 Marketing 1/16/2017 8:13:00 PM

 It’s fun to know things- pumpkin papers (who wants to be a millionaire)

and 3rd selling flavor of ice cream
 A short pencil is better than a long memory

 Why study marketing?

o Can’t avoid it- marketing is everywhere
o Inform, persuade, and remind you
o 25-30% of jobs are marketing related
o marketing costs a lot of money
o companies that are successful understand marketing

 country song- world was falling apart

 what makes the world go round?
 Seller > buyer exchange is most important thing in economic world
 Bottom line: that’s the ultimate, that’s it.
o Term comes from profit=amount of money you bring in minus
costs – limit amount of costs or increase revenue
o To increase revenue, need more exchange
 Spears school of business had to reduce faculty and majors at one
point because not enough exchange between students

 Course is like jeopardy topic then answer

For marketing to occur:

 Two or more parties with unsatisfied needs
 Desire/ability to satisfy these
 Way for parties to communicate
 Something to exchange

 Marketing definition: the activity for creating, communicating, and

exchanging that affects the community at large

 John Kerry: secretary of state

 Joe Biden: vice president

 Provide benefit to bring satisfaction for exchange

Needs vs Wants
 Should we satisfy consumer needs or wants?
 Some argue you should only satisfy needs
 Need occurs when someone is deprived (ex. Need a coat)
 Want- shaped by someone’s knowledge, culture, and personality
(want a coat of a certain color or style)
 We want to satisfy people’s needs by satisfying their wants

 Trying to hang a portrait over a brick fireplace
 Create a hole; to get that, you need a drill bit
 The need= a hole
 Want= a drill bit
o The want satisfies the need
 Lets say someone creates a less expensive way to make the hole;
the need is still the hole, the want is the new product/way of doing
it
 Hunger- a need
o Want- the certain place you want the food from
 The challenge- meeting consumer’s needs with a new product
o New product experts estimate that up to 94% of the more
than 40,000 new consumer products introduced in US
annually don’t succeed in the long run
 Page 15
 Goal is satisfaction between seller and buyer
 Is it possible for two organizations with the same goal but different
approaches to reach the goal? Yes.
 Story: McDonalds every morning and get one of two things. They
know me by name. There was a man who looked like a freshman in
college. The man seemed unhappy to do his job. The next day the
same guy was there. I said “are you alright?” He viewed himself as
bad so he did a bad job
 How an organization views themselves affects how they do their job

 5 different ways to do this:

1. The production orientation/concept/approach:
  Organization says they can satisfy people
 Affordable products & widely available- they emphasize production
(keeping costs down)
 It is a good deal but only works in certain situations
o Chinese products- cheap & available (this works)
o Ex. Years ago, if you wanted a car, you went to an auto
manufacturer and ask for a car and say where you’re from. It
took nearly 2 months to make car and was very expensive
o Henry Ford wanted to lower cost and make it more widely
available  the assembly line
o Henry Ford made every car black to decrease time it took to
assembly. One day someone asked for a different colored car.
o Ford said “You can have any color car you want as long as it’s
black” to the customer & was still successful. How?
 When demand for the product > supply for it, he could
sell enough black cars that he didn’t need to satisfy
these few customers
 The problem today w/ cars is that the supply>demand
o Before Ford, if you would’ve asked people what they needed,
they would’ve said a faster horse.
 2. Product concept/orientation
 They want the best quality/performance & innovative features
 These are important, but you still have to market correctly
o Example: When he worked with Dall, he had to travel to PA.
The natives spoke differently & it was smart to talk like the
locals did in order to get their business.
o Other company- Animal Company of America- made game
traps but made most the money on mouse traps- president of
the company was made fun of when people heard of the
product he made (mouse traps); If you make a better mouse
trap, the world will beat a path at your door
 after hearing this, they invested into mouse trap
research
 This new trap had quality & a lot of features; they gave
it to panels of housewives to test then got feedback
  The women thought it was the best trap ever. Most
important question- would you buy it?
 They put it on the market & the sales increased in the
short run- Sales cannot increase forever & it started to
decline after awhile; they lost a lot of money
 Why did this fail?
o It didn’t satisfy people. Why?
 Who buys mouse traps? People who have mice.
 Logic- the more mice, the more mouse traps. But
people who are innovative with mice don’t need them
(cats)
 The male generally usually sets it, then there’s the
mouse in the wooden trap. You throw the whole thing
away- good for resales. To reuse it, you clean it & then
it reminds you that you have mice.
 Next time you buy a mouse trap, buy a wooden one
because the plastic ones are too nice to throw away
 3. Selling Concept
 If the consumer is left alone, they will not buy enough
o We have to promote
o Typically used when S>D
o In town, were selling hamburgers. Thousands of burgers, less
want for them.
o Stan Clark & Eskimo Joes- Does he aggressively promote
Eskimo Joes? Yes.
 The risk- people don’t want what you’re trying to sell

 4. Marketing Concept
 All 4 exams will have questions about this
 This orientation is different: If you know your market, what is the
first thing you need to know in order to satisfy?
o Answer: what they need to be satisfied
 The previous 3 claim to know what people want & then sell it to
customers, Marketing orientation says to find out what they want &
then provide it better and more efficiently than the other seller
 You would think most do this, but most do not.
 o Why? Anyone in their right mind knows that if you come to
class, read, and take notes, it’s the best way to do it. Very
few students do this because we think the easier ways may
be equally as effective.
 It’s hard to determine what people want. Disney guy said if you ask
what movies people want, they say biblical epic but actually want
sex and violence in the same scene.
 Formal definition: A way of thinking or organizing that says all
elements of business are oriented toward creating customer value
and satisfaction at a long term profit.
o What does this mean?
o Everyone in the organization (acct, finance, etc) understands
the most important thing is satisfaction between seller and
buy and will do this by creating value and the seller will give
us long term profit.
o Marketing myopia- organizations who only focus on short
term rather than the long term
 This is probably the reason so many companies
fail
 8/25/14
 story: dean of business stands up and says everything will go to
benefit accounting from now on (money, positions, etc)
o Only the accounting department would like that
o Let’s say your CEO of a company and you have various
departments.
 CEO says to institute the marketing concept because he
believes it’s better for all concerns
 Just because we say to implement marketing concept,
we’re not saying marketing is better than the others.
 The center of the company should be on the customer
a. Marketing is the branch that primarily
interacts with the customer
o Marketing is an integrative function- brings the customer and
the other departments together (finance, accounting, product,
etc)
o
 Selling & Marketing
 Most people believe: Selling=Marketing  NOT TRUE
o Selling is a PART of marketing

5. Societal Marketing Concept

 Definition: the view that organizations should satisfy the needs of
consumers in a way that provides for society’s well-being.
 In LA, they’re considering giving incentives to vote.
 Pipeline
o They want oil to come down through pipelines to Cushing,
OK.
 Some say no in fear of leakage
 Some want it to happen because of job creation
o You must consider the needs of society
o Interstate system
 Been around since the fifties, but if they started it today
it wouldn’t be done for a long time because of the
opposition
 If you have thousands of things to do in marketing, you put them
into groups.

 Four Groups:
1. Product- good or service
2. Price – what is exchanged for the product
3. Promotion- communication between buyer and seller
4. Place- means of getting product to the customer
i. distribution- how a product gets from place to place

 marketing mix- the four P’s are elements of this
 a mix- combination of different things
o the combination- decisions you make regarding the 4 P’s
o Eskimo Joes- deciding what products he’s going to sell
 Prices, advertisement, goods, location
a. Combination of these decisions is called the
marketing mix
 Marketing mix & 4 P’s are not the same thing
 o Marketing mix- result of the decisions you make regarding the
4 P’s
o Baking a Cake-
 Ingredients- the four P’s
 Cake- the marketing mix
o 4 P’s- The controllable variables
o Competition- uncontrollable variables (p. 6)

Who markets? Every organization markets

Chapter 2- Marketing Managing 1/16/2017 8:13:00 PM

 What is management?
 Planning, executing (implementing) & Controlling
What is marketing management?
 Planning, implementing, and controlling to obtain marketing goals.

 Offered his grandfather tv, radio, etc. in nursing home but he declined.
 You know the worst thing about living here is?... I have nothing to look
forward to. *he didn’t have goals*

 Goals
 Alice & Wonderland:
o Alice saw a rabit and followed it down
o She met a Chesser Cat & the cat could talk. While talking, it’s
body parts would start to disappear. The last thing that was
always there was his smile.
o They come to a fork in the road and Alice asks the cat which
road to take. The cat asks which road to take, Alice says she
doesn’t know, and the cat says it doesn’t matter then.
 People think organization have their act together  not usually true
 With goals:
o They act as a reference point= you can measure how well
you are doing
o You can rally and concentrate the organization/firm around
the goal
 Only possible if people know what the goal is
 Story: when he worked in industrial sales, goal was to
increase it by 15% over the quarter
a. People knew the goal & the division did 18%
(exceeded the goal)
Story: Water needs to get to the end of the road.
o Top management comes up with goals, etc.
 If you’re not careful, those ideas may stop at the source
and not get down to normal employees (people won’t
rally because they’re unaware)
  Hired by Conoco & decided to invest money and did
research to see what kind of convenient stores people
would like.
a. They decided to take 5 or 6 stores in OKC and
change the stores to meet what the research said
b. Train employees to give extraordinarily great
service. Dr. M was hired to give training to these
employees.
c. At the time this was going on, Conoco had ad
campaign (you want a tag line, something you
build the campaign on and people remember)
d. Tag Line: Just like Home
 Purpose: if you go to a convenient store somewhere
besides your hometown, it’ll be just like home
(consistent)
 Out of these employees (50 people), none knew the
tagline.
a. This made tag line ineffective because it didn’t get
to the bottom of the road
b. The people actually working the stores and
affecting the experience were unable to follow the
goal
 One of the biggest myths out there- Organizations have
their act together
o Goal motivate us
 Student missed class 33 times but stayed in the course.
 We would say student wasn’t motivated, BUT he was
motivated to sleep.
 We cannot say we aren’t motivated because something
always motivates us whether its positive or negative.
 As an organization, you want to motivate people toward
the goal you want
o Goals will aid decision making.
 In some ways, this is the most important.
 Life is nothing more than a set of decisions
 Goals help us make decisions.
 If you make good decisions regularly, you will generally
get good results & vice versa.
o You must stay committed to the goal.
o Daughter wanted to go to prom w/ a senior as a freshmen but
she wasn’t allowed to date until 16.
 Manzer wouldn’t let her go- you must be consistent
 Reward & punishment systems are common, but the
real solution is to get them committed before they want
to do it
o Goals- statements of an accomplishment or task to be
achieved, often by a certain time.
 3 Trends:
 Things organizations are trying to move to
1. There is a long-term customer focus
a. A lot of companies claim to want this, but often don’t do it.
b. You have to think long-term over short term as a customer.
c. It’s easier to keep a customer than to get a new customer.
d. You want to bind the customers to you BUT there “aint no brand
loyalty that two cents off wont fix”
e. You want to bind them in multiple ways
SOME OF THESE BINDS:
o Economic/financial ties:
 Economic: you give them something that they value
 Financial: The cheaper option
o Technological binds/structural ties:
 Example: Worked for a company called Air Products
(AP)
a. You need raw materials for a company like this.
b. AP Sent Nitrogen to Dow through pipelines  this
is a STRUCTURAL tie
o Social Ties
 Personal interaction with people
a. Idea: have social functions with the companies
you work with that revolve around their interests
to build relations and “bind” the two companies
b. (in the story they had a bbq)
 2. Interdependability/Teamwork
 Interdependability- working together
o Tendency to put people in teams and reward them based on
teamwork
o Someone asked if he’d head up a committee; he said he’d
just do the work so he didn’t have to mess with it
o Parent called and said her daughter was put in a group with 3
slugs- she should’ve learned how to deal with the situation
because that’s how it will be in real life
 3. Entitlement/ Employee Accountability
 definition: When you receive a reward based on who you are, not
what you do.
 “All children of the world are entitled to a safe loving home”
 Employees got Christmas hams instead of bonuses and they were
ticked.
 Generation Y seems entitled.
 Mom kept giving him $20 because he is her child. One day she gave
him a $10 and he was bummed because he felt entitled.
 In an organization, there are entitlements:
o Slip on ice outside work and break your ankle- they pay
because of who you are (an employee)
 Problem exists when employees get confused and feel they’re
entitled to things such as raises, relocations, etc when they actually
need to PRODUCE to get these things.
 Why would an organization create something like this?
o They don’t.
o It happens when there’s a lot of money in an organization,
people feel entitled. Even poor employees get merit raises.
 When poor employees get raises, GOOD employees:
 1. Quit
 2. Continue
 3. Slack off
THE TREND IS GETTING RID OF THIS ENTITLEMENT.
 To do this:
o Hold people accountable
o Assign people things & evaluate them
 o If they succeed, reward them. If not, don’t.
o Hard workers want to be accountable & poor workers don’t
want to be
o Manzer was in Hastings. They were making transition from
VHS to DVD. He didn’t see anything so he went to where the
tapes were. He got a movie called Zulu (?). He got angry
about the price being too low.
o You want to hold people accountable to be good employees
and keep the poor ones accountable as well.
 3. Want to grow
 More $ if they’re bigger: owner’s mandate
 Want to get larger for sustainability/survival
 Bartlesville citizens despise boone pickens because he would take
over companies and it was causing commotion-he changed
Bartlesville completely
 Movie: 127 hours
o The guy was hiking and his arm got stuck between rock and
wall and had to cut it off with a pin knife survival
 Prestige is associated with larger companies

 Growth Strategies
 If you wanted to write a letter to a company about a potential job
and you’d never written one before, you would RESEARCH.
o You look for a template or some guidelines
o If you’re gonna grow, you should look at a guide for how to
do this.
 In business, you want a portfolio- Collection of business entities and
products (want some diversity)
 Ex. ESPNs portfolio consists of more than 50 entities, ranging from
tv, radio, magazines, internet, restaurants, etc.
 In turn, ESPN is just one unit in broader company (Disney)
 Angry birds is in the entertainment business- not the game
business
 Diversification Analysis (Figure 2-5)-
 Current Products New Products

Current Market Market Penetration Product Development

 putting recipe on the  Starbucks came out
back of Cream of with an instant coffee-
Mushroom Soup “VIA” new product for
 Open a lot of stores & current market
change the inside of
the stores so you will
stay there longer.
New Market Market Development Diversification
 Starbucks is spreading  Starbucks purchased a
everywhere company
 Trying to get older
people in there


 Starbucks got name from Moby Dick

 Marketing Strategy:
 1. To find the target market (the people you wish to serve)
 2. Develop a Marketing Mix to satisfy the target that you chose.
 Take the 4 P’s (Product, Price, Promotion, & Place) and make
decisions regarding these
 This combination is the MARKETING MIX; we want this to satisfy
the target
 Your target market is women. You develop a hairspray.
1. You develop a product.
2. Put it in a pink pastel container
3. Name it- something that appeals to women “La Petite”
4. Price it upscale & advertise on relevant places (Hallmark
Channel)
5. Show attractive blonde in commercial

 PAGE 35
 1. Every environmental opportunity (potential market) has success
requirements
2. If you’re going to be successful in that market, you will have to do
certain things.
3. Every organization has certain competencies (does some things really
well)
 You want to choose the market where you have a competitive
advantage- Where you’ll be successful
 You’ll be successful if you go where your strengths and success
requirements match up
 If there’s an environmental threat, companies must adapt by
changing the things they have control of.
 Ex. In 1975, Stan Clark & Steve Clark wants to open a bar, they
went to look at a property. They wanted to name it Eskimo Joes
and they had someone draw the logo. Bought it for $35. They
opened it & it was okay. Making some money but not a lot.
Everyone else went to the Grey Fox Inn. More Budd was sold there
than any other location in the world.
o In early 80s, drinking age was raised from 18 to 21.
o This is an environmental threat. Law said if you can show
most of your customers came in for non-alcoholic stuff, under
21 can enter.
o Clark hired Hawkins and started selling food & started selling
more shirts.
o In 6 months, 50.3% was non-alcoholic sales.
o The best thing that ever happened to Stan Clark was:
 The drinking age change.
 Stan Clark made changes regarding his Marketing
Strategy

 McDonald brothers-
 Sam Berdino paid 2.7 million $ and purchased their name
 When he started, the whole idea was QSCV (quality, service,
cleanliness & value)
 Today they serve 68 million customers per day; racking up $85
billion annually
  Something happened in the mid-90s:
o Health concerns- they had heavy calorie food and were
bashed for it
o Man ate at McDonalds for a year and gained 100 pounds
o Sales started to decline as a result; in 2002 for the first time,
they lost money.
o The environment constituted an environmental threat
 To adapt, they put money into improving stores rather
than building new ones
 Instead of just fast food, they wanted their mission to
be the customer’s favorite place and way to eat
 Changed products, people, etc. Motivated employees to
focus on quality and experience
 Now they have wifi, nice seating, food, etc.
 Started selling salads, lean food.
a. Became world’s largest seller of salads
b. These stores have added on average $125,000 a
year on revenue
c. Profits nearly quadrupled & stock price tripled
 McDonald’s revenue are now 20% greater than those of
competitors Wendy’s, KFC, Burger King, Taco Bell
COMBINED
EX:
 When at Dow, he told Latex for paint
o Dow came up with synthetic latex; binds the paint to surface
o Dow got the targeted market (paint industry) and created a
product to satisfy them
o Then, something happened in the environment which was an
environmental threat- September 1, 1939
 What happened? Invasion of Poland by Germany
 Started WWII
 Japanese who were already in Asia cut off RUBBER
(vital to war effort)
 Dow chemical company is the only company that makes
synthetic latex
  These people selling regular latex are looking for
somewhere to sell it- to who? The paint companies
a. Dow who had a monopoly on this now has
competitors (environmental threat)
 Dow found another industry to sell to (they could sell
10x as much here)
a. They found the PAPER INDUSTRY
b. Latex makes it to where there aren’t holes in the
people (ink wont bleed)
 They can also use latex in Carpet
 Topic: Change
 He was sitting in his office years ago minding his own business. Young
man came in and asked to talk. He told him he was having trouble in his
class. Made an F on the first exam, D on the second exam. Manzer asked
what he did to study? Pulled an all nighter on the second exam. Manzer
said to read the assignments for the next exam before class. He said he
couldn’t do that. Why not? “It’s not my style.”
 This young man had a style (a way of doing things)
o he was attached to this style
o this style was now failing. Why?
 He brought that style into a new environment (a new
class) of which he had no control (test questions, etc)
 He was unwilling to change  failed this course
 POINT: anybody in business understands the
environment is changing rapidly
 Makes sense that people should be looking at their style
and making decisions on the margin
 The problem is that there is a reluctance to change
o Makes sense that we ought to change.
o
 Manzer’s large friend has heart problem and has Type 2 Diabetes
 He couldn’t run .25 a mile when he was young and can now run
marathons
 He changed & fixed the problem

 The Question: Is it easier for an organization to change or an individual?
 Answer: The individual.
 To get an organization to change, you need to get everyone
on board.

