Download developing customer relationships and value through marketing

LINKING MARKETING AND
CORPORATE STRATEGIES
CHAPTER CONTENTS
PAGE
MATERIALS AVAILABLE FOR LECTURE AND DISCUSSION .................................. 2-2
STUDENT LEARNING OBJECTIVES ................................................................................ 2-3
KEY TERMS AND CONCEPTS ........................................................................................... 2-3
LECTURE NOTES

Where Can an “A” in Ice Cream Making Lead? ........................................................... 2-4

Organizations and Their Levels of Strategy .................................................................. 2-4

Setting Strategic Directions ........................................................................................... 2-7

The Strategic Marketing Process .................................................................................. 2-10
ANSWERS TO “APPLYING MARKETING CONCEPTS AND PERSPECTIVES” .... 2-15
ANSWERS TO “INTERNET EXERCISE”......................................................................... 2-17
SUPPLEMENTAL LECTURE NOTE (SLN)

SLN 2-1: Lands’ End: The Complexities of Being an “E-tailer”. ................................ 2-20
IN-CLASS ACTIVITIES (ICA)

ICA 2-1: Marketing Yourself........................................................................................ 2-21

ICA 2-2: Marketing Planning Worksheet ..................................................................... 2-28
VIDEO CASE 2 TEACHING NOTE (TN)

Golden Valley Microwave Foods: The Surprising Channel ......................................... 2-32
POWERPOINT THUMBNAILS .......................................................................................... 2-36
2-1
Chapter 2
MATERIALS AVAILABLE FOR LECTURE AND DISCUSSION
PowerPoint
Slidesa
Transparenciesb
Handoutsc
Textbook Figures
Figure 2-1
Figure 2-2
The three levels of strategy in organizations:
corporation, business unit, and functional .............. 

Boston Consulting Group growth-share matrix
for a strong, diversified firm showing some
strategic plans.......................................................... 

Figure 2-3
Four market-product strategies: alternative ways
to expand sales revenues for Ben & Jerry’s ............ 
Figure 2-4
The strategic marketing process............................... 
Figure 2-5
Ben & Jerry’s: a “SWOT” to get it growing again .. 
Figure 2-6
Elements of the marketing mix that comprise a
cohesive marketing program ................................... 
Figure 2-7
Organization of a typical manufacturing firm,
showing a breakdown of the marketing
department............................................................... 
Figure 2-8
Evaluation and control of Kodak’s
marketing program .................................................. 


Supplemental Figures and Advertisements
Figure 2-A
A magazine ad from JCPenney ................................ 

Figure 2-B
A magazine ad from Lands’ End ............................. 

In-Class Activity (ICA) Figures
ICA 2-1, Figure 1 The Do-It-Myself Marketing Plan .......................

ICA 2-2, Figure 1 Marketing Planning Worksheet for Team
Development Sessions ........................................

a
b
c
“PowerPoint Slides” are available on a CD-ROM and appear as “PowerPoint Thumbnails” within this chapter
of the Instructor’s Manual.
100 “Transparencies” are available to textbook adopters by request of their local McGraw-Hill/Irwin sales
representative.
Instructors may choose to reproduce some figures and hand them out to each student in the class to enhance
discussion. These “Handouts” are shown with a check in the right column.
Chapter 2
2-2
STUDENT LEARNING OBJECTIVES
After reading this chapter students should be able to:

Describe the three organizational levels of strategy and how they relate to each other and
the marketing function.

Describe why business, mission, culture, and goals are important in organizations.

Understand how organizations set strategic directions by assessing where they are now
and seek to be in the future.

Describe the strategic marketing process and its three key phases: planning,
implementation, and control.

Explain how the marketing mix elements are blended into a cohesive marketing program.

Describe how marketing control compares actual results with planned objectives and acts
on deviations from the plan.
KEY TERMS AND CONCEPTS
goals
objectives
market segmentation
points of difference
market share
profit
marketing plan
situation analysis
marketing strategy
strategic marketing process
marketing tactics
SWOT analysis
mission
2-3
Chapter 2
LECTURE NOTES
Chapter Opening
Photo: Ben &
Jerry’s Website
CHAPTER OPENING EXAMPLE
Where Can an “A” in Ice Cream Making Lead?
Slide 2-8
Chapter Opening
Photo: Ben &
Jerry’s Social
Mission
Ben Cohen and Jerry Greenfield were grade school classmates on Long
Island. In 1978 they headed to Vermont and eventually started Ben & Jerry’s
Homemade, Inc.—a company that produces dozens of flavors of ice cream, ice
milk, and yogurt. Some of their flavors: Cherry Garcia, Rainforest Crunch,
Peace Pops, and the recent One Sweet Whirled ice cream.
Ben & Jerry’s website reflects its creative, funky approach to
business—linked to a genuine concern for social causes. Some examples:
Slide 2-9

It contributes 7.5% of its pretax profits to charities.
Chapter Opening
Photo: Ben & Jerry

It pays its employees a livable wage.

It purchases supplies from other socially responsible firms.

Its PartnerShops help nonprofit organizations provide training and jobs.
Slide 2-10
But by the late 1990s Ben and Jerry concluded the company’s sales
were flattening and it needed additional financial resources to grow. So in
2000, Ben & Jerry’s agreed to be acquired by Unilever, a huge multinational.
Ben & Jerry’s would operate separately from Unilever’s current ice cream
business to preserve the company’s legendary concern for the environment and
social responsibility, and both cofounders would continue their involvement
with the company.
Because of intense competition, firms must continuously revisit both
marketing and corporate strategies, as Ben & Jerry’s Homemade has had to do.
I. ORGANIZATIONS AND THEIR LEVELS OF STRATEGY
There are two basic kinds of organizations:

A business firm is a privately owned organization that serves its
customers in order to earn a profit, which is both:
–
the reward to a business firm for the risk it undertakes in offering
a product for sale, and
– the money left over after a firm’s total expenses are subtracted
from its total sales.

Chapter 2
A nonprofit organization is a nongovernmental organization that
serves its customers but does not have profit as an organizational
goal. Some examples: museums, orchestras, and private hospitals.
2-4
A. Levels in Organizations and How Marketing Links to Them
Figure 2-1
Three levels of
strategy
Slide 2-13, T
There are three levels in large organizations:
1. The corporate level, where top management directs overall
strategy for the entire organization and creates value for its
shareholders.
2. The business unit level (also termed strategic business units or
SBUs), which is the part of an organization that markets a set of
related products to a clearly defined group of customers.
3. The functional level, where groups of specialists actually create
value for the organization. The term department refers to these
specialized functions. Examples of functional units are finance,
human resources, marketing, and research and development.
B. Strategy Issues in Organizations
Organizations need a reason for existence and a direction. This is
where their business, mission, and goals converge. Business and
mission apply to the corporate and business unit levels; goals relate
to all three levels.
1. The Business.
Organizations exist for a purpose—to accomplish something for
someone. But over time, its purpose gets fuzzy.
One guideline in defining the company’s business: Try to
understand the people served by the organization and the value
they receive, which emphasizes the critical customer-driven
focus that successful organizations have.
In famous article by Harvard professor Theodore Levitt
(Marketing Myopia), organizations must not define their
business and customer focus too narrowly. Some examples:



