smoking-related ailments.

Research the history of cigarette marketing in the United States. Are there any new restrictions with respect to marketing this product?
Sixty years ago, about 45 percent of Americans smoked cigarettes, but now the smoking rate is less than 20 percent. This decline results from acquired knowledge on the potential health dangers of smoking and marketing restrictions for this product. Although smoking rates are declining in most developed nations, however, more and more consumers in developing nations, such as Russia and China, are puffing away. Smoker rates in some countries run as high as 40 percent. Developing nations account for more than 70 percent of world tobacco consumption, and marketers are fueling this growth. Most of these nations do not have the restrictions prevalent in developed nations, such as advertising bans, warning labels, and distribution restrictions. Consequently, it is predicted that one billion people worldwide will die this century from smoking-related ailments.

Give examples of needs, wants, and demands that JetBlue customers demonstrate, differentiating these three concepts. What are the implications of each for JetBlue’s practices?
In 2007, JetBlue was a thriving young airline with a strong reputation for outstanding service. In fact, the low-fare airline referred to itself as a customer service company that just happened to fly planes. But on Valentine’s Day 2007, JetBlue was hit by the perfect storm—literally—of events that led to an operational meltdown. One of the most severe storms of the decade covered JetBlue’s main hub at New York’s John F. Kennedy International Airport with a thick layer of snow and ice. Small JetBlue did not have the infrastructure to deal with such a crisis. The severity of the storm, coupled with a series of poor management decisions, left JetBlue passengers stranded in planes on the runway for up to 11 hours. Worse still, the ripple effect of the storm created major JetBlue flight disruptions for six more days. Understandably, customers were livid. JetBlue’s efforts to clean up the mess following the six-day Valentine’s Day nightmare cost over $30 million dollars in overtime, flight refunds, vouchers for future travel, and other expenses. But the blow to the company’s previously stellar customer-service reputation stung far more than the financial fallout. JetBlue became the butt of jokes by late night talk show hosts. Some industry observers even predicted that this would be the end of the seven-year-old airline. But just three years later, the company is not only still flying, it is growing, profitable, and hotter than ever. During the recent economic downturn, even as most competing airlines were cutting routes, retiring aircraft, laying off employees, and losing money, JetBlue was adding planes, expanding into new cities, hiring thousands of new employees, and turning profits. Even more, JetBlue’s customers adore the airline. For the fifth consecutive year (even including 2007), JetBlue has had the highest J.D. Power and Associates customer satisfaction score for the entire airline industry. Not only did JetBlue recover quickly from the Valentine’s Day hiccup, it’s now stronger than ever.

Describe in detail all the facets of JetBlue’s product. What is being exchanged in a JetBlue transaction?
In 2007, JetBlue was a thriving young airline with a strong reputation for outstanding service. In fact, the low-fare airline referred to itself as a customer service company that just happened to fly planes. But on Valentine’s Day 2007, JetBlue was hit by the perfect storm—literally—of events that led to an operational meltdown. One of the most severe storms of the decade covered JetBlue’s main hub at New York’s John F. Kennedy International Airport with a thick layer of snow and ice. Small JetBlue did not have the infrastructure to deal with such a crisis. The severity of the storm, coupled with a series of poor management decisions, left JetBlue passengers stranded in planes on the runway for up to 11 hours. Worse still, the ripple effect of the storm created major JetBlue flight disruptions for six more days. Understandably, customers were livid. JetBlue’s efforts to clean up the mess following the six-day Valentine’s Day nightmare cost over $30 million dollars in overtime, flight refunds, vouchers for future travel, and other expenses. But the blow to the company’s previously stellar customer-service reputation stung far more than the financial fallout. JetBlue became the butt of jokes by late night talk show hosts. Some industry observers even predicted that this would be the end of the seven-year-old airline. But just three years later, the company is not only still flying, it is growing, profitable, and hotter than ever. During the recent economic downturn, even as most competing airlines were cutting routes, retiring aircraft, laying off employees, and losing money, JetBlue was adding planes, expanding into new cities, hiring thousands of new employees, and turning profits. Even more, JetBlue’s customers adore the airline. For the fifth consecutive year (even including 2007), JetBlue has had the highest J.D. Power and Associates customer satisfaction score for the entire airline industry. Not only did JetBlue recover quickly from the Valentine’s Day hiccup, it’s now stronger than ever.

