Welcome to our textbook tour! by ps94506


									                      Welcome to our textbook tour!
                       Dear Marketing Student:
                       Effective Marketing, First Canadian Edition is your introduction to the exciting field of
                       marketing today. Examples from the world of entertainment bring the message home
                       in a way that’s fun and memorable, while our superior pedagogy helps you under-
                       stand and remember what YOU need to know.
                          Please come along for a tour of the book and its features. Learn how you can get the
                       most from Effective Marketing!


41497_00_FM.indd vii                                                                                               11/14/07 2:46:39 PM
                        Stories that will capture your attention and excite
                        you about marketing
                         The curtain rises on Setting the Scene—an
                         opening vignette that illustrates a real-life,
                         practical application of the chapter’s concepts.
                         But our entertainment theme means these pro-
                         files aren’t just practical, they’re fascinating! Read
                         about Canadian and international marketing stars
                         in profiles of Avril, Cirque de Soleil, Red Dragon
                         Skateboarding, RoboRoach, RIM, the iPod shuffle,
                         White Water West, Entertainment One, and more!

                            CHAPTER   EIGHT
                                      8                                                            SETTING                         THE             SCENE
                                  MARKET SEGMENTATION, TARGETING,                                        A   vril Lavigne is anything but ordinary and her album Under My Skin sold more than six
                                                                                                             times as many copies as her debut Let Go in its first week on the charts. The punk rock,
                                                                                                         skateboarding, teen mall rat has struck a chord with 11- to 13-year-olds, and she has even
                                        AND POSITIONING STRATEGIES                                       managed to attract more than a few adventuresome adults to her music. She is demon-
                                                                                                         strating that her music appeals to many different market segments from teens to adults. She
                                                                                                         co-writes her own songs and is not afraid to say what she thinks in public. This attitude has
                                                                                                         had some negative effects and resulted in her interview on MTV’s Total Request Live being
                                                                                                         pulled for her obnoxious hand gestures. Her behaviour in this case did not appeal to adults
                                                                                                         and more conservative segments of the market. Avril claimed that her behaviour was influ-
                                                                                                         enced by a high-carb diet and too much sugar.1 After the Janet Jackson/Justin Timberlake
                                                                                                         Super Bowl halftime show fiasco in 2004, executives are very careful about what they show
                                                                                                         on TV, and Avril has become a sort of spokesperson for teenagers all over North America. Her
                                                                                                         rebellious nature helps to attract her main core segment, but she needs to be careful not to
                                                                                                         alienate others who would also potentially listen to her music.
                                                                                                           Avril grew up in Napanee, Ontario, a small town of 5000 people. She started singing when
                                                                                                         she was a small child and dropped out of high school when she was 15 to pursue her dream
                                                                                                         of being a rock star. She went to New York and L.A. on her own, and was discovered by Arista
                                                                                                         records. She is managed by Vancouver-based Nettwerk Management, which has also been
                                                                                                         responsible for the careers of Sarah McLachlan, Dido, Coldplay, and the Barenaked Ladies.
                                                                                                         She is startlingly upfront and outrageous, with everything it takes to reach stardom completely
                                                                                                         on her own terms: “I’m just coming out and I’m going to clearly be myself—I write what I feel,
                                                                                                         I never worry what others think. I’m gonna dress what’s me, I’m gonna act what’s me and I’m
                                                                                                         gonna sing what’s me.”2 Her real-girl style underlines her individuality and her main message
                                                                                                         is to think independently. Her major attitude and her style of baggy pants and sneakers was
                                                                                                         featured in the video for the mega-hit “Complicated,” which showed her acting bratty in a
                                                      LEARNING OBJECTIVES                                mall with her teenage friends. She is a strong role model for the teen segment of the music
                                                      After you have studied this chapter,               market because of her attitudes and style, which hit home with this group.
                                                      you will be able to …                                  Her style on her second album became more grown-up and she appeared on David
                                                      1 Explain the concept of the market                Letterman wearing lip-gloss and crimped hair—a look that’s more glam girl than punk rock.
                                                         and market segmentation.
                                                                                                         Now instead of portraying the image of a mall rat and punk skater girl, she is appealing to
                                                      2 Relate the identification of
                                                                                                         disillusioned but fabulous glam girls in need of anger management. One thing that Avril has
                                                         meaningful target markets to
                                                         the development of effective                    not done is to use sex as a tool to sell her music as Britney Spears and Christina Aguilera
                                                         marketing mixes.                                have done before her.3 She has even done the very unfashionable thing and written a song
                                                      3 List the market segmentation                     about not giving into the pressure to have sex. All this in an age when the average age for
                                                         variables most commonly used by                 teenagers to have sex is getting younger and younger.
                                                         marketing managers and explain                     She has been featured in Time, J-14, YM, Elle Girl, The National Post, and Maclean’s, all of
                                                         how marketers identify which
                                                                                                         which have helped to broaden her appeal beyond the traditional teen market. The National
                                                         ones are appropriate.
                                                      4 Explain the purpose of a                         Post and Maclean’s target a different segment of the market than magazines like J-14 and
                                                         positioning strategy.                           YM. As Avril’s superstar career progresses, she runs the risk of overexposure that so many
                                                                                                         other superstars have run up against. The pitfalls of instant disruptive fame are close by, and

                            192                                                              NEL   NEL

                                                                                                          218          PART 2— U N D E R S T A N D I N G   THE   MARKETPLACE: CONSUMERS            AND    ORGANIZATIONS (B2C      AND   B2B)

                                                                                                                                               predispositions. The appropriateness                  strategy is to identify a product’s or
                                                                                                                                               of any one variable or combination of                 brand’s competitive advantage and to
                                                                                                                                               variables varies considerably from case               stress relevant product characteristics
                                                                                                                                               to case. The marketing manager must                   or consumer benefits that differentiate
                                                                                                                                               determine which variables will isolate a              the product or brand from those of
                                                                                                                                               meaningful target market.                             competitors.

                                                                                                                                           4) Explain the purpose of a positioning
                                                                                                                                              Each brand appealing to a given market             Say Again
                                                                                                                                              segment has a position in the consum-              For a podcast summary, go to
                                                                                                                                              er’s mind. The purpose of a positioning            http://www.effectivemarketing.nelson.com.

                                                                                                                                           Q    U E S T I O N S               f or Cr i t i c al Thi nk i ng

                                                                                                                                             1. Think about the last time you saw a photo of Avril Lavigne either on TV or in a magazine
                                                                                                                                                or newspaper. Has her image changed over time? Has she positioned herself differently
                                                                                                                                                in the market from whey she launched her first album? Explain.
                                                                                                                                             2. Name three different segments of the music market that Avril Lavigne appeals to. How
                                                                                                                                                are they different and how are they similar?

                         Once you’ve read the chapter, take the                                                                              3. Why do organizations practise market segmentation?
                                                                                                                                             4. Think of some creative ways the following organizations might segment the market.
                                                                                                                                                a. A rental car company
                                                                                                                                                b. A zoo
                         next step and revisit the Scene in the                                                                                 c. A personal computer manufacturer
                                                                                                                                                d. A science magazine
                                                                                                                                             5. What are some unusual ways markets have been segmented?

                         first two Questions for Critical Thinking.                                                                          6. Identify and evaluate the target market for the following products.
                                                                                                                                                a. The Globe & Mail
                                                                                                                                                b. The Winnipeg Blue Bombers
                                                                                                                                                c. Terra boots
                         Apply what you’ve learned to the                                                                                       d. Perrier bottled water
                                                                                                                                                e. Wired magazine
                                                                                                                                             7. What questions should a marketer ask to determine if a market segment is meaningful?

                         opening scenario—follow up on the                                                                                   8. How might Levi’s segment the men’s clothing market? How might Molson segment the
                                                                                                                                                market for beer?
                                                                                                                                             9. What variable do you think is best for segmenting a market?

