CHAPTER 1: CREATING CONSUMER VALUE AND ENGAGEMENT

WHAT IS MARKETING? The process by which companies engage consumers and build/manage customer
relationships and create consumer value in order to capture value from consumers in return.

The Marketing Process (5 steps)

1. Understand the marketplace and consumer needs and wants.
2. Design a customer value-driven marketing strategy.
3. Construct an integrated marketing program that delivers superior value.
4. Engage customers, build profitable relationships, and create customer delight.
5. Capture value from customers to create profits, sales, and customer equity.
UNDERSTANDING THE MARKETPLACE AND CONSUMER NEEDS
Five customer and marketplace concepts: (1) needs, wants, and demands; (2) market offerings; (3) consumer value
and satisfaction; (4) exchanges and relationships; and (5) markets.

- Consumer Needs, Wants, and Demands: Human needs are states of feeling deprived. Human Wants are human
needs shaped by culture and individual personality. When backed by $ power, customer wants become demands.
- Market Offerings—Products, Services, Information, and Experiences
- Needs and wants are fulfilled through market offerings—a combination of products, services, information,
or experiences offered to a market to satisfy a need or want. Market offerings are not limited to physical
products, they also include services. Marketing myopia occurs when a company becomes so taken with its
own products that it loses sight of the customer needs.
- Consumer Value and Satisfaction: Consumers form expectations about the value/satisfaction that market
offerings will deliver/buy.
- Relationships Exchange is obtaining a desired product/service/experience from someone by offering something in
return.
- Market= the set of actual/potential consumers of a product/service.

DESIGNING A MARKETING STRATEGY AND PLAN

Marketing management is defined as managing target markets to build profitable customer relationships. The
marketing manager must answer: the target market, and the value proposition.
1) Selecting Consumers to Serve: A company must decide whom it will serve by dividing the market into segments
of customers (market segmentation) and selecting which segments it will go after (target marketing). Marketing
management is customer management and demand management.
2) Choosing a Value Proposition: A company’s value proposition is the set of benefits or values it promises to deliver
to consumers to satisfy their needs.

Marketing Management Orientations: There are five alternative concepts:

1) Production Concept: consumers will favor products that are available and highly affordable.

2) The Product Concept: holds that consumers will favor products that offer the most quality, performance.

3) The Selling Concept: consumers will not buy enough unless the firm makes a large sale and promotion.
4) The Marketing Concept: knowing the needs and wants of markets and delivering satisfactions better than
others.
5) The Societal Marketing Concept: conflicts between consumer wants and consumer long-term welfare.

* The selling concept takes an inside-out approach, the marketing concept uses an outside-in perspective.

MARKETING MIX CONSISTS OF 4 Ps: product, price, place, and promotion.

Customer Relationship Management: (most important concept). It is the overall process of building and maintaining
profitable customer relationships by delivering superior customer value and satisfaction.

Consumer-Perceived Value. This is the customer’s evaluation of the difference between all the benefits and all
the costs of a market offering compared to competing offers.

Consumer Satisfaction: depends on the product’s perceived performance relative to a consumer’s

expectations.

What Is Consumer Equity: It is the total combined consumer lifetime values of all of the company’s
current/potential customers.

Building the Right Relationships with the Right Consumers

- “Strangers” show low potential profitability and little projected loyalty.
- “Butterflies” are potentially profitable but not loyal.
- “True friends” are both profitable and loyal.
- “Barnacles” are highly loyal but not very profitable.

1.1 How do customer relationship management and consumer-perceived value impact consumer
satisfaction?
Answer: Customer relationship management is the process of maintaining profitable customer relationships by
delivering superior customer value and satisfaction. Consumer-perceived value is the customer’s evaluation of the
difference between all the benefits and all the costs of offers. Consumer satisfaction depends on the product’s perceived
performance relative to a buyer’s expectations.

CHAPTER 3: ANALYZING THE MARKETING ENVIRONMENT

The microenvironment consists of companies and people close to the company that affect its ability to engage and serve
its customers. The macroenvironment consists of larger societal forces that affect the microenvironment.
THE MICROENVIRONMENT
- The Company: All the interrelated groups form the internal environment.
- Suppliers: provide the resources needed by the company to produce goods/services.
- Marketing intermediaries help the company to promote, sell, and distribute its products to final buyers.
- Competitors: Marketers must gain strategic advantage by positioning their offerings strongly against competitors.
- A public: any group that has a potential interest in an organization’s ability to achieve its objectives.

Customers (Five types of customer markets)

1. Consumer markets: individuals/households that buy goods/services for personal consumption.
2. Business markets buy goods/services for further processing or use in their production process.
3. Reseller markets buy goods and services to resell at a profit.
4. Government markets: government agencies that buy goods/services to produce public services.
5. International markets: consumers in other countries, (producers, resellers, and governments).
THE MACROENVIRONMENT: THE DEMOGRAPHIC AND ECONOMIC ENVIRONMENTS
Demographic Environment, technological, cultural, social, political, natural, etc.

Changing Age Structure of the Population

Baby Boomers: born between 1946 and 1965. Baby boomers account for over 25 percent of the Canadian population
but still control the highest spending power of any age cohort. They are the fastest-growing shopper demographic
online, outspending younger generations two to one.
Generation X: They are less materialistic than the other groups; they prize experience, not acquisition. They developed
a more cautious economic outlook. The Gen Xers are a more skeptical bunch. Gen Xers are more likely to have
household incomes higher than $100,000.
Millennials: Born between 1981 and 1997, they don’t just embrace technology; it’s a way of life. They engage with
brands in an entirely new way, such as with mobile or social media.
Generation Z: Born between 1997 and 2012. They have a fluency and comfort with digital technologie and blend the
online and offline worlds. They are hyperaware of social responsibility, social justice, and the sustainability efforts of
brands.
Generation Alpha: The latest generational group exerts substantial influence on the household buying decisions of its
mostly millennial parents.

Discussion Questions
3.1 Define the marketing environment and discuss the two parts that make up a company’s
marketing environment.
Answer: The marketing environment consists of a microenvironment and a macroenvironment. The microenvironment
consists of the companies and people close to the company that affect its ability to engage and serve its customers—the
company, suppliers, marketing intermediaries, customer markets, competitors, and public. The macroenvironment
consists of the larger societal forces that affect microenvironment: demographic, economic, natural, technological,
political, and cultural forces.
CHAPTER 4: MANAGING MARKETING INFORMATION TO GAIN CUSTOMER INSIGHTS
Marketing Information and Today’s “Big Data”: Far from lacking information, most marketing managers are
overloaded with data and often overwhelmed by it. This problem is summed up in the concept of big data. Big data
refers to the issue of huge and complex data sets generated by today’s sophisticated information.
Developing Customer Insights
The real value of marketing information lies in how it is used—in the customer insights that it provides.
The Marketing Information System
(MIS) consists of people/procedures that assess information needs, develop the needed information, and help
decision-makers to use the information to generate/ validate actionable customer and market insights.

Marketers can obtain information from internal data, competitive marketing intelligence, and marketing research.
- Internal Data:
Electronic collections of consumer/market information obtained from data sources within the company network.
Information in the database can come from many sources.
- Competitive Marketing Intelligence:
The systematic collection/analysis of publicly available information about consumers, competitors, and developments
in the marketplace. Marketing intelligence gathering has grown dramatically. Firms use competitive intelligence to gain
early warnings of other competitor moves and strategies.
- MARKETING RESEARCH:
The systematic design/collection/analysis/report of data relevant to a specific marketing situation facing an
organization. The marketing research process has four steps:
1- Defining the Problem and Objectives: the hardest step in the research process. A marketing research project
might have one of three types of objectives.
2- Exploratory research: gather preliminary information that help define the problem and suggest
hypotheses.
3- Descriptive research: to describe things, such as the market potential for a product.
4- Causal research: to test hypotheses about cause-and-effect relationships.

Developing the Research Plan: The research plan outlines sources of existing data and spells out the specific research
approaches, contact methods, sampling plans, and instruments.

Secondary data: it consists of information that already exists and having been collected for another purpose.
Primary data consists of information collected for the specific purpose at hand.

Research Approaches
1- Observational Research involves gathering primary data by observing relevant people, actions, and situations.
2- Ethnographic research involves sending observers to watch and interact with consumers
3- Survey research, the most used method for data collection, is best suited for gathering descriptive information.
4- Experimental Research is best suited for gathering causal information.
- Contact Methods: Mail/Email, Phone, and Personal Interviewing
- Mail questionnaires
- Phone interviewing is one of the best methods for gathering information quickly
- Personal interviewing takes two forms—individual and group interviewing.

Online Marketing Research

Increasingly, researchers are collecting primary data through online marketing research. Online and mobile
channels are especially well suited for quantitative research.

A sample is a segment of the population selected for marketing research to represent the population as a
whole. Designing the sample requires three decisions.
1. Implementing the Research Plan
This stage involves collecting, processing, and analyzing the information. Researchers must process and analyze the
collected data to isolate important information and findings
4. Interpreting and Reporting the Findings
Researchers should present important findings and insights that are useful in the major decisions faced by
management.

Customer Relationship Management (CRM): Companies capture information at every possible customer touch
point. (CRM) is used to manage detailed information about individual customers and carefully manage customer
touch points in order to maximize customer loyalty.

Marketing analytics consists of the analysis tools, technologies, and processes by which marketers dig out
meaningful patterns in big data to gain customer insights and gauge marketing performance. Marketing analytics
employ artificial intelligence (AI).

Distributing and Using Marketing Information

Many companies use an intranet and internal CRM to facilitate information distribution. The intranet provides
ready access to data, stored reports, and so forth. Companies are increasingly allowing key customers and value-
network members to access account and product information, along with other information. The systems that do
this are called extranets.
Discussion Questions
4.1 Explain how marketing intelligence differs from marketing research. Which is more valuable to a company?
Why?
Answer: Competitive marketing intelligence is the systematic collection and analysis of publicly available information
about consumers, competitors, and developments in the marketplace. The goal of competitive marketing intelligence is
to improve strategic decision-making by understanding the consumer environment, assessing and tracking competitors’
actions, and providing early warnings of opportunities and threats. Marketing research is the systematic design,
collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization. It can help
them to assess market potential and market share or measure the effectiveness of pricing, product, distribution, and
promotion activities.
CHAPTER 5: UNDERSTANDING CONSUMER AND BUSINESS BUYER BEHAVIOUR

Characteristics Affecting Consumer Behaviour

Subcultures are groups of people with shared value systems based on common life experiences and situations.
Subcultures include nationalities, religions, racial groups, and geographic regions.

Social Factors: Groups and Social Networks, Reference groups, Opinion leaders, Word-of-mouth influence, Influencer
marketing, Online social networks, etc.

