Download what is management

Other Teaching Tools
10.3
Video Notes
10.4
Brief Chapter Outline and Learning Goals
10.5
Lecture Outline and Lecture Notes
10.7
Career and Study Skills Notes
10.29
CAREER DEVELOPMENT: Make an Impression that Counts
10.29
STUDY SKILLS: The Importance of Study Partners
10.30
Lecture Links
10.31
LECTURE LINK 10-1 What Intermediaries to Use When Going
10.31
International
LECTURE LINK 10-2 Utilities Created by Marketing
10.31
LECTURE LINK 10-3 When the Supply Chain Breaks
10.33
LECTURE LINK 10-4 Evaluating Modes of Transportation
10.34
LECTURE LINK 10-5 Wal-Mart to the Rescue
10.35
LECTURE LINK 10-6 The Cost of Violating the
10.36
“Do Not Call” Registration Law
LECTURE LINK 10-7 Party On
10.37
LECTURE LINK 10-8 Measuring Web Traffic
10.37
LECTURE LINK 10-9 Desktop Distribution
10.38
LECTURE LINK 10-10 Promotional Bits
10.39
A.
Effective Advertising: Celebrity Voice-Overs
B.
Outdoor Advertising: Watch the Phone Booth
C.
Creative Promotion: Wrap Your SUV
D.
Advertising: Measuring the Television Audience in the Age of the DVR
E.
Event Marketing: Times Square’s Appeal
F.
Viral Marketing: The Subservient Chicken
10.1
CHAPTER
MARKETING: PLACE
AND PROMOTION
10
Bonus Internet Exercises
10.43
BONUS INTERNET EXERCISE 10-1 Careers in Distribution
10.43
BONUS INTERNET EXERCISE 10-2 Top 100 Retailers
10.44
BONUS INTERNET EXERCISE 10-3 Internet Auctions: Bypassing the
10.46
Retailer
BONUS INTERNET EXERCISE 10-4 Advertising on Google
10.47
BONUS INTERNET EXERCISE 10-5 Ethics in Advertising
10.48
BONUS INTERNET EXERCISE 10-6 Protecting Competition and
10.49
Consumers
Critical Thinking Exercises
10.50
CRITICAL THINKING EXERCISE 10-1 Distribution Channels
10.50
CRITICAL THINKING EXERCISE 10-2 Retail Distribution Strategy
10.51
CRITICAL THINKING EXERCISE 10-3 Designing a Website
10.52
CRITICAL THINKING EXERCISE 10-4 Advertising Appeals
10.54
CRITICAL THINKING EXERCISE 10-5 Identifying Product Placement
10.56
Bonus Cases
10.57
BONUS CASE 10-1 Multilevel Marketing
10.57
BONUS CASE 10-2 Greater Chicago Food Depository: Feeding the
10.59
Poor of Chicago (Video Case)
10.2
BONUS CASE 10-3 Starting an Online Business
10.61
BONUS CASE 10-4 Wieden & Kennedy: Experimental Promotions
10.63
BONUS CASE 10-5 Night Agency (Video Case)
10.65
BONUS CASE 10-6 Guerrilla Marketing
10.67
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
OTHER TEACHING TOOLS
For a description of each of these valuable teaching tools, please see the Preface in this manual.
Student Learning Tools
Student Online Learning Center (OLC) www.mhhe.com/diasbusiness
Student Study Guide
Spanish Translation Glossary (OLC)
Spanish Translation Quizzes (OLC)
Instructor Teaching Tools
Annotated Instructor’s Resource Manual
IRCD (Instructor’s Resource Manual, Test Bank, PowerPoints, EZtest)
Asset Map
Online Learning Center (OLC) www.mhhe.com/diasbusiness
PageOut
PowerPoint Presentations (on IRCD and OLC)
Test Bank
Business Videos on DVD
Enhanced Cartridge option
Spanish Translation Glossary (OLC)
CHAPTER 10: Marketing: Place and Promotion
10.3
VIDEO NOTES
Twenty videos are available, geared to individual chapter topics. The teaching notes for these
videos are also included in the Video Notes section of this Instructor’s Resource Manual, beginning on
page V.1.
VIDEO 10: “Night Agency”
Night Agency is a marketing agency focusing on cutting-edge promotional tactics, such as viral marketing and product placement. The video shows how the agency uses promotions such as online interactive games to reach today’s technology-savvy customers.
(BONUS CASE 10-6, “Night Agency” on page 10.65 of this manual relates to
this video.)
ALTERNATIVE: “Greater Chicago Food Depository: Feeding the Poor of Chicago”
The Greater Chicago Food Depository (GCFD) distributes more than 40 million
pounds of food per year to outlets such as food pantries, soup kitchens, and churches.
This video discusses the distribution channels GCFD uses and the importance of logistics.
(BONUS CASE 10-2, “Greater Chicago Food Depository: Feeding the Poor
of Chicago” on page 10.59 of this manual relates to this video.)
10.4
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
BRIEF CHAPTER OUTLINE AND LEARNING GOALS
CHAPTER 10
Marketing: Place and Promotion
I. INTRODUCTION TO PLACE AND PROMOTION
►
LEARNING OBJECTIVE 1
Explain place and how it pertains to marketing.
II. THE 4Ps OF MARKETING: PLACE
A.
Merchant Wholesalers
B.
Agents and Brokers
C.
Retail Intermediary
III. LOGISTICS AND TRANSPORTATION
►
LEARNING OBJECTIVE 2
Describe logistics and different transportation
modes.
IV. RETAILING
►
A.
LEARNING OBJECTIVE 3
Describe the types of retail competition and distribution.
Method of Competition in Retailing
1.
Price Competition
2.
Service Competition
3.
Location Competition
4.
Selection Competition
5.
Entertainment Competition
B.
Retail Distribution
C.
Other Types of Retailing
V. THE 4Ps OF MARKETING: PROMOTION
►
LEARNING OBJECTIVE 4
Understand the five types of promotion.
A.
Advertising
B.
Personal Selling
CHAPTER 10: Marketing: Place and Promotion
10.5
C.
Steps in the Selling Process
D.
Public Relations
E.
Sales Promotion
F.
Other Types of Promotion
VI. IMC: PUTTING PROMOTIONS TOGETHER
►
LEARNING OBJECTIVE 5
Define integrated marketing communication and
its role in promotion.
VII. SUMMARY
10.6
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE AND LECTURE NOTES
CHAPTER OPENING PROFILE
The Sunny Window (Text pages 316-318)
Nancy Engel took the last $30 of her welfare check and purchased assorted spices. She then
mixed the spices together and called it her “Italian spice mix.” The next day she took her mixes to a flea
market and sold out. Her $30 investment earned her $200. By reinvesting her profits and carefully expanding, her business, The Sunny Window, became a $250,000 venture. Engel’s story is an excellent example of how, with nothing but an idea and $30, a successful business can be created.
LECTURE OUTLINE
I. INTRODUCTION TO PLACE AND
PROMOTION
►
LEARNING OBJECTIVE 1
Explain place and how it pertains to marketing.
(Text pages 318-323)
A. The final two “P”s of the marketing mix are
place and promotion.
B. PLACE is the process of getting products
to the places where they will be sold, or
distribution, and how to determine the actual locations where the products are sold.
C. Promotion consists of five areas:
1. advertising;
2. sales promotion;
3. direct marketing;
4. public relations;
5. personal selling.
II. THE 4Ps OF MARKETING: PLACE
A. There are hundreds of thousands of marketing intermediaries whose job it is to help
move goods through the distribution network from producer to customers.
B. MARKETING INTERMEDIARIES are or-
CHAPTER 10: Marketing: Place and Promotion
LECTURE NOTES
POWERPOINT 10-1
Chapter Title
(Refers to text page 316)
POWERPOINT 10-2
Learning Objectives
(Refers to text page 317)
POWERPOINT 10-3
The 4Ps of Marketing:
Place (Refers to text pages
318-319)
10.7
LECTURE OUTLINE
LECTURE NOTES
ganizations that assist in moving goods
and services from producer to business
and consumer users (often called middlemen).
1. These are organizations in the middle
of a series of organizations that distribute goods from producer to consumer.
2. A CHANNEL OF DISTRIBUTION is
the whole series of marketing intermediaries, such as agents, brokers,
wholesalers, and retailers, which join
together to transport and store goods
in their path (or channel) from producers to consumers.
3. AGENTS/BROKERS are marketing
intermediaries who bring buyers and
sellers together and assist in negotiating an exchange, but do not take title
to the goods (don’t own the goods at
any point in the process).
4. A WHOLESALER is a marketing intermediary that sells to other organizations.
5. A RETAILER is an organization that
sells to ultimate consumers.
6. Channels of distribution keep communication, the exchange of currency,
and the title of the goods flowing openly among the parties.
C. MERCHANT WHOLESALERS are independently-owned firms that take title to the
goods that they handle.
1. Full-service wholesalers perform all of
the distribution functions.
10.8
TEXT REFERENCE
Real World Business Apps
(Box in text on page 319)
Wei Zhang is the owner of a
small retail store that sells
ethnic foods, such as spices
and packaged foods. Wei
wants to expand his business
and bring more paying customers into the store.
TEXT FIGURE 10.1
Examples of Distribution
Channels for Consumer
and Industrial Goods (Box
in text on page 320)
CRITICAL THINKING
EXERCISE 10-1
Distribution Channels
This exercise asks students to
identify the channels of distribution of manufacturers in
their areas. (See complete
exercise on page 10.50 of
this manual.)
TEXT FIGURE 10.2
Intermediaries Create Exchange Efficiency (Box in
text on page 321)
POWERPOINT 10-4
Merchant Wholesalers
(Refers to text pages 319323)
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE
2.
Limited-function wholesalers perform
only selected functions, but try to do
them especially well.
3. RACK JOBBERS furnish racks or
shelves full of merchandise to retailers, display products, and sell on consignment.
4. CASH-AND-CARRY WHOLESALERS serve mostly smaller retailers
with a limited assortment of products
(example: Office Depot).
5. DROP SHIPPERS solicit orders from
retailers and other wholesalers and
have the merchandise shipped directly
from a producer to a buyer.
D. Agents and Brokers
1. Agents and brokers bring buyers and
sellers together and help negotiate an
exchange, but they never own the
products.
a. They earn commissions or fees
based on a percentage of the
sales revenues.
b. Agents maintain long-term relationships with the people they represent.
c. Brokers are usually hired on a
temporary basis.
2. Agents who represent producers are
known as manufacturer’s agents or
sales agents.
a. Manufacturers’ agents may represent several manufacturers in a
specific territory.
b. Sales agents represent a single
CHAPTER 10: Marketing: Place and Promotion
LECTURE NOTES
LECTURE LINK 10-1
What Intermediaries to Use
When Going International
What intermediaries are
needed to reach the international customer? (See complete lecture link on page
10.31 of this manual.)
TEXT REFERENCE
Study Skills: Importance of
Study Partners
(Box in text on page 322)
An additional exercise and
discussion is available on
page 10.30 of this manual.
LECTURE LINK 10-2
Utilities Created by
Marketing
Six types of utilities are created when products are made
available to consumers—
form, time, place, possession,
information, and service.
PPT 10-5 below can be used
with this lecture link. (See
complete lecture link on page
10.31 of this manual.)
POWERPOINT 10-5
Utilities Created by
Intermediaries (Refers to
LL 10-2 above and text pages 323-325)
10.9
LECTURE OUTLINE
LECTURE NOTES
producer in a larger territory.
3. Brokers have no continuous relationship with the buyer or seller.
E. Retail Intermediaries
1. For customers, the most useful intermediary is the retailer.
2. These are the firms who bring goods
and services to neighborhoods and
make them available to consumers.
SELF CHECK QUESTIONS (Text page 323)
1.
What are marketing intermediaries? Why are they useful?
2.
What is the difference between a merchant wholesaler
and an agent/broker?
III. LOGISTICS AND TRANSPORTATION
► LEARNING OBJECTIVE 2
Describe logistics and different transportation
modes. (Text pages 323-325)
A. A key issue in marketing is determining the
most effective and efficient methods of delivering goods.
B. SUPPLY CHAIN MANAGEMENT is the
process of moving goods and materials
from one place to another.
1. The supply chain (or value chain) is
the sequence of linked activities that
must be performed by various organizations to move goods from the
sources or raw materials to ultimate
consumers.
2. The supply chain is longer than the
channel of distribution.
C. LOGISTICS is planning, implementing, and
controlling the physical flow of materials,
goods, and related information from points
10.10
BONUS INTERNET
EXERCISE 10-1
Careers in Distribution
This Internet exercise asks
students to research a career
in distribution. (See complete
exercise on page 10.43 of
this manual.)
BONUS CASE 10-1
Multilevel Marketing
Multilevel marketing often
gets a bad rap. But when
multilevel marketing companies succeed, their growth
can be astonishing. (See
complete case, discussion
questions, and suggested
answers on page 10.57 of this
manual.)
POWERPOINT 10-6
Logistics and Transportation (Refers to text pages
323-325)
LECTURE LINK 10-3
When the Supply Chain
Breaks
The unexpected closure of a
key player in the supply
chain can create chaos in the
market. (See complete lecture link on page 10.33 of
this manual.)
TEXT FIGURE 10.3
The Supply Chain and
Channels of Distribution
(Box in text on page 324)
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE
of origin to points of consumption.
1. The amount of time a product spends
in transit and the associated costs are
factors to consider when choosing
transportation.
a. Bringing goods by water is inexpensive, but very slow.
b. Trucks are good for small shipments and can be used to reach
remote locations.
c. Trains are good for large shipments, but not practical for remote
locations.
d. Air transportation is speedy, but
very expensive.
2. Most logistics managers use intermodal shipping, using multiple forms
of transportation to complete a single
shipment.
SELF CHECK QUESTIONS (Text page 325)
1.
Define logistics and supply chain management. What is
the difference?
2.
What are the advantages of train transportation vs. truck
transportation?
LECTURE NOTES
TEXT FIGURE 10.4
Comparison of Transportation Modes (Box in text on
page 324)
LECTURE LINK 10-4
Evaluating Modes of
Transportation
All transportation modes can
be evaluated on basic service
criteria: cost, speed, dependability, flexibility, frequency,
and reach. (See complete
lecture link on page 10.34 of
this manual.)
BONUS CASE 10-2
Greater Chicago Food Depository: Feeding the Poor
of Chicago (Video Case)
This bonus case ties in with
the video available for use
with this chapter. Every
business, both for-profit and
not-for-profit, needs to understand the basic principles
of marketing. This case focuses on one such nonprofit—the Greater Chicago
Food Depository. (See complete case, discussion questions, and suggested answers
on page 10.59 of this manual.)
