Marketing pride ferrell 2014e part 1

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Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it This is an electronic version of the print textbook Due to electronic rights restrictions, some third party content may be suppressed Editorial review has deemed that any suppressed content does not materially affect the overall learning experience The publisher reserves the right to remove content from this title at any time if subsequent rights restrictions require it For valuable information on pricing, previous editions, changes to current editions, and alternate formats, please visit www.cengage.com/highered to search by ISBN#, author, title, or keyword for materials in your areas of interest Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 14 E D I T I O N | P R I D E & F E R R E L L WILLIAM M PRIDE Texas A & M University O.C FERRELL University of New Mexico Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Marketing, 17th Edition © 2014, 2012 South-Western, Cengage Learning William M Pride and O C Ferrell ALL RIGHTS RESERVED No part of this work covered by the copyright herein may be reproduced, transmitted, stored, or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher Senior Vice President, LRS/Acquisitions & Solutions Planning: Jack W Calhoun Editorial Director, Business & Economics: Erin Joyner Executive Editor: Mike Roche Managing Developmental Editor: Joanne Dauksewicz Developmental Editors: Suzanna Bainbridge/Julie Klooster Editorial Assistant: Megan Fischer Sr Content Project Manager: Scott Dillon Media Editor: John Rich Manufacturing Planner: Ron Montgomery Sr Brand Manager: Robin LeFevre Marketing Coordinator: Michael Saver Project Management and Composition: Integra Sr Art Director: Stacy Jenkins Shirley Internal/Cover Designer: Mike Stratton Cover Image: iStockphoto/hh5800 Rights Acquisitions Specialist: Deanna Ettinger Rights Acquisitions Director: Audrey Pettengill Image Researcher: Terri Miller (E-Visual Communications, Inc.) For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706 For permission to use material from this text or product, submit all requests online at www.cengage.com/permissions Further permissions questions can be emailed to permissionrequest@cengage.com ExamView® is a registered trademark of eInstruction Corp Windows is a registered trademark of the Microsoft Corporation used herein under license Macintosh and Power Macintosh are registered trademarks of Apple Computer, Inc used herein under license © 2013 Cengage Learning All Rights Reserved Library of Congress Control Number: 2012946258 ISBN-13: 978-1-133-93925-2 ISBN-10: 1-133-93925-2 South-Western 5191 Natorp Boulevard Mason, OH 45040 USA Cengage Learning is a leading provider of customized learning solutions with office locations around the globe, including Singapore, the United Kingdom, Australia, Mexico, Brazil, and Japan Locate your local office at: www.cengage.com/global Cengage Learning products are represented in Canada by Nelson Education, Ltd For your course and learning solutions, visit www.cengage.com Purchase any of our products at your local college store or at our preferred online store www.cengagebrain.com Printed in the United States of America 17 16 15 14 13 Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it To Nancy, Allen, Mike, Ashley, and Charlie Pride To Linda Ferrell Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it © Mike Stratton / © iStockphoto.com/hh5800 / © iStockphoto.com/sorendis Part 1: Marketing Stratteggy and Custom merr Relationsships 1 An Overview of Strategic Marketing 2 Planning, Implementing, and Evaluating Marketing Strategies 30 Part 2: Envvironm menttal Forces and Social andd Ethiccal Responnsibilitiees 67 The Marketing Environment 68 Social Responsibility and Ethics in Marketing 102 Part 3: Marketinng Reseaarchh andd Tarrgeet Marrket Anaalyysis 141 Marketing Research and Information Systems 142 Target Markets: Segmentation and Evaluation 174 Part 4: Buying Behavior, Globbal Marketing, and Digital Marketing 211 Consumer Buying Behavior 212 Business Markets and Buying Behavior 246 Reaching Global Markets 272 10 Digital Marketing and Social Networking 314 Part 5: Product Decisions 3577 11 12 13 14 Product Concepts 358 Developing and Managing Products 388 Services Marketing 416 Branding and Packaging 444 Part 6: Diistributtionn Decisions 479 15 Marketing Channels and Supply-Chain Management 480 16 Retailing, Direct Marketing, and Wholesaling 520 Part 7: Prromotion Decisioons 563 17 Integrated Marketing Communications 564 18 Advertising and Public Relations 596 19 Personal Selling and Sales Promotion 628 Part 8: Priccing Deecisionss 671 20 Pricing Concepts 672 21 Setting Prices 700 Appendix A: Financial Analysis in Marketing A-1 Appendix B: Sample Marketing Plan B-1 Online Appendix: Careers in Marketing OA-1 v Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it © Mike Stratton / © iStockphoto.com/hh5800 / © iStockphoto.com/sorendis Preface xvii Part 1: Marketing Strategy and Customer Relationships Chaptter 1: An Overrview of Straategic Marrkettingg Marketing Insights: Walmart Returns to Its Roots Defining Marketing Marketing Focuses on Customers Emerging Trends: Netflix Alienates Its Target Market Marketing Deals with Products, Distribution, Promotion, and Price Snapshot: Would You Pay a Price Premium for an Electric Vehicle? Marketing Creates Value Marketing Debate: The Relationship between Marketing and Value 10 Marketing Builds Relationships with Customers and Other Stakeholders 11 Marketing Occurs in a Dynamic Environment 12 Understanding the Marketing Concept 13 Evolution of the Marketing Concept 14 Implementing the Marketing Concept 15 Customer Relationship Management 16 Relationship Marketing 16 Customer Lifetime Value 17 The Importance of Marketing in Our Global Economy 17 Marketing Costs Consume a Sizable Portion of Buyers’ Dollars 18 Marketing Is Used in Nonprofit Organizations 18 Marketing Is Important to Businesses and the Economy 19 Marketing Fuels Our Global Economy 19 Entrepreneurship in Marketing: Electronic Payments: From Beer Money to Multi-Million Dollar Company 19 Marketing Knowledge Enhances Consumer Awareness 20 Marketing Connects People through Technology 20 Socially Responsible Marketing: Promoting the Welfare of Customers and Stakeholders 21 Going Green: Legal Sea Foods Uses Edgy Ads to Hook Consumers 22 Marketing Offers Many Exciting Career Prospects 22 Summary 23 Important Terms 24 Discussion and Review Questions 24 Application Questions 25 Internet Exercise 25 Developing Your Marketing Plan 25 Video Case 1.1 Cruising to Success: The Tale of New Belgium Brewing 26 Case 1.2 Campbell’s Wants to Show You the Value of Soup 27 Notes 28 Chaptter 2: Planninng, Impplem mennting, and Evaluatingg Markeeting Strateggies 30 Marketing Insights: The Humble Grilled Cheese Sandwich Goes High Tech 31 The Strategic Planning Process 32 Establishing Organizational Mission Statements and Goals 33 Marketing Debate: Minding the Mission 33 Developing Corporate and Business-Unit Strategies 34 Going Green: GE’s Ecomagination Saves and Earns Billions 36 Assessing Organizational Resources and Opportunities 37 Emerging Trends: Watch That Weather Forecast! 