 Two reasons companies change:
 1. Increase in technology
 2. Increase in competition

 when the economy goes down, there’s less money for the economy
to give, so you increase technology to win the competition

 How Easy it is to be Great
 Generally, if you want to do better, it’s easy.
 Manzer was sitting in his office and his phone rang. He picked it up
and it was a previous student. He said his name and Manzer didn’t
remember him. Student said he graduated in May and was trying to
get a job. He was going to interview with Conoco on campus.
 He said he knew Manzer was going to lunch with recruiters before
his interviews. He asked if he would mention his name to the
recruiters. Manzer asked how he knew faculty had lunch with
recruiters. He said he went to a seminar and they mentioned it.
 Manzer says he’s going to praise him because what he has done is
so unusual for a student or employee. Benny read the O’Colly and
noticed something that might be of value, went to a seminar, and
was proactive about it.
 The actions to do this were very simple, but very few students ever
do things like that.
o Benny was trying to gain a competitive edge.
o He had built a relationship with his advisor
o When he went to the interview, he had an advantage.
Chapter 3- Scanning the Marketing Environment 1/16/2017 8:13:00


 9 years ago, Mike Zuckerburg invented Facebook at Harvard and it
spread. Now, over 1/7 of the world population is on Facebook.
 How did this grow so rapidly?
o The environment was ready for this type of thing
 Environmental Scanning- process of continually acquiring
information on events occurring outside the organization to identify
and interpret potential trends
 Coffee
o 1962- ¾ adults drank coffee
o 2004- 49% adults drank coffee
o 2012- 64% drank coffee
 Why did it drop then go back up & who is the market?
o Less people are drinking coffee away from home.
o People 18-24
 16% drank coffee in 2003
 50% drank coffee in 2012

 5 Environmental Forces
1. Natural environment- the physical and natural inputs needed to make
products
a. The winter- Last winter was a hard very cold winter.
Consumption of luxury items went down.
b. Hurricane Katrina
c. Phoenix right now- big floods
 Trends: shortages, increased pollution (affects what you can
market), increased government intervention (EPA, etc)
2. Social Forces- demographic shifts and cultural changes
a. As demographics change, you have to change your marketing.
b. Why don’t we have a target in Stillwater?
i. Population is too small
ii. Baby boomers- as they get older, you market differently.
1. Social Security Problem
o Gay population & minority population is rising- you need to
fulfill their needs and market to them.
o Generation Y multitasks- it’s BS
 o Largest 10 cities used to border Canada
o Now 7 of them border Mexico
 Second social force: Culture
o Values, ideas and attitudes that are learned and shared
among the members of a group
o Monitoring cultural trends is important for marketing
 One of the biggest is the attitudes in the roles of men
and women in the marketplace
 Household products previously targeted at women
 Generation Y has no memory of role change, so target
market needs to be appealing to both sexes
o Social Change Example:
 Movies used to not be rated because there wasn’t racy
things in them.
a. About a young lady from rural Ohio and falls in
with show biz people
b. Had to be 16 to see this movie due to language
two words (pregnant & seduce)
o Economic Forces:
 Pg. 76 & 77- one criticism about people our age is that
we don’t know about personal finance.
a. Gross Income- If somebody hires you and pays
you $3000/month.
b. Disposable income- the money that is left after
you pay your taxes.
 If I make $1000 (gross income), I bring
home $650.
 Taxes: Federal, State, FICA
c. After taxes come out, you have to pay for utilities,
rent, food, etc.
d. Discretionary income: Money left over for luxury
items.
e. Personal finance- you don’t have control over
taxes, but you do have control over what you
spend on necessities versus luxuries.
 What is a luxury and what is a necessity?
 There there little luxury, don’t you cry
You’ll become a necessity by and by
a. What does that mean?
 Often starts out as a luxury but turns into a
necessity.
o Technology force
 Refers to innovations or inventions in scientific research
 90% of all
 who have ever lived are alive today
o Page 79- Impacts on you and me
i. Technology is increasing cost-wise
ii. Provides value to new products
iii. Changes existing products and the way they are produced
o Sales of jeans have decreased by 6%
o Competitive Forces
 THIS IS THE MOST DANGEROUS
a. They can react to you and be proactive to you
b. If you do something small business, things wont
really change
c. If you do something, your competitors across the
street will compare and react to you
d. Example: Store in town where he’s been a
customer for years (Dupree’s). What’s coming to
town now? Academy’s.
 Comment about competition:
a. Small businesses as competitors: 2/3 new jobs
are created by small businesses
b. How does a small business compete against large
business?
 Differentiate yourself. Have some
advantage.
 Take the things you have control over (4
P’s) and alter them
c. Chuck’s Paint- Differentiate themselves by quality
and good service over Wal-Mart
 d. Keoto Restaurant- many businesses have been
there but have failed besides Keoto. Differentiate
themselves by good food & the experience.
 Geico Gecko- superior advertising
 Differentiation:
a. Better distribution
 Dell computers- used to all be online, now
in stores to look at
 Avon- found a different way to distribute-
come to your house or have parties
 Vets in Stillwater- his vet differentiates
herself by doing house calls

EXAM SETUP
 Chapter 1- 17 questions
 Chapter 2- 18 questions
 Chapter 3- 6 questions
 Chapter 4- 9 questions
Chapter 4- Ethical and Social Responsibilities in
Marketing 1/16/2017 8:13:00 PM
 15 years ago, you would never see a full chapter on ethics. Things have
changed. If you’re accredited, you have to have a component on ethics in
every course taught.
 Ann Bush- Since 1982, she has spent close to 1 billion dollars telling
you not to use her product. They’re talking about underage
drinking, driving, etc.
o Pamphlets, counseling, blimps, etc.
o Recycling- recycle over 15 billion cans a year (ethical and
social responsibility)
 Page 92- Ethics
o Definition: Ethics are the moral principles and values that
govern the decisions and actions of an individual or group.
Serve as guidelines that help one act in a situation of moral
dilemma.
 What is a dilemma?
a. A problem.
 What is a moral dilemma?
a. Talking about values and principles and you have
to make a decision regarding them.
 We’re facing one right now in Syria and Iraq.
a. The deal is: 13th anniversary of 9/11. When that
occurred, we realized we have to protect our
people so certain laws were passed as a result.
When you increase the safety, you’re decreasing
freedom. This is a moral dilemma.
 A good starting point (page 92) is the difference
between laws and ethics.
a. Laws- enforceable in the court
b. Ethics- personal values
c. Something can be ethical but illegal and vice
versa
 You’re interviewing to hire a marketing representative.
Interviewing a female and she is the most qualified for
the position. In your industry, you know the big
customers prefer dealing with men. If you hire the
 female, you will lose some big business. What do you
do?
a. Moral Dilemma. Do you hire and lose the business
or hire her?
 You are a company in the USA. You’ve got a dealer who
sells your stuff in the most important area. You have a
great relationship with him, but he’s having family
problems and sales are decreasing. What do you do?
 Pg 94- Perception of ethics in business is that its really
low
a. Why is this? LOOK UP THIS LIST
i. Increased pressure
ii.
b. Factors that influence ethics in marketing:
1. Societal culture norms set what is right or wrong
in society
c. Unites States sued China for taking our patents,
etc.
 Illegally downloading music: unethical to adults, ethical
to college students.

Business culture & industry practices

 Comprise the effective rules of the game, the boundaries between
competitive and unethical behavior, and the codes of conduct in
business dealings.
o Consumer bill of Rights- codifies the ethics of exchange
between buyers and sellers
 Right to safety
 Right to be informed
 Right to choose
 Right to be heard
 Ethics of exchange between buyer and seller
o Products- We have a right to expect that our products are
safe. We can trust what the ingredient list is, for example.
o General Motors- Has recently recalled millions of cars. That
cost that company a lot of money.
 o Price- We have the right to fair prices.
 After Katrina, all the lumber was 2x as much as it would
have been
o Do the poor pay more for groceries than people who have
more money?
 There is an argument that they do:
a. When you want to buy groceries, you have
mobility- can go from one place to another
because you have options. If you are a poor
person living in an economically depressed area,
you may not have transportation and your options
will be limited to mom & pop store. So a poor
person who cannot go to a chain pays more for a
gallon of milk than wealthier people do.
b. Many low-income consumers find themselves in a
food desert: Healthier food is out of reach and too
expensive for them
o Promotion
 Communication part of marketing; advertising,
salespeople, etc.
 This is the one that has the greatest possibility of abuse
 Puffery- saying something is superior without evidence
(“World’s best service”)

 Corporate Culture:
o You hire someone and it wont take them awhile to see how
things are done that way. When new employee asks why it’s
done that, way the older people say “That’s the way we’ve
always done it”
o This is very powerful. Every company has a certain kind of
culture. If you can handle it, you can do extremely well.
o Example: Manzer was in Texas. He had never been there and
he was in the refinery. He was dressed differently than them.
He was walking through and was nearly an alien. A young
man came over to him and said “excuse me sir, but what
you’re doing is unsafe.” He changed his behavior and asked
 who it was. Manzer asked who it was and it was an hourly
worker. Usually this is the job of a manager or supervisor.
The company had created a safety culture.
o Companies are going to have an ethical, unethical, or semi-
ethical culture.
 Enron- One of the greatest companies. It no longer
exists and the chief officers are in prison.
o Code of Ethics- formal statement of code of conduct
 Many companies have this
 Here’s the problem: Enron had those too. It didn’t seem
to work for them.
o Story: Number of years ago he was marketing department
head. He had to deal with people who you didn’t have too
much control over. When he was head, it was important to
him that they did nothing unethical. Under his watch, it was
extremely important. He wanted to emphasize this. He
decided to tell them this:
 His dad was born in 1892, mom in 1898. Married in
1914. They were extremely economically deprived.
They raised 3 children during the Great Depression.
They were extremely honest. Mother said this: She was
working at a laundry for 25 cents a day. One day she
was walking about a mile to work, she looked down and
there was a 20 dollar bill. Her heart began to race. She
reached down and picked it up. She was ashamed to
say she looked around hoping she would see no one.
 Even in her poverty, she was thinking about the ethics
of it.
 Personal Philosophy
o Son was talking about the baseball team. When things go
bad, you go back to your bases. If you’re playing a very good
time, you focus on individuality and athleticism.
o Example: His son was a great athlete. He played basketball of
full scholarship here. He was a better baseball player. He was
in high school in spring of his freshmen year. He made the
traveling team of his high school baseball team. Manzer
 congratulated him. His son told him that the seniors made
them chew tobacco for initiation. The son said he didn’t want
to but the seniors were making him. Manzer told him to think
about it and then do what was right. Manzer went and
watched a game. Son came back home and manzer asked
about initiation. Son said they got to the bus and senior told
him to come here and tried to make him chew tobacco. His
son said no. What did the seniors do? They said okay.
 The lesson: Stick to them and others will respect them.
 Everybody knows the thought of attending the prom is
greater than the prom itself.
o Example: He was raised in a home with no alcohol. He
maintained that in high school because he didn’t want to
dishonor them. Then he got to college and still maintained
that standard. He went to work for Dow chemical company
and was in industrial sales. He’s dealing with companies
trying to increase business. Part of this is entertaining.
Alcohol is a part of entertaining. Him not drinking did not
affect his career.
Understanding and Reaching Global Consumers and
Markets 1/16/2017 8:13:00 PM
 The dollar value of world trade has more than doubled in the past decade
 Manufactured products and commodities account for 75% of world trade.
 China will replace USA as biggest country measured by trade in 2015
 Means the jobs are in China
 US, China, Japan, Western Europe & Canada account for more than two-
thirds of world trade
 Biggest exporter- China
 Biggest Importer-USA
 Balance of trade- difference between the monetary value of a nation’s
exports and imports
 If you export more than import, positive BOT
 If you import more than export, negative BOT
 The four largest importers of US products & Services:
1. Canada
2. Mexico
3. China
4. Japan
 Purchase 2/3 of US exports
Four largest exporters to USA are the same countries.

The International Environment

Story: Years ago was director of graduate studies. He had a grad student
assistant named Bob Patterson; was in the military and came back to get
MBA. Graduated and took a job with Hallmark. Hallmark HQ are in Kansas
City. When he was there, he was fortunate enough to get a mentor in that
company. He hadn’t been there long and they sent his family to Hong Kong
for 13 years. He was the first assigned there. He was the first to go into
People’s Republic of China. Traveled all around the area. He would come
back every 2-3 years and he came and talked to Manzer’s classes and would
talk about many of the cultural differences mentioned in this chapter.
 Hallmark makes cards, movies, gifts, wall décor, clocks, bears,
ornaments, etc.
 Products may be designed in Kansas but are made in far East
countries. One of his responsibilities was to get manufacturers to
 make the products they wanted to produce. He told this story in
Taiwan:
o Negotiating the price to make ornaments. The seller said to
Patterson, the buyer- “I will make and sell these to you for 12
cents each.” Patterson says- “12 cents. We will buy these
from you and I will pay you 15 cents.”
 The buyer negotiated the price up. Why?
a. Its hard to find things to make things up to their
qualifications and this company was close to
bankruptcy; The seller lowered the prices in order
to get the business, but Patterson needed the
company to continue producing in the long run for
Hallmark.
 Supplier development- involves the deliberate effort by
organizational buyers to build relationships that shape supplier’s
products, services, and capabilities to fit a buyer’s needs and those
of its customers.
o Patterson and his family were in Hong Kong for 13 years. In
that span, he is not building any relationships with
management and people moving up in Kansas City. After 13
years he comes back after doing a great job, but has no
internal relationships. The company chooses other people to
hire over Patterson because they know them better.
 Cross-cultural analysis- involves the study of similarities and
differences among consumers in two or more nations.
o Ex. McDonalds doesn’t sell hamburgers in India because cow
is considered holy
o Germans haven’t taken well to credit cards and don’t use
them as much
 Customs- what is considered normal and expected about the way
people do things in a specific company.
 Cultural symbols- things that represent ideas and concepts.
o Ex. Americans being suspicious of the number 13
o Frozen: Translated into 41 languages. They had to find
someone who could sound like that young lady in every
language- cost over $1 billion.
  Consumer ethnocentrism- the tendency to believe that it is
inappropriate, even immoral, to purchase foreign made products.
 Economic infrastructure- a country’s communications,
transportation, financial & distribution systems
o Critical in determining whether to try to market to a country’s
consumers
o USSR- several countries united under one title. Broke up into
individual states being countries. Why did this happen?
 USSR couldn’t even get its inferior products to its
people (couldn’t distribute them)
 Had even hospitals without electricity
 Microfinance
 Practice of offering small, collateral-free loans to individuals who
would otherwise not have access to capital necessary to make small
businesses or other income-generating activities
 All are benefited
 Efforts to raise household incomes in developing countries
o There’s people who want to start business but don’t have
access to money
o Loan small amounts to people- $100-$500
o Collateral-free: Means you don’t have to put up anything to
get the loan
 Ex. When you get a loan for a car, they can take the car
if you don’t pay it back.
o EX. Lever hygenic products being sold by women in India
because they’re given stock to buy products
o Mother Theresa: Helped people in India. She said “might be a
drop in the ocean, but if I do not do this, that is one drop the
ocean will not have.”