IV. RETAILING
►
LEARNING OBJECTIVE 3
Describe the types of retail competition and distribution. (Text pages 325-333)
A. A retailer is a middleman that sells to consumers.
1. The U.S. has about 2.3 million retail
stores, not including websites.
2. These firms generate $3.8 trillion sales
annually.
CHAPTER 10: Marketing: Place and Promotion
POWERPOINT 10-7
Retailing (Refers to text
pages 325-329)
10.11
LECTURE OUTLINE
LECTURE NOTES
3.
About 15.3 million people work for retail organizations.
B. Method of Competition in Retailing
1. There are five major ways in which retailers compete for customers.
2. Price competition
a. Discount stores such as Wal-Mart,
Target, and Kmart succeed by offering low prices.
b. Service organizations, such as
Southwest Airlines and H&R
Block, also compete on price.
c. Price competition is getting fiercer
as Internet firms help consumers
find the best prices.
3. Service competition
a. Service in retailing involves putting the customer first and providing follow-up service.
b. Consumers are frequently willing
to pay a little more if the retailer
offers outstanding service.
c. The benchmark companies include Home Depot, The Men’s
Warehouse, Southwest Airlines,
and Nordstrom.
4. Location competition
a. Many services compete effectively
by having good locations (Burger
King and Pizza Hut have on campus locations).
b. Nothing is more convenient than
shopping online.
c. Competition between brick-and-
10.12
BONUS INTERNET
EXERCISE 10-2
Top 100 Retailers
This Internet exercise asks
student to use the Internet to
research the top ten U.S. retailers. (See complete exercise on page 10.44 of this
manual.)
LECTURE LINK 10-5
Wal-Mart to the Rescue
After Hurricane Katrina devastated Waveland, Mississippi, Wal-Mart store manager
Ron Cox contacted the retailer and arranged for a temporary replacement. (See complete lecture link on page
10.35 of this manual.)
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE
5.
6.
mortar retailers and online retailers is intensifying.
Selection competition
a. Selection is the offering of a wide
variety of items in the same product category.
b. CATEGORY KILLER STORES
offer wide selection of goods in a
specific category (such as Toys
“R” Us), at competitive prices.
c. Small, independent toys stores
were driven out of business by
Toys “R” Us.
d. In turn, many category killer stores
are being “killed” by discount
stores like Wal-Mart.
i. Customers find it convenient
to shop for multiple products
at one store.
ii. Location may be more important than selection for consumer items.
e. Internet stores can offer products
from dozens of suppliers and almost unlimited selection.
f. Customers favor stores such as
Costco for the convenience of
one-stop shopping.
Entertainment competition
a. Retailers try to add value through
innovative items and designs. Examples:
i. Jordan’s Furniture recreates
French Quarter facades.
CHAPTER 10: Marketing: Place and Promotion
LECTURE NOTES
TEXT FIGURE 10.5
Types of Retail Stores (Box
in text on page 326)
10.13
LECTURE OUTLINE
LECTURE NOTES
ii.
b.
c.
Bass Pro Shops feature
aquariums.
If the experience is “fun,” it can
build loyalty and repeat visits.
Many retailers compete in multiple
areas (example: REI Stores use
selection, location, service, and
entertainment competition).
SELF CHECK QUESTIONS (Text page 330)
1.
Differentiate between price and service competition.
What customers would be attracted to each category?
Why?
2.
Explain the concepts of selection and entertainment
competition. Can retailers compete in more than one area? Explain.
C. Retail Distribution
1. Different products call for different retail distribution strategies.
2. INTENSIVE DISTRIBUTION puts
products into as many retail outlets as
possible, including vending machines
(used for convenience goods.)
a. Convenience goods such as candy, gum, and popular magazines,
need intensive distribution.
b. Such products should be in as
many retailer outlets as possible.
3. SELECTIVE DISTRIBUTION sends
products to only a preferred group of
retailers in an area (used for shopping
goods).
a. Selective distribution helps assure
producers of quality sales and
service.
b. Examples: Godiva Chocolatier, H
10.14
POWERPOINT 10-8
Retail Distribution
(Refers to text pages 330333)
CRITICAL THINKING
EXERCISE 10-2
Retail Distribution Strategy
This exercise asks students to
give examples for each category of distribution strategy.
(See complete exercise on
page 10.51 of this manual.)
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE
and M Polo, and Polo clothing.
c. Such distribution is less widespread than intensive distribution.
4. EXCLUSIVE DISTRIBUTION sends
products to only one retail outlet in a
given geographic area (used for specialty goods).
a. The retailer has exclusive rights to
sell the product.
b. Examples: luxury auto manufacturers and Tiffany’s.
D. Other Types of Retailing
1. Electronic retailing means selling
goods and services to ultimate consumers (e.g., you and me) over the Internet.
a. Attracting customers is only half
the battle; the other half is delivering the goods, providing service,
and keeping your customers.
b. Internet retailers have had difficulties with service after the sale,
such as handling complaints and
returns.
c. Most Internet retailers provide email confirmation.
d. Some websites have live chat
functions.
2. TELEMARKETING is the sale of
goods and services by telephone.
a. Many companies use telemarketing to supplement in-store selling.
b. There are two types of telemarketing:
CHAPTER 10: Marketing: Place and Promotion
LECTURE NOTES
BONUS CASE 10-3
Starting an Online Business
Joseph Cohen started an
online business at age 14.
(See complete case, discussion questions, and suggested
answers on page 10.61 of this
manual.)
CRITICAL THINKING
EXERCISE 10-3
Designing a Website
A well-designed website is a
powerful promotional tool.
This exercise asks students to
design a basic website—
developing an overall message, developing interesting
visual features, and building
a basic page hierarchy. PPT
10-9, “Designing a Website,” below can be used with
this exercise. (See complete
exercise on page 10.52 of
this manual.)
POWERPOINT 10-9
Designing a Website (Refers
to CTE 10-3 above and text
pages 334-337)
BONUS INTERNET
EXERCISE 10-3
Internet Auctions:
Bypassing the Retailer
This Internet exercise directs
students to the Internet auction site eBay to explore how
such sites are changing the
channel of distribution for
consumer goods. (See complete exercise on page 10.46
of this manual.)
10.15
LECTURE OUTLINE
LECTURE NOTES
i.
3.
4.
10.16
At outbound call centers an
employee calls people to try
to sell a product
ii. An inbound call centers handles calls from customers on
a toll-free number.
c. Companies that use outbound telemarketing face several challenges:
i. the National Do No Call Registry;
ii. caller identification services;
iii. other methods customers use
to screen out potential telemarketing calls.
d. Many online sellers use spam, emails that encourage potential
customers to buy a product.
i. The goal is to send out as
many e-mails as possible in
the hope a few customers will
respond.
ii. Many customers consider
outbound telemarketing and
spam as nuisances.
Vending
a. Vending machines dispense convenience goods when customers
deposit enough money into the
machine.
b. The benefit of vending machines
is their convenient location.
DIRECT SELLING is selling to consumers in their homes or where they
work.
LECTURE LINK 10-6
The Cost of Violating the
“Do Not Call” Registration
Law
Ignoring the Federal Do Not
Call registry can be expensive. One company was fined
nearly $4.5 million. (See
complete lecture link on page
10.36 of this manual.)
TEXT REFERENCE
Ethical Challenge: Salespeople’s Time and Trouble
Is Advertising Unethical?
(Box in text on page 331)
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE
a.
b.
Some goods are sold at “house
parties” sponsored by sellers.
Many companies are sponsoring
parties at workplaces and on
weekends and evenings to accommodate working women.
SELF CHECK QUESTIONS (Text page 333)
1.
What are the three types of retail distribution? What
type of distribution would convenience products use?
Specialty products?
2.
Name three forms of retailing that take place outside of
bricks and mortar stores.
LECTURE NOTES
LECTURE LINK 10-7
Party On
The days of the oldfashioned Tupperware party
are over, but some companies are using the direct-tohome distribution method for
more unusual products. (See
complete lecture link on page
10.37 of this manual.)
V. THE 4Ps OF MARKETING: PROMOTION
► LEARNING OBJECTIVE 4
Understand the five types of promotion. (Text
pages 334-349)
A. The final “P” is promotion.
1. Promotion is an effort by marketers to
inform and remind people in the target
market and about products and to persuade them to participate in the exchange.
a. The marketer must:
i. define the target audience;
ii. select methods to reach the
audience;
iii. design the right message for
the audience;
iv. make sure the audience gets
the message.
b. Many companies chose to hire
advertising agencies to:
i. develop the target market;
CHAPTER 10: Marketing: Place and Promotion
POWERPOINT 10-10
The 4Ps of Marketing:
Promotion (Refers to text
pages 334-337)
TEXT FIGURE 10.6
The Promotion Mix (Box in
text on page 335)
TEXT FIGURE 10.7
Steps in a Promotion Campaign (Box in text on page
335)
10.17
LECTURE OUTLINE
LECTURE NOTES
ii.
create advertisements and
promotional plans;
iii. implement these plans.
c. The combination of promotional
tools, or its PROMOTIONAL MIX,
includes advertising, personal selling, public relations, and sales
promotion.
2. INTEGRATED MARKETING COMMUNICATION (IMC) combines all the
promotional tools into one comprehensive and unified promotional strategy.
a. Companies use all the promotional tools and resources to create a
positive brand image and meet
strategic marketing goals.
b. The concept involves unifying all
aspects of the product and its
marketing.
c. Good IMC should provide the customer with a consistent message
about a product.
B. Advertising
1. ADVERTISING is paid, nonpersonal
communication through various media
by organizations and individuals who
are in some way identified in the advertising message.
a. Total ad volume exceeds $281 billion yearly.
b. Television is the number one advertising medium in terms of total
dollars spent.
c. The public benefits from advertising:
10.18
TEXT FIGURE 10.8
Advantages and Disadvantages of Various Forms
of Media (Box in text on
page 336)
BONUS INTERNET
EXERCISE 10-4
Advertising on Google
A popular method of Internet
advertising is buying an ad
on a web search engine such
as Google. This Internet exercise lets students explore
exactly what this involves.
(See complete exercise on
page 10.47 of this manual.)
BONUS INTERNET
EXERCISE 10-5
Ethics in Advertising
The American Association of
Advertising Agencies is the
professional organization
representing the major advertising agencies. Its website
provides guidelines for ethical behavior in advertising.
(See complete exercise on
page 10.48 of this manual.)
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE
Advertising is informative–it
provides information about
products, prices, features,
and so on.
ii. Advertising provides us with
free TV and radio programs,
because advertisers cover
most of the production costs.
iii. Advertising costs cover the
major costs of producing
newspapers and magazines.
d. Newspapers, radio, and the yellow
pages are especially attractive to
local advertisers.
e. TV has many advantages to national advertisers, but it is expensive.
i. However, few other media
can reach as many people
with such impact.
ii. Forty-three percent of U.S.
households are reached by
the Super Bowl.
2. PRODUCT PLACEMENT is paying to
put products into TV shows and movies where they will be seen.
3. Marketers must choose which media
and which programs will best reach
the audience they desire.
C. PERSONAL SELLING is face-to-face
presentation and promotion of products
and services.
1. Personal selling occurs at both a B2B
level and at a consumer level.
a. Effective selling today is more
LECTURE NOTES
i.
CHAPTER 10: Marketing: Place and Promotion
CRITICAL THINKING
EXERCISE 10-4
Advertising Appeals
This exercise explores the
different advertising appeals
that marketers use in television advertising. (See complete exercise on page 10.54
of this manual.)
TEXT FIGURE 10.9
Expenditures in 2006 for
Various Types of Media
(Box in text on page 337)
CRITICAL THINKING
EXERCISE 10-5
Identifying Product
Placement
This exercise asks students to
watch prime time television
to identify product placements in television shows.
(See complete exercise on
page 10.56 of this manual.)
10.19
LECTURE OUTLINE
2.
3.
10.20
LECTURE NOTES
than persuading others to buy; it is
helping consumers satisfy their
wants and needs.
b. Salespeople now use technology,
such as the Internet, portable
computers, and fax machines, to
help customers and to complete
the sale.
c. The benefit of personal selling is
having a person help compete the
transaction.
d. Because personal attention for
customers is expensive, some
companies are replacing salespeople with Internet services.
Step 1: Prospect and Qualify
a. PROSPECTING involves researching potential buyers and
choosing those most likely to buy.
b. This is also called qualifying, making sure that people have the
need for a product, the authority to
buy, and the willingness to listen
to a sales message.
c. A person who meets these criteria
is the prospect.
d. The best prospects are people
recommended by existing customers.
Step 2: Preapproach
a. Before making a sales call, sales
representatives must learn as
much as possible about customers and their wants and needs.
b. In B2B situations, salespeople of-
POWERPOINT 10-11
Personal Selling
(Refers to text pages 337341)
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE
4.
5.
6.
7.
LECTURE NOTES
ten e-mail potential clients with
proposals before making a formal
visit.
Step 3: Approach
a. You don’t have a second chance
to make a first impression.
b. The approach should give an impression of friendly professionalism to create rapport, to build
credibility, and to start a relationship.
Step 4: Make presentation
a. The presentation should match
the benefits of your value package
to the client’s needs.
b. Using research, salespeople can
tailor their presentation to fit clients.
c. This is a good time to use testimonials.
Step 5: Answer objections
a. A salesperson should anticipate
potential objections and prepare
proper responses.
b. Questions should be viewed as
opportunities to create better relationships.
Step 6: Close sale
a. The trial close consists of a question or statement that moves the
selling process toward the actual
close.
b. The final step is to ask for the order.
CHAPTER 10: Marketing: Place and Promotion
10.21
LECTURE OUTLINE
LECTURE NOTES
8.
Step 7: Follow Up
a. The selling process isn’t over until
the order is approved and the customer is happy.
b. Selling includes establishing relationships, not just selling goods
and services.
c. Follow-up includes handling customer complaints, making sure
that the customer’s questions are
answered, and supplying what the
customer wants.
d. Customer service is often as important to the sale as the product
itself.
9. The selling process varies somewhat
among different goods and services,
but the general idea is the same.
D. Public Relations
1. PUBLIC RELATIONS (PR) is the
management function that evaluates
public attitudes, changes policies and
procedures accordingly, and executes
a program of action and information to
earn public understanding and acceptance.
a. A good public relations program
has three steps:
i. listen to the public: start with
good marketing research;
ii. change policies and procedures in response to what
customers want;
iii. inform people that you’re being responsive to their needs.
10.22
POWERPOINT 10-12
Public Relations
(Refers to text pages 341344)
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE
b.
2.
Customers often complain that it
is nearly impossible to reach a
human being with a complaint.
i. Today PR is taking a more
active role in listening to consumer with problems.
ii. PR must maintain good relationships with production and
service people so they can
answer questions quickly.
c. Public relations is one of the fastest-growing industries.
d. The public relations department is
responsible for maintaining close
relationships with the media,
community leaders, government
officials, and other stakeholders.
