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Transcript
Part 5: Integrating
Chapter 17: THE MARKETING MIX
CHAPTER OVERVIEW



Leads students to explore how the marketing mix is constructed and managed.
Encourages students to understand the concept of optimizing each element of
the marketing mix.
Helps students understand “modeling” and the importance of measuring
effectiveness.
VISUAL SUMMARY
TEACHING TIPS

This chapter is a summary of how all the “parts” of past chapters accomplish
marketing objectives through integration and provides an opportunity to revisit
past concepts.

Provide current examples of how companies are expanding their media choices
and how these various choices are integrated into an overall marketing strategy.
EXAMPLES TO CONSIDER
(Please know that the links below were live when this Instructor’s Manual was developed. We,
of course, cannot promise that they still are. Please check before trying to connect in class.)

Crayola
http://www.crayola.com/
Encourage discussion about Crayola® and how the company devised a
marketing strategy to revise the 4Ps and re-position their product line.

Planters Peanuts
http://www.planterspeanuts.ca/index.shtml
Planters-Canada’s website reveals a marketing strategy that is aligned with the
product and the target market—keeping a 100-year-old product fresh.

Barbie
http://yhadz-critic.blogspot.com/2008/10/barbie-marketing-strategy.html
http://barbie.everythinggirl.com/
The first site provides a critical look at one aspect of Mattel’s marketing strategy
for Barbie. The second is the home page for Barbie. Encourage students to
discuss ways Mattel’s marketing mix has led to Barbie’s global success.

Copernicus Consulting
http://www.copernicusmarketing.com/consult/e.shtml
This webpage introduces the students to the applications of the Copernican
Discovery™ Marketing Mix Model.
SUGGESTED CLASSROOM ACTIVITIES

PetSmart Analysis
Visit the following website in class: http://www.petsmart.com/
Then, divide the class into small groups and ask each group to describe how
PetSmart’s website reflects their marketing strategy. What are their 4Ps? What
types of promotion are evident?

The 7Ps
Divide the class into seven groups and assign each group one of the “Ps” in the
extended services marketing mix. Using a local service provider (banking, hotel,
restaurant, etc.) have each group describe for the class how the business
addresses their assigned marketing mix component.

GEICO
Preview the following website with the class: http://www.geico.com/
Form students into groups of three to five asking each group to answer the
following questions. Each group should share its findings with the class.
1. How do its ads break through the “clutter”?
2. How do you think GIECO approaches setting advertising objectives? Would
this be the same for other insurance companies?
3. What’s next for GEICO? What new advertising direction would you suggest
for it now?
4. How should GEICO plan a marketing mix model?
5. How should GIECO’s marketing mix change if it were to enter the
international environment?
MEDIA
PowerPoint
Use PowerPoint materials provided to support lecture material.
(Please know that the links below were live when this Instructor’s Manual was developed. We,
of course, cannot promise that they still are. Please check before trying to connect in class.)
Video Links
These links to commercials – probably familiar—can be used to discuss the marketing
mix.

Commercial: Peyton Manning for MasterCard
http://www.youtube.com/watch?v=NwDAfdmNMVw
This TV commercial was part of the “for everything else” campaign. Discussion
topics could include celebrity endorsement value, target market for credit cards,
and the 4Ps of MasterCard strategy.

Disney World
http://www.youtube.com/watch?v=bw2Q0_uUu3M
Discuss the unique marketing mix for Disney. Especially note the variety of
target markets and the wants and needs of each of the markets.

Allstate Insurance
http://www.youtube.com/watch?v=6HNKqffU3Cc
This commercial could launch a good discussion on the unique propositions of
services. Discuss the relations of services to people, physical evidence, and
process. How does this message impact the audience? What’s the objective of
the message? Where does emotional appeal fit in the marketing mix?
Article Links
Each of these articles focuses on an aspect of marketing mix:

The Clorox Company
http://www.prweekus.com/Clorox-finds-confidence-in-strongcomms/article/127788/
This article looks at measuring the effectiveness of public relations through
modeling and an effort to pull PR out of the marketing mix for measurement
purposes.

Marketing Management Analytics
http://www.mma.com/marketing_mix.htm
This article explores the concept of “modeling” based on John Wanamaker’s
famous line: “Half the money I spend on advertising is wasted; the trouble is I
don’t know which half.”