39 Snapshot: Most Promising Growth Opportunities in the Technology Industry 40 Developing Marketing Objectives and Marketing Strategies 42 Managing Marketing Implementation 44 Entrepreneurship in Marketing: At the Rogers Family Company, Coffee Is Not the Only Concern 45 Organizing the Marketing Unit 45 Motivating Marketing Personnel 46 Communicating within the Marketing Unit 46 Coordinating Marketing Activities 47 Establishing a Timetable for Implementation 47 Evaluating Marketing Strategies 48 Establishing Performance Standards 48 Analyzing Actual Performance 48 Comparing Actual Performance with Performance Standards and Making Changes, if Needed 50 vi Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 350 Part | Buying Behavior, Global Marketing, and Digital Marketing Robin Maignan, Vice President of Marketing You have been vice president of marketing for the past five years During this time, you have noticed that sales have been increasing at a slower rate You are faced with managing the numbers and driving revenue for PIE Before joining PIE, you were the marketing manager for the European division of FedEx In this position, you faced severe competition and had to work hard to make the numbers As you have moved from positions as a middle manager and local manager, you have excelled at operational and tactical plans to achieve goals set by the CEO You develop marketing strategies for PIE to become an industry benchmark for innovation and performance Without new ideas, the company will become stagnant and lose market share By being innovative, the marketing department can continue to put forth the best possible performance You don’t believe that it is possible to maintain performance without being entrepreneurial and allowing employees to be creative You are particularly concerned about the bribery allegations against the sales manager Peter Hult While paying off government officials is clearly unethical in the United States and many nations in the Western world, in other cultures it is an expected business practice You know that giving payments to officials in countries like China, Mexico, and Russia are expected in order to business there You feel that salespeople must be aggressive and persuasive or they will lose out to the competition You also believe that businesses must adhere to a cultural relativist approach to remain competitive and accept the fact that morality differs from culture to culture You are concerned about changes in digital marketing and customer relationships You would like to create a company blog to increase PIE’s global presence You also feel that a blog will enhance the company’s customer service so it can be used to answer simple questions and free up the customer service representatives at the call center to spend more time on difficult issues However, you also know that managing such a blog requires a serious time commitment that you don’t have You feel that investing in CRM technologies might help PIE to better identify specific customers, establish dialogues with them, and use this information to increase PIE’s level of customer service It is something you wish to discuss with the manager of customer relationship management and the customer service manager in the upcoming meeting Loren Chanchey, Vice President of Operations As the vice president of operations, you’re responsible for coordinating the efforts of PIE’s global operations and focusing on the importance of staying competitive This past year, when profits began to slow, the CEO expressed concern that operations needed to improve its performance, because the cost of basic commodities and supplies are increasing at a rapid rate There is no room in your operations to slow down or fail to push employees to perform Last year, your spouse filed for divorce and called you a workaholic Now, your career and loyalty to PIE is your main focus in life Each month, you travel to different operational facilities to witness firsthand the efficiencies that are being achieved with new technology You have all the processes in place and not want to disrupt the system You feel that employee misconduct and customer relationship issues are not your responsibilities You are not happy at being at this meeting, because it is a threat to operational efficiency In your position, you can’t afford to compromise competitive advantages and performance objectives You will be out of a job if you don’t deliver operational excellence You are, however, interested in discussing digital technologies that can improve efficiency Since more than one-fourth of the world’s population has Internet access, you feel that this would be a great technology to use to reach customers in far off places and coordinate shipping and distribution You are particularly interested in using social media as a way to help customers or businesses track their shipments While you currently have such technology available through your website, you feel that using the popularity of social media for these purposes will provide PIE with an edge You also hope that investing more in digital technologies and e-marketing will increase operational efficiencies and affordability Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Role-Play Team Case | Exercise | Chapter 10 You have been asked to voice both opportunities and risk areas related to operations In your area, good employees are encouraged to be creative, and everyone seems to be willing to forgive stellar performers for minor issues of misconduct You agree to try to identify some opportunities and risk areas in your department Sidney Dolce, Vice President of International Marketing You joined PIE 10 years ago after leaving a position as vice president of international marketing with a trucking company You enjoy evaluating projects to see if they will be profitable and deciding how to best develop favorable relationships with businesses and consumers in different countries The industry is expanding but faces many challenges, such as how to reach customers in countries with less infrastructure and development You have found your career educational and rewarding but very stressful Every night, you take long walks and mentally review the international issues that constantly arise, whether they be economic, regulatory, political, or sociocultural For instance, you have been trying to reduce the costs for shipping packages in developing countries to compete with low-cost local competitors You also work closely with the legal department to understand the relevant laws for each of the 100 countries in which PIE does business You are used to a regulatory environment that provides rules for exact procedures to maintain compliance In addition, you believe that, if you obey the law and follow the regulations, there should be no misconduct issues You not want to question the ethics of employees because you view that as their concern Although you are very supportive of following the rules, you feel that some issues, such as bribery, are nearly impossible to get around in certain countries Trying to maintain compliance while also following the provisions of the Foreign Corrupt Practices Act, the U.K Bribery Act, and other regulations is a continual challenge Figuring out how to enter a country is a major challenge as well In China and India, PIE has formed joint ventures, or partnerships