Publicity
a. PUBLICITY is any information
about an individual, product, or an
organization that is distributed to
the public through the media and
that’s not paid for or controlled by
the sponsor.
i. Press releases must be carefully written so the media will
publish them.
ii. Publicity works only if the media finds the material interesting or newsworthy.
b. Advantages of publicity:
i. Publicity is free.
ii. Publicity may reach people
who wouldn’t read an ad.
iii. The greatest advantage of
LECTURE NOTES
CHAPTER 10: Marketing: Place and Promotion
BONUS INTERNET
EXERCISE 10-6
Protecting Competition and
Consumers
The Federal Trade Commission is the enforcement arm
for consumer protection laws
and laws ensuring fair competition. This Internet exercise asks students to explore
the specific laws that affect
advertising and competition.
(See complete exercise on
page 10.49 of this manual.)
TEXT FIGURE 10.10
A Press Release Announced
Apple’s Introduction of the
iPhone (Box in text on page
343)
10.23
LECTURE OUTLINE
LECTURE NOTES
publicity may be its believability.
c. Disadvantages of publicity include:
i. Marketers have no control
over how, when, or if the media will use the story.
ii. The media does not have to
publish it.
iii. The story can be altered so
it’s not positive.
iv. There is good publicity and
there is bad publicity.
v. Stories are not likely to be repeated; advertising can be
repeated as often as needed.
d. To see that publicity is handled
well by the media, the marketer
should establish a friendly relationship with the media and cooperate with them.
E. SALES PROMOTION is the promotional
tool that stimulates consumer purchasing
and dealer interest by means of short-term
activities.
1. Examples of consumer sales promotions include free samples, cents-off
coupons, and prizes.
a. Sales promotion programs are
designed to supplement personal
selling, advertising, and public relations by creating enthusiasm for
the overall promotional program.
b. Internal sales promotions (within
company) generate employee en10.24
TEXT FIGURE 10.11
Examples of Business-toBusiness Sales Promotion:
Techniques and Consumer
Sales Promotion Techniques (Box in text on page
344)
POWERPOINT 10-13
Sales Promotion
(Refers to text pages 344349)
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE
2.
3.
thusiasm about a product, including:
i. sales training;
ii. development of sales aids
such as flip charts, portable
audiovisual displays, and videotapes;
iii. participation in trade shows.
c. External sales promotion (outside
company, including distributors
and dealers)
i. It is important to get distributors and dealers involved so
they, too, are enthusiastic.
ii. Trade shows are important
because buyers are able to
see products from many different sellers.
d. Virtual trade shows—trade shows
on the Internet—let buyers to see
many products without leaving the
office.
Next promote to final consumers.
a. Techniques include samples,
coupons, cents-off deals, displays,
contests, rebates, and so on.
b. Sales promotion is an ongoing effort to maintain enthusiasm.
SAMPLING is letting consumers have
a small sample of a product for no
charge.
a. Using sampling in grocery stores
is a quick, effective way of
demonstrating a product’s superiority at the time consumers are
CHAPTER 10: Marketing: Place and Promotion
LECTURE NOTES
TEXT REFERENCE
Career Development: Make
an Impression That
Counts!
(Box in text on page 347)
An additional exercise and
discussion is available on
page 10.29 of this manual.
TEXT REFERENCE
Thinking Critically: SmallScreen Dream: Launch a
Cable Ad Campaign
(Box in text on page 348)
Cable networks have lured
audiences away from broadcast TV networks. Now local
commercials are the mainstay of cable systems and
allow marketers to reach a
wide yet qualified audience.
TEXT REFERENCE
Real World Business Apps
(Box in text on page 351)
Wei Zhang has learned that
he needs to develop a promotional plan to expand his customer base. He has developed an advertisement for the
yellow pages and plans to
use public relations as part of
his marketing plan.
LECTURE LINK 10-8
Measuring Web Traffic
Is the “most popular” website
the one with the most unique
visitors or the most individual hits? It makes a big difference. (See complete lecture
link on page 10.37 of this
manual.)
10.25
LECTURE OUTLINE
F.
10.26
LECTURE NOTES
making a purchase decision.
b. Sampling is a quick, effective way
of showing a product’s benefits.
4. Companies use sampling in conjunction with other techniques such as
event marketing.
a. EVENT MARKETING is sponsoring events such as rock concerts
or being at various events to promote your products.
b. Companies can also support charitable organizations in order to
give back to their communities.
Other Types of Promotion
1. To create a “buzz” companies can try
viral marketing and word-of-mouth.
2. VIRAL MARKETING is the term now
used to describe everything from paying people to say positive things on the
Internet to setting up multilevel selling
schemes whereby consumers get
commissions for directing friends to
specific websites.
a. Viral marketing can include:
i. paying people to say positive
things on the Internet;
ii. setting up multilevel selling
schemes.
b. Example: Barnes & Noble sends
an e-mail to customers’ friends
telling them if you enjoy reading a
book.
3. Word-of-mouth is one of the most effective promotional tools.
LECTURE LINK 10-9
Desktop Distribution
Internet providers and software companies use a form
of sampling, trial software
preloaded on new PCs. (See
complete lecture link on page
10.38 of this manual.)
LECTURE LINK 10-10
Promotional Bits
Celebrity voice-overs, phone
booth ads, advertising and
TiVo, and an online chicken—a collection of interesting bits about promotion.
(See complete lecture link on
page 10.39 of this manual.)
BONUS CASE 10-4
Wieden & Kennedy:
Experimental Promotions
Wieden and Kennedy
(W&K), is known as one of
the most creative advertising
agencies in the United States.
One of its ads even used a
streaker. (See complete case,
discussion questions, and
suggested answers on page
10.63 of this manual.)
BONUS CASE 10-5
Night Agency (Video Case)
This bonus case ties in with
the video available for use
with this chapter The challenge for marketers today is
to create promotions for the
new realities of the marketplace. That means, for one
thing, creating advertising
and other promotions on the
Internet. (See complete case,
discussion questions, and
suggested answers on page
10.65 of this manual.)
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE OUTLINE
a.
b.
c.
d.
e.
WORD-OF-MOUTH PROMOTION
is a promotional tool that involves
people telling other people about
products they have purchased.
Anything that encourages people
to talk favorably about an organization is effective word-of-mouth.
Clever commercials and samples
can generate word-of-mouth.
An effective strategy for spreading
word-of-mouth is to send testimonials to current customers.
Testimonials are effective in confirming customers’ belief that they
chose the right company and are
effective in promotion to new customers.
LECTURE NOTES
BONUS CASE 10-6
Guerrilla Marketing
Dietrich Mateschitz is the
man who introduced Red
Bull to the U.S. market. The
secret to Red Bull’s success
is something called guerrilla
marketing. (See complete
case, discussion questions,
and suggested answers on
page 10.67 of this manual.)
SELF CHECK QUESTIONS (Text page 349)
1.
List each type of promotion we discussed.
2.
Which method of promotion do you think is most effective in selling to you? Which is the least effective?
VI. IMC: PUTTING PROMOTIONS TOGETHER
OBJECTIVE 5
► LEARNING
Define integrated marketing communication and
POWERPOINT 10-13
IMC: Putting Promotions
Together (Refers to text
pages 349-351)
its role in promotion. (Text pages 349-352)
A. Each target group calls for a separate
promotion mix.
1. All the promotions are part of one concerted effort.
2. An integrated marketing communications (IMC) promotional approach is a
method of uniting all promotional efforts and making them more consistent.
CHAPTER 10: Marketing: Place and Promotion
TEXT FIGURE 10.12
Integrated Marketing
Communication (Box in text
on page 349)
10.27
LECTURE OUTLINE
LECTURE NOTES
3.
IMC includes public relations and promotional efforts such as jingles, packaging, Internet communications, and
interactive tools.
B. There is often little coordination across
promotional efforts.
1. Customers can receive conflicting
messages.
2. Small businesses can use IMC by ensuring that any signage, letterheads,
and ads carry the same message.
TEXT REFERENCE
Career Spotlight: So, You
Want to Be … in Logistics
(Box in text on page 350)
SELF CHECK QUESTIONS (Text page 352)
1.
Explain why IMC is beneficial to businesses.
2.
What are two items that are important to remember
when developing a program of IMC?
VII. SUMMARY
10.28
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
CAREER AND STUDY SKILLS NOTES
CAREER DEVELOPMENT BOX:
Make an Impression That Counts! (Text page 347)
Instructor’s Notes for Text Box Ten:(Objectives to consider and implement to increase students’
knowledge, usage, and understanding of the concepts).
STUDENT EXERCISES:
Have students practice the basics of entering a room or class and meeting their instructor, classmates or other college personnel. Make sure you have a form for evaluation of the positives and negatives
of each student’s performance. Practice this exercise until students are comfortable with clear “impression” objectives and a sense of confidence that they can make that first good impression on a regular basis.
CHAPTER 10: Marketing: Place and Promotion
10.29
STUDY SKILLS BOX:
Importance of Study Partners (Text page 322)
Instructor’s Notes for Text Box Ten:(Objectives to consider and implement to increase students’
knowledge, usage, and understanding of the concepts).
What has your experience been with a study partner? There are many benefits a study partner can
bring to your educational experience that can help you outside the classroom. A good study partner can
fill in the gaps in areas where you lack a clear understanding of any given subject, engage in conversations that help you reinforce what you do understand, and usually can inspire you to explain what you
have learned back to your study partner.
The advantages of study partners is that they help you schedule and participate in study time,
keep you focused on the right amount of study time, and they allow you the security of help when you
need to learn difficult subject areas. The disadvantages occur when study partners become less interested
in maintaining a study schedule or when they have issues with the instructor or other students in the class
and spend more time discussing non-study materials; these distractions can lead to unproductive use of
time.
All things considered, study partners have greater value in your educational than not and are
worth the investment in most cases. Just beware of the pitfalls that come, sometimes unexpectedly, and
learn how to take the lead when it appears your study partner is getting off course.
STUDENT EXERCISES:
Put student in groups of two that create study partners. Put a series of words on the board and let
each group discuss and write down the definitions of each word. Give each group five minutes. Have each
group exchange papers and grade them by reading correct answers. Afterwards, have the students notice
how much more fun and helpful it was to have a partner to discuss and share ideas and potential answers.
Also mention how easy it is to use a study partner’s work. Allow for discussions on the benefits and potential problems of working together.
Sample words for this exercise:












10.30
Adroit
Concourse
Extricate
Brine
Emulate
Effigy
Animate
Saturated
Convergence
Colossal
Manifest
Liquidate
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE LINKS
LECTURE LINK 10-1
What Intermediaries to Use When Going International
It’s one thing to decide to sell a product internationally; it’s something else again to try to implement such a program. How are you going to reach the consumer? You could, of course, send sales representatives to contact people directly, but that would be costly and risky. How can you get your product
into foreign markets at a minimum cost and still have wide distribution?
Use brokers. As explained in the chapter text, a broker is an intermediary who keeps no inventory and
takes no risk. A broker can find distributors for you. Brokers sell for you and make a commission
on the sale. This is the least expensive way to enter foreign markets, but you still assume the risks
of transportation.
Use importers and exporters. Importers and exporters take all the risks of business and sell your products to international markets. Their commission is much higher than that of brokers, but they do
much more for you. They may find you distributors or do the selling to ultimate consumers themselves.
Call on distributors directly. You can bypass exporters and brokers and call on distributors yourself. In
that case, you actually become your own exporter and deliver directly to distributors, but again
you assume the risks of transportation.
Sell direct. The most costly and risky way to sell internationally is to set up your own distribution system
of wholesalers and retailers. On the other hand, this maximizes potential profits in the long run.
Many firms start out selling through importers and exporters and end up setting up their own distribution system as sales increase.
Use third-party logistics (3PL) providers. This new kind of company will distribute goods worldwide
for you. The U.S. market leader is Ryder Integrated Logistics. Ryder designs, implements, and
manages the whole system for delivering goods in the United States and overseas.
LECTURE LINK 10-2
Utilities Created by Marketing
Utility, in economics, is the want-satisfying ability, or value, that organizations add to goods or
services when the products are made more useful or accessible to consumers than they were before. Six
utilities are added: form, time, place, possession, information, and service. Although some utilities are
performed largely by producers, most are performed by marketing intermediaries. We shall explore all the
utilities next and describe how intermediaries provide each. (POWERPOINT 10-5, “Utilities Created by
Intermediaries” presents these six utilities.)
FORM UTILITY
Traditionally, form utility has been provided mostly by producers rather than by intermediaries.
It consists of taking raw materials and changing their form so that they become useful products. Thus, a
farmer who separates the wheat from the chaff and the processor who turns the wheat into flour are creating form utility. Retailers and other marketers sometimes perform form utility as well. For example, retail
butchers cut pork chops from a larger piece of meat and trims off the fat. The servers at Starbucks make
coffee just the way you want it. Dell assembles computers according to customers’ wishes.
CHAPTER 10: Marketing: Place and Promotion
10.31
TIME UTILITY
Intermediaries, such as retailers, add time utility to products by making them available when
they’re needed. For example, Devar Tennent lives in Boston. One winter evening while watching TV with
his brother, Tennent suddenly got the urge for a hot dog and Coke. The problem was that there were no
hot dogs or Cokes in the house. Devar ran down to the corner delicatessen and bought some hot dogs,
buns, Cokes, and potato chips. He also bought some frozen strawberries and ice cream. Devar was able to
get these groceries at midnight because the local deli was open 24 hours a day. That’s time utility. You
can buy goods at any time on the Internet, but you can’t beat having them available right around the corner when you want them. On the other hand, note the value that an Internet company provides by staying
accessible 24 hours a day.
PLACE UTILITY
Intermediaries add place utility to products by having them where people want them. For example, while traveling through the badlands of South Dakota, Juanita Ruiz got hungry and thirsty. There are
no stores for miles in this part of the country. Juanita saw one of many signs along the road saying that
Wall Drug with fountain service was up ahead. Lured by the signs, she stopped at the store for refreshments. She also bought some sunglasses and souvenir items there. The goods and services provided by
Wall Drug are in a convenient place for vacationers. Throughout the United States, 7-Eleven stores remain popular because they are usually in easy-to-reach locations. They provide place utility. As more and
more sales become global, place utility will grow in importance.
POSSESSION UTILITY
Intermediaries add possession utility by doing whatever is necessary to transfer ownership from
one party to another, including providing credit. Activities associated with possession utility include delivery, installation, guarantees, and follow-up service. For example, Larry Rosenberg wanted to buy a
nice home in the suburbs. He found just what he wanted, but he didn’t have the money he needed. So he
went with the real estate broker to a local savings and loan and borrowed the money to buy the home.
