MAR5125
In the 5W model of customer analysis, what is the primary emphasis of the "What" question?
Assessing how customers consume and dispose of products
The collection of strategic activities aimed at marketing an organization, its issues, and its ideals to potential stakeholders is referred to as __________. It typically involves marketing activities that are not directed to the end users of a firm's products.
corporate affairs
Being economically responsible is the most basic social responsibility of any business. This responsibility has the most immediate effect on:
shareholders
__________ is a broad concept that relates to an organization's obligation to maximize its positive impact on society while minimizing its negative impact.
social responsibility
The overall concept or model that guides the firm as it weaves various marketing elements together into a coherent strategy is called its:
strategic posture
What type of planning deals with specific markets or market segments and the development of marketing programs that will fulfill the needs of customers in those markets?
tactical planning
ESSAY Identify and discuss the five questions that should be answered by a good mission statement. Why do you think some firms have mission statements that do not answer these basic questions?
A well-devised mission statement should answer the same five basic questions: 1. Who are we? 2. Who are our customers? 3. What is our operating philosophy (basic beliefs, values, ethics, etc.)? 4. What are our core competencies or competitive advantages? 5. What are our responsibilities with respect to being a good steward of our human, financial, and environmental resources? A mission statement that delivers a clear answer to each of these questions installs the cornerstone for the development of the marketing plan. If the cornerstone is weak, or not in line with the foundation laid in the preliminary steps, the entire plan will have no real chance of long-term success. In recent years, firms have realized the role that mission statements can play in their marketing efforts. Consequently, mission statements have become much more customer oriented. People's lives and businesses should be enriched because they have dealt with the organization. A focus on profit in the mission statement means that something positive happens for the owners and managers of the organization, not necessarily for the customers or other stakeholders. It is likely that most firms have weak mission statements simply out of neglect. Perhaps these firms do not understand the importance of having a solid mission statement. Firms can still be successful if their mission statements do not answer these five basic questions. However, the potential always exists for the firm to step beyond its mission and core competencies.
With respect to conducting a situation analysis, which of the following IS NOT one of the four important issues to keep in mind?
All bits of data are relevant no matter how minor they may seem.
ESSAY "Analysis alone is not a solution" is an important piece of advice to keep in mind during a situation analysis. What does this phrase mean? If analysis alone is not a solution, what other considerations are relevant during a situation analysis?
Although it is true that a comprehensive situation analysis can lead to better planning and decision making, analysis itself is not enough. Put another way, situation analysis is a necessary but insufficient prerequisite for effective strategic planning. The analysis must be combined with intuition and judgment to make the results of the analysis useful for planning purposes. Situation analysis should not replace the manager in the decision-making process. Its purpose is to empower the manager with information for more effective decision making. A thorough situation analysis empowers the marketing manager because it encourages both analysis and synthesis of information. From this perspective, situation analysis involves taking things apart: whether it's a customer segment (in order to study the heavy users), a product (in order to understand the relationship between its features and customers' needs), or competitors (in order to weigh their strengths and weaknesses against your own). The purpose of taking things apart is to understand why people, products, or organizations perform the way they do. After this dissection is complete, the manager can then synthesize the information to gain a big-picture view of the complex decisions to be made
ESSAY Identify and discuss the many challenges of being ethical and socially responsible. Focus on challenges at both the individual (employee) level and the managerial level.
Although most consider the values of honesty, respect, and trust to be self-evident and universally accepted, business decisions involve complex and detailed discussions in which correctness may not be so apparent. Both employees and managers need experience within their specific industry to understand how to operate in gray areas or to handle close calls in evolving areas. Individuals who have limited business experience often find themselves required to make sudden decisions about product quality, advertising, pricing, sales techniques, hiring practices, privacy, and pollution control. The personal values learned through socialization from family, religion, and school may not provide specific guidelines for these complex business decisions. In other words, a person's experiences and decisions at home, in school, and in the community may be quite different from the experiences and the decisions that he or she has to make at work. Moreover, the interests and values of individual employees may differ from those of the company in which they work, from industry standards, and from society in general. When personal values are inconsistent with the configuration of values held by the work group, ethical conflict may ensue. It is important that a shared vision of acceptable behavior develop from an organizational perspective, to cultivate consistent and reliable relationships with all concerned stakeholders. A shared vision of ethics that is part of an organization's culture can be questioned, analyzed, and modified as new issues develop. However, marketing ethics should relate to work environment decisions and should not control or influence personal ethical issues. It is imperative that firms become familiar with many of the ethical and social issues that can occur in marketing so that these issues can be identified and resolved when they occur. Essentially, any time that an activity causes managers, employees, or customers in a target market to feel manipulated or cheated, an ethical issue exists regardless of the legality of the activity. Many ethical issues can develop into legal problems if they do not become addressed in the planning process. Once an issue has been identified, marketers must decide how to deal with it.
Many large firms, such as Walmart, Home Depot, Lowe's, and Barnes & Noble, have been accused of predatory pricing because their business practices have put many local, mom-and-pop firms out of business. In reality, these large firms are not necessarily guilty of predatory pricing. Why?
Because the large firms have efficient cost structures and lower variable costs.
In the context of marketing planning, why is it vital that the marketing plan be capable of selling itself to top management?
Because top managers must decide whether the marketing plan is the best use for the organization's scarce resources.
Changing value propositions in today's economy—such as changes caused by the growth in e-commerce—have forced marketers to learn a tough lesson about customers. What is that lesson?
Customers will turn to the most convenient, least expensive alternative in situations where they see goods and services as commodities.
Strengths are typically based on the existence and nature of the __________ possessed by the firm. Weaknesses stem from a lack of these important factors.
resources and relationships
ESSAY Identify and discuss the challenges involved in collecting environmental data and information. How can a marketing manager or analyst overcome these problems?