Which of the five marketing management concepts best applies to JetBlue?
In 2007, JetBlue was a thriving young airline with a strong reputation for outstanding service. In fact, the low-fare airline referred to itself as a customer service company that just happened to fly planes. But on Valentine’s Day 2007, JetBlue was hit by the perfect storm—literally—of events that led to an operational meltdown. One of the most severe storms of the decade covered JetBlue’s main hub at New York’s John F. Kennedy International Airport with a thick layer of snow and ice. Small JetBlue did not have the infrastructure to deal with such a crisis. The severity of the storm, coupled with a series of poor management decisions, left JetBlue passengers stranded in planes on the runway for up to 11 hours. Worse still, the ripple effect of the storm created major JetBlue flight disruptions for six more days. Understandably, customers were livid. JetBlue’s efforts to clean up the mess following the six-day Valentine’s Day nightmare cost over $30 million dollars in overtime, flight refunds, vouchers for future travel, and other expenses. But the blow to the company’s previously stellar customer-service reputation stung far more than the financial fallout. JetBlue became the butt of jokes by late night talk show hosts. Some industry observers even predicted that this would be the end of the seven-year-old airline. But just three years later, the company is not only still flying, it is growing, profitable, and hotter than ever. During the recent economic downturn, even as most competing airlines were cutting routes, retiring aircraft, laying off employees, and losing money, JetBlue was adding planes, expanding into new cities, hiring thousands of new employees, and turning profits. Even more, JetBlue’s customers adore the airline. For the fifth consecutive year (even including 2007), JetBlue has had the highest J.D. Power and Associates customer satisfaction score for the entire airline industry. Not only did JetBlue recover quickly from the Valentine’s Day hiccup, it’s now stronger than ever.

What value does JetBlue create for its customers?
In 2007, JetBlue was a thriving young airline with a strong reputation for outstanding service. In fact, the low-fare airline referred to itself as a customer service company that just happened to fly planes. But on Valentine’s Day 2007, JetBlue was hit by the perfect storm—literally—of events that led to an operational meltdown. One of the most severe storms of the decade covered JetBlue’s main hub at New York’s John F. Kennedy International Airport with a thick layer of snow and ice. Small JetBlue did not have the infrastructure to deal with such a crisis. The severity of the storm, coupled with a series of poor management decisions, left JetBlue passengers stranded in planes on the runway for up to 11 hours. Worse still, the ripple effect of the storm created major JetBlue flight disruptions for six more days. Understandably, customers were livid. JetBlue’s efforts to clean up the mess following the six-day Valentine’s Day nightmare cost over $30 million dollars in overtime, flight refunds, vouchers for future travel, and other expenses. But the blow to the company’s previously stellar customer-service reputation stung far more than the financial fallout. JetBlue became the butt of jokes by late night talk show hosts. Some industry observers even predicted that this would be the end of the seven-year-old airline. But just three years later, the company is not only still flying, it is growing, profitable, and hotter than ever. During the recent economic downturn, even as most competing airlines were cutting routes, retiring aircraft, laying off employees, and losing money, JetBlue was adding planes, expanding into new cities, hiring thousands of new employees, and turning profits. Even more, JetBlue’s customers adore the airline. For the fifth consecutive year (even including 2007), JetBlue has had the highest J.D. Power and Associates customer satisfaction score for the entire airline industry. Not only did JetBlue recover quickly from the Valentine’s Day hiccup, it’s now stronger than ever.

Is JetBlue likely to continue being successful in building customer relationships? Why or why not?
In 2007, JetBlue was a thriving young airline with a strong reputation for outstanding service. In fact, the low-fare airline referred to itself as a customer service company that just happened to fly planes. But on Valentine’s Day 2007, JetBlue was hit by the perfect storm—literally—of events that led to an operational meltdown. One of the most severe storms of the decade covered JetBlue’s main hub at New York’s John F. Kennedy International Airport with a thick layer of snow and ice. Small JetBlue did not have the infrastructure to deal with such a crisis. The severity of the storm, coupled with a series of poor management decisions, left JetBlue passengers stranded in planes on the runway for up to 11 hours. Worse still, the ripple effect of the storm created major JetBlue flight disruptions for six more days. Understandably, customers were livid. JetBlue’s efforts to clean up the mess following the six-day Valentine’s Day nightmare cost over $30 million dollars in overtime, flight refunds, vouchers for future travel, and other expenses. But the blow to the company’s previously stellar customer-service reputation stung far more than the financial fallout. JetBlue became the butt of jokes by late night talk show hosts. Some industry observers even predicted that this would be the end of the seven-year-old airline. But just three years later, the company is not only still flying, it is growing, profitable, and hotter than ever. During the recent economic downturn, even as most competing airlines were cutting routes, retiring aircraft, laying off employees, and losing money, JetBlue was adding planes, expanding into new cities, hiring thousands of new employees, and turning profits. Even more, JetBlue’s customers adore the airline. For the fifth consecutive year (even including 2007), JetBlue has had the highest J.D. Power and Associates customer satisfaction score for the entire airline industry. Not only did JetBlue recover quickly from the Valentine’s Day hiccup, it’s now stronger than ever.