Both the real estate broker and the savings and loan are marketing intermediaries that provide possession
utility. For those consumers who don’t want to own goods, possession utility makes it possible for them
to use goods through renting or leasing.
INFORMATION UTILITY
Intermediaries add information utility by opening two-way flows of information between marketing participants. For example, Jerome Washington couldn’t decide what kind of TV set to buy. He
looked at various ads in the newspaper, talked to salespeople at several stores, and read material at the
library and on the Internet. He also got some booklets from the government about radiation hazards and
consumer buying tips. Newspapers, salespeople, libraries, websites, and government publications are all
information sources made available by intermediaries. They provide information utility.
SERVICE UTILITY
Intermediaries add service utility by providing fast, friendly service during and after the sale and
by teaching customers how to best use products over time. For example, Sze Leung bought a personal
computer for his office at home. Both the computer manufacturer and the retailer where he bought the
computer continue to offer help whenever Leung needs it. He also gets software updates for a small fee to
keep his computer up-to-date. What attracted Leung to the retailer in the first place was the helpful,
friendly service he received from the salesperson in the store. Service utility is rapidly becoming the most
important utility for many retailers because without it they could lose business to direct marketing (e.g.,
marketing by catalog or on the Internet).
10.32
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
LECTURE LINK 10-3
When the Supply Chain Breaks
The supply chain is only as strong as its weakest link. The unexpected closure of Clark Foam in
December 2005 clearly illustrates this. Clark, a Laguna Niguel, California, company, mass-produced
foam blocks used to create customized surfboards. Gordon Clark pioneered the technology in 1961. The
foam blanks, which cost between $50 and $90, are bought by custom surfboard makers. The boards are
first smoothed and shaved with sandpaper and shavers. Painters then add color and design before the
board is covered in fiberglass.
Clark enjoyed a virtual monopoly on the blocks (called “blanks”). It supplied unshaped blanks for
about 90% of all custom-made boards purchased worldwide. Before the Clark closure, custom-made
boards sold for between $300 and $800. Suddenly manufacturers were scrambling to purchase the last
supplies of the polyurethane blanks. The price for a classic longboard rose from $100 to $1,000 shortly
after Clark closed.
Clark Foam closed because California’s Orange County Fire Authority had repeatedly reported
Clark Foam to other government agencies, including the EPA. The government agency cited the company
for its continued use of the toxic chemical toluene diisocyanate, which can cause severe and chronic lung
problems.
Clark finally shut down the facility of his own volition, rather than face the legal fallout. The media attention on Clark’s closure focused light on this and other environmental problems associated with
the production of surfboards, such as the use of polyester-based resins, which are harmful to the worker
and emit noxious fumes. Most of the industry, long silent on the fact that manufacturing a surfboard is a
dirty process, was poised for change.
In the weeks following Clark’s closure, board builders scrambled to find the remaining Clark
blanks. They were even available on eBay. Bidding for blanks went as high as $50,000. Scraps of Clark
Foam were even being sold as pieces of history, starting at $1.
Before the closure, Clark had churned out about 1,000 blanks a day. Gradually smaller producers
like JustFoam in San Clemente began to ramp up production. JustFoam was able to increase daily production from 24 to 350.
But Clark’s closure may turn out to be the best thing to happen to the sport. Surfers have been
forced to find a new ride. A handful of small companies had already been working, some for up to twenty
years, on cleaner surfboard-making technologies that would cost the same as the dirtier ones. But they
couldn’t find a hole in Clark’s monopoly to successfully introduce a product. Among the contenders was
Homeblown U.S., an independently-owned six-employee foam producer that had developed a foam production system that was similar to Clark’s but was safer to workers because it didn’t emit volatile fumes.
Homeblown started in Britain in the late 1980s and held a 50% share of the market for blanks
there. But Clark had such a dominant position in the market that it wasn’t practical for Homeblown to
open in the U.S. until the Clark factory closed.
Today, Homeblown has gained a toehold in the U.S. market—though it still produces only 75 to
100 foam blanks a day, compared to Clark’s 1,000 a day production. It is ramping up its efforts to bring
more sustainable surfboards into the market. The end of Clark’s monopoly in surfboard blanks has paved
the way for cleaner ways of making surfboards, with independent businesses taking the lead.
Companies like California’s Firewire Surfboards and France’s Salomon have caught the attention
of high-ranking pro surfers by bringing innovative materials and construction methods to surfboards,
something that already worked for skis, snowboards, and the wings of Boeing jetliners. The buzzword is
“flex memory,” the way a board snaps back into its original shape in a turn or maneuver, something that
CHAPTER 10: Marketing: Place and Promotion
10.33
conventional polyurethane boards simply could not do. The new materials have a memory of the original
curve, and they return to that curve very quickly.
The new composites are crafted from foams of varying densities as well as fiberglass, resins, carbon fibers, and wood in various configurations, some devised with sophisticated computer modeling.
These materials have allowed designers to tinker with the board’s outline, giving more or less curve, and
fins, the design element critical for responsiveness and control.
Salomon, a brand famous for its skis and snowboards, introduced an “S-Core” design that creates
a shock-absorber-like effect using foam stringers in a hollow carbon core, covered by a foam shell—an
airplane wing on the water. High-ranking surfers love the new boards—they can be custom shaped, are
20% lighter, and last up to ten times as long as foam boards.i
LECTURE LINK 10-4
Evaluating Modes of Transportation
All transportation modes can be evaluated on basic service criteria: cost, speed, dependability,
flexibility, frequency, and reach.
TRAINS ARE GREAT FOR LARGE SHIPMENTS
The largest percentage of goods in the United States (by volume) is shipped by rail. Railroad
shipment is best for bulky items such as coal, wheat, automobiles, and heavy equipment. For the past 20
years or so, railroads have handled about 35 to 40% of the total volume of goods in the United States. In
piggyback shipping, a truck trailer is detached from the cab; loaded onto a railroad flatcar; and taken to a
destination where it will be offloaded, attached to a truck, and driven to the customer’s plant. As a result
of practices such as piggyback shipments, railroads should continue to hold better than a 38% share of the
market. Railroad shipment is a relatively energy-efficient way to move goods and could therefore experience significant gains if energy prices continue to climb.
However, smaller manufacturers or marketers that don’t ship enough products to fill a railcar or
truck can get good rates and service by using a freight forwarder. A freight forwarder can put many small
shipments together to create a single large shipment that can be transported cost-effectively, by truck or
train, to the final destination. Some freight forwarders also offer warehousing, customs assistance, and
other services along with pickup and delivery. You can see the benefits of such a company to a smaller
seller. A freight forwarder is just one of many distribution specialists that have emerged to help marketers
move goods from one place to another.
TRUCKS ARE GOOD FOR SMALL SHIPMENTS TO REMOTE LOCATIONS
The second largest surface transportation mode is motor vehicles (trucks, vans, and so forth).
Such vehicles handle a little over 25% of the volume. Trucks reach more locations than trains. Trucks can
deliver almost any commodity door-to-door. You could buy your own truck to make deliveries, but for
widespread delivery you can’t beat trucking specialists. Like freight forwarders, they have emerged to
supply one important marketing function—transporting goods. Railroads have joined with trucking firms
to further the process of piggybacking. The difference lately is that the new 20-foot-high railroad cars,
called double stacks, can carry two truck trailers, one on top of the other. The cost of trucking goes up
when fuel prices rise. That forces trucking companies to look for ways to cut costs.
WATER TRANSPORTATION IS INEXPENSIVE BUT SLOW
When sending goods overseas, often the least expensive way is by ship. Obviously, ships are
slower than ground or air transportation, so water transportation isn’t appropriate for goods that need to
10.34
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
be delivered quickly. Ships move a greater volume of goods than you might expect. Over the past 20
years, water transportation has carried 15 to 17% of the total. Water transport is local as well as international. If you live near the Mississippi River, for example, you’ve likely seen towboats hauling as many
as 30 barges at a time, with a cargo of up to 35,000 tons. On smaller rivers, about eight barges can be
hauled, carrying up to 20,000 tons—that’s the equivalent of four 100-car railroad trains. Thus, you can
see the importance of river traffic. Add to that Great Lakes shipping, shipping from coast to coast and
along the coasts, and international shipments, and water transportation takes on a new dimension as a key
transportation mode. When truck trailers are placed on ships to travel long distances at lower rates, the
process is called fishyback (see the explanation of piggyback). When they are placed in airplanes, by the
way, the process is called birdyback.
PIPELINES ARE FAST AND EFFICIENT
One transportation mode that’s not readily visible to the average consumer is movement by pipeline. About 21% of the total volume of goods moves this way. Pipelines are used primarily for transporting water, petroleum, and petroleum products—but a lot more products than you may imagine may be
sent by pipeline. One company, for example, sent coal by pipeline by first crushing it and mixing it with
water.
AIR TRANSPORTATION IS FAST BUT EXPENSIVE
Today, only a small part of shipping is done by air. Nonetheless, air transportation is a critical
factor in many industries. Airlines carry everything from small packages to luxury cars and elephants, and
are expanding to be a competitive mode for other goods. The primary benefit of air transportation is
speed. No firms know this better than FedEx and UPS. As just two of several competitors vying for the
fast-delivery market, FedEx and UPS have used air transport to expand into global markets.
The air freight industry is starting to focus on global distribution. Emery has been an industry pioneer in establishing specialized sales and operations teams aimed at serving the distribution needs of
specific industries. KLM Royal Dutch Airlines has cargo/passenger planes that handle high-profit items
such as diplomatic pouches and medical supplies. Specializing in such cargo has enabled KLM to compete with FedEx and UPS.
INTERMODAL SHIPPING
Intermodal shipping uses multiple modes of transportation—highway, air, water, rail—to complete a single long-distance movement of freight. Services that specialize in intermodal shipping are
known as intermodal marketing companies. Today, railroads are merging with each other and with other
transportation companies to offer intermodal distribution.
You can imagine such a system in action. Picture an automobile made in Japan for sale in the
United States. It would be shipped by truck to a loading dock, and from there it would be moved by ship
to a port in the United States. It may be placed on another truck and then taken to a railroad station for
loading on a train that will take it across country to again be loaded on a truck for delivery to a local dealer. No doubt you have seen automobiles being hauled across country by train and by truck.
Now imagine that all of that movement was handled by one integrated shipping firm. That’s what intermodal shipping is all about.ii
LECTURE LINK 10-5
Wal-Mart to the Rescue
Hurricane Katrina leveled most of Waveland, Mississippi, a community of 7,000 on the Mississippi Gulf coast. The wind and water wiped out nearly every home and business within a half-mile of the
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10.35
beach, including the Wal-Mart that served the area around Waveland, Pearlington, and Bay St. Louis,
Mississippi.
For weeks Wal-Mart store manager Ron Cox watched friends and neighbors receive supplies
from an emergency distribution point that offered only the basics. The only store in Waveland still selling
food and drink was a gas station convenience store. Cox wanted to do something for the community.
“They need meat. They need bread. In this part of the country, those are luxuries,” he said.
So Cox contacted Wal-Mart headquarters and arranged for a temporary replacement. Three weeks
after the storm, he and his crew erected a miniature version of the largest retail store in the nation—in a
16,000 square foot Wal-Mart tent. Cox set up across the parking lot from the old building, damaged by 12
feet of filthy floodwater.
A crew of 25 staffed the tent store, down from 431 pre-Katrina. They sold canned vegetables, soda, power drinks, crackers, and bug spray. Cox stocked peroxide, alcohol, Germ-X, and over-the counter
drugs. He also set up a pharmacy trailer with a computer to find prescriptions for people with no ID.
Cox thinks that the mini-Wal-Mart served another need. “Let’s face it: Wal-Mart is a place people
come to socialize.” The store helped “get some normalcy going again.”iii
LECTURE LINK 10-6
The Cost of Violating the “Do Not Call” Registration Law
The National Do Not Call Registry was established in 2002 to let consumers opt out of telemarketing attempts. The registry now contains 148 billion numbers. The success of the registry is one reason
that marketers are moving to other medias, such as direct-mail and e-mail. Since then, telemarketing
spending has remained essentially flat at $46 billion. In contrast, direct-mail spending increased from $24
billion to $32 billion from 2001 to 2006. Similar jumps occurred with catalogs and Internet marketing.
The cost of violating the Do Not Call listing is steep—up to $11,000 per call. One company,
Craftmatic Beds, was fined nearly $4.5 million for violating the rule. Telemarketers for Craftmatic called
hundreds of thousands of people, even though many of them were on the national list. Some companies
fooled consumers into giving them their telephone numbers. Craftmatic, for example, obtained numbers b
asking people, who filled out entry forms to win a free bed, to include their phone numbers, which would
be their contest entry number. But nowhere on the form did it give the company permission to call them,
which is why the bed maker was slapped with the second largest fine every imposed.
But an even bigger debacle is looming in the next few years. Few people realized that the 2002
law came with a five-year expiration date. Those first registry entries in 2002 began expiring in 2007. To
remain on the do-not-call listing, the consumer must renew their entries or begin receiving irritating, but
legal, telemarketing calls. Nearly half of the numbers were registered in 2003, which means they started
falling off the list in 2008.
The five-year limit was set in place to purge the list of Americans who invariably move or change
numbers. But for telemarketers, a lack of awareness about the expiration date signals a new opportunity.
Tim Searcy, CEO of the American Teleservices Association, argues that the “mass expiration” will also
let customers decide whether they want to opt out. Searcy thinks that new offers might entice consumers
after the 5-year hiatus.
In 2007 the state of Pennsylvania began a public-service campaign to alert consumers of the approaching deadline. By late 2007, however, less than 690,000 people had renewed their listing.iv
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LECTURE LINK 10-7
Party On
The days of the neighborhood Tupperware parties are over, but other types of home selling are
making a rebound. Twenty years ago, most home-party purchasers were friends of the hostess and could
be counted on for sales anyway. The new generation product parties are lively gatherings guided by a
consultant who doesn’t necessarily know the partygoers.
Pampered Chef embraced the home shopping party. The company, which offers kitchen-supply
parties, was so successful that Warren Buffet purchased it in 2002. The same year, Crayola introduced its
Big Yellow Box program, bringing kids and parents together to make crafts. Tommy Tools attracts women customers with woman-friendly products such as lightweight toolboxes and scaled down hacksaws.
Lane Nemeth’s house parties feature special seat belts, chewable rubber toys, and venison-jerky
treats. Her products are targeted at the parents of a new breed of child: pets. Petlane, her pet-products
company, reached $1 million sales in 2005, up from $300,000 the year before. Her sales team of 225 “pet
advisors” in 12 states and expanding every year.