 Going International
 Must select a means of market entry in one of four ways:
 1. Exporting
 2. Licensing
 3. Joint Venture
 4. Direct Investment
  Exporting- potential for success is low; risk is low
 Direct investment- potential for success high
 READ ALL ABOUT THIS. (through page 184)


1. Chapter 5- Understanding Consumer Behavior 1/16/2017 8:13

 Page 110
 This chapter deals with the consumer.
 “Who influences 80% of new car purchases?”
 -women
 They are consumers of new cars. You have to understand that.
 Difference between what men and women want in an automobile:
 For men: care more about exterior and curb appeal
 For women: Care more about the interior
 - both sexes want speed but for different reasons
 - women want speed for safety, men for show
 - Women want safety to survive an accident, men want it to avoid it

 If I’m in the car business, I should know those differences.
 What you buy
 How much you buy
 Where you buy it
o The problem: Knowing WHY you buy it

 Page 112:
 Definition of consumer behavior:
 The actions a person takes in purchasing and using ???

 A model is a representation of a real-life system.
 Ex. E=MC2
 Y= mx + b

 We want to know what happens in the “Black Box”
o We want to know the stimulus & the response
o Then make an inference from the response
o Ex. Ray Rice & Peterson- people want to explain why they are
beating their children
o People may have different responses to the same stimulus

 In this course, we’re interested in Consumer Behavior

  Going down the highway, see the golden arches. You pull in & get a
big mac. Somewhere else goes down the highway and sees the
arches and throws up. Why does this happen?
 The stimuli are the four P’s
o Others are: the environment, the economy, etc.
 We want to know how the stimuli transfers in the black box to a
response.
 Behind the visible act of making a purchase lies a process that must
be investigated. The process made in the purchasing process.
 Depending upon the purchase, some of the stages may be more
valuable than others and you wont necessarily go through all.
 Extended- could be purchasing an automobile
 Limited problem solving- Where should we eat lunch?
 Routine- Like purchasing toothpaste
o The stages are important but it depends on what consumption
decision you're making
1. Perceiving a need- You have to perceive that you have a problem.
a. People tell him they need to pass his class to graduate. He says
they’re trying to make their problem his problem.
b. It’s like the guy who dropped the ball the last play of the game- he
didn’t lose the game, the team probably lost the game earlier on.
c. There’s a perceived difference between the ideal and the actual.
d. Want cereal but no milk. Actual- no milk. Ideal- You have meal.
Disparity between the two means you have a problem.
e. You need to know the difference between a want and a need.
2. Seek information regarding solving the problem
a. After recognizing a problem, consumer seeks for info.
b. In other words, if you have no milk in the fridge you have various
solutions to fix the problem.
c. First you scan your memory for previous experience with products
of brands (internal search).
d. If that doesn’t solve the problem, you go to external search. This
could be advertising, friends, commercial use, etc.
e. Ex. Asking wife where to eat
o Page 120
  One person sees the Cadillac and see’s it as an
accomplishment, and the other doesn’t like it.
 How do we know what’s going on around us? Our
senses.
 We are exposed to so many things that we only select
to take in certain senses. Once we select, we organize
and that becomes the real world to them.
a. Two people bring in their notes to class and some
people wonder if they were in the same class.
 Best way to murder is in the middle of a busy
intersection because all witnesses will say different
things.
o Where does this come into play in the market?
 You’re driving home to OKC. You’re hungry. You look
over and see the golden arches. You think they must’ve
just built it but its been there for 5 years. Why didn’t
you see it before?
a. You weren’t hungry before and your receptors
didn’t look for it. When you have a problem, your
receptors are up and search internally and
externally.
b. He used to take his wife on this sports car (Red
Stealth). They saw four here! They only noticed
them because they were suddenly looking for
them
c. With his son in the supermarket shopping and son
asked to go down an aisle he’d never been down
in his life. He wanted to go down the baby aisle
because he now had a child and his receptors
were kicked up.
o Pg. 112
 Its not uncommon to get info from commercial sources,
but that info is often validated by personal people or
individuals
 I’m buying an iPhone and have new money in an
account that you can only spend if it justifies your job.
 He decides to by an iPad but doesn’t know much about
them. He goes down to IT people in building and they
give him a suggestion. He trusts it and orders one
without fully knowing what it is.
o The point: If you are going to seek info, seek it from someone
who knows what they’re talking about.
 Story: In November you’re going to start pre-enrolling.
You start seeking info about courses, classes, and
instructors. This guy’s perceptors were up. M was
teaching a class in the classroom building. Saw a guy
walking through the hall toward the class. The guys
were talking and one was angry about a bad score on
his finance test. One said to never take Jackson for the
class because he’s hard, boring, and unfair. Young man
in Manzer’s class made a note to never take that
teacher. Manzer asked if he knew those people and he
didn’t, but the student trusted the stranger’s opinion.
 19 year old girls ask each other for advice when they don’t know
anything more than eachother.
3. Third stage (p 113)- Alternative evaluation
i. Once you do this and get alternatives, you evaluate which one
you will purchase from.
1. Criteria: Represents objective and subjective ones.
Price, prestige, etc.
2. When buying, you look at criteria. Sellers need to know
which are the most important factors.
ii. Banks failed in the early 80s. Bank in Norman was failing.
You’re a customer to this bank. You come in on Monday and
there’s new people, a new sign, etc.
1. Number 1 question: Are you still going to give away the
popcorn? (The bank had previously done this)
2. Pretend you’re a young married couple with two small
children and you’re choosing between 3 cars. You chose
the most important factor but don’t consider it when
actually choosing. People say the most important thing
 is safety, but they didn’t even consider it because they
assume all cars are equally safe.
3. Why didn’t they ask about the safety of their money in
the bank? They just assumed it was safe.
4. What people say they want is not always what they
want
Another fact: Risk.
Purchasing one alternative as opposed to another.
o Risk typically determined by two factors- amount at stake
(the more that’s at stake, the higher the risk) & probability
you will do well in making a decision.
 Ex. Is it riskier to purchase a new car or candy bar?
Obviously candy bar. Financial Risks.
 Social Risk- ex. Outfits (friends may not like it)
 Manzer is going to get an iPad but doesn’t know
anything about it. The probability that he will make a
good decision regarding the iPad is low because he
doesn’t know anything about it.
 If I’m a seller and I know that people view risk in
determining what to purchase, I as the seller wish to
eliminate the risk by:
1. lowering the price
2. Increasing the probability that somebody will do well
i. Provide information
ii. Money-back guarantee
iii. Warrantee
 5. The purchase decision
 Because you made the decision does not mean you will actually
purchase that.
o BI does not always equal B. (buyer’s intention doesn’t equal
behavior)
 You got the item, I got your money.
 6. Post-purchase behavior
 after buying a product, consumer compares it with expectations and
decides if they’re satisfied or dissatisfied.

 If they’re satisfied, they will return again & if they’re dissatisfied
they will not return and will tell other people.
 Daughter goes to get gas and locked keys in the car. Went inside
and asked to use phone to call her mother. He said no. She runs up
two blocks and catches her mother. Her mother had to go to church
but would return. When daughter got back, they were towing her
car. Manzer went down there the next day and then told all his
classes what happened. Two days later, those people brought roses
into his classroom to apologize but the damage was done.
 People tend to tell people about bad products rather than good
ones.
 Manzer goes to McDonalds and spend on average $25 a week there.
Probably $1500 every year. He is worth something to them and
adds long term value
o Vignette: How much is a satisfied customer worth?
 Ave consumer consumes 25 pounds per year
 Exxon- $500 a year
 Ford owners- percentage that will purchase another ford
is 60%- want to increase to 80% because ford exec
says each additional percentage is equal to 100 million
dollars in profits
 Idea of studying use behavior-
a. Orange juice- if I talk about orange juice and ask
you what time people consumer OJ, they say
breakfast. What if you studied behavior and found
out 1/3 was consumed at other times during the
day? Maybe they’re using it for snack drinks for
their children. Marketers can exploit that.
b. Ex. When he was our age, you could name all the
cigarettes. They would try to sell them to
everyone. One of the major companies decided to
target their cigarettes towards women. Need
marketing mix directed towards that market.
Wasn’t obvious, but more subtle. The cigarette
was successful because they studied USE
behavior. They found out latent things. They
 found out men were buying this in extraordinary
amounts. They made it a little more masculine &
became #1 cigarette . What brand? Marlboro.
They succeeded because they found other
alternatives of who to sell to.
c. The name Marlboro was chosen for women- came
from English royalty (duke & duchess)
 Color was chosen for women (red)
 Had solid container so it wouldn’t be crushed in their
purses
 Made it more masculine by having ads of men opening
door with a tattoo (masculine)

 Four consumer models that make contributions to behavior:

 None of these models totally explain behavior (that’s why there’s 4)
 Each is a partial explanation about consumer behavior
1. Economic Model-
o Man is a rational animal
o When we make those decisions, we sit down and think about it and
make a logical decision
 Example: It’s Monday and you need to eat. You can either fix
something at your house or eat out. If I eat it I will spend around
$3 and if I eat out it’ll be around $9. Choose to eat in Mon-Thurs.
Friday you eat out. You eat out because you saved $9 through the
week by eating in.
 Its always operating and its probably true by definition.
o We probably to act in our own best interest
 Probably more descriptive than normative.
 2. Learning Model
 We learn from experience.
 Ex. Test. Now we know what to expect for future tests.
 A cat that jumps on a hot stove will never jump on a hot stove
again, nor a cold one.
o The cat wont know the difference, but humans are able to
through experience and cognitive processes.
 o Most of what we learn about learning is from Pavlov through
the study of dogs. He talks about the drive.
 The drive for the dog is hunger. The stimulus is a bell
and the dog’s response was to salivate. You would
reinforce by giving the reward (food).
o Pavlov’s assistants were cleaning the dog cages and he had
his keys to open it up and dropped his keys. He went to pick
them up and noticed the dog was salivating. Why?
 Did experiments & found that the dogs thought the
jingling of the keys was the sound of the bell.
 For some dogs, they discriminated and only responded
to the bell but others were subject to similar noises as
well.
o Campbell soup comes out with a new soup. Pea with shrimp.
They’re going to put it in the red and white label. This is the
stimulus. They’re hoping the consumer will pick that up
because the cue has been generalized.
o Proctor Gamble company makes 7 o r 8 different detergents
all in different companies. They want you to discriminate the
cue.
 3. Psycho Analytical Model
 You buy products for reasons that are subconsciously.
 Buy things for the functionality but also symbolism
o Function of a coat- keep you warm
o We want a coat that matches your eyes, brand, etc. This is
the symbolism.
o Story: We live in a culdesac. For years they lived by the
Maxwell’s. Dr. Maxwell worked here and his wife worked in a
staff position with 3 children. Same for the Manzer’s. Wifes
had a car and men had a car. Manzers was an old Chevy with
a vinyl car given to him by his grandfather. Charles (Dr.
Maxwell) drove a 240 Dodson ZX something. Two seater with
dark windows. Really nice car. The functionality was the
same.
 Why did he have that car and Manzer a different one?
a. He had that car because of what is symbolized.
 o One day he went to pick up daughter from high school and he
was in that rusty car. He was in line and she saw him and
came running down before he got to where everyone is. She
says “Why did you bring this car?”
 He’s only been mad at her twice in his whole life. This
was one of those times. He said this car had nothing to
do with him, the family, or who they were. She never
said anything like that again. He gave her that car when
she turned 16.
 Page 126
Social Psychological Model
o Psychology- study of individuals
o Sociology- study of a group
o These influence consumption behaviors
o Influence of groups on individuals
1. Culture and Subculture influences
 We all belong to a culture that has a set of values, ideas that
are learned within a group
 For example, we believe innocent til proven guilty. Not all
societies believe this.
 You want to look for trends in cultures and understand that
 Cultural changes increase the market for new jobs,
products, etc
 Ex. We have moved from a saving culture to a
spending culture
 US rank as one of the lowest in countries that save
 Master card when it first came out was called master
charge. They changed this name because of the
negative connotation.
 We want instant gratitude.
 We have moved from a parent centered home to a
child centered home.
 We are having less children
 Means children have more influence on what we
do as a family and how we consume.
  Children used to be seen and not heard but now
they are heard loudly
 Children under 8 years old have nearly 8 billion
dollars that they control
 Parents spend summers hauling you around.
 Religion-dominated society to a secular society.
a. Religion doesn’t play as big of a part as it used to.
 Self-reliant society to a government-reliant
society.
a. You can spend your money now because the
government will help you.
 These changes create new opportunities:
 Change for health and physical fitness.
 That cultural change has created new jobs & new products.
o Supplements, fit bands, gyms, work out clothing, health food,
personal trainers, diet plans
 2. Sub cultures
 Page 131
 Subroots within the larger culture with unique values.
 In US:
 Hispanic
 African-american
 Asian

 Young people are heavily influenced by African American and Hispanic
entertainers. McDonalds will make a commercial with Hispanics but will
show it to everyone.

 Geographical subcultures:
 Story: lived in Chattanooga, TN. They think different. Eat grits and other
foods.

 Religious subcultures: The bible belt. You market differently than you
would in the NE (Catholicism & Jewish Religion emphasis).

 Highest birthrate- Utah where BYU is.
 The highest per capita consumption is for macaroni & cheese, jell-o and
ice cream because they have a lot of children.

 3. Social Class
 Page 130
 A relatively permanent homogenous division in a society to which people
are grouped based on values, interests & behaviors.
 Not permanent- can be changed based on education, marriage,
 A rich man is not just a poor man with money.
o Values and interests are different
 Sam Walton-
o Drove an old truck and got his clothes from Wal-Mart
o Did a study by PBS on 6 families in a rural community in West
Texas. They all got the lottery.
 5/6 families spent all the money and went back to what
they were doing
 Why are we interested in social class? There is similar buying
patterns in each group.
 J.C. Penney traditionally has geared themselves toward middle
class. You don’t hear much about them anymore because:
o Wal mart came as well as more other department stores and
Penney’s lost a lot of market share to other stores. They tried
to upgrade their products.
 Psychological difference-
o Lower class- would say ideal man would be masculine, strong
o Upper class- ambition, career-oriented, etc.
o Lower class- kitchen is the most important room in the house
o Upper class- the room you entertain in is the most important
room
 Reference Groups
 Page 128- Most important to the market
 People to whom an individual looks as a basis for appraisal or
reference to personal standards
 These people can be opinion leaders because of special skills or
knowledge that you look to
 When you came to college, parents are concerned about who you
hangout with because “Birds of a feather, hang out together”
 Story:
When oldest daughter came to school, they didn’t bother her with
calls but they worried about who she would hangout with. It
dawned on him that she would hangout with who she sought out.
She found people similar to her.
 For example, first question asked when planning to attend a social
event is “What are you going to wear?”
 Story: In 1960, a guy named Reisman wrote a book called The
Lonely Crowd. He hypothesized that you could place people in 3
categories based on reference groups:
1. Tradition directed:
o Very low physical and social mobility
o If your parents were government officials, you would be too.
o In US we don’t have much of this, but we do in Appalachia.
2. Inner-directed:
3. Other-directed:
 High physical and social mobility
o Example is when families live all over the country with
different jobs
o Family influences as well as people you work with and others
such as church groups, people you live by, etc.
o We are becoming a nation of other directed because of high
physical and social mobility.
 These personality traits are often revealed in a person’s self-
concept; this is a way people see themselves and the ways others
(the reference groups) see them
o Our self-image makes us believe others see us the same way,
making us think others hate us.
 The reference group views you a certain way. You know how they
view you. You behave the way they know they view you.
o If you believe your friends view you as a wild and crazy guy,
you tend to behave that way around them.
 Store, Brands, and Products also have images
 o If he says Wal-Mart and Neiman Marcus, they have certain
images.
 How does your reference group influence you?
o Ref group knows images of products, etc and so do you, so
you purchase items that reflect what your reference group
thinks of you
o There appears to be a matching with their image of you and
your purchases
 There are some products and some brands that your friends, in
term of image and reference group friends, don’t influence you &
others where they will influence you.
o There are certain buying trends where both a purchase
decision (purchasing the product) and the brand are
influenced.
o Example: Beer, Cigarettes, Automobiles
o There’s influence whether you purchase beer or not, but also
on the type of beer. Influence on whether you purchase
cigarettes, but also the brand. Same with automobile.
o There’s some where ref influence is the brand only.
 Ex: Clothing
 There is no influence on whether you purchase clothing
or not because you have to. There is influence on what
brand or type of clothing you purchase.
 Influence for the product only (the purchase decision)
a. Ex: Air conditioning.
b. Influence on whether you have AC or not, but
probably not the brand.
o Influence on neither product nor brand
 Canned corn
 No reference group influence on this.
o The point is: It’s matching your image with what you will buy.
 Not true in all situations
 Why did it not work for canned corn or AC?
a. Reference groups influence LUXURY items, not
NECESSITIES; especially affects highly visible
products
 Family
 Influences our behavior and what we purchase
 Man came in and M asked if he drove a truck. His grandfather had
one too. It affects what you do.
 M & his wife thought and realized theres only one thing he ate at
his house that she didn’t eat at her house or that they concocted
themselves.
 You can take 2 people. They belong to the same culture, same
subculture, same social class, same reference groups, same family
& they’ll behave differently.
o Have a brother or sister?
o This model doesn’t explain everything. People can be from all
the same groups and still behave differently.
 Once an image is set, it is difficult to change.
o Once you get a reputation, its hard to change.
o Saying: Get a reputation as an early riser and you can sleep
til noon.
 Meaning: If people believe you’re an early riser and you
sleep til noon, they’ll cut you slack.
 Coming to college- You basically can change your image
 Guy in high school class- his name was Kenny and
everyone called him killer because he couldn’t get a girl
so they called him lady killer; he’s extremely successful
and good looking. People still call him killer.
 People who sell tea have a problem. The problem is that
their sales are season.
a. If we graphed the sale of tea, it would be highest
in summer months and lower in the winter
months
b. You’d like to have that smoothed out- you can
either decrease sales in summer times or increase
sales in cold months. Why do we sell more in the
summer time? Because people like iced tea.
c. How are you going to increase the sale in the
winter months? Most logical way is to promote hot
tea.
 d. According to you and others: All you have to do is
have one ad and you’ll have all these sales. That
didn’t happen. People who sell tea thought why
didn’t this work? They decided they would do an
image study on people who drink hot tea in the
United States.
e. What would be one image of someone who drinks
hot tea generally?
 Old, female, rich, snooty, sick= no wonder
f. They thought they would change the image of this
o The advertisement didn’t work. This shows that once you get
the image, it is difficult to change. That doesn’t mean it cant,
but it is difficult to do so.
o Story: When he was young, anyone who rode a motorcycle
was thought of as a thug.
 Now it is acceptable. What happened?
 1973 happened. Around this time, the Oil Embargo took
place. We get a lot of our oil and petroleum from
foreign countries. There was an energy shortage and
people would have to stand in line to wait for gas.
Policies were instituted. Car pooling became common,
speed limit was dropped to 55 mph even on the
interstates to use less fuel and cause less pollution
 Environmental conditions changed. People want to
spend less money and still travel. Solution was a
motorcycle. Image change. At this time, Honda had
motorcycles and had a clever advertising campaigns.
a. Tagline: You meet the nicest people on a Honda
b. Showed older people, clean cut people, nuns,
grandmas, etc riding the motorcycles
o Brand of motorcycle that didn’t change image: Harley
Davidson
 They want the bad edgy image. It differentiates them.