Railroads are in the “transportation” business, not the
railroad business.
Disney is in the entertainment business, not movie or theme
park businesses.
Medtronic is in the business of alleviating pain, restoring
health, and extending life, not the medical device business.
2. The Mission.
By understanding its business, an organization can define its
mission, which is a statement of the organization’s scope, often
identifying its customers, markets, products, technology, and
values.
2-5
Chapter 2
Star Trek has probably the best-known mission statement in
America: “To explore strange new worlds, to seek out new life
and new civilizations, to boldly go where no one has gone
before.”
Medtronic Mural
What is its mission?
Slide 2-15
Medtronic’s mission statement: “To contribute to human welfare
by application of biomedical engineering in the research, design,
manufacture, and sale of instruments or appliances that alleviate
pain, restore health, and extend life.”
Organizations must connect not just with their customers but
with all their stakeholders, which:


Are the people who are affected by what the organization
does and how well it performs.
Includes employees, owners, board members, suppliers,
distributors, unions, local communities, and customers.
3. Goals.
Goals or objectives convert the mission into targeted levels of
performance to be achieved, often by a specific time. Goals
measure how well the mission is being accomplished.
Business firms pursue several different types of goals:







Profit. According economic theory, a firm seeks as much
profit as possible.
Sales (dollars or units). A firm may elect to maintain or
increase sales even though profits may not be maximized.
Market share, which is the ratio of sales revenue of the firm
to the total sales revenue of all firms in the industry,
including the firm itself.
Quality. A firm may choose to focus on high quality.
Customer satisfaction. Customers are the reason an
organization exists. Can monitor their satisfaction through
surveys or complaints.
Employee welfare. A firm may recognize the critical role
employees play in its success.
Social responsibility. A firm may seek to balance conflicting
goals of consumers, employees, and stockholders to promote
overall welfare of all these groups, even at the expense of
profits.
Nonprofit organizations also set goals:


Chapter 2
Private organizations strive to serve customers efficiently.
Government agencies try to serve the public good.
2-6
CONCEPT CHECK
1. What are the three levels in today’s large organizations?
Answer: The three levels are the corporate, business unit, and functional.
2. What is the meaning of an organization’s mission?
Answer: Mission is a statement of the organization’s scope, often
identifying its customers, markets, products, technology, and values.
3. How does an organization’s goals relate to its mission?
Answer: Goals or objectives measure how well the organization’s
mission is being accomplished.
II. SETTING STRATEGIC DIRECTIONS
Setting strategic directions involves answering two questions:


Where are we now?
Where do we want to go?
A. A Look Around: Where Are We Now?
Asking an organization where it is at the present time involves
identifying its customers, competencies, and competitors.
Lands’ End ad
What strategic
direction?
1. Customers.
Strategic directions must be customer-focused and provide
genuine value and benefits to present and prospective customers.
2. Competencies.
Slide 2-17
Answers the question, “What do we do best?”


Competencies are an organization’s special capabilities,
including skills, technologies, and resources that distinguish
it from other organizations. Exploiting them can lead to
success.
Competitive advantage is a unique strength relative to
competitors, often based on quality, time, cost, or innovation.
3. Competitors.
In global competition, the lines among competitive sectors are
increasingly blurred, so successful firms continuously assess
both who the competitors are and how they are changing in order
to respond with their own strategies.
2-7
Chapter 2
SLN 2-1:
Lands’ End:
The Complexities of Being
an “E-tailer”


Lands’ End started as a catalog retailer. But defining its
competitors as other catalog retailers would be a huge
oversimplification.
Lands’ End now competes not only with other catalog
retailers of clothing but with traditional department stores,
mass merchandisers, specialty shops, and well-known brands
of clothing sold in all these kinds of retailers. In addition, all
these have websites for Internet sales.
B. Growth Strategies: Where Do We Want to Go?
Knowing where the organization is at the present time enables
managers to set a direction for the firm and allocate resources to
move in that direction. Two techniques to aid in these decisions are
the (1) business portfolio analysis and (2) market-product analysis.
Figure 2-2
BCG growth-share
matrix
Slide 2-24, T
1. The Business Portfolio Analysis.
The Boston Consulting Group’s (BCG) business portfolio
analysis uses quantified performance measures and growth
targets to analyze a firm’s business units (called strategic
business units or SBUs by BCG) as though they were a
collection of separate investments.
This analysis has also been applied at the product line or
individual product or brand level. The SBUs are positioned on a
growth-share matrix, in which:


The vertical axis is the market growth rate, which is the
annual rate of growth of the specific market or industry in
which a given SBU is competing.
The horizontal axis is the relative market share, defined as
the sales of the SBU divided by the sales of the largest firm
in the industry.
BCG has given names and descriptions to the four resulting
quadrants in its growth-share matrix based on the amount of
cash they generate or require from the firm:



Chapter 2
Cash cows (lower left). SBUs that have a dominant share of
slow-growth market. Generates large amounts of cash to pay
company overhead and to invest in other SBUs.
Stars (upper left). SBUs with a high share of high-growth
market that needs extra cash to finance their future growth.
Question marks or problem children (upper right). SBUs
with a low share of high-growth markets. Requires a lot of
cash to maintain or increase market share. Management
must choose which to invest in and phase out the rest.
2-8


Fujitsu
Tablet PC ad
What SBU
cash strategy?
Management often makes decisions on the role of its SBUs in
the future and either injects or removes cash from it. As a result,
four alternative strategies are available for each SBU:

Slide 2-25
Dogs (lower right). SBUs with a low share of low-growth
markets. May generate enough cash to sustain but do not
hold promise of becoming winners for the firm. Consider
dropping unless relationships with other SBUs, competition,
or potential strategic alliances exist that benefit the firm.
NOTE: The area of the circles in a growth-share matrix is
proportional to the corresponding SBU’s annual sales
revenue.



Build. Invest cash in question marks to increase market
share and turn them into stars.
Hold. Invest just enough cash in cash cows to maintain
market share at their current levels.
Harvest. Remove cash from cash cows in the short-term
even though they may lose market share and become dogs in
the longer run.
Divest. Phase out dogs by withholding cash or actually
selling them to gain cash for other SBUs.
2. The Market-Product Analysis.
Duncan Hines ad
What SBU
cash strategy?
Firms view growth opportunities via markets and products.