She is banking on American’s increasing obsession with their pets, which is fueling the 6% annual growth in the $34 billion pet-care industry. “Pets are the new kids,” she says, noting that young couples
see pets as a parenting test run. Her sales people teach pet care to their customers. Nemeth’s obsession is
teaching pet owners how pets communicate.
Nemeth is no stranger to success in direct sales. Inspired in 1978 to find stimulating toys for her
daughter, she started Discovery Toys. The educational-toy company grew from a $5,000 garage-based enterprise into an international direct sales company with $100 million in revenues by 1997, when she sold it to
Avon.v
LECTURE LINK 10-8
Measuring Web Traffic
As marketers continue to move their advertising campaigns onto the Internet, it is becoming more
and more important to know exactly which sites are most popular. Like the TV Nielsen ratings, several
Web research companies now publish rankings for the “top” websites.
How many people visited Yahoo!® in June 2007? The answer is critical for companies wanting to
optimize their Web spending. Companies want proof that the $20 billion they spend to advertise online is
worth it. According to Nielsen//NetRatings, 108 million people visited Yahoo! in that month. However,
according to ComScore, another Web measurement company, about 133 million people visited. The different is 25 million people, hardly a rounding error.
In the last months of 2006, the problems with the online numbers game were starkly illustrated.
According to ComScore Networks, a third Web measurement firm, the top Web space was
MySpace.com®, with 38.7 billion page views, beating long-time champ Yahoo! (38.1 billion). However,
Nielsen//NetRatings still had Yahoo! leading page views, 33.4 billion versus 29 billion for MySpace. The
discrepancy illustrates the complications of measuring Web traffic.
MySpace.com’s meteoric rise in popularity took marketers by surprise. In 2004, social networking site represented 0.1% of U.S. Internet visits, according to Hitwise. By 2006, MySpace had 4.5% of all
U.S. Internet domain name visits, according to the metrics company. In other words, the company increased its market share by 4,300% in two years. But did it top Yahoo!?
Counting page views and unique visitors is confusing. ComScore ranks websites based on unique
audience members. Thus, a Web surfer who visits eBay® four times in a week is counted as only one au-
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10.37
dience member. Hitwise also monitors Web traffic among more than 500,000 websites. Unlike ComScore, Hitwise measures individual visits to each site, so-called “hits.” Also complicating the equation are
widgets, cookies, and a technology called “Ajax.” Most Web users toggle between several windows, making exact measurement of “hits” difficult. Also, not all Web pages are created equal. New technologies
like Ajax, Real Simple Syndication (RSS), and widgets make some pages more valuable than others because they let people watch videos, read news articles, or make purchases on multiple websites.
Today ComScore and Nielsen//NetRatings hold the majority of the Net rating market. They use a
series of global panels of thousands of volunteers to measure Web visits, a method carried over from TV
ratings measurements. The companies know they have a consistency problem and are introducing new
services to address it. ComScore is rolling out a new set of enhancements: measuring widgets, counting
video downloads, and expanding search categories to include sites like Amazon.com and eBay. Nielsen//NetRatings is also unveiling improvements. The company recently began measuring how much time
consumers spend on sites.
HitWise is trying to gain market share by dumping the panel approach in favor of tagging Web
pages with small pieces of code, called cookies. When users visit a site, the server logs them in. But as
many as 30% of Web users regularly delete their cookies. Another start-up company, Quantcast, uses both
a panel and Web tracker, creating mathematical models to arrive at audience measurements.
Before marketers will be able to accurately measure the effectiveness of Internet advertising
campaigns, they must decide which rating method best measures Internet activity—number of visitors or
number of hits, panels, or cookies. And with more and more Web traffic moving to cell-phones, the debate will only intensifyvi
LECTURE LINK 10-9
Desktop Distribution
There’s an enticing distribution method used by software companies today—the PC desktop.
Companies such as AOL® and EarthLink® routinely pay to have trial offers installed on soon-to-be purchased PCs. Until recently, Dell™ and Google™ also had an agreement to install Google software on new
Dell PCs.
PC makers see the trial software as a new source of revenue to boost their profit margins. They
are scrambling to sell little pieces of the desktop not already controlled by Microsoft®. The value of that
real estate is soaring. Dell alone reaches around 37 million people a year. Big software and Internet companies, such as EarthLink, are willing to pay for the privilege of appearing on those systems. They believe
that if customers use the trial software and like it, they will purchase the full version when the trial expires.
Not all customers are delighted with the trend. Geek Squad founder Robert Stevens says that
complaints about “crapware” are mentioned prominent in discussion forums and blogs. PlumChoice, an
online PC services company, estimates that 90% of the complaints its online PC technicians receive about
slow-running PCs can be fixed by deleting unneeded programs.
Customers who purchase PC through Best Buy have another option. They can take their systems
to the Geek Squad counter and, for a fee, let the technicians go through every piece of software that
comes on a new PC and make recommendations as to what should stay and what should go.
But Dell has reconsidered using trialware. According to its own research, Dell found that smallbusiness users overwhelmingly viewed trialware as an irritant, not a benefit. That research led Dell to axe
the extras from its Vostro line of small-business desktop PCs and laptops in 2007. For now, the company
will keep the trialware on the machines it sells for personal use. Dell says that these consumers do express
interest in preloaded trialware, but small-business owners have different needs.vii
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LECTURE LINK 10-10
Promotional Bits
A. EFFECTIVE ADVERTISING: CELEBRITY VOICE-OVERS
Good news for the actors who moonlight doing voice-overs for television commercials. According to the Journal of Consumer Research, celebrity voice-overs are effective in reaching consumers. But
voice-overs are most effective when people recognize the voice—but can’t quite put a name to it. Researchers studied reactions to TV commercials with actors David Duchovny, Donald Sutherland, David
Hyde Pierce, and Willem Dafoe doing voice-overs for Sprint, Volvo, Lipton, and Quest. The commercial
watchers’ prior attitudes toward the celebrity influenced how much they liked or disliked the brand, but
the celebrity endorsements created stronger feelings for the brand when viewers weren’t sure to whom the
familiar voice belonged.
According to researcher Mark Forehand, who ran the study, “When they [viewers] recognize the
celebrity, it seems potentially manipulative, and they wind up overcompensating. But when they don’t
recognize the celebrity, they generalize over to the brand.”viii
B. OUTDOOR ADVERTISING: WATCH THE PHONE BOOTH
Even in the age of cell phones, Blackberries, and Bluetooth® headsets, you can still find a pay
phone in New York City. There’s a reason for their survival. Public telephones are one of the stranger
cash cows in New York City’s finance. Not because of the coins that are fed into them, but rather because
of the million of dollars companies are willing to pay to put ads on them.
The phone booths generate $62 million in advertising revenue annually, and the city gets about a
quarter of the take. In 2006, income from ads was triple what the city earned from phone calls.
Over all, the number of pay phones in New York is falling, as it is throughout the country. But the
New York phones are more valuable than ever, thanks to the intense competition among advertisers. “One
of the top buys in New York right now, and it has been for the last couple of years, is phone kiosks,” said
Keith Steward, vice president of Generation Outdoor, which places outdoor advertising. “We’re able to
spend a fraction of what we would for other outdoor formats. With kiosks, I can blanket the city.”
Phone companies say that pay phones are still necessary and point to the 2003 blackout, when
people lined up to use them. But it is the phone booth’s desirability to advertisers that is driving their
popularity. The phones are plentiful, and advertising on them is cheap. That drives pressure on the city for
permission to install new phones in choice locations.
Since 2003, every new phone the city has authorized has been put at the curb, the only spot where
city regulations permit advertising. The city has also approved moving 465 pay phones from alongside
buildings to the curb. The phones are a source of frustration to some neighborhood and community
groups, who say the city is giving precious sidewalk space over to Madison Avenue marketers. Phone
booths alongside buildings, rather than at the curb, are disappearing. They don’t permit advertising.ix
C. CREATIVE PROMOTION: WRAP YOUR SUV
Some companies pay millions to have their logos on Dale Earnhardt Jr.’s racecar, but others prefer to pay $500 to put their ads on cars of everyday citizens such as Brian Katz of Manhattan. Katz is one
of tens of thousands of motorists who have signed up to have their cars and trucks wrapped in advertisements in exchange for a monthly stipend.
These offers are becoming so popular that car owners have been willing to limit where they shop
and abide by a code of conduct while they are behind the wheel. People whose cars were wrapped with
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10.39
ads for two Coca-Cola products—Planet Java and Vault—were cautioned against sipping Pepsi products
behind the wheel or parking at restaurant chains like KFC or Pizza Hut that serve Pepsi exclusively.
Vehicle wrapping started in 1993 when PepsiCo bought the rights to paint six Seattle city buses
with its logo. Pepsi planned to put the buses in a paint shop for six weeks, but Louis Hoffman, general
manager for a Seattle printing company called SuperGraphics, persuaded Pepsi to have the buses wrapped
instead. Wrapping, using a vinyl material made by 3M, could be applied in less than two days. 3M uses
an adhesive similar to the one on its Post-It notes that makes the “wrap” possible. Far from hurting the
paint job, the wrap preserves it.
Brian Katz has had his car wrapped for several companies, including Jamba Juice and Verizon
Wireless. Katz says the experience has been great, although he often has to roll down his window to answer strangers’ questions about Verizon’s calling plans.
Katz was matched with his advertisers by FreeCar Media, a Los Angeles ad agency that has a database of more than a million car owners who say they will wrap their cars for a fee, says Drew Livingston, president of the company. According to Livingston, companies like Procter & Gamble believe the
wrap advertising is a low-cost, effective way to reach the demographic they desire. For example, the target market for a new version of Tide detergent could be defined as “stay-at-home moms with two-plus
children who live in selected markets.” Livingston’s company would then find drivers in that demographic. “We feel that when you can wrap a mom’s car and get it to her P.T.A. meeting or Curves gym, you are
getting the acceptance from her social circle.”
Another FreeCar participant, Jerome Harris, was in his junior year at Temple University when he
had his Nissan Altima wrapped for a promotion for Trolls dolls. He earned $500 a month while his car
was wrapped. In addition, he was required to hand out Trolls pens to fellow students during finals week.
The vehicle ad technique seems to pay off. Brian Morris, owner of We Fix Ugly Pools, a pool repair company in Phoenix, wrapped more than 30 vehicles in his fleet in ads for his company. He says he
has earned more than $1 million in revenue over a year from people seeing one of his trucks in a driveway. Or in traffic. Morris advises his drivers to find the slowest lane in rush hour traffic and “sit in it.” He
pays for the time and the gas. “The people behind you can’t help but sit and stare.”x
D. ADVERTISING: MEASURING THE TELEVISION AUDIENCE IN THE AGE OF THE DVR
The prevalence of the digital video recorder (DVR) in the homes of television watchers is beginning to skew the ratings of Nielsen Media Research, the company that provides audience figures for network television shows. An estimated 25% of the nation’s 110 million homes with televisions now have
DVRs. Television viewing can easily be time shifted and, even more alarming, enables watchers to zip
through commercials. This technology is changing what and how people watch and has the potential to
disrupt a multimillion-dollar business.
Until recently, Nielsen has bypassed these DVR homes when it signs up the estimated 9,000 families that make up its national sample of homes. The Nielsen sample families provide the basis for its ratings, which make a show a hit or a flop. In 2006, these DVR homes were added to the Nielsen sample.
It took this long to include DVR watchers because the Nielsen “people meters” that record what
families are watching weren’t equipped to handle DVRs. The company was finally able to create new
“active/passive meters” that could. With the help of a code embedded in a program by the television networks, Nielsen can tell when something that has been recorded is actually watched. They even know
when people fast-forward through commercials.
Nielsen anticipated that the new measurements would show that the top-rated television shows
have a higher audience with a significant amount of playback. In testing, the company discovered that
popular shows like CSI: Crime Scene Investigation and Desperate Housewives were the most likely to be
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taped and watched later. The DVR measuring meters may also help smaller, cult favorites. Tests showed
that the WB’s Smallville was watched at double the rate in DVR homes than in homes without the device.
Nielsen gives its clients—mostly TV networks, advertisers, and ad agencies—a weekly list of
how many people watch each program each week. Now Nielsen will offer three lists: the number of people who watch a show live; the number who watch it live or within 24 hours; and the number of people
who watch it live or within a week.
Network executives are beginning to worry. If these figures show that viewers skip over the
ads—something that 90% of people claim to do—it could cost them dearly. Advertisers may look for
lower prices if they have evidence of how many commercials are skipped.xi
E. EVENT MARKETING: TIMES SQUARE’S APPEAL
The billboards along Times Square in New York have always been important venues for advertising, with companies paying hundreds of thousands of dollars for space on the blazing video screens. But
recently companies have discovered new, innovative ways to use the landmark site.
Take for instance, the 2006 display of public toilets set up by Charmin bathroom tissue. It was
used by thousands in Times Square and viewed by 7,400 Web users on one site alone. Or NASCAR’s
display of racecars. Videos of the event were viewed on YouTube more than 1,800 times. More than 60
people wrote about the event on the blogs and 60 more spread the word—and pictures—on the Flickr
website. As a result of the growing popularity of consumer-generated pictures, videos, and e-mail messages on Internet sites like YouTube and MySpace, advertisers are getting consumers to essentially do
their jobs for them.
Times Square is becoming, in a way, a publishing platform. On sites like Flickr and YouTube, an
army of tourists and residents are spreading advertisers’ messages well beyond Manhattan, using their cell
phones and video cameras as they walk through the square. Consumer brand companies are taking advantage of that by hosting elaborate events, fully aware that those events are great fodder for footage.
Hosting events in Times Square, advertisers say, is like buying product placement in a TV show or a
movie, except the cameras are held by consumers and the placement is on the Internet.
Experiential marketing, as the trend is called, is intended to give people something they can try
out and photograph. People around the world recognize Times Square in photos and videos online and are
more likely to view them.
Charmin’s bathrooms generated traditional coverage with more than 100 articles published about
the fancy toilets. But consumer videos posted on YouTube alone have been viewed more than 7,400
times.
It is difficult to count exactly how many people pass through Times Square each day, but foot
traffic, by some estimates, has nearly doubled. In 1997, the Times Square Business Improvement District
counted 8,702 people an hour passing through the most crowded parts of Times Square during the busiest
times of the year. In 2006, the Alliance found that number nearly doubled—more than 15,000 people
passed the Virgin Megastore on Broadway during busy hours.
General Electric recently rented nine digital billboards in Times Square and displayed photos of
people passing by. People on the street photographed themselves standing below the billboards when their
images appeared. Soon, those images were circulating online.
The costs of the experiential marketing are generally kept private by the companies, but GE marketers said the total expenses came out surprisingly low compared with other forms of marketing. Mayor
Bloomberg’s office said permits to use Times Square areas start at $25,000, but can often cost $50,000 or
more for a day.