Despite the best intentions, problems usually arise in collecting data and information. One of the most common problems is an incomplete or inaccurate assessment of the situation that the gathering of data should address. After expending a great degree of effort in collecting data, the manager may be unsure of the usefulness or relevance of what has been collected. In some cases, the manager might even suffer from severe information overload. To prevent these problems from occurring, the marketing problem must be accurately and specifically defined before the collection of any data. Top managers who do not adequately explain their needs and expectations to marketing researchers often cause the problem. Another common difficulty is the expense of collecting environmental data. Although there are always costs associated with data collection (even if the data are free), the process need not be prohibitively expensive. The key is to find alternative data collection methods or sources. For example, an excellent way for some businesses to collect data is to engage the cooperation of a local college or university. Many professors seek out marketing projects for their students as a part of course requirements. Likewise, to help overcome data collection costs, many researchers have turned to the Internet as a means of collecting both quantitative and qualitative data on customer opinions and behaviors. A third issue is the time it takes to collect data and information. Although this is certainly true with respect to primary data collection, the collection of secondary data can be quite easy and fast. Online data sources are quite accessible. Even if the manager has no idea where to begin the search, the powerful search engines and indexes available on the Internet make it easy to find data. Online data sources have become so good at data retrieval that the real problem involves the time needed to sort through all of the available information to find something that is truly relevant. Finally, it can be challenging to find a way to organize the vast amount of data and information collected during the situation analysis. Clearly defining the marketing problem and blending different data sources are among the first steps toward finding all of the pieces to the puzzle. A critical next step is to convert the data and information into a form that will facilitate strategy development. Although there are a variety of tools that can be used to analyze and organize environmental data and information, one of the most effective of these tools is SWOT analysis. As we will see in the next chapter, SWOT analysis—which involves classifying data and information into strengths, weaknesses, opportunities and threats—can be used to organize data and information and used as a catalyst for strategy formulation.
ESSAY Identify and explain each element of the 5W model for customer analysis. What role does this analysis play in an overall situation analysis?
During the analysis of the customer environment, information should be collected that identifies (1) the firm's current and potential customers, (2) the prevailing needs of current and potential customers, (3) the basic features of the firm's and competitors' products perceived by customers as meeting their needs, and (4) anticipated changes in customers' needs. • Who Are Our Current and Potential Customers?—Answering the "who" question requires an examination of the relevant characteristics that define target markets. This includes demographic characteristics (gender, age, income, etc.), geographic characteristics (where customers live, density of the target market, etc.), and psychographic characteristics (attitudes, opinions, interests, etc.). • What Do Customers Do with Our Products?—The "what" question entails an assessment of how customers consume and dispose of the firm's products. Here the marketing manager might be interested in identifying the rate of product consumption (sometimes called the usage rate), differences between heavy and light users of products, whether customers use complementary products during consumption, and what customers do with the firm's products after consumption. • Where Do Customers Purchase Our Products?—The "where" question is associated mainly with distribution and customer convenience. Until recently, most firms looked solely at traditional channels of distribution such as brokers, wholesalers, and retailers. Thus, the marketing manager would have concerns about the intensity of the distribution effort and the types of retailers that the firm's customers patronized. Today, however, many other forms of distribution are available. The fastest growing form of distribution today is nonstore retailing—which includes vending machines; direct marketing through catalogs, home sales, or infomercials; and electronic merchandising through the Internet, interactive television, and video kiosks. • When Do Customers Purchase Our Products?—The "when" question refers to any situational influences that may cause customer purchasing activity to vary over time. This includes broad issues such as the seasonality of the firm's products and the variability in purchasing activity caused by promotional events or budgetary constraints. • Why (and How) Do Customers Select Our Products?—The "why" question involves identifying the basic need-satisfying benefits provided by the firm's products. The potential benefits provided by the features of competing products should also be analyzed. The "how" part of this question refers to the means of payment that customers use when making a purchase. • Why Do Potential Customers Not Purchase Our Products?—An important part of customer analysis is the realization that many potential customers choose not to purchase the firm's products. There are many potential reasons why customers might not purchase a firm's products. This analysis is vital because the information can be used to identify and select specific target markets for the revised marketing strategy. The firm should target those customer segments where it can create and maintain a sustainable advantage over its competition.
Why is the connection between marketing ethics and leadership so important in nurturing a strong ethical culture?
Employees look to the leader as a model of acceptable behavior.
ESSAY Discuss the role of the strategy canvas and the four-actions framework in establishing a strategic focus for the firm's marketing strategy. Why are these approaches invaluable in today's highly competitive environment?
Establishing a solid strategic focus is important because it lays the groundwork for the development of marketing goals and objectives. Unfortunately, many firms struggle with finding a focus that translates into a strategy that offers customers a compelling reason for purchasing the firm's products. In their book Blue Ocean Strategy, W. Chan Kim and Renee Mauborgne outlined two tools that can be used to help develop a strategic focus: the strategy canvas and the four-actions framework. In essence, a strategy canvas is a tool for visualizing a firm's strategy relative to other firms in a given industry. The horizontal axis of a strategy canvas identifies the key factors that the industry competes on with the products that are offered to customers. The vertical axis indicates the offering level that firms offer to buyers across these factors. The central portion of the strategy canvas is the value curve, or the graphic representation of the firm's relative performance across its industry's factors. The key to using the strategy canvas (and the key to developing a compelling strategic focus) lies in identifying a value curve that stands apart from the competition. To use the strategy canvas successfully, the marketing manager must identify a value curve with two major characteristics. First, the value curve should clearly depict the firm's strategic focus. Second, the value curve should be distinctively different from competitors. The four-actions framework is a tool for discovering how to shift the strategy canvas and reorient the firm's strategic focus. The four-actions framework is designed to challenge traditional assumptions about strategy by asking four questions about the firm's way of doing business. Eliminate—Which of the factors that the industry takes for granted should be eliminated? Reduce—Which factors should be reduced well below the industry's standard? Create—Which factors should be created that the industry has never offered? Raise—Which factors should be raised well above the industry's standard? These approaches are invaluable for two reasons. First, both tools require the firm to give up long-held assumptions about how business should be conducted. Instead, the approach requires firms to fundamentally alter their strategic logic. Second, both tools argue against the traditional approaches of benchmarking and extensive customer research. These traditional approaches tend to create a typical "more for less" mentality that guides the strategic focus of most firms.
With respect to the text's advice in conducting a SWOT analysis, which of the following best describes "Look for Causes, Not Characteristics"?
Focus on the resources possessed by the firm and/or its competitors that are the true causes for the firm's strengths, weaknesses, opportunities, and threats.
Which of the following changes occurring in today's economy has NOT been caused by the growth of the Internet?
rising prices for most products
In the 5W model of customer analysis, what is the primary emphasis of the "Why" question?
Identifying the basic need-satisfying benefits provided by the firm's products.
ESSAY Identify and explain the major characteristics of marketing goals.