                         latest developments in the story!                                                                                  10. What is positioning? Provide some examples.
                                                                                                                                            11. Identify the positioning strategy for the following brands.
                                                                                                                                                a. Jones Soda
                                                                                                                                                b. WestJet
                                                                                                                                                c. Telus long-distance service
                                                                                                                                                d. Dell computers
                                                                                                                                            12. Form small groups of four or five students. Assume you have been hired by a rental car
                                                                                                                                                company as consultants. Research and identify a market segmentation strategy and a
                                                                                                                                                positioning strategy for the company.

        viii                                                                                                                                                                                                                                   NEL

41497_00_FM.indd viii                                                                                                                                                                                                                            11/14/07 2:46:40 PM
                      Compelling examples bring theory into focus
                       Effective Marketing illustrates academic theory with examples you’ll remember and use
                       in your own professional life. We look at the profound changes brought about by the
                       Internet and information technology. Easily grasped stories of success and failure
                       bring abstract principles to life.

                                                                                                                                                                                  You’ll find out about the
                                                                                      CHAPTER 14— I N T E G R A T E D M A R K E T I N G C O M M U N I C A T I O N S         387
                                                                                                                                                                                  latest innovations in new
                                                                                                                                               Dove’s “Evolution” video,
                                                                                                                                               created by Toronto-based
                                                                                                                                                                                  interactive media. How are
                                                                                                                                               agency Ogilvy & Mather,

                                                                                                                                                                                  blogs, podcasts, and YouTube
                                                                                                                                               shows the transformation of
                                                                                                                                               an “ordinary” woman into
                                                                                                                                               a stunning billboard model
                                                                                                                                               through make-up, lighting,

                                                                                                                                                                                  changing marketing today?
                                                                                                                                               and photo enhancement.
                                                                                                                                               Dove’s marketers bypassed
                                                                                                                                               conventional high-priced
                                                                                                                                               media and posted the time-
                                                                                                                                               lapse video for free on
                                                                                                                                               YouTube, where it has drawn
                                                                                                                                               over 5 million hits. This is a
                                                                                                                                               powerful example of how
                                                                                                                                               creative marketers can bypass
                                                                                                                                               traditional formats and use
                                                                                                                                               new interactive media to
                                                                                                                                               deliver their message.

                                       time slots and shown the piece during various prime-time slots throughout the week.
                                       YouTube enabled users to view the film when it was convenient to them, leading to over
                                       5 million hits from new and repeat viewers. The creative direction of the campaign dem-
                                       onstrates how an average woman is transformed to look like a model, with the tagline “No
                                       wonder our perception of beauty is distorted.” Viewers are then encouraged to take part
                                       in the “Dove Real Beauty Workshop for Girls.”3 The video sparked so much interest that it
                                       was featured on Good Morning America and the Ellen DeGeneres show, and it is estimated
                                       that the short film generated over $150 million in public relations and media coverage
                                       throughout Canada, the United States, and Britain. Taking advantage of new interactive
                                       media forms such as YouTube can strengthen your brand within your target market.4

                                 The Five Promotional Mix Elements
                                       The promotional mix includes personal selling, advertising, publicity, sales promotion,
                                       and direct marketing. It is up to the marketer to determine which approach, or combina-
                                       tion of approaches, is best in terms of creating an integrated marketing communication
                                                                                                                                                                                                                        What Went Right? What
                                       strategy for the product or service. The nature of the message and the context in which
                                       it is to be delivered provide powerful clues about which method or methods to choose.
                                       Few organizational buyers would feel comfortable buying industrial equipment solely on
                                       the basis of direct mail or telephone communication. On the other hand, few consumers
                                                                                                                                                                                                                        Went Wrong? These mini-
                                       need help from a salesperson to choose a certain brand of popcorn; they are content to
                                       rely on advertising for most product information. To determine which promotional mix
                                       elements should be used, it is important that the target market, the positioning strategy,
                                       and the other marketing mix elements are taken into consideration.
                                                                                                                                                                                                                        cases focus on decisions
                                                                                                                                                                                                                        made by a variety of orga-

                                                                                                                                                                                                                        nizations. Learn from the
                                                                                                                                                                                                                        success of the experts—and
                                                                                                                                                                                                                        from their mistakes!

                         260            PART 3— C R E A T I N G   A   WINNING MARKETING STRATEGY

                          Exhibit 10–2                     THE GENERAL STAGES IN THE DEVELOPMENT OF NEW PRODUCTS

                                                                                       Many New Product Ideas

                                                                                      Idea       Idea
                                                                               Idea           Idea                Idea

                                                                                             Idea generation                                                                         390          PART 3— C R E A T I N G      A   WINNING MARKETING STRATEGY


                                                                                          Business analysis
                                                                                                                                                                                     WHAT WENT WRONG? WRONG
                                                                                                                                                                                                 WHAT WENT
                                                                                                                                                                                     The Lord of the Rings—the Next                      on sale, it was reported that the stage pro-        The show ended its Toronto run in
                                                                                                                                                                                     Evolution? The Lord of the Rings trilogy            duction would be a one-of-a-kind expe-           September 2006, and it will reopen
                                                                                              Development                                                                            has sold over 50 million copies worldwide           rience, with over 70 actors, singers, and        in London, England, in June 2007. To
                                                                                                                                                                                     since its first publishing in 1955. Passed          musicians, and 17 elevators. To recoup           improve the production, producers will
                                                                                                                                                                                     down from generation to generation, this            the initial investment, The Lord of the          use a more universal language, shorten
                                                                                          Commercialization                                                                          novel series is not only one of the world’s         Rings would have to sell out each night,         the show length to three hours, and
                                                                                                                                                                                     most widely read pieces of fiction but it           which should not be a problem, based             decrease the number of the subplots.
                                                                                                                                                                                     has also been made into a $27 million               on the lavish production investment and          In addition, they will increase the overall
                                                                                                                                                                                     part-musical and part-play production,              strong fan base.                                 use of music within the production. In
                                                                                                                                                                                     which opened in Toronto in March 2006.                  After the curtain opened, the critics did    the end, the production cost investors
                                                                                                 New                                                                                 As a point of reference, the initial invest-        not review the production as expected. They      $28 million, including a $3 million invest-
                                                                                                product                                                                              ment in this production was 50 percent              claimed the show was to long; the Toronto        ment from the Ontario government. Is this
                                                                                                                                                                                     more than the investment required to                Star described it as “dull,” while the Toronto   a case of poor publicity or a poor theatre
                                                                                                                                                                                     produce The Lion King. When tickets went            Sun said it “falls victim to its own hype.”      production?5

                                                                                      One Commercial Success
                                                                                                                                                                                                       Expected to be a sensational
                                                                                                                                                                                                       hit and a one-of-a-kind pro-
                                                                                                                                                                                                       duction, the Lord of the Rings
                                                                                                                                                                                                       musical closed its doors early.
                                                                                                                                                                                                       But was this due to a poor
                                                                                                                                                                                                       theatre production or to poor