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In another event, Walt Disney World sent Hans Florine, the X-games gold medal climber, scaling
up a billboard to promote Expedition Everest, a new Animal Kingdom Park ride. Mickey Mouse was also
there, but he stayed on the ground.xii
F. VIRAL MARKETING: THE SUBSERVIENT CHICKEN
To reach potential customers on the Internet requires creativity, research, and a little irreverence.
When Burger King introduced a new chicken sandwich, the Bacon Cheddar Ranch, in February 2005, the
company turned the marketing campaign over to Crispin Porter + Bogusky ad agency. The original concept had been to have Dolly Parton belt out the tune “Big Rock Candy Mountain” on a surreal fantasy
ranch. But at a staff meeting to plan the launch, creative executive Andrew Keller scrubbed the plan and
threw the subject open for suggestions. By the end of the meeting, Dolly Parton had been replaced by the
Subservient Chicken. Not a television campaign—a website.
The website involved a man, a dingy apartment, a chicken suit, and a garter belt. The “chicken”
hung out in front of his Webcam all day—at least that was the illusion—and happily accommodated almost any request a user could think to type in. (Suggestions for lewd acts were met with a “naughty
naughty” shake of the wing.)
Website creator Jeff Benjamin came up with an exhaustive list of commands and a film crew to
shoot the chicken performing. The trick was to structure the website so that the chicken could simultaneously carry out millions of demands in real time.
The film crew grabbed a friend’s apartment and shot the chicken doing 200 different actions.
When the site neared completion, Benjamin e-mailed the URL to several people in the agency asking
them to send the link out to friends to test. From that single e-mail, the Subservient Chicken site ended the
day with 1 million total hits. The site eventually attracted more than 385 million hits, with visitors spending an average of six minutes asking the chicken to perform various stunts. Burger King’s ad director,
Andy Bonaparte, bragged that the site helped “sell a lot, a lot, a lot of chicken sandwiches.”xiii
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BONUS INTERNET EXERCISESxiv
BONUS INTERNET EXERCISE 10-1
Careers in Distribution
PURPOSE:
To use the Internet to explore possible careers in distribution, the education requirements, job
duties, and career potential.
EXERCISE:
What would a career in distribution involve? What are the educational requirements? The future
job prospects?
The Bureau of Labor Statistics publishes the Occupational Outlook Handbook, a comprehensive
analysis for thousands of careers. The handbook is available online at the Bureau’s website
(www.bls.gov/oco). (Sometimes the Web address for a location changes. You might need to search to
find the exact location mentioned.)
Choose a career in one of the distribution-related fields, such as retail sales representative, wholesale sales representative, or manufacturing sales representative. Summarize the information given in the
Handbook below.
1.
Describe the nature of the work for this career.
2.
What are the working conditions?
3.
What training and qualifications are needed?
4.
How many jobs are available in this career area?
5.
What is the job outlook for the next decade?
6.
What is the median annual salary for this career?
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BONUS INTERNET EXERCISE 10-2
Top 100 Retailers
PURPOSE:
To use the Internet to identify the top 100 retailers, ranked by revenue.
EXERCISE:
The National Retail Foundation’s (NRF) website (www.nrf.com) contains numerous resources for
retailers and people interested in a retailing career. The site also provides links to other sites related to
retailing. (Sometimes the Web address for a location changes. You might need to search to find the exact
location mentioned.)
NRF publishes an online magazine, Stores, that contains stories about successful retail stores,
unique promotions, and retail statistics. They also publish a listing of the year’s top 100 retailers. Go to
the Stores’ website (www.stores.org), navigate to the list of recent articles, and find the current listings for
the Top 100 Retailers. Use the information presented there to fill in the information below.
1.
2.
Which retailer has the highest revenue for the current year? _____________________________
(a)
Where is the headquarters?
(b)
Give the current year’s revenue figure.
(c)
Is this an increase or decrease from the previous year? By what percentage?
(d)
Give the current year’s earnings.
(e)
How many stores does the company have?
Choose two other retail companies that you are familiar with and answer the same questions.
Company 1: ______________________________________________
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(a)
Where is the headquarters?
(b)
Give the current year’s revenue figure.
(c)
Is this an increase or decrease from the previous year? By what percentage?
(d)
Give the current year’s earnings.
(e)
How many stores does the company have?
(f)
Why did you choose this company?
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
Company 2: ______________________________________________
(a)
Where is the headquarters?
(b)
Give the current year’s revenue figure.
(c)
Is this an increase or decrease from the previous year? By what percentage?
(d)
Give the current year’s earnings.
(e)
How many stores does the company have?
(f)
Why did you choose this company?
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BONUS INTERNET EXERCISE 10-3
Internet Auctions: Bypassing the Retailer
PURPOSE:
To explore how online auction sites are changing the channels of distribution for consumer
goods.
EXERCISE:
The traditional method for consumers to purchase goods is through a retail outlet. Even electronic
retailing involves an intermediary, the online retail store. But small sellers are now finding a new chain of
distribution—direct to consumers through online auction sites such as eBay and Amazon.com. Go to the
website for eBay (www.eBay.com). Search the site for fax machines offered for sale. (Sometimes the
Web address for a location changes. You might need to search to find the exact location mentioned.)
1.
Open two listings for fax machines: the least expensive offered and the most expensive. Choose
items that have approximately 24 hours before expiration. Write down the description and current
price bid. Why do you think sellers of the lower priced item are asking such a low price?
2.
Check the eBay website after 8 to 24 hours. How have the bids changed?
3.
What type of payment is accepted for each of these items? How do these payment types differ
from payment options at brick and mortar stores? Why?
4.
What type of business would be able to use an online auction site effectively to sell its products?
5.
eBay also offers an option for businesses to establish non-auction “eBay stores” to sell products
through the website. What would be the advantages to a small business of establishing such a
store rather than a brick and mortar stores? Would there be any disadvantages? Explain.
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BONUS INTERNET EXERCISE 10-4
Advertising on Google
PURPOSE:
To explore online advertising practices and pricing.
EXERCISE:
One of the most popular types of online advertising involves buying an ad-link on search engines
like Google, Yahoo, MSN Search, or Ask.com. Advertisers can narrowly target potential customers by
buying an ad that will be placed next to the search results for a specific term. For instance, if you used
Yahoo search engine and typed in “spaghetti,” you would get 13 million results, ranging from spaghetti
recipes, to encyclopedia references, to a link for the “Church of the Flying Spaghetti Monster.” In the
right column are “sponsored results”—ads for spaghetti cookbooks, pasta making equipment, and several
distributors of spaghetti sauce.
Each search engine’s advertising system is unique, but you can get a basic understanding of the
process by investigating Google’s system, called “AdWords.” Go to the AdWords website
(https://adwords.google.com), and answer the questions below. If the link does not work, you can start at
www.google.com and click on “advertising programs” to get to the AdWords site.
1.
Explain how the price of an ad on Google is calculated.
2.
When purchasing search term advertising, a critical decision is identifying as many possible key
terms to describe your product as possible. Suppose you were an online organic food store and
you wanted to advertise your vegetarian spaghetti sauce on Google. What specific keywords
would you want to include? (Hint: Use the “keyword tool.”) List the best prospects.
3.
Assume your daily advertising budget is $50. What would be the best combination of key terms
and cost per click to reach your target audience?
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BONUS INTERNET EXERCISE 10-5
Ethics in Advertising
PURPOSE:
Use the Internet to research the ethical code for the advertising industry.
EXERCISE:
The professional organization representing the major advertising agencies is the American Association of Advertising Agencies (AAAA). The AAAA website explains the organization’s mission and
standards of practice. Go to the AAAA site (www.aaaa.org) and use the information you find there to answer the following questions. (Sometimes the Web address for a location changes. You might need to
search to find the exact location mentioned.)
1.
Give a brief summary of the organization’s history, purpose, and membership.
2.
What is the mission of the AAAA?
3.
Find the AAAA’s Standards of Practice. What does this document say about the basic beliefs or
codes of conduct for advertisers?
4.
What advertising practices are specifically excluded on ethical grounds?
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BONUS INTERNET EXERCISE 10-6
Protecting Competition and Consumers
PURPOSE:
Research how the Federal Trade Commission enforces federal laws affecting consumers and
competition.
EXERCISE:
The Federal Trade Commission (FTC) deals with issues that touch the economic lives of most
Americans. The FTC has a dual purpose. The agency is charged with maintaining a competitive marketplace for both consumers and businesses. When the FTC was created in 1914, its purpose was to prevent
unfair methods of competition in commerce as part of the battle to “bust the trusts.” Over the years, Congress passed additional laws giving the agency greater authority to police anticompetitive practices.
Go to the FTC website (www.ftc.gov) and use the information there to answer the following
questions. (Sometimes the Web address for a location changes. You might need to search to find the exact
location mentioned.)
1.
What are the major provisions of the Wheeler-Lea Amendment (1938)? How does this law affect
marketing?
2.
What are the major provisions of the Magnuson-Moss Act? How does this law affect marketing?
3.
What are the functions of the Bureau of Consumer Protection?
4.
What are the functions of the Division of Advertising Practices?
5.
What are the functions of the Division of Marketing Practices?
6.
How does the FTC prevent anticompetitive business practices?
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CRITICAL THINKING EXERCISES
CRITICAL THINKING EXERCISE 10-1
Distribution Channels
Let’s find out about the kinds of distributions channels used by manufacturers in your area. Call
or visit five manufacturers in your area and ask them the following questions. Record your answers on the
chart below.
1.
What is your main product?
2.
How do you distribute your product to consumers? Do you use a direct channel (straight from you
to consumers) or an indirect channel (through intermediaries)?
3.
If you use wholesalers, what kind?
MANUFACTURER
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MAIN
PRODUCT
DISTRIBUTION CHANNEL
DIRECT OR INDIRECT
WHOLESALERS
INTRODUCTION TO BUSINESS: Instructor’s Resource Manual
CRITICAL THINKING EXERCISE 10-2
Retail Distribution Strategy
The text discusses three categories of retail distribution—intensive distribution, selective distribution, and exclusive distribution. For each of the categories, summarize the distribution strategy and give
three examples of each that are NOT included in the text discussion.
INTENSIVE DISTRIBUTION
Summarize the strategy:
Example 1: _____________________________________
Example 2: _____________________________________
Example 3: _____________________________________
SELECTIVE DISTRIBUTION
Summarize the strategy:
Example 1: _____________________________________
Example 2: _____________________________________
Example 3: _____________________________________
EXCLUSIVE DISTRIBUTION
Summarize the strategy:
Example 1: _____________________________________
Example 2: _____________________________________
Example 3: _____________________________________
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CRITICAL THINKING EXERCISE 10-3
Designing a Website
A well-designed website is one of the most important promotional tools for a company. The site
should be designed to present a consistent message in a way that appeals to visitors.
The information below is a guide to designing a simple website. The Microsoft Office website
has a wealth of information on creating websites. Go to http://office.microsoft.com/enus/assistance/HA010429391033.aspx. If the link is broken, you can go to the Office website
(http://office.microsoft.com) and follow the links below.
Assistance > FrontPage > Creating web pages > Piecing together the Web page puzzle.
EXERCISE:
You are the director of promotion for a new restaurant. Design a simple Web page to promote the
restaurant. Choose one of the restaurant suggestions below or develop your own. Think through the message you wish to convey to consumers. Consider the structure of your site—what subpages would be appropriate (for example “menus,” “about us,” etc.)? Then use the blank template on the next page to unveil
the website for your company.
(a)
(b)
Shell-Fish Shuck: baked, broiled, and blackened seafood cuisine.
Very Vegetarian: a vegetarian restaurant
(c)
The Cajun Platter: specializing in South Louisiana cuisine.
(d)
Blues Bistro: Southern cooking with great music
1.
Site identifier – lets visitors know where they are, may include logo, name, or other graphics.
2.
Navigation bar – shows visitors the structure of your website, helps them find content.
3.
Main content – the page title, headings, text, and images is what your visitors actually come to
see.
4.
Secondary content – may include advertising, announcements, news, links.
5.
Identification bar – copyright, last updated, contact information, security/privacy links, and
name of Web developer.
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CRITICAL THINKING EXERCISE 10-3 (continued)
CRITICAL THINKING EXERCISE 10-4
Advertising Appeals
Advertising is not a collection of homogeneous commercials. Each company and even different
brands within the company use different advertising appeals. Humor works best for some commercials;
honesty for others.
Watch television for several days and identify commercials that use the following appeals. Then
decide what TV commercial shown in the last year you remember best, and which commercial irritated
you the most.
1.
Identify television commercials that use the following appeals:
(a)
Honesty:
(b)
Fear:
(c)
Emotion:
(d)
Sex:
(e)
Humor:
(f)
Irritation:
(g)
Cost-comparison:
2.
What TV commercial in the last year do you remember best? Why do you remember it?
3.
What is the most obnoxious, irritating, or disgusting TV advertisement you have seen recently?
Why do you remember it?
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NOTES ON CRITICAL THINKING EXERCISE 10-4
1.
Identify television commercials that use the following appeals: honesty, fear, emotion, sex, humor, irritation, and cost-comparison.
Honesty. Ads featuring children are perceived by the public as more honest than those featuring
adults. Children project an innocent, honest image. To an extent, celebrity testimonials try to use honesty
as an appeal, but may not work.
Fear. Fear is a powerful advertising hook. Life insurance companies have used it for decades to
sell their product. Products as varied as smoke detectors, mouth wash, deodorant, and insect sprays use
fear to develop sales.
Emotion. One of the pioneers in using emotional appeals to sell products is Hallmark Cards. For
years, wives have been shown presenting the perfect card to doting husbands and grandmothers crying
over a cherished Christmas card.
Sex. The old Madison Avenue adage “Sex sells” is still true. Marketers of perfume use little else.
Automobiles are shown driven by seductive women or well-dressed, elegant men. Cosmetics makers and
perfume companies tout the advantages to one’s social life of their brand of eye shadow or cologne.
Humor. Used judicially, humor can be very effective. Each year the new Bud Lite advertisement,
unveiled during the Super Bowl, is anticipated almost as much as the game itself.
Irritation. These are the commercials we as consumers generally hate. They irritate us with repetition or stupidity, but we remember them. One pain relief product advertises “Head-On, applied directly
to the forehead. Head-On, applied directly to the forehead …” ad infinitum. The commercial is irritating,
but gets the message across. Charmin bathroom tissue scored big several decades ago with its “Mr. Whipple” commercials. One survey showed that more elementary school kids could identify Mr. Whipple than
could identify the president of the U.S.
Cost-comparison. Cost comparison commercials appeal to the logical and rational side of us.