In developing goals for the marketing plan, it is important to keep in mind that marketing goals should be attainable, consistent, comprehensive, and involve some degree of intangibility. Failure to consider these issues will result in goals that are less effective and perhaps even dysfunctional. • Attainability—Setting realistic goals is important because the key parties involved in reaching them must see each goal as reasonable. Determining whether a goal is realistic requires an assessment of both the internal and external environments. Unrealistic goals can be demotivational because they show employees that management is out of touch. Because one of the primary benefits of having goals is to motivate employees toward better performance, setting unrealistic goals can cause major problems. • Consistency—In addition to being realistic, management must work to set goals that are consistent with one another. Enhancing market share and working to have the highest profit margins in the industry are both reasonable goals by themselves, but together they are inconsistent. Goals to increase both sales and market share would be consistent, as would goals to enhance customer service and customer satisfaction. Goals across and within functional areas should also mesh together. • Comprehensiveness—This means that each functional area should be able to develop its own goals that relate to the organization's goals. Goals should help clarify the roles of all parties in the organization. Functional areas that do not match any of the organization's goals should question their need for future resources and their ability to acquire them. • Intangibility—Goals should involve some degree of intangibility. A goal is not an action that the firm can take; rather, it is an outcome that the organization hopes to accomplish. Actions such as hiring new salespeople or doubling the advertising budget are not goals because any firm with adequate resources can accomplish both tasks. However, having "the best-trained sales force in the industry" or "the most creative and effective advertising campaign in the industry" are suitable goals. Note the intangibility associated with the use of terms such as best-trained, most creative, and most effective. These terms are motivational because they promote comparisons with rival firms. They also push for excellence because their openended nature always leaves room for improvement.
ESSAY Discuss each of the three competitive advantage strategies (operational excellence, product leadership, customer intimacy) and explain why most firms pursue only one of these strategies.
In recent years, many successful firms have developed capabilities and competitive advantages based on one of three basic strategies: operational excellence, product leadership, and customer intimacy: • Operational Excellence—Firms employing a strategy of operational excellence focus on efficiency of operations and processes. These firms operate at lower costs than their competitors, allowing them to deliver goods and services to their customers at lower prices or a better value. • Product Leadership—Firms that focus on product leadership excel at technology and product development. As a result, these firms offer customers the most advanced, highest quality goods and services in the industry • Customer Intimacy—Working to know your customers and understand their needs better than the competition is the hallmark of customer intimacy. These firms attempt to develop long-term relationships with customers by seeking their input on how to make the firm's goods and services better or how to solve specific customer problems. To be successful, firms should be able to execute all three strategies. However, the most successful firms choose one area at which to excel and then actively manage customer perceptions so that customers believe that the firm does indeed excel in that area. To implement any one of these strategies effectively, a firm must possess certain core competencies. Firms that boast such competencies are more likely to create a competitive advantage than those that do not. However, before a competitive advantage can be translated into specific customer benefits, the firm's target markets must recognize that its competencies give it an advantage over the competition. The core competencies are internal (strength) issues, and specific attributes refer to activities that customers will notice as they interact with the firm.
All of the following are benefits of SWOT analysis EXCEPT:
Its structured nature ensures that data and information are correctly categorized.
When a firm analyzes its objectives and performance, availability of resources, structural characteristics, and organizational culture, the firm is most likely examining its:
Internal environment
Which of the following statements best describes the nature of a marketing plan?
It clearly outlines the organization's marketing activities.
ESSAY Defend or contradict this statement: "The most important aspect of strategic market planning is marketing implementation. Without good implementation, nothing gets accomplished and customers do not receive desired benefits."
It is difficult to contradict this statement. However, students must realize that implementation occurs on two fronts: externally with markets and customers and internally with employees. It is obvious that external implementation is vital to the success of the strategy—even if the strategy is flawed. In Chapter 1, the text describes how there are very few rules in marketing. Hence, a bad strategy could prove to be correct by the time it is implemented. However, poor implementation is always a key reason for marketing failure. Internally, good implementation is essential for getting things done. All marketing plans, when executed, have repercussions both inside and outside the firm. Even seemingly disconnected events in finance or human resources can have an effect on the firm's ultimate customers—the individuals and businesses that buy the firm's products. The short answer is that the firm must rely on its people to implement the strategy. Hence, good implementation will always consider the effects of the strategy on employees.
Why is it important that marketing goals involve some degree of intangibility?
It makes the goal more motivational and promotes continuous improvement
In terms of setting goals and objectives, what is considered to be one of the major benefits gained from applying for the Malcolm Baldrige National Quality Award?
It promotes the development of discontinuous objectives.
In the marketing strategy for Amazon, the following statement appears: Our strategy is designed to increase the percentage of repeat customers from 80 percent to 85 percent in the next 12 months. This statement is an example of a:
continuous objective
ESSAY Discuss the different views or interpretations of marketing as a function of business, including the AMA's 2007 change in the definition of marketing. Why do you think the AMA changed the definition?
Many people, especially those not employed in marketing, see marketing as a function of business. As a business function, the goal of marketing is to connect the organization to its customers. Other individuals, particularly those working in marketing jobs, tend to see marketing as a process of managing the flow of products from the point of conception to the point of consumption. A final way to think about marketing relates to meeting human and social needs. This broad view links marketing with our standard of living, not only in terms of enhanced consumption and prosperity but also in terms of society's well-being. The AMA changed the definition of marketing to better reflect the realities of competing in today's marketplace. The new definition stresses two critical success factors in marketing today: value and customer relationships. Whereas the former definition of marketing had a decidedly transactional focus, the new definition emphasizes long-term relationships that provide value for both customers and the firm.
Which of the following IS NOT a challenge associated with being ethical and socially responsible?
Most employees perceive that the values of honesty, respect, and trust are infrequently applied in the workplace.
ESSAY Describe the role that a code of conduct plays in ensuring ethical compliance within a firm. How should a code of conduct be developed, what should it contain, and what are the keys to ensuring that the code is successfully implemented?