with domestic firms, to enter the country While these partnerships have been extremely beneficial, there has been talk about misconduct in the partners’ firms You worry that, if this is true, PIE could be held liable As if these issues weren’t enough, you are learning how to navigate different trade alliances, such as NAFTA and ASEAN, as these alliances affect operations in different countries with different regulations For instance, member countries of these trade alliances are often able to forgo certain taxes, whereas PIE, as a foreign company, is not provided with these benefits You understand that it is your responsibility to contribute to this meeting by identifying international marketing risks in your area You have created a list of international issues that you feel must be addressed immediately for PIE to maintain its global competitiveness Terry Nely, Customer Service Manager You are a member of the seasoned management team You started working at PIE in 2002, three weeks after finishing your undergraduate studies in customer service Being a customer service manager at PIE has posed several challenges, including not having an equally weighted voice in important decisions Although it is negligible to outsiders, several employees have noticed your lack of clout You worked diligently to move up through the ranks to obtain your current position and have a mild resentment for those who consider you and your department as trivial Nobody better understands the pool of employees than you Corporate culture is an important aspect at PIE, and the company’s leaders have strived to make the job enjoyable Creativity and risk-taking are both encouraged PIE’s mission statement even emphasizes the importance of “intrapreneurship” (an entrepreneurship-like attitude within the company’s framework) and innovation to the company’s success PIE has been a leader in providing employee compensation and benefits At the same time, you feel that your employees are overworked and undertrained Essentially, your job in the consumer buying process is to ensure that the customer has a positive postpurchase evaluation This means that your department must provide the highest in quality and service, including coordinating reimbursements for lost or damaged items and answering questions or complaints Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 351 352 Part | Buying Behavior, Global Marketing, and Digital Marketing As a customer service manager, you tend to emphasize business market customer services more than consumer customer services You know that businesses use PIE’s shipping services much more frequently on a daily basis than individual consumers Hence, you spend more time communicating with business customers than consumer customers when they call or e-mail PIE has several contracts with large businesses that involve straight rebuy purchases, which occur when the business customer uses PIE’s products routinely under approximately the same terms of sales It is interesting to note that most complaints about the quality of PIE’s customer services come from consumers, not businesses Rarely consumer complaints deal with the service quality of the actual delivery, as PIE has become known for its speed Most of the complaints that the customer service department receives involve damaged goods or missing packages The number of complaints received does not appear to be any greater than any other shipping company, so you are disheartened to hear so many complaints about customer service You feel that your representatives, many with only a high school diploma, get easily frustrated with customers You recognize this job is not easy For instance, despite a clear policy stating that PIE is not liable for any damages not reported within 30 days after delivery (or, in the case of lost packages, 30 days after the expected arrival), customer service representatives are constantly receiving calls from irate customers expecting to be reimbursed after the 30-day time period You feel that perhaps if PIE had clearer policies in place alerting customers to the rules, as well as investing in better customer service training for representatives, then this situation could be avoided You have been asked to identify potential risk areas in the customer service area Specifically, you are supposed to address the nature of customer complaints as well as how customer sales representatives respond to them Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Digital Marketing and Social Networking | Chapter 10 353 NOTES Sarah E Needleman, “Facebook ‘Likes’ Small Business,” The Wall Street Journal, September 26, 2011, B11; Jefferson Graham, “Facebook wants to be big among small businesses,” USA Today, September 16, 2011, 3B; Edward Lovett and Melinda Arons, “Facebook Is Friend to Jobless and Small Business, Says Company COO,” ABC News, September 15, 2011, http:// abcnews.go.com/Business/facebook-friend-jobless-small-business-createsjobs-coo/story?id=14521237 (accessed November 8, 2011) 18 Cotton Delo, “New Belgium Toasts to Its Facebook Fans,” Advertising Age, February 13, 2012, http://adage.com/article/news/belgium-toastsfacebook-fans/232681/ (accessed February 27, 2012) 19 Jon Swartz, “Timberlake Could Revive Popularity of Myspace,” USA Today, July 5, 2011, 5B 20 Myspace website, www.myspace.com/ (accessed April 11, 2011) 21 Trefis Team, “Baidu Girds For Google Battle In China,” Forbes, www forbes.com/sites/greatspeculations/2011/12/07/baidu-girds-for-googlebattle-in-china/ (accessed February 10, 2012) “Justin Timberlake Debuts Myspace TV,” Rolling Stone, January 10, 2012, www.rollingstone.com/music/news/justin-timberlake-debuts-myspace-tv20120110 (accessed February 10, 2012) 22 Piet Levy, “The State of Digital Marketing,” Marketing News, March 15, 2010, 20–21 Elizabeth Holmes, “Tweeting Without Fear,” The Wall Street Journal, December 9, 2011, B1 23 Mike Snider, “Study Details Digital Lives by Age, Sex and Race,” USA Today, February 24, 2012, 4A Bruce Horowitz, “Marketers Step Up Their Rewards for Twitter Buzz,” USA Today, November 17, 2010, 2B 24 “Crunching the Numbers,” Inc., April 2011, 24 Zachary Karabell, “To Tweet or Not to Tweet,” TIME, April 11, 2011, 24 25 Ibid Suzanne Vranica, “Tweeting to Sell Cars,” The Wall Street Journal, November 15, 2010, B12 Don Fletcher, “Gift Giving on Facebook Gets Real,” Time, February 15, 2010, www.time.com/time/magazine/article/0,9171,1960260,00.html (accessed April 12, 2011) 26 “As Twitter Grows and Evolves, More Manpower Is Needed,” Marketing News, March 15, 2011, 13 27 “17 Key Differences Between Social Media and Traditional Marketing,” Microgeist, April 20, 2009, http://microgeist.com (accessed February 18, 2010) “Social Media Summit,” Harrisburg University, 2012, www.harrisburgu edu/academics/professional/socialmedia/index-2012.php (accessed February 16, 2012) “2009 Digital Handbook,” Marketing News, April 30, 2009, 13 10 “CafeMom,” Highland Capital Partners, www.hcp.com/cafemom (accessed February 10, 2012); “Top 15 Most Popular Social Networking Sites,” eBiz, February 2012, www.ebizmba.com/articles/social-networkingwebsites (accessed February 10, 2012) 11 Pew Research Center, “53%—Social Networking Popular Worldwide, with Israel in the Lead,” February 10, 2012, http://pewresearch.org/ databank/dailynumber/?NumberID=1408 (accessed February 10, 2012) 12 Pew Research Center, “53%—Social Networking Popular Worldwide, with Israel in the Lead,” February 10, 2012, http://pewresearch.org/ databank/dailynumber/?NumberID=1408 (accessed February 10, 2012) 28 “Couldn’t Stop the Spread of the Conversation in Reactions from Other Bloggers,” from Hyejin Kim’s May 4, 2007, blog post, “Korea: Bloggers and Donuts” on the blog Global Voices, http://groundswell.forrester.com/ site1-16 (accessed April 12, 2011) 29 “How Not to Handle Bad Reviews,” The Guardian, www.guardian.co.uk/ books/booksblog/2011/mar/30/jacqueline-howett-bad-review (accessed February 16, 2012) 30 Randy Tinseth, “Randy’s Journal,” Boeing, http://boeingblogs.com/randy (accessed April 12, 2011) 31 Drake Bennett, “Ten Years of Inaccuracy and Remarkable Detail: Wikipedia,” Bloomberg Businessweek, January 10, 2011, 57–61 13 Sharon Gaudin, “Alcatel-Lucent Gets Social with Company Communication,” Computerworld, July 15, 2010, www.computerworld.com/s/ article/9179169/Alcatel_Lucent_gets_social_with_company_communication (accessed July 5, 2011); Alison Diana, “Yammer Beefs Up Executive Suite,” InformationWeek, February 10, 2011, www.informationweek.com/ news/software/productivity_ apps/229215134 (accessed July 5, 2011) 14 Zachary Karabell, “To Tweet or Not to Tweet,” Time, April 12, 2011, 24 15 “Facebook: Largest, Fastest Growing Social Network,” Tech Tree, August 13, 2008, www.techtree.com/India/News/Facebook_Largest_Fastest_ Growing_Social_Network/551-92134-643.html (accessed April 12, 2011) 16 Courtney Rubin, “Internet Users Over Age 50 Flocking to Social Media,” Inc., August 30, 2010, www.inc.com/news/articles/2010/08/users-over50-are-fastest-growing-social-media-demographic.html (accessed February 13, 2012) 17 Bruce Horovitz, “AmEx Rewards Points Now Buy You Facebook Ads,” USA Today, June 29, 2011, 1B 32 Charlene Li and Josh Bernoff, Groundswell (Boston: Harvard Business Press, 2008), 24 33 Ibid., 25–26 34 Nora Ganim Barnes and Justina Andonian, “The 2011 Fortune 500 and Social Media Adoption: Have America’s Largest Companies Reached a Social Media Plateau?” University of Massachusetts, 2011, www.umassd edu/cmr/studiesandresearch/2011fortune500/ (accessed February 16, 2012) 35 “Keller Williams Reality Photostream,” www.flickr.com/photos/ kellerwilliamsrealty/ (accessed February 16, 2012) 36 Bianca Male, “How to Promote Your Business on Flickr,” The Business Insider, December 1, 2009, www.businessinsider.com/how-to-promoteyour-business-on-flickr-2009-12?utm_source=feedburner&utm_medium= feed&utm_campaign=Feed%3A+businessinsider+(The+Business+Insider) (accessed April 12, 2011) Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 354 Part | Buying Behavior, Global Marketing, and Digital Marketing 37 “How to Market on Flickr,” Small Business Search Marketing, www.small businesssem.com/articles (accessed April 12, 2011) 54 38 55 Emily Glazer, “Who Is Ray WJ? YouTube’s Top Star,” The Wall Street Journal, February 2, 2012, B1 39 Tom Foster, “The GoPro Army,” Inc., February 2012, 52–59 40 “2009 Digital Handbook,” Marketing News, April 30, 2009, 14 41 “About Made Money,” CNBC, www.cnbc.com/id/17283246/ (accessed February 28, 2012) Foursquare website, https://foursquare.com/ (accessed February 16, 2012) Anita Campbell, “What the Heck Is an App?” Small Business Trends, March 7, 2011, http://smallbiztrends.com/2011/03/what-is-an-app.html (accessed February 28, 2012) 56 “Half of All Adult Cell Phone Owners Have Apps on Their Phones,” Pew Internet and American Life Project, November 2, 2011, http://pewinternet org/~/media/Files/Reports/2011/PIP_Apps-Update-2011.pdf (accessed February 28, 2012) 42 “Dominos Pizza,” Second Places, www.secondplaces.net/opencms/ opencms/portfolio/caseStudies/caseStudy_dominospizza.html (accessed February 16, 2012) 57 Jefferson Graham, “Shopkick App Knocking on Doors of Local Retailers to Offer Deals,” USA Today, June 22, 2011, 3B 58 43 Brandy Shaul, “CityVille Celebrates the Golden Arches with Branded McDonald’s Restaurant,” Games.com, October 19, 2011, http://blog.games com/2011/10/19/cityville-mcdonalds-restaurant Todd Wasserman, “5 Innovative Mobile Marketing Campaigns,” Mashable, March 8, 2011, http://mashable.com/2011/03/08/mobile-marketingcampaigns/ (accessed February 13, 2012) 59 44 Emily Glazer, “Virtual Fairs Offer Real Jobs,” The Wall Street Journal, October 31, 2011, B9 45 Aaron Smith, “Americans and Their Cell Phones,” Pew Internet & American Life Project, August 15, 2011, http://pewinternet.org/ Reports/2011/Cell-Phones.aspx (accessed February 28, 2012) Umika Pidaparthy, “Marketers Embracing QR Codes, for Better or Worse,” CNN Tech, March 28, 2011, http://articles.cnn.com/2011-03-28/ tech/qr.codes.marketing_1_qr-smartphone-users-symbian?_s=PM:TECH (accessed April 11, 2011) 60 Ann Zimmerman, “Check Out the Future of Shopping,” The Wall Street Journal, May 18, 2011, D1 46 Melissa Hoffman, “Mobile Marketing to Explode in 2012,” Direct Marketing News, January 12, 2012, www.dmnews.com/mobile-marketingto-explode-in-2012/article/222991/ (accessed February 28, 2012) 61 Brad Stone and Olga Kharif, “Pay As You Go,” Bloomberg Businessweek, July 18–July 24, 2011, 66–71 62 47 Thomas Claburn, “Google Tells Businesses ‘Fall In Love With Mobile’,” Information Week, February 28, 2012, www.informationweek.com/news/ mobility/business/232601587 (accessed February 28, 2012) 48 “Brands Continue Limited Mobile Site Offerings,” eMarketer, January 30, 2012, www.emarketer.com/Article.aspx?id=1008803&R=1008803 (accessed February 28, 2012) 49 “Mobile Marketing Advertising Budgets Will Increase in 2012 Due to Smartphone Sales,” PR Web, January 11, 2012, www.prweb.com/ releases/2012/1/prweb9095950.htm (accessed February 28, 2012) 50 Mark Milian, “Why Text Messages Are Limited to 160 Characters,” Los Angeles Times, May 3, 2009, http://latimesblogs.latimes.com/technology/ 2009/05/invented-text-messaging.html (accessed February 28, 2012); “Eight Reasons Why Your Business Should Use SMS Marketing,” Mobile Marketing Ratings, www.mobilemarketingratings.com/eight-reasons-smsmarketing.html (accessed February 28, 2012) 51 Lauren Folino and Michelle V Rafter, “How to Use Multimedia for Business Marketing,” Inc., January 25, 2010, www.inc.com/guides/multimedia-forbusiness-marketing.html (accessed February 28, 2012); “Motorola Powers House of Blues®,” PR Newswire, www.prnewswire.com/news-releases/ motorola-powers-house-of-bluesr-54990822.html (accessed February 28, 2012) 52 Lauren Johnson, “Orville Redenbacher Promotes Healthy Snacks with Mobile Banner Ads,” Mobile Marketer, October 26, 2011, www mobilemarketer.com/cms/news/advertising/11321.html (accessed February 28, 2012) 53 Nick Bilton, “Mobile Devices Account for a Growing Portion of Web Traffic,” The New York Times, October 12, 2011, http://bits.blogs.nytimes com/2011/10/12/mobile-accounts-for-7-percent-of-web-traffic-report-says/ (accessed February 28, 2012) “Google Wallet,” www.google.com/wallet/what-is-google-wallet.html (accessed February 16, 2012) 63 Miriam Gottfried, “Mobile Banking Gets Riskier,” The Wall Street Journal, July 10, 2011, B7 64 Vangie Beal, “All About Widgets,” Webopedia™, August 31, 2010, www.webopedia.com/DidYouKnow/Internet/2007/widgets.asp (accessed February 28, 2012) 65 Rachael King, “Building a Brand with Widgets,” Bloomberg Businessweek, March 3, 2008, www.businessweek.com/technology/content/ feb2008/tc20080303_000743.htm (accessed February 28, 2012) 66 PR Newswire, “Barkley Develops Krispy Kreme® ‘Hot Light’ App and Widget,” The Wall Street Journal, December 23, 2011, http://online.wsj com/article/PR-CO-20111223-904499.html (accessed February 28, 2012) 67 “17 Key Differences Between Social Media and Traditional Marketing.” 