                                                       WHAT WENT RIGHT?
                                                              WHAT WENT RIGHT?
                         BlackBerry The BlackBerry Pearl is the           has been photographed with her favourite            A Toronto marketing professor explains the
                         latest innovation from Research in Motion        “CrackBerry.” Not bad for what started out          company’s success by saying BlackBerry
                         (RIM), the Waterloo, Ontario–based com-          as a wireless e-mail device designed for            “managed to really hit a need and do it
                         pany that has become a global Canadian           Wall Street stockbrokers.                           better than anybody else.” RIM is a home-
                         brand. This “smart phone” offers e-mail,             When the Blackberry was first intro-            grown success story that was honoured
                         text-messaging capabilities, a digital music     duced, it took five years for the number of         with Marketing Magazine’s Marketer of
                         player, and a camera. The major news,            subscribers to reach a million. Then, only          the Year Award in 2006. However, there is
                         however, is that the BlackBerry now con-         10 months later, the numbers doubled                now some stiff competition for BlackBerry,
                         tains a little trackball, which finally makes    as RIM went global. There are now over              including the Palm Treo, Microsoft’s
                                                                                                                                                                                                                             The main purpose of sales promotion is to achieve short-term objectives, such as a
                         horizontal scrolling easy. The BlackBerry        6 million BlackBerry subscribers around the         Windows Mobile, and the Apple iPhone.
                                                                                                                                                                                                                         first-time trial of a product.
                         has been called one of the great innova-         world, and RIM is exploring new markets             Yet RIM is not worried by this competition,
                         tions in communications, and anything            in Europe, the Middle East, Latin America,          as it continues to strive towards its goal                                                 Direct Marketing
                         that makes life easier for busy business-        Africa, and Asia.                                   of making Interbrand’s 100 Best Global
                                                                                                                                                                                                                         When marketers communicate directly with their target market through the mail, the tele-
                         people is welcome in today’s market.                 What is really amazing is that BlackBerry       Brands in the next few years. To date, no
                                                                                                                                                                                                                         phone, and the television, it is called direct marketing or a direct-response campaign.
                         Oprah Winfrey says the BlackBerry is one         has achieved all of this success without            Canadian company has made the list.4                                                       The purpose of direct marketing is to trigger a response by the consumer, such as a sale.
                         of her “favourite things,” and Paris Hilton      multi-million dollar advertising campaigns.                                                                                                    Examples of direct marketing include the direct mailing of the Sears catalogues and elec-
                                                                                                                                                                                                                         tronic media advertisements featuring computerized ordering for Columbia House. Direct
                                                                                                                                                                                     Direct marketing                    marketing offers marketers the opportunity to speak on a personal level with the con-
                                                                                                                                                                                     Marketing that uses                 sumer to address personal needs. A direct-response campaign, like the other major pro-
                                                                                                                                                                                     mail, telephone, and                motional campaigns, may be used in conjunction with other strategies. The advertising
                                                                                                                                                                                     television to commu-                and personal selling tactics associated with direct-response campaigns will be addressed
                                                                                                                                                                                     nicate directly with the            in Chapters 15 and 16. To evaluate the effectiveness of the campaign, a database should
                                                                                                                                                                                     target market.                      be used to collect consumer information.
                                                                                                                                                                                                                            The characteristics of the five elements of promotion are summarized in Exhibit 14-2.



41497_00_FM.indd ix                                                                                                                                                                                                                                                                                                                           11/14/07 2:46:45 PM
                     Understand the marketing environment, from local
                     to global
                      Because marketing in Canada isn’t just about big North American corporations, you
                      need to know about a variety of organizations. Close-up views of small businesses
                      give you insight into the challenges faced by localized firms. Global profiles show how
                      marketing is increasingly an international discipline and what it will take to success-
                      fully compete. And these topics aren’t just covered in boxes—examples are integrated
                      throughout every chapter.

                                                                           CHAPTER 4— E N V I R O N M E N T A L F O R C E S : T H E M A C R O E N V I R O N M E N T        89

                                      Electronic commerce, or e-commerce, is any activity that uses some form of electronic
                                   communication in the inventory, exchange, advertisement, distribution and payment
                                   of goods and services. The dot-com crash in 2000 resulted in cutbacks in spending on
                                   e-commerce. However, online retail sales Canada have now recovered and are projected
                                   to grow in the future.
                                      As our discussion of the Internet illustrates, technological forces have a pervasive
                                   influence on the marketing of most goods and services. Because changes related to tech-
                                   nology can have a major impact, organizations of all types must monitor these changes
                                   and adjust their marketing mixes to meet them.

                                                               1. The study of people’s vital statistics, such as their ages, births, deaths, and locations, is known as
                                               4-2                                     .

                                   For answers, see
                                                               2. True or false? Newfoundland, Saskatchewan, and the Yukon grew in population during 2000–
                                                                  2001 due to migration.
                                                               3. Many companies use the Internet to do business. What percentage of Canadian businesses use
                                                                                                                                                                                                                 Small Business Beat! boxes
                                   page 480.                      the Internet?

                                                                                                                                                                                                                 focus on Canadian firms that
                                     Small Business Beat!                                                                                                                                                        owe their success to identifying
                                     Y    ou are probably familiar with the saying
                                          “one person’s garbage is another person’s
                                                                                                   1.4 percent turnover in a firm with hardly
                                                                                                  any employees over age 35. The interview
                                     treasure.” One small Canadian company has man-
                                     aged to make it big by turning junk into a sizeable
                                     profit. The company, 1-800-Got-Junk, was voted
                                                                                           process at 1-800-Got-Junk is intense. There are
                                                                                           sometimes more than 250 applicants for every
                                                                                           operations person hired. Scudmore treats his
                                                                                                                                                                                                                 a niche, delivering excellent
                                     the best company to work for in B.C. in 2004.         employees well, and 25 percent of profits are
                                     With sales projected at $7 million for the year,
                                     it is clear that there is money to be made in the
                                     junk-removal business. Brain Scudmore and Jerry
                                     Gratton, who run 1-800-Got-Junk in Vancouver,
                                                                                           directed back to the employees. Sometimes
                                                                                           the hopeful applicants line up outside the door
                                                                                           wearing the franchisee truck operator’s signature
                                                                                           blue clown wigs.
                                                                                                                                                                                                                 products or services—and, of
                                     have come a long way from their one-truck oper-           “Energetic, compassionate, and fun” are words
                                     ation, which started with a $700 investment in
                                     1989.32 The franchise operation has become so
                                     successful that Scudmore dropped out of his UBC
                                                                                           used to describe the company culture. The blue
                                                                                           wigs are only part of the fun in a company where
                                                                                           final decisions are made using the “rock, paper,
                                                                                                                                                                                                                 course, to effective marketing!
                                     commerce program in third year to be able to          scissors” game.33 Scudmore doesn’t drive a fancy
                                     dedicate more time to running his business. There     car or have a corner office. He sits in a nondescript
                                     are now 123 trucks coast to coast, 55 employees       workplace outside the boardroom wearing jeans
                                     and an 836 square metre Granville Island office       and a t-shirt and listens to the Pink Floyd music that
                                     called “the Junktion.” This all supports the firm’s   is heard in the office along with everyone else.
                                     215 self-employed franchisees and its employees           Who would have thought that the banal
                                     across North America.                                 removal of junk could be so profitable? The com-
                                          This young company boasts a record of            pany was able to take an opportunity in the mar-
                                     employment that is enviable in any industry. Only     keting environment and has built a very successful
                                     one employee has ever left voluntarily. That’s        enterprise as a result.34


                                                                236          PART 3— C R E A T I N G   A   WINNING MARKETING STRATEGY

                                                                  Exhibit 9–3                     CHARACTERISTICS OF A GOOD BRAND NAME
                                                                                                                                                                                                                                                 World Beat! boxes reflect
                                                                                           Suggests a
                                                                                                                                   Is easy to
                                                                                                                                   remember                           Invokes positive
                                                                                                                                                                                                                                                 changing global markets
                                                                                           positive image

                                                                                                                                                                                                                                                 and the increased competi-
                                                                                                                                                                      or connotation

                                                                                                               Cover Girl                                Outward
                                                                                                                makeup                                    Bound
                                                                                                                                                          Nail Guard
                                                                                                                                                                                                                                                 tion today’s marketers face
                                                                                                             Jiffy cake mix

                                                                                                                                                                                                                                                 from foreign firms. How are
                                                                                                                                                                       Says something

                                                                                                                                                                                                                                                 partnerships and innovation
                                                                                                                            Is easy to pronounce;                      about the user
                                                                                            benefits                        has mnemonic
                                                                                                                            quality; is short and