Most firms begin the process of establishing organizational ethics programs by developing codes of conduct (also called codes of ethics), which are formal statements that describe what an organization expects of its employees. These codes may address a variety of situations from internal operations to sales presentations and financial disclosure practices. A code of ethical conduct has to reflect the board of directors' and senior management's desire for organizational compliance with the values, rules, and policies that support an ethical climate. Development of a code of conduct should involve the board of directors, president, and senior managers who will be implementing the code. Legal staff should be called upon to ensure that the code has correctly assessed key areas of risk and that standards contained in the code buffer potential legal problems. A code of conduct that does not address specific high-risk activities within the scope of daily operations is inadequate for maintaining standards that can prevent misconduct. Research has found that corporate codes of ethics often have five to seven core values or principles in addition to more-detailed descriptions and examples of appropriate conduct. Six core values are considered to be highly desirable in any code of ethical conduct: (1) trustworthiness, (2) respect, (3) responsibility, (4) fairness, (5) caring, and (6) citizenship. These values will not be effective without distribution, training, and the support of top management in making them a part of the corporate culture and the ethical climate. Employees need specific examples of how these values can be implemented. Codes of conduct will not resolve every ethical issue encountered in daily operations, but they help employees and managers deal with ethical dilemmas by prescribing or limiting specific activities. Many firms have a code of ethics, but sometimes they do not communicate their code effectively. A code placed on a website or in a training manual is useless if the company doesn't reinforce it on a daily basis. By communicating both the expectations of proper behavior to employees, as well as punishments they face if they violate the rules, codes of conduct curtail opportunities for unethical behavior and thereby improve ethical decision making. Codes of conduct do not have to be so detailed that they take into account every situation, but they should provide guidelines and principles capable of helping employees achieve organizational ethical objectives and address risks in an accepted manner
ESSAY Identify and explain the major characteristics of marketing objectives.
Objectives provide specific and quantitative benchmarks that can be used to gauge progress toward the achievement of the marketing goals. Goals without objectives are essentially meaningless because progress is impossible to measure. Objectives involve measurable, quantitative outcomes, with specifically assigned responsibility for their accomplishment and a definite time period for their attainment. • Attainability—As with goals, marketing objectives should be realistic given the internal and external environments identified during the situation and SWOT analyses. A good objective is one that is attainable with a reasonable amount of effort. Easily attainable objectives will not motivate employees to achieve higher levels of performance. • Continuity—Marketing objectives can be either continuous or discontinuous. A firm uses continuous objectives when its current objectives are similar to objectives set in the previous planning period. Unfortunately, objectives that are identical or only slightly modified from period to period often do not need new strategies, increased effort, or better implementation to be achieved. Discontinuous objectives significantly elevate the level of performance on a given outcome factor or bring new factors into the set of objectives. Discontinuous objectives require more analysis and linkage to strategic planning than continuous objectives. • Time Frame—Another key consideration in setting objectives is the time frame for their achievement. Although companies often establish marketing plans on an annual basis, marketing objectives may differ from this period in their time frame. The time frame should be appropriate and allow for accomplishment with reasonable levels of effort. • Assignment of Responsibility—One final aspect of objectives that sets them apart from goals is that the marketing manager must identify the person, team, or unit responsible for achieving each objective. By explicitly assigning responsibility, the firm can limit the problems of stealing credit and avoiding responsibility
ESSAY Discuss the challenges and opportunities associated with planning and developing marketing strategy in today's economy. Why is marketing strategy both exciting and challenging?
One of the greatest frustrations and opportunities in marketing is change—customers change, competitors change, and even the marketing organization changes. Strategies that are highly successful today will not work tomorrow. Customers will buy products today that they will have no interest in tomorrow. These are truisms in marketing. Although frustrating, challenges like these also make marketing extremely interesting and rewarding. Another fact about marketing strategy is that it is inherently people driven. Marketing strategy is about people (inside an organization) trying to find ways to deliver exceptional value by fulfilling the needs and wants of other people (customers, shareholders, business partners, society at large), as well as the needs of the organization itself. The combination of continual change and the people-driven nature of marketing makes developing and implementing marketing strategy a challenging task. A perfect strategy that is executed perfectly can still fail. This happens because there are very few rules for how to do marketing in specific situations. In other words, it is impossible to say that given "this customer need" and these "competitors" and this "level of government regulation" that Product A, Price B, Promotion C, and Distribution D should be used. Marketing simply doesn't work that way. The lack of rules and the ever-changing economic, sociocultural, competitive, technological, and political/legal landscapes make marketing strategy a terribly fascinating subject.
ESSAY What is the relationship among marketing ethics, strategic planning, and organizational performance? How is this related to having a stakeholder orientation?
One of the most powerful arguments for including ethics and social responsibility in the strategic planning process is the evidence of a link between social responsibility, stakeholders, and marketing performance. An ethical climate calls for organizational members to incorporate the interests of all stakeholders, including customers, in their decisions and actions. Hence, employees working in an ethical climate will make an extra effort to better understand the demands and concerns of customers. One study found that ethical climate is associated with employee commitment to quality and intrafirm trust. Employee commitment to the firm, customer loyalty, and profitability have also been linked to increased social responsibility. These findings emphasize the role of an ethical climate in building a strong competitive position. An ethical climate is also conducive to a strong market orientation. Market orientation refers to the development of an organizational culture that effectively and efficiently promotes the necessary behaviors for the creation of superior value for buyers and, thus, continuous superior performance of the firm. Market orientation places the customer's interests first, but it does not exclude the interests of other stakeholders. Being market oriented means fostering a sense of cooperation and open information exchange that gives the firm a clearer view of the customer's needs and desires. The degree to which a firm understands and addresses stakeholder demands can be referred to as a stakeholder orientation. This orientation contains three sets of activities: (1) the organization-wide generation of data about stakeholder groups and assessment of the firm's effects on these groups, (2) the distribution of this information throughout the firm, and (3) the organization's responsiveness as a whole to this intelligence. A stakeholder orientation can be viewed as a continuum in that firms are likely to adopt the concept to varying degrees. To gauge a given firm's stakeholder orientation, it is necessary to evaluate the extent to which the firm adopts behaviors that typify both the generation and dissemination of stakeholder intelligence and responsiveness to it. A given organization may generate and disseminate more intelligence about certain stakeholder communities than about others and, as a result, may respond to that intelligence differently
What is perhaps the most important economic reality in the United States over the last 50 years?
Our economy has shifted to become dominated by intangibles such as services and information.
ESSAY . With respect to the strategic planning process, why has social responsibility and marketing ethics become important today? Is it really necessary to consider these issues in strategic planning? How can a firm plan to be socially responsible?