Personality: the unique psychological characteristics that lead to relatively consistent and lasting responses to
one’s environment. A brand personality is the specific mix of human traits that may be attributed to a particular
brand.
Psychological Factors
- A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. Freud suggests
 that a person’s buying decisions are affected by subconscious motives that even the buyer may not fully
understand.
- Perception is the process by which people select, organize, and interpret information to form a meaningful
picture of the world.
- Learning describes changes in an individual’s behavior arising from experiences.
- Attitudes are a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea.
Selective attention is the tendency for people to screen out most of the information to which they are exposed.

Selective distortion describes the tendency of people to interpret information in a way that will support what they
already believe.

Selective retention is the retaining of information that supports their attitudes and beliefs.

- Beliefs and Attitudes: A belief is a descriptive thought that a person has about something. Attitude describes a
person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea.
The Buyer Decision Process (five stages)
1. need recognition,
2. Information search: Personal sources, Commercial sources, Public sources, Experiential sources
3. evaluation of alternatives,
4. purchase decision, and
5. post-purchase behaviour.
THE BUYER DECISION PROCESS FOR NEW PRODUCTS
The adoption process of a new product: Awareness, Interest, Evaluation, Trial, Adoption

The five adopter groups have differing values.

1. Innovators are venturesome—they try new ideas at some risk.
2. Early adopters are guided by respect, they are opinion leaders in their communities
3. Early mainstream adopters adopt new ideas before the average person.
4. Late mainstream adopters are skeptical—they adopt an innovation only after a majority of people have tried it.
5. Lagging adopters are tradition-bound—they are suspicious of changes
BUSINESS MARKETS AND BUSINESS BUYER BEHAVIOUR
Business Markets: involve far more dollars and items than do consumer markets. The main differences between
business markets and consumer markets relate to the following:
 market structure and demand
 nature of the buying unit
 the types of decisions and the decision process involved
1. Market Structure and Demand
Many business markets have inelastic demand; that is, total demand for many business products is not affected
much by price changes. Business markets have more fluctuating demand. The business marketer normally deals
with far fewer but far larger buyers than the consumer marketer does. Business demand is derived demand.

2. Nature of the Buying Unit

Business purchases usually involve more decision participants and a more professional purchasing
effort.

Discussion Questions
5.1 What are the stages in the adoption process? Describe how a student goes through the adoption
process when choosing a college or university.
Answer:
 Awareness: The consumer becomes aware of the new product but lacks information about it.
  Interest: The consumer seeks information about the new product
 Evaluation: The consumer considers whether trying the new product makes sense.
 Trial: The consumer tries the new product on a small scale to improve his or her estimate of its value.
 Adoption: The consumer decides to make full and regular use of the new product.

CHAPTER 6: CUSTOMER VALUE-DRIVEN MARKETING STRATEGY: CREATING VALUE FOR

TARGET CUSTOMERS
Market segmentation involves dividing a market into smaller groups of buyers with distinct needs, characteristics, or
behaviors that might require separate marketing strategies or mixes.

Market targeting: consists of evaluating each market segment’s attractiveness and selecting one or more market
segments to enter.

Differentiation: differentiating the firm’s market offering to create superior customer value.

Positioning consists of arranging for a market offering to occupy a clear, distinctive, and desirable place
relative to competing products in the minds (and hearts) of target consumers.

- Geographic segmentation calls for dividing the market into different geographical units such as nations, regions,
provinces, cities, or even neighborhoods.

- Demographic segmentation divides the market into groups based on variables such as age, gender, life
cycle stage, income, occupation, education, religion, ethnicity, and generation.

- Gender segmentation

- Psychographic segmentation divides buyers into different groups based on lifestyle or personality

- Behavioural segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses

- Occasion segmentation involves grouping buyers according to occasions when they get the idea to buy.

- Benefit segmentation is a group of buyers according to the different benefits that they seek

- User status refers to segmenting markets into nonusers, ex-users, potential users, first-time users, and
regular users of a product. Loyalty status is dividing buyers into groups according to their degree of
loyalty.

Segmenting Business Markets

- Consumer and business marketers use many of the same variables to segment their markets and some additional
variables, such as customer operating characteristics, purchasing approaches, situational factors, and personal
characteristics.
Segmenting International Markets
- Geographic factors: Nations close to one another may have many common traits and behaviours.
- Economic factors: population income levels or by their level of economic development.
- Political and legal factors: Type and stability of government, etc.
- Cultural factors: common languages, religions, values and attitudes, customs, and behavioral patterns.

A target market consists of a set of buyers who share common needs or characteristics

Undifferentiated Marketing: (or mass-marketing) strategy, a firm might decide to ignore market segment
differences and target the whole market with one offer. COMMON NEEDS rather than different needs.

Differentiated Marketing: strategy: target several market segments and designs separate offers for each.
Concentrated Marketing (or niche marketing) strategy: the firm goes after a large share of one and fine-tunes its
products, prices, and programs to the needs of carefully defined segments.

Micromarketing: is the practice of tailoring products and marketing programs to suit the tastes of specific individuals
and locations. It includes local marketing and individual marketing.

Value proposition: The value for targeted segments and what positions it wants to occupy in those segments. A
product’s position is the way the product is defined by consumers by important attributes.
Identifying and Differentiating Competitive Advantages: It can differentiate along the lines of (1) product, (2)
services, (3) channels, (4) people, (5) or image differentiation.

Positioning Strategy (brand’s value proposition):

1- More for More = providing the highest quality, highest price (prestige… EX: MERCEDES)

2- More for the Same = brand offering more similar quality but at same price (TARGET)

3- The Same for Less offers many of the same brands but at deep discounts (COSTCO).

4- Less for Much Less = low quality and low price (MOTEL)

5- More for Less: the winning value proposition. In the long run, companies will find it very difficult to sustain.

CHAPTER 7
A product= offered to a market that satisfies a want or need. This includes services, events, people, places, etc.
Services: Activities, benefits, or satisfactions offered for sale that are intangible and do not result in ownership.
A company’s market offering: includes both goods and services. It can range from tangible goods (like soap) to
services.
Product planners have three levels.
- (1) identify the core customer value that consumers seek, (2) design the actual product and (3) augment it.

Consumer Products: products and services bought by consumers for consumption. Convenience products: bought
frequently, immediately, and with a minimum comparison and buying effort. They are usually low priced, and
marketers place them in many locations to make them readily available when customers need or want them. Examples
include milk, bread, candy, magazines, and fast food.

Shopping products: less frequently purchased, customers compare carefully on quality, price, and style. Examples
include furniture, clothing, and hotel services.

Specialty products: unique characteristics or brand that buyers will specially buy. Examples: specific brands of cars
(Lamborghini), designer clothes, gourmet foods, and the services of medical or legal specialists.

Unsought products: products that the consumer does not know/does not normally think of buying. Unsought products
need advertising, personal selling, etc. Examples: life insurance, and blood donations to the Red Cross.

Industrial Products: are those purchased for further processing or for use in conducting a business. 3 groups :
• Materials and parts
• Capital items are industrial products that aid in the buyer’s production (installations and accessory equipment).
• Supplies and services
Organization marketing: activities that create, and maintain the behavior of consumers toward an organization.
Person marketing consists of activities undertaken to create, and maintain behaviour toward people.

Place marketing involves creating, and maintaining behavior toward particular places.
 Social marketing: the use of commercial marketing to influence individuals’ behaviour to improve their well-being and
that of society.

The benefits of a product are communicated/delivered by product attributes: quality, features, style, and design.

Product quality creates customer value and satisfaction through level and consistency. Level means performance
quality. Quality consistency= freedom from defects, and consistency in performance.
- Total quality management (TQM) is an approach that companies are involved in improving the quality of
products, services, etc.

Product features are a competitive tool to differentiate the company’s products from competitors’ products.

Product style and design also add to customer value. Style= appearance, Design= a product’s usefulness and its looks

Branding: A brand is a name, sign, symbol, (etc.), that identifies the maker of a product. The brand name is the basis
of the story of a product. It provides legal protection and helps the market segment.

Labelling and Logos: The label identifies the product, describes things about the product, and promotes the brand. It
supports the brand’s positioning and adds personality to it. Logos are simpler, brighter, and more modern designs. In
Canada, the Consumer Packaging and Labelling Act establishes regulations for goods sold pertaining to labels and
packaging.

Product Support Services: (1) Survey customers to assess the value of current services and get new ideas. (2) The
company fixes problems and adds new services that will delight customers.
A product line is a group of products that function similarly, sold to the same customer groups, marketed through the
same outlets, or fall within the same price range. For example, Marriott offers several lines of hotels: a luxury line, a
premium line including Marriott, etc.
- (1) Product line length, (2) filling, and (3) stretching
* *Companies at the market's upper end stretch their lines downward. Companies located at the market's lower end
stretch their product lines upward. Companies located in the middle range = both directions.

Product mix: all the product lines sold by a particular seller. Each product line consists of many brands. Ex: Colgate
divides its product mix into four major lines: oral care, personal care, home care, and pet nutrition. A company’s
product mix has four dimensions: width, length, depth, and consistency.
• Width: number of product lines in the company
• Length: total number of items on the product lines
• Depth: number of versions of each product
• Consistency: how related the product lines are
The company can increase its business in 4 ways.
1. Add new product lines, lengthen them, add more versions of each product, or pursue more product lines.
A company must consider 4 service characteristics when designing marketing programs:
(1) Service intangibility: services cannot be seen, tasted, felt, heard, or smelled before they are bought.
(2) Service inseparability: services cannot be separated from their providers because the customer is also present
(3) Service variability: the quality of services depends on who provides them, when, where, and how they are
provided.
(4) Service perishability: services cannot be stored for later sale/use.
The Service-Profit Chain (5 links): Internal service quality, Satisfied/productive service, Greater service value,
Satisfied/ loyal customers, Service profits, and growth.
Internal marketing: Service quality depends on the quality of the buyer-seller interaction. Service companies need to
increase their service differentiation, service quality, and service productivity.
Service Differentiation: This includes features that differentiate one company from competitors by having more reliable
customer-contact people, a superior physical environment, and a delivery process. They can differentiate their images
through symbols and branding.

Service Quality: Service quality will always vary, depending on the interactions between employees and customers.

Service Productivity:
• They can train employees better or hire better ones, increase the quantity of their service, and increase technology.
Brand equity is the differential effect the brand name has on customer response to the product. It’s a measure of the
brand’s ability to capture consumer preference. Ad agency WWP’s Brand Asset Evaluator measures brand strength
based on 4 dimensions: Differentiation, relevance, knowledge, and esteem.