68 Li and Bernoff, Groundswell, 41 69 Ibid., 41–42 70 Scott, The New Rules of Marketing and PR, 195–196 71 “Forrester Unveils New Segment of Social Technographics - The Conversationalists,” 360 Digital Connections, January 21, 2010, http://blog.360i com/social-media/forrester-new-segment-social-technographicsconversationalists (accessed April 17, 2012) 72 Li and Bernoff, Groundswell, 44 73 Ibid, 44–45 74 “Internet Usage Statistics,” Internet World Stats, www.internetworldstats com/stats.htm (accessed February 16, 2012) 75 Paula Andruss, “Social Shopping,” Marketing News, January 30, 2011, 22–23 Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Digital Marketing and Social Networking | Chapter 10 76 Matthew Boyle and Douglas MacMillan, “Wal-Mart’s Rocky Path From Bricks to Clicks,” Bloomberg Businessweek, July 25–July 31, 2011, 31–33; “Free Shipping With Site to Store®,” Walmart, www.walmart.com/cp/Siteto-Store/538452 (accessed February 10, 2012) 77 Aaron Back, “China’s Big Brands Tackle Web Sales,” The Wall Street Journal, December 1, 2009, B2; “The Taobao Affair from China Largest Auction Website,” PR Log, February 7, 2010, www.prlog.org/10552554the-taobao-affair-from-china-largest-auction-website.html (accessed February 16, 2012) 78 Shayndi Raice, “The Man Behind Facebook’s Marketing,” The Wall Street Journal, February 3, 2012, B7; “About Sponsored Stories,” Facebook, www.facebook.com/help/?page=154500071282557 (accessed February 13, 2012) 79 Larry D Woddard, “Super Bowl Advertisers Heavy Up on the Social Media,” ABC News, February 5, 2012, http://abcnews.go.com/Business/ chevy-super-bowl-advertisers-big-social-media/story?id=15482527 (accessed February 16, 2012) 80 “Who You Calling Copycat,” Bloomberg Businessweek, September 26–October 2, 2011, 45–46 81 Bruce Horovitz, “Retailers Set up Shop on Facebook,” USA Today, May 11, 2011, 1A 82 Stone and Kharif, 69 355 www.huffingtonpost.com/2012/01/21/sopa-and-pipa-bills-anti-piracylegislation_n_1220817.html (accessed February 16, 2012) 92 “2010 Global PC Software Theft Reaches Record 59 Billion,” BSA, http:// portal.bsa.org/globalpiracy2010/ (accessed February 16, 2012) 93 Aubry R Fowler III, Barry J Babin, and May K Este, “Burning for Fun or Money: Illicit Consumer Behavior in a Contemporary Context,” presented at the Academy of Marketing Science Annual Conference, May 27, 2005, Tampa, FL 94 Kevin Shanahan and Mike Hyman, “Motivators and Enablers of SCOURing: A Study of Online Piracy in the US and UK,” Journal of Business Research, 63 (2010): 1095–1102 95 “Postage ˜ Postcards,” iTunes Preview, http://itunes.apple.com/app/postagepostcards/id312231322?mt=8# (accessed March 14, 2012); “Welcome to Rogue Sheep,” RogueSheep website, www.roguesheep.com/ (accessed March 14, 2012); Philip Michaels, “Macworld’s 2009 App Gems Awards,” Macworld, December 15, 2009, www.macworld.com/article/145088/2009/12/ appgems_2009.html?lsrc=top_1 (accessed March 14, 2012); “Company,” RogueSheep website, www.roguesheep.com/company (accessed April 22, 2010); Brier Dudley, “Rogue Sheep Wins Apple’s Stamp of Approval,” The Seattle Times, June 11, 2009, seattletimes.nwsource.com/html/brierdudley/ 2009325474_brier11.html (accessed March 14, 2012); “RogueSheep,” Marketing Video Series, Cengage Learning 96 83 Larry Barrett, “Data Breach Costs Surge in 2009: Study,” eSecurity Planet, January 26, 2010, www.esecurityplanet.com/features/article php/3860811/article.htm (accessed April 12, 2011) 84 Julia Angwin, Shayndi Raice, and Spencer E Ante, “Facebook Retreats on Privacy,” The Wall Street Journal, November 11, 2011, http://online.wsj com/article/SB10001424052970204224604577030383745515166.html (accessed February 16, 2012) 85 Julia Angwin, “U.S Seeks Web Privacy ‘Bill of Rights,’” The Wall Street Journal, December 17, 2010, A1–A2; Julia Angwin and Steve Stecklow, “‘Scrapers’ Dig Deep for Data on Web,” The Wall Street Journal, October 12, 2010, A1, A18 86 Jon Swartz, “Facebook Changes Its Status in Washington,” USA Today, January 13, 2011, 1B–2B; John W Miller, “Yahoo Cookie Plan in Place,” The Wall Street Journal, March 19, 2011, http://online.wsj.com/article/ SB 10001424052748703512404576208700813815570.html (accessed July 5, 2011) 87 Byron Acohido, “Net Do-Not-Track Option Kicks Off to Criticism,” USA Today, August 30, 2011, 2B 88 “Friend Me On Faecbook,” Bloomberg Businessweek, November 7– November 13, 2011, 36–37 89 Sarah Needleman, “Social-Media Con Game,” The Wall Street Journal, October 12, 2009, http://online.wsj.com/article/SB10001424052748704471 504574445502831219412.html (accessed April 12, 2011) 90 Brett Molina, “Legit Megaupload Users Cut Off from Their Files,” The Wall Street Journal, February 1, 2012, 3B 91 Derek Broes, “Why Should You Fear SOPA and PIPA?” Forbes, January 20, 2012, www.forbes.com/sites/derekbroes/2012/01/20/whyshould-you-fear-sopa-and-pipa/ (accessed February 16, 2012); “SOPA And PIPA Bills: Online Companies Win Piracy Fight,” Huffington Post, Michael S Malone, “The Twitter Revolution,” The Wall Street Journal, April 18, 2009, A11; “A Peach of an Opportunity,” The Economist, January 30, 2010, 13–15; Stella & Dot Twitter page, http://twitter.com/#!/ stelladot (accessed March 15, 2012); Ashton Kutcher Twitter page, http:// twitter.com/#!/aplusk (accessed March 15, 2012); Kogi BBQ Twitter page, http://twitter.com/#!/kogibbq (accessed March 15, 2012); Jeff Mason and Steve Holland, “Obama Tweets for the First Time, Tweaks Republicans,” Reuters, July 6, 2011, www.reuters.com/article/2011/07/06/us-obamatwitter-idUSTRE7652VO20110706 (accessed March 15, 2012); Michael A Stelzner, 2011 Social Media Marketing Industry Report, April 2011, www socialmediaexaminer.com/SocialMediaMarketingReport2011.pdf (accessed March 15, 2012); “Promoted Promotions,” Twitter Blog, October 4, 2010, http://blog.twitter.com/2010/10/promoted-promotions.html (accessed March 15, 2012); Brad Stone, “Twitter, the Startup That Wouldn’t Die,” Bloomberg Businessweek, March 1, 2012, www.businessweek.com/articles/ 2012-03-01/twitter-the-startup-that-wouldnt-die#p1 (accessed March 15, 2012); Sarah E Needleman, “Twitter’s Small-Business Big Shots,” The Wall Street Journal, June 28, 2011, http://online.wsj.com/article/SB1000 1424052702304314404576414182020501492.html (accessed March 15, 2012); “Twitter Settles Charges that It Failed to Protect Consumers’ Personal Information; Company Will Establish Independently Audited Information Security Program,” Federal Trade Commission, June 24, 2010, www.ftc.gov/opa/2010/06/twitter.shtm (accessed March 15, 2012) 97 Based on information in Wenguang Huang, “McDonald’s China CEO on Bringing McMuffins to the Masses,” Fortune, May 10, 2012, http:// management.fortune.cnn.com; Rebecca Smithers, “McDonald’s Pops-Up Its Biggest Ever Restaurant for Olympics,” Guardian (U.K.), June 25, 2012, www.guardian.co.uk; Tiffany Hsu, “The