Our society still reverberates from the effects of corporate scandals at Enron, WorldCom, and ImClone, among others. Although these scandals make for interesting reading, many innocent individuals have suffered the consequences from these companies' unethical behavior. Social responsibility refers to an organization's obligation to maximize its positive impact on society while minimizing its negative impact. In terms of marketing strategy, social responsibility addresses the total effect of an organization's marketing activities on society. A major part of this responsibility is marketing ethics, or the principles and standards that define acceptable conduct in marketing activities. Ethical marketing can build trust and commitment and is a crucial ingredient in building long-term relationships with all stakeholders. Another major component of any firm's impact on society is the degree to which it engages in philanthropic activities. Many firms now make philanthropy a key strategic activity. Because efforts to be socially responsible involve the allocation of human and financial resources, these activities must be planned just like traditional marketing activities.
Which of the following statements about pricing decisions in the marketing program is TRUE?
Price has a direct connection with customer demand.
Your supervisor repeatedly informs you that "Goals without objectives are essentially meaningless." What is the rationale for such a philosophy?
Progress is impossible to track without measurable performance targets.
Research indicates that being ethical and socially responsible has a number of benefits for the organization. Which of the following IS NOT one of these benefits?
increased competitive orientation
Many firms attempt to distinguish or differentiate their product offerings through the use of __________ strategies. This involves establishing a mental image of the product offering relative to competing offerings in the minds of target buyers.
product positioning
The growth of the Internet has changed the way that situation analysis is conducted in today's business environment. In terms on situation analysis, which of the following is the most drastic change caused by the Internet?
The analyst is more likely to suffer from severe information overload.
ESSAY Discuss the role of corporate affairs in the analysis of the external environment. What types of activities are conducted by corporate affairs specialists?
The external environment encompasses a wide array of important factors that must be analyzed carefully before developing the marketing plan. These issues are so important that most firms have specialists on staff to track emerging trends and develop strategies for dealing with external concerns. These specialists are typically housed in corporate affairs departments. In its broadest sense, corporate affairs is a collection of strategic activities aimed at marketing an organization, its issues, and its ideals to potential stakeholders (consumers, general public, shareholders, media, government, etc.). One way to think about corporate affairs is that it includes all of the organization's marketing activities not directed at the end users of its products. The activities that define corporate affairs vary; however, most organizations maintain departments that engage in the following strategic activities: • Corporate communications includes activities aimed at telling the organization's story and promoting goodwill among a variety of stakeholders. It includes such activities as public relations, employee relations, corporate image advertising, public affairs, and media relations. • Government relations are activities aimed at educating and influencing elected officials, government officials, and regulatory agencies with respect to key issues that are pertinent to the firm. The most visible form of government relations is lobbying. • Investor relations are activities designed to promote investment in the organization through the sale of financial instruments such as stocks and bonds. It includes such activities as developing the annual report, planning shareholders' meetings, and other customer service activities directed at corporate shareholders. • Corporate philanthropy includes activities aimed at serving the needs of the community at large (either domestically or globally) through product or cash donations, volunteerism, or support of humanitarian initiatives. • Corporate sustainability includes activities aimed at reducing the organization's impact on the environment. It includes activities such as reducing the organization's carbon footprint, recycling of its products, and promoting environmental stewardship. • Policy analysis involves activities designed to influence the national or international dialogue with respect to public or economic policy in an industry-related area. It includes research and analysis designed to provide needed information for making policy decisions
ESSAY Briefly explain and discuss the five types of utility. Which type(s) of utility is(are) the most important and why?
The five types of utility are: 1. Form Utility—Products high in form utility have attributes or features that set them apart from the competition. 2. Time Utility—Products high in time utility are available when customers want them. 3. Place Utility—Products high in place utility are available where customers want them, which is typically wherever the customer happens to be at that moment or where the product needs to be at that moment. 4. Possession Utility—Possession utility deals with the transfer of ownership or title from marketer to customer. Products higher in possession utility are more satisfying because marketers make them easier to acquire. 5. Psychological Utility—Products high in psychological utility deliver positive experiential or psychological attributes that customers find satisfying. Conversely, a product might offer exceptional psychological utility because it lacks negative experiential or psychological attributes. One type of utility is not necessarily more important than the others. In reality, all five types are complementary and overlap to a great degree. One could argue that form utility is the most important, however, because customers tend to choose products that offer certain features. For routinely purchased products (gasoline, bread), time and place utility are likely to be more important. For unique types of products (vacations, luxury goods), psychological utility might be relatively more important.
What is the main purpose of the Sarbanes-Oxley Act of 2002?
To increase the accuracy and reliability of corporate disclosures of financial information.
ESSAY Why have ethics and social responsibility become so important in recent years? Why is it important that marketing ethics be incorporated into the firm's strategic plan?
The importance of marketing ethics and social responsibility has grown in recent years, and their role in the strategic planning process has become even more important as many firms have seen their images, reputations, and marketing efforts destroyed by problems in these areas. The failure to see ethical conduct as part of strategic market planning can destroy the trust and customer relationships that are necessary for success. Ethics and social responsibility are also necessary in light of stakeholder demands and changes in federal law. Furthermore, ethical and socially responsible behavior improves marketing performance and profits. Marketing ethics does not just happen by hiring ethical people; it requires implementation of an effective ethics and compliance program. In response to customer demands, along with the threat of increased regulation, more and more firms have incorporated ethics and social responsibility into the strategic marketing planning process. Any organization's reputation can be damaged by poor performance or ethical misconduct. However, it is much easier to recover from poor marketing performance than from ethical misconduct. Obviously, stakeholders who are most directly affected by negative events will have a corresponding shift in their perceptions of a firm's reputation. On the other hand, even those indirectly connected to negative events can shift their reputation attributions. In many cases, those indirectly connected to the negative events may be more influenced by the news media or general public opinion than those who are directly connected to an organization. Some scandals may lead to boycotts and aggressive campaigns to dampen sales and earnings.
ESSAY Explain how and why the process of developing a marketing plan might be more important than the marketing plan document itself. What are the benefits of the planning process irrespective of the actual outcomes of the process?
The key to the benefits of the planning process is communication, which is vital for synchronizing actions within the firm. As stated in the quote in Chapter 2: "the process of preparing the plan is more important than the document itself. . . . A marketing plan does compel attention, though. It makes the marketing team concentrate on the market, on the company's objectives, and on the strategies and tactics appropriate to those objectives. It's a mechanism for synchronizing action." Research indicates that organizations that develop formal, written strategic marketing plans tend to be more tightly integrated across functional areas, more specialized, and more decentralized in decision making. The end result of these marketing plan efforts is improved financial and marketing performance. This question also coincides with Exhibit 2.4 regarding the key obstacles to developing and implementing marketing plans. Students should note that lack of communication is the major stumbling block to effective marketing planning.
