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SECTION 9
AN OVERVIEW OF VIDEOS ACCOMPANYING
MARKETING, 13TH EDITION
Part 1: The Nature and Scope of Marketing
Video Case A: Palm, Inc. (Running time = 9 minutes. Note: Palm is also the Chapter
9 case.)
Applications: customer orientation, global marketing, and strategy development.
Overview: Palm, Inc., the maker of personal data assistants (PDAs), positions its
products as simple, elegant, and useful. Marketing products in over 40 countries requires
that the firm be sensitive to regional differences. Among the considerations viewed as
most important in developing country-specific strategies are market size, available
distribution channels, government regulations, and language (for a product highly
dependent on alphabet, characters, and symbols). For example, a PDA for the Chinese
market required extra memory.
Mention is made of the role of NAFTA and the EU in manufacturing and market access.
In developing the marketing mixes for specific cultures, special attention is given to
product styling, branding, and shopping preferences.
Teaching suggestion: Palm can be used to illustrate an application of the marketing
concept. The firm responds to consumers’ desires in the design and function of its
products, while meeting it own growth and performance goals, by implementing a
coordinated marketing mix.
Possible discussion questions:
1. What consideration went into the choice of the name Zire for a line of Palm
PDAs? (The name would have no undesirable meaning or interpretation in any
market).
2. In addition to the points raised on the video, what else should Palm consider in
assessing a foreign market? (Other considerations are the level of economic
development, competition, and the most desirable method of marketing in the
particular market.)
Video Case B: Marketing in the Hardwood Industry (Running time = 12:51.)
Applications: market orientation, environment, global marketing, business-to-business
marketing, and strategy development.
Overview: Hardwood for use as a raw material in the manufacture of various products is
generally viewed as a commodity. In many parts of the U.S., its production and sale have
followed a product orientation. However, its uses in various specialty goods such as
furniture and flooring create opportunities for adding value to the basic product. To
move beyond being commodity marketers competing primarily on price, firms in this
industry must adopt a market orientation. That involves gaining an understanding of who
the customers are, what their needs are, what specific products meet their needs, and the
best way to differentiate the offerings. Using the Canadian market as an example,
various channel alternatives are described, indicating many options possibly open to
hardwood producers.
Teaching suggestion: This video lends itself to an examination of various external
macroenvironmental influences. It also can be used to help students appreciate the
external microenvironment. As hardwood producers consider opportunities to add value
to their product, it will impact their relationships with intermediaries.
Possible discussion questions:
1. What does “adding value” to a product mean? (Value is added to hardwood when
it is further processed beyond raw lumber to a more finished form useful to a firm
at the next level of manufacturing. The firm adding value changes the product,
adding to its attractiveness.)
2. What is the benefit of differentiating a product? (Differentiation, which can be as
simple as offering more carefully sorted and graded hardwood or as complex as
creating particle board from chips, reduces competition.)
Part 2: Identifying and Selecting Markets
Video Case A: Gathering Marketing Information (Running time = 15 minutes.)
Applications: marketing research and marketing to consumers.
Overview: Marketing research methods are divided into qualitative and quantitative.
Various types of each, along with their respective strengths and limitations, are described
in this segment. Qualitative methods include focus groups, enterprise interviews (focus
groups in businesses), projective techniques, and sorting techniques. Quantitative
methods include various survey techniques (mail, panel, telephone, and face-to-face),
computer assisted data collection, and observation. A number of major marketing
research firms (e.g., Burke, NFO, IRI, Inc., A.C. Nielsen) are featured.
Teaching suggestion: Have students visit the websites of the research firms identified in
the video. All have more information on the services they provide, and most have
examples and case histories. By examining one or two sites, students will develop a
better idea of the breadth and depth of this important function.
Possible discussion questions:
1. Why would a firm choose qualitative research techniques over quantitative
techniques? (Use of a qualitative technique would be appropriate if the objective
of the project were to broaden understanding of a concept rather than to count or
measure the magnitude of something.)