Slide 2-26
Figure 2-3
Four marketproduct strategies
For any product there is both a current market (existing
customers) and a new market (potential customers).
For any market there is both a current product (what existing
customers now use) and a new product (something
customers might use if developed).
Firms consider four alternative market-product strategies:

Slide 2-28

Market penetration. Increase sales of present products in
existing markets. There is no change in the basic product
line or the market served, but increased sales are possible
through finding efficiencies. Example: Increase sales of Ben
& Jerry’s present ice cream products to U.S. consumers by
hooking onto Unilever’s Breyers and Good Humor ice cream
brands or through developing new flavors.
Market development. Sell existing products to new markets
(such as geographically). Example: Selling existing Ben &
Jerry’s products to South American consumers, whose
incomes are increasing in South American markets, but are
not well aware of the Ben & Jerry’s brand.
2-9
Chapter 2


Product development. Sell a new product to existing
markets. Example: Unilever could try leveraging the Ben &
Jerry’s brand by selling its own Ben & Jerry’s brand of
children’s clothing in the U.S. This is risky because
consumers may not be able to see a clear connection between
the company’s expertise in ice cream and children’s clothing.
Diversification. Develop new products and sell them in new
markets. Example: Sell a brand of children’s clothing in
South America. This is a potentially high-risk strategy
because the company has neither previous production
experience nor marketing experience on which to draw.
CONCEPT CHECK
1. What are competencies and why are they important?
Answer: Competencies are an organization’s special capabilities,
including skills, technologies, and resources that distinguish it from other
organizations. They are important because exploiting these competencies
can lead to the organization’s success.
2. What is business portfolio analysis?
Answer: Business portfolio analysis studies a firm’s business units as
though they were a collection of separate investments.
3. What are the four market-product strategies?
Answer: The four market-product strategies are: (1) market penetration;
(2) market development; (3) product development; and
(4) diversification.
III. THE STRATEGIC MARKETING PROCESS
Figure 2-4
The strategic
marketing process
Slide 2-34 T
After the organization assesses where it’s at and where it wants to go,
other questions emerge:



How do we allocate our resources to get to where we want to go?
How do we convert our plans into actions?
How do our results compare with our plans, and do deviations
require new plans and actions?
This approach is used when:
ICA 2-1:
Marketing
Yourself
Chapter 2

Engaging in the strategic marketing process, whereby an
organization allocates its marketing mix resources to reach its target
markets. This process is divided into three phases: planning,
implementation, and control.
2-10

Developing a marketing plan, which is a road map for the
marketing activities of an organization for a specified future period
of time, such as one year or five years.
A. Strategic Marketing Process: The Planning Phase
The planning phase consists of three steps:
Figure 2-5
SWOT of
Ben & Jerry’s



Situation analysis.
Market-product focus and goal setting.
The marketing program.
1. Step1: Situation (SWOT) Analysis.

Slide 2-36
Ben & Jerry’s
SWOT: new social
resp. programs?

Slide 2-37

Ben & Jerry’s
SWOT: new ice
cream flavors?

Slide 2-38
Ben & Jerry’s
SWOT: new ice
cream flavors?
Slide 2-39
A situation analysis involves taking stock of where the firm
or product has been recently, where it is now, and where it is
headed in light of the organization’s plans and the external
factors and trends affecting it.
A short-hand summary of the situation analysis is a SWOT
analysis, an acronym describing an organization’s appraisal
of its internal strengths and weaknesses and its external
opportunities and threats.
A SWOT analysis helps a firm to identify the strategyrelated factors to help the firm grow and succeed by building
on vital strengths, correcting glaring weaknesses, exploiting
significant opportunities, and avoiding disaster-laden threats.
A SWOT analysis is based on an exhaustive study of the four
areas in Step 1 of the planning phase and forms the
foundation on which the firm builds its marketing program:
–
–
–
–
Identifying trends in the firm’s industry.
Analyzing the firm’s competitors.
Assessing the firm itself.
Researching the firm’s present/prospective customers.
2. Step 2: Market-Product Focus and Goal Setting.
Determining which products will be directed toward which
customers is essential to develop an effective marketing
program.
This decision often based on market segmentation, which
involves considering prospective buyers into groups, or
segments, that (1) have common needs and (2) will respond
similarly to a marketing action.
2-11
Chapter 2
Medtronic’s
Champion
What point of
difference?
Slide 2-41
Goal setting involves setting measurable marketing objectives to
be achieved. For an entire marketing program, the objective is
often a series of actions to be implemented over several years.
Example: Medtronic’s Champion heart pacemaker targeted at
the “affordable and reliable” segment:




Figure 2-6
Marketing mix
elements
Set marketing and product goals. Design and market such a
pacemaker in three years for the Asian market.
Select target markets. The Champion pacemaker will be
targeted at cardiologists and medical clinics in India, China,
and other Asian countries performing heart surgery.
Find points of difference. Points of difference are those
characteristics of a product that make it superior to
competitive substitutes. For the Champion pacemaker, the
key points of difference are high quality, long life, reliability,
ease of use, and low cost.
Position the product. The pacemaker will be “positioned” in
cardiologists’ and patients’ minds as a medical device that is
high quality and reliable with a long, nine-year life. The
name “Champion” was selected after testing acceptable
names in India, China, Pakistan, Singapore, and Malaysia.
3. Step 3: Marketing Program.
This aspect of the planning phase involves developing the
marketing program’s marketing mix and the budget.
Example: Medtronic’s Champion heart pacemaker:
Slide 2-43, T




ICA 2-2:
Marketing
Plan
Worksheet
Chapter 2

Product strategy. Offer a Champion brand pacemaker with
features needed by Asian patients.
Price strategy. Manufacture the Champion to control costs
to price it below $1,000 (US).
Promotion strategy. Demonstrate the Champion at
cardiologist conventions.
Place (distribution) strategy. Search out and train reputable
medical distributors across Asia to call on cardiologists and
medical clinics.
Budget. After developing a sales forecast, a budget is
developed that must be approved by top management.
2-12
CONCEPT CHECK
1. What is the difference between strength and an opportunity in a
SWOT analysis?
Answer: Both are positive factors for the organization, but strength is an
internal factor whereas an opportunity is an external one.
2. What is market segmentation?
Answer: Market segmentation involves considering prospective buyers
into groups, or segments, that (1) have common needs and (2) will
respond similarly to a marketing action.
3. What are points of difference and why are they important?
Answer: Points of difference are those characteristics of a product that
make it superior to competitive substitutes. They are the single most
important factor in the success or failure of a new product.
B. Strategic Marketing Process: The Implementation Phase
Implementation, the second phase of the strategic marketing
process, involves executing the marketing plan. The four
components of the implementation phase are:
1. Obtaining Resources.
The responsible marketing manager must obtain the people and
money necessary to succeed.
Figure 2-7
Marketing
department
Slide 2-48
2. Designing the Marketing Organization.
A marketing program needs a marketing organization to
implement it. The responsibilities of all individuals within the
marketing organization need to be specified.
3. Developing Schedules.
Effective implementation requires deadlines—scheduling
important milestones and meeting them.
4. Executing the Marketing Program.
Effective execution requires attention to detail for both
marketing strategies and marketing tactics.
2-13
Chapter 2


A marketing strategy is the means by which a goal is to be
achieved, usually characterized by a specified target market
and a marketing program to reach it. Example: Kodak’s
launch of a new product targeted at Gen Yers (18-28 yrs).
Marketing tactics are detailed day-to-day operational
decisions essential to the overall success of marketing
strategies. Example: Kodak decided to form a crossfunctional team to develop a digital camera that plays
MP3 music files.
C. Strategic Marketing Process: The Control Phase
The control phase of the strategic marketing process seeks to keep
the marketing program moving in the direction set for it. It has two
key elements:
Figure 2-8
Kodak: evaluation
and control
1. Compare the results of the marketing program with the goals in
the written plans to identify deviations.