. To successfully utilize SWOT analysis as a catalyst for strategic planning, the marketing manager must focus on several important issues. Which of the following IS NOT one of these issues?
The manager must find ways to transform key threats into strengths.
With respect to developing a marketing plan, what does it mean for a marketing plan outline to be consistent?
The outline should have some connection to other functional area plans.
ESSAY Draw, label, and explain the pyramid of social responsibility. What are the requirements for a firm if it truly wants to be ethical and socially responsible?
The pyramid of social responsibility consists of four dimensions or responsibilities: economic, legal, ethical, and philanthropic. From an economic perspective, all firms must be responsible to their shareholders, who have a keen interest in stakeholder relationships that influence reputation of the firm and, of course, earning a return on their investment. The economic responsibility of making a profit also serves employees and the community at large due to its impact on employment and income levels in the area that the firm calls home. Marketers also have expectations, at a minimum, to obey laws and regulations. This is a challenge because the legal and regulatory environment is hard to navigate and interpretations of the law change frequently. Economic and legal concerns are the most basic levels of social responsibility for good reason: Without them, the firm may not survive long enough to engage in ethical or philanthropic activities. At the next level of the pyramid, marketing ethics refers to principles and standards that define acceptable marketing conduct as determined by the public, government regulators, private-interest groups, competitors, and the firm itself. The most basic of these principles have been codified as laws and regulations to induce marketers to conform to society's expectations of conduct. However, it is important to understand that marketing ethics goes beyond legal issues: Ethical marketing decisions foster trust, which helps build long-term marketing relationships. In terms of philanthropy, firms that choose to take these extra steps concern themselves with increasing their overall positive impact on society, their local communities, and the environment, with the bottom line of increased goodwill toward the firm, as well as increased profits. Many firms try hard to align their philanthropy with marketing and brand image. During major crises, like Hurricane Katrina or the more recent financial meltdown, firms are given an opportunity to make their philanthropic programs more responsive and visible to the public. Socially responsible behavior is not only good for customers, employees, and the community, but it also makes good business sense. For this reason, philanthropic activities make very good marketing tools. Thinking of corporate philanthropy as a marketing tool may seem cynical, but it points out the reality that philanthropy can be very good for a firm.
ESSAY: The text discusses seven challenges and opportunities associated with marketing in today's economy. Identify these issues and discuss how they are related. What is the common thread that ties all seven issues together?
The seven issues are: 1. Power Shift to Customers 2. Massive Increase in Product Selection 3. Audience and Media Fragmentation 4. Changing Value Propositions 5. Shifting Demand Patterns 6. Privacy, Security, and Ethical Concerns 7. Unclear Legal Jurisdiction The common thread that ties these issues together is the increase in information and choices made available by the Internet.
ESSAY Discuss the concept of balanced strategic planning and the approach outlined by the Balanced Performance Scorecard. What are the five common principles associated with implementing the balanced approach to strategic planning?
The shift to balanced strategic planning was born out of necessity. As the twenty-first century approached, firms realized that traditional planning and measurement approaches could not capture value created by the organization's intangible assets. These assets—including such vital issues as customer relationships, processes, human resources, innovation, and information—were becoming increasingly important to business success, but they were not being reported through traditional financial measures. The basic tenet of the balanced performance scorecard is that firms can achieve better performance if they align their strategic efforts by approaching strategy from four complementary perspectives: financial, customer, internal process, and learning and growth. The financial perspective is the traditional view of strategy and performance. This perspective is vital but should be balanced by the other components of the scorecard. The customer perspective looks at customer satisfaction metrics as a key indicator of firm performance, particularly as the firm moves ahead. Financial measures are not suited to this task because they report past performance rather than current performance. The internal process perspective focuses on the way that the business is running by looking at both mission-critical and routine processes that drive day-to-day activity. Finally, the learning and growth perspective focuses on people and includes such vital issues as corporate culture, employee training, communication, and knowledge management. The five common principles associated with implementing the balanced approach to strategic planning are: 1. Translate the Strategy into Operational Terms—Successful firms can illustrate the cause-and-effect relationships that show how intangible assets are transformed into value for customers and other stakeholders. This provides a common frame of reference for all employees. 2. Align the Organization to Strategy—Successful firms link different functional areas through common themes, priorities, and objectives. This creates synergy within the organization that ensures that all efforts are coordinated. 3. Make Strategy Everyone's Everyday Job—Successful firms move the strategy from the executive boardroom to the front lines of the organization. They do this through communication, education, allowing employees to set personal objectives, and tying incentives to the balanced scorecard. 4. Make Strategy a Continual Process—Successful firms hold regular meetings to review strategy performance. They also establish a process whereby the firm can learn and adapt as the strategy evolves. 5. Mobilize Change Through Executive Leadership—Successful firms have committed energetic leaders who champion the strategy and the balanced scorecard. This ensures that the strategy maintains momentum. Good leaders also prevent the strategy from becoming an obstacle to future progress. The balanced scorecard doesn't refute the traditional approach to strategic planning. It does, however, caution business leaders to look at strategy and performance as a multidimensional issue. Financial measures, though important, simply cannot tell the whole story. One of the major benefits of the balanced scorecard is that it forces organizations to explicitly consider during strategy formulation those factors that are critical to strategy execution.
Most firms that experience ethical or legal problems actually have a code of conduct or an ethical compliance program in place. Why is it that these firms can still have ethical problems despite having a code of ethics or compliance program?
Their codes are typically not integrated into daily decision making.
ESSAY . Identify and discuss at least five reasons why potential customers do not purchase a firm's goods or services. For each reason, discuss ways that the firm can overcome the resistance of noncustomers.
There are many potential reasons why customers might not purchase a firm's products. The reasons given in the text are: • Noncustomers have a basic need that the firm's product does not fulfill. • Noncustomers perceive that they have better or lower-priced alternatives such as competing substitute products. • Competing products actually have better features or benefits than the firm's product. • The firm's product does not match noncustomers' budgets or lifestyles. • Noncustomers have high switching costs. • Noncustomers do not know that the firm's product exists. • Noncustomers have misconceptions about the firm's product (weak or poor image). • Poor distribution makes the firm's product difficult to find. Student responses will vary greatly as to the reasons for nonpurchase, as well as how the firm might overcome the resistance of noncustomers.