The asset of brand equity is customer equity—the value of the customer relationships that the brand creates.
Brand Positioning: Marketers can position brands at any of 3 levels.
- They can position the brand on product attributes, with a benefit, or on beliefs and values.

Brand value: the total financial value of a brand.

Brand Name Selection: Desirable qualities for a brand name:

(1) It should suggest something about the product’s benefits and qualities.
(2) It should be easy to pronounce, recognize, and remember.
(3) The brand name should be distinctive.
(4) It should be extendable.
(5) It should be translated easily into foreign languages.
(6) It should be capable of legal protection.
Brand Sponsorship: 4 sponsorship options:
(1) The product may be launched as a manufacturer’s brand (or national brand).
(2) The manufacturer may sell to resellers who give it a private brand (also called a store brand).
(3) The manufacturer can market licensed brands.
(4) Two companies can join forces and co-brand a product.
National Brands versus Store Brands: National brands have dominated the retail scene, but store brands have grown
much faster than national brands, retailers have many advantages.
• Retailers often price their store brands lower than comparable national brands.
• Store brands yield higher profit margins for the reseller.
• Store brands give resellers exclusive products that cannot be bought from competitors.
Co-branding: two brand names of different companies are used for the same products. Co-branding offers broader
consumer appeal and greater brand equity. Co-branding also allows a company to expand its existing brand into
categories.
Brand Development (4 choices):
(1) Line extensions: extend existing brand names to new forms, colors, sizes, ingredients, or
flavors of an existing product category.
(2) Brand extensions extend a current brand name to new/modified products in a new
category.
(3) Multibrands introduce additional brands in the same category.
(4) New brands

Master brand strategies involve weeding out weaker brands and focusing marketing dollars only on brands that can
achieve the highest market share positions in their categories.
The brand experience involves customers coming to know a brand through a wide range of contacts and touch points.
Companies need to periodically audit their brand's strengths and weaknesses

DISCUSSION Questions
Digital Marketing: Feeding Buddy from Your Smartphone

People lead busy lives, sometimes taking time away from their pets. Petnet has developed the Smartfeeder, allowing pet
owners to schedule feeding times, monitor food intake, and personalize pet nutrition information. The Smartfeeder
measures out the appropriate amount of food for a pet based on age, activity, and weight. Additional features include
the ability to conveniently store 5-7 pounds of pet food in the attached hopper. Petnet has also seamlessly integrated its
products with a smartphone app. Pet owners can now control feeding times, portion sizes, and food supply and even
order pet food to be delivered directly to their homes, all from a mobile device.

7.6 What type of product is Petnet’s Smartfeeder? How should this type of product be marketed?

Answer: The Petnet Smartfeeder is best classified as a consumer product, used for personal consumption. More
specifically, it can be classified as a shopping product. The buyer will likely evaluate other products in the market
before making a final purchase. Pet owners will likely review quality, prices, styles, features, and functionality of other
pet feeders found in retail stores, specialty pet stores, and through websites. Marketers should consider that consumers
plan these purchases carefully and there is a high degree of effort involved in such purchases. Therefore, marketing
professionals would best serve these customers by creating streamlined customer service processes and points where
customers can easily access all information about the product to expedite product comparisons and purchase.

7.7 What are customers really buying when they purchase a Petnet Smartfeeder? Identify the core, actual, and
augmented product levels for this product.

Answer: The core benefit of the Smartfeeder is automated pet feeding and food monitoring. Many consumers would
purchase the product simply for solving this one problem. Petnet’s actual product is the nuts and bolts, design,
packaging, and other features of the Smartfeeder. The augmented product offering includes additional services such as
pet food delivery through the app. Augmented products offer additional consumer benefits and services. The primary
benefit of the Smartfeeder is automated pet feeding and food monitoring. Petnet creates value by offering the
augmented product, the pet food delivery service, to further enhance customer value. It solves another problem the
consumer may face: not having enough time to shop for pet food. It is an environmentally friendly option, by
eliminating trips to the store and saving fuel.
CHAPTER 8

INTRODUCTION: Every product seems to go through a life cycle. This product life cycle presents two major
challenges:
1. Because all products eventually decline, a firm must be good at developing new products to replace aging ones (the
challenge of new product development).
2. The firm must be good at adapting its marketing strategies in the face of changing tastes, technologies, and
competition as products pass through life-cycle stages (the challenge of product life-cycle strategies).

By new products, we mean original products, product improvements, product modifications, and new brands that the
firm develops through its own product development. A firm can obtain new products in two ways.

1. Acquisition—buying a whole company, a patent, or a license to produce someone else’s product.

2. New product development efforts.
THE NEW-PRODUCT DEVELOPMENT PROCESS
8 major steps:
1. Idea Generation: is a systematic search for new product ideas.
Internal Idea Sources: The company can find new ideas through formal research and development. Or it can pick the
brains of employees—from executives to salespeople to scientists, engineers, and manufacturing staff.
External Idea Sources: Companies can also obtain good new product ideas from any of a number of external sources,
such as distributors suppliers, or even competitors. Perhaps the most important source of new product ideas is
customers themselves.

Crowdsourcing: Many companies are now developing crowdsourcing new product idea programs. Crowdsourcing
invites broad communities of people into the new product innovation process.

2. Idea Screening: The first idea-reducing stage is idea screening, which helps spot good ideas and drop poor ones
as soon as possible.

3. Concept Development and Testing

A product idea is an idea for a possible product that the company can see itself offering to the market.

A product concept is a detailed version of the idea stated in meaningful consumer terms. A product image is the way
consumers perceive an actual or potential product.

Concept Development, several descriptions of the product are generated to find out how attractive each concept is to
customers. From these concepts, the best one is chosen.

Concept Testing: calls for testing new product concepts with groups of target consumers.

4. Marketing strategy development involves designing an initial marketing strategy for a new product based on
product concepts. It consists of three parts.

1. A description of the target market; the planned value proposition; and the sales, market share, and profit goals
for the first few years
2. An outline of the product’s planned price, distribution, and marketing budget for the first year
3. A description of the planned long-run sales, profit goals, and marketing mix strategy

5. Business analysis involves a review of the sales, costs, and profit projections for a new product to find out whether
they satisfy the company’s objectives.

6. Product Development: R&D or engineering develops the product concept into a physical product. The product
development step calls for a large jump in investment.

7. Test Marketing is the stage at which the product and marketing program are introduced into realistic market
settings.

8. Commercialization: involves introducing a new product into the market. Decisions must be made about the
introduction of timing as well as where to launch the new product.

MANAGING NEW PRODUCT DEVELOPMENT

Customer-centered New Product Development: New product development must be customer-centered. This
development focuses on finding new ways to solve customer problems and create more customer-satisfying
experiences.

Team-Based New Product Development: Under the sequential product development approach, one company
department works individually to complete its stage of the process before passing the new product along to the next
department and stage. This orderly, step-by-step process can help bring control to complex and risky projects. But it
also can be dangerously slow. To get their new products to market more quickly, many companies use a team-based
new product development approach. Under this approach, company departments work closely together in cross-
functional teams, overlapping the steps in the product development process to save time and increase effectiveness.
Instead of passing the new product from department to department, the company assembles a team of people from
various departments that stay with the new product from start to finish.

Systematic New Product Development: This system can be used to collect and manage new product ideas.
1. It helps create an innovation-oriented company culture.
2. It will yield a larger number of new product ideas, among which will be found some especially good ones.
PRODUCT LIFE-CYCLE STRATEGIES: five distinct stages:
1. Product development begins when the company finds and develops a new product idea. During product
development, sales are zero, and the company’s investment costs mount.
2. Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in
this stage because of the heavy expenses of product introduction.
3. Growth is a period of rapid market acceptance and increasing profits.
4. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential
buyers. Profits level off or decline because of increased marketing outlays to defend the product against
competition.
5. Decline is the period when sales fall off and profits drop.
The PLC concept can describe a product class (gasoline-powered automobiles), a product form
(SUVs), or a brand (the Ford Escape). Product classes have the longest life cycles. Product forms have the standard
PLC shape.
Product brand PLC can change quickly because of changing competitive attacks and responses. The PLC can be
applied to styles, fashions, and fads
- A style is a basic and distinctive mode of expression.
• A fashion is a currently accepted or popular style in a given field.
• Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product
or brand popularity.

Strategies for each of the other life-cycle stages:

Introduction Stage: starts when the new product is first launched. In this stage, profits are negative or low, promotion
spending is relatively high, and only basic versions of the product are produced. A company, especially the market
pioneer, must choose a launch strategy that is consistent with the intended product positioning.

Growth Stage: where sales begin to climb quickly. New competitors will enter the market. They will introduce new
product features, and the market will expand. The increase in competitors leads to an increase in the number of
distribution outlets. Prices remain stable.
Profits increase during the growth stage.

Maturity Stage: characterized by slowing product growth. The slowdown in sales growth results in many producers
with many products to sell. Competitors begin marking down prices, increasing their advertising and sales promotions,
and upping their product-development budgets to find better versions of the product. These steps lead to a drop in
profit. Product managers should consider modifying the market, product, and marketing mix.

In modifying the market, the company tries to increase the consumption of the current product.

In modifying the product, the company tries changing characteristics such as quality, features, style, or packaging to
attract new users and to inspire more usage.

In modifying the marketing mix, the company tries changing one or more marketing mix elements.

Decline Stage: The sales of most product forms and brands eventually dip. This is the decline stage.

 Management may decide to maintain its brand without change in the hope that competitors will leave the
industry.

Management may decide to harvest the product, which means reducing various costs (plant and equipment,
maintenance, R&D, advertising, sales force) and hoping that sales hold up.

Discussion Questions
8.1 Why do so many new products fail?

Answer: There are several reasons many new products fail. Although an idea may be good, the company may
overestimate market size. The actual product may be poorly designed. Or it might be incorrectly positioned, launched at
the wrong time, priced too high, or poorly advertised. A high-level executive might push a favorite idea despite poor
marketing research findings. Sometimes the costs of product development are higher than expected, and sometimes
competitors fight back harder than expected.

8.2 What is idea generation? List and explain the sources of new product ideas.

Answer: Idea generation is the first step in new product development. It is the systematic search for new product ideas.
A company typically generates hundreds or thousands of ideas to find a few good ones. There are internal and external
sources of new product ideas including:

 Customers – Companies can analyze customer questions and complaints to find new products that solve
consumer problems. Crowdsourcing is a way for customers to share ideas.
 Competitors – Companies watch competitors’ ads to get clues about their new products.
 Distributors and suppliers – Distributors can pass along information about consumer problems and new
product possibilities. Suppliers can share new concepts, techniques, and materials that can be used to develop
new products.
 Employees – Many companies have intrapreneurial programs where employees can develop and present new
product ideas
 idea sources include trade magazines, shows, websites, and seminars; government agencies; advertising
agencies; marketing research firms; university and commercial laboratories; and inventors.