Internet service providers frequently use cost comparisons to differentiate their services.
2.
What TV commercial in the last year do you remember best? Why do you remember it?
This will change with the whims of Madison Avenue.
3.
What is the most obnoxious or irritating or disgusting TV advertisement you have seen recently?
Why do you remember it?
This, also, will vary. There are some truly disgusting advertisements on the air at any given time.
Feminine hygiene products, adult diapers, and local furniture companies and automobile dealers usually
top the list. Late night ads for dial-a-porn, personal injury lawyers, and herbal performance enhancers deserve a category all their own.
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CRITICAL THINKING EXERCISE 10-5
Identifying Product Placement
Your assignment is to watch prime time television. Not a bad assignment, right? Watch at least
two hours of prime time programming. Try to include one drama, one comedy, and one reality program.
Watch closely and try to identify brand name products that are featured. Record the name of the program
and the television channel. Then analyze the effect of the product placement and whether the placement is
positive or negative.
Program Name
Network
Products
Featured
Is the placement
effect positive or
negative? Why?
Drama
Comedy
Reality
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BONUS CASES
BONUS CASE 10-1
Multilevel Marketing
Multilevel marketing often doesn’t get the respect it deserves in marketing literature. When multilevel marketing companies succeed, their growth is often unbelievable. At least six multilevel marketing
companies have reached the $500 million level in sales.
Multilevel marketing companies work like this: The founders begin by recruiting a few good
people to go out and find managers to sell their products and to recruit other supervisors. These supervisors then recruit additional salespeople. That is, 20 people recruit 6 people each. That means 120 salespeople. Those people then recruit 6 people each, and you have 720 salespeople. If in turn those people all
recruit 6 people, you then have almost 5,000 salespeople. All supervisors earn commissions on what they
sell as well as on what everyone under them sells. When you get thousands of salespeople selling for you,
commissions can be quite large. One company promotes the fact that 1% from 100 salespeople is as good
as 100% from one successful salesperson. Companies often add new products or expand to other countries to keep a continuous growth pattern.
Distribution under multilevel marketing is relatively easy. Often the salespeople will carry inventory in their own homes and deliver products as ordered. Many companies also offer direct shipping to
customers using UPS or other delivery firms.
Marketers cannot ignore the success of this sales and distribution strategy. Nu Skin (a seller of
health and beauty products) alone will soon have $1 billion in sales. Looking for more growth, the company started a new division, Interior Design Nutrition, to make and sell vitamins and weight-control
products. Amway, perhaps one of the most well-known multilevel marketers, has chosen the international
route for growth; recently, its sales of home and personal care products increased by over $1 billion in
one year.
DISCUSSION QUESTIONS FOR BONUS CASE 10-1
1.
Amway and others have been successful in Japan. To what other countries could you lead such
companies so that you could become a top earner?
2.
What will happen as multilevel marketing distributors begin selling and recruiting others using
the latest in technology such as the Internet?
3.
Why do you suppose multilevel marketing hasn’t received the same acceptance as other retail innovations such as catalog sales? What could the companies do to improve their image?
4.
If multilevel marketing works so well for beauty and health care products, why not use the same
concept to sell other products?
ANSWERS TO DISCUSSION QUESTIONS FOR BONUS CASE 10-1
1.
Amway and others have been successful in Japan. To what other countries could you lead such
companies so that you could become a top earner?
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Many developing countries would have the consumer purchasing power for network marketing to
be successful. Central and Southern American countries come to mind, as do the Eastern European countries formerly a part of the Soviet Union.
2.
What will happen as multilevel marketing distributors begin selling and recruiting others using
the latest in technology such as the Internet?
It will be interesting to see what answers your students come up with. So much of network marketing is dependent on personal sales that impersonal Internet selling does not seem feasible. Many network marketers use telemarketing rather than in-home visits. There may be other possibilities.
3.
Why do you suppose multilevel marketing hasn’t received the same acceptance as other retail innovations such as catalog sales? What could the companies do to improve their image?
Unfortunately, many multilevel marketing schemes have been little more than fraud. The term
“pyramid sales” still evokes the image of unscrupulous marketers and risky investments. In order to make
multilevel marketing more acceptable, salespeople will need to convince customers of the value of their
product. One easy way to start would be to offer a money back guarantee in writing.
4.
If multilevel marketing works so well for beauty and health care products, why not use the same
concept to sell other products?
Any product with a high profit margin is a possible candidate for multilevel marketing. There are
some products that people would rather buy in the store (for example, feminine hygiene products) and
don’t want to face a human. Others have a high time utility, and the distribution lag would be a problem.
Americans, however, are very creative in their approach to competition, so anything is possible.
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BONUS CASE 10-2
Greater Chicago Food Depository: Feeding the Poor of Chicago
(Video Case)
(NOTE: This case can be used with the Video on DVD for this chapter.)
Every business, both for-profit and not-for-profit, needs to understand the basic principles of
marketing. This video highlights one of the most important marketing functions—distribution. Like all
marketing challenges, the Greater Chicago Food Depository began by “finding a need and filling it.”
Here is the need: Often the many caterers, restaurants, hotels and hospitals in the Chicago area
prepare too much food for their customers. It seems like a waste to just throw the food away, but the food
is perishable and can’t be saved for long. While these businesses have too much food, there are thousands
of poor people in the Chicago area who have too little or no food.
Here is the solution: The Greater Chicago Food Depository (CGFD) gathers the food from those
with too much and gives it to those with too little. While this may sound simple, consider that the CGFD
distributes more than 40 million pounds of food a year to 600 retail outlets (soup kitchens, food pantries
and the like). Its warehouse is 268,000 square feet (the size of six football fields).
Middlemen (intermediaries) play an important role in the CGFD distribution system. It must have
people who are willing and able to gather and prepare the food from these various sources and help distribute the food to groups and individuals. It has to have a warehouse where food can be stored, sorted,
and then distributed where needed. It has to have retail outlets where people can easily get to the food.
And it has to have suppliers who will keep the channel of distribution full of the foods needed.
The smooth working of this system involves the cooperation of businesses (restaurants, hotels,
and so on), nonprofit agencies of all kinds, and the government. It is important to recognize that other
stakeholders are involved. Taxpayers, for example, would want to know how you choose what people get
the free food and what people do not. The local community would be interested in the location of food
distribution centers. Keeping all stakeholders happy is a major concern of the Greater Chicago Food Depository as it is with all organizations.
Once a food distribution center has been established, the next step, as in all such organizations, is
to make the system more efficient. Using capital items like the Producemobile to gather produce is just
one example. Naturally, such a system calls for a leader who has some experience running a large organization. Such experience does not have to be in logistics, necessarily. It could be in management or IT or
similar areas of business. The exciting thing about working for the Greater Chicago Food Depository and
the various organizations that work with it is the feeling one has of making a direct major contribution to
society.
DISCUSSION QUESTIONS FOR BONUS CASE 10-2
1.
When you compare the food distribution system being used to feed the poor with the distribution
system used by supermarkets in your area, what other technologies, systems, techniques, or strategies might you recommend for making the logistics of food distribution to the poor more effective and efficient?
2.
There are literally billions of poor people throughout the world who need food and other staples.
Can you envision a distribution system that would become more global in scope? Would that be a
good idea? Why or why not?
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3.
After reviewing this video, do you see the opportunities such organizations provide for applying
business skills you are learning in this class? Do you see yourself volunteering for such an organization? What might you do for them?
ANSWERS TO DISCUSSION QUESTIONS FOR BONUS CASE 10-2
1.
When you compare the food distribution system being used to feed the poor with the distribution
system used by supermarkets in your area, what other technologies, systems, techniques, or strategies might you recommend for making the logistics of food distribution to the poor more effective and efficient?
This is a great discussion starter. Students need to brainstorm ways of reaching the poor. Could restaurants provide food from the back door? Could supermarkets leave leftover food in a convenient pick-up spot?
What are the best ways for keeping food hot or cold? How could food be delivered to people out in the country? What challenges do older people make to the system, for example, if they cannot travel?
2.
There are literally billions of poor people throughout the world who need food and other staples.
Can you envision a distribution system that would become more global in scope? Would that be a
good idea? Why or why not?
Distributing food overseas is a major challenge. There is the need for identifying needs, finding storage facilities, getting government and local permission, and more. This again is a challenging and interesting
discussion starter. It should include the many efforts now being made to do this.
3.
After reviewing this video, do you see the opportunities such organizations provide for applying
business skills you are learning in this class? Do you see yourself volunteering for such an organization? What might you do for them?
Students should learn that their skills can be used in a variety of settings, including volunteer work.
Many hands make for light work. Students don’t tend to focus on volunteering until later in their careers. Why
not start now? What skills could they use? Where? Another great discussion starter.
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BONUS CASE 10-3
Starting an Online Business
When Joseph Cohen’s parents left for a week-long trip out of town, the 14-year-old Brooklynite
didn’t plan a big parents-free party. He called a cab, collected the money he had saved up working for his
dad, and drove into Manhattan. He returned with $3,000 worth of Christmas decorations, toys, and lights.
Joseph put the goods online, adopting the name of his family’s hardware store, Polsteins.
For about $1,000 a month, Joseph opened a Yahoo store account to handle online payments. He
also signed onto some Web ad services to generate traffic. Every time someone keyed “Christmas lights”
into a Web search engine, Joseph paid 10¢ to 50¢ for a link to Polsteins.com. By the time his parents returned, he had doubled his money and bought more goods to sell.
Soon after selling out the Christmas items, he put a $50 battery-operated Pinocchio doll on his
site; 1,000 orders came in. Another early success was a $10 animated kung fu hamster that 2,000 people
ordered. Within three years, Joseph’s operation was selling $1.9 million worth of goods annually.
Despite his entrepreneurial ability, Joseph is still a teenager and still has to attend school. He runs
his online enterprise out of his office/warehouse after school. He does admit to taking “sick days” from
school when business is heavy.
He has made some mistakes, however. The summer he turned 15, Joseph took his eye off the
business, doing what kids do during the summer. He went to travel camp, visiting a different North American city each week. At the time, Polsteins was selling a 50-foot rolled flat hose for $20. While he was
away for six weeks, thousands of orders poured in and were automatically put on back order.
When he returned from camp, Joseph rushed out the $30,000 worth of back orders, only to discover that the hoses were defective. Once they were returned, he had to repay customers, while applying
for refunds from the manufacturer. And because no one had been minding the online store in his absence,
the hoses had been left on the site all summer, running up $43,000 in ad charges, built up every time
someone clicked on “garden hose.” He stopped the ads, negotiated discounts on shipping, and spent the
next three months paying off his debts and rebuilding his store.
A surprise best seller: mason jars for canning. These jars had become hard to find, and Joseph
was able to sell thousands to people canning summer fruits and vegetables. Polsteins.com is now the largest customer for Ball and Kerr jars.
Recently Polsteins.com established a partnership with its giant former rival Amazon.com. The
company also changed its name to HomeandBeyond.com and announced the introduction of a home
shopping catalog filled with household tips and recipes to be called @Home. Cohen, who is now company CEO, said, “Changing our name from Polsteins.com to HomeandBeyond.com allows us to better
brand our site as one dedicated to home shopping.”xv
DISCUSSION QUESTIONS FOR BONUS CASE 10-3
1.
If you were to start an online business, what kind of products would you be interested in selling?
What would you anticipate to be your biggest problem?
2.
What do you see as the advantages of starting an online store vs. a bricks and mortar store?
3.
What are the advantages and disadvantages of starting an online business while you are still in
school?
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ANSWERS TO DISCUSSION QUESTIONS FOR BONUS CASE 10-3
1.
If you were to start an online business, what kind of products would you be interested in selling?
What would you anticipate to be your biggest problem?
Students may enjoy hearing the ideas of other students about what could be sold online. In fact, almost
anything can be sold online, including houses, cars, and more. Often the biggest problem is learning the best
way to ship products. Ensuring payment is another.
2.
What do you see as the advantages of starting an online store versus a bricks and mortar store?
Advantages include the ease of startup, including start-up fees. It is easier to sell a wide variety of
things online; there is almost no limit. Hours of operation are 24/7, but you don’t have to work all of that time.
In short, there is the potential for more free time. When lots of people want to buy at the same time, you don’t
experience long lines, but can answer orders one at a time. Students may come up with more and more creative
answers.
3.
What are the advantages and disadvantages of starting an online business while you are still in
school?
Students may enjoy brainstorming this answer. They should consider things like lower grades in
school because of less study time, less free time for socializing, more responsibility and stress, less desire
for advanced degrees, and more.
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BONUS CASE 10-4
Wieden & Kennedy: Experimental Promotions
You may not know the name Dan Wieden, but you are likely to have seen his work. He is the person who created the “Just Do It” slogan for Nike. His company, Wieden and Kennedy (W&K), is known
as one of the most creative advertising agencies in the United States.
One of the most controversial Nike ads from W&K featured a streaker running around a stadium
during a soccer game. The filming was so realistic that many people thought that they were witnessing an
actual event. In fact, the people in the stands were extras who were hired for the shoot. The commercial
took five days to create in near freezing weather. It’s no wonder the man in the commercial ran so fast!
With the tagline “MoreGo,” the commercial promoted Nike’s ShoxNZ.
W&K was started in Portland, Oregon, in 1982 with Nike as its sole client. By the 1990s, Nike
ads featuring Michael Jordan, Spike Lee, and Tiger Woods were being hailed as industry leaders. Wieden
was credited with bringing in a new, postmodern school of advertising that blended influences from the
popular culture, the art scene, independent film, and rock and rap music. For example, rapper Snoop
Dogg was featured in a disco Nike ad. W&K now has many other clients, including ESPN and Miller
Brewing.
As an independent ad agency, W&K is more free to experiment and take risks than traditional
agencies are. Part of that risk-taking is to move the agency into entertainment as well as advertising. For
example, W&K is putting together a Broadway musical about basketball that is set to a hip-hop beat. Its
Tokyo office is launching a record label. You might also see documentary films, a weekly TV series, and
MTV music videos coming out of the agency. W&K’s first piece of self-funded entertainment was a book
about dogs in Portland. It hit the bestseller lists overseas. You can see the appeal of the book by looking
at the cover. It says, “Cat Spelled Backward Doesn’t Spell God,” an obvious dig at cat owners.
Why is an advertising agency getting involved in so many other ventures? Part of the answer is
that the ad business was battered by the recession in early 2000, hurt tremendously by the fall of dotcoms, and threatened by new technology. In the early 2000s, companies wishing to promote their products began looking for ways of promotion more creative than the typical 30-second TV commercial.
Companies feared, for one thing, that many consumers, armed with TiVo and other digital recorders,
would simply skip watching commercials on TV by programming their recorders to avoid them.