Secret to a Camera-Ready Burger? McDonald’s Tells All,” Los Angeles Times, June 23, 2012, www.latimes.com; Brad Tuttle, “McDonald’s Dollar Menu Shakeup,” Time, March 8, 2012, www.time.com; Nicolette Fox, “McDonald’s: Flush with Success,” Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 356 Part | Buying Behavior, Global Marketing, and Digital Marketing Guardian (UK), May 30, 2012, www.guardian.co.uk; Keith O’Brien, “How McDonald’s Came Back Bigger than Ever,” The New York Times, May 4, 2012, www.nytimes.com; Esther Fung, “McDonald’s to Double Restaurants in China,” The Wall Street Journal, March 29, 2010, www.wsj.com; Meg Marco, “McDonald’s Rolls Out Breakfast Dollar Menu,” The Consumerist, August 28, 2099, http://consumerist.com; Janet Adamy, “Steady Diet: As Burgers Boom in Russia, McDonald’s Touts Discipline,” The Wall Street Journal, October 16, 2007, A1; www.mcdonalds.com Feature Notes a Liz Welch and David Karp, “The Way I Work: David Karp, Tumblr,” Inc., June 2011, 115–118; Spencer E Ante, “Tumblr Valued At $800 Million,” The Wall Street Journal, September 7, 2011, B3; “About Us,” Tumblr, www.tumblr.com/about (accessed November 10, 2011) b Nick Wingfield, “Virtual Products, Real Profits,” The Wall Street Journal, September 9, 2011, A1, A11; Julie Jargon, “Wrigley Targets Web Gamers,” The Wall Street Journal, August 23, 2011, B6; Douglas MacMillan, “Getting Social Media Games to Play Overseas,” Bloomberg Businessweek, February 21, 2011, www.businessweek.com/magazine/content/11_10/ b4218036715963.htm (accessed December 12, 2011) c “Hitting the e-books,” Inc., September 2011, 36; Leon Kaye, “Will iPads Kindle a Massive Carbon Footprint,” April 13, 2011, The Guardian, www guardian.co.uk/sustainable-business/carbon-footprint-ipad-kindle (accessed December 8, 2011); Nancy Davis Kho, “E-readers or Print Books—which Is Greener?” San Francisco Chronicle, December 4, 2011, www.sfgate.com/ cgi-bin/article.cgi?f=/c/a/2011/12/01/HOCR1M0J6B.DTL (accessed December 8, 2011); Nick Bilton, “Replacing a Pile of Textbooks With an iPad,” The New York Times, August 23, 2010, http://bits.blogs.nytimes com/2010/08/23/replacing-a-pile-of-textbook-with-an-ipad/ (accessed December 8, 2011) d Tim Mullaney, “Distractions for Workers Add Up,” USA Today, May 18, 2011, 1B; Anthony Balderrama, “Social Media at Work—Bane or Boon?” CNN, March 8, 2010, www.cnn.com/2010/LIVING/worklife/03/08/ cb.social.media.banned/index.html (accessed November 22, 2011); Carlos Dominguez, “A Case for Social Media at Work,” Cisco blog, November 16, 2011, http://blogs.cisco.com/news/a-case-for-social-media-at-work/ (accessed November 22, 2011) Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Prod ductt Deciisiion ns 111: Product Concepts 358 We are now prepared to analyze the decisions and activities 122: Developing and Managing Products 388 associated with developing and maintaining effective 133: Services Marketing 416 marketing mixes In Parts through 8, we focus on the 144: Branding and Packaging 444 major components of the marketing mix: product, distribution, promotion, and price PART explores the product component of the marketing mix CHAPTER 11 introduces basic concepts and relationships that must be understood to make effective product decisions CHAPTER 12 analyzes a variety of dimensions regarding product management, including line extensions and product modification, newproduct development, and product deletions CHAPTER 13 explores the nature, importance, and characteristics of services CHAPTER 14 discusses branding, © iStockphoto.com/sorendis/© Cengage Learning 2014 packaging, and labeling Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it OBJECTIVES To understand the concept of a product To explain how to classify products To examine the concepts of product item, product line, and product mix, and understand how they are connected To understand the product life cycle and its impact on marketing strategies To describe the product adoption process To understand why some products fail and some succeed © iStockphoto.com/sorendis/© JB Reed/Bloomberg via Getty Images Product Concepts Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it M A R K E T I N G I N S I G H T S The Future Is Denim for Gap Inc keting Officer Seth Farbman, Gap is going back to its roots by focusing on denim as its core product One of its most recent clothing lines, 1969 jeans, emphasizes its strong heritage in the American fashion industry (1969 was the year Gap was founded) Gap views the line as a premium product that it makes accessible with reasonable prices Gap has also taken steps to make its jeans an experiential product During one fashion launch, Gap partnered with taco trucks in Los Angeles to provide $1.69 tacos, along with a Gap coupon According to Farbman, Gap clothing lines are not just functional but also emotional Thus, while the core product might be jeans, consumers who purchase from Gap are also buying an experience.1 © Andrew Harrer/Bloomberg via Getty Images Domestically, Gap Inc clothing has reached the maturity level of the product life cycle, characterized by little or no growth But Gap is not about to remain at this level without a fight It intends to jump back into the growth stage One way it will try and accomplish this is through international expansion While Gap will close 189 underperforming American stores by 2013, it plans to open stores in Hong Kong to capture China’s growing demand for quality clothing lines It has also opened stores in South Africa and Australia The company is working to create awareness and encourage product trial and adoption among global consumers However, Gap is also repositioning its clothing lines in the United States Under the leadership of Chief Mar- Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it 360 Part | Product Decisions The product is a key variable in the marketing mix Products, such as the 1969 jeans sold by Gap, are typically a firm’s most important asset If a company’s products not meet customers’ desires and needs, the firm will fail, unless it is willing to make adjustments Developing successful products and carrying out strategic moves requires highly sophisticated knowledge of fundamental marketing and product concepts In this chapter, we first define product and discuss how buyers view products Next, we examine the concepts of product line and product mix We then explore the stages of the product life cycle and the effect of each life cycle stage on marketing strategies Then we outline the product adoption process Finally, we discuss the factors that contribute to a product’s failure or success WHAT IS A PRODUCT? service An intangible result of the application of human and mechanical efforts to people or objects idea A concept, philosophy, image, or issue What Is a Product? A product can be an idea, a good, or service, such as this concert by One Direction in New York Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it © AP Images/PRNewsFoto/Columbia Records good A tangible physical entity As defined in Chapter 1, a product is a good, a service, or an idea received in an exchange It can be either tangible or intangible and includes functional, social, and psychological utilities or benefits It also includes supporting services, such as installation, guarantees, product