Slide 2-51

Kodak
Exploiting a
positive deviation?
2. Act on these deviations by:

Slide 2-52
Kodak
Correcting a
negative deviation?
Slide 2-53
Can reveal a planning gap, which is the difference between
the projection of the path to reach a new goal and the
projection of the path of the results of a plan already in place.
The ultimate purpose of the firm’s marketing program is to
“fill in” this planning gap.

Exploiting a positive deviation. Example: Since consumers
like to take their film to Kodak mini-labs at retailers and get
a CD for a second set of “prints,” Kodak strengthened its
strategic partnerships with retailers like Wal-Mart, Kinko’s,
etc. by installing its PictureMaker.
Correcting a negative deviation. Example: Digital camera
owners want to get exact photo from cameras linked to PCs
and the Internet. Software was improved to allow this with
the EasyShare cameras.
CONCEPT CHECK
1. What is the control phase of the strategic marketing process?
Answer: This is the phase that seeks to keep the marketing program
moving in the direction set for it.
2. How do the objectives set for a marketing program in the planning
phase relate to the control phase of the strategic marketing process?
Answer: The planning phase objectives are used as the benchmarks with
which the actual performance results are compared in the control phase.
Chapter 2
2-14
ANSWERS TO “APPLYING MARKETING CONCEPTS
AND PERSPECTIVES”
1.
(a) Explain what a mission statement is. (b) Create a mission statement for your
own career.
Answesr: Consumer wants or benefits met by each of four products or services include:
2.
a.
A mission statement defines the organization’s scope, often identifying its
customers, markets, products, technology, and values.
b.
An example of a mission statement for a student’s career might be: “To be
recognized as an outstanding, ethically and environmentally responsible, global
marketing executive.”
What competencies best describe (a) your college or university, (b) your favorite
restaurant, and (c) the company that manufactures the computer you own or use
most often?
Answers: Some competencies for each of these organizations might be:
3.
a.
Your college or University. [NOTE: These vary along a continuum from
research universities to community colleges.] A world-class research institution
for biotechnology; student-oriented faculty. Flexible course scheduling to
accommodate the special needs of part-time and working students.
b.
Your Favorite Restaurant. Genuine French cuisine. A family menu at a
reasonable price.
c.
The Company That Manufactures the Computer You Own or Use Most
Often. A 24-hour, 1-800 number help line. Capability of new computer models
to run all software designed for older models.
Why does a product often start as a question mark and then move counterclockwise
around BCG’s growth-share matrix shown in Figure 2-2?
Answer: When a product is introduced, it is usually a “question mark” because it is
“new” and there is uncertainty about consumers’ acceptance of them. After a period of
time, depending on the product category, the “not-so-new” product could be classified as
a “star” if its growth rate is sizeable and had a significant share of the product category.
If the growth rate in the product category falls substantially and there is great competition
from competing brands, the product probably will fall in the “cash cow” category. If,
however, the product isn’t supported with an effective marketing program, it could
become a “dog.”
2-15
Chapter 2
4.
Many American liberal arts colleges have traditionally offered an undergraduate
degree in liberal arts (the product) to full-time 18- to 22-year-old students (the
market). How might such a college use the four market-product expansion
strategies shown in Figure 2-3 to compete in the twenty-first century?
Answers:
5.
a.
Market penetration. Obtain a greater share of the full-time 18- to 22-year-old
students in the geographic area served by the college.
b.
Product development. Offer new courses at either the undergraduate or master’s
degree level in areas such as business, computers, or law.
c.
Market development. Offer existing liberal arts courses to new markets in the
form of distance learning via the Internet, part-time courses for evening, etc.
d.
Diversification. Offer new courses in business or computers to new markets,
such as employees of local companies.
What is the main result of each of the three phases of the strategic marketing
process: (a) planning, (b) implementation, and (c) control?
Answers: The results of each phase of the strategic marketing process are:
6.
a.
Planning phase. Results are formal marketing plans that identify specific
objectives to be achieved by a particular time and the specific actions to achieve
those objectives.
b.
Implementation phase. Results are formal measurements of the results
achieved, which can be compared with the plans established in the planning phase
to determine if any deviations from plans occurred.
c.
Control phase. Results are new actions taken to exploit opportunities where
deviations from plans are better than expected or corrective actions where
deviations from plans are worse than expected.
The goal-setting step in the planning phase of the strategic marketing process sets
quantified objectives for use in the control phase. What actions are suggested for a
marketing manager if measured results are below objectives? Above objectives?
Answers: If the marketing manager discovers a planning gap, which is a difference
between the projection of the path to reach a new goal and the projection of the path of
the results of a plan already in place for the marketing program, he or she can take the
following actions:
a.
Below objectives: Correct a negative deviation by making minor or major
changes to the existing marketing program of a product to better reflect future
expectations in the marketing environment.
b.
Above objectives: Exploit a positive deviation by strengthening strategic
partnerships, engage in a market development or product development strategy,
etc. to maintain or enhance the firm’s position.
Chapter 2
2-16
ANSWERS TO “INTERNET EXERCISE”
Internet Exercise
Ben & Jerry’s
social mission
Slide 2-57
Ben & Jerry’s markets its flavors of ice cream, frozen yogurt,
sorbet, and novelty bars in response to both consumer  ahem!  tastes
and important causes it supports, a practice continued even after being
sold to Unilever in 2000. Recently, Ben & Jerry’s teamed up with the
award-winning Dave Matthews Band and SaveOurEnvironment.org to
fight global warming by creating the One Sweet Whirled ice cream flavor
in pints and novelty bars. But not all flavors last. The ones that don’t
wind up in Ben & Jerry’s Flavor Graveyard.
1.
Go to Ben & Jerry’s website (www.benjerry.com) to read
Ben & Jerry’s mission statement. What are the elements of its
mission? Do you think all companies should have these elements in
their mission statement, particularly the idea of “linked
prosperity?” Why or why not?
Answers: The elements of its mission can be found in its mission
statement below:
“Ben & Jerry’s is founded on and dedicated to a sustainable corporate
concept of linked prosperity. Our mission consists of 3 interrelated
parts:
a.
Product Mission: To make, distribute, & sell the finest quality,
all natural ice cream and euphoric concoctions with a continued
commitment to incorporating wholesome, natural ingredients
and promoting business practices that respect the Earth and the
Environment.
b.
Economic Mission: To operate the company on a sustainable
financial basis of profitable growth, increasing value for our
stakeholders & expanding opportunities for development and
career growth for our employees.
c.
Social Mission: To operate the company in a way that actively
recognizes the central role that business plays in society by
initiating innovative ways to improve the quality of life locally,
nationally, and internationally.
Central to the mission of Ben & Jerry’s is the belief that all three parts
must thrive equally in a manner that commands deep respect for
individuals in and outside the company and supports the communities of
which they are a part.”
Answer: Should all companies have these elements in their mission
statement, particularly the idea of linked prosperity? Students may offer
support for each side of this question. Examples include:
2-17
Chapter 2
For “Linked Prosperity”:
1. Increases well being of all people if the correct choices are made
by company management.
2. When the world is using its resources carefully, there will be
more remaining for future generations.
Against “Linked Prosperity”:
1. Those who excel in their chosen field may not be inclined to
give their best work if everyone is rewarded in the same way:
2. The business community does not have the role of improving the
quality of life for a broad community when the cost for this
action reduces value for the company shareholders.
2.
Ben & Jerry’s prides itself on being a socially responsible firm.
Each year, it publishes a “Social Audit” that reviews its social
responsibility in several areas. Check out Ben & Jerry’s latest
report by clicking the “Our Company” link and then the “Our
Mission” link for the latest social audit. Be sure to click on the
Marketing & Sales link.
What has Ben & Jerry’s done in the areas of packaging, marketing
and sales, and activism to be a socially responsible corporate
citizen?
Answer: Ben & Jerry’s cites the following actions in its latest social
audit as examples of its commitment to its social mission:
a.
Packaging.