2. Are the people who participate in focus groups, surveys, and consumer panels
“typical” consumers? (This question that must be addressed by all users of
research. If there is reason to believe that the participants are not representative
of the population of interest, the research findings should be ignored or at least
treated with caution.)
Video Case B: Lands’ End (Running time = 11:30.)
Applications: business markets and personal selling.
Overview: In this segment, business-to-business marketing is viewed from the
perspective of the buyer. Lands’ End, a catalog retailer, is a producer-buyer rather than
an intermediate buyer. That is, it actively participates in the design and manufacturing of
the items sold in its catalog. The alternative, an intermediate buyer, purchases finished
goods from suppliers and resells them. Working with suppliers to make straight rebuys,
modified rebuys, and new task buys, Lands’ End managers describe the criteria used and
the importance of developing and maintaining relationships.
Teaching suggestion: It is important for students to understand that Lands’ End doesn’t
buy goods and resell them as many of its competitors do. The company actually makes
many decisions with and for its suppliers. In effect, Lands’ End has taken greater control
over its product assortment than many other retailers. Once students realize it is possible
for some retailers to do this, a discussion of why (to gain a differential advantage) and
under what conditions (the retailer must have leverage, for example, Wal-Mart with its
size) it occurs can be fruitful.
Possible discussion questions:
1. What benefits does Lands’ End derive from being a “producer-buyer” as opposed
to being an “intermediate buyer?” (It has greater control of what is offered in its
catalog and also is more likely to have unique items, giving it a differential
advantage.)
2. Why would Lands’ End go beyond economic and quality issues to include the
organizational culture in selecting vendors? (In order to maintain a long-term
relationship and enjoys the benefits it provides, a buyer and a seller must have
similar beliefs and values.)
Video Case C: Nokia (Running time = 12:30.)
Applications: the consumer market, segmentation, and advertising.
Overview: Nokia’s concept of its business mission is to “connect people.” To
accomplish its mission, the firm recognizes that all people are not alike. Therefore, in
order to connect them, Nokia has divided the total market into 6 segments. This video
segment focuses on the variations in product appearance and features as well as the
different advertising messages to reach and satisfy the distinct segments.
Teaching suggestion: Discuss the criteria for segmenting consumer markets that are
described in the video and then compare them with the options suggested in the text
(geographic, demographic, psychographic, and behavioral). Which specific
characteristics not described in the video could be considered by Nokia? The video ends
with the introduction of the picture cell phone. Have the students consider how that
market might be segmented.
Possible discussion questions:
1. Each segment, which requires a somewhat different marketing mix, significantly
increases Nokia’s marketing costs. Are all of the segments necessary? (A firm
must decide how narrowly it wants to define a market’s segments. In doing so, it
must balance the benefits of more precisely meeting the segments needs with the
cost of the marketing effort.)
2. On what criteria is Nokia segmenting the market? (From the ads, it appears that
lifestyles and values outweigh demographics, although demographics are not
entirely ignored.)
Part 3: Product
Video Case A: Salton, Inc. (Running time = 7:50. Note: Salton’s George Foreman
brand of grill is also the Chapter 10 case.)
Applications: product development, branding, and promotion.
Overview: Salton, a successful designer, marketer, and distributor of a variety of small
appliances, teamed with George Foreman to develop one of the most successful brands in
history. The story of the George Foreman brand of indoor grill includes the efforts
directed toward building a brand image, carrying out brand extensions, and providing
different retail chains with distinctive versions of basic models of the product. The video
segment also describes how Salton has made very effective use of infomercials and has
adapted its marketing efforts internationally.
Teaching suggestion: Other firms have used spokespersons and received endorsements
from celebrities, but they stopped short of putting the person’s name on the product.
Discuss the advantages and disadvantages of both strategies.