information, and promises of repair or maintenance Thus, the four-year/50,000mile warranty that covers most new automobiles is part of the product itself A good is a tangible physical entity, such as an iPad or a Quiznos sandwich A service, in contrast, is intangible; it is the result of the application of human and mechanical efforts to people or objects Examples of services include a performance by Lady Gaga, an online travel agency booking, a medical examination, child day care, real estate services, and martial arts lessons (Chapter 13 provides a detailed discussion of services) An idea is a concept, philosophy, image, or issue Ideas provide the psychological stimulation that aids in solving problems or adjusting to the environment For example, MADD (Mothers Against Drunk Driving) promotes safe consumption of alcoholic beverages and stricter enforcement of laws against drunk driving It is helpful to think of a total product offering as having a combination of three interdependent elements: the core product itself, its supplemental features, and its symbolic or experiential value (Figure 11.1) Consider that some people buy new tires for their basic utility 361 Courtesy of The Advertising Archives (e.g., Goodyear), whereas some look for safety (e.g., Michelin), and others buy on the basis of brand name or exemplary perfor- Figure 11.1 The Total Product mance (e.g., Pirelli) The core product consists of a product’s fundamental utility or main benefit For example, Chipotle’s core product uses the finest sustainable ingredients Its core product is therefore high-quality fast food.2 The core product usually addresses a fundamental need Core of the consumer When you buy bottled water, you can buy name product brands like Dasani and Aquafina or more exclusive brands, such as Fiji, Voss, or Evian Regardless of price, each alternative will quench your thirst Retailers like Target and Walmart specialize in offering core products (store brands and generics) of a generally acceptable quality level at competitive prices Hotels, such as Clarion and the Hampton Inn, specialize in providing quality Symbolic and services at affordable prices Supplemental experiential A product’s supplemental features provide added value or features benefits attributes in addition to its core utility or benefit Supplemental products can also provide installation, delivery, training, and financing These supplemental attributes are not required to make the core product function effectively, but they help differentiate one product brand from another For example, the Mercedes-Benz dealership in Manhattan is trying to set a model for its national dealerships by reinventing the showroom experience Its showroom includes a coffee bar, designer furniture, flat-screen televisions, and a service bay that can be viewed from the sales floor The picture and name of the technician working on the customer’s car is displayed on the TV The goal of Mercedes-Benz is to have the atmosphere of its dealerships reflect the luxury of its products.3 These supplemental features add real value to the core product of car shopping and car repair Luxury Products When individuals buy Patek Philippe watches, they are buying the specialty status and symbols of success more than they’re purchasing mere timepieces Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it © Cengage Learning 2014 Product Concepts | Chapter 11 362 Part | Product Decisions SNAPSHOT Finally, customers also receive benefits based on their experiences How Do You Decide Whether a Product Is “Green”? with the product For some consumers, the simple act of shopping gives Specific 45% certification symbolic value and improves their attitudes Some stores capitalize on Packaging 15% this value by striving to create a special experience for customers For What I read 12% or heard instance, co-creation encourages the ? customer to participate in creating Advertisement 6% the purchase, service, or consumption event This personalized experience 4% Brand website can not only serve to increase cus0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% tomer satisfaction but can also make the development of the product more cost-effective.4 Build-A-Bear creates Source: 2011 ImagePower Green Brands survey of 1,200 people such an experience for its customers You can buy stuffed toys at many retailers, but at Build-A-Bear, you can choose the type of animal, stuff it yourself, give it a heart, and create a name complete with a birth certificate, as well as give the toy a bath and clothe and accessorize it The atmosphere and décor of a retail store, the variety and depth of product choices, the customer support, and even the sounds and smells all contribute to the experiential element When you check into a Hotel Monaco, not only you get a great room with down comforters, bed toppers, and pillows, but you can also “check out” a fish as your companion during your stay Many customers credit the Hotel Monaco with providing a differentiated, enjoyable stay and become loyal customers In addition, Hotel Monacos offer complementary wine happy hours to allow guests to socialize in their lobby These symbolic and experiential features are all part of the Hotel Monaco total product Thus, when buyers purchase a product, they are really buying the benefits and satisfaction they think the product will provide A Rolex or Patek Philippe watch is purchased to make a statement of success, not just for telling time Services in particular are purchased on the basis of expectations Expectations, suggested by images, promises, and symbols, as well as processes and delivery, help consumers make judgments about tangible and intangible products For example, some restaurants offer 10-15 minute lunch guarantees to assure customers that they are an efficient and quick place to dine Products are formed by the activities and processes that help satisfy expectations Starbucks did not invent the coffee shop, but it did make high-quality coffee beverages readily available around the world with standardized service and in stylish, comfortable stores Starbucks has conducted extensive consumer research to develop a “consumer sensory preference map.” The sensory map helps Starbucks understand the preferences of coffee-drinkers across the world.5 Often, symbols and cues are used to make intangible products more tangible, or real, to the consumer Allstate Insurance Company, for example, uses giant hands to symbolize security, strength, and friendliness, whereas Travelers Insurance uses an umbrella to signify protection Fine Blen d CLASSIFYING PRODUCTS consumer products Products purchased to satisfy personal and family needs business products Products bought to use in a firm’s operations, to resell, or to make other products Products fall into one of two general categories Products that are purchased to satisfy personal and family needs are consumer products Products bought to use in a firm’s operations, to resell, or to make other products are business products Consumers buy products to satisfy their personal wants, whereas business buyers seek to satisfy the goals of their organizations The same item can be classified as both a consumer product and a business product When a person buys a 100-watt light bulb for lighting a home closet, it is classified as a