b.
Chapter 2
Converted domestic pint packaging to our Eco-Pint, which is
constructed from unbleached paperboard that is
biodegradable.
Incorporated a recyclable tamper-evident seal on all of our
domestic and international pints.
Marketing and sales. Created the Global Warming Campaign
in concert with the Dave Matthews Band, and in partnership
with many environmental non-profits. The goal is to educate and
motivate our consumer base to: (1) urge Congress to enforce
legislation that reduces U.S. reliance on fossil fuels and supports
renewable, efficient energy sources; (2) reduce carbon load
emissions through individual actions; and (3) to motivate
consumers abroad around Kyoto issues and personal actions to
reduce CO2 emissions.
2-18
c.
Activism.





d.
Signed the “Invest in America Statement of National
Priorities” to urge the President and Congress to address the
needs of children in poor communities and their families,
improve public transportation and housing, and protect water
and the environment.
Supported the Tom Joyner Foundation, which supports
scholarships at traditionally black colleges by offering the
Butter Pecan flavor to generate royalties.
Had a fleet of 7 “scoop trucks” that gave out over 250,000
samples to support local organizations by either donating or
selling ice cream to fundraise for nonprofit groups.
Helped build KaBoom!, a playground in Boston.
Teamed up with the American Red Cross Give a Pint - Get a
Pint program on campuses nationwide to raise awareness
about the services that the American Red Cross provides.
Others include dioxin, recombinant Bovine Growth Hormone
(rBGH), and genetically modified organisms.
What impact do these efforts have on a firm’s sales and profits, like
those of Ben & Jerry’s?
Answer: The impact on sales and profits depends on demand. If these
actions and new flavors stimulate demand beyond the cost of providing
the actions and manufacturing the flavors, then profits should increase,
all other things held equal. If the demand is not there for the new
flavors, then profits will suffer.
3.
To see Ben & Jerry’s current flavors and those “laid to rest” in the
Flavor Graveyard, visit
www.benjerry.com/our_products/flavor_graveyard. Have any of
your favorite flavors been laid to rest? If yes, what are they?
Answers: See the website.
2-19
Chapter 2
SLN 2-1: SUPPLEMENTAL LECTURE NOTE
Lands’ End: The Complexities of Being an “E-tailer”
As described later in the Retailing and Wholesaling chapter (Chapter
14), firms like Lands’ End increasingly face “intertype competition” from
clothing sellers that may be department stores, mass merchandisers, boutiques,
catalog outlets, or on the Internet (e-tailers). Lands’ End competes with many
of these and also retail outlets that started simply as clothing brands.
Figure 2-A
JCPenney
e-tailing ad
Lands’ End is not only in catalog retailing—where it started—but now
also has stores and has achieved success in e-tailing by selling over the Internet.
The result is that both it and major competitors like JCPenney must be creative
in finding ways to use their promotional dollars to reach target customers.

JCPenney. The JCPenney ad (Figure 2-A) announces its free “$1,000
shopping spree” that can be entered by going to its special website shown
in the ad.

Lands’ End. The Lands’ End ad (Figure 2-B) also gives the reader its
website. But unlike the JCPenney ad, this Lands’ End ad actually “asks
for the order” and invites the reader to order its “Reversible Down Jacket”
through either its website or its 800 number.
Slide 2-62, T
Figure 2-B
Lands’ End
e-tailing ad
Slide 2-63, T
Chapter 2
2-20
ICA 2-1: IN-CLASS ACTIVITY
Marketing Yourself
Learning Objectives. To show students, especially non-marketing majors, that
marketing is applicable to their future by using the strategic marketing process and marketing
mix when looking for a job.
Definitions. The following marketing terms are referred to in this in-class activity (ICA):

Marketing Mix: The elements of the marketing mix are the marketing manager’s
controllable factors—product, price, promotion, and place—that can be taken to solve
a marketing problem.

Points of Difference: Are those characteristics of a product that make it superior to
competitive substitutes.

Positioning: The place an offering occupies in a consumer’s mind with regard to
important attributes relative to competitive offerings.

Situation Analysis: Taking stock of where the firm or product has been recently,
where it is now, and where it is headed in light of the organization’s plans and the
external factors and trends affecting it.

Strategic Marketing Process: The approach whereby an organization allocates its
marketing mix resources to reach its target markets.

SWOT Analysis: An acronym describing an organization’s appraisal of its internal
strengths and weaknesses and external opportunities and threats.
Nature of the Activity. To have students apply the strategic marketing process to
themselves as they seek employment.
Estimated Class Time. 15 minutes.
Materials Needed.

The Core02.ppt file in the Core PowerPoint CD from the Core Instructor’s Box.

Copies of the “Marketing Yourself” handout for each student.

Copies of ICA 2-1, Figure 1: The Do-It-Myself Marketing Plan worksheet for each
student.