Explain what is meant by a market-oriented mission statement and discuss the characteristics of effective mission statements.

Define strategic planning and briefly describe the four steps that lead managers and a firm through the strategic planning process. Discuss the role marketing plays in this process.

Explain why it is important for all departments of an organization—marketing, accounting, finance, operations management, human resources, and so on—to “think consumer.” Why is it important that even people who are not in marketing understand it?

Define positioning and explain how it is accomplished. Describe the positioning for the following brands: Wendy’s, the Chevy Volt, Amazon.com, Twitter, and Coca-Cola.

Define each of the four Ps. What insights might a firm gain by considering the four Cs rather than the four Ps?

What is marketing ROI? Why is it difficult to measure?

In a small group, conduct a SWOT analysis, develop objectives, and create a marketing strategy for your school, a student organization you might be involved in, or a local business.

Explain the role of a chief marketing officer. Summarize an article that describes the importance of this position, the characteristics of an effective officer, or any issues surrounding this position.

Name and describe the four product and market expansion grid strategies and explain which strategy Google implemented with the Nexus One.
Did you buy a Google Nexus One smartphone when it hit the market in early 2010? Didn’t think so—few people did. That’s why Google stopped selling them in the United States. The phone carried Google’s brand and was powered by the Google Android operating system, which was found on other manufacturers’ phones. With the Nexus One, Google made several mistakes. First, in an effort to get products to market faster and make more money through direct sales, Google tried to change the way wireless phones are distributed. Rather than the typical carrier distribution model (buying a phone through AT&T, Verizon Wireless, or another wireless provider), it used a Web-based sales model. The only way to buy a Nexus One was at Google’s Web site. Looking back, notes one executive, Google would probably have sold more of the phones through the traditional carrier network. To make matters worse, Google invested little in advertising for the Nexus One. And it was ill-equipped to handle customer service queries, attempting at first to handle them through e-mail instead of offering dedicated customer-service support. Finally, analysts said the phone wasn’t much better than other Android phones already on the market. No wonder the Nexus One failed. However, although Google discontinued the phone, its Android operating system remains strong, powering 27 percent of all U.S. smartphones, ahead of second place Apple’s 23 percent.

Discuss the marketing strategy and tactical mistakes Google made when introducing the Nexus One.
Did you buy a Google Nexus One smartphone when it hit the market in early 2010? Didn’t think so—few people did. That’s why Google stopped selling them in the United States. The phone carried Google’s brand and was powered by the Google Android operating system, which was found on other manufacturers’ phones. With the Nexus One, Google made several mistakes. First, in an effort to get products to market faster and make more money through direct sales, Google tried to change the way wireless phones are distributed. Rather than the typical carrier distribution model (buying a phone through AT&T, Verizon Wireless, or another wireless provider), it used a Web-based sales model. The only way to buy a Nexus One was at Google’s Web site. Looking back, notes one executive, Google would probably have sold more of the phones through the traditional carrier network. To make matters worse, Google invested little in advertising for the Nexus One. And it was ill-equipped to handle customer service queries, attempting at first to handle them through e-mail instead of offering dedicated customer-service support. Finally, analysts said the phone wasn’t much better than other Android phones already on the market. No wonder the Nexus One failed. However, although Google discontinued the phone, its Android operating system remains strong, powering 27 percent of all U.S. smartphones, ahead of second place Apple’s 23 percent.

Should these shoemakers capitalize on consumers who want to be fit without doing the work to achieve that goal? Do you think that basing claims on research sponsored by the company is ethical? Explain your reasoning.
With 64 percent of the women in the United States overweight or obese and less than half participating in regular physical activity, athletic shoe marketers saw an opportunity: “toning shoes.” Marketers tout these shoes as revolutionary; you can tone your muscles, lose weight, and improve your posture just by wearing them and going about your daily business. The claims are based on shoemaker-sponsored studies, and the Podiatric Medical Association agrees that toning shoes have some health value. They purportedly perform their magic by destabilizing a person’s gait, making leg muscles work harder. Consumers, particularly women, are buying it. Toning shoe sales reached an estimated $1.5 billion in 2010. Sketchers saw a 69 percent increase in sales due to its shoe that looks like a rocking chair on the bottom. Reebok expected toning shoe sales to increase tenfold to $10 million in 2010. Toning shoes accounted for 20 percent of the women’s performance footwear category in 2009, with prices ranging from $80 to more than $200. However, these shoes have their critics, who claim a shoe that comes with an instruction booklet and an educational DVD to explain proper usage should wave warning flags to consumers. Some doctors claim the shoes are dangerous, causing strained Achilles tendons or worse; one wearer broke her ankle while wearing them. A study by the American Council on Exercise found no benefit in toning shoes over regular walking or other exercise. Noticeably absent from the toning shoe feeding frenzy is Nike, which thinks it’s all hype and is sticking to traditional performance athletic shoes. This leader in the women’s shoe market, however, is losing market share to competitors.