Benefits of Sales Catalogs
http://www.articledashboard.com/Article/Measuring-the-Benefits-of-SalesCatalogs/465636
This article looks at the role of sales catalogs in the marketing mix of successful
companies like Victoria Secret, Radio Shack, Staples, and DELL.
CHAPTER OUTLINE…OBJECTIVES…and KEY TERMS
MARKETING MIX (pp. 209-210)
Objective 1: What choices to marketers make to achieve their sales
goals?
Defined:
A marketing mix is a group of marketing variables that a business controls with
the intent of implementing a marketing strategy directed at a specific target
market.
Explained:
The 4Ps (product, price, place, and promotion) are the most common
classification for the marketing mix. It is essential to understand the marketing
objectives of the company and the needs and wants of the target segments.
Applied:
In practice, businesses make decisions about marketing-mix variables either by
reacting to changes in the market or strategically changing positions for improved
financial results.
KEY TERMS CHECKLIST
Be sure to include this objective’s key term in your lecture and class discussion:
p. 209
□ 4 Ps
The most common classification of a marketing mix and consist of
product, price, place, and promotion.
MARKETING-MIX STRATEGIES (pp. 210-213)
Objective 2: How do marketers select a particular marketing mix to
achieve their sales goals?
Within the Marketing Mix
Beyond the 4Ps
Defined:
Marketing-mix strategy is the logic that guides the selection of a particular
marketing mix to achieve marketing objectives.
Explained:
The marketing-mix strategy considers whether each decision will serve the
company in meeting its objectives; is consistent with the company’s overall
mission and business plan; and, is increasing the level of risk or exposure for the
company.
Applied:
Changes in the product portfolio or the market will require assessment of the
marketing mix. In addition to the basic 4Ps, service industries need to consider
an additional 3Ps – people, process and physical evidence. The 4Ps can be
translated into a consumer perspective called the 4Cs: customer value, cost,
convenience, and communication. As competition grows, it becomes even more
important to be consumer-centric and consider consumer expectations in our
marketing-mix strategies.
KEY TERMS CHECKLIST
Be sure to include this objective’s key terms in your lecture and class discussion:
p. 213
□ 4 Cs
A classification of a marketing mix that includes customer value, cost,
convenience, and communication.
□ 7 Ps
A classification of a marketing mix that includes product, price,
place,promotion, people, physical evidence, and process.
MARKETING-MIX MODELS (pp. 213-215)
Objective 3: How do marketers measure the effects of each
component in a marketing program?
Defined:
Marketing-mix models evaluate the contribution that each component of a
marketing program makes to changes in market performance.
Explained:
Marketing activities can be tracked on databases using statistical modeling as
the measurement tool. In this way, performance can be tied directly to specific
marketing events.
Applied:
The marketing-mix model is a statistical way to justify the costs associated with
implementing a marketing plan. The use of a marketing-mix model will increase
the effectiveness of every marketing dollar across different media.
KEY TERMS CHECKLIST
Be sure to include this objective’s key term in your lecture and class discussion:
p. 214
□ Marketing-mix optimization
This involves assigning portions of the marketing budget to each
marketing-mix element so as to maximize revenues or profits.
CAPSTONE EXERCISE (appears in text at end of chapter)
ACME manufacturing has traditionally spent very little on marketing activities. Recently,
ACME invented several new products and has greatly expanded its portfolio. ACME
has decided to increase its marketing expenditures and plans to implement marketingmix modeling. Explain marketing-mix modeling and describe the potential benefits that
ACME could realize.
Answers will vary. Marketing-mix modeling provides insights into which types of
marketing activities provide the greatest contribution to favorable changes in market
performance. ACME could identify which types of media are most efficient for each
product in its portfolio and at the overall portfolio level. A marketing mix model would
provide confidence for the business to invest in marketing to support growth of the
business.
APPLICATION EXERCISES (appears in text at end of chapter)
Please complete the following exercises.
1. GE is planning to launch a new collection of kitchen appliances. Discuss how
marketing-mix models might help GE with their product launch in a two-page paper.
The individual papers will vary. The concept of marketing-mix models should be
explained as it applies to GE’s new products and some type of measurement method
should be described.
2. Develop a marketing-mix strategy using the 7 Ps for a product of your choice.
Consider Wal-Mart (www.walmart.com) and Amazon (www.amazon.com). In what ways
do these two companies compete? Compare them using the variables of the marketing
mix. Specifically, look at how both companies market their music offerings. Which do
you believe has the upper hand? Why?
Answers will vary. Answers should include some specifics on the target markets of
each and address each of the 7 elements for each company: product, price, place,
promotion, people, process, and physical evidence.
CASE STUDY
Snap-on Tools began its business in Milwaukee, Wisconsin, in 1918. The original
business sold an interchangeable socket wrench set directly to auto mechanics. Snapon Wrench was incorporated in 1920. They intended to grow the business in a typical