A transparency of ICA 2-1, Figure 1: The Do-It-Myself Marketing Plan.
2-21
Chapter 2
Preparation Before Class. Follow the steps below:
1. Make a transparency of ICA 2-1, Figure 1.
2. Make copies of the “Marketing Yourself” handout and “The Do-It-Myself Marketing
Plan” worksheet.
3. Review the PowerPoint slides.
ICA 2-1
Instructions. Follow the steps below to conduct this ICA:
HotJobs.com TV ad
Slide 2-65
1. Show Slide 2-65: HotJobs.com TV ad (TRT: 0:30). This humorous
ad shows how being both qualified and prepared for the job
interview can lead to a job that fits both the applicant and the
employer.
2. Ask students about the type of jobs they hope to land after
graduation and how they intend to find these jobs. Most students
will describe a “shotgun approach” of aiming at any job without any
focused or targeted effort at specific careers (product management,
marketing research, advertising, sales, etc.) or positions (assistant
product manager, marketing research analyst, etc.).
3. Contrast the difference between a shotgun approach and a targeted
marketing effort. This is a good opportunity to explain how
research can help students develop information to identify
alternative “target markets.” For example, students can learn about
potential opportunities through networking, internships,
informational interviewing, and many secondary sources.
4. Have students conduct a situation analysis, which involves taking
stock of what they have done regarding their career search, where
they are now, and where they are headed in terms of their existing
plans and the external factors and trends affecting their employment
prospects. A SWOT analysis should be used to appraise students’
personal strengths and weaknesses as well as their opportunities for
and threats (or barriers) to successful employment.
a. To conduct an internal analysis, ask students what some of their
strengths and weaknesses are in terms of the courses taken and
grades received, work experience, extra-curricular activities
involvement, honors received, etc.
b. To conduct an external analysis, ask students which industries or
types of jobs are growing or in demand that may be
opportunities. Further, ask them what advantages or “points of
difference” they have relative to other “competitors” (other
students) seeking the same job opportunities, such as taking this
Chapter 2
2-22
marketing course, the reputation of this educational institution,
etc. Finally, ask them what other external forces can impact
their job search, for example a downturn in the economy, the
need to be computer literate, etc. This type of focused approach
helps to define potential market segments that can be targeted.
5. Ask students to identify elements of their marketing mix:
a. What type of “product” do you have to offer?
b. What sort of “pricing” is appropriate?
c. What “promotion” will be utilized?
d. What type of “place” or channel will be used? These include
intermediaries such as on-campus career services, networking,
employment agencies, and even the Internet, with firms such as
HotJobs.com.
6. Pass out copies of the “Marketing Yourself” handout and “The DoIt-Yourself Marketing Plan” worksheet and ask students to spend 10
minutes filling them out.
7. Show the transparency of ICA 2-1, Figure 1.
Bolles’
Job & Mission
Slide 2-66
8. Call on students and ask them to share portions of their personal
marketing plan with the class. If students have few ideas about their
marketing mix, ask about how information could be developed to
help formulate an appropriate marketing mix.
9. Show Slide 2-66 from Richard Bolles’ “Anatomy of a Job” and
“How to Find Your Mission in Life” from the best-selling jobhunting book What Color is Your Parachute” to provide students
with a tangible resource for applying the strategic marketing process
to themselves.
Marketing Lesson. The strategic marketing process can be applied to products, services,
ideas, and even to marketing yourself!
Websites. To investigate some job possibilities, go to the HotJobs.com website, which is
www.hotjobs.com. To view the Ten Speed Press website, go to www.tenspeed.com. For
Richard Bolles’ website, go to www.jobhuntersbible.com. There, you will find information on
the latest edition of his best-selling book, What Color is Your Parachute? Bolles also has
several other resources that may help students plan their careers and first job search.
2-23
Chapter 2
MARKETING YOURSELF
Planning Phase
Situation Analysis

Internal Assessment: What are your strengths and weaknesses? What can you do to
enhance your strengths and minimize your weaknesses? What points of difference or
competitive advantage do YOU have? If you don't have one, can you develop one?

External Analysis: What are the trends in the environmental factors that could impact
your job search and career development? These consist of: sociocultural, economic,
technological, competitive, and regulatory factors.

Competitive Analysis: What type of background, experiences, strengths, and weaknesses
do your competitors have?

Market Analysis: What market segments (job opportunities) have you identified as
having the best potential? How do you fit into these markets? [NOTE: This means doing
some research!]
Focus and Goal Setting

What are your objectives? Make them specific and measurable!

What is your target market? Examples might be large public accounting firms, businessto-business sales, and marketing research for a consulting firm in Chicago, etc.
Marketing Program

Product: YOU. Know yourself well. Continually improve yourself. Understand how
you can meet the needs of your target market—prospective employers!

Pricing: What salary and compensation package do you want? What are you willing to
settle for? What’s the average salary received by competitors in your target market?

Promotion: Very important. Think about the buying process. How will you create
awareness for yourself? What can you do to “break through the clutter” and get the
opportunity for an interview? Your personal selling skills will be important for telephone
contacts and face-to-face interviews. Probe to find out about the needs of the
organization before that “sales call” and during the interview. Have your questions
prepared.

Place: What channels have you developed to access your target market, such as
associations, personal contacts, professors, etc? Do some careful research on these.
Don’t assume that intensive distribution is necessarily the way to go. Focus your efforts
to those target markets that hold promise.
Chapter 2
2-24
Implementation Phase
Develop a timetable and budget for research, wardrobe, résumés, and travel. Carry out
your program. Contact your target market opportunities. Follow-up consistently. Remember
that looking for a job requires a significant commitment of your time and effort.
Control Phase
Follow-up on all leads. Find out why you did or didn’t make the cut. Ask at an interview
what it was about your résumé that interested them. Even if you don't get the job, you have more
insight. Similarly, when you call to follow-up on those cover letters and résumés that you sent
out, ask when decisions will be made, when it would be appropriate to call back (and then do it).
If you are rejected, call back and ask why. If you exhaust all of the possibilities in a given target
market, go back to your situation analysis and identify new segments. Always send a “Thank
You” note.
Resources:

Your college placement office.

Informational interviewing (a great opportunity to learn more about careers you are
considering while you are still in school and can make some adjustments to your program).

Internships. Good experience to build your résumé and potential contacts for positions.
Even if you don't want to work there, they can possibly open doors for you elsewhere.

Richard N. Bolles, What Color is Your Parachute?: A Practical Manual for Job-Hunters and
Career-Changers, (Berkeley, CA: Ten Speed Press). A companion workbook is also
available. See www.jobhuntersbible.com (Bolles’ website) and www.tenspeedpress.com.