Chapter 6- Understanding Organizations As
Customers 1/16/2017 8:13:00 PM
 Look at pages 138-149; 151 ONLY
Business marketing- the marketing of goods and services to companies,
governments, or not-for-profit organizations for use in the creation of goods
and services that they can produce and market to others.
 B2B- business to business

Organizational buyers- manufacturers, wholesalers, retailers, and

government agencies that buy goods and services for their own use or
resale.
 Ex. JC Penney buying paper to send out pamphlets, etc.
 JCP will go to paper making sites for extended period of time to
check out quality, price, and ability to deliver on time.
 Who are you going to sell to?
o Three Categories of markets:
1. Industrial (8 million)- reprocess what they buy before
selling it to the next buyer
2. Reseller markets- buy products from manufacturers and
resale them
3. Government markets- federal, state, and local agencies
that buy goods and services for the constituents they
serve.

 Characteristics of businesses buying
 Buying for an organization is different that for you family
 OSU buys a truck, M buys the same truck.
o One is organizational transaction, one is consumer.
o Question to find out which: Who bought it & why did they buy
it?
o Organizational- used for business purposes
o Consumer- used for personal use

 Demand Characteristics
 Derived demand- demand for industrial products and services is
driven by, or derived from, demand for consumer products and
services.
  Story: He’s a salesperson for Dall Chemical company and gets a
note from the sales manager. He says that HQ said they have too
much latex in inventory so management wants each person to sell
an additional 5% more in the next 2 months. It dawned on him
where he was going to sell his latex- to people he has a relationship
with. Who is that? Bill Chafer and PH paper mill. Its one of his
biggest accounts so he drives to PA and he goes in to see his friend.
He asked Bill if he could help him out and Bill said no. Why does he
say no? Because demand is derived from consumers and they didn’t
need it. Chafer said he would preorder.
 Size of the Purchase Order
 Size of the purchase involved in organizational buying is typically
much larger
 Story: Good Year makes tires and sell to us and organizations who
buy tires. An example who buys tired is WalMart, US Army, General
Motors.
 Kellogg tries to sell to 80 million household. Plane sellers have a
much more limited customer base. Same with Good Year.
 Organizations are more interested in profits, while consumers are
more interested in style.
 Story: Denis McLaughlin, a big Irishmen- One time they were out at
night at a fancy restaurant with an account & Denis after a couple
of drinks (very happy), Bill came and paid and signed it and came
back. A few minutes later, the Matre De (?) came over to Denis and
asked how the food was. Denis said it was excellent, then said the
service was fantastic too. Then the Matre De said the gratuity did
not reflect it. Denis looked and agreed then put $0 and gave it back
to them.

 Geographic Concentrations
 Tend to be concentrated
o Ex. Automobile industry- detroit
o Steel- Pittsburg
o Technology- Silicone Valley
o Dalton, GA- Carpet Mills
 o Over 50% of all manufacturing occurs in seven states in the
union
o Family Feud- The question is: What seven states Constitute
over 50% of MANUFACTURING in the US?
 Michigan, California, New York, Illinois, Pennsylvania,
New Jersey, Ohio
 Bill Bradley- #1 basketball recruit in the nation and went to
Princeton. Went to the final 4 with them. Played with NY Nix for ten
years then became senator of NJ. Says he was at a fancy banquet
and they were getting ready to eat and guy was coming around
passing around butter and Bradley asked for another pad of butter
in addition. Bradley asked if he knew who he was? The waiter said
no. Bradley told about all his accomplishments. The man said that
was impressive then told him he was a guy who gives out the pads
of butter.
o What did Bradley mean?
 Everyone has their strengths and worth
 This guys worth was handing out butter- you treat
people well because they have their worth and
strengths
 Everyone has something they do extremely well.

 Professional Buyers
 Difference between professional and amateur- professionals are
paid.
 Another difference:
o Consumer buys a Pepsi- you have never bought a Pepsi
straight from Pepsi, but from the resellers.
o In organizational buying, its common to buy straight from the
manufacturer (direct buying)

 The buying center- group that share common goals, risks, and knowledge
important to a purchase decision.
 Very common to have multiple people involved in decision
 School of business- we switch out computers every few years. Not
just one person decides, but there are committees, faculty
 members, students, etc.  this constitutes a buying center (usually
an informal group)
 If you’re trying to market to someone, it would be nice to know who
is in the buying center.
 IMPORTANT:
 Roles in the buying center
o Users- people in the organization who actually use the
product/service
o Influencers- affect the buying decision, usually by helping
define the specifications for what is bought.
o Deciders- have the formal or informal power to select or
approve the supplier that receives the contract. Usually the
buyer or purchasing manager; in important technical
purchases it is likely someone from R&D or engineering.
 Hardest one to find
 Called up a company in PA for about 5 months and
found out the decision maker was actually down in
Philidelphia
 Gatekeepers- control the flow of information in the buying center;
purchasing personnel, technical experts, and secretaries can all
keep salespeople or info from reaching people performing other
roles.
 Buyers- have formal authority and responsibility to select supplier
and negotiate the terms of contract.
 Build relationships and be affective so when you want to sell, you
know the people in each role.
 If the dollar amount on purchase decision is higher, more people
are involved in decision.
 Example: how many people take basic marketing a year? Around
2000. If everyone bought a book for $140 each, thats $280,000.
Lets say the sellers of the books get a bonus of $2 per book. That’s
$4000.
o You’re a book representative and you’re trying to sell. You
want the $4000. It would be useful to know who plays these
roles in choosing what book to adopt.
o User- the Instructor
 o Gatekeeper- administrative assistant or other
o Buyer- Bookstore
o Influencer- Students
o Decider- Depends. For Manzer, he is the decision maker.
 Kelly Ryan is the sales rep for our book & comes by
every 3 weeks
 Midstream- people between refinery and company.
o Its important to be able to make relationships in this role
 New buy, straight buy, modified rebuy (lookup)
 Online buying
o Organizations can buy online. Why?
 Online buying is prominent for 3 reason?
 1. Depend heavily on timely supplier information that describes product
availability, technical specifications, application uses, price, and delivery
schedules.
 2. This technology has been shown to substantially reduce buyer
processing costs
 3. Business marketers have found that internet technology can reduce
marketing costs, particularly sales and advertising expense.
 Implication: No relationship with buyer anymore
 Another one: buying has all the information about various
companies and can play them against one another


 TEST INFO:
 Ch. 6- 138-149,153
 Ch. 7- 162-163; 173-184
 Ch 8- ALL
 Ch 9- ALL
From Customer Insights to Actions 1/16/2017 8:13:00 PM


 Need information in 3 areas in marketing:
1. Customers- potential and current
2. Activities- what you are capable of doing
3. Environment
 Need information today about these things more than ever before
because things are more complex today  We need more
information if things are more complex.
 Why are things more complex?
o We’ve moved from national markets (selling within own
borders) to global/international markets
o If you take some company like Kicker (in town and makes
sound systems) and sell in Tulsa and NC. They decide they
want to sell in Bangladesh. Which is more complex to sell to?
Bangladesh. You need more information.
o We’ve moved from buyer needs  buyer wants
o Ex. We need a car but WANT one that sounds good, matches
your eyes, think you’re cool, etc.
 It’s more complex to satisfy people’s wants than their needs.
o We’ve moved from price competition  non-price competition
o Two people sell cars down the street selling Chevy’s. They
compete with price.
o Non-price- is competition in other aspects, such as service,
diversity, quality, warrantees, etc.
o Therefore, we need MORE information.
 Most companies find this info from Marketing Information System
o Arrangements to tap the flow of information that influences
marketing management.
o You’re going to have some sort of arrangement (people,
computers, etc) to gather information that will influence
marketing management.
o This system has different parts. One way of looking at it is in
3 components:
 1. Databases
o Internal or External
  Internal- accounting, etc. Info such as sales, promotions. You
use this to make decisions.
 Specific ways- data mining. This is the extraction of hidden
predictive information from large databases to find statistical
links between consumer purchasing patterns and marketing
actions.
 Controversy with Federal Government
 NSA is gathering phone calls, looking at texts, etc and trying
to find connection between our conversations and terrorists.
 You’re flying on a plane from LA to Denver and you’re going to miss
your flight. That database knows there’s 3 people on that flight who
need to get on to catch a connecting flight. They are not going to
hold that plane unless you are important or a big time customer.
 2. Competitive marketing Intelligence System
o Gathers information about the marketing place
o Companies of any size have intelligence agents working and
gathering info.
o Manzer worked as one of these agents. In business they’re called
Salespeople. We’re talking about industrial salespeople who are out
there interacting with the customer.
o Salespeople have two functions: have to sell products & gather
information and bringing it back to management.
 They’re HORRIBLE at bringing this info back. Why? They see
no reward.
 Ex. If manzer tells us to read a chapter not on the test,
people don’t read because they don’t see value. Same with
them.
 Famous study that shows these: Years ago Jerald Album did
study on this topic. Had a company he was working with
salespeople. Took 10 of these salespeople. They took a
customer of each one of these salespeople and planted
information with the customer. You were supposed to provide
it with the salesperson. We know what info was given and
how to track it back. Ex. Our plant may go on strike/doubling
size of faculty. Of the 10 salespeople, 7 never mentioned one
word to management regarding this. Two brought it back late
 and severely distorted it; only one brought it back in a timely
and mostly accurate manner.
o This tells us they are bad at bringing information back.
o Why aren’t they good? They see no value in it. This
doesn’t make sense.
o When M was in industrial sales, he brought back
information because he is not stupid.
o If salespeople bring back info to management, they can
make better and more informed decisions. If they make
better decisions, they salespeople ends up benefiting.
o Another reason: It is to your personal advantage.
 If was in NJ in industrial sales for about 3 months.
He was in the urinal and in walks Bud Visker, a
big boss. M said hi and Bud said M is acting like
he was working there 3 years instead of 3 months
because he was bringing back information.
 If you want to be successful, Reward A while expecting B.
o How are sales people paid? By selling (This is A).
o They expect them to bring back information (This is B).
o If you want B, you should reward B.
o College professors have 3 functions: research/publishing (A),
expect you to teach (B).
 You will go after A because it has incentives. This is why
we have lousy instructors.
 If you want good teaching, you should reward it.
 Story: Research/teaching monetary awards; advisor got
a ball point pen
3. Marketing research
 Page 194- (look at this)
 The role of marketing research:
o Definition- the process of defining a marketing problem or
opportunity, systematically collecting data…?
o Stan Clark, the owner of Joseppi’s is on Perkins & he sees a
new building for an Olive Garden (a competitor). This is not
marketing research. He just happened to be there. Why not?
 Because he needs to define the problem & systematically go
through processes.
o Lets say Stan Clark is thinking about opening Eskimo Joes in
Lawrence, Kansas. He develops a research plan and now he
wishes to gain information.
 LOOK UP TYPES OF RESEARCH
 Step 3: Data Collection.
 Page 198- collecting enough relevant information to
make a rational decision.
 Two kinds of data (facts and figures related to project):
 1. Secondary- facts and figures that have already been reported prior to
the project at hand
 Sources: internal, census reports, internet, trade journals, etc.
 Called secondary data because you are using it secondarily
 This information is not written specifically for you to use it, so you
will not use it first.
 Critical Evaluation- evaluate the data and make sure it’s accurate
o How?
 Lets say we assign term papers in here. What do you
want to know? When is it due? How long? Over what
topic? How you’re going to grade it?
 Person decides to write on sustainability and chooses
paper mills. There’s a lot of secondary data available for
this. He turns it in Nov 8th. It’s 15 pages with no
grammar problems. Every reference is from the same
magazine. He gave it back with a C. The problem is that
it is one sided.
 You must check on whether they are impartial or not.
 If Stan Clark gets info from Chamber of Commerce,
they are going to say it’s a great place to create a
company. They are biased.
 Check Validity
 Check Reliability- can you reproduce it? It should
remain consistent over time.
 Check homogeneity
 a. When he worked for Dall, they paid him $700 a
month. He guesses you could go there today
doing the same thing with a general business
degree and they’d pay you $2800 a month.
Therefore, we can conclude that the gen bus is
worth 4x as much. But this is not true.
 Same roles. Data is not consistent
(homogenous)
o Years ago, he was teaching and a young lady came down and
said she worked for the O’Colley; she was going to write an
article about the Student Gov writing a summation on teacher
evaluations and putting them in the library so that students
could go and look to make informed decisions on who to take.
She asked if she could ask him a couple of questions. He said
he was okay with it, but that a lot of instructors wouldn’t like
it. She asked why? He said that the reviews are not
necessarily reliable. There are so many other factors that
determine answers.
 Ex. 8:30 vs 10:30 class, required class versus ones
they want to take
 She writes the article; the article inferred that he said
that statistics was harder than other courses. He didn’t
say this. A couple days later, he got a mean letter from
teachers of other classes. He called him and said he got
his letter, said things written are not always correct,
and he apologized. He said “I accept your apology.” M
didn’t do anything wrong. The other guy should have
apologized.
 Primary data- look up definition
o You have to go generate it
o Ex. If stan clark wants to open that restaurant in Lawrence,
KS, he will go generate how many people know what it is.
o Variety of ways to gather this:
Observation- there are some ways of gathering it.
 Mechanically. If you agree, they can put a box on your TV and
record what you watch, etc.
 o Rubber tooth in the road- Counting traffic. They relieved
pressure off McElroy and Perkins by observing.
 Personally observing- finding a new career: mystery shopper.
Observing information from an anonymous person on customer
service, etc.
o Big stores than anchor the mall- Macy’s, Dillard’s, Sears.
Cannot open a big mall without these. Then you have smaller
stores in between. Its not uncommon for people to say “Let’s
go to Dillard’s” then to want to go to Macy’s. They often go to
the stores between the two. This is called walk-in or drop-in
traffic.
o Some stores need this traffic to survive.
o Opening a new store- you’re going to have limited resources
and you wont be able to afford a place with high traffic; you
will lose money.
o You could have 1000 people go by your store but it doesn’t
tell you if they’re interested in your products or not.
 Experiments-
 Involves obtaining data why manipulating factors under tightly
controlled conditions to test cause and effect.
 Ex. If you are trying to lose weight and you are trying to
manipulate the amount you’re working out, there’s cause and
effect.
 Years ago when he was in grad school he took a test on
experimental design. They went in class and went on a field trip.
They walk across the street and they had green houses. Doing
experiment on chrysanthimums. Doing experiments on light change
on the mums. The problem is that there are other factors that
influence the growth of plants such as water, soil, temperature, etc.
 If you want to know only the effect of light on the mums, you must
keep the other variables constant.
 Were not interested in mums, but we may be interested on how our
advertising affects our sales.
 The problem: there’s factors other than advertising that influence
sales.
o Competition
 o Weather
o Economy
 Focus Groups- (page 203)
 Informal sessions of 6-10 prospective customers with a discussion
leader, moderator, etc.
 A colleague of his years ago said he wanted to do a focus group
with students on what we thought was a good instructor. They went
to a room with a one way mirror.
 There were 3 groups and each didn’t know the other existed. One
group had very high grades, one had average, and one had poor
grades.
 M was the moderator; he asked who was the best instructor they
ever had and why. Then he asked the worst and why.
o Found out some interesting things: office hours are
important.
 You get data and you have to interpret it. The group that had the
high grades said that one factor that made a good instructor was
preparedness. Why was this important to them?
o The group with the high grades were prepared themselves.
 Social Media
 Page 206
 Facebook, twitter, and others and revolutionizing the way things
are done.
 Ex. New potato chip flavors (Lay’s); all people had to do was click
an “I’d eat button” to show preference.
 Survey
 Questionnaire
 Phone, snail mail, social media, internet, interviews, etc.
o Ex. Personal interview is very good but is time consuming and
expensive
o When they were expanding Gallagher Iba- they did phone
interviews, focus groups, snail mail, etc.
o Phone is good but when people call, we often think people are
trying to sell to us.
 Phone call saying if he told her the not-assassinated
president and he would win a trip, car, or fur coat
  Sources of error-
o Takes place in surveys
o Sampling Error- does not have to be random, but it has to be
representative.
o Non-Response- If you get a questionnaire in the mail and
throw it away or delete it.
o Response Error- people give the wrong answer. Some people
just lie or are biased.