8.3 How does a product idea differ from a product concept and a product image? Where do these concepts fit in
the new product development process?

Answer: In the new product development process, concept development, and testing follows idea generation and idea
screening. An attractive idea must be developed into a product concept. It is important to distinguish between a product
idea, a product concept, and a product image. A product idea is an idea for a possible product that the company can see
itself offering to the market. A product concept is a detailed version of the idea stated in meaningful consumer terms. A
product image is the way consumers perceive an actual or potential product.
CHAPTER 9
MAJOR PRICING STRATEGIES:

Customer Value-Based Pricing: In the end, the customer will decide whether a product’s price is right. It uses buyers’
perceptions of value, not the seller’s cost, as the key to pricing. Price is considered along with the other marketing mix
variables before the marketing program is set.

Cost-Based Pricing: Whereas customer-value perceptions set the price ceilings, costs set the floor for the price that the
company can charge. Cost-based pricing involves setting prices based on the costs for producing, distributing, and
selling the product plus a target profit margin. “Good value” is not the same as “low price.” Types of value-based
pricing are good-value pricing and value-added pricing.

1. Good-value pricing involves offering just the right combination of quality and good service at a fair price.
Everyday low pricing (EDLP). EDLP involves charging a constant, everyday low price with few price discounts.

High-low pricing involves charging higher prices on an everyday basis but running frequent promotions to lower
prices.
2. Value-added pricing is the strategy of attaching value-added features and services to differentiate their offers and
thus support higher prices.
Types of Costs
Fixed costs (also known as overhead) are costs that do not vary with production or sales level. For example, a company
must pay each month’s bills for rent, heat, interest, and executive salaries regardless of the company’s level of output.

Variable costs vary directly with the amount of production. They are called variables because their total varies with the
number of units produced. Each smartphone or tablet produced by Samsung involves a cost of computer chips, wires,
plastic, packaging, and other inputs.

Total costs are the sum of the fixed and variable costs for any given level of production.

Cost-Plus Pricing: The simplest pricing method is cost-plus pricing (markup pricing)—adding a standard markup to
the cost of the product.

Does using standard markups to set prices make sense? Generally, no. Markup pricing remains popular for many
reasons.
1. Sellers are more certain about costs than about demand.
2. When all firms in the industry use this pricing method, prices tend to be similar and pricecompetition is thus
minimized.

Another cost-oriented pricing approach is break-even pricing, or a variation called target return pricing. The firm
tries to determine the price at which it will break even or make the target profit it is seeking.

Target return pricing uses the concept of a break-even chart, which shows total cost and total revenue expected at
different sales volume levels. The major problem with this analysis is that it fails to consider customer value and the
relationship between price and demand.

Typically, as the price increases, demand decreases.

Competition-Based Pricing: involves setting prices based on competitors’ strategies, costs, prices, and market
offerings. What principle should guide decisions about what price to charge relative to those of competitors? The
answer is simple in concept but difficult in practice. Be certain to give customers superior value for the price.

OTHER INTERNAL AND EXTERNAL CONSIDERATIONS AFFECTING PRICE DECISIONS

Overall Marketing Strategy, Objectives, and Mix: Price is only one of the marketing mix tools that a company uses to
achieve its marketing objectives. Price decisions must be coordinated with product design, distribution, and promotion
decisions to form a consistent and effective integrated marketing program. Companies often position their products on
price and then tailor other marketing mix decisions to the prices they want to charge.

Target costing starts with an ideal selling price based on customer-value considerations, and then targets costs that will
ensure that the price is met. Companies may deemphasize price and use other marketing mix tools to create nonprice
positions.

Organizational Considerations: In small companies, prices are often set by top management rather than by the
marketing or sales departments. In large companies, pricing is typically handled by divisional or product line managers.
In industrial markets, salespeople may be allowed to negotiate with customers within certain price ranges. In industries
in which pricing is a key factor, companies often have pricing departments to set the best prices or to help others in
setting them.

Pricing in Different Types of Markets

Pure competition: The market consists of many buyers and sellers trading in a uniform commodity, such as wheat,
copper, or financial securities. No single buyer or seller has much effect on the going market price. Thus, sellers in
these markets do not spend much time on marketing strategy.
Monopolistic competition: The market consists of many buyers and sellers who trade over a range of prices rather than
a single market price. A range of prices occurs because sellers can differentiate their offers to buyers. Sellers try to
develop differentiated offers for different customer segments and, in addition to price, freely use branding, advertising,
and personal selling to set their offers apart.
Oligopolistic competition: The market consists of a few sellers who are highly competitive to each other’s pricing and
marketing strategies. There are few sellers because it is difficult for new sellers to enter the market.

Pure monopoly: The market consists of one seller. The seller may be a government monopoly (Canada Post) , a private
regulated monopoly, or a private nonregulated monopoly.

Analyzing the Price-Demand Relationship

- The relationship between the price charged and the resulting demand level is shown in the
demand curve
- In a normal case, demand and price are inversely related; that is, the higher the price, the lower the demand.
- In a monopoly, the demand curve shows the total market demand resulting from different prices. If the company
faces competition, its demand at different prices will depend on whether competitors’ prices stay constant or
change with the company’s own prices.

Price Elasticity of Demand: How responsive demand will be to a change in price. If demand hardly changes with a
small change in price, we say demand is inelastic. If demand changes greatly with a small change in price, we say the
demand is elastic.

The Economy: It can have a strong impact on the firm’s pricing strategies. In the aftermath of major economic
disruptions such as the Great Recession (2008-2009) and the Covid-19 pandemic, consumers have rethought the price-
value equation. Many consumers have tightened their belts and become more value conscious. The most obvious
response to the new economic reality is to cut prices. Rather than cutting prices, many companies are shifting their
marketing to focus on more affordable items in their product mixes. Remember, even in tough economic times,
consumers do not buy based on price alone. The key is to offer great value for money.
Other External Factors: The company must also consider what impact its prices will have on other parties in its
environment, such as resellers and the government. Social concerns may have to be considered.

NEW-PRODUCT PRICING STRATEGIES

Market-Skimming Pricing: (or price skimming) is setting high initial prices to “skim” revenues layer by layer from
the market. Market skimming makes sense under certain conditions.
1. The product’s quality and image must support its higher price and enough buyers must want the product at that
price.
2. The costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more.
3. Competitors should not be able to enter the market easily and undercut the high price.
Market-Penetration Pricing is setting a low initial price in order to penetrate the market quickly and deeply—to
attract a large number of buyers quickly and win a large market share. Several conditions must be met for this strategy
to work.

1. The market must be highly price sensitive so that a low price produces more market growth.
2. Production and distribution costs must fall as sales volume increases.
3. The low price must help keep out the competition, and the penetration price must maintain its low-price position.
PRODUCT MIX PRICING STRATEGIES
In pricing individual products, a company looks for a set of prices that maximizes its profits on the total product mix.

- Product line pricing: we set the price between the various products in a line. The price steps should take into
account cost differences between the products in the line.
- Optional product pricing is offering to sell optional or accessory products along with a main product.

- Captive product pricing, companies make products that must be used along with a main product. The price of the
service is broken into a fixed fee plus a variable usage rate.

- By-product pricing: pricing low-value by-products to get rid of or make money on them. The company seeks a
market for the by-products produced in the generation of some products and services.

- Product-bundle pricing: sellers often combine several of their products and offer the bundle at a reduced price.
For example, fast-food restaurants bundle a burger, fries, and a soft drink at a “combo” price.

CHAPTER 10
The supply chain consists of “upstream” and “downstream” partners. Upstream from the company is the set of firms
that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or
service. Marketers have traditionally focused on the “downstream” side of the supply chain—on the marketing
channels (or distribution channels) that look forward toward the customer. A better term would be demanding chain
because it suggests a sense-and-respond view of the market. Under this view, planning starts with the needs of target
customers, to which the company responds by organizing a chain of resources and activities to create customer value.

The Nature and Importance of Marketing Channels

- Producers try to forge a marketing channel (or distribution channel)—a set of interdependent organizations that
help make a product or service available for use or consumption by the consumer or business user.

How Channel Members Add Value

- The role of marketing intermediaries is to transform the assortments of products made by producers into the
assortments wanted by consumers. Members of the marketing channel perform many key functions. Some help to
complete transactions:
 Information: Gathering and distributing marketing research and intelligence information about actors and forces in
the marketing environment needed for planning and aiding exchange.
 Promotion: Developing and spreading persuasive communications about an offer.
 Contact: Finding and communicating with prospective buyers.
 Matching: Shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing, grading,
assembling, and packaging.
 Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or possession can be
transferred.

Others help to fulfill the completed transactions:

 Physical distribution: Transporting and storing goods.
 Financing: Acquiring and using funds to cover the costs of the channel work.
 Risk taking: Assuming the risks of carrying out the channel work.
Number of Channel Levels: A channel level is each layer of marketing intermediaries that performs some work in
bringing the product and its ownership closer to the final buyer.

The number of intermediary levels indicates the length of a channel.

- A direct marketing channel has no intermediary levels; the company sells directly to consumers. For example,
Mary Kay Cosmetics and Amway sell their products through home and office sales parties, websites, and social
media; companies ranging from GEICO insurance to Omaha Steaks sell directly to customers via the internet,
mobile, and telephone channels.
- An indirect marketing channel contains one or more intermediaries, such as wholesalers and retailers in
consumer markets and manufacturer’s representatives or business distributors in business marketing channels.
Students will likely use a producer to retailer to consumer channel as an example of an indirect marketing channel
but may also come up with examples of producer to wholesaler to retailer consumer.
CHANNEL BEHAVIOUR: A marketing channel consists of firms that have partnered for their common good. Each
channel member depends on the others. Each channel member plays a specialized role in the channel. The channel will
be most effective when each member assumes the tasks it can do best. Disagreements over goals, roles, and rewards
generate channel conflict. Horizontal conflict occurs among firms at the same level of the channel. Vertical conflict
occurs between different levels of the same channel.

Vertical Marketing Systems

- A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers.
Each is a separate business seeking to maximize its own profits, perhaps even at the expense of the system as a
whole.
- A vertical marketing system (VMS) consists of producers, wholesalers, and retailers acting as a unified system.
One channel member owns the others, has contracts with them, or wields so much power that they must all
cooperate.

A corporate VMS integrates successive stages of production and distribution under single ownership.

A contractual VMS consists of independent firms at different levels of production and distribution, who join together
through contracts to obtain more economies or sales impact than each could achieve alone.