                                                                                                     Some frequently encountered products have names that are owned by retailers or
                                                                                                                                                                                                                                                 helping Canadian businesses
                                                                                                  other intermediaries. The Sears line of Craftsman tools is a good example. Brands owned
                                                                                                  by Sears, Safeway, Wal-Mart, and other retailers are called distributor brands or private
                                                                                                  brands. Here, the name distributor brand is more descriptive. Brands owned by whole-
                                                                                                  salers, such as IGA, are also called distributor brands.
                                                                                                                                                                                                                                                 to survive and thrive?
                                                                                              World Beat!
                                                                                              Lululemon Athletica Inc. Lululemon                             pronunciation for the Japanese and it is
                                                                                              Athletica Inc. is ready to take on the world and              not part of their vocabulary. He thought to
                                                                                              sell its gospel of healthy living stores in Asia and     himself that if he ever ran another company he
                                                                                              Australia. The first store is set to open in Japan       would make a name with three L’s in it and see
                                                                                                                                                                                                                                                  CHAPTER 8— M A R K E T S E G M E N T A T I O N , T A R G E T I N G ,   AND   POSITIONING STRATEGIES    221
                                                                                              even though the catchy brand name tongue ties            if he could make three times the money. He
                                                                                              the Japanese. With 17 stores in Canada and the           was playing with the L’s and came up with the
                                                                                              U.S., Lululemon Athletica has proven that yoga           name Lululemon. It’s a brand name that is kind
                                                                                              and fitness apparel is a viable business in a whole      of exotic for the Japanese and Chip says that it
                                                                                                                                                                                                                                   VALS™ SEGMENTATION SYSTEM24
                                                                                              new category of clothing. President and founder          is funny to try and watch them say it. Lululemon
                                                                                              Chip Wilson used to run Westbeach a surf/skate/          has expanded through a combination of fran-
                                                                                              snowboard line where he dealt with the Japanese          chise and corporate owned stores. With over
                                                                                              market. During that time he learned that Japanese        200 employees, Lululemon has proven that it can
                                                                                              marketing companies would never come up with             be successful selling fashionable workout gear to
                                                                                              a name that had an L in it. The letter L is a tough      the image-conscious fitness crowd.5


                                                                                                                                                                                                                              and stability over risk, intimacy, and self-discovery. They are deeply committed to their work and
                                                                                                                                                                                                                              families, and their social lives are structured around family, church, and business. As consumers, they
                                                                                                                                                                                                                              favour established products and services that demonstrate their success to their peers. Strivers seek
                                                                                                                                                                                                                              motivation, self-definition, and approval from the world around them. They are striving to find a secure

                      It’s too easy to regard marketing as                                                                                                                                                                    place in life. Unsure of themselves and with limited economic, social, and psychological resources, they
                                                                                                                                                                                                                              are deeply concerned about the opinions and approval of others. They may try to emulate people who
                                                                                                                                                                                                                              own more impressive possessions, but what they wish to obtain is often beyond their reach.25


                      an end in itself—a closed world that                                                                                                                                                                    1.
                                                                                                                                                                                                                                    Evaluate VALS as the basis for a market segmentation strategy.
                                                                                                                                                                                                                                    What types of products are most likely to benefit from segmentation based on VALS?

                      has little interaction with daily life.                                                                                                                                                         >> Cross-functional Insights
                                                                                                                                                                                                                              Many theories and principles from other business disci-                   What database software might be used by marketing

                      Cross-Functional Insights appear from                                                                                                                                                                   plines can provide insights about the role of marketing
                                                                                                                                                                                                                              in an organization. The questions in this section are
                                                                                                                                                                                                                              designed to help you think about integrating what you
                                                                                                                                                                                                                              have learned in other business courses with the mar-
                                                                                                                                                                                                                                                                                                     research managers?
                                                                                                                                                                                                                                                                                                        What spreadsheet software might be used by mar-
                                                                                                                                                                                                                                                                                                     keting research managers?
                                                                                                                                                                                                                                                                                                        What statistical software might be used by marketing

                      time to time to demonstrate how mar-
                                                                                                                                                                                                                              keting principles explained in Chapters 5 through 8.                   research managers?
                                                                                                                                                                                                                                                                                                        In what ways must a marketer’s decision support
                                                                                                                                                                                                                              Decision Support Systems for Marketing                                 system be coordinated with the organization’s informa-
                                                                                                                                                                                                                              Decision support systems serve specific business units                 tion system?
                                                                                                                                                                                                                              in a company. A decision support system is a computer

                      keting fits into the broader landscape of                                                                                                                                                               system designed to store data and transform the data                   Research Is Systematic and Objective
                                                                                                                                                                                                                              into accessible information. Its purpose is to allow                   Marketing research allows managers to make deci-
                                                                                                                                                                                                                              decision makers to answer questions through direct                     sions based on objective, systematically gathered data
                                                                                                                                                                                                                              interaction with databases.                                            rather than intuition.

                      business and society.                                                                                                                                                                             NEL

       x                                                                                                                                                                                                                                                                                                                                                       NEL

41497_00_FM.indd x                                                                                                                                                                                                                                                                                                                                               11/14/07 2:46:49 PM
                      Success is in your hands with our Integrated
                      Learning System
                        Are you prepared for tests and exams? Use our superior pedagogy to study more effec-
                        tively. Learning objectives and frequent review checks help ensure you understand
                        the major topics of each chapter.

                        Learning Objectives at the          CHAPTER   TWO
                                                                 MARKETING MANAGEMENT: STRATEGY
                        start of each chapter preview
                        the important topics you’ll
                        read about.

                                                                                                                    LEARNING OBJECTIVES
                                                                                                                    After you have studied this chapter,
                                                                                                                    you will be able to …
                                                                                                                    1 Discuss the roles of marketing
                                                                                                                       planning and execution at the
                                                                                                                       corporate level, at the strategic
                                                                                                                       business unit level, and at the
                                                                                                                       operational level of management.
                                                                                                                    2 Understand the concept of the
                                                                                                                       organizational mission.
                                                                                                                    3 Understand the nature of a com-
                                                                                                                       petitive advantage.
                                                                                                                    4 Explain the market/product matrix.
                                                                                                                    5 Identify the stages in the strategic
                                                                                                                       marketing process.
                                                                                                                    6 Understand the nature of
                                                                                                                       marketing ethics and socially
                                                                                                                       responsible behaviour.

                                                                          46      PART I— U N D E R S T A N D I N G M A R K E T I N G P R O C E S S   AND   STRATEGIES
                                                            26                                                                                                     NEL

                                                                                                        The results or findings generated during the control phase provide a basis for judging both
                                                                                                        the marketing plans and their execution and serve as new inputs for further planning and
                                                                                                        execution. Thus, a series of logical steps is maintained, as shown in Exhibit 2-9.
                                                                                                           Planning, execution, and control of marketing strategies and tactics are also inter-
                                                                                                        related because each has ethical dimensions. Understanding the nature of marketing
                                                                                                        ethics is essential for anyone who plans to be a manager. The remainder of this chapter
                                                                                                        addresses this issue.

                                                                                                        1. What are the six major steps in the strategic marketing process?
                                                                                                        2. What is the difference between environmental scanning and environmental monitoring?

                                                                                                        3. What does the acronym SWOT stand for? The internal analysis consists of
                                                                                                           and                    . The external analysis consists of                            and

                                                                                                        4. A                           is a portion of a larger market, identified according to some shared char-
                                                                                                           acteristic or characteristics.
                                                                           For answers, see             5. The way in which consumers perceive a product relative to its competition is known as
                                                                           page 479.                                           or                     .