Page 215
 Sales Forecasting
 One of the most important things a company does
 Often a key goal in a market research strategy
o When you leave after taking a test, you ask “How’d you do?”
o Asking them to forecast their grade
o Lets say you forecast that you got an 80 and you found out
you made a 65. Bad forecast. You make a 90. Good.
o You forecast you’re going to sell a million- you sell $600,000
(bad)
o You could’ve sold 1,200,000 but you didn’t produce enough.
This is BAD. You’re missing out on money.
o There’s a lot of decisions made on the forecast: it must be
accurate. A company starts out and is going to recruit 80
accountants. They got this # based on the revenue projection
(forecast).
 3 Ways to forecast:
1. What people say
 Survey of buyer-intentions
 In other words, you’re going to ask the buyers how much they will buy
this year. You add it up and this is your forecast.
 Story: Sometimes it’s to the advantage of the buyer to not tell you
how much they will buy. He was at Nichole. They bought latex and
used it in processing things like tile. They didn’t sell them the latex but M
went there on a regular basis and met with them. Tony Boyle, the
research director, said they were having trouble with latex supply and
were thinking about switching. The currently didn’t have a latex to meet
 specifications, but asked if they could do it. M asked tony how much they
buy on an annual basis. Tony didn’t tell him. He said it was a secret. M
went back to the office and found a letter written buy a previous
salesperson and it says they bought 600,000 pounds a year. Tony wants
to go to Midland to try to make progress on getting the right latex. Tony
has been fired a few weeks later. Tony tells him how much latex they
buy- 200,000. This wouldn’t have been profitable to specialize the
product for such a small request.
 Sales Force Composite
 Asking sales force to make projects
 Make estimate and they pull them together to make a composite
 Expert Opinion
 2. What people have DONE
 what people have done in the past is indicative of what they’ll do in
the future
 Classical time series- looking for patters in behavior and trends in
behavior. You project what it will do based on past.
 If there is no general pattern, take a different technique to choose
forecast.
o Statistical Demand Analysis
o Y= f(x)
 Ex. If Y is weight, then it is probably related to x
(caloric intake). If you measure your calories, you will
probably change your weight (y).
 We’re interested in sales. For example, x may be
advertising.
 Sales= f(adv.)
 You graph that.
 3. What people DO
 you come out with totally new product.
o You cant base it on what people have done because no one
has used it.
o Ex. You cook a roast. May take 5-6 hours. Someone has a
new idea to cook a roast in 45 minutes. It’s not going to be
brown, but it’ll be grey. Just described a microwave.
o You put it in the market place and see what people do.
 1/16/2017 8:13:00 PM

 Starts on page 224


 Let’s say you go crazy and get a PhD. Let’s say you have a masters
and you’re going to get a PhD (additional 90 hours). After you’ve
taken your coursework, you take a qualifying exam over everything
in your courses.
 Get the questions from faculty. He used to submit this question:
o What are the principles of marketing? Defend your answers.
o He would fail them if they didn’t write Market
Segmentation.
o Segmentation- break it up/divide it.
 One way of looking at how to do that is this:
o Looking at the demand curve.
o This is called an aggregate demand curve. In other words, if
you have some product that everyone consumes no matter
how often. (someone drinking beer daily vs only on new
years)
o There’s different types of demand curves. Who are the people
who jump in when the price gets way lower?
 The people who are looking for a bargain.
o People who jump out of market when price gets really low.
What are they seeking?
 Prestige.
o Necessities- sell nearly the same no matter what price
 Ex. Gasoline
o What is the relationship between all the demand curves &
then the normal one with a straight line?
 They are all apart of it.
 If the straight is the market, the unique ones are
segments of the market. It is to our advantage to do
this.
 Marketing Strategy- (1) Define the target market of people you
wish to serve (2) Develop a marketing mix that satisfies the target.
o Your mix will be different based on the grouping.
 o A simple definition of market segmentation: Taking a
heterogeneous market and divide it into more homogeneous
subsets.
 People have different needs and wants even though it would be
easier for marketing if they didn’t.
o You can divide the market any way you want. Class is the
market. Divide into 3 groups. Most obvious is sections. That is
not meaningful. Must divide it into groups with similar needs.
o Pg 228.
o Five Criteria: Cost, profitability, similar needs, are segments
different?, can you reach them?
o When you get out there and want to open business- look for
unsatisfied market.
 Dividing the market
1. Geographic Segmentation
a. A region- NE, SE, etc, small town vs. large city
b. “It is difficult to sell pop to people who drink soda.”
c. Tennis shoes- no one actually plays tennis in them. Some people
call them sneakers. He used to wear a lot of athletic shoes to class
because he had bad feet. Wore all white shoes. One day he was in
class and a young man called his shoes “old man shoes.”
d. Sports illustrated- come out with a preseason football magazine,
will have someone from Oklahoma State for the cover. They make
it appealing to the area.
i. Geographic Segmentation
2. Gender Age Race & Ethnicity
a. Very popular for 3 reasons- 1. Good correlation between variables
and buying 2. Data is available 3. Data is measurable
b. Toothpaste- benefits people believe they will get from toothpaste.
They want it to whiten teeth, prevent cavities
c. Companies are interested in consumers who buy the most
d. 90% of all cola drinks are drank by 39% of people.
e. Favorite one- 2% of people don’t use toilet tissue
f. Characteristics we want to know about people- income, age,
male/female
 i. You know there’s heavy beer drinkers. Want to know age,
location, income, where they shop at, male/female
ii. These variables are called demographic variables
Product differentiation- a firm using different marketing mix actions, such
as product features and advertising, to help customers perceive the product
as different and better
 Ex. Volvo- say they’re different by their safety. Lexus differentiates
through luxury.
 M believed a guy made millions-billions of dollars through purple
stamp that said “Sunkist”

 Market Segmentation Strategies
 1. Undifferentiated Strategy
 Not going to make a difference
 If you have a firm/organization and a market, you create marketing
mix to satisfy EVERYONE in the market. You’re not going to
segment it.
 You create a marketing mix and try to satisfy everyone with it.
 Restaurant in Stillwater- want to sell quality food at reasonable
prices. Serve to anyone.
o Don’t want to exclude anyone
 Slight problem with this- You try to please everybody, you can end
up pleasing nobody.
 It’s a heterogeneous market, not homogeneous.
 Just because you are choosing to not segment does mean there
aren’t.
 Hyper-competition in the larger segments
 Smaller segments are under-satisfied
 Tends to work if market is fairly homogeneous

 2. Concentrated Strategy
 Create a marketing mix and concentrate
o Ex. Volkswagen
 Focused on people who were single, economy-minded,
unmarried, etc.
 Fault- What if you choose the wrong niche?
 o Wife wanted to open dance studio for students and parent
who really wanted to leave in a group of 6-8.
o Problem- that is too small a niche to make any money. People
send their children to dance class to socialize, get them out of
the house, etc.

 3. Differentiated Strategy
 product differentiation & market differentiation are different
 got a market & segment; know we cant make one mix to satisfy
everyone, so create a marketing mix for each of the segments.
o Ex. Converse- expanded products
o Hallmark- vigorously segments market; in addition to card
line and subbranded lines, they’ve introduced a line targeting
a dozen smaller segments.

 New companies- do not choose differentiated.
 When you start a new business, you don’t have enough money to
differentiate.

 Most companies move towards differentiated strategy.

 Example
 We think he started with concentrated, but now he does differentiation
because he has 3 restaurants.

Choosing a strategy
Effect of competition-
 He sold latex & epoxy. Used like glue. Make most money selling it to
other firms. You can segment market for epoxy into 2 segments:
 One way is how they use the market: Coatings market (paint with epoxy
paint and it stays) & laminate marketing (white lines on roads)
 Shell Chemical & Dow Chemical
 Shell sold it to coating and dow sold it for laminate
o This is a concentrated strategy
 One weekend they had meeting with Dow on epoxy. Basically, they said
they were going to do some training. They wanted the employees to get
into Shell’s category, coatings.
 Shell also had a meeting and said they wanted to get more into the
laminate business too.
 Concentrated  differentiated
 What happened?
 Let’s say you have a girlfriend and one day you’re walking across
campus and see someone else you like so you spend time with her.
 While you do that, a guy spends time with original girlfriend and
you find out about it.
 You go back to old gf because it’s easier to keep a gf then get a
new one.
 SO, Dow went back to laminate & Shell to coatings.

 This is the effect of competition on segmentation.


Chapter 10- developing new products & Services
 Steve Jobs- created iPhone, died early
 Apple- first commercial PC in 1977

the lifeblood of an organization is creating new products.

 Product- good or service or idea consisting of tangible and intangible
attributes.
 Buyers are willing to give something for these products.
 You buy a new car.
 Car is tangible.
 How you feel is intangible.
 George Strait concert
 He mostly just stands there and sings
 He’s what’s known as a “lip flapper”
 Garth Brooks
 Tells a lot of jokes
 Comes in in a space ship
 More entertainment
 The point: the total product is ALL the stuff garth brooks & Strait do
during their concerts.
This is called total product concept.
 Lets classify  helps us market and be successful

Consumer products:
1. Convenience good- goods or products that we wish to purchase
conveniently; don’t want to spend a lot of time. We may have preference,
but it’s not very strong.
a. Don’t have wonder bread- simply pick up something else
2. Shopping goods
a. Willing to spend some time comparing
3. Specialty goods
a. Have a particular characteristic you want and you’re willing to seek
it out
4. Unsought items
a. Items consumer may not know about or known about but does not
necessarily wants
i. Life insurance- don’t want it now in college but you may want it
 ii. Cemetery plot- when you’re getting earlier
iii. he and his wife looked up at plots next to his parents
o $500 each
Lets say you have a convenience good and want to put it in Stillwater, OK-
put it in as many places as you can.

Problem: you’re classifying behaviors, not products.

Street divisions- say the products cant move to another category, but this is
not true

Wife & he- moved to Philadelphia and lived in apartments. If you wanted to
wash clothes, you went to Laundromat. Needed to purchase a washer and
dryer. She wanted to go buy one. She said she wanted a Whirlpool.
Wouldn’t compromise. To him, it was a shopping good. To her, it was a
specialty good.

Question: Why did she want a Whirlpool?

 Her mother had one.

Product item- single thing you make

 If you make a washing machine and the machine has attachments,
that’s one item.
 Eskimo Joes- all foods and drinks are individual product items
Product line- closely related items.
 Make 10 dryer- each is an item, but they are a line.
Product mix- MOST IMPORTANT
 The combination of all the things you make; all items and lines.
 If you’re at Eskimo Joes, it would be cups, drinks, food, clothing,
etc.
 Different from marketing mix. Keep this in mind.

New product- the lifeblood of a company. They keep it growing but financial
risks can be large.
 New product depends on who you’re asking; what’s new to one may
not be new to another.
 Consumers view this in 3 categories:
1. Continuous innovation- consumers don’t need to learn new behavior
 toothbrush
2. Dynamically continuous
 Heinz- new squeezable bottle
3. Discontinuous behavior
 learn new behavior
 cars that drive themselves

 You can only says its new for 6 months after regular distribution
 “regular” is up for discussion (ambiguous)

What is new to an organization?

Usually, there’s four categories.
1. If it’s original
2. if you modify a product
 come out with ketchup Heinz but change packaging
3. imitation
 if you copy something.
 Ex. Copying the iPhone
4. purchase
 RJ reynolds may purchase velveeta cheese; not new to some, but
it’s new to RJ.

The point= people define “new” differently

New products are the LIFEBLOOD.

If you don’t have lifeblood, you’re going to die.
 New blood is created in the bone marrow in the body.
 Old saying- “innovate or die” (innovate- coming up with new
products)
o If you do not come up with new products, eventually your
company will cease to exist.
o You must come up with new products
o PROBLEM: it’s risky to innovate. But if you don’t innovate it’s
risky too.
o This is a conundrum.
Reasons why it’s risky:
1. you have to have a lot of ideas to come up with one successful product
2. When you bring it to the marketplace, most of them fail. 90% of all new
products fail.
 Failure rate of small business is 85%-90%
 Those that are successful are for a short period of time
 If there’s risks, you want to reduce the risks.

Rubber- its great. But problem is that it goes hard in the winter time.
Guy was working for good year and spilled some on a hot plate and realized
you need to volcanize it to keep it from going hard in the winter.

Guy working for P&G- had a mixture of hand soap and left the mixture out.
What he has done was aerate the mixture- turned into soap bars that
floated.

St. Louis fair- selling ice cream and ran out of cups but still had ice cream.
Guy next to him was selling pancakes. Guy put the ice cream on top of the
pancake- created ice cream cone.

Normally, you take a formulized system where you try to think of new
products but reduce the risk of product failure.

New product process/Innovation Process- to develop products

efficiently, companies use a sequence of steps to make product ready for the
market.
1. New Product Strategy development
 Set goals and tone
2. Coming up with Product Ideas
 You can get ideas any place
 Some groups of individuals that may be good sources- (258) employees
& coworkers, customers, suppliers, competition, researchers
 When he ran P&G laundry detergent business, he had to redesign boxes
that were easier to open. Boxes had been easy to open with a
screwdriver..
 Example- competitive products. For 6 months, corporation sent people
who stay at economy hotels. This brand didn’t have any economy hotels
but people tested all the aspects of hotels. Budgeted money to make new
economy hotels.
 Lets say company thinks of 40 ideas. (Side story) He was in Dow a couple
of weeks and lab people asked him to come in and stay all day. Dow
trying to come up with new consumer products. M said he didn’t know
anything about their products, but said that was even better. M got there
and was trying to come up with sources. They come up with 30-40 ideas.
One of them was a spray on glove. Then you have protection of glove,
but flexibility. Guys in lab worked on that and they’d want you to stick
your hand in bucket to test it. Another one was a hairspray that would
hold in damp weather. Problem- if its resistant to water, you cant get it
out.

Take 40 ideas to next stage  screening and evaluation

Internally and externally evaluates
 Eliminating poor ideas
 Only stage where direct goal is to get rid of ideas
 Mistakes could be eliminated good idea or getting rid of a bad idea
 Scholarships- you’re grading and trying to eliminate some.
o You’re looking for things but want to get rid of poor ideas.
o Look at small things such as who typed it nicely, whose was
late, etc.
 Like a funnel- stop the bad ideas and let the good ones come through
 General rule of thumb- you eliminate those ideas that are not consistent
with resources and objectives and keep the ideas that are.

 Ex. Someone comes up with idea for new pizza (great idea) but its
general electric who comes up with idea (they make kitchen
appliances). However, they shouldn’t because it doesn’t work with
their resources and objectives.