Possible discussion questions:
1. Is the partnership between Salton, Inc. and George Foreman unique, or could
Foreman serve as a brand and spokesperson for any product? (Certainly George
Foreman is charismatic, but his effectiveness as a spokesperson is probably
limited to products with which consumers can reasonably associate him. Known
for his prodigious appetite, Foreman is a natural for a food-related product.)
2. How far can Salton extend the George Foreman brand? (Only as far as consumers
will permit. The image created for a brand has to be believable.)
Video Case B: Golden Valley Microwave Foods (Running time = 10:30.)
Applications: branding, product development, and distribution.
Overview: Golden Valley Microwave Foods, a division of ConAgra Foods, makes
microwave popcorn. Its brand is Act II. At its beginning, Act II was a niche brand
because so few consumers had microwave ovens. Today, however, through product
development, expanded distribution, integrated promotion, and careful brand extension,
Act II is the dominant brand of microwave popcorn in both the U.S. and abroad.
The company uses a website as one way to stay in touch with the market, receiving
feedback from consumers and also providing them with information. As it expands into
international markets, Golden Valley customizes its product, but retains the Act II brand.
The keys to success, according to the management team, are single-minded focus
(Golden Valley makes and markets only microwave popcorn), innovation, and service.
Teaching suggestion: Discuss product categories and innovation. There are numerous
categories that have not changed in years. Microwave popcorn is such a product.
Occasionally, the status quo is altered by an innovator that sees an opportunity or
problem and offers a product that meets the needs of customers. Often, an innovator
brings a fresh perspective from outside the industry. What other categories may be ripe
for change? What products are students using that they are unhappy with? What is the
source of their dissatisfaction?
Possible discussion questions:
1. Does Act II have the characteristics of a good brand name that are described in
the text? (These characteristics are: should suggest something about the product,
be easy to pronounce and remember, be distinctive, be adaptable to product line
additions, and be capable of registration and legal protection.)
2. Should Act II expand beyond microwave popcorn? (One could argue that Golden
Valley could more fully exploit the brand name through expansion into other
products, possibly also microwaveable, to retain an association in consumers’
minds. However, by focusing on one particular product, the firm’s knowledge of
consumer tastes, distribution, promotion, and pricing is unexcelled in the industry.
As long as there are customers who want various forms of microwave popcorn,
Golden Valley appears to be in a position to dominant the industry.)
Video Case C: Celestial Seasonings (Running time = 14:11.)
Applications: product development, branding, entrepreneurship, positioning, and
targeting.
Overview: Celestial Seasonings is a good example of the growth and evolution of an
entrpreneurial company. The firm began making herb tea in Boulder, Colorado, and
distributing it locally, primarily through health food stores. When its products garnered a
following among consumers, more varieties of tea were added to the line. However, the
firm had a difficult time gaining access to mass merchants. It was acquired by Kraft but
as a result of a clash of cultures between the carryover personnel from the original
enterprise and Kraft’s executives, the company was sold back to the original owners
within a year. However, the brief time as a Kraft brand allowed Celestial Seasonings teas
to gain widespread distribution. Celestial Seasonings now carefully targets a defined
consumer segment and leverages its brand name to expand into the herbal supplements
category. The issues of safety, regulation, and labeling in herbal supplements have posed
new challenges for the firm.
Teaching suggestion: The video describes how Celestial Seasonings (an unusual name
for a firm that began by making tea) moved from marketing herb tea to marketing herbal
supplements. Although the products have a logical connection, it is interesting to
consider how the marketing of them differ and the challenges that creates. For example:
What regulations apply to their packaging? Which types of retailers sell them? How
much shelf space do different retailers allocate to these distinct product lines? How many
different brands of the products do they stock? Based on how familiar consumers are
with them, what kinds of promotion do these two different product lines require? The
point is, even if a brand extension appears logical, a firm must consider the marketing
effort required.
Possible discussion questions:
1. Tea has been around for hundreds of years and brands such as Lipton seem to
dominate. What made it possible for Celestial Seasonings to be successful?