Should Nike have entered this product category instead of giving up market share to competitors? Explain your reasoning.
With 64 percent of the women in the United States overweight or obese and less than half participating in regular physical activity, athletic shoe marketers saw an opportunity: “toning shoes.” Marketers tout these shoes as revolutionary; you can tone your muscles, lose weight, and improve your posture just by wearing them and going about your daily business. The claims are based on shoemaker-sponsored studies, and the Podiatric Medical Association agrees that toning shoes have some health value. They purportedly perform their magic by destabilizing a person’s gait, making leg muscles work harder. Consumers, particularly women, are buying it. Toning shoe sales reached an estimated $1.5 billion in 2010. Sketchers saw a 69 percent increase in sales due to its shoe that looks like a rocking chair on the bottom. Reebok expected toning shoe sales to increase tenfold to $10 million in 2010. Toning shoes accounted for 20 percent of the women’s performance footwear category in 2009, with prices ranging from $80 to more than $200. However, these shoes have their critics, who claim a shoe that comes with an instruction booklet and an educational DVD to explain proper usage should wave warning flags to consumers. Some doctors claim the shoes are dangerous, causing strained Achilles tendons or worse; one wearer broke her ankle while wearing them. A study by the American Council on Exercise found no benefit in toning shoes over regular walking or other exercise. Noticeably absent from the toning shoe feeding frenzy is Nike, which thinks it’s all hype and is sticking to traditional performance athletic shoes. This leader in the women’s shoe market, however, is losing market share to competitors.

Calculate marketing return on sales and marketing ROI for both companies, as described in Appendix 2.
Appendix 2 discusses other marketing profitability metrics beyond the marketing ROI measure described in this chapter. On the next page are the profit-and-loss statements for two businesses. Review Appendix 2 and answer the following questions.

Which company is doing better overall and with respect to marketing? Explain.
Appendix 2 discusses other marketing profitability metrics beyond the marketing ROI measure described in this chapter. On the next page are the profit-and-loss statements for two businesses. Review Appendix 2 and answer the followingquestions.
Which company is doing better overall and with respect to
Martha and the Trap-Ease America investors believe they face a once-in-a-lifetime opportunity. What information do they need to evaluate this opportunity? How do you think the group would write its mission statement? How would you write it?
One April morning, Martha House, president of Trap-Ease America, entered her office in Costa Mesa, California. She paused for a moment to contemplate the Ralph Waldo Emerson quote that she had framed and hung near her desk: If a man [can] . . . make a better mousetrap than his neighbor . . . the world will make a beaten path to his door. Perhaps, she mused, Emerson knew something that she didn’t. She had the better mousetrap—Trap-Ease—but the world didn’t seem all that excited about it. The National Hardware Show Martha had just returned from the National Hardware Show in Chicago. Standing in the trade show display booth for long hours and answering the same questions hundreds of times had been tiring. Yet, all the hard work had paid off. Each year, National Hardware Show officials held a contest to select the best new product introduced at that year’s show. The Trap-Ease had won the contest this year, beating out over 300 new products. Such notoriety was not new for the Trap-Ease mousetrap, however. People magazine had run a feature article on the trap, and the trap had been the subject of numerous talk shows and articles in various popular press and trade publications. Despite all of this attention, however, the expected demand for the trap had not materialized. Martha hoped that this award might stimulate increased interest and sales.

Has Martha identified the best target market for Trap-Ease? What other market segments might the firm target?
One April morning, Martha House, president of Trap-Ease America, entered her office in Costa Mesa, California. She paused for a moment to contemplate the Ralph Waldo Emerson quote that she had framed and hung near her desk: If a man [can] . . . make a better mousetrap than his neighbor . . . the world will make a beaten path to his door. Perhaps, she mused, Emerson knew something that she didn’t. She had the better mousetrap—Trap-Ease—but the world didn’t seem all that excited about it. The National Hardware Show Martha had just returned from the National Hardware Show in Chicago. Standing in the trade show display booth for long hours and answering the same questions hundreds of times had been tiring. Yet, all the hard work had paid off. Each year, National Hardware Show officials held a contest to select the best new product introduced at that year’s show. The Trap-Ease had won the contest this year, beating out over 300 new products. Such notoriety was not new for the Trap-Ease mousetrap, however. People magazine had run a feature article on the trap, and the trap had been the subject of numerous talk shows and articles in various popular press and trade publications. Despite all of this attention, however, the expected demand for the trap had not materialized. Martha hoped that this award might stimulate increased interest and sales.