fashion by offering its wrenches in an indirect marketing channel through distributors.
The distributors, at that time, were less than impressed with the product and Snap-on
had difficulty getting its product into the hands of end-users.
The founders developed a selling strategy that presented the tools directly to the
mechanics with a demonstration and opportunity for the mechanics to try out the
product. By 1927 the transition to direct selling-- “from factory-to-warehouse-to-you”—
was completed. Although in the past 80 years the sales force dynamics have changed,
the basic commitment to direct selling has remained the cornerstone of the Snap-on
marketing strategy.
In 1939, the Teamsters Union attempted to organize the branch sales force. In direct
response, Snap-on introduced a new distribution method by selling territories to
individual sales representatives (dealers) and having them carry product inventory in
their vehicles for immediate delivery to the customer. The final step in the marketing
evolution was establishing each independent dealer as a franchised owner carrying a
rolling stock of Snap-on small hand tools. In an effort to increase volume, Snap-on
started a program (that still exists today) of selling to mechanics on credit with weekly
time payments. The company backs this credit program as it proved to increase sales
and generated customer loyalty.
Snap-on’s growth since 1960 has been impressive. Despite rapid growth Snap-on has
not wavered from its core marketing strategy. The company’s basic purpose has
remained unchanged – “the production and sale of quality hand tools and related items
to professional mechanics and industrial users.”
Snap-on concentrates on selling direct to end-users through a system of salespersonfranchisees and distributors. Today, there are 5,700 franchise dealers driving their
independently-owned white cargo vans loaded with more than $100,000 worth of
inventory to over 300,000 car dealerships, service stations, and independent repair
shops around the U.S. and abroad. Snap-on is committed to quality. To tool-lovers,
Snap-on is the “gold standard” similar to Rolex, Rolls-Royce, and Chivas Regal in their
own markets.
Snap-on’s target market is distinctively blue-collar, lower-to-middle income level with a
limited access to credit. The market consists of 1.25 million automobile, truck, and
airplane mechanics. However, Snap-on sees itself as an upscale retail operation
disguised as a manufacturer of tools. For those who fix cars for a living, tools are like
toys and entering the Snap-on van is like entering a toy-lover’s fantasyland. However,
Snap-on utilizes a pull strategy with the end-users built on trust rather than emotion.
Snap-on has stayed focused on its core customer avoiding expansion into other related
areas like construction and home improvement. Snap-on charges premium prices –
about 10% more than its direct competitors. To respond to new computerized
components on vehicles, Snap-on has added diagnostic equipment under the name
Snap-on Diagnostics and another van makes the circuit with a technical representative
who backs up the dealers and their increasingly-complex product line with training and
technical advice.
Snap-on utilizes four channels: mobile van franchises, company-direct, distributor and
the Internet. The company-owner vans only comprise 3% of total business and are
used to open new markets. A select number of distributors purchase products directly
from Snap-on and then resell them to end-users. Snap-on markets it products and
brands through multiple distribution channels in approximately 130 countries. It has
replicated the franchised mobile van in several countries. Snap-on has always avoided
huge advertising and promotional expenditures, relying instead on direct-selling and a
product catalog (print and online) offering over 14,000 products.
Snap-on maintains a 60% share of the mobile-van tool business with their closest
competitor, Mac Tools, holding just 13%. A single Snap-on van with approximately 160
square feet of cargo space typically produces more than $400,000 per year in revenues.
Snap-on’s net sales in 2008 were $2.9billion--an increase of about 3% over 2007.
Level 1/Qualitative Questions
1. What are the four key components of the Snap-on marketing strategy?
Snap-on focuses on product quality, premium pricing, a well-defined target market,
and an effective distribution system.
2. What one element of Snap-on’s marketing mix do you think separates it from its
competition?
Answers may vary. Two key differences are the credit services and the direct sales
to end-users through franchised mobile vans.
3. How would you describe Snap-on’s marketing channels?
Answers will vary. Snap-on uses direct sales, company direct (catalog), and
interactive (web catalog). In addition, word-of-mouth and customer retention play a
major role in their marketing strategy.
Level 2/Quantitative Question
1. Assume that average annual per-square-foot sales for specialty retail are
approximately $400 per square foot. How does this compare to Snap-on’s revenue
generation per square foot? Why do you think there is such a difference?
The typical Snap-on van has 160-square-feet of cargo space and produces an
average of $400,000 annually. $400,000 ÷ 160 = $2,500. Snap-on mobile vans
generate about 6.25 times the revenues (per square foot) compared to the typical
retail space.
Taking the product to the consumer and utilizing quality personal selling strategies on
the end-user’s own “turf” is more effective than the traditional brick-and-mortar retail
orientation.