 Dow Chemical Company was founded by Herbert Dow. He was a

chemical engineer and found a way to extract halogens from salt
 water more effectively than Germans who had a cartel on this.
Went to Michigan and founded the company.
o Mr. Dow made all the decisions initially (marketing,
accounting, etc.)
o They were making a product and getting a byproduct (when
you make a product and get something you’re not trying to
make)
o They were getting thin oily liquid and pouring some in the
river. A couple engineers wanted to find a better place to use
this stuff. They came to Mr. Dow and got idea to mix it with
water and the water would freeze slower. Dow said it was a
good idea except for one thing: we don’t sell to consumers,
we sell to other industrial firms.
 When you delay a decision, you’re actually making a
decision.
 These two guys got frustrated and took it to DuPont and
now its antifreeze.
 Resources are more than just making the product- its
marketing, customers, etc.
 Lets say you screen and get rid of 20 ideas.
3. Business Analysis
 Page 261
 Specifies features of product needed to bring to market and make
financial predictions
o Require estimates of prices per unit, break even analysis, etc.
o Lets say you think you can only make money on 8 of them.
You can work with 8.
o You have no products, only concept.
4. Product Development
 Idea takes on tangible form
 You make a prototype- make a few of them.
 Just because you have an idea doesn’t mean you can actually make it
 Dow had idea for product called MicroSpheres-
 Small and white in color and had gas in them. Idea was that you could
put microspheres in plastic and it would cause them to get evenly
distributed.
 1. If you put it in a chair, it would make it lighter.
2. In a car, it would make the gas mileage much better.
 Back to idea- you start at 40 ideas, and now have four products.

5. Market Testing- put it out there to see if people will buy

 This is a stage you may not do; you may emit it.

 Standard way- you have a product and instead of putting it out there in
every city, you choose a few cities and you put it in there and then you
promote it and see what people will do. What you really want to know is if
people will buy it. Then, you get a feel for it.
 Ex. When he was with Dow, Dow came up with a new product call liquid
tire chain. In an aerosole can. Idea was if you got stuck in ice or snow,
you could clean off the tires, spray some of the stuff on there, then spin
tires and you could drive again.
 If M told us there was a product like that, we initially wouldn’t think it
worked.
 You pick a few cities. Cleveland and Buffalo.
 M and wife were in Cleveland expecting new child. It had snowed. They
went to grocery store and parked on a pack of snow. When they came
out, they couldn’t get off the snow. They gave everyone a case of the
product. It actually worked.
 Suggested reasons it was successful: poor marketing, price was too high,
tire disintegrated
1. Actual reason: When it got really cold, you couldn’t get
it out of the can.
 When you test market, #1 thing you’re trying to find out is
knowledge of potential sales.
1. Others include product faults, pretest marketing
strategies (different market segments)
o This is one is not always done.
Why wouldn’t you do this?
 Cost vs benefits
o If the benefits outweigh the costs, you’re likely to do this.
o Ex. Children
 Hope the benefits outweigh the cost
 o What costs are we talking about?
 Costs you out of the pocket to do it.
 Another kind of cost- Opportunity cost
a. You’re foregoing an opportunity by being here
o You have real costs of doing research but you’re also having
opportunity cost.
 If you’re in 3 cities, you could be in a thousand instead.
 How do you market test an industrial product (sold to different
companies)?
o Ex. Microspheres- you could incorporate it into paper and
paper would be very light. Who would be interested in this?
 Companies that send out catalogues (Victoria Secret)
a. Charged based on weight
 Dow could make this paper. But you don’t make paper
on a 20 ft machine. It should be twice as long as a
football field.
 Gladfelder had a machine over 200 feet long so Dow
tested it there. Why would Gladfelder shut down for a
day to do this?
a. If this thing worked, they would have exclusive to
this for a year.
b. They ran this and the stuff came off into the air.
It didn’t work & they sued Dow.
o Above was example of industrial market testing
Commercialization
Page 263
 The stage of the new product process that launches a product in
production and sales
 Most expensive stage
 You start out with 60 ideas at the beginning and maybe put 3 into
the market place.
 What happens to the 3? Some fail. Maybe you only get one. That
one has to cover all the previous stage’s costs.
o Pharmaceuticals- come out with drugs that are expensive.
They work at compounds for many years and selling the one
drug has to recover all the costs. If they don’t cover costs,
 they wont be able to make cures for new emerging diseases.
We argue it should be cheap to save people’s lives but this
does not make sense financially.

Page 264- Example

 READ PARAGRAPH ABOUT BURGER KING FRENCH FRIES

After the product is out on the market, you want the potential customers to
“adopt your product.” This means to use it on a regular basis.
o Adoption process- mental and physical stages people go through
when adopting a product
 People go through series of stages when a new product
comes out
 This is IMPORTANT.
1. Awareness
a. you know the new product/business exists.
2. Interest
a. You’re seeking information about the new product.
3. Evaluation
o you are trying to decide if you should try it or not.
o Well, hey next time we go out to eat lets try it.
4. Trial
o You buy the product, try to car, go to the restaurant, etc.
5. Adoption
o You use in on a regular basis.

 Thought is that you go through these stages in order.

 Why is this so powerful?
o Perry opens a retail business. This is a new product. Everyone
in town is aware or knows that it exists but they never do
anything else. The business fails.
o Lets say everyone in town gathers info but never does
anything. Fails.
o The only way she can be successful is if people adopt the
product.
 o If people are stuck in a process/stage, you have to unstick
them.
 You wouldn’t unstick the same way in every stage

Story: Wife opened up dance studio. Lost money in the first year. Like a
good husband, he did not get mad. He said most companies did not make
money in the first year. He suggested people may not know business
exists.
 Less than 15% of potential market knew her business existed.
o These people were stuck in awareness.

M saw a TV for the first time. Grandma nave had a TV and let the kids come
watch shows. TVs weren’t really selling except in Dallas. When you went into
his stores, TVs were right there on the right and caused people to notice
them. They installed it in houses and let them have trial rune. These people
were stuck in trial but moved to adoption because of this process.

Page 254
Marketing Reasons for New Product Failure
 in general, products fail because of marketing shortcomings.
o With a new product, you have to come up with something
that is differential.
o But it cant be so different that its not compatible with the way
we do things.
 When you go into a room with a machine, how do you know its
operating?
o you can hear the machines.
 Lets say you go put money in pop machine and nothing happens
and it won’t return your money. Most people hit the machine.
Somebody tried to put a bell on it. This made it compatible with
what we do.
o Ex. Microwaves making roasts grey. This wasn’t compatible.
Chapter 11 1/16/2017 8:13:00 PM

Managing Successful Brands

o Gatorade (270)
o Why is the thirst for Gatorade unquenchable?
o Synonymous with sports drinks. Today its global.
 This is something to take with you.

Product Lifecycle
o The concept of the stages a product goes through in the
marketplace.
 All living things have a lifecycle.
 They take the concept of a lifecycle and apply it to an
inanimate object. Take idea that it’s born, grows, and
eventually ceases to exist.
 When you typically apply it, you see the graph on page 273.
 If you have monetary units and time.
o If its successful, as time goes along, sales will go up.
 Increase and an increasing rate, then a decreasing rate,
then eventually declines.
 To study this, they divide it into quadrants.
 Give name to quadrants.
1. Quadrant one- introduction stage
2. Quadrant two- growth stage
3. Quadrant three- maturity stage
4. Quadrant four- decline stage

This is the sales curve measuring total industry sales revenue.

 If you’re selling sunglasses, its measuring ALL sunglasses of ALL
companies.
 Can depict other types of sales.
o Page 277
o Youngest daughter loves history. He asked her once why she
loved history. She said she never gave it a chance. Give this
concept a chance:
 The product lifestyle showed in 11-1 is a total industry or
generalized curve. Yet, in managing a product, its important to
 distinguish between multiple life cycles. Product class refers to
entire product or industry, such as prerecorded music.
o If you wanted to graph sales of all prerecorded music since it
every began.
 Product form measures the sales of each type. (cassettes,
records, etc).
o The industry would be all of those together.
 You can also take a brand and graph the lifecycle.
 You can graph all toothpaste sales, you can graph a specific type,
or the entire brand.
 Since the quadrant graph is monetary units, you can put other stuff
that has monetary units associated with it.
o Ex. A profit curve
Why is this such a big deal?
 It tells us that products have a limited life. They won’t exist
forever.
 Depressing: Everyone in this room is going to die. This is a fact. M
is closer to dying than us. This is hard for us to believe.
o Oscar Truveres (sp?)- Rookie for cardinals with tremendous
career and died in a car wreck.
o He never thought about dying.
o If something is successful, it’s hard to believe it won’t be that
way forever.
 Brett Favre
o Hall of fame football player for Packers
o He retired then he came out of retirement and played for the
Jets then retired and came back again
o He didn’t realize his career was over.
 Profits and Sales are not the same thing
o People with a lot of sales often believe they are successful
o If you have $1000 in sales at on period and $1000 at
another, you can have profit at one and not the other.
 You have to consider expenditures
 You can make a million dollars a year and still be in
debt.
  Most important thing the product life cycle tells us- that marketing
strategies must change over time
o Things change over time.
o We’re in our 20s right now. We will live differently in our 50s
and 60s than we do now.
o When M was younger, he was an athlete. People change.
o Marketing strategy must change if you go through.
o Marketing Strategy- find target market and develop
marketing mix to satisfy the target
 Page 273 figure 11-1

Introduction Stage
 Occurs when a product is introduced to its target market.
 During this period, sales go slowly & profit is minimal
 Primary demand & selective demand
o Most of the time youre in business, you don’t want
competition. You open an Italian restaurant and you don’t
want anyone else to open one. In the introductory stage, you
may want/draw competition to stimulate primary demand
 When microwaves came out, a man developed a
microwave and couldn’t get awareness out. (primary
demand) Wanted competitors to create a demand for
them. Then they’d, say they have the best (Selective
demand)
Growth Stage
 Rapid increase in sales
 Competitors are starting to enter
 Industry sales are going to increase; now you have competition and
react to it
Maturity stage
 Slowing of total industry sales & starts to decline
 Competitors are dropping out
 Money is made at this point
 Most products are in maturity stage
 o Lets say you have a product in maturity stage and you’re
making money. Sometimes you may want to take a
successful product and change it even if its successful.
 Why change something you’re doing well with?
a. Coca-Cola: after many years, they changed their
formula to coca-cola. They came out with what
they call “new coke.” They were making billions in
profit, but they changed their product. Why?
b. Pepsi cola was taking away market share. They
were considered about that. We know in taste
tests, people prefer pepsi over coke and that its
sweeter than coke. They reformulated it to make
the taste sweeter. They put it in the market and
called it the New Coke. It was one of the biggest
bombs in the history of business. There is risk
associated with making changes on a
successful product. The risk is that they
wont like it and you’ll lose sales.
 Coca Cola forgot that its an American Institution. We all
know that.
 If you are changing your product and you know there’s a risk, you
want to lower the risk.
o If I’m going to change my product in the maturity stage,
lower the risk by doing marketing research.
 Now Coke is called Classic Cola
 One way to reduce risk is to keep the original.
 Make the change gradual
Decline Stage
 Occurs when sales drop
 You have weak products
 Products in decline stage consume disproportionate share of
resources in relation to their worth
 Two choices: Delete/Eliminate or Harvest
o Deleting is toughest decision
o Harvest- Retain but reduce costs
 There are reasons that you would keep a weak product.
 o Sentimentality- First product they ever had, etc.
o There might be a comeback- ideas that if you change things,
he will recover.
 Ex. Converse- Sales declined and now they’re back in.
 Shoes made out of corefam (sp)- men liked them, but
women didn’t want a pair that lasted 15 years because
they want new styles etc.
o It may be a tie-in product
 The sale of the poor product is tied-in to the sale of
strong product.
a. For epoxy to be used, you need hardener or
imean (SP?); a byproduct can be essential
b. If you take Brine (saltwater) and run electricity
through it, you get chlorine; you get many
byproducts. You want to get rid of them, but if
you get rid of those, you also would have to get
rid of the main product.
o Disruptive to the firm- OSU has departments that don’t make
money. You cant get rid of those that lose money because the
university is all-inclusive.
 Coca-cola still tells Tab, its first diet drink to a small
group of die-hard fans.
Elimination of products
 He lived in Philidelphia at a place called Polymer corporation
 They sold them Epoxy- two kinds
o One called DER668 (140K a year)
o One called DER667 (40K a year)
 They knew they bought from other suppliers but they were unsure
of who they were and how much they sold.
 They had a relationship with these people. M helped them develop
the product, etc.
 One day he got a letter from purchasing director and Polymer and
they said they were going to single source and listed all the epoxy
they had purchased from M’s company and others.
o He asked M’s company to submit letter listed what they’d
charge and if they could meet requirement.
 o Whoever sold for the lowest made the business.
o Those at Dow were extremely unhappy.
 Lets say Camille is married to a good guy and he comes
home and says he’d like to go to med school. That
would mean 8 more years of school but it’d be great
when he got out. He said he wouldn’t do that unless she
agrees, she agrees. What is Camille doing during those
8 years? Working. She’s willing to do this because it will
pay off. During those 8 years, she is likely to have kids
and take care of them. She’s willing to do that because
she loves the kids and because life will be fantastic if he
gets out. He gets out and they move to their dream
location; they have a nice house and a nanny. Then one
day, husband comes home and found someone new.
This has something to do with the Dow story.
o They were unhappy because Dow was the one who built the
product with them and showed them how to be profitable.
 The only factor Polymer cares about is the cost now.
 They submit the bid and lost the business. 3 weeks
later, a person from Polymer calls and says the
company who got the bid cannot provide 668 according
to their specifications and asked for Dow to provide it
again.
 Dow says they’ll ship it and M will come out and have
dinner.
 M send outs a request for 20K pounds. 2 hours later
message comes back and says they don’t make it
anymore. (product deletion and elimination)
 M called product manager and manager said that the
products were hard to make and they discontinued it. M
said this will hurt Polymer. Bob (manager) said “well
they should’ve thought about that”
 Manzer went out there to meet Polymer
 How do you solve this problem?
 o Dow said they would make 80,000 pounds and sell it to them
at low price on the bid; give them 7 months to find someone
new
o Polymer called and said they found another supplier after Dow
had already made it.
o Polymer guy would blame it on Dow if he told this story.
 This would hurt the Dow chemical company
o If you have a product and you’re going to eliminate it, you
need to tell your customers first and give a deadline date.
Page 276
 Length of product lifecycle- no set time
o Some humans live 2 hours and others live 105 years
 Factors:
o Rate of technological change in that industry
 ex. If tech change is rapid, tends to shorten life cycle.
 Ex. Smart phones
o Rate of market acceptance
 how fast people in market accept new ideas
 if people are more accepting, life cycles are shorter.
o Ease of competitive entry
 Its easy to enter an industry
 These factors influence length of cycles.
 Example: Toys
o Rate of tech change is fast
o Market acceptance- children accept new products
o Ease of entry- easy
o = life cycle tends to be short for yoys
 Steel industry
o Rate of change- slow
o Market acceptance- slow
o Easy to be a steel competitor- slow
o Life cycle of steel- long
Shape of lifecycle- page 277

This is typical life cycle.

Every organization has its stories.
 Fred Black taught here and was a bachelor. He was tall and
weighed about 170 pounds. He always wore black polyester pants,
black shoes and a white shirt. He had an office in the basement in
business building. He was teaching a class MWF at 1:30 and was
talking about infiniti. Student said he didn’t understand the concept
of infiniti at 2:00. Teacher picked up board and drew straight line
and didn’t come back. (pointless story)

Lifecycle and Consumers

 The lifecycle of a product depends on sales to consumers
 Not all consumers buy product in introductory stage
 In shape of lifecycle, curve indicates most sales occur when its been
out in the market for some time
 Diffusion of innovation- How do product diffuse through society?
o Bell shaped curve on 279
 Everyone who adopts this product is under the curve.
a. Area under the curve should equal 100%
 Some people are not going to adopt the
product

As a marketer, you’re interested in people on left

side
 left to right under curve- innovators, early adopters, (look up the
rest)
 Example: men’s hairstyles
o When he was young, most men had short hairstyles
o Then longer hairstyles come
 Who was first? The hippies.
 Then who? Athletes, rockstars
 Then? Young people, college students
 Then older men
 Last people- blue collar workers
 You try to get more people on left side
 o Most interested in Early adopters
 Why?
a. First large group
b. These people tend to be opinion leaders
c. Affected by promotion, innovators aren’t really
 Farming style- No till
o Identify who will try it first- it wont be your grandfather who
has done it the same his whole life
o It will be young farmer who is educated

 Story- used to go see his mother and go to home town places

where they had home cooked meals. He was over there and she
wanted to go to a new place. M agreed and asked where it was.
They got into town and she pointed to KFC. She said “have you
ever eaten there?” He said he hadn’t because he hadn’t been to
that location. For next 8 years, they went to KFC instead of great
home cooking restaurant.