How has the company positioned the Trap-Ease for the chosen target market? Could it position the product in other ways?
One April morning, Martha House, president of Trap-Ease America, entered her office in Costa Mesa, California. She paused for a moment to contemplate the Ralph Waldo Emerson quote that she had framed and hung near her desk: If a man [can] . . . make a better mousetrap than his neighbor . . . the world will make a beaten path to his door. Perhaps, she mused, Emerson knew something that she didn’t. She had the better mousetrap—Trap-Ease—but the world didn’t seem all that excited about it. The National Hardware Show Martha had just returned from the National Hardware Show in Chicago. Standing in the trade show display booth for long hours and answering the same questions hundreds of times had been tiring. Yet, all the hard work had paid off. Each year, National Hardware Show officials held a contest to select the best new product introduced at that year’s show. The Trap-Ease had won the contest this year, beating out over 300 new products. Such notoriety was not new for the Trap-Ease mousetrap, however. People magazine had run a feature article on the trap, and the trap had been the subject of numerous talk shows and articles in various popular press and trade publications. Despite all of this attention, however, the expected demand for the trap had not materialized. Martha hoped that this award might stimulate increased interest and sales.

Describe the current marketing mix for Trap-Ease. Do you see any problems with this mix?
One April morning, Martha House, president of Trap-Ease America, entered her office in Costa Mesa, California. She paused for a moment to contemplate the Ralph Waldo Emerson quote that she had framed and hung near her desk: If a man [can] . . . make a better mousetrap than his neighbor . . . the world will make a beaten path to his door. Perhaps, she mused, Emerson knew something that she didn’t. She had the better mousetrap—Trap-Ease—but the world didn’t seem all that excited about it. The National Hardware Show Martha had just returned from the National Hardware Show in Chicago. Standing in the trade show display booth for long hours and answering the same questions hundreds of times had been tiring. Yet, all the hard work had paid off. Each year, National Hardware Show officials held a contest to select the best new product introduced at that year’s show. The Trap-Ease had won the contest this year, beating out over 300 new products. Such notoriety was not new for the Trap-Ease mousetrap, however. People magazine had run a feature article on the trap, and the trap had been the subject of numerous talk shows and articles in various popular press and trade publications. Despite all of this attention, however, the expected demand for the trap had not materialized. Martha hoped that this award might stimulate increased interest and sales.

Who is Trap-Ease America’s competition?
One April morning, Martha House, president of Trap-Ease America, entered her office in Costa Mesa, California. She paused for a moment to contemplate the Ralph Waldo Emerson quote that she had framed and hung near her desk: If a man [can] . . . make a better mousetrap than his neighbor . . . the world will make a beaten path to his door. Perhaps, she mused, Emerson knew something that she didn’t. She had the better mousetrap—Trap-Ease—but the world didn’t seem all that excited about it. The National Hardware Show Martha had just returned from the National Hardware Show in Chicago. Standing in the trade show display booth for long hours and answering the same questions hundreds of times had been tiring. Yet, all the hard work had paid off. Each year, National Hardware Show officials held a contest to select the best new product introduced at that year’s show. The Trap-Ease had won the contest this year, beating out over 300 new products. Such notoriety was not new for the Trap-Ease mousetrap, however. People magazine had run a feature article on the trap, and the trap had been the subject of numerous talk shows and articles in various popular press and trade publications. Despite all of this attention, however, the expected demand for the trap had not materialized. Martha hoped that this award might stimulate increased interest and sales.

How would you change Trap-Ease’s marketing strategy? What kinds of control procedures would you establish for this strategy?
One April morning, Martha House, president of Trap-Ease America, entered her office in Costa Mesa, California. She paused for a moment to contemplate the Ralph Waldo Emerson quote that she had framed and hung near her desk: If a man [can] . . . make a better mousetrap than his neighbor . . . the world will make a beaten path to his door. Perhaps, she mused, Emerson knew something that she didn’t. She had the better mousetrap—Trap-Ease—but the world didn’t seem all that excited about it. The National Hardware Show Martha had just returned from the National Hardware Show in Chicago. Standing in the trade show display booth for long hours and answering the same questions hundreds of times had been tiring. Yet, all the hard work had paid off. Each year, National Hardware Show officials held a contest to select the best new product introduced at that year’s show. The Trap-Ease had won the contest this year, beating out over 300 new products. Such notoriety was not new for the Trap-Ease mousetrap, however. People magazine had run a feature article on the trap, and the trap had been the subject of numerous talk shows and articles in various popular press and trade publications. Despite all of this attention, however, the expected demand for the trap had not materialized. Martha hoped that this award might stimulate increased interest and sales.