consumer product However, when an organization purchases a 100-watt light bulb for lighting a reception area, it is considered a business product, because it is used in daily operations Thus, the Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Product Concepts | Chapter 11 363 buyer’s intent—or the ultimate use of the product—determines whether an item is classified as a consumer or business product In addition, the sizes of business product purchases are often very large, as they are used to accommodate an office, manufacturing facility, or warehouse Product classifications are important, because classes of products are aimed at particular target markets; this targeting, in turn, affects distribution, promotion, and pricing decisions Furthermore, appropriate marketing strategies vary among the classes of consumer and business products In short, how a product is classified can affect the entire marketing mix In this section, we examine the characteristics of consumer and business products and explore the marketing activities associated with some of these products Consumer Products The most widely accepted approach to classifying consumer products is based on characteristics of consumer buying behavior It divides products into four categories: convenience, shopping, specialty, and unsought products However, not all buyers behave in the same way when purchasing a specific type of product Thus, a single product can fit into several categories To minimize this problem, marketers think in terms of how buyers generally behave when purchasing a specific item In addition, they recognize that the “correct” classification can be determined only by considering a particular firm’s intended target market Examining the four traditional categories of consumer products can provide further insight Convenience Products Convenience products are relatively inexpensive, frequently purchased items for which buyers exert only minimal purchasing effort They range from bread, soft drinks, and chewing gum to gasoline and newspapers The buyer spends little time planning the purchase or comparing available brands or sellers Today, time has become one of our most precious assets, and many consumers therefore buy products at the closest location to preserve time for other activities Even a buyer who prefers a specific brand will often willingly choose a substitute if the preferred brand is not readily available Classifying a product as a convenience product has several implications for a firm’s marketing strategy A convenience product is normally marketed through many retail outlets Examples of typical outlets include 7-Eleven, Conoco gas stations, and Starbucks Starbucks coffee is available in airports, hotels, and grocery stores, and many of the Starbucks companyowned stores now have drive-thru lanes to ensure that customers can get coffee whenever or wherever the desire strikes.6 Because sellers experience high inventory turnover, per-unit gross margins can be relatively low Producers of convenience products, such as Altoid mints, expect little promotional effort at the retail level and thus must provide it themselves with convenience products Relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort Marketing Debate ISSUE: Do stress-relief drinks really work? In a stressful world, demand for relaxation products is at an all-time high Marketers of “stress-busting” drinks, such as Mini Chill, GEM, and Be Happy, are seizing upon this opportunity by touting the “anti-stress” qualities of their products Stress-relief drinks consist of herbs or natural growth hormones that appear to help with sleep deprivation or anxiety However, while some of the ingredients seem to have relaxation properties, nutritionists caution against trusting the products’ marketing claims too much Some ingredients found in certain drinks might be harmful if consumed excessively, such as the hormone melatonin found in stress-relief drinks like Dream Water Because these drinks have not gone through extensive clinical trials, many nutritionists are also questioning whether they even work.a Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it © iStockphoto.com/CTRd The Authenticity of Stress-Relief Drinks 364 Part | Product Decisions advertising and sales promotion Packaging is also an important element of the marketing mix for convenience products The package may have to sell the product because many convenience items are available only on a self-service basis at the retail level Shopping Products Courtesy of The Advertising Archives Courtesy of The Advertising Archives shopping products Items for which buyers are willing to expend considerable effort in planning and making purchases Shopping products are items for which buyers are willing to expend considerable effort in planning and making the purchase Buyers spend a lot of time comparing stores and brands with respect to prices, product features, qualities, services, and even warranties Shoppers may compare products at a number of outlets, such as Best Buy, Amazon.com, Lowe’s, or Home Depot Appliances, bicycles, furniture, stereos, cameras, and shoes exemplify shopping products These products are expected to last a fairly long time and, thus, are purchased less frequently than convenience items Although shopping products are more expensive than convenience products, few buyers of shopping products are particularly brand loyal As an example, most consumers are not brand loyal for home appliances and decorations If they were, they would be unwilling to shop and compare among brands Even when they are brand loyal, they may still spend considerable time comparing the features of different models of a brand A consumer who is looking for a new LG washing machine may explore the company’s website to compare the features of different washers before visiting a store and talking to a salesperson Regardless of the number of brands of interest, buyers may also consult buying guides, such as Consumer Reports, or visit consumer information websites like www epinions.com or the consumer review website www.yelp.com to view others’ opinions or ratings of brands before they are ready to make an actual purchase To market a shopping product effectively, a marketer considers several key issues Shopping products require fewer retail outlets than convenience products Because shopping products are Convenience Products vs Shopping Products M&M candies are an example of a convenience product, whereas people spend considerable time buying cameras, such as the Canon EOS, which are usually considered shopping products Copyright 2013 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it ... Research OA -1 0 Sales OA -1 1 Industrial Buying OA -1 1 Public Relations OA -1 2 Distribution Management OA -1 3 Product Management OA -1 4 Advertising OA -1 4 Retail Management OA -1 5 Direct Marketing OA -1 5 Notes... under license © 2 013 Cengage Learning All Rights Reserved Library of Congress Control Number: 2 012 946258 ISBN -1 3 : 97 8 -1 -1 3 3-9 392 5-2 ISBN -1 0 : 1- 1 3 3-9 392 5-2 South-Western 519 1 Natorp Boulevard... Investment A-7 Price Calculations A-7 Markups A-7 Markdowns A-9 Discussion and Review Questions A -1 0 Appendix B: Sample Marketing Plan B -1 I Executive Summary B -1 II Environmental Analysis B -1 A The Marketing