(Celestial Seasonings actually developed a category of products - herb teas within the tea market and then capitalized on evolving consumer tastes. The
lesson is that customer tastes and preferences, not competition, define market
opportunities.)
2. Was it important for Celestial Seasonings to define a target market? (Defining a
target allows the firm to focus, especially in the area of new product development,
but also in distribution and advertising.)
Part 4: Price
Video Case A: Washburn International, Inc. (Running time = 10:17.)
Application: pricing.
Overview: Washburn is a guitar manufacturer. The firm markets a full-line of products
from one-of-a-kind customized guitars to mass-market instruments (manufactured in
Asia). Pricing the guitars is a major marketing decision, despite the fact that the firm
feels its products are of very high quality and differentiated from the competition.
Pricing decisions at Washburn take into consideration the firm’s profit objectives,
strength of demand, and costs. The video highlights the difference between fixed and
variable costs, the impact of production volume on costs, moving along - as opposed to
shifting - demand curves, and breakeven analysis. Also included is the effect of
endorsements on demand and, therefore, on prices.
Teaching suggestion: This video segment represents an opportunity to discuss breakeven
with an actual application. Demonstrate how changing variable costs, price, and/or the
volume of items purchased will influence the breakeven point for a product. Then move
to the components of each: What influences variable costs (e.g., labor time, material
quality), price (e.g., competition, retail markups), and demand (e.g., advertising,
endorsements)? Finally, in the case of Washburn, which of these variables would it be
wise to change and which would be mistakes to change?
Possible questions:
1. Which of the factors that influence price - company profit goals, demand, or costs
- do the managers at Washburn have the most control over? (The answer depends
on the level of management. For example, the CEO can alter the profit goals,
while the marketing manager may be able to influence demand by obtaining an
endorsement by a well-known guitarist. Cost control is mentioned several times
in the video. Clearly all three factors are important and must be considered in
setting prices.)
2. What role does competition likely play in Washburn’s pricing decisions?
(Competition is not emphasized in the video. Washburn managers may feel the
differentiation of their guitars as well as the brand’s reputation allows them to put
greater emphasis on factors other than competition. However, prospects attracted
to the low end of the product line are probably more likely to make price
comparisons. Thus, the importance of competition probably varies by particular
model, and hence price, of the product.)
Part 5: Distribution
Video Case A: CNS Breathe Right Strips (Running time = 14:20.)
Applications: Promotion, product life cycle, retail distribution, international marketing,
and strategy.
Overview: The links between an inventor, a manufacturer, and a distributor are nicely
illustrated. The inventor of Breathe Right Strips did not have the capacity to manufacture
or market the product, so he sought the help of CNS. Seeing the product’s potential,
CNS developed a licensing arrangement with the inventor, and began producing and
marketing the product. However, CNS is not a consumer products firm, so it lacked the
distribution and promotion capability to fully exploit the opportunity. To solve the
problem, CNS formed a partnership with 3M to distribute the product in the U.S. and
abroad. In 3 years sales went from $2.8 million to $85 million, suggesting all parties
benefited from the arrangements!
To promote Breathe Right Strips, the firm uses advertising (varying the message to suit
different international markets). In addition, the unusual or quirky nature of the product
makes it particularly amenable to public relations and publicity. Use of the product by
NFL players has been a major source of exposure. Distribution and packaging present
some interesting challenges because of the way products are distributed and displayed in
various countries.
Teaching suggestion: This is a good opportunity to show what different parties can bring
to a party, so to speak. Students often assume that one firm does everything in getting a
product to market. This video segment demonstrates that partnerships taking advantage
of the participants’ different strengths are often the best way to go. This situation helps
explain how distribution channel members, who don’t physically change the products
they sell, add value for the customers.
Possible discussion questions:
1. What is suggested by the linkages developed among the inventor of Breathe Right
Strips, CNS, and 3M? (Marketing requires a variety of specialized skills, from
producing innovative ideas to promotion and distribution. It is often more
efficient to find experts in particular areas than it is to attempt to develop these
specializations internally.)