Name and describe the major steps in developing a new product.

Define crowd sourcing and describe an example not already presented in the chapter.

Compare and contrast the terms product idea, product concept, and product image.

Explain why successful new product development requires a customer-centered, team-based, and systematic effort.

Why do products enter the decline stage of the product life cycle? Discuss marketers’ options at this stage.

Discuss the special challenges facing international product and service marketers.

Coca-Cola has sustained success in the maturity stage of the product life cycle for many years. Discuss how Coca-Cola has evolved over the years. Identify ways that Coca-Cola can continue to evolve to meet changing consumer needs and wants.

To acquire new products, many companies purchase other firms or buy individual brands from other companies. For example, Disney purchased Marvel Entertainment and its portfolio of more than 5,000 characters, such as Spider-Man and Captain America. Discuss two other examples of companies acquiring new products through this means.

What skills would you need to function in this type of work environment?
Technology is speeding up new product development while also reducing its costs. What formerly took months and cost millions of dollars can now be done in seconds and for pennies. Because technology is making new product testing easy and accessible to just about any employee, from the chief executive officer to maintenance personnel, predictions are for a groundbreaking change in corporate cultures surrounding new product development—much like the Google culture described at the beginning of this chapter. An employee may come up with a great idea and test it—all in a single day. This new environment may present some challenges, however. One is that managers must be prepared to give up control and empower employees. Another is “scaling,” which means companies must be able to scale or implement new ideas rapidly and efficiently.

As described at the beginning of this chapter, Google is already ahead of this curve. Visit Google Labs (www .googlelabs.com) to learn about new products that are still in the testing stage—what Google calls the “playground stage.” Briefly discuss two of the experiments and explain why Google hosts a site such as Google Labs.
Technology is speeding up new product development while also reducing its costs. What formerly took months and cost millions of dollars can now be done in seconds and for pennies. Because technology is making new product testing easy and accessible to just about any employee, from the chief executive officer to maintenance personnel, predictions are for a groundbreaking change in corporate cultures surrounding new product development—much like the Google culture described at the beginning of this chapter. An employee may come up with a great idea and test it—all in a single day. This new environment may present some challenges, however. One is that managers must be prepared to give up control and empower employees. Another is “scaling,” which means companies must be able to scale or implement new ideas rapidly and efficiently.

Should Apple have released the iPhone 4 when engineers were aware of the antenna problem? Discuss the pros and cons of further testing before launching the product.
There is usually lots of publicity surrounding the launch of a new Apple product. The iPhone 4 was no exception. Unfortunately, much of it was negative, with some critics even labeling the introduction “antenna-gate.” Within days of the product’s release, reports surfaced of reduced signal strength and dropped calls. The problem resulted from the sleeker, slimmer phone’s antenna, consisting of a metal band around the side of the phone. Apple’s response was that all smartphones have signal problems, users should hold the phone differently, and users should purchase a case for about $30 to fix the problem. It turns out that Apple engineers knew of this issue a year before the product was launched, but Steve Jobs, CEO of Apple Inc., liked the design and opted to go ahead with it. The controversy even caught the ear of a U.S. senator, who urged Jobs to fix the problem at no cost to consumers. Contrary to typical industry practice, AT&T, the exclusive service provider for Apple’s phones, was allowed to test only a disguised phone for a very limited time without touching it, so the problem was not discovered during testing. Apple later announced that all purchasers would receive a free case and reimbursed users who had already purchased one. This controversy didn’t hurt sales, though; Apple sold three million of the new phones in just three weeks and could not keep up with demand.