                        Rewind and Review cues                            Exhibit 2–9                   PLANNING, EXECUTION, AND CONTROL ARE INTERRELATED

                        you to stop and check your
                        understanding of what you’ve
                        read before you move on
                        to the next section. Did
                        you get it right? Check the
                        suggested answers at the                                                                                                                                                CHAPTER 2— M A R K E T I N G M A N A G E M E N T : S T R A T E G Y   51


                        back of the book.                                                                                               Summary
                                                                                                                                        This chapter discusses marketing strategy            5) Identify the stages in the strategic
                                                                                                                                        and tactics and explains how marketing                  marketing process.
                                                                                                                                        managers must plan, execute, and control                The strategic marketing process
                                                                                                                                        the organization’s marketing activities.                includes the following six stages:
                                                                                                                                                                                                1. Identifying and evaluating
                                                                                                                                        1) Discuss the roles of marketing
                                                                                                                                           planning and execution at the
                                                                                                                                                                                                2. Analyzing market segments and
                                                                                                                                           corporate level, at the strategic
                                                                                                                                                                                                   selecting target markets
                                                                                                                                           business unit level, and at the
                                                                                                                                                                                                3. Planning a market position and
                                                                                                                                           operational level of management.
                                                                                                                                                                                                   developing a marketing mix
                                                                                                                                           Top management engages in strategic
                                                                                                                                                                                                4. Preparing a formal marketing plan
                                                                                                                                           planning to determine long-term goals
                                                                                                                                                                                                5. Executing the plan
                                                                                                                                           for the entire orga nization. Managers
                                                                                                                                                                                                6. Controlling efforts and evaluating
                                                                                                                                           at the strategic business unit level plan
                                                                                                                                           strategies for the business unit and for
                                                                                                                                           individual products. Operational                  6) Understand the nature of marketing

                      The Summary at the end of the chapter
                                                                                                                                           managers are concerned with planning                 ethics and socially responsible
                                                                                                                                           and executing the day-to-day activities              behaviour.
                                                                                                                                           of the organization.                                 Social responsibility refers to the ethical
                                                                                                                                        2) Understand the concept of the                        principle that people or organiza-

                      is keyed to the Learning Objectives. Here
                                                                                                                                           organizational mission.                              tions must be accountable for how
                                                                                                                                                                                                their acts might affect the interests of
                                                                                                                                            An organizational mission is a state-
                                                                                                                                                                                                others. Ethics involves values about
                                                                                                                                            ment of a company’s purpose. It
                                                                                                                                                                                                right and wrong conduct. Marketing
                                                                                                                                            explains why an organization exists
                                                                                                                                                                                                ethics are the principles that guide an

                      is a quick overview of the key concepts
                                                                                                                                            and what it hopes to accomplish.
                                                                                                                                                                                                organization’s conduct and the values
                                                                                                                                        3) Understand the nature of a                           it expects to express in certain situa-
                                                                                                                                           competitive advantage.                               tions. Moral behaviour on the part of
                                                                                                                                            A business or product that is superior              marketers is activity that exhibits ethical

                      you’ve learned.
                                                                                                                                            to or favourably different from its com-            values. Ethical principles reflect the
                                                                                                                                            petitors in a way that is important to the          cultural values and norms of a society.
                                                                                                                                            market has a competitive advantage. It              Marketing decisions often have ethical
                                                                                                                                            may offer the same quality at a lower cost          dimensions and may involve ethical
                                                                                                                                            or some unique feature, for example.                dilemmas.

                                                                                                                                        4) Explain the market/product matrix.
                                                                                                                                           The market/product matrix broadly cat-
                                                                                                                                           egorizes the opportunities of a strategic
                                                                                                                                           business unit in terms of strategies for
                                                                                                                                           growth. The four strategies are market            Say Again
                                                                                                                                           penetration, market development, product          For a podcast summary, go to
                                                                                                                                           development, and product diversification.         http://www.effectivemarketing.nelson.com.

                      Listen and learn! You can download                                                                         NEL

                      Summary podcasts from our website at


41497_00_FM.indd xi                                                                                                                                                                                                                                                       11/14/07 2:46:50 PM
                       Make sure you can talk the talk
                         Key marketing terms are identified and defined throughout the text (and beyond) to
                         help you master important professional terminology.

                                                               6            PART I— U N D E R S T A N D I N G M A R K E T I N G P R O C E S S   AND   STRATEGIES

                         Key terms are printed in bold                                                   Suppose you were the vice president of marketing for Sara Lee Bakery, the maker of
                                                                                                     frozen cheesecakes and other frozen desserts. Your marketing activities might be iden-

                         and defined in the margin
                                                                                                     tified as, but not limited to, conceiving and developing products, determining prices,
                                                                                                     advertising, selling, distributing products to consumers, and servicing customers after
                                                                                                     sales have been made.
                                                                                                         A full understanding of marketing requires recognition of the fact that product

                         when they first appear.               Need
                                                               The gap between an
                                                                                                     development activities and product modifications are planned in response to the pub-
                                                                                                     lic’s changing needs and wants. A major marketing activity, then, is paying continuous
                                                                                                     attention to customers’ needs—identifying and interpreting those needs before undertaking
                                                               actual and desired state.             other activities, including production. Although most marketing activities are intended to
                                                                                                     direct the flow of goods and services from producer to consumer, the marketing process
                                                                                                     begins with customer analysis even before the product is produced.
                                                                                                         Again, let’s consider Sara Lee. The company experienced declining sales of its frozen
                                                                                                     cheesecakes. When Sara Lee investigated its problem, its marketing research uncov-
                                                                                                     ered a major shift in the eating behaviour of North Americans, connected to consumers’
                                                                                                     limited free time. For instance, an increasing number of people are eating their meals
                                                                                                     away from home.9 A whole new culture of “dashboard dining” has developed as the car
                                                                                                     has become a regular place where people 8 — MInR addition, M E N T A families dineE atI N G , A N D P O S I T I O N I N G S T R A T E G I E S
                                                                                                                                           C H A P T E R eat. A K E T S E G when T I O N , T A R G T home,                                           219
                         Key terms are also listed at                                                they often seek the convenience of ready-made or hassle-free entrées available from
                                                                                                     restaurants, supermarkets, or packaged food marketers. The company also learned that
                                                                                                     consumers were more likely to have dessert in front of the TV at 9 p.m. than to take time

                         the end of each chapter. Use                                                                K
                                                                                                     to eat cheesecake after dinner. Discussions with families created a better understanding
                                                                                                                          E Y Terms
                                                                                                     of their changing needs and resulted in a new product: Sara Lee Cheesecake Bites. The
                                                                                                                     cross-classification cheesecake                        lifestyle p. 209
                                                                                                     product consists of individualmatrix p. 197 servings, which can be eaten straight from the
                                                                                                                     undifferentiated marketing p. consumer needs, they find it easier to bring buyers
                                                                                                     freezer.10 When marketers understand199                                psychographics p. 209

                         this list for review—can you                                                                concentrated marketing p. 200
                                                                                                     and sellers together.
                                                                                                                     80/20 principle p. 201
                                                                                                                                                                            cross-selling p. 211
                                                                                                                                                                            benefit segmentation p. 211
                                                                                                            differentiated marketing p.        geodemographic segmentation p.
                                                                                                    Marketing Is marketing p. 203 201 than Products competition p. 214 211
                                                                                                            custom about More
                         define each term? If not, use
                                                               Tangible goods                                       mass marketing, p. are                            repositioning p. 216
                                                                                                     When we consider customization we204 inclined to think of tangible goods or products, such
                                                               Items that can be felt,               as cars, clothes, soft drinks, and DVDs. However, in today’s fast-paced world, the mar-
                                                               tasted, heard, seen, and/             keting of services or intangible goods—such as insurance, fitness, daycare, and sporting

                         the page reference to go back         or smelled.                           events—have e-exercises
                                                                                                                    become big business. A large part of most Western economies is now based
                                                                                                     on the service sector—selling these intangibles.
                                                               Intangible goods                                                                  1. Go to the Statistics Canada home page at http://www.statcan.ca. What three provinces
                                                                                                         In addition to tangible and intangible goods, we have social marketing. This area of

                         and refresh your memory of                                                  marketing embraces everything from not-for-profit organizations, such most inCanadian between 2013 and 2020? What is the
                                                               Purchases that are not                                                               are forecasted to increase the as the population
                                                               perceived through the                                                                expected growth of the Chinese-Canadian market? The Indo-Canadian market?
                                                                                                     Actors’ Equity Association, to political parties to global forums. The primary character-
                                                               senses.                               istic of marketing is that it involves an exchange process in which two or more parties
                                                                                                     exchange, or trade, something of equal value. A transfer of goods or services in exchange