2. What made this product attractive to a large and successful company such as 3M?
(First, 3M managers recognized that the product not only works but also appeals
to a large market. Second, it fits with other 3M consumer adhesive products.
Finally, it presented an opportunity for 3M to broaden it product line.)
Video Case B: Amazon (Running time = 7:15. Note: Amazon is also a Part 7 case.)
Applications: Internet retailing, logistics, and supply chain management.
Overview: Amazon pioneered Internet retailing in 1995. Jeff Bezos’ strategy from the
beginning was to “get big fast” because he expected competitors to enter the market
quickly. By adding product lines and heavily promoting the site, Amazon has become
the largest online retailer with customers in over 220 countries. However, Amazon has
found it more difficult to generate steady profits than to produce more and more sales.
Amazon’s ability to support huge volumes of business is largely attributable to its supply
chain management. The video segment describes how orders are handled at Amazon,
utilizing automation and computer technology. As Bezos explains, the Internet permits a
firm to have (or, at least, have access to) an infinite amount of inventory.
Teaching suggestion: Compare the advantages and disadvantages of Internet retailers
and bricks-and-mortar retailers with respect to such factors as hours of operation,
inventory, live sales people, contact with products, and return privileges. Then ask the
students to describe the likely characteristics of consumers who would be drawn to each
form of retailing. Finally, ask if - based on their analysis of the benefits, limitations, and
likely customers - the Internet is going to replace traditional retail stores, as many experts
or observers have predicted.
Possible discussion questions:
1. Traditional bricks-and-mortar retailers differentiate their stores on the basis of a
dimension such as location, merchandise assortment, customer service, and price.
What differentiates an online retailer from a bricks-and-mortar competitor?
(Online retailers are accessible to anyone with an Internet connection, never close,
have potentially unlimited inventory, and don’t require in-store sales personnel.
However, on the down side, online merchandise cannot be inspected or
experienced in person before the purchase, consumers must await delivery of their
purchases, and returns may be difficult.)
2. What is the likely reasoning behind Amazon’s strategy of “get big fast?” (Jeff
Bezos, the founder, realized online retailing only requires a website. To gain an
advantage over other new entrants and established bricks-and-mortar retailers that
would likely add online operations, he felt it was essential to gain consumer trial
and adoption quickly. His dream is to be a site where consumers can buy almost
anything they need. )
Video Case C: Successful Retailing (Running time = 14:29.)
Application: Retailing
Overview: In the highly competitive world of retailing, firms must find new ways to
satisfy consumers. That is, just like manufacturers, retailers must innovate. This video
describes four recent developments (called trends on the video) in retailing. The first is
the “category killer,” with consumer electronics firm Circuit City as the example. The
second is “quality-oriented specialty stores,” and the example is West Point Market, a
supermarket. Next, “entertainment-based retailing” is described, using Rainforest Café to
illustrate the format. Finally, “non-store retailing” is featured, with Lands’ End
representing catalog retailers and Autobytel illustrating online retailing. The overall
theme is the dynamic nature of retailing.
Teaching suggestion: Viewing the different types of retailers creates an opportunity to
discuss the dynamic nature of retailing (which many students view as staid and
traditional). In evaluating these and other retail innovations, students should be asked if
the attraction is substantive or superficial? In other words, does the retailer add real value
to the consumer or only provide novelty? It is unlikely that a large investment in an
innovation that only adds novelty (making it a fad) would be wise.
Possible discussion questions:
1. What is the basis for the creation of these retail trends? (The notion of a trend
suggests that these innovations are widespread and reasonably enduring, as
opposed to fads or novelties. If, in fact, they all meet these criteria, the answer is
the needs of consumers are what spawns them. Alert marketers are always on the
lookout for ways to provided added value to customers. If that means providing
entertainment along with a restaurant meal, then they do it.)
2. What might be the next retail innovation? (To get an answer, students should
consider what consumer needs are inadequately satisfied today. For example, the
quest for convenience and speed led to the drive-up concept at fast-food
restaurants, banks, and dry cleaners. What other retail businesses could benefit
from such a service?)