The franchise organization is the most common type of contractual relationship—a channel member called a
franchisor links several stages in the production-distribution process. There are three types of franchises.
1. The manufacturer-sponsored retailer franchise system—for example, Ford.
2. The manufacturer-sponsored wholesaler franchise system—Coca-Cola licenses bottlers (wholesalers) in various
markets who buy Coca-Cola syrup concentrate and then bottle and sell the finished product to retailers in local
markets.
3. The service-firm-sponsored retailer franchise system—examples are found in the auto- rental business (Avis), the
coffee shops business (Tim Hortons), and the motel business (Holiday Inn).
- In an administered VMS, leadership is assumed not through common ownership or contractual ties but through the
size and power of one or a few dominant channel members.

- Horizontal Marketing Systems: Two or more companies at one level join together to follow a new marketing
opportunity.

- Multichannel Distribution Systems: Occurs when a single firm sets up two or more marketing channels to reach
one or more customer segment.

Disintermediate occurs when product or service producers cut out intermediaries and go directly to final buyers, or
when radically new types of channel intermediaries displace traditional ones.

CHANNEL DESIGN DECISIONS

Marketing channel design calls for analyzing consumer needs, setting channel objectives, identifying major channel
alternatives, and evaluating them.

Analyzing Consumer Needs: As noted previously, marketing channels are part of the overall customer value delivery
network.

Setting Channel Objectives: Companies should state their marketing channel objectives in terms of targeted levels of
customer service. The company’s channel objectives are influenced by the nature of the company, its products, its
marketing intermediaries, its competitors, and the environment. Environmental factors such as economic conditions and
legal constraints may affect channel objectives and design.

Identifying Major Alternatives: A firm should identify the types, number, and responsibilities of channel members
available to carry out its channel work.
Number of Marketing Intermediaries
Companies must also determine the number of channel members to use at each level. Three strategies are available:
1. Intensive distribution: Ideal for producers of convenience products and common raw materials. It is a strategy in
which they stock their products in as many outlets as possible.
2. Exclusive distribution: Purposely limit the number of intermediaries handling their products. The producer gives
only a limited number of dealers the exclusive right to distribute its products in their territories.
3. Selective distribution: This is the use of more than one, but fewer than all, of the intermediaries who are willing
to carry a company’s products.

Responsibilities of Channel Members: The producer and intermediaries need to agree on the terms and responsibilities
of each channel member. They should agree on price policies, conditions of sale, territorial rights, and specific services
to be performed by each party.

Evaluating the Major Alternatives: Using economic criteria, a company compares the forecasted sales, costs, and
profitability of different channel alternatives. Using control issues means giving them some control over the marketing
of the product, and some intermediaries take more control than others. Using adaptability criteria means the company
wants to keep the channel flexible so that it can adapt to environmental changes.

Designing International Distribution Channels: In some markets, the distribution system is complex and hard to
penetrate, consisting of many layers and large numbers of intermediaries. At the other extreme, distribution systems in
developing countries may be scattered, inefficient, or altogether lacking. Sometimes local customs can greatly restrict
how a company distributes products in global markets.

CHANNEL MANAGEMENT DECISION: calls for selecting, managing, and motivating individual channel
members and evaluating their performance over time.

Managing and Motivating Channel Members: The company must sell not only through the intermediaries but also
to and with them. Most companies practice strong partner relationship management (PRM) to forge long-term
partnerships

Evaluating Channel Members: The company should recognize and reward intermediaries who are performing well
and adding good value for consumers. Those who are performing poorly should be assisted or replaced. Companies
need to be sensitive to their channel partners.

Public Policy and Distribution Decisions

- Exclusive distribution occurs when the seller allows only certain outlets to carry its products.
- Exclusive dealing occurs when the seller requires that these dealers not handle competitors’ products.

Exclusive arrangements exclude other producers from selling to these dealers. This brings exclusive dealing contracts
under the scope of the Canadian Competition Act.

Exclusive territorial agreements occur when the producer agrees not to sell to other dealers in a given area, or the
buyer may agree to sell only in its own territory.

Full-line forcing occurs when producers of a strong brand sell it to dealers only if the dealers will take some or all of
the rest of the line. This is also known as a tying agreement.

Discussion Questions
10.1 How do logistics managers effectively manage the supply chain? Why do companies need to pay close
attention to managing logistics?

Answer: Marketing logistics involves not only outbound logistics (moving products from the factory to resellers and
ultimately to customers) but also inbound logistics (moving products and materials from suppliers to the factory) and
reverse logistics (reusing, recycling, refurbishing, or disposing of broken, unwanted, or excess products returned by
consumers or resellers). That is, it involves the entirety of supply chain management— managing upstream and
downstream value-added flows of materials, final goods, and related information among suppliers, the company,
resellers, and final consumers. Companies today are placing greater emphasis on logistics for several reasons. First,
companies can gain a powerful competitive advantage by using improved logistics to give customers better service or
lower prices. Second, improved logistics can yield tremendous cost savings to both a company and its customers. As
much as 20 percent of an average product’s price is accounted for by shipping and transport alone. Third, the explosion
in product variety has created a need for improved logistics management.
Finally, more than almost any other marketing function, logistics affects the environment and a firm’s environmental
sustainability efforts. Transportation, warehousing, packaging, and other logistics functions are typically the biggest
supply chain contributors to the company’s ecological footprint.

10.2 Define integrated logistics management and discuss its importance in a firm achieving its corporate goals.

Answer: Integrated logistics management is the logistics concept that emphasizes teamwork—both inside the company
and among all the marketing channel organizations—to maximize the performance of the entire distribution system.
Most companies assign responsibility for various logistics activities to many different departments—marketing, sales,
finance, operations, and purchasing. Too often, each function tries to optimize its own logistics performance without
regard for the activities of the other functions. The goal of integrated supply chain management is to harmonize all of
the company’s logistics decisions. Close working relationships among departments can be achieved in several ways.
Some companies have created permanent logistics committees composed of managers responsible for different physical
distribution activities. Companies can also create supply chain manager positions that link the logistics activities of
functional areas. Many companies have a vice president of logistics or a supply chain VP with cross-functional
authority. Finally, companies can employ sophisticated, system-wide supply chain management, now available from a
wide range of software enterprises, large and small. It coordinates every aspect of the supply chain, from value chain
collaboration to inventory optimization to transportation and logistics management. The important thing is that the
company must coordinate its logistics, inventory investments, demand forecasting, and marketing activities to create
high market satisfaction at a reasonable cost.
CHAPTER 12
The New Marketing Communications Model

Factors that are changing the face of marketing communications:

1. Consumers are changing. They are better informed and more communications-empowered.
2. Marketing strategies are changing. As mass markets have fragmented, marketers are shifting away from mass
marketing.
3. Changes in digital technology are causing changes in how companies and customers communicate with each other.

Companies create/share brand messages with clients across owned/earned channels + expanding paid media platforms.
Together we call these owned, earned, and paid channels the marketing trifecta.

The Need for Integrated Marketing Communications (IMC) requires the company to integrate its many
communications channels carefully to deliver a clear, consistent, and compelling message about the organization and
its brands. While the strategies used differ, the end goal for using owned, earned, and paid media is the same: build
awareness and engage users with a brand.

Customer experience (CX) marketing is a marketing strategy that aims to improve how customers experience and
interact with a brand’s products and services. It involves all points of contact that consumers have with the business,
from the first interaction until they become lifelong customers.

Benefits of CX marketing:
-increased brand loyalty,
-improved social proof,
-extended customer journeys through increased engagement

CX needs continual nurturing and attention.

By paying close attention to a customer experience strategy, companies will see a positive impact in terms of customer
loyalty, higher retention rates, and increased revenue growth.

A customer journey map is a tool for visualizing a customer’s interaction with the brand. Journey mapping builds an
organization’s shared understanding of how customers engage across the various stages of a customer’s life cycle and
the roles and responsibilities of different teams responsible for providing this experience. A journey map shows all of
the touchpoints customers might have with the brand.

OWNED MARKETING COMMUNICATIONS: understood to be any content within a channel that the brand
controls (website, social media accounts, emails, company newsletter, and so on). Its role in the marketing trifecta is to
build longer‐term relationships with existing and potential customers.
Content marketing is the cornerstone of an owned marketing communications strategy. It is a strategic marketing and
business process focused on creating and distributing valuable, relevant, and consistent content to attract and retain a
clearly defined audience and, ultimately, to drive profitable customer action. Content marketing is also often called
inbound marketing, which is the opposite of outbound (or interruption) marketing. The goal of inbound marketing is to
attract traffic, which is then converted into leads, and those leads are converted into sales.

Content Vision or Strategy: An effective content vision is born from the company’s purpose or “why.” Effective
content visions connect with consumers on an emotional level rather than simply a product or service level.
VISION stands for a content vision or strategy that is:
V ‐ Vivid I ‐ Inspirational S ‐ Significant I ‐ Infectious O ‐ Out of the ordinary N ‐ North Star

Types of Owned Marketing Communications Content

Websites:vary greatly in purpose and content. Some websites are primarily lead-generating or marketing websites.
Other types of websites are e-commerce websites, which are designed to convert the website visitor directly into a
purchaser. A third type of website is the brand community website.

Email Marketing: According to one estimate, each dollar spent on email marketing yields $42 in return. Email rates as
the third most influential information source for B‐to‐B buyers.

Earned media: describes content written about a company by a third party and published on channels not owned by
the company. Earned media can only be gained organically, as the content gets traction and attention via
communications channels such as social media and word‐of‐mouth.

User-generated content (UGC) is any type of content—text, posts, images, videos, reviews, and so on—created by an
individual person (not a brand) and posted on a website or a social media platform.

Viral marketing, the digital version of word‐of‐mouth marketing, involves creating videos, ads, and other marketing
content that are so infectious that customers will seek them out or pass them along to their friends.

Traditional Public Relations

Public relations consist of activities designed to engage and build good relations with the company’s various publics.
PR may perform any or all of the following functions:
 Press relations or press agency: Creating and placing newsworthy information in the news media to attract
attention to a person, product, or service.
 Product and brand publicity: Publicizing specific products and brands.
 Public affairs: Building and maintaining national or local community relations.
 Lobbying: Building and maintaining relations with legislators and government officials to influence legislation
and regulation.
 Investor relations: Maintaining relationships with shareholders and others in the financial community.
 Development: Public relations with donors or members of nonprofit organizations to gain financial or volunteer
support.

Public relations are used to promote products, people, places, ideas, activities, organizations, and even nations.

The Role and Impact of PR

Public relations can have a strong impact on public awareness at a much lower cost than advertising can. If the
company develops an interesting story or event, it could be picked up by several different media, having the same
effect as advertising that would cost millions of dollars.

PAID MEDIA PLANNING AND BUYING

Paid media is the media or content promoted or sponsored in order to generate awareness, traffic, and conversions for
a brand. It includes advertising or sponsored content on news sites and blogs and traditional channels like television,
print, and out‐of‐home.