                         the term.                             Social marketing
                                                               Use of marketing tech-
                                                                                                     for money is the most frequent marketing transaction. However, exchanges also occur
                                                                                                     in a politician’s campaign, a zoo’s fund-raising drive, or an anti-smoking group’s pro-
                                                                                                                     E                                   R                           W
                                                               niques to bring aware-                                   T H I C A L L political campaign, to a zoo, or to an O N G
                                                                                                     gram. When a donation is made to a Y                I G H T          OR           R anti-smoking
                                                               ness to a cause or idea.              effort, something is given and something is received—even though what is received may
                                                                                                                    The CRTC in Canada is responsible for guidelines regarding what can and cannot be broadcast
                                                                                                     be intangible, such as a feeling of goodwill or a sense of satisfaction. In each situation,
                                                               Exchange process                                     on television. After the exposure of Janet Jackson during the Super Bowl in 2004 and Eminem
                                                                                                     there has been a transaction, either between an individual and a group or between two
                                                               The interchange of                                   “mooning” the audience during the MTV Music Awards, the broadcasting networks in Canada
                                                               something of value by                                and the United States have imposed a five-second delay for certain broadcasts to better control
                                                                                                         Every exchange requires two or more parties: A buyer and a seller. In business, com-
                                                               two or more parties.                                 unacceptable events. The CRTC also has strict guidelines for what can be shown on television
                                                                                                     panies give up their product, which may be a good, a service, or an idea, for a price.
                                                                                                                    at different times of the day and for what can be considered family-viewing content.
                                                                                                     Both buyers and sellers are looking to benefit from the exchange; revenues satisfy the
                                                                                                     marketer’s objectives (profit), and products satisfy the consumer’s needs.
                                                                                                                     1. Should the CRTC segment television viewing by age?
                                                                                                                     2. It is ethical to have a five-second delay imposed by the television broadcast companies?

                         For overall reference, the                                                                      But wait, there’s more!
                                                                                                                         Go to http://www.effectivemarketing.nelson.com to find podcast summaries, practice
                         Glossary at the end of the                                                                      quizzes, online exercises and appendixes, useful weblinks, career tips, a marketing math
                                                                                                                         tutorial, and more! Find out about Enhanced WebAssign, the online learning and home-
                                                                                                Glossary                 work assessment program that tests your understanding of the chapter, and then pro-

                         book lists every key term and                                          A
                                                                                                                         vides a media-rich customized study plan to help you master what you need to know.

                                                                                                Account service representative the book’s website at http://www.effectivemarketing.nelson.com to see theA government
                                                                                                                          Go to A sales
                                                                                                                                                Allowance A reduction in price, or rebate,
                                                                                                                                             given to a marketing intermediary in
                                                                                                                                                                                             Boycott The refusal of some group to
                                                                                                                                                                                        buy certain products. CBC
                                                                                                    employee at company headquar-for this chapter. for a large order or the perfor-
                                                                                                                          video case
                                                                                                                                                                                        may enforce a boycott of the prod-

                         definition, plus a page refer-                                             ters or at a branch office who cor-
                                                                                                    responds with clients and provides
                                                                                                    customer service to established
                                                                                                                                             mance of a specific activity. (453)
                                                                                                                                          Anticipation discount A discount over
                                                                                                                                             and above the regular cash discount,
                                                                                                                                                                                        ucts of some other country. (98)
                                                                                                                                                                                     Brand An identifying feature that distin-
                                                                                                                                                                                        guishes one product from another;
                                                                                                    accounts; sometimes called a sales       meant to encourage even faster pay-        more specifically, any name, term,

                         ence so you can check the                                                  correspondent. (458)                     ment of accounts. (303)                    symbol, sign, or design, or a unifying
                                                                                                Administered strategic alliance A ver-    Approach The step in the creative             combination of these. (63, 233)
                                                                                                    tical marketing system in which a        selling process wherein the sales-      Brand equity The value associated with
                                                                                                    strong channel leader coordinates        person makes initial contact and           a brand. When a brand has brand
                                                                                                                    NEL                      starts the relationship building pro-      equity, market share or profit margins

                         original context.
                                                                                                    marketing activities at all levels in
                                                                                                    the channel through planning and         cess with a prospect. (461)                are greater because of the goodwill
                                                                                                    management of a mutually beneficial Art Any aspect of an advertisement              associated with the brand. (239)
                                                                                                    program. (343)                           other than copy, including pictures,    Brand image The complex of symbols
                                                                                                Adoption process The mental and              layout, and white space. (423)             and meanings associated with a
                                                                                                    behavioural stages through which      Aspirational group A group to which an        brand. (153)
                                                                                                    a consumer passes before making          individual would like to belong. (161)  Brand mark A unique symbol that is
                                                                                                    a purchase or placing an order. The   Assembler A marketing intermediary            part of a brand. (233)
                                                                                                    stages are awareness, interest, eval-    that performs a bulk-accumulating       Brand name The verbal part of a
                                                                                                    uation, trial, and adoption. (272)       function. (328)                            brand—the part that can be spoken
                                                                                                Advertising An informative or persua-     Atmospherics Physical characteristics of a    or written. (233)
                                                                                                    sive message carried by a nonper-        store’s environment, such as appear-    Break-even point The point at which an
                                                                                                    sonal medium and paid for by an          ance, layout, and displays. (370)          organization’s revenues and costs
                                                                                                    identified sponsor whose or ganiza-   Attitude An individual’s general              are equal. (301)
                                                                                                    tion or product is identified in some    affective, cognitive, and behavioural   Broker An agent intermediary whose
                                                                                                    way. (388)                               responses to a given object, issue, or     major role is placing buyers and
                                                                                                Advertising appeal The central theme or      person. (155)                              sellers in touch with one another
                                                                                                    idea of an advertising message. (418) Auxiliary dimension An aspect of a            and assisting in contractual arrange-
                                                                                                Advertising theme An advertising             product that provides supplementary        ments. (375)
                                                                                                    appeal used in several different         benefits, such as special features,     Bulk-accumulating function An activity,
                                                                                                    advertisements to give continuity to     aesthetics, packaging, warranty,           performed by marketing interme-
                                                                                                    an advertising campaign. (418)           repair service contract, reputation,       diaries, consisting of buying small
                                                                                                Agent A wholesaler that does not take        brand name, or instructions. (226)         quantities of a particular product from
                                                                                                    title to goods. Agents sometimes                                                    many small producers and then selling
                                                                                                    take possession of goods but                                                        the assembled larger quantities. (328)
                                                                                                    function primarily to bring buyers
                                                                                                                                          B                                          Bulk-breaking function An activity, per-
                                                                                                                                          Backward channel A channel of distri-         formed by marketing intermediaries,
                                                                                                    and sellers together or otherwise
                                                                                                                                             bution for recycling, in which the         consisting of buying products in rela-
                                                                                                    help consummate a marketing
                                                                                                                                             customary flow from producer to            tively large quantities and selling in
                                                                                                    transaction. (374)
                                                                                                                                             ultimate user is reversed. (348)           smaller quantities. (327)
                                                                                                Agent intermediary A channel interme-
                                                                                                                                          Bait pricing A method of attracting cus-   Business analysis stage The stage in
                                                                                                    diary that does not take title to the
                                                                                                                                             tomers by offering low-priced items        new product development in which
                                                                                                    product. Agent intermediaries bring
                                                                                                                                             for sale with the intention of selling     the new product is reviewed from all
                                                                                                    buyers and sellers together to help
                                                                                                                                             more expensive goods. (312)                organizational perspectives to deter-
                                                                                                    complete a transaction. (325)
                                                                                                                                          Barter The exchange of products or ser-       mine performance criteria and likely
                                                                                                AIDA An acronym for attention, interest,
                                                                                                                                             vices without the use of money. (288)      profitability. (261)
                                                                                                    desire, and action. The AIDA formula
                                                                                                                                          Belief A conviction concerning the exis-   Business cycle Recurrent fluctuations
                                                                                                    is a hierarchy of communication
                                                                                                                                             tence or the characteristics of phys-      in general economic activity. The
                                                                                                    effects model used as a guideline in
                                                                                                                                             ical and social phenomena. (80)            four phases of the business cycle are
                                                                                                    creating advertisements. (423)
                                                                                                                                          Below-the-competition strategy A              prosperity, recession, depression,
                                                                                                Aided recall test In the context of
                                                                                                                                             pricing strategy whereby an orga-          and recovery. (91)
                                                                                                    advertising, a test of consumers’
                                                                                                                                             nization sets prices at levels lower    Business model The fundamental
                                                                                                    memories of an advertisement, in
                                                                                                                                             than those of competitors. (309)           strategy underlying the way a busi-
                                                                                                    which clues about the specific
                                                                                                                                          Benefit segmentation A type of market         ness unit operates. (33)
                                                                                                    material to be remembered are
                                                                                                                                             segmentation by which consumers are Business-to-business marketing Also
                                                                                                    provided. (433)
                                                                                                                                             grouped according to the specific ben-     known as B2B marketing; marketing
                                                                                                Air freight The shipment of products by
                                                                                                                                             efits they seek from a product. (211)      aimed at bringing about an exchange
                                                                                                    air carrier. (330)