In the airline industry, companies like American, Delta, and US Air have a difficult time competing because their industry has become commoditized. What does this mean for firms in the airline industry?
There is very little differentiation among product offerings in the industry.
Identify and discuss the major problems associated with creating marketing plans. What are some potential ways that firms and managers can overcome these problems?
This question is based on Exhibit 2.4. Most students will focus on the fact that poor communication is the key obstacle in developing and implementing marketing plans. However, astute students will note that most of the factors in the exhibit are internal characteristics of an organization—most of them being based in the organization's culture or management style. Consequently, most of these obstacles can be overcome by developing a culture that fully supports strategic planning. This might involve opening channels of communication, breaking down barriers among departments, employee training, top management commitment, and dedicating adequate time to the planning process.
In a truly market-oriented organization, what is the role of the CEO?
To ensure that his or her employees have everything they need to perform their jobs well.
When creating a corporate vision statement, organizations are attempting to answer which of the following questions:
What do we want to become
ESSAY Identify and explain the directives for the productive use of SWOT analysis. Which directive do you think is the most important? Why?
Whether a firm receives the full benefits of SWOT analysis depends on the way that the manager uses the framework. If done correctly and smartly, SWOT analysis can be a viable mechanism for the development of the marketing plan. If done haphazardly or incorrectly, it can be a great waste of time and other valuable resources. To help ensure that the former, not the latter, takes place, we offer the following directives to make SWOT analysis more productive and useful. Stay Focused—Marketing planners often make the mistake of conducting one generic SWOT analysis for the entire organization or business unit. In most firms, there should be a series of analyses, each focusing on a specific product/market combination. Search Extensively for Competitors—During the SWOT analysis, the firm must watch for any current or potential direct substitutes for its products. Looking for all four types of competition is crucial because many firms and managers never look past brand competitors. Collaborate with Other Functional Areas—One of the benefits of SWOT analysis is that it generates information and perspective that can be shared across a variety of functional areas in the firm. When combining the SWOT analyses from individual areas, the marketing manager can identify opportunities for joint projects and cross selling of the firm's products. Examine Issues from the Customers' Perspective—All issues in a SWOT analysis are not equally important with respect to developing competitive advantages and strategic focus for the marketing plan. As the analysis progresses, the marketing manager should identify the most critical issues by looking at each one through the eyes of the firm's customers. Examining issues from the customers' perspective also includes the firm's internal customers: its employees. Look for Causes, Not Characteristics—The problem in many SWOT analyses lies in listing strengths, weaknesses, opportunities, and threats as simple descriptions or characteristics of the firm's internal and external environments without going deeper to consider the causes for these characteristics. More often than not, the causes for each issue in a SWOT analysis can be found in the resources possessed by the firm and/or its competitors. Separate Internal Issues from External Issues—It is important for the analyst to maintain a separation between internal issues and external issues. Internal issues are the firm's strengths and weaknesses, whereas external issues refer to opportunities and threats in the firm's external environments. The key test to differentiate a strength or weakness from an opportunity or threat is to ask, "Would this issue exist if the firm did not exist?" If the answer is yes, the issue should be classified as external to the firm.
With regard to Blue Ocean Strategy, the Four-Actions Framework is designed to challenge traditional assumptions about marketing strategy by asking four key questions. Which of the following IS NOT one of these questions?
Which factors used throughout the industry should be copied?
Ben & Jerry's is well known for its use of __________ in that it ties its products and marketing strategy to social causes such as environmental stewardship.
cause-related marketing
__________ is the curse of mature markets whereby products lack any real means of differentiation and customers see competing products as offering roughly the same benefits.
commoditization
Whether at the corporate, business-unit, or functional level, the planning process always begins with an in-depth:
a situation analysis
In the traditional transactional marketing approach, the ultimate goal of marketing is to:
acquire new customers and complete a large number of exchanges.
Expansion and growth, with new products and new markets, are the keys to Google's __________ approach to marketing strategy. Google uses this approach because it possesses many different strengths that coincide with key market opportunities.
aggressive
Colgate promotes its toothpaste using a claim that states "helps fight plaque and gingivitis." What potential ethical issue does Colgate have with respect to its promotional strategy?
ambiguous statements
Compared to primary data, secondary data have the main advantage of:
being dramatically lower in cost
In the competitive sports drink market, Gatorade pays very close attention to the activities of Powerade, a major __________ competitor that markets drinks that are similar in features and benefits.
brand
Marketing goals can be defined as:
broad, qualitative statements of desired accomplishments
When a firm possesses capabilities that allow it to serve customers' needs better than the competition, the firm is said to have a:
competitive advantage
All organizations need a __________, the central scheme for utilizing and integrating resources in the areas of production, finance, research and development, human resources, and marketing to carry out the organization's mission and achieve desired goals and objectives.
corporate strategy
Socially responsible firms tend to enjoy higher __________ because customers perceive that the firm is dedicated to doing the right thing and treating customers fairly.
customer loyalty
Among the fundamental changes to marketing and business practice in today's economy is the dramatic increase in the availability of information. This increase in information has created a shift in the balance of power in the supply chain. Who now holds most of the power in today's economy?
customers
In many buying situations, customers will buy one product because it complements another product. In these cases of __________ demand, the demand of one product depends on the demand of another product.
derived
Which of the following IS NOT one of the five conditions of exchange in marketing?
each party must be capable of immediate delivery
Focusing on customers has not always been the hallmark of strategic planning. In fact, in the early 20th century, firms tended to focus strictly on __________ rather than on developing relationships with customers.
efficiency and quality
__________ involves the analysis of economic, political, legal, technological, and cultural events and trends that may affect the future of the organization and its marketing efforts.
environmental scanning
The link between marketing ethics/social responsibility and firm performance has been documented repeatedly over time. This link is most evident in firms that have a strong __________.
ethical climate
In developing a marketing plan, the section on goals and objectives defines the parameters by which the firm will measure actual performance. In this respect, the goals and objectives section is tied closely to the __________ section of the marketing plan.
evaluation and control
Motorola continuously establishes performance standards and assesses actual performance by comparing it with these standards. Afterwards, Motorola often takes corrective action to reduce any discrepancies. This process is most likely outlined in the __________ section of Motorola's marketing plan.