Did Apple handle the situation effectively? Did Apple’s iPhone lose brand equity from this controversy?
There is usually lots of publicity surrounding the launch of a new Apple product. The iPhone 4 was no exception. Unfortunately, much of it was negative, with some critics even labeling the introduction “antenna-gate.” Within days of the product’s release, reports surfaced of reduced signal strength and dropped calls. The problem resulted from the sleeker, slimmer phone’s antenna, consisting of a metal band around the side of the phone. Apple’s response was that all smartphones have signal problems, users should hold the phone differently, and users should purchase a case for about $30 to fix the problem. It turns out that Apple engineers knew of this issue a year before the product was launched, but Steve Jobs, CEO of Apple Inc., liked the design and opted to go ahead with it. The controversy even caught the ear of a U.S. senator, who urged Jobs to fix the problem at no cost to consumers. Contrary to typical industry practice, AT&T, the exclusive service provider for Apple’s phones, was allowed to test only a disguised phone for a very limited time without touching it, so the problem was not discovered during testing. Apple later announced that all purchasers would receive a free case and reimbursed users who had already purchased one. This controversy didn’t hurt sales, though; Apple sold three million of the new phones in just three weeks and could not keep up with demand.

Refer to Appendix 2 and calculate the incremental contribution realized by adding the new iPhone 4 if sales during the first six months of launch were five million units. However, the company also estimated that 30 percent of iPhone 4 sales came from customers who would have purchased the iPhone 3G but instead purchased the base model of the iPhone 4.
Apple introduced the iPhone 4 in 2010 but still continued to offer the iPhone 3G. The 16GB base version of the iPhone 4 was priced at $199, with unit variable costs equal to $187. The iPhone 3G’s price had decreased to $99 by the time the iPhone 4 was introduced, and its unit variable costs were $65.

Apple also offered a 32GB version of the iPhone 4 at $299. Variable costs for that version were $250. Besides its higher price, explain why Apple would encourage customers to purchase the 32GB over the 16GB version.
Apple introduced the iPhone 4 in 2010 but still continued to offer the iPhone 3G. The 16GB base version of the iPhone 4 was priced at $199, with unit variable costs equal to $187. The iPhone 3G’s price had decreased to $99 by the time the iPhone 4 was introduced, and its unit variable costs were $65.

How was Samsung able to go from copycat brand to product leader?
In the world of consumer electronics, copycat brands are a dime a dozen. These are the brands consumers turn to if they don’t want to pay the price for the high-end market leaders. So if consumers want a top-tier television, they’ll probably look at one from Sony or LG. If they want something cheaper that’s probably not quite as good, they’ll look at brands such as Insignia, Dynex, or Vizio. But what about Samsung? Believe it or not, Samsung Electronics was a maker of cheap consumer electronic knock-offs from the time it started making calculators and black-and-white TVs in 1969 through the mid 1990s. Today, however, Samsung is the world’s largest television manufacturer and offers the most cuttingedge models around.
Putting the brand in context, Samsung Electronics is part of the world’s largest conglomerate, South Korea’s Samsung Group. Founded in 1938, the huge Samsung Group also owns the world’s second largest shipbuilder, a major global construction company, and the largest life insurance company in Korea. The conglomerate is so big that it accounts for 25 percent of all corporate profits in South Korea, well ahead of the number two Hyundai-Kia Automotive Group at 6.4 percent. Under the direction of Lee Kunhee, CEO and chairman, the third son of founder Lee Byung-Chull, Samsung Electronics has made major strides.

Is Samsung’s product development process customer centered? Team based? Systematic?
In the world of consumer electronics, copycat brands are a dime a dozen. These are the brands consumers turn to if they don’t want to pay the price for the high-end market leaders. So if consumers want a top-tier television, they’ll probably look at one from Sony or LG. If they want something cheaper that’s probably not quite as good, they’ll look at brands such as Insignia, Dynex, or Vizio. But what about Samsung? Believe it or not, Samsung Electronics was a maker of cheap consumer electronic knock-offs from the time it started making calculators and black-and-white TVs in 1969 through the mid 1990s. Today, however, Samsung is the world’s largest television manufacturer and offers the most cuttingedge models around.
Putting the brand in context, Samsung Electronics is part of the world’s largest conglomerate, South Korea’s Samsung Group. Founded in 1938, the huge Samsung Group also owns the world’s second largest shipbuilder, a major global construction company, and the largest life insurance company in Korea. The conglomerate is so big that it accounts for 25 percent of all corporate profits in South Korea, well ahead of the number two Hyundai-Kia Automotive Group at 6.4 percent. Under the direction of Lee Kunhee, CEO and chairman, the third son of founder Lee Byung-Chull, Samsung Electronics has made major strides.