Media Selection: The most challenging work of the paid media planner is selecting channels and platforms. Media
selection is a complex and strategic decision based on the best way to reach a company’s marketing objectives, given a
wide range of variables.

Media Recommendation and Rationale: A paid media recommendation should include:

1. Scheduling recommendations
2. Exposure levels/frequency
3. Costs
4. A calendar of scheduled media called a media blocking chart
5. Media considered but not recommended (with rationale)
6. Any data or analysis that supports the media plan:
Audiences and Targeting: One of the greatest strengths of the digitization of media is the ability to precisely target
marketing communications to appear to the right person, in the right context, and at the right time.

Retargeting campaigns tailor content to consumers based on their past actions.

Social Media Advertising: Brands need to “pay to play” on social platforms. No owned content will get reached
without a paid boost.

Paid Media Metrics: Some of the most common and important metrics are:
 Sales and revenue generated: We call this the return on advertising spend, or ROAS.
 Conversion rate: the percentage of consumers who completed a desired action.
 Cost‐per‐click (CPC): A click is how many consumers clicked through the ad to your
website, and your cost is how much you spent on the campaign.
 Impressions: the number of people who saw your ad. These are measured by cost per thousand people
(CPM).

Display Advertising: A display ad is an online ad that isn’t simply text: it can be an image, a GIF, a video, audio,
static, or interactive.

Programmatic Advertising: is a system that automates the processes and transactions involved with purchasing and
dynamically placing ads on websites or apps.

Traditional Media: Print, Broadcast, and Out-of-Home Print Media

The scope of print media is huge and traditionally encompasses everything from newspaper and magazine ads to
coupons, door hangers, and flyers.

Broadcast Media: Broadcast media encompasses television and radio. It is most effective early in the customer
journey and its strength is its extensive reach. It can be quite costly to buy and produce. The Canadian Broadcast
Standards Council governs all advertising content.

Out-of-Home Media (OoH) encompasses billboards, posters, murals, sandwich boards, bus shelters, and interior and
exterior transit ads. It is best used to generate awareness.
Discussion Questions

12.1 How have changing consumer behaviors impacted the shift towards a more targeted and engaging marketing
approach?
Answer: Digital and social media have created a more targeted, social, and engaging marketing communications model,
with many large advertisers moving toward a “digital‐first” approach. Instead of interrupting customers with mass
messages, marketers use new media formats to reach smaller communities of consumers more engagingly, using a mix
of owned, earned, and paid channels that deliver a seamless customer journey with a brand.

12.2 What are the benefits and drawbacks of earned media strategies, and in what situations would they be most
effective for a company trying to promote its brand?
Answer: Earned media, user‐generated content (UGC), and viral marketing are low‐cost marketing strategies that rely
on customer engagement to spread brand messages. Earned media is created by a third party writing about a company
and is shared by people who enjoy the content or are invested in its success. They are highly effective ways to generate
engagement with a brand. The drawback is that marketers usually have little control over where their viral messages
end up. They can seed content online, but that does little good unless the message itself strikes a chord with consumers.

CHAPTER 13
SEARCH ENGINE OPTIMIZATION (SEO): the process of optimizing a website to improve its visibility in search
engine results pages (SERPs). This is done through on‐page and off‐page techniques [SEO]

On-Site SEO vs. Off-Site SEO

On-site SEO: optimizing a website’s content to rank higher in search engine results and earn more relevant traffic.

Off-site SEO: improving a website’s visibility and ranking through external means (ex: social media marketing, etc.)

SEO PROCESS: (5 steps)

1. Start with a list of keywords relevant to the website’s content and target audience.
2. Analyze the search volume and competition level of each keyword.
3. Consider the intent behind each keyword.
4. Use long‐tail keywords (a phrase or string of more specific and detailed words).
5. Use a mix of broad and specific keywords.
Improving Relevance for a Target Keyword
 Use the keyword in the page’s title and heading tags
 Use the keyword in the page’s content
 Use the keyword in the page’s URL
 Use the keyword in the page’s meta description
 Use variations of the keyword
 Use internal and external links that use the keyword as the anchor text
EAT = “expertise, authority, and trustworthiness.” EAT is an important factor in on‐site SEO because it helps search
engines understand the level of trust and credibility that a website should be given in search results.

Off-Site Search Engine Optimization: Main goal of off‐site SEO: build high‐quality, relevant links to a website. We
call this strategy backlink building.

Types of Links
 Internal links: These are links that point to other pages on the same website.
 Hyperlinks: These links can be clicked on to navigate to a different web page.
 Anchor links: These are links that navigate to a specific section of a web page.
 Image links: These links use an image rather than text as the link.
 External links: These are links that point to a different website.
Determining Weaknesses: By identifying these weaknesses in a website’s link profile, it is possible to develop a plan
to improve the quality and diversity of the website’s links, which can help improve its ranking in relevant searches.
Improving Rankings: Marketers could, for example, identify the types of websites relevant to the website and its
content; identify opportunities to earn a link; create a list of target websites and reach out to them; monitor the progress
of the link‐building efforts and adjust the plan as needed.

SEARCH ENGINE MARKETING (SEM): paying for ads to appear in search engine results. These ads, also known
as pay‐per‐click (PPC) ads, are typically placed at the top or bottom of search results and are marked as “sponsored.”

Types of Search Engine Ads

 Pay‐per‐click (PPC) ads.
 Product listing ads (PLAs)
 Local service ads (LSAs)
 Google Maps ads
The Google Ads Auction: a process that determines which ads appear in search results and in what order they appear.
Advertisers bid on keywords in an attempt to win the ad auction and have their ad shown in search results.

To Analyze the Effectiveness of a Search Engine Ad Campaign, digital marketers must:

 Set specific goals for the ad campaign.
 Use the tools provided by the search engine (like Google Analytics) to track the ad campaign’s performance.
 Analyze the data to understand how the ad campaign performs against the set goals.
 Identify the keywords and ad groups that are performing the best and the worst.
 Use the data to optimize the ad campaign.
Ways to Improving an Ad’s Position in Search Results:
 Improve the ad’s relevance.
 Improve the ad’s quality.
 Use ad extensions (e.g., location, phone number).
 Use negative keywords (prevent your ad from appearing for irrelevant searches).
Marketers use many different strategies to develop the list of keywords. Steps to consider:
 Identify the target audience for the ad campaign.
 Conduct keyword research to identify potential keywords for the ad campaign.
 Organize the keywords into categories.
 Determine the search intent of each keyword.
 Use the keyword categories to create ad groups.
SOCIAL MEDIA AS A MARKET DISRUPTOR:
 Power has shifted from businesses to consumers.
Businesses are open 24/7, and time zones have disappeared.
 Social media has a global reach.
 Consumers now regard social media as a more trustworthy source of information than traditional communications.
Social Media Marketing Advantages:
 Social media are interactive.
 Social media are immediate and timely.
 Social media content is also flexible and adaptable.
 Social media can be very cost-effective.
 Community building, sometimes called the network value, is an advantage unique to social media marketing.
Best Practices for Social Media Content: Consider balancing promotional content, owned content, and curated
content. The ratio should be 10/30/60 or similar.
Steps into Measuring and Analyzing the Effectiveness of a Social Media Campaign
 Identify the goals of the social media campaign.
 Consider the target audience of the social media campaign.
 Research the available tools and platforms that can be used to track and measure the results of the social media
campaign.
 Determine the specific metrics that will be tracked to assess the social media campaign results.
 Set benchmarks for the metrics being tracked.
THE RISE OF MOBILE: Mobile vs. Desktop Usage and Users
- Marketing features, marketing messages, promotions, and other content delivered to
on‐the‐go consumers through mobile devices. The average global mobile user interacts with a mobile device 63 times
every day. For consumers, a smartphone or tablet can be a handy shopping companion. Mobile buying is growing
rapidly and now accounts for more than 50 percent of all digital commerce. Companies use mobile marketing to
stimulate immediate buying, make shopping easier, enrich the brand experience, or all of these.

ANALYTICS: A digital marketing campaign for a product launch might be measured by metrics such as website
traffic, conversion rates, and sales. Measuring is not limited to only quantitative methods but also to qualitative
methods such as surveys, interviews, and focus groups. Analytics plays a crucial role in digital marketing because it
allows marketers to track and measure the performance of their campaigns and strategies. Types of Analytics
 Web analytics (e.g., page views, bounce rates)
 Social media analytics (e.g., likes, shares, comments)
 Search engine analytics
 Email marketing analytics
 Marketing automation analytics (e.g., CRM provides data about the customer journey)
Key Performance Indicators: are metrics used to measure the performance of a specific aspect of a business or
organization. Selecting the best KPIs for a website can be a complex process, as there are many different factors to
consider. Some general guidelines include:
 Start with your goals. They should guide the selection of KPIs.
 Understand your target audience (identify the KPIs that are most relevant to your target audience).
 Identify key business metrics.
 Consider multiple perspectives.
 Measure what you can measure.
 Monitor and adjust as needed.
Conversion Funnels: In the context of analytics, this customer journey is often called the conversion funnel because it
maps the consumer’s path to conversion. A conversion funnel is a visual representation of the different stages a
customer goes through in making a purchase or taking some other desired action on a website.

Attribution Methods: are rules and techniques used to assign credit to different marketing touch points for a sale or a
conversion. There are several different types of attribution methods:
 Last‐click attribution: This method assigns 100% of the credit to the last touch point before conversion.
 First‐click attribution: This assigns 100% of the credit to the first touch point that started the customer’s journey.
 Linear attribution: This method assigns equal credit to all touchpoints.
 Time decay attribution: This assigns more credit to touch points that occurred closer in time to the conversion.
 Position‐based attribution: This method assigns credit based on a fixed percentage, usually 40 percent, to the first
and last touchpoints, and the remaining 20 percent is distributed among the middle touchpoints.
 U‐shaped attribution: This method gives extra credits to both the first and last touch points.
 Attribution: This method allows marketers to create their own attribution models by weighting different touch
points based on their own criteria.
 Data‐driven attribution: This method uses advanced machine learning techniques.
Discussion Questions
 13.1 What are the benefits of social media marketing for brands?
Answer: Social media marketing has several advantages, including interactivity, increased targeting capabilities, cost‐
effectiveness, immediacy, flexibility, and community building.

13.2 Discuss how the traditional forms of direct marketing continue to be important promotion tools.

Answer: Social media marketing challenges include measuring results (ROI), management, strategy, and the need to
keep pace with evolving consumer expectations and navigating social networks that are largely user-controlled.