                       Listen and learn! You can download
                       Summary podcasts from our website at

        xii                                                                                                                                                                                                                                                NEL

41497_00_FM.indd xii                                                                                                                                                                                                                                         11/14/07 2:46:54 PM
                      The essence of knowledge is having to apply it
                        Experiential learning is the basis of Effective Marketing’s end-of-chapter exercises. A
                        wide range of activities reinforces your understanding of chapter topics—because only
                        by experiencing a situation can you truly learn.

                                                                                                                            CHAPTER 9— M A N A G I N G P R O D U C T S , S E R V I C E S ,    AND    IDEAS         251

                        With e-exercises, you prac-                       e-exercises                    http://www.effectivemarketing.nelson.com

                        tice applied marketing as                                                        1. Go to the JRC&A home page at http://www.jrcanda.com. Select Strategic Branding. What
                                                                                                            four recommendations are offered for global branding?
                                                                                                         2. Visit the brandchannel.com website at http://www.brandchannel.com. Look at the
                                                                                                            “Features” section and the “Debate” section. Choose your favourite brand and find a fea-
                        you explore how information                                                         ture or debate in the brandchannel site. Summarize your findings in a report.
                                                                                                         3. Visit the website of Industry Canada, Strategis, at http://www.strategis.ic.gc.ca. Review the
                                                                                                            patent application procedure. Prepare a brief report on the patent application process

                        technologies are changing the                                                       noting how much it costs to apply for a patent, how the patent application is evaluated,
                                                                                                            the benefits of a patent, and the length of time a patent is valid.

                        way business is conducted                        E   T H I C A L L Y               R    I G H T              OR   W      RONG

                                                                         In recent years, the Internet gambling market has been flying high, especially in the United

                        around the world.                                States. The popularity of Texas hold ’em and televised poker tournaments has led an esti-
                                                                         mated 10 million Americans to play online poker and bet on sporting events. According to
                                                                         some estimates, there are now 1500 to 2000 gambling sites that process US$12 billion per
                                                                         year. The industry is creating playboy billionaires overnight, and the most famous so far is
                                                                         Saskatchewan-born Calvin Ayre. He claims to have made billions from his online poker com-
                                                                         pany Bodog.com based in Costa Rica. His company is now moving into mainstream enter-
                                                                         tainment, with a record label, a poker TV show, and Bodog Fight, a pay-per-view extreme

                        Ethically Right or Wrong?                        fighting competition. Ayre has been on the cover of both Canadian Business and Forbes
                                                                         magazines, proclaiming himself the newest member of the exclusive billionaires club. Yet all
                                                                         of this initial success happened before the U.S. government enacted the Unlawful Internet
                                                                         Gambling Enforcement Act, banning Internet gambling by making it illegal for U.S. financial
                        Read the ethical dilemma,                        institutions to process the Internet wagers of American citizens. The outcome was quick and
                                                                         harsh. In Canada, many companies who had built up an extensive infrastructure to service
                                                                         the growing market simply disappeared overnight. Others are reorganizing themselves for

                        then take a stand—and defend                     success under the new laws. The future of Internet gambling will be interesting to watch.
                                                                         How the industry will transform itself has yet to be seen. After all, as some say, prohibition
                                                                         didn’t stop people from drinking, so neither will this law stop people from gambling.12
                        it. Experience what it’s like to                 1. Do you agree with the U.S. authorities that Internet gambling should be illegal? Should it
                                                                            be illegal in Canada?
                                                                         2. Has the Internet made gambling easier for consumers? Would you prefer to gamble

                        evaluate ethical claims and                         online or in a casino? Why?

                                                                             But wait, there’s more!
                        apply your principles to spe-                        Go to http://www.effectivemarketing.nelson.com to find podcast summaries, practice
                                                                             quizzes, online exercises and appendixes, useful weblinks, career tips, a marketing math
                                                                             tutorial, and more! Find out about Enhanced WebAssign, the online learning and home-

                        cific situations.                                    work assessment program that tests your understanding of the chapter, and then pro-
                                                                             vides a media-rich customized study plan to help you master what you need to know.

                                                                                     166         P A R T 2 U N D E R S T A N D I N G T H E M A R K E T P L A C E : C O S U the A N
                                                                             Go to the book’s website at—http://www.effectivemarketing.nelson.com toNseeM E R SCBC D O R G A N I Z A T I O N S ( B 2 C               AND   B2B)
                                                                             video case for this chapter.

                                                                                                                        3) Explain the nature of culture and                         divided into different social classes
                                                                   NEL                                                     subculture in terms of social values,                     determined by wealth, education, occu-
                                                                                                                           norms, and roles.                                         pation, and other measures of prestige.
                                                                                                                           Marketers look at culture as the values,                  People in different social classes differ

                        Questions for Critical
                                                                                                                           beliefs, and customary behaviours that                    in lifestyle, purchase preferences, and
                                                                                                                           the members of a society learn and                        shopping and consumption patterns.
                                                                                                                           share. Insofar as consumers in a society                  Groups also strongly influence indi-
                                                                                                                           share a culture, they think and act in                    viduals’ behaviour. Reference groups,

                        Thinking challenge you to                                                                          similar ways. A subculture is a group
                                                                                                                           within a dominant culture that has
                                                                                                                           values and distinctive characteristics not
                                                                                                                                                                                     including membership and aspirational
                                                                                                                                                                                     groups, provide points of comparison by
                                                                                                                                                                                     which an individual evaluates himself or

                        think about topics beyond
                                                                                                                           shared with the larger culture. Cultures                  herself. These groups have many direct
                                                                                                                           and subcultures prescribe certain values,                 and indirect influences on purchasing
                                                                                                                           norms, and roles for the members.                         behaviours. The family is the group pri-
                                                                                                                                                                                     marily responsible for the socialization

                        the textbook and promote
                                                                                                                        4) Explain the influence of social class,
                                                                                                                                                                                     process, which involves passing down
                                                                                                                           reference groups, and the family life
                                                                                                                                                                                     social values, norms, and roles.
                                                                                                                           cycle on individual buyers.
                                                                                                                           A social class is a group of people

                        your understanding of key                                                                          with similar levels of prestige, power,
                                                                                                                           and wealth. According to one view,
                                                                                                                           Canadian society may be roughly
                                                                                                                                                                                  Say Again
                                                                                                                                                                                  For a podcast summary, go to

                        concepts.                                                                                      Q    U E S T I O N S                     for Critical Thinking

