Discussion Questions
2- 1. Select one company from Table 2.1 and explain
why the market-oriented definition is superior to the product-oriented definition. (AACSB: Written and Oral Communication)
2- 2. Identify the two steps involved in business portfolio
planning. Explain why each step is important. (AAC- SB: Written and Oral Communication; Reflective Thinking)
2- 3. Why would a firm sell a major brand or business to an-
other firm? Please provide an example. (AACSB: Writ- ten and Oral Communication; Reflective Thinking)
2- 4. Why do companies segment markets? How does market
segmentation relate market targeting? (AACSB: Written and Oral Communication; Reflective Thinking)
2- 5. Discuss how a new brand manufacturer would go about
defining their market segments and then begin to target them. (AACSB: Written and Oral Communication)
2- 6. One criticism of the four Ps is that they take the seller’s
view of the market, not the buyer’s view. Briefly describe the four As, which take the buyer’s view of the market.
(AACSB: Written and Oral Communication; Reflective Thinking)
Critical Thinking Exercises
2- 7. Visit www.businessfinancing.co.uk/the-most-popular-
consumer-brand-in-every-country/ and choose one of the world maps showing the popularity of brands around the world. Identify the top five and the bottom five brands. Suggest a strategy for each of the brands using the product/market expansion grid shown in Figure 2.3. Support your suggestions. (AACSB: Writ- ten and Oral Communication; Reflective Thinking)
2- 8. Examine the integrated marketing mix of the Japanese
clothing brand UNIQLO. What are their key market- ing mix ingredients? What about their brand, service, and IMC? (AASCB: Communication)
2- 9. Create a mission statement for a nonprofit organization
you would be interested in starting. Have another student evaluate your mission statement while you evaluate the other student’s statement, suggesting areas for improve- ment. (AACSB: Written and Oral Communication; Re- flective Thinking)
Lush Fresh Handmade Cosmetics UK sells handmade premium beauty products such as body washes, bath bombs, and face masks through 950 cosmetics shops around the globe. Lush previously engaged customers with captivating Instagram posts, which contributed to its massive following of more than 570,000 people. Therefore, people were surprised when the company announced it was abandoning social media because it inhibited the firm’s ability to engage with fans and because Lush does not pay for advertising, including paid so- cial media posts. Lush mentioned difficulties associated with talking directly to customers and the challenges of chang- ing social media algorithms the firm had to fight to appear in customers’ newsfeeds. Social media platforms order posts
MINICASES AND APPLICATIONS
by relevancy rather than chronology, which makes it harder for many brands to appear in consumers’ social media feeds without paying to be there. “We want social to be more about passions and less about likes,” says Lush.
2- 10. Evaluate the rationale behind Lush’s decision to discon-
tinue its social media channels. Do you think followers understood Lush’s choice? Why or why not? (AACSB:
Written and Oral Communication; Reflective Thinking)
2- 11. As Lush UK implemented the change, how could it
measure the effects of leaving social media on the achievement of its marketing goals? (AACSB: Written and Oral Communication; Reflective Thinking)
Marketing Ethics Pharrell Williams’s Humanrace Brand
In 2020, Pharrell Williams launched an all-gender, all-race skincare line called Humanrace, sold exclusively through its website ( www.humanrace.com ). The skincare line had three vegan and sustainable products sold in Japan-inspired green packaging made with 50 percent post-consumer recycled landfill plastic with braille writing for the visually impaired.
The signature recyclable and refillable green packaging includes what a consumer needs for a three-step, three-minute facial: a cleanser, an exfoliant, and a moisturizer. The sustain- able packaging is one major source of differentiation for the product.
Despite the brand’s goal of accessibility to all, its prices were expensive relative to those of competing products. When launched, the cost of the three-product set was $100. One reason for the high price was the quality of the ingredients.
Another reason was fit with the brand’s positioning as a high- quality product that really works. Even so, Humanrace’s pric- es raised questions about whether it really offered skin care
for all humans. Still, Pharrell Williams was applauded for associ- ating his celebrity with a position related to inclusivity.