13.3 What are some examples of mobile marketing tools that can be used to engage customers during the buying
process?

Answer: Mobile marketing features marketing messages, promotions, and other marketing content delivered to on-the-
go consumers through their mobile devices. Marketers use mobile marketing to engage customers anywhere, anytime
during the buying and relationship- building processes. The widespread adoption of mobile devices and the surge in
mobile web traffic have made mobile marketing a must for most brands. Companies use mobile marketing to stimulate
immediate buying, make shopping easier, enrich the brand experience, or all of these. It lets marketers provide
consumers with information, incentives, and choices at the moment they are expressing an interest or when they are
most likely to make a buying choice. As with other forms of direct marketing, however, companies must use mobile
marketing responsibly or risk angering already ad-weary consumers.

CHAPTER 14: THE GLOBAL MARKETPLACE

GLOBAL MARKETING TODAY: The total volume of global trade, including merchandise and service exports, has
grown sharply over the past three decades.

Global marketing is the process of marketing products and services within and across multiple countries. As barriers
to trade and market entry fall, global competition is intensifying. Foreign companies are expanding into new global
markets, and saturated home markets are no longer as rich in opportunity. Few industries are now safe from foreign
competition.

A global company is one that, by operating in more than one country, often in numerous countries, gains marketing,
production, research and development (R&D), financial, and other advantages that are not available to purely domestic
competitors. The global company sees the world as one market. It minimizes the importance of national boundaries and
develops global brands. The global marketing process involves 5 steps.

UNDERSTANDING THE GLOBAL MARKETING CONTEXT: The PESTLE framework analyzes the forces
that impact marketing decisions in various global environments:
 Political
 Economics
 Sociocultural
 Technological
 Legal/Institutional
 Environmental/Ecological
Political Context: The political systems in some nations are receptive to foreign companies; others are less so. A
company must evaluate both the nature and the certainty of the political climate before committing to enter a country.
EX: Russia’s geopolitical conflicts with countries have made doing business in Russia difficult and risky.

Economic Context: Two economic factors reflect the country’s attractiveness as a market: The country’s industrial
development and Income distribution
- Countries with a more equal distribution of income may have a larger and more affluent middle class that can
support greater consumer spending, while countries with high levels of inequality may have a smaller middle class
and a greater concentration of wealth.
 Sociocultural Context
The Impact of Culture on Marketing Strategy
The seller must understand the ways that consumers in different countries think about and use certain products before
planning a marketing program. Companies that violate sociocultural norms can make expensive and embarrassing
mistakes. Business norms and behavior vary from country to country.

Dimensions of National Cultures: Understanding cultural differences across countries can help global marketers
determine which countries offer the best prospects for their brands. Marketers can position and market their brands
across countries for maximum success. A tool for systematically assessing cultural differences across countries is Geert
Hofstede’s Six Dimensions of National Culture framework:

 Power Distance Index—High versus Low. This dimension deals with the extent to which less powerful members
of society are comfortable with an unequal distribution of power across its members.
 Individualism versus Collectivism. In highly individualistic societies, people are more focused on the needs and
well-being of themselves and their immediate family members. By contrast, in highly collectivistic societies,
people are embedded in strong social networks and expect that the large social group will take care of their needs.
 Toughness versus Tenderness. Tougher societies tend to prefer achievement, heroism, assertiveness, and material
rewards. More tender societies seek cooperation, exhibit modesty, feel a sense of caring for less fortunate or weak
society members, and emphasize quality of life.
 Uncertainty Avoidance Index—High versus Low. Societies that are high on this dimension dislike uncertainty,
work in line with a well-established belief and value system and try to control the future to reduce uncertainty. By
contrast, societies that are low on this dimension are comfortable with uncertainty.
 -Term Orientation versus Short-Term Orientation. Societies value their pasts differently. Societies that are long-
term oriented tend to be ready for future change, even when it requires them to break sharply from the past.
 Indulgence versus Restraint. Societies scoring high on indulgence are open to individuals seeking goods, services,
and experiences that go beyond their basic needs. By contrast, societies high on restraint have rigid norms that
govern behavior, emphasize the fulfillment of basic needs, and frown on showy consumption.

The Impact of Marketing Strategy on Cultures: Social critics contend that large American multinationals such as
McDonald’s, Coca-Cola, Starbucks, Nike, Microsoft, Disney, and Facebook are “Americanizing” the world’s cultures.
Critics worry that, under such “McDomination,” countries around the globe are losing their individual cultural
identities.
In the most recent survey of global brands, 21 of the top 25 brands were American-owned.

Yet, globalization is a two-way street. If the world is eating Big Macs and drinking Coca-Cola, it is also talking on a
Samsung smartphone, buying furniture at IKEA, driving a Toyota Camry, and watching a British-inspired show on an
LG OLED television.

Marketing strategies have complex and varied impacts on cultures. While some companies have been criticized for
promoting unhealthy consumption patterns, cultural stereotypes, or environmental degradation, others have embraced
social responsibility, sustainability, and cultural sensitivity in their marketing efforts.

Technological Context: Marketing communications have changed due to technological advances and changing
consumer behavior. The traditional mass‐marketing approach is no longer practical as mass markets have fragmented
and consumers curate their own newsfeeds. Global marketing has been energized by 3 technological advances:
 rapid rise of electronic networks that carry huge amounts of information that can be accessed in every part of the
globe.
 global adoption of smart devices—including computers, smartphones, and tablets— that interface with the internet
and other data networks.
 rise of digital commerce platforms that bring together buyers and sellers.
A company must evaluate the level of technological evolution of those markets. The technology context will influence
the company’s entry strategy, product and service design, and sales and distribution approaches.

The Legal and Institutional Context

The Global Trade Perspective
Global trade occurs when an offering produced in one country is sold in another country. Companies engaging in
global trade face restrictions on trade between nations. Countries may impose tariffs, duties, or quotas on imported
products in order to raise revenue, protect domestic companies, manage currency reserves and fluctuations, or manage
trade deficits between countries.

Global Trade Agreements and Organizations

The World Trade Organization (WTO) oversees provisions that were designed to promote world trade by reducing
tariffs and other international trade barriers, established under the General Agreement on Tariffs and Trade (GATT) in
1947 and modified in 1994. It has successfully reduced tariffs. The WTO also imposes international trade sanctions and
mediates global trade disputes.

Free trade zones or economic communities are groups of nations organized to work toward common goals in the
regulation of international trade. One such community is the European Union (EU).

The European Union represents one of the world’s single largest markets. Widespread adoption of the euro decreased
much of the currency risk associated with doing business in Europe, making member countries with previously weak
currencies more attractive markets. After a lengthy and contentious transition period, the UK left the EU in January
2021. Another important free trade zone is the United States-Mexico-Canada Agreement (USMCA). Taking effect in
July 2020, the USMCA replaced the North American Free Trade Agreement (NAFTA), which first established a free
trade zone among the United States, Mexico, and Canada in 1994.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) exists among 11 Pacific
Rim countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and
Vietnam. The 11 CPTPP members have a collective population of 500 million people and account for 13.5 percent of
the world’s GDP.

The Internal Legal Perspective: Global marketers may also face rules and restraints within another country’s borders.
 Some countries impose currency restrictions. A country may insist that sellers take payment in its own or a less
widely accepted world currency.
 Countries may impose labour restrictions.
 Companies may face nontariff trade barriers, such as biases against certain kinds of bids for business contracts,
restrictive product standards, and excessive or selective host-country regulations or enforcement.

The Environmental and Ecological Context: Countries and societies are concerned about social and environmental
conditions and feel increasing pressure from customers, employees, policy makers, and citizens. Governments and
companies across the globe have increased regulations and voluntary initiatives that promote socially and
environmentally sustainable business practices. Many companies adopt their own sustainable initiatives and practices.

DECIDING WHETHER TO GO GLOBAL AND WHICH MARKETS TO ENTER: all companies need to
venture into global markets to survive. Any of several factors might draw a company into the global arena.
 Global competitors might attack the company’s home market by offering better products or lower prices. The
company might want to counterattack these competitors in their home markets.
 The company’s customers might be expanding abroad and require global servicing.
 Global markets may present better opportunities for growth.
 A diversified presence across numerous countries can dilute the risks that come with being overly concentrated in
one country.
 Some industries are inherently global.
Before going abroad, the company must weigh the advantages and disadvantages and evaluate its assets and
capabilities:
 the presence of open and global managerial mindsets
 cash reserves to fund global expansion
 the ability to quickly gain global customer and market insights
 a pathway to build the global brand
 access to global sourcing and distribution partners.

Deciding Which Markets to Enter

Before going abroad, the company should:

 Define its international marketing objectives and policies.
 Decide what volume of foreign sales it wants.
 Decide how many countries it wants to market.
 Decide on the types of countries to enter.
 Evaluate each selected country.
Possible global markets should be ranked on several factors, including:
 Market size, Market growth, Cost of doing business, Competitive advantage, Risk level
DECIDING HOW TO ENTER THE MARKET
Exporting: Indirect exporting is working through independent international marketing intermediaries. Indirect
exporting involves less investment and less risk. Direct exporting is where the company handles its own exports. The
investment and risk are somewhat greater in this strategy, but so is the potential return.
Joint venturing is joining with foreign companies to produce or market products or services. 4 types of joint ventures.
1. Licensing
2. Contract Manufacturing
3. Management contracting
4. Joint ownership
1. Licensing: a simple way for a manufacturer to enter international marketing. The licensee buys the right to use the
company’s manufacturing process, trademark, patent, trade secret, or other item of value. Licensing has
disadvantages:
 The firm has less control over the license, and the firm can lose profits.
2. Contract Manufacturing: when the company contracts with manufacturers in the market to produce its product.
Disadvantages (1) Decreased control over the manufacturing process, (2) Loss of profits on manufacturing.
3. Management Contracting: takes place when the domestic firm supplies management know-how to a foreign
company that supplies the capital. This is a low-risk method of getting into a foreign market, and it yields income
from the beginning.
4. Joint Ownership: ventures consist of one company joining forces with foreign investors to create a local business
in which they share joint ownership and control. A company may buy an interest in a local firm, or the two parties
may form a new business venture. Joint ownership may be needed for economic or political reasons. Joint
ownership has drawbacks:

Direct Investment: is the development of foreign-based assembly or manufacturing facilities. Advantages:

 Lower costs in the form of cheaper labor or raw materials, foreign government investment incentives, and freight
savings
 The firm may improve its image in the host country.
 Development of a deeper relationship with government, customers, local suppliers, and distributors
 The firm keeps full control over the investment.
Standardized global marketing is using largely the same marketing strategy approaches and marketing mix
worldwide.

Adapted global marketing is adjusting the marketing strategy to each target market, bearing more costs but hoping for
a larger market share and return. Some global marketers believe that consumer needs around the world are becoming
more similar. This paves the way for “global brands” and standardized global marketing. Global branding and
standardization, in turn, result in greater brand power and reduced costs from economies of scale.
Product: Five strategies are used for adapting products and marketing communication strategies.