Martin Yate, Knock'em Dead; Cover Letters That Knock ‘Em Dead; and Resumes That
Knock ‘Em Dead, (Holbrook, MA: Adams Media Corporation). See www.
adamsmedia.com.
Websites. The following contain resources on job searches, résumé writing, interviewing, job
postings, etc.
www.careercity.com
www.hotjobs.com
www.careerXroads.com
www.monster.com
www.careers-in-marketing.com
www.studentcentral.com
2-25
Chapter 2
ICA 2-1, FIGURE 1: THE DO-IT-MYSELF MARKETING PLAN
STRATEGIC
MARKETING
PROCESS
Situational
Location
Analysis
of Factor
(SWOT) Internal: Me
MY OWN MARKETING PLAN
Kind of Factor
Favorable
My Strengths:
Unfavorable
My Weaknesses:
Opportunities For Me:
Threats Affecting Me:
 Personality
 Formal Education
 Job Experience
 Motivation
 Other:
External:
P
L
A
N
N
I
N
G
 Economic
 Technical
 Legal
 Other:
Focus
and Goal
Setting
P
H
A
S
E
My Goals Upon
Graduation
My Desired
Position
Personal Goals:
Job Description:
Industries:
My Target
Industries,
Organizations, and
Locations
Organizations:
Geographical Areas:
Personality:
My Uniqueness
(Points of
Difference)
Education & Experience:
Other:
My “Positioning”
Chapter 2
How You Compare to Other Job Applicants:
2-26
ICA 2-1, FIGURE 1: THE DO-IT-MYSELF MARKETING PLAN
P
L
A
N
N
I
N
G
P
H
A
S
E
I
M
P
L
E
M
E
N
T
A
T
I
O
N
P
H
A
S
E
C
O
N
T
R
O
L
MARKETING
PROGRAM
 Product Strategy
Formal Education/Courses:
(Actions to Improve
My “Marketability”)
Job Experiences/Projects Completed:
MY OWN MARKETING PLAN
Extra-Curricular/Volunteer Activities:
Obstacles To Overcome:
 Price Strategy
Compensation Sought:
 Promotion Strategy
Résumé, Personal Interviews, and Letters/Telephone Calls:
 Place Strategy
Networking for Contacts and References:
 Schedule/Budget
Marketing Actions
Actions to Take/Budget
1.
Deadlines
1.
(Courses to take,
summer jobs to get,
résumés to write,
clothes to buy, travel
arrangements to make,
etc.)
2.
2.
3.
3.
4.
4.
5.
5.
 Evaluation
What Did and Didn’t Work:
 Control
How to Modify Strategy:
P
H
A
S
E
2-27
Chapter 2
ICA 2-2: IN-CLASS ACTIVITY
Marketing Planning Worksheet
Learning Objective. To have students do a marketing plan that lets them apply the
strategic marketing process to highlight the key issues in assessing a marketing opportunity.
Definitions. The following marketing terms are referred to in this in-class activity (ICA):

Marketing Plan: A road map for the marketing activities of an organization for a
specified future period of time, such as one year or five years.

Strategic Marketing Process: The approach whereby an organization allocates its
marketing mix resources to reach its target markets.
Nature of the Activity. To have students complete the marketing planning worksheet
for a simple marketing situation that might be either:
1. The one described below.
2. One the instructor selects.
3. The product or service the student or team will use for a marketing plan class project.
If Choices #1 or #2 are used, this ICA will be used as a means of summarizing the
course in conjunction with Chapter 2 of the textbook. Alternatively, the ICA may be
used early in the course to help students undertake a preliminary structuring of the
product or service used for their marketing plans (Choice #3 above).
Estimated Class Time. 20 minutes.
Materials Needed.

A scenario, like the one below or Choices #2 or #3 described above.

Copies of the “Marketing Plan Worksheet” handout for each student.