Based on the PLC, what challenges does Samsung face in managing its high-tech products?
In the world of consumer electronics, copycat brands are a dime a dozen. These are the brands consumers turn to if they don’t want to pay the price for the high-end market leaders. So if consumers want a top-tier television, they’ll probably look at one from Sony or LG. If they want something cheaper that’s probably not quite as good, they’ll look at brands such as Insignia, Dynex, or Vizio. But what about Samsung? Believe it or not, Samsung Electronics was a maker of cheap consumer electronic knock-offs from the time it started making calculators and black-and-white TVs in 1969 through the mid 1990s. Today, however, Samsung is the world’s largest television manufacturer and offers the most cuttingedge models around.
Putting the brand in context, Samsung Electronics is part of the world’s largest conglomerate, South Korea’s Samsung Group. Founded in 1938, the huge Samsung Group also owns the world’s second largest shipbuilder, a major global construction company, and the largest life insurance company in Korea. The conglomerate is so big that it accounts for 25 percent of all corporate profits in South Korea, well ahead of the number two Hyundai-Kia Automotive Group at 6.4 percent. Under the direction of Lee Kunhee, CEO and chairman, the third son of founder Lee Byung-Chull, Samsung Electronics has made major strides.

Will Samsung likely achieve its goals in markets where it does not dominate, such as smart phones? Why or why not?
In the world of consumer electronics, copycat brands are a dime a dozen. These are the brands consumers turn to if they don’t want to pay the price for the high-end market leaders. So if consumers want a top-tier television, they’ll probably look at one from Sony or LG. If they want something cheaper that’s probably not quite as good, they’ll look at brands such as Insignia, Dynex, or Vizio. But what about Samsung? Believe it or not, Samsung Electronics was a maker of cheap consumer electronic knock-offs from the time it started making calculators and black-and-white TVs in 1969 through the mid 1990s. Today, however, Samsung is the world’s largest television manufacturer and offers the most cuttingedge models around.
Putting the brand in context, Samsung Electronics is part of the world’s largest conglomerate, South Korea’s Samsung Group. Founded in 1938, the huge Samsung Group also owns the world’s second largest shipbuilder, a major global construction company, and the largest life insurance company in Korea. The conglomerate is so big that it accounts for 25 percent of all corporate profits in South Korea, well ahead of the number two Hyundai-Kia Automotive Group at 6.4 percent. Under the direction of Lee Kunhee, CEO and chairman, the third son of founder Lee Byung-Chull, Samsung Electronics has made major strides.

What factors must marketers consider when setting prices?

Name and describe the two types of value-based pricing methods.

Describe the types of cost-based pricing and the methods of implementing each.

What is target costing and how is it different from the usual process of setting prices?

Discuss the impact of the economy on a company’s pricing strategies.

Name and describe the four types of markets recognized by economists and discuss the pricing challenges posed by each.

In a small group, discuss your perceptions of value and how much you are willing to pay for the following products: automobiles, frozen dinners, jeans, and athletic shoes. Are there differences among members of your group? Explain why those differences exist. Discuss some examples of brands of these products that are positioned to deliver different value to consumers.

Find estimates of price elasticity for a variety of consumer goods and services. Explain what price elasticities of 0.5 and 2.4 mean.

In a small group, determine the costs associated with offering an online MBA degree in addition to a traditional MBA degree at a university. Which costs are fixed and which are variable? Determine the tuition (that is, price) to charge for a three-credit course in this degree program. Which pricing method is your group using to determine the price?

Go to www.outofpocket.com/OOP/Default.aspx to determine the average cost for a colonoscopy. Using a source such as www.newchoicehealth.com, determine the cost for a colonoscopy in your city and in a nearby city. What is the most and least expensive in each city? Are prices comparable to the national average? Why are there differences or similarities in the range of prices for the two cities?
Would you shop around for the best price on a medical procedure? Most patients do not know the price of a medical procedure, and many might not care because they think insurance will cover it. But that is not always the case. Many patients are paying out of their own pockets for their health care. However, healthcare costs and doctors’ prices are now more transparent thanks to the Internet. Several Web sites arm patients with cost information, and others allow them to make price comparisons in their areas. They might even get a coupon for a price reduction from a participating provider.

Health-care providers offer price deals through these types of Web sites. Debate the likelihood of consumers taking advantage of Internet price discounts for medical care.
Would you shop around for the best price on a medical procedure? Most patients do not know the price of a medical procedure, and many might not care because they think insurance will cover it. But that is not always the case. Many patients are paying out of their own pockets for their health care. However, healthcare costs and doctors’ prices are now more transparent thanks to the Internet. Several Web sites arm patients with cost information, and others allow them to make price comparisons in their areas. They might even get a coupon for a price reduction from a participating provider.

Showing 1 - 100 of 13110
Join SolutionInn Study Help for
1 Million+ Textbook Solutions
Learn the step-by-step answers to your textbook problems, just enter our Solution Library containing more than 1 Million+ textbooks solutions and help guides from over 1300 courses.
24/7 Online Tutors
Tune up your concepts by asking our tutors any time around the clock and get prompt responses.