                                                                                                                          1. Refer back to the opening vignette on RDS Skateboards. Describe how skateboarding
                                                                                                                             demonstrates the influence of different reference groups such as membership groups
                                                                                                                             and aspirational groups. What other sports can you think of that have a similar culture?
                                                                                                                             Describe these in detail.
                                                                                                                          2. RDS Skateboards has been very successful launching its line of clothing, shoes, and
                                                                                                                             expanding skate parks. What other products would you recommend RDS launch in
                                                                                                                             order to remain the undisputed leader in the field of skateboarding?
                                                                                                                              3. Use the consumer decision-making model shown in Exhibit 6-2 (page 142) to explain
                                                                                                                                   how an individual might arrive at each of the following decisions:
                                                                                                                                   a. To buy a pack of Trident chewing gum

                        Cases at the end of each Part                                                                              b. Not to buy a BMW convertible
                                                                                                                                   c. To buy a new house
                                                                                                                                   d. Not to take a group of three children to the Ice Capades
                                                             474   PART                                                       4. S T R T E G Y
                                                                              3 — C R E A T I N G A W I N N I N G M A R K E T I N GUsingAexamples from your own experience, explain how the following have affected

                        help you apply and integrate                                                                               your purchasing behaviour:
                                                                                                                                   a. Extensive problem solving
                                                                                                                                   b. Perceived risk

                        the basic principles you’ve
                                                                                                                                   c. Choice criteria Critical Thinking Case
                                                                                             Public Relations: d. Cognitive dissonance
                                                                                                                              5. of might
                                                                                             An Important Part Whatthe a marketer do to reduce cognitive dissonance in the following situations?
                                                                                                                                   a. A consumer Sobeys
                                                                                             Communications Process forpurchases an automobile.
                        learned. (And there are more                                     T
                                                                                                                                   b. A wholesaler agrees to carry an industrial product line.
                                                                                                 he grocery and food retail sector has become increasingly competitive, partially due to some of the
                                                                                                                                   c. With established discount retailers such as Wal-Mart now entering
                                                                                                 new entrants in the market place. A parent purchases an expensive video game for her children.
                                                                                                                                   d. giants purchases a and Loblaws are pressed to remain leaders
                                                                                             the food retail market, traditional foodA mansuch as Sobeysmagazine subscription and wants to be
                                                                                                                                      billed later.

                        cases, plus CBC video cases,
                                                                                             in the market. However, Sobeys Inc., Canada’s second largest supermarket chain is weathering the
                                                                                         storm. The company currently operates nearly 1 300 food stores in all ten provinces, under the retail
                                                                                         names Sobeys, Foodland, Price Chopper, and IGA. In addition, the company also holds the chain of                                         NEL
                                                                                         Lawtons Drug Stores under their business umbrella.

                        on our website!)                                                     In May of 2007, the Stellarton Nova Scotia—based company celebrated 100 years in business—an
                                                                                         accomplishment that the company is very proud of. Effective communication and promotion has been
                                                                                         a very important staple to the success of Sobeys over the past century. To celebrate this very significant
                                                                                         milestone, Sobeys used an appropriate celebration, 100 days of activities and events in their 81 stores
                                                                                         across Atlantic Canada, where the company was originally founded by Frank H. Sobey.
                                                                                             The celebration of their 100 years in business is not only due to their products, services and cus-
                                                                                         tomer relationships, but to the fact the company uses a diverse and effective promotional mix. One
                                                                                         promotional tool that Sobeys uses effectively is public relations. As discussed in chapter 15, the aim of
                                                                                         any public relations program is to identify, establish, and maintain favourable relationships between an
                                                                                         organization and other publics. Sobeys is well known for their community involvement and giving back
                                                                                         to the communities which they serve, and this is communicated through publicity.
                                                                                             The celebration of their 100 years in business is not only due to their products, services, and cus-
                                                                                         tomer relationships, but to the fact the company uses a diverse and effective promotional mix. Sobeys
                                                                                         effectively integrated their significant celebration with a series of sales promotions. The company’s
                                                                                         century anniversary was tied to the promotional offer of 100 days of activities and promotions for their

                                                                                         Public Relations Activities at Work

                                                                                         O     ne primary intention of any public relations program is to maintain favourable relationships between
                                                                                               an organization and the public on whom its success or failure depends. Sobeys successfully uses
                                                                                         publicity to disseminate favourable information to its customers and other stakeholders. Late in 2006,
                                                                                         Sobeys introduced a reusable grocery bag dubbed “Green Bag for Life” in an effort to redirect plastic
                                                                                         bags from the waste and landfill systems. This was not only promoted within their stores, but also in
                                                                                         the media, to inform all stakeholders and customers of their efforts to help the environment.
                                                                                             The new reusable grocery bag program is part of Sobeys larger corporate initiative to help protect the
                                                                                         environment. The company has initiated proper in-store training of their cashiers, as Sobeys estimates
                                                                                         that it can reduce the use of traditional plastic grocery bags by 20 percent by simply adding one more
                                                                                         item to the average customer’s shopping bag. In addition, all new grocery bags introduced in their entire
                                                                                         retail chain will contain a minimum of 5 percent recycled material.
                                                                                             On World Diabetes Day, November 14, 2005, Sobeys and the Canadian Diabetes Association
                                                                                         invited the media to the launch of Smart Options, a new display offering diabetes-friendly foods in all
                                                                                         68 of the Ontario stores. With top corporate officials from Sobeys, The Canadian Diabetes Association,
                                                                                         and the Provincial Minister of Health and Promotion on hand, the event was a glowing success. This
                                                                                         was made possible in part to the pre-promotion of the event through the media and the effective use
                                                                                         of publicity with this public relations celebration.
                                                                                             Another form of public relations activity is sponsorship. Sobeys has donated many millions of dollars
                                                                                         to St. Mary’s University in Halifax, Nova Scotia to fund scholarships and capital construction projects. In fact,
                                                                                         the Business School at the University is named the Sobeys School of Business. Such generous donations
                                                                                         provide the company with constant exposure and help to enhance the company’s overall image.



41497_00_FM.indd xiii                                                                                                                                                                                                                   11/14/07 2:46:55 PM
                       Especially for you—effective study support
                        Focused studying with CengageNOW will minimize your efforts and yet maximize
                        results. It’s an online learning and homework assessment program created for Effective
                        Marketing to present a seamless, integrated learning tool. You can improve your
                        grades and save study time with CengageNOW. It isn’t just reading—it provides a
                        customized study plan that lets you master what you need to know without spending
                        time on what you already know!
                           First, take a chapter pretest. It tells you which sections of the chapters you’ve aced
                        and which ones you need to study more. Next, your customized study plan is instantly
                        generated, with resources that include:
                           • interactive exercises—practice!
                           • PowerPoint slides—drill down to the details!
                           • e-Book—read just the specific sections you need to review, automatically selected
                              to meet your needs!
                           • vodcasts—watch videos of interviews with marketing professionals!
                           Last, take the posttest and check your progress. Congratulations, you’ve mastered
                        the chapter—now you’re ready for that test!
                           Ask your instructor about ordering CengageNOW for your course, or find out more
                        at the Effective Marketing website.

                        InfoTrac® College Edition
                        InfoTrac® College Edition is a world-class online university library that offers the full
                        text of articles from over 5000 scholarly and popular publications —updated daily and
                        going back as far as 20 years. It is automatically bundled FREE with CengageNOW!
                        Users of CengageNOW receive unlimited access for four months.

                        Log on and learn at the Effective Marketing website
                        The online complement to Effective Marketing is rich in educational resources. You can
                        practice for tests, work on your applied skills, and delve deeper into marketing issues.
                        You’ll find learning tools such as interactive quizzes for every chapter, audio flashcards
                        and crosswords to test your expertise with key terms, CBC video cases, additional
                        exercises and cases, information about career opportunities, weblinks and research
                        resources, and more! Check out these resources at

        xiv                                                                                                          NEL

41497_00_FM.indd xiv                                                                                                   11/14/07 2:46:55 PM

To top