Straight product extension means marketing a product in a foreign market without any change.

Product adaptation involves changing the product to meet local conditions or wants.

Product invention consists of creating something new for a specific country's market.

Communication adaptation is fully adapting advertising messages to local markets. Companies can either: Adopt the
same communication strategy or change it for each local market.

Price: Foreign prices will be higher than domestic prices. Why? It is a price escalation problem. It must add the cost to
its factory price. Solution: companies make simpler or smaller versions of their products at lower prices.

Distribution Channels: The whole-channel view takes into account the global supply chain and marketing channel.
Channels between nations move company products from points of production to the borders of countries
Channels within nations move products from their market entry points to final consumers.

DECIDING ON THE GLOBAL MARKETING ORGANIZATION

If global sales expand, the company organizes an export department. Many companies get involved in several global
markets and ventures. A global division may be created to handle all international activity.

Global divisions are organized in a variety of ways.

 Geographical organizations: Country managers are responsible for salespeople, sales branches, distributors, etc.
 World product groups: Each unit is responsible for worldwide sales of different product groups.
 Global subsidiaries: Each unit is responsible for its sales and profits.
Global organizations are companies that have stopped thinking of themselves as national marketers who sell abroad
and have started thinking of themselves as global marketers.

Discussion Questions

14.1 What are the five steps in the global marketing process?
Answer:
(1) Understanding the global marketing context (2). Deciding whether to go global and which markets to enter. (3)
Deciding how to enter global markets. (4) Deciding on the global marketing program. (5) Deciding on the global
marketing organization.

14.2 What factors influence a company’s standardization or adaptation of products and marketing across global
markets?

Answer: Companies must decide how much their marketing strategies and their products, promotion, price, and
channels should be adapted for each foreign market. Marketers who believe that technology is making the world a
smaller place andfeel consumer needs are converging might be likely to use standardized global marketing worldwide,
which leads to global brands, greater brand power, and economies of scale. However, some markets benefit from
adapted marketing efforts that are tailored to consumers’ needs in the market. Adaptation recognizes that cultures vary,
and consumers differ in terms of needs and wants, spending power, product preferences, and shopping behaviours.
Marketers can adjust the marketing strategy and mix with each target market, bearing more costs but hoping for a larger
market share and return

CHAPTER 15: SUSTAINABLE MARKETING

Sustainable marketing: social and environmentally responsible actions that meet the present needs of consumers and
businesses while also preserving or enhancing the ability of future generations to meet their needs.
- The societal marketing concept considers the future welfare of consumers, and the strategic planning concept
considers future company needs, the sustainable marketing concept considers BOTH.
Marketing’s Impact on Individual Consumers: Consumer advocates, government agencies, and other critics have
accused marketing of harming consumers through high prices, deceptive practices, high-pressure selling, shoddy or
unsafe products, planned obsolescence, and poor service to disadvantaged consumers.

High Prices: Many critics argue that the marketing system causes prices to be higher than they would be under more
“sensible” systems.

High Costs of Distribution: A long-standing charge is that greedy channel intermediaries mark up prices beyond the
value of their services. How do resellers answer these charges? They argue that intermediaries do work that would
otherwise have to be done by manufacturers or consumers.

High Advertising and Promotion Costs: Modern marketing is accused of pushing up prices to finance heavy
advertising and sales promotion. Marketers respond that advertising does add to product costs. But it also adds value by
informing potential buyers of the availability and merits of a brand.

Excessive Markups. Critics charge that some companies markup goods excessively. Marketers respond that most
businesses try to deal fairly with consumers because they want to build customer relationships and repeat business.

Deceptive practices fall into three groups: (1) Promotion, (2) Packaging, (3) Pricing

Deceptive promotion includes practices such as misrepresenting the product’s features or performance or luring
customers to the store for a bargain that is out of stock.

Deceptive packaging includes exaggerating package contents through subtle design, using misleading labelling, or
describing size in misleading terms.

Deceptive pricing includes practices such as falsely advertising “factory” or “wholesale” prices or a large price
reduction from a phony high retail list price. “Puffery” is defined as innocent exaggeration for effect.

High-Pressure Selling: Marketers have little to gain from high-pressure selling. Such tactics may work in one-time
selling situations for short-term gain.

Shoddy, Harmful, or Unsafe Products, Types of product complaints:

 Products are not made well, and services are not performed well.
 Product safety has been a problem for several reasons, including company indifference, and poor-quality control.
 Many products deliver little benefit, or they might even be harmful.
Planned Obsolescence: Critics also have charged that some companies practice planned obsolescence, causing their
products to become obsolete before they actually should need replacement. Other companies are charged with
perceived obsolescence—continually changing consumer concepts of acceptable styles to encourage more and earlier
buying. Marketers respond that consumers like style changes; they get tired of the old goods and want a new look in
fashion.

Poor Service to Low-income Consumers: The Canadian marketing system has been accused of serving low-income
consumers poorly. Critics accuse major chain retailers of redlining, drawing a red line around low-income
neighborhoods and avoiding placing stores there.

Marketing’s Impact on Society as a Whole

False Wants and Too Much Materialism
Critics believe marketers can create false wants and an obsession with material goods and worldly possessions. They
believe that by selling the “American dream,” marketers are encouraging waste and mass consumption (or
unsustainable overconsumption). However, marketers do not have the power to create wants and they are more
successful when they appeal to existing wants than when they try to create new ones. People seek information to ensure
they get good value. Products often fail. Firms cannot manipulate demand or wants.
 Too Few Social Goods
Businesses have been accused of overselling private goods at the expense of public goods. A way must be found to
restore a balance between private and public goods Some options include:
 Making producers bear the full social costs of their operations.
 Making consumers pay the social costs.
Cultural Pollution
They feel our senses are being constantly assaulted by marketing and advertising. Marketers answer the charges of
“commercial noise” with these arguments:
1. Because of mass-communication channels, some ads are bound to reach people who have no interest in the
product and are therefore bored or annoyed.
2. Ads make much of television, radio, online, and social media sites free to users and keep down the costs of
magazines and newspapers.
3. Today’s consumers have alternatives.
Marketing’s Impact on Other Businesses: Critics argue that a company’s marketing practices can harm other
companies and reduce competition. Three problems are involved: (1) Acquisitions of competitors; (2) Marketing
practices that create barriers to entry; (3) Unfair competitive marketing practices.

Consumer Actions to Promote Sustainable Marketing: The 2 major movements: consumerism and
environmentalism.

Consumerism is an organized movement of citizens and government agencies to improve the rights and power of
buyers in relation to sellers. Traditional sellers’ rights include:
 The right to introduce any product in any size and style, provided it is not hazardous to personal health or safety;
or, if it is, to include proper warnings and controls.
 The right to charge any price for the product, provided no discrimination exists among similar kinds of buyers.
 The right to spend any amount to promote the product, provided it is not defined as unfair competition.
 The right to use any product message, provided it is not misleading or dishonest in content or execution.
 The right to use any buying incentive programs, provided they are not unfair or misleading.
Traditional buyers’ rights include:
- The right not to buy a product for sale, to expect safety from product, to expect the product to perform as claimed.

Consumer advocates call for the following additional consumer rights:

 The right to be well-informed about important aspects of the product.
 The right to be protected against questionable products and marketing practices.
 The right to influence products and marketing practices in ways that will improve the “quality of life.”
 The right to consume now in a way that will preserve the world for future generations of consumers.
The Rise of Environmentalism is an organized movement of concerned citizens, businesses, and government agencies
to protect and improve people’s living environment. Environmentalism is concerned with damage to the ecosystem
caused by global warming, resource depletion, toxic and solid waste, litter, and other problems. The term carbon
footprint captures the total negative atmospheric impact associated with a product or service.

Business Actions Toward Sustainable Marketing

Corporate Social Sustainability Initiatives: Independent of the pressure from environmentalists and regulators,
companies are increasingly engaging in socially sustainable marketing practices.

Pollution prevention – Eliminating or minimizing waste before it is created.

Product stewardship – Minimizing not just pollution from production and product design but all environmental
impacts throughout the full product life cycle, all the while reducing costs.
Design for the environment (DFE) and cradle-to-cradle practices involve thinking ahead to design products that
are easier to recover, reuse, or recycle and developing programs to reclaim products at the end of their lives.
 New clean technology – Many organizations that have made good sustainability headway are still limited by
existing technologies. To create fully sustainable strategies, they will need to develop innovative new
technologies.

Sustainability vision – Serves as a guide to the future. It shows how the company’s products and services,
processes, and policies must evolve and what new technologies must be developed to get there.

Specific Approaches to Reducing Environmental Harm

 Reimagine material choices
 Source materials from sustainable suppliers
 Simplify product design and other processes
 Shift to sustainable energy sources
 Rethink packaging
 Construct closed-loop value chains
 Improving product durability and productivity, strategically lowering provided service levels, etc.
Sustainable Marketing Principles: Under the sustainable marketing concept, a company’s marketing should support
the best long-run performance of the marketing system. A company’s marketing should be guided by five sustainable
marketing principles: a market with ethics, be consumer-centric, build long-term customer value, embrace a sense of
mission, and do no harm.

What principle should guide companies and marketing managers on issues of ethics and social responsibility?
- One philosophy is that such issues are decided by the free market and legal system. A second philosophy puts
responsibility not on the system but in the hands of individual companies and managers. Each company must work
out a philosophy of socially responsible and ethical behaviour. As with environmentalism, ethical behaviour, and
standards present special challenges for international marketers.

Many industrial and professional associations have suggested codes of ethics, and many companies are
now adopting their own codes. The Canadian Marketing Association has developed a code of ethics.

Be Consumer-Centric Always: The company should view and organize its marketing activities from the consumer’s
point of view. Only by seeing the world through its customers’ eyes can the company build lasting and profitable
customer relationships.

Build Long-Term Customer Value

The company should put most of its resources into customer value-building marketing investments. By creating value
for consumers, the company captures value from consumers in return.

Do No Harm—Inspire Socially Responsible Outcomes: Neglecting consumer and societal long-run interests is a
disservice to consumers and society. Products can be classified according to their degree of immediate consumer
satisfaction and long-run consumer benefit
Deficient products have neither immediate appeal nor long-run benefits.
 Pleasing products give high immediate satisfaction but may hurt consumers in the long run.
 Salutary products have low appeal but may benefit consumers in the long run.
 Desirable products give both high immediate satisfaction and high long-run benefits

Sustainable company: A company that creates value for customers through socially, environmentally, and ethically
responsible actions. Sustainable marketing goes beyond caring for the needs and wants of today’s customers.