evaluation and control
As a form of __________ competition, bicycles can solve the same basic need as automobiles, albeit with a very different product.
generic
The sheer volume of available information on the economy, population, and business activities is the major strength of most __________ data sources.
government
Which of the following cultural values is not typically associated with American consumers?
greater focus on long-term goals
Some companies choose to engage in a deceptive marketing practice called __________, which involves misleading consumers into thinking that a product is more environmentally friendly than it actually is.
greenwashing
A customer's decision to purchase one product or group of products over another is primarily a function of:
how well that choice will fulfill that person's needs and satisfy his or her wants
While all marketing plans face a number of obstacles in development and implementation, __________ is by far the most commonly occurring obstacle across most firms.
inadequate communication
All of the following are reasons for the general decline in customer satisfaction over the past 20 years EXCEPT:
product quality is much lower now than at any time in the past
Although internal data sources have a number of advantages, one of their biggest problems is:
internal date are often in a form that is not readily accessible
One of the major difficulties of conducting business in today's economy concerns the unclear legal jurisdiction surrounding many business transactions. The issue is especially keen for marketers who do business in:
international markets
Each of the following is a potential product-related ethical issue EXCEPT:
invasion of privacy
Which of the following IS NOT a purpose of a marketing plan?
it explains how marketing activities mesh with other funcational areas
Although mass media audiences are becoming increasingly fragmented, media fragmentation does have a major advantage. What is this advantage?
it is now easier to reach small, highly targeted audiences
Research has found that corporate codes of ethics should contain six highly desirable core values or principles. Which of the following IS NOT one of these core values?
legality
With respect to regulating marketing ethics, a key advantage of self-regulatory programs like the Better Business Bureau is the fact that they are:
less costly and more practical to implement
The failure to understand the difference between internal and external issues is one of the major reasons for a poorly conducted SWOT analysis. This happens because managers:
list their marketing options or strategies as opportunities.
May firms, like the Altria Group, focus on diversification in their marketing strategies because they possess:
many internal strengths and many external threats.
__________ firms are those that successfully generate, disseminate, and respond to market information.
market-oriented
The principles and standards that define acceptable marketing conduct as determined by the public, government regulators, private-interest groups, competitors, and the firm itself are termed:
marketing ethics
To ensure that ethics and social responsibility are thoroughly incorporated into the firm's strategic planning process, the firm's __________ should never be silent about ethical requirements and social responsibility.
marketing plan
A cluster of closely related goods and services that center around a specific consumption activity is referred to as a:
metamarket
Edmunds.com provides a collection of online services and information pertaining to the automotive market. Edmunds offers reviews, free pricing reports, discussion boards, and links to a variety of car manufacturers, dealers, insurance companies, and finance companies. What role does Edmunds.com play in today's economy?
metamediary
Between now and 2050, __________ will account for a full 90 percent of the growth in the total U.S. population.
minority population growth
In a marketing plan, the executive summary should be a complete but concise overview of the entire marketing plan because:
most readers of a marketing plan are busy and value condensed information.
Which of the following statements does not describe a reason why noncustomers do not purchase a firm's products?
noncustomers have low switching costs
In today's business environment, firms that truly focus on customers instill a corporate culture that places customers and other stakeholders at the top of the organizational hierarchy. When this occurs, the firm shifts its focus from transactions to __________, and from __________ to collaboration.
relationships; competition
Microsoft is interested in customers' perceptions of Windows 8, its new PC operating system. Since the research goal is rather specific, Microsoft should conduct its own __________ research by asking customers to complete an online questionnaire.
primary
Microsoft's Windows platform dominates the market for personal computer operating systems. By continuously upgrading and stretching the technology underlying its Windows system, Microsoft is pursuing a strategy of:
product leadership
By focusing on efficiency of operations and processes, lower costs, and delivering good value, Southwest Airlines attempts to build a competitive advantage based on:
operational excellence
. __________ typically occur within the competitive, customer, economic, political/legal, technological, and/or sociocultural environments of the firm.
opportunities and threats
. Issues such as marketing's position and authority in a firm's hierarchy, the overall market orientation of the firm, and the emphasis on short- or long-term planning are examples of which component of the internal environment?
organizational structure
Furniture Mart offers services such as financing and home delivery to its customers. What type of utility is Furniture Mart trying to increase?
possession utility
__________, which occurs when a firm charges different prices to different customers, occurs in both consumer and business markets. However, it is very common among different members of the supply chain
price discrimination
Firms possessing certain core competencies are more likely to create competitive advantages based on these competencies. However, before a competitive advantage can be translated into specific customer benefits, the firm's __________ must recognize that its competencies give it an advantage over the competition.
target markets
Which of the following examples best describes an advance in backstage technology?
the use of radio frequency identification (RFID) to control inventory and logistics
Many firms have shifted to balanced strategic planning because traditional planning and measurement approaches are not able to capture:
the value created by an organization's intangible assets.
Essentially, having a climate of ethics and social responsibility is all about creating trust among a firm's stakeholders. To gain trust, the firm and its employees must continuously uphold:
their standards of integrity
A product that provides the utmost in convenience is said to offer exceptional:
time and place utility
The role of ethics in marketing strategy can be distilled into one word. Without __________, marketers run the risk of alienating stakeholders and inviting financial ruin.
trust
As a tool of Blue Ocean Strategy, the strategy canvas provides a way to visualize the firm's strategy relative to other firms in the industry. The central portion of the strategy canvas is the __________, or the graphic representation of the firm's relative performance across its industry's factors.
value curve
In 2005, the American Marketing Association changed the definition of marketing that had stood for 20 years. The major changes in the definition included a shift from delivering the 4 Ps (product, price, place, promotion) to delivering __________ and a shift from creating exchanges to creating __________.
value; customer relationships
The Balanced Performance Scorecard cautions business leaders to look at strategy and performance through four interrelated perspectives. Which of the following IS NOT one of these perspectives?
vision and strategy perspective
Which of the following is one of the five basic questions that a good mission statement should answer?
what is our operating philosophy
In terms of SWOT analysis, when does a strength become a capability of the firm?
when the strength can be tied to satisfying a customer need
Sears at one time lost sight of its mission and jumped into markets such as real estate and financial services that did not fit its strengths or core operations. This most likely occurred because Sears lacked a mission statement with the appropriate:
width