Managing the Lifecycle

 You have to always remember that when you are the manager, you
are paid to make decisions.
 When you make the right decisions more often than the right
decision, you get the promotion.
 A product manager does 3 things: modify product, modify market,
reposition the product
o Modifying product- new features, packaging, etc.
 Proctor Gamble revamped Pantene and now it’s the top
selling company in an industry with more that a
thousand competitors
o Modifying market-
 Change the market- change the seat, the bars
o Positioning the product
 Cheerios- advertised on the radio using lone rangers;
tried to sell to children; repositioned it from a children
cereal to an adult cereal
 Not in text:
o Product mix- to remind you what it is, it’s the combination of
all the products that you make. Ex. Eskimo joes- clothes,
food, drink, etc
 Sets the upper limit of the profits that you can make
 Different product mixes have varying upper limits
 How close you come is dependent upon market strategy
 Factors that affect the limit- marketing strategy
o You’re a toy manufacturer and you make 10 toys.
 Those toys are your product mix.
 You then design your marketing program.
a. Lets say its advertising
b. Toys are geared for kids 5-9 years old
c. Where should we advertise?
d. Someone says David Letterman show.
e. Bad idea. You have a lousy strategy.
f. You want to choose the optimal marketing mix.
 The problem is that its extremely difficult to determine
if you have the optimal mix.
 BUT its not difficult to determine if you do NOT have the
optimal mix.
o It’s basketball season. They have 8 players playing against
Clippers. You’re looking for best basketball player and you
have some choices. Manzer is one. You know he’s not the
best choice.
o If you have chronic excess production capacity, you probably
don’t have best combination of product.
 What does that mean?
 Lets say you could produce 100 chairs a day but for 5
years you’re only producing 5 chairs a day.
 Then you should sell something else because you don’t
have optimal marketing mix.
o If you have a disproportionately percentage of total
profits from a few products, you likely have excess
production.
o Let’s say you make 10 products.
o Those products would constitute your product mix.
 o Lets say product one generates 95% of all products.
 This could be a disproportionately high percentage from
a few products. You may discontinue others.
 If product mix does not exploit your sales force
a. M would drive 3 hours to PA to a paper mill to sell
one product. Let’s think. In many ways, that one
product was the product mix. But there are costs
going up there that wouldn’t change if you were
selling 10 products. Ex. Gas mileage and cost to
stay in hotel. There are certain costs that remain
the same no matter what (fixed cost)
o If you have steadily declining profits/sales, this may be an
indicator that you’re selling the wrong stuff.

Next exam- 10,11,12,15

Brands
 Different than products
 An automobile is a product, a brand is a Chevrolet
 Product is clothing, brand is old navy
 Definition: an organization uses a name, a phrase, a design,
symbols, or a combo to distinguish and identify products
o This distinguishes your product from the computer
o Ancient kingdom- king required artisans to put their mark
upon the things that they made; the mark provided a
recourse
o Once the artisan began to put their mark on their products,
they started to make better quality because it could be traced
back to them
o People will do things in a group where they cant be identified
that they wouldn’t do individually
Brand Personality
 Corvette has different personality than Solara
 Introduces something interesting:
o Concept: Brand Equity
o Brand name importance to something has led to this.
 o Define: added value a brand name gives to a product beyond
the functionality provided
o The NAME corvette means something and adds value
 In the parking lot, there is a yellow corvette with a
black top barked. It’s a staff person.
This added value:
1. Gives competitive advantages
2. Consumers are willing to pay more for products with brand equity

 Valuing brand equity:

 The CEO of McDonalds once said “if something happened to
Mcdonald’s, I would give you absolutely everything, but he wouldn’t
give up the name”
 Brand equity also provides a financial advantage
 Have economic value in that they’re intangible assets
 Ex. Snapple being bought for 300,000 and sold for 900,000

How much are brands worth?

 #1 brand in the world: Apple
o How much is it worth?
 $104,000,000,000
 Locked automobile- example of protecting what you value
o This supports the idea of protecting your brand
o How will you protect it?
 Rule of thumb- protect it by acting as if it is yours
 When crock mcdonalds bought mcdonalds brothers, he
bought the name.
 If you don’t act as if it is yours, it must be someone
else’s.
 Dow in sales training- 2 hour thing with lawyers on how
to protect brand name- put the little R on there
 Union story
a. A club was raising money and were selling shirts
that said “Tulsa’s little juke joint jumping high
school”
 b. Miami doesn’t care if union is using it and Joes
doesn’t really care, but if they don’t pursue it and
act like it’s theirs, they will lose it.
c. Don’t want their brand to become generic
o Years ago, a company found something that you could ingest.
If you had a pain it your foot, the pain would disappear. Pain
in your butt, it would disappear. Didn’t defend their product,
Aspirin and now others copy.
o Names right now that are in danger because we use them
improperly- Kleenex
 If they lose that, anyone can use it
 Jell-O- it’s gelatin
 Scotch tape- brand name of the 3M corporation
 Band-Aid
 Xerox
o M took care of 2 beautiful trees- one day he heard a chainsaw
and his neighbor, Rick, is cutting down those trees because
they’re befowling his gutters. Can M go to court to keep him
from cutting down his own trees on his own property?
For 25 years, his neighbor acted like they weren’t his. If
for 25 years he would’ve acted like they were his, M
wouldn’t have had a chance.
Branding Strategies
 Multiproduct branding-
o A company uses one name for all products in class- family
branding or corporate branding
 Campbell’s- all products use name
 Gave a talk for small town newspaper publishers- a guy
from Altus sent him an article he wrote about M’s talk.
The headline was “Father of OSU player speaks”
a. Father- not a good description of M
 It makes sense why you would use family branding
 Multibranding strategy-
o Company can engage in multibranding
o Useful strategy when each brand is intended for different
market segments
 o Different name for products in the same class
o Each of these in the same product class have a different
brand. Why would you do that?
 One reason: each brand is for different market
segments
 Another reason: You get intracompany competition
a. Within organization, different brands compete
with each other and keeps each on their toes
b. Brand switches- captures them
 His wife is brand loyal to Coca Cola
 If they don’t have coca cola, she will go
someplace else to buy it. But if you prefer
coca cola and Pepsi is on sale, many will
buy it. This is switching brands.
 So, if you normally buy Cheer but Tide is
cheaper, P&G doesn’t care because they
own both. You capture the switchers
 Other reason: You may increase allocated shelf space.
a. In a store, you want the most shelf space
possible.
b. This keeps the other products out.
 Private branding stategy:
o When manufacturer uses name of wholesaler or retailer
o Washer and dryers- the only place you can buy a Kenmoore
washer and dryer is Sears. Kenmoore is a private brand of
Sears.
 Lets think. Do you think Sears has a manufacturing
plant that makes washers and dryers? No. They get
their washing machines from someone who makes
them. They get them from a major manufacturer like
Whirlpool. Whirlpool also makes Kenmoore than you
can only buy at Sears.
 IGA peaches- the only place you can get them is an IGA
store. But they don’t have a cannery.
 One timed he owned a Dodge & Mitsubishi- made by
the same people.
o Question: If whirlpool makes Kenmoore washers, which is
cheaper?
 1 out of 5 items purchased is a private brand
a. why do they buy them? They’re CHEAPER.
 1/16/2017 8:13:00 PM

Chapter 15- 400-406

Chapter 17- 440-459
Chapter 18- 470-479, 486-489
Chapter 19- Selected pages
Chapter 20- All
Chapter 13/14- Selected pages

“a short pencil is better than a long memory”

 If you take notes, a short pencil making those notes is better than
trying to remember what he said 3 weeks from now.
Page 400
 Dealt with marketing channels
 Supply Chains
o This is BIG
o Different than a marketing channel.
o Supply Chain vs. Marketing Channel
 A supply chain refers to various firms involved in
distributing to various channels
 Differs from marketing channel in terms of firms
involved; supply is suppliers that deliver raw materials
o Why is it such a big deal?
 This is gigantic because you view this as one and you
integrate it and it makes it more effective and efficient
to include the supplier in the bigger picture
o Example
o Page 401
 Supplier network auto- If youre going to make
automobiles, you have to have steel aluminum and
rubber that goes to someone who makes stuff out of it;
they assemble it all then it comes out to the dealer
a. You coordinate this so suppliers are there when
you want them and the price so they’re consistent
with demand
b. You coordinate it as 1- like a family; you
coordinate so there are no misunderstandings
o Wal Mart
  Page 403
 Efficient supply chain
 Walmarts marketing strategy is to be reliable and lower
priced for a variety of goods. This strategy favors an
efficient supply chain. Each week, around 200 million
people go into wal mart; those products need to be
there at a low cost. Efficiency is achieved in a variety of
ways. Wal mart keeps low inventory levels. Use cross
docking. No warehousing or storing of products for a
long period of time. Cross docking allows for only a
small number of distributing center.
a. You have the Wal Mart warehouse. Suppliers take
it there to sort and immediately take it to the
stores. Don’t want products to be sitting there
gathering dust.
 Southwest airlines always makes money. Why? The
only way to make money is to make sure planes are
flying. They have no central terminal. The others have
planes sitting around everywhere. They’re efficient.
 Sam Walton
o Born in Kingfisher, OK
o Went to university of Missouri
o At one time, 5 of the Walton’s were 5 of the top 10 wealthiest
people in the world.
o When you think about WalMart, what do you think about?
 Lots of products, low prices, great service
 He wasn’t the first to think about these concepts
 One of the things he did differently—
a. Stillwater has 2 wal marts
b. Perry has walmart, cushing has a wal mart,
they’re everywhere.
c. They sell so much stuff because they create more
stores.
d. For efficiency- learned how to put his
businesses in smaller trading areas.
 Dr. Roger Banister
 o 1954- he did something thought to be humanly impossible
o he ran a mile under 4 minutes
 first person to ever do this
 within 2 or 3 months, several others did it and broke his
record
 the barrier wasn’t physical, it was mental
 When Sam Walton did what he did, he broke the
barrier.
 Youngest daughter- married a guy at 35. She never cooked in her
life. First 6 months of marriage, she wasn’t cooking. One day she
started doing it and now she’s an amazing cook. How did this
happen? She tried it and she had success.

Logistics- Elements of physical distribution

 How you physically move stuff
 You make this car in South Korea- how does it get to Stillwater?
o Determine nature of the ship
 You go into a store and you’re buying canned tomatoes;
it has a price; $1 a can. Also may have price that says if
you buy 2 cans, its $1.95.
 With industrial products, they do the same thing. They
have a price list that may be something like this: buy 1-
4 drums, $1.55 a gallon. 5+ drums, you pay $1.50 a
gallon. Lets say lowest price is $1.30 a gallon. If you
buy a truck load, you’ll get the lowest price. What is a
truck load? They arbitrarily choose a number and call it
a truck load.
 In Cleveland- selling back for truckload was 20,000
pounds. You’d have to order at least 400 bags. Dow
changed it to 30,000 so you’d have to buy 600 bags. M
was in his office and guy named Harvey called him and
asked for his regular order of Calcium Chloride. M told
him the new minimum was 600 bags. Harvey said he
didn’t want 600 bags. Harvey was an ex-marine.
a. If you give it to him, you lose control of your
pricing and if you don’t, you lose his business.
 b. If probably doesn’t want to order 600 because for
10 years he’s been ordering 400. M offers 450 for
the lowest price and Harvey eventually goes up to
600 over time.
 Transportation
o Rails, trucks, water, air, pipeline
o Truck drivers- the last American cowboys
o In WWII, Nazis had a top 10 list of 10 places in US that
should be sabotaged- Cushing, OK. Destroy the pipelines
there.
o You have to figure out a material handling system
 You have a warehousing system
 You need an inventory control system
a. Inventory costs money
b. When you go buy 8 cans of corn and put it in
closet and don’t use it for 2 months, they go bad
and it costs you money.
 Order Processing system
a. Drive up, talk, give money, you’re in your car and
it says to have money ready; can run through 20
cars in 10 minutes
b. Let’s say you have a customer in Seattle call San
Francisco office asking for sulfuric acid; want it
billed to new york office. You make it in Texas.
You need a system that gets it effectively and
efficiently to all places.
c. Had a guy in office; tall and attractive. All the
women liked him. They had computers; he’d take
orders. He processed order and it said 1050 bags.
Guy only wanted 10 bags. Almost got fired for
that.
Chapter 12 1/16/2017 8:13:00 PM

.Page 300-311
 deals with services- this is still part of the product
 You can divide service into two categories:
1. Service Industries
o Intangible things such as education, doctors, lawyers, etc.
o These industries have no products or goods
o This is BIG.
o By the year 2020, there will be somewhere around 20 million
jobs with people making products, but there will be 130 million
in service industries.
2. The Service Encounter
o It doesn’t matter what you’re selling, there is always a service
encounter.
o Page 304- Let’s take steel. Is that a service industry? No. Is
there a service component with selling steel? Yes.
o If you can learn to service better than the other guy, you will
have an advantage.
o Before WWII, you bought a product from japan and it was a
piece of junk. That’s not how they are. What happened?
 US is exceptional because when we have a war and win,
we help rebuild them. We did this with Japan &
Germany. Others exploit defeated nations.
 When Japanese made good products, they started
taking our markets and we started shaping up and
making products. One of the #1 sellers in Japan is
Buick right now.
 We start making good products and in the mid 80s
people realized the fasted growing industry was service;
people started studying this more.
 Handout
o Page 301- Service quality is harder to evaluate than product
quality.
 Its harder for people to tell you what they want in a
service. Why?
o Four I’s
  Intangibility- Services cannot be held, touch, or seen
before purchase is made
a. Difficult to describe something that is intangible
b. Almost impossible for a mother to describe the
love she has for her children
c. Story: 3 adult children. They were in the backyard
with a tennis ball talking; he watched them out
the window and became extremely emotional.
d. Ex. Insurance- try to give you a tangible aspect.
Prudential (the rock)
 Inconsistency
a. If he goes and buys same thing at store every
morning, it will be the same.
b. You go and get your haircut and one time it’s bad
and one time it’s good.
 Inseparability
a. Difficult to separate service from giver of the
service
b. That’s why you see in paper you see an ad and
it’s linked to a person
c. You pay big money to get a good seat at BOK to
see Carrie Underwood
 Voice says Underwood is ill but understudy
will present the show
 Understudy may be better, but you still get
paid back.
 Inventory
a. There is not good to grab
o The point is that there are difference.

Customer Satisfaction- based on comparison of expectations and

actual service
Page 308-
 When a customer comes in, they expect a certain level of service
o General rule of thumb- if they meet expectation or exceed,
they tend to be satisfied
 o If the service is below, they’re dissatisfied.
 You expect to get 30 mpg, you get 35. Satisfied. 25. Dissatisfied.
 Expectations can change.
 If you’re going to satisfy people, you need to know what the
expectations are and its not always easy to do.
 Expectations come from (308) word of mouth communication,
personal needs, past experiences, and promotional activities.
o It happens all the time
o You’re going to get a job, work there, and there will be some
people who become your friends. Before you go to work, you
seek out your friends and ask them “how was your weekend?”
Lets say we have 2 friends, Jason and Tyler. T seeks out J
and asks how his weekend was. J says they went to the best
movie he’s ever seen. T asked what movie it was. J would
answer. T goes to the movie and doesn’t like it, why? They
have different tastes and the expectation was very high.
o Jason doesn’t know much about movie when he goes and the
expectation was higher than actual.
o Example of the power of expectation.
o You go to a restaurant and there’s people waiting. You ask
how long the wait is. If the wait is shorter than what you said,
you’re satisfied. Vice versa.
 Probably important:

 Quality of Life

Income
o As income increase, quality of life does too.
 o But when people’s income decreases for whatever reason, they try
to maintain quality of life.
 They go through savings then go into debt
 Then, at a certain time, they have to lower quality of life.
 They don’t slide back down, but go in steps.

As service expectations goes up, actual goes up as well.

 In short run, if expectations are about what you provide, they’re
dissatisfied.
o Could be a cost issue (hiring less workers, etc.)
 If you want to satisfy, you have two choices:
o Raise your services
o Lower their expectations
(use same graph and previous with Y labeled Service
Expectation a X labeled actual service)
 Wife wanted to buy an Electralux vacuum.
o She wanted one because her mother had one.
o They went to the salesperson and he was talking about how
great it is. M tried to see the price without salesperson
noticing. He sees the price and it was $395. Salesperson told
her the price was $269. M realized he saw the price of the
bags (3.95); M wanted to buy it now because cost was
actually less than he expected.

The customer evaluates both the service outcome and the service
product (important!!!)
Says there are 2 parts: outcome and the process. Customer will
evaluate these based on expectations.
o Outcome is the result of the service
 You take a loved one to the hospital- they’re either
healed or not healed
 You want a refund- either get it or don’t
 Student was 4 points away from an A- M said no so
outcome was negative.
o The process is how you get to the outcome.
  If you’re not careful, you believe that if you give people
the outcome they want, they will be satisfied.
a. May not be true. They also evaluate the process.
b. Ex. IT people solve your problem (positive
outcome) but wonder why people don’t love
them. People don’t love them because of the
process.
o Of the two, generally the outcome is more important to the
customer.
 You take grandmother to hospital- whether she is cured
is more important than if the doctors were nice or not.
 Having said that, of the two, you (as a giver of the
service) have the most control over the process.
a. You may not be able to heal someone, but you
can have good service towards them.
o Basketball- M will be at the game. If you’re there, you will see
him at midcourt refereeing. You have offense & defense.
Teams have most control over their defense.
 Example: you go into walmart and buy something for $20. You go home
and realize you want your money back. They take it back. Are you
satisfied? Maybe not. He didn’t tell us the process. Let’s say you went in
for a refund and you were sent to several different places and once you
find the right guy, you have to wait awhile. You’re not satisfied even
though the outcome was positive.
TEST-
Ch 10- all
Ch 11- 270-296
Ch 12- 300-311
Ch 15- 384-399

How are people going to evaluate the process?