Part 6: Promotion
Video Case A: Dirt Devil (Running time = 15:55.)
Applications: integrated promotion, advertising, and strategy.
Overview: The Dirt Devil brand name was introduced in 1984 to describe a line of
innovative vacuum cleaners of the Royal Appliance Manufacturing Company. Its
success led to Dirt Devil becoming a separate operating unit of Royal. That
accomplishment and Dirt Devil’s subsequent successes are presented in this video.
Primary attention is given to the marketing mix developed for the Dirt Devil Broom Vac.
From its innovative design (combining a broom with a vacuum cleaner) to the use of both
direct response advertising and mass media advertising on the NFL’s Super Bowl, this
video demonstrates the importance of a coordinated marketing mix.
Other concepts represented in the case are family branding, extending the life of a
product through modifications and upgrades, pricing over the life of a product, and
capitalizing on brand equity.
Teaching suggestion: This segment provides an opportunity to compare direct response
advertising with mass media commercials with regards to objectives, audience, impact,
and cost. The goal would be to illustrate how promotion can vary even within the same
medium.
Possible discussion questions:
1. What explains the success of the Dirt Devil ads that made use of Fred Astaire?
(The ads accomplished the two goals of successful advertising – attracting
attention and transferring that attention to a message about the product. Famed
dancer Fred Astaire was well known to the target audience, and his dancing
“partner,” the Broom Vac, generated attention. The presence of the Broom Vac
stimulated enough curiosity that Dirt Devil was able to get its product and the
brand message across to its target market.)
2. How has Dirt Devil taken advantage of the brand equity created by the success of
its early products? (By using the Dirt Devil names on other products such as the
Scrub Devil and a yard wagon, the company has signaled to consumers that they
provide value similar to its original products.)
Part 7: Managing the Marketing Effort
Video Case A: Strategy Planning: Reintroduction of the Volkswagen Beetle
(Running time = 14:50.)
Applications: positioning and strategy.
Overview: The history of the Beetle may be unprecedented. From a humble beginning in
1936, it became the world’s most popular car model, with cumulative sales of over 21
million units. However, sales of the Beetle began to decline in the early 1970s. By 1978,
Volkswagen had stopped selling the car in the U.S. This video begins by describing the
creation and growth of the Beetle, its demise due to competitive pressure and changing
tastes, and finally its “rebirth” as the new Beetle in 1998.
Teaching suggestion: The Beetle presents an opportunity to illustrate positioning,
differential advantage, targeting, and demand strength. Have students apply these
concepts to the “old” Beetle and the “new” Beetle so they can see the differences. Add
the marketing mixes for the two versions of the car to the discussion. The conclusion
should be that even though they have the same name and a physical resemblance, these
are entirely different products with very different strategies.
Discussion questions:
1. The new Beetle was introduced in 1998. What sort of sales curve (over time)
would you expect it to have? (This is a question that gets at the consumer’s
motivation for buying the car. According to an executive in the video, “Everyone
smiled” when they saw the new Beetle. Is that because it provided a short trip
down memory lane or because it had the potential to provide satisfaction today?
Sales by year: 1998 – 50,000; 1999 – 80,000; 2000 – 80,000; 2002 – 65,000;
2003 – 52,000. In hopes of stopping the decline, VW introduced a convertible
version in 2004.)
2. Volkswagen has recently added the Touareg SUV and the Phaeton luxury sedan
(starting price = $65,000) to its product line that includes the Passat, Jetta, and
Golf (at $15,500) in addition to the Beetle. If these two new additions fall into the
“product development” box on the Product-Market Growth matrix and “question
marks” box on the BCG matrix, how would you describe their short and longer
run implications for VW? (Volkswagen’s newest additions are attempts to reach
new markets. Because they are different products than the existing VW line, they
will require large investments in both manufacturing and marketing. Their future
is uncertain.)