Pop-up ads on the Internet have proved too annoying to be a powerful promotional tool. Nonetheless, many companies are using websites packed with product information, entertainment, and branding
messages. Promoters tend toward using a variety of promotional companies rather than one huge agency
that promises to do it all for them. That means that companies are hiring public relations firms, Internet
specialists, media buying specialists, and international specialists to provide them with variety and expertise. That includes, of course, hiring an agency like W&K to come up with creative ads that people don’t
soon forget.xvi
DISCUSSION QUESTIONS FOR BONUS CASE 10-4
1.
What are your favorite commercials or magazine ads? What makes them special to you?
2.
What celebrities’ endorsements have attracted you to buy a product? Which have turned you
away from such a purchase?
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3.
If you were to obtain a job in advertising, what would you enjoy doing the most: creative, writing
ad material, creating art, selling advertising to businesses, analyzing markets, shooting commercials, buying media, or something else?
ANSWERS TO DISCUSSION QUESTIONS FOR BONUS CASE 10-4
1.
What are your favorite commercials or magazine ads? What makes them special to you?
This is a great discussion starter. You may be amazed at the different reasons for enjoying commercials. What medium is mentioned the most? Is that a surprise? What kinds of products are featured?
2.
What celebrities’ endorsements have attracted you to buy a product? Which have turned you
away from such a purchase?
This question opens up the whole area of celebrity endorsements and their value to advertisers.
Do students respond as favorably to celebrities such as Tiger Woods as you would expect from their wide
use? Which celebrities are most attractive to students? Why?
3.
If you were to obtain a job in advertising, what would you enjoy doing the most: creative, writing
ad material, creating art, selling advertising to businesses, analyzing markets, shooting commercials, buying media, or something else?
A great chance to talk about the variety of jobs in advertising, including (surprisingly) account-
ing.
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BONUS CASE 10-5
Night Agency (Video Case)
(NOTE: This case can be used with the Video on DVD for this chapter.)
Students today are witnessing a major revolution in promotion. They have seen radio change
from standard broadcasting to commercial-free satellite radio. They have watched families blank out TV
commercials with TiVo and other DVR recording devices. Students spend less time reading newspapers
and magazines and more time talking on the phone, playing video games, and listening to their iPods.
There are more entertainment options available today and more distractions from traditional promotional
tools.
Today’s students also have a wonderful opportunity to reinvent promotion, changing it from a
one-way stream of sales pitches to an interactive dialogue among promoters and consumers. Traditional
promotional tools—selling, advertising, public relations, and sales promotion—have always provided fun
and interesting careers. Creating funny and captivating ads for TV has been a real challenge. Selling to
businesses and consumers has always been challenging and interesting to those with the needed skills and
desire. Public relations has been critical to all kinds of organizations and individuals (think of politicians,
Hollywood stars, sports stars and others). And who has not been tempted by cents-off coupons and other
sales promotion tools?
The challenge today is to create promotions for the new realities of the marketplace. That means,
for one thing, creating advertising and other promotions on the Internet. One of the cutting edge advertising agencies in this regard is Night Agency. The Night Agency has become an integral part of the marketing process for the firms it serves. It does everything from helping in the design of the product to working
with the company to develop a winning brand name, effective packaging, and fast distribution.
A company like Night Agency has to promote itself to other businesses. Like most firms, Night
Agency relies heavily on word-of-mouth to spread its name. Word-of-mouth and other promotional efforts have succeeded in making this agency stand out from the others. Publicity in the form of articles
written about the company is another powerful promotional tool. Night Agency teaches other firms how
to use public relations and publicity to educate the public about the good that the firms do and to give the
firm’s side of controversies. Think of the public relations challenge that oil companies have had over high
gas prices at the pump.
Often promotional efforts begin inside of a company. Salespeople, clerks, and other customercontact people (and that means almost everyone in the firm because they all contact other people) often
don’t understand everything they need to know about the products they make and sell. A worker in a firm
making watches, for example, should be able to talk with people on the street about the quality and value
the watches provide. That means using internal promotions to keep employees informed. That may take
the form of videos, brochures, meetings, charts, and more. Full function advertising agencies get involved
in such internal promotions as well as the more traditional external promotions you and I are more used to
seeing.
One of the more innovative products from Night Agency is interactive Web games and demonstrations. Such promotions get potential customers more deeply involved in promotions than they have
been in the past. But such promotions need to be measured like any other promotional tools to make sure
they are seen, remembered, and followed.
The Darfur Digital Activist Contest is one of the more memorable of their efforts. It was designed
to increase awareness of the desperate need for aid among the people in Darfur, Sudan. It is exciting and
rewarding to use promotional tools to make a difference in the world, and doing what you can to end
world hunger, poverty, disease, and war is part of that challenge.
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DISCUSSION QUESTIONS FOR BONUS CASE 10-5
1.
What kind of promotions have led to you to buy the things that you have purchased lately? That
includes the school you attend (what prompted you to go there?), the clothes you have bought, the
music you listen to, the restaurants you go to, and so on.
2.
What differences did you notice between what Night Agency does and what you are used to seeing in promotions, if anything?
3.
What has been your reaction thus far to Internet promotions? Do you pay any attention to them?
Are they getting better? If so, in what way?
ANSWERS TO DISCUSSION QUESTIONS FOR BONUS CASE 10-5
1.
What kinds of promotions have led you to buy the things that you have purchased lately? That includes the school you attend (what prompted you to go there), the clothes you have bought, the
music you listen to, the restaurants you go to, and so on.
This question gets at the heart of promotion: what works and why. Students should have much to
contribute to the discussion. Different promotional efforts are effective in selling different products. For
example, publicity is often effective in political campaigns. Students can provide the examples. The same
is true in promoting music videos, TV shows, clothes, shoes, and everything else students buy.
2.
What differences did you notice between what Night Agency does and what you are used to seeing
in promotions, if anything?
The promotions that your students remember have broken through the advertising clutter. The
fact that students notice them means the ads are achieving a key objective—getting the audience’s attention.
3.
What has been your reaction thus far to Internet promotions? Do you pay any attention to them?
Are they getting better? If so, in what way?
The most effective Internet promotions are often those that students are not even aware of. How
much time do they spend online? Are they aware of the advertisements on the various websites? This is a
chance not only to discuss what is, but what could be with Internet advertising.
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BONUS CASE 10-6
Guerrilla Marketing
Many a student sits with a can of Red Bull next to him or her when preparing for a big exam. Red
Bull, Monster, and Full Throttle are all energy drinks with giant doses of caffeine in them.
Dietrich Mateschitz is the man who introduced Red Bull to the U.S. market. Mateschitz graduated
from the Vienna University of Economics and Business Administration. His major was world trade, and
for a while he worked on the marketing of Procter & Gamble’s Blendax toothpaste. He also did some
marketing for Unilever and Jacobs Coffee. In 1987, he founded Red Bull with two Thai partners. Now he
is a billionaire.
Mateschitz is an example of a billionaire who did not invent a wonderful new product. Instead, he
made his money through creative marketing. Mateschitz bought a Thai company that already had an energy drink called Krating Daeng (red water buffalo). He changed the ingredients and the name (a little) and
added carbonation. Red Bull is not known for tasting great. Furthermore, the name isn’t very appealing
and the price is high. So what made it so popular? For one thing, Red Bull has a lot of wake-up power,
including 80 milligrams of caffeine. It also has mysterious ingredients such as taurine and glucuronolactone.
But the secret to Red Bull’s success is something called guerrilla marketing. Guerrilla (not gorilla) marketing means studying the market for your product very carefully and then going after that market
using nontraditional promotional means such as sponsoring sports events and creating word-of-mouth
with sometimes outrageous promotions. Event marketing began with the sponsorship of mountain biking,
paragliding, snowboarding, and hang-gliding competitions.
Mateschitz also sponsors Red Bull’s Flutag (flying day) contest, in which competitors fly homemade contraptions over water. All together, Red Bull supports about 500 world-class extreme sports athletes. It also sponsors parties on various university campuses.
In addition to sponsoring extreme sports, Mateschitz sponsors the World Stunt Awards. He
bought the Formula I Team Jaguar Racing from Ford and renamed it Red Bull Racing. In other words, the
brand Red Bull has become closely associated with those who live large and are not afraid to take chances, including drinking something that has a lot of kick.
The success of Red Bull led to the introduction of more than 100 competitors, including Monster,
whose slogan is “Unleash the Beast.” There are lots of energy drinks available today, but Red Bull still
stands out in the crowd because of its unusual promotions. This chapter is about effective promotional
techniques. You will explore traditional promotional tools such as advertising, selling, and public relations. But you will also delve into some nontraditional promotional tools.xvii
DISCUSSION QUESTIONS FOR BONUS CASE 10-6
1.
In this case of Red Bull, is it a success because of the producer discovering a real market need or
is it strictly an example of all marketing hype and very little product substance? Could it be a
combination of both factors?
2.
If you were to define the marketing demographics of the target customer for Red Bull, what
would they be? How has their success created more products that are similar in the marketplace?
3.
How has the entire marketing efforts of the Red Bull product been different then some of the traditional marketing efforts or other drink products? Describe what is meant by “guerrilla marketing.”
CHAPTER 10: Marketing: Place and Promotion
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4.
How much do you see the success of Red Bull to market timing or marketing perseverance? Explain.
ANSWERS TO DISCUSSION QUESTIONS FOR BONUS CASE 10-6
1.
In this case of Red Bull, is it a success because of the producer discovering a real market need or
is it strictly an example of all marketing hype and very little product substance? Could it be a
combination of both factors?
Red Bull is successful both because of the product image and target market demographics. The
fact that it has more caffeine that other products makes it somewhat unique, but it is only a more caffeinated version of sodas like Mountain Dew that have already proved successful. As a result, the success of
Red Bull is probably a combination of a newly designed product and savvy marketing campaigns.
2.
If you were to define the marketing demographics of the target customer for Red Bull, what would
they be? How has their success created more products that are similar in the marketplace?
Red Bull should market to a young crowd looking to identify with a contemporary and cool product. The punch of the caffeine is the hook.
3.
How has the entire marketing efforts of the Red Bull product been different then some of the traditional marketing efforts or other drink products? Describe what is meant by “guerrilla marketing.”
Because of the age group (primarily college students and other similar young adults), the company should probably put more emphasis on event marketing and other non traditional marketing tools like
pod casting and blogging. This age group tends to have more free time and is easily encouraged to participate in product promotional events designed for their age group. Guerrilla marketing is best defined by
more local, event-planned marketing campaigns as opposed to more traditional print, magazine, and billboard media advertising mediums.
4.
How much do you see the success of Red Bull to market timing or marketing perseverance? Explain.
It appears Red Bull is successful because its young audience was ready to move on from soda and
other caffeinated drinks. Market timing and successful marketing have both contributed to the product’s
success.
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ENDNOTES
Sources: The Associated Press, The Clarion-Ledger, December 10, 2005; Robert Whitfield, “Clark Foam Surfboard Blanks on eBay,” The Orange County Register, December 15, 2005; Nancy Luna, “Former Clark Foam Employees Say They’ve Formed a New Foam-Making Factory,” The Orange County Register, March 4, 2005; Nancy
Luna, “Buyers Flood Clark Foam Auction,” The Orange County Register, March 9, 2006; and Coco Masters, “Surfing’s New Wave.,” Time, July 17, 2006.
i
Sources: Michael Aneiro, “Shipping Woes Boost Freight Co-Ops,” Inc., March 2005; and Robert Wright, “Growing Ships,” Financial Times, May 23, 2005.
ii
iii
Source: “Tent Offers Critical Supplies,” The Clarion-Ledger, The Associated Press, September 23, 2005.
Sources: Kurt Soller, “Dial and Tribulation,” Newsweek, September 10, 2007; and “Companies Fined for Violating Do Not Call Rules,” ABC News, November 7, 2007.
iv
Sources: Coco Masters, Let’s Pawty!” Time Inside Business, May 2005; and Alyssa Danigells, “Party One,” Fast
Company, May 2006.
v
Sources: “Top Websites,” ZDNet Research, July 23, 2006; K.C. Jones, “MySpace Soars; Hitwise Defends Figures,” Tech Web, July 14, 2006; Bill Tancer, “MySpace Moves Into #1 Position for All Internet Sites,”
www.hitwise.com, July 11, 2006; Catherine Holahan, “Did MySpace Really Beat Yahoo?” BusinessWeek.com, December 15, 2006; “Web Numbers: What’s Real?” BusinessWeek.com, October 23, 2006; and Jessi Hempel, “The
Online Numbers Game,” Fortune, September 3, 2007.
vi
Sources: Tom Krazit, “Trial Software Trying PC Users’ Patience,” ZDNet Tech News, May 31, 2006; and Melissa
J. Perenson, “Dell Gives Trialware the Heave-Ho,” PCWorld.com, August 23, 2007.
vii
viii
Source: Barbara Kiviat, “Voice Lessons,” Time Inside Business, June 2005
Source: Jo Craven McGinty, “As Billboards, Public Phones Always Work,” The New York Times, August 17,
2007.
ix
Source: Andrew Adam Newman, “Your Ad Here, on My S.U.V.? And You’ll Pay?” The New York Times, August
27, 1007.
x
Source: David Bauder, “Company That Measures TV Viewing Targets DVR Habits,” The Clarion-Ledger, The
Associated Press, December 22, 2005
xi
Source: Louise Story, “Hottest Ad Space in Times Square May Be on Tourists’ Cameras,” The New York Times,
December 11, 2006.
xii
xiii
Source: Ryan Underwood, “Ruling the Roost,” Fast Company, April 2005
xiv
The Internet is a dynamic, changing information source. Web links noted in this manual were checked at the time
of publication, but content may change over time. Please review the website before recommending it to your students.
Sources: Phyllis Berman, “The Merchant of Bay Ridge,” Forbes, December 27, 2004; “Polsteins.com to Operate
Under New Name: HomeandBeyond.com,” PRWeb, October 17, 2005; “Polsteins.com Announces Partnership with
Amazon.com, www.polsteins.com, October 17, 2005; and www.homeandbeyond.com/.
xv
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Sources: Warren Berger, “Just Do It. Again,” Business 2.0, September 2002, pp. 77–84; and Gerry Khermouch,
“The 5 Rules of the Ad Game,” Business Week, January 20, 2003, pp. 12–13.
xvi
Sources: Kerry A. Dolan, “The Soda with Buzz,” Forbes , March 28, 2005; Christopher Palmeri, “Hansen Natural,” BusinessWeek , June 6, 2005; Wikipedia, (online encyclopedia); Gwendolyn Bounds, “Move Over, Coke,” The
Wall Street Journal , January 30, 2006, pp. R1 and R3; and Andrew Murr, “Monster vs. Red Bull,” Newsweek,
March 28, 2006.
xvii
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