2- 12. Humanrace’s focus on reusable, recyclable plastics; high-
quality, vegan ingredients; and skincare products that work for all humans seems to go against the traditional segmen- tation and targeting process. Defend this market segmen- tation strategy. Is it ethical to characterize the Humanrace product line as skin care for all? (AACSB: Written and Oral Communication; Ethical Understanding and Reasoning)
2- 13. From an ethics standpoint, discuss Humanrace’s focus
on sourcing high-quality, vegan ingredients and post- recycled, reusable packaging instead of developing products that keep costs down. Discuss the challenges Humanrace faces as a brand that is positioned as acces- sible to everyone but not affordable for many. (AACSB:
Written and Oral Communication; Reflective Thinking;
Ethical Understanding and Reasoning)
Marketing by the Numbers Facebook versus Google
Facebook and Google are both giants in the tech industry.
However, if you compare sales and profits, you would think that Google is a far better marketer than Facebook: Google’s sales last year were more than double Facebook’s sales, and its profits were 38 percent higher. Sales and profits provide information to compare the profitability of companies, but
between these numbers is information regarding the efficiency of the marketing efforts in creating those sales and profits.
Appendix 2: Marketing by the Numbers, Marketing Performance Measures, discusses other marketing profitability measures beyond the return on marketing investment (marketing ROI) measure described in this chapter. Review the appendix to
Digital Marketing Lush UK Abandons Social Media
answer the questions using the following information from the two companies’ incomes statements (all numbers are in thousands):
Facebook Google
Sales $85,965,000 $182,257,000
Gross Profit $69,273,000 $97,795,000
Marketing Expenses $13,616,250 $21,748,500 Net Income (Profit) $29,146,000 $40,269,000
2-14. Calculate profit margin, net marketing contribution,
marketing return on sales (or marketing ROS), and marketing return on investment (or marketing ROI) for each company. Which company is performing
better? (AACSB: Written and Oral Communication;
Analytic Thinking)
2-15. Go to Yahoo! Finance (http://finance.yahoo.com/) and
find the income statements for two other competing companies. Perform the same analyses for these com- panies that you performed for the previous question.
Which company is doing better overall and with respect to marketing? For marketing expenses, use 75 percent of the company’s reported “Selling General and Ad- ministrative” expenses, as not all of the expenses in that category are marketing expenses. (AACSB:
Written and Oral Communication; Analytic Reasoning;
Reflective Thinking)
Company Cases 2 Dyson/6 Outschool/8 Toyota
See Appendix 1 for cases appropriate for this chapter.
Case 2, Dyson: Solving Customer Problems in Ways They Never Imagined. Much more than a make of vacuum cleaners, at its core, Dyson is a technology company that seeks to develop new and innovative versions of everyday products that wow customers.
Case 6, Outschool: Personalized Education for All.
A fast-growing marketplace for remote-delivered K-12
classes, Outschool is out to make learning fun, social, and self-directed.
Case 8, Toyota: Developing a Million New Product Ideas Every Year. The processes by which Toyota develops new products and deals with the product life cycle are an inte- gral part of its success. When developing a new product, Toyota takes a concept on paper and puts it through different modeling phases, from computer 3D modeling to clay modeling.
3 Analyzing the Marketing Environment
Objectives Outline
OBJECTIVE 3-1 Describe the environmental forces that affect the company’s ability to serve its customers.
OBJECTIVE 3-2 Explain how changes in the demographic and economic environ- ments affect marketing decisions.
OBJECTIVE 3-3 Identify the major trends in the firm’s natural and technological environments.
OBJECTIVE 3-4 Explain the key changes in the political and cultural environments.
OBJECTIVE 3-5 Discuss how companies can react to the marketing environment.
Previewing the Concepts
So far, you’ve learned about the basic concepts of marketing and the steps in the market- ing process for engaging and building profitable relationships with targeted consumers.
In this chapter, we’ll begin digging deeper into the first step of the marketing process—
understanding the marketplace and customer needs and wants. You’ll see that marketing operates in a complex and changing environment. Other actors in this environment—
suppliers, intermediaries, customers, competitors, publics, and others—may work with or against the company. Major environmental forces—demographic, economic, natural and physical, technological, political, and cultural—shape marketing opportunities, pose threats, and affect the company’s ability to engage customers and build customer relationships. To develop effective marketing strategies, a company must first understand the environment in which marketing operates.
To start, let’s look at Microsoft, the technology giant that dominated the computer soft- ware world throughout the 1990s and much of the 2000s. Its Windows and Office products have long been must-haves in the PC market. But with the decline in standalone personal computers and the surge in digitally connected devices—everything from smartphones and tablets to internet-connected TVs—mighty Microsoft found itself struggling to find its place in a fast-changing environment. However, the tech giant has now reinvented itself as a relevant brand that consumers can’t live without in the post-PC era.