Copies of the ICA 2-2, Figure 1: “Marketing Planning Worksheet for Team
Development Sessions” handout for each student.
Preparation Before Class. Follow the steps below:
1. Read the material below to use either the scenario below as a basis for the student
activity or prepare one of your own.
2. Make copies of ICA 2-2, Figure 1: “Marketing Planning Worksheet” and the
“Marketing Planning Worksheet for Team Development Sessions” handouts for each
student.
3. Make a transparency of ICA 2-2, Figure 1.
Chapter 2
2-28
Instructions. Follow the steps below to conduct this ICA:
1. Give students this background mini-lecture:
“A subsidiary of a community health center, specializing in private psychiatric care, has
recently expanded into human resource development programs for business and
industry. As the first in a series of offerings, the subsidiary is planning to offer an
outdoor, adventure-based team development session for employee groups who work
together to accomplish tasks. The center’s subsidiary activities are intended to generate
sufficient revenues to help fund new health programs.”
2. Pass out copies of the Marketing Planning Worksheet handout.
3. Give students 10 minutes to complete the worksheet.
4. Inform students that the Marketing Plan Worksheet provides examples of possible
responses to each of the factors involved in developing a marketing plan.
5. Pass out copies of the Marketing Planning Worksheet for Team Development
Sessions handout.
6. Show the transparency of ICA 2-2, Figure 1: Marketing Planning Worksheet for Team
Development Sessions.
7. Discuss the students’ ideas and their marketing implications for the choice that was
selected from above.
Marketing Lessons. Marketing managers are often faced with a number of alternative
opportunities. The Marketing Planning Worksheet enables a marketer to quickly assess the key
environmental and marketing factors. While this quick assessment cannot replace an in-depth
analysis, it can often screen out impractical ideas.
2-29
Chapter 2
MARKETING PLANNNING WORKSHEET FOR: _____________________
FACTOR
ISSUE
MARKETING PLAN
 Who Benefits?
Consumer
 How Do They Benefit?
Analysis/Target
Market Analysis  Who Decides to Buy or Use?
 Point of Difference?
 Consumer/Social Factors
 Economic Factors
Environmental
(Uncontrollable)  Technological Factors
Factors
 Competitive Factors
 Legal/Regulatory Factors
 Objective
 Research (Collect Info)
 Product/Service Offered
 Price
Developing the
Marketing Plan
 Promotion
– Advertising
–
Sales Promotion
–
Public Relations
–
Personal Selling
 Place/Distribution
 Budget
Executing the
Marketing Plan
 Who is Responsible?
 Milestone Dates
Evaluating the
Marketing Plan
 Did it Work?
© McGraw-Hill Companies, Inc. 2003
Chapter 2
2-30
ICA 2-2, FIGURE 1
MARKETING PLANNING WORKSHEET FOR TEAM DEVELOPMENT SESSIONS
FACTOR
Consumer
Analysis/Target
Market Analysis
Environmental
(Uncontrollable)
Factors
ISSUE
MARKETING PLAN
 Who Benefits?
Employees, work groups, employers
 How Do They Benefit?
Skill building: problem solving, creative
thinking, communication
 Who Decides to Buy/Use?
Owner, CEO, Director of Human Resources
 Point of Difference?
Alternative, more experiential approach
 Consumer/Social Factors
Perception of need, values to human
resource-development
 Economic Factors
Perceived as too expensive by many smallmedium companies
 Technological Factors
Only 8 - 10 people at one time—requires high
technical and safety emphasis
 Competitive Factors
One competitor—program not as inclusive or
safe but it costs half the amount
 Legal/Regulatory Factors
None
 Objective
Provide team building workshops to area
companies leading to other businesses
Which companies now purchase such
programs? What are their characteristics?
What companies are considering more
progressive management practices?
2 hours of orientation and planning, 9-hour
course w/ 2 meals, 2 hour debrief session
 Research (Collect Info)
 Product/Service Offered
Developing the
Marketing Plan
Executing the
Marketing Plan
Evaluating the
Marketing Plan
 Price
$150
 Promotion
– Advertising
Professional/business journals
–
Sales Promotion
None
–
Public Relations
Professional meeting, free course exhibits,
newspaper, TV, radio, fairs
–
Personal Selling
By facilitators and Marketing Director
 Place/Distribution
4 hours in their office and 9 hours on course
 Budget
$100,000
 Who is Responsible?
Marketing Director
 Milestone Dates
Complete model by Aug. 1-2; free days by
Oct. 1; Exec. Comm. & Bd. by Sep. 1
 Did it Work?
Meeting revenue targets
© McGraw-Hill Companies, Inc. 2003
2-31
Chapter 2
TN: VIDEO CASE 2
Golden Valley Microwave Foods: The Surprising Channel
Video Case 2
Golden Valley
Microwave Foods
Slide 2-69
Synopsis:
Golden Valley Microwave Foods (Golden Valley) developed the
technology that jump-started the microwave popcorn industry. The vital
technology was a thin strip of material laminated between layers of paper in the
popcorn package that focused the microwaves to produce high quality popped
corn. Golden Valley got the capital it needed from its partner, but agreed not to
distribute ACT II brand microwave popcorn in US grocery stores for ten years.
ACT II focused on selling through mass merchandisers like Target and WalMart, which now account for 33% of all bag sales (21% of dollar sales) for the
microwave popcorn industry. Students can see how ACT II has managed the
product/brand and contemplate directions for future growth at Golden Valley.
Teaching Suggestions:
This video can be used with Chapter 11 and a focus on managing
products and brands. However, it is also quite integrative and can be used with
Chapter 9 (segmentation and positioning), Chapter 13 (marketing channels), or
Chapter 15 (integrated marketing communications). The primary theme is
branding and product positioning, but the case also illustrates the connection
between channel strategy and marketing communications. These concepts
might be addressed through the recommended SWOT analysis.
The case video highlights ACT II’s product differentiation strategy and
how the company integrates its website (www.actii.com) into its overall
marketing strategy. After viewing the video, an instructor might start the
discussion by asking the following questions:
1. How many of you have ever consumed microwave popcorn? Most
students will have bought this product.
2. What brands do you typically purchase? Students may say ACTII,
Pop Secret, Orville Redenbacher (also owned by Golden Valley
Microwave Foods), Newman’s Own, Jolly Time, etc.
3. Where do you typically buy microwave popcorn? Student may say
grocery stores, convenience stores, mass merchandisers, such as
Target or Wal-Mart, etc.
4. What has Golden Valley done to grow its sales?
Chapter 2
2-32
Answers to Questions:
1. Visit ACT II’s website at www.actii.com and examine the assortment of
products. Do a SWOT analysis for Golden Valley Microwave Foods. Use Figure
2-5 in Chapter 2 as a guide. In assessing internal factors (strengths and
weaknesses), use the material provided in the case and on ACT II’s website.
In assessing external factors (opportunities and threats) augment the case
material with what you see happening in the snack food industry.
Answer: The results of each phase of the strategic marketing process are:
Strengths
Weaknesses
1. ACT II is the dominant microwave
1. Late entry to grocery channel (68% of
popcorn seller in all non-grocery channels
dollar sales and 49% of bag sales of
(mass, drug, club, vending, video and
microwave popcorn for the industry).
convenience store).
2. Limited previous experience with
2. Innovation success. Golden Valley has
consumer-oriented promotional campaigns
many firsts:
(ACT II ran its first TV ad in 2001).
 First mass market microwave popcorn.
 First flavored microwave popcorn tub.
 First extra butter microwave popcorn
tub.
 First fat-free microwave popcorn.
 First one-step sweetened microwave
popcorn.
3. Established relationship with Wal-Mart,
the largest, fastest-growing mass seller of
microwave popcorn.
Opportunities
1. Extending the ACT II brand name into
new snack food categories.
2. Reaching new global markets (as
microwave oven penetration levels
increase in many countries).
3. Potential for significant grocery channel
sales (but also an apparent weakness).
Threats
1. Mass merchandise-giants like Wal-Mart
and Target can exercise significant
bargaining power against Golden Valley.
2. Customer backlash against higher fat
products like buttered popcorn may
impact sales.
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Chapter 2
2. Compared to selling through the non-grocery channels, what kind of product,
price, and promotion strategies might Golden Valley use to reach the grocery
channel more effectively?
Answers:
Mass merchandisers like Target and Wal-Mart emphasize store reputation (brand) and
merchandise lines, including private brands. In contrast, grocery stores all carry the
same deep assortment of brands in each product category. That means ACT II will be
competing for shelf space with many other brands of microwave popcorn.
a.
Product strategy. Because of the large slotting fees that may be required,
Golden Valley may reduce the variety of ACT II product available in grocery
chains.
b.
Price strategy. The grocery business runs on one of the smallest margins in
retailing; it may be as low as 1%. That means grocers will push for the lowest
possible cost and be dedicated to efficient practices such as EDI and “just-intime” inventory systems—and expect ACT II to use them, too. Grocery chains
often require manufacturers to pay a slotting fee to place a new item on the shelf.
In some areas, these can run as high as $100,000 per store. That can be too
expensive for a smaller company like Golden Valley.
c.
Promotion strategy. Consumers are much more promotion-sensitive in grocery
stores. For example, consumers use manufacturer and store coupons at the
grocery store. Grocery stores expect brand owners like Golden Valley to
distribute more coupons, participate in the chain’s free standing insert or
promotional flyer, and do other advertising to help sell ACT II products to
consumers. In the grocery store channel, ACT II may have its own consumer
(pull strategy) advertising to encourage consumers to select ACT II brand at the
grocery store.
There are few “national” grocery chains, but mostly regional chains, which will
require ACT II sales force to make more calls and/or have more salespeople. As
the number of chains buying ACT II increases, ACT II has to handle more
accounts, more transactions, and different customer ordering, shipping, and
stocking systems. ACT II will need an information/ordering process system
capable of handling this complexity or may have to rely more heavily on
wholesalers.
Chapter 2
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3. What special marketing issues does Golden Valley face as it pursues growth in
global markets?
Answer:
The market for microwave popcorn many not be completely “global” in that there are
significant regional taste differences. These differences mean Golden Valley has to:




Identify the specific taste preference for microwave popcorn in a given country.
Develop “unique” products for specific countries.
Achieve the scale economies required to be price and cost competitive in each
country.
Gain access to appropriate distribution channels.
Golden Valley must follow the distribution of microwave ovens around the world.
It is not economically feasible to sell microwave popcorn in a country until there
is sufficient penetration of microwave ovens in the country.
Epilogue:
Instructors may have students visit the ACT II website (www.actii.com) or do it in class.
In the case video, Frank Lynch, Vice President of Marketing, explains the value of ACT II’s
website in obtaining:



Customer comments.
Requests for information such as nutrition, ingredients, etc.
Inquiries about certain products, such as the mini-bags at Halloween. Based on
comments from consumers, these became a regular item.
In addition, ACT II has tested promotional activities on its website. The promotion is
delivered to the customer on the package, and executed on the website. Once customers come to
the website to play the game, they also find out about new items being introduced or other
special promotions.
Instructors can ask students to assess the ACT II website and the kinds of consumers
most likely to visit it.
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