Page 308. M would rather us know the 10 on the paper than the 5 in the
text.
 M was hired years ago by Conoco. Conoco has convenience stores.
They got to thinking about why someone would go to one
convenient store as opposed to another because they’re all similar.
 As you know, people don’t go just to buy gasoline, but to sell food.
What would cause one person to go to one and another person to
go to another (other than location)? Conoco thought if they studied
what people wanted, they could better provide what people wanted.
Part of the deal was to train employees to give outstanding service.
M was hired to talk to these employees for seven hours. Usually
people who work in a convenient store are young, high school
education, minimum wage. It’s hard to convince this type of person
to give great service. If asked to change, people ask what they get
out of it? And Can I do what you want me to do?
o So M is down there and there’s a kid named Reggie. After an
hour and a half he and M are buddies. M catches his eye and
it dawns on M that Reggie isn’t interested in providing
services. M doesn’t want to just get paid, he wants to make a
difference. M asked how long Reggie would be working for
Conoco and it became obvious he wouldn’t even be there a
year from now. M decided to make him answer the 2
questions everyone needs. M says he can give advice that
would cause Reggie to always be able to get a job. Says if he
practices them at Conoco, the skills will go with him.
o Does this mean Reggie and his friends will give great service?
Not necessarily. But the turnover of these companies went
way down afterwards.
Paper-
 Tend to be in order of importance.
 Courtesy- When you ask people off the top of their head what
makes good service, they often say this. Why is it lower on the list?
It’s easy to be courteous to people that are courteous to you.
Secret of how to be nice to people who aren’t nice to you: There
was a mean note on his car. It didn’t bother him because he knew
he couldn’t please all of his students.
 Access- all of us want access and we want it now.
o The difference between good service through access and
great service through access: Years ago, he was in between
semesters and went up to Salina, KS to make presentations
for State Farm. Has 8 minutes left until he should be there. It
 says they’re meeting in the Magnolia room. There’s a young
woman on the computer and she’s concentrating really hard.
She finally gets off and kindly asks if she can help him. He
gets there in time, but not great service.
o How would she let him know he had access? By looking at
him and signaling she would be with him in one second.
o In his office, he’s on the fourth floor. He’s talking to a student
and another wants to speak with him. The waiting student
tends to stop in the doorway. They want to make sure they
have access.
 On this process (backing up a little), it doesn’t matter if you (the
giver) think its great, but only if the customer think its great.
o Years ago while in grad school, it dawned on him he needed
to pay his utilities before it got turned off. M went to city hall
on Monday morning to pay the bill. It took him 47 seconds.
So is he satisfied? No. He goes there on 8:00 Monday
morning and there’s not another person in there. There’s a
slot to put this in. But he wants to hand it to someone so they
don’t turn it off. There’s two people to talk to but they’re both
getting coffee. They’re talking about the weekend and the
movie they saw over the weekend. It took them 47 seconds
to come up and get his check. Let’s say he’s irritated enough
to call the manager. If he would’ve called, the manager
probably would’ve thought it was a compliment. But M is
mad. However, it doesn’t matter what they think, it matters
what the customer thinks.
o Example of what: only matters what the customer thinks
about it.
 What he’s about to say can change your life. If you’re doing this,
you have the advantage over others:
o Responsiveness- willingness or readiness to provide the
service.
 If you do this, you will have the advantage.
 When you provide a service, they don’t want to think
they’re dragging it out of you, but that you want to do
this for them. When people act like they’re doing you a
 favor versus the person who acts like they’re glad
you’re in the store.
 When you do a good service, do you wish to get credit
for having done the good job? Usually yes. That’s why
you want the raise, the better hours, the pat on the
back.
 The person who makes you feel so great about being in
the store may get the credit over the person who
doesn’t.
 Example: gets calls from service organizations often. He does this
all the time. If he does the service, he wants to get the credit. He
gets a call to speak at rotary club. Tells them he’d be delighted to
go. But if he’s going to go to it, he doesn’t mention how
inconvenient it is at all. No one cares how busy you are. Everyone
thinks they’re busy. M asks what topic he would like and how long
he needs to speak. When the guy hangs up, he thinks he’s a
wonderful guy. If M didn’t act this way, the guy will think he’s a
jerk.
o M would prepare in both situations, but to get the credit, he
should act in the responsive way.
o Every morning his wife drinks a coke for breakfast. Lets say M
has to get up early one morning and is very busy all day. He
left at 6 in the morning and gets home at 11:30 at night. His
wife is in bed reading a book. M says how tired he is. His wife
says that she doesn’t have any coke and if he would go out
and get her a coke? If you’re going to get the cokes, he might
as well get the credit for it. This is why he should act willing
to provide the service.
o Ex. Story told about son taking the trash out.
o His son for years was the all time 3 point percentage shooter
for OSU. People ask him if he worked him. But when you’re
playing ball, there’s always someone better than you. But if
you keep coming, the majority of people will quit and you will
win.
 Reliability- the most important
o We all like consistency in our lives.
 o You can raise children any way you want and come out with
good kids but there’s certain things you should probably do.
 Children have to know you love them
 Customers have to know that you value them
 Mother in grocery store said if her child didn’t quit, she would break
his arm. If she actual did this and was consistent, she would go to
jail. If child doesn’t stop and she doesn’t do anything, the child
wins.
 When Brendan was 7 and wants to go down and play with kids and
M told him to pick up his toys. M leaves the room and Brendan is
gone but toys are still there. The easiest thing for the parent to do
is to pick up the toys. Instead, M would go find him and have him
pick up the toys.
 Youd be better off giving a mediocre level of service than being
inconsistent
 Rented a car in San Fran for a meeting. As he was driving along, he
decided he should eat something. He looked for trucks to find a
good Mexican restaurant and got to thinking that he has to get up
early so he decided to eat at McDonald’s instead. He does know
this—their food is consistent.
 Many of us think we are consistent but we are not.
o He decided years ago he would try to be consistent
o One thing he decided is that he wouldn’t be unhappy
 Favorite story:
 Guy sits down and orders 2 fried eggs- one fried really hard and the
other runny- orders 4 pieces of bacon with different specifications
& lukewarm coffee
 Waitress says that’s a hard order to fill & the guy said “that’s what
you did yesterday”
Chapter 15 1/16/2017 8:13:00 PM

384-399 only

PLACE
 Channels of distribution or placement
 Callaway Golf-
o Make golfing equipment and accessories
o Their golf clubs are expensive- one club may be hundreds of
dollars
o Vignette- Celebrities use this brand when playing golf.
Callaway is one of the most recognized and highly regarded
companies; they have BROAD distribution in more than 100
countries worldwide.
 How does this happen?
a. Primarily markets through nearly 15000 golf and
sport retailers; sell quality golf products and
provide quality customer SERVICE appropriate for
goods
b. The more expensive the product, the better the
service must be.
c. If you’re spending a lot of money, the seller must
be informed.
d. The company also has its own online store which
makes a full fledge multichannel marketer and a
successful one as well.
e. So, they have an online system and well as in
person. They can buy straight from the company.
f. The 15,000 retailers probably don’t like the online
system because now they have competition from
their own supplier.
g. The retailers are important to Callaway- to solve
the problem, Callaway has one of the retailers get
credit from the sale. What happens is if I buy a
driver from Callaway in Tulsa, they send it to
Tulsa and they get the credit.
 Page 386
o Heading- nature importance in marketing channels
 o You must know what a marketing channel is
 Definition- consists of individuals and firms involved in
making the product available for you and I. Can be
compared to a pipeline that takes a product from one
place to another.
 Stillwater has a pipeline from Lake Call to Stillwater.
This is the sources & the terminus. (lake is the source,
terminus is Stillwater).
 Page 388
o Figure 15-3 shows the four most common marketing channels
for goods & services
 Producer- makes something and sells in directly
to you and I
a. Ex. Swan trucks- deliver frozen food to
households
b. Stillwater- farmer’s market; people can pay a
small fee and open up their stand to sell their
goods.
c. Goes straight from producer to consumer
d. NO INTERMEDIARY
 Producer that sells to retailer who provides it to
you & I
a. McDonalds, Old Navy, Gap, Student Union, Toyota
b. Makes their goods somewhere else and sell it at
other locations
 Producer (wholesaler)  Retailer  You
a. Ex. Gasoline
b. Mars- makes candy- Makes Snickers. They make
the candy bar and sells to wholesaler in OKC and
they disperse around the state.
c. Some wholesalers distribute to convenient stores
 #1 thing sold to convenient stores is
cigarettes
 Multiple agents/wholesalers
a. Beer made in Canada, given to Chicago,
distributed to Tulsa, etc.
  From a marketing concept point of view, the best would be
producer to consumer because you’re directly interacting
with your customer.
o you’re satisfying your own customers needs
o You have to know what your customers want in order to
satisfy the customers—you have a more control over their
satisfaction
 Internet
o Page 390- Amazon
 Franchising Distribution
o Way of distributing things
o You pay x number of dollars to get the equipment, design,
name of a franchise
 Subway has more outlets than any other store
 Page 387-
 The question can be asked “What do these intermediaries do?”
 Look at figure
 Buying, selling, risk taking, financing, grading, etc.
 What they do generally- they generally reduce discrepancies
o What is a discrepancy?
 Doesn’t match up
 Years ago when he was a grad student, he had a kid
come by his office because he had missed an exam. He
went to his grandmother’s funeral. Manzer offered to
work out something. He was later talking to another
grad student and found out that the young man took
the 9:30 test but didn’t take Manzer’s test at 8:30.
 There is a discrepancy in his story.
 Manzer brought it to his attention and called him in and asked for
an explanation and called him a liar.
o Discrepancy #1: Intermediaries reduce discrepancy of
assortment
 There is a difference between what produce makes and
what the consumer wants
 General Mills- makes a lot of food items. Every once in
awhile, M would like to have a pepsi. GM doesn’t make
pepsi.
 Intermediaries reduce that by selling from multiple
producers. Wholesalers sell all these products to various
retailers.
o Discrepancy #2: Difference in quantity between what
they produce and what we want
 Consumers usually want less than producers make
Producer of golf balls, Titleist. Lets say they make 50
million golf balls. Intermediaries reduce discrepancy by
selling this huge number of golf balls to various places-
the wholesalers disperse the number to various places.
The amount of golf balls per retailer is significantly less.
 Provide Convenience for us
 Spatial convenience
 Lets say we have 3 manufacturers
o Manufacturer A, B, & C
o What we want to do is exchange goods so each manufacturer
has the others’ goods
o Use triangle to illustrate intermediaries
o You need meat, bread & milk
 It would be much easier if you just went to one place
 In some societies, they have to go to all 3 of those.

11/12/14
 The cost of bread is 50x what the farmer growing the wheat in
western Oklahoma is getting
o Farmers say the intermediaries (middlemen) are getting all
the money
 Lets say you’re trying to buy something and someone tells you not
to because they can get it for you wholesale
o If you buy wholesale, you’re cutting out the retailer.
o Is it true that it reduces cost?
o Lets say M goes home tonight and goes North on Western and
goes to lakeview. He can turn right and go home or go left
 and go to the Tumbleweed. There’s a sign that says “Eggs a
dollar a dozen”
 He can go down there and cut out $1.50 because he
cuts out the middleman
 Eliminating middleman doesn’t always reduce the
cost; you cannot eliminate what they do
 When you get the eggs, you’re doing the job of the
middleman.
o Farmers market- sometimes its worth it and sometimes its
not
 His son bought a car in dallas, bypassed a dealer, flew to dallas, got
a cab  costs money

Page 394
 Choosing a marketing channel is a critical decision

3 managing challenges when decided marketing channels:

 How many levels
 How many in each level
 How to manage the channel relationships
o Usually the levels are independent and trying to make a living
o You have to manage the relationships

 You have the 4 P’s

 Stan clark comes in and says he wants to discount the fowl thing or
eliminate the fowl thing  he can do these things
 He wants to open a restaurant in Lawrence, KS  cant change it
immediately

 Factors affecting channel choice of management

 Coverage
 Satisfy
 Making a dollar (profit)
o Profit is most important

Page 396
Channel relationships
 Channels consist of independent firms so there’s always potential for
disagreement
 These are long term decisions (who provides what, profits, etc)
 Managing channel relations & Conflict and cooperation
o Conflict- arises when one channel member believes another is
engaging in behavior that keeps it from achieving their goals
 Two kinds of conflict: Vertical conflict
o Example of vertical conflict and dropping channel member-
 He was in Cleveland, OH; had teacher named Darcy
Cox. He always talked about how he taught at Yale (OK,
lol)
 When he was in Cleveland; Dow (Producer) sold directly
to Firestone and also sold through wholesalers
(McKesson); Dow was getting product to buyers
through direct & then through one level.
a. McKesson- Dow would sell them a solvent; this
new product was sold to Firestone through
McKesson. So, Dow’s product getting to Firestone
through 2 levels.
b. Over time, McKesson keeps increasing sales to
Firestone. Once McKesson started selling a ton to
Firestone, Dow dropped them. This caused
vertical conflict.
o Why would Dow drop that channel?
 McKesson is a big time company and a big customer to
Dow.
 That was the correct thing to do because Dow &
McKesson had a contract that said McKesson couldn’t
sell over a certain amount.
o He took graduate macroeconomics in the summer. On the
first exam, he missed a question and made a middle B. He
went into the instructor and asked if he could still make an A.
Made 48/50 on homework and curved the final. Still made a
B.
 Horizontal Conflict
 o Conflict on the same level
o Goodyear (Producer); for 60 years, to get a Goodyear tire,
you can to get it from a Goodyear dealer. A few years ago,
they decided to sell their tires to sears and discount tire
center. Goodyear went from having an exclusive year to
having two competitors in town—caused horizontal and
vertical conflict.
 Local goodyear says theyre going to start selling other
tires too
o Your children will have conflict with neighborhood children.
 Stay out of it; the next day they will be playing and
getting along
 In Cleveland, OH- all the paint companies were there. When you
paint something, you want it to look pretty and also protect the
surface. If youre painting wood in a high humidity area, that
moisture has potential for fungus to attack wood.
o Dow had came up with product that would stop the growth of
fungus
o All the companies knew about this and wanted it
o The problem- Dow was making it in small quantities and
couldn’t give as much as they wanted
o The company that wanted more than anyone was Sherwin
Williams; each day the assistant buyer from Sherwin Williams
called M to get some of the stuff.
 M and him became friends.
 Then one day Tom didn’t call and he didn’t the next day
either and then M called Tom. Tom said they weren’t
buying that anymore. He said if you put the stuff in
acrylic paint and its not used in 6 months, it becomes
ineffective.
 So all the paint companies quit buying besides John
Lucas paint company manufacturer- why did they
continue to buy this?
a. Logic- their paint must be being used within 6
months
 b. Why was their paint being used within 6 months?
They must have had a cooperation and effective
channel.
c. John Lucas made paint under a private label for
the world’s largest retailer, Sears.
 Their channel distribution was effective.
 Dow was making this in small quantities. They made a facility to
make this product that no one wanted. You are the manager. Two
options are to back out or adapt it.
 1/16/2017 8:13:00 PM

Page 470-479
486-489

More money is spent on advertising on television.

There are a lot of mediums.
 Advertising- any paid form of non-personal communication about an organization,
product, service, or an idea by an identified sponsor.
 Advertising deals with creating the message you’re trying to deliver and choosing a
medium to do so.
o You’d like to stay at the same price, but sell more. The only way this can happen
is if the demand curve shifts to the right.
o Proctor and gamble spends 4 billion on advertising. Who ultimately pays for
this? The consumer does.
o When you advertise, expenditures go up. This is thought to make the price to
consumer up.
o Some people think advertising costs make the costs go down for the consumer. If
he has economies of scale as he produces more, cost/item to produce goes down.
o Advertising costs going up, production costs going down; if production costs go
down faster than advertising costs go up, you save money.
o You want to lose weight and you’re currently taking in 2000 calories a day; you
increase to 3000 calories a day. Is it possible to increase calories and lose
weight? Yes. But you have to burn off more calories. This is a parallel situation.
Product Advertising
Institutional Advertising
 Advocacy- presidential election; MTV advertised heavily to encourage young
people to vote
Setting the Advertising budget
 In 1990, advertisers pay $700,000 to place a 30-second ad during the super bowl
 By 2013, the cost is $3.8 million
 Expensive because the audience is equally split between men and women and
many people watch solely for the commercials. These commercials are usually
very effective in generating sales.
Message Content
 Most is made up of information & persuasion content
 Use appeals:
o Fear appeal- used to suggest to the consumer that he or she can avoid
some negative experience through he purchase and use of a product or
service
 Head and Shoulders
 Advertiser must be sure that the appeal is strong enough to get the
audience’s attention and concern but not so strong that it will lead
them to tune out the message
 Studies on fear- shows a bell shaped curve between fear & change
in behavior. Moderate fear is more effective in changing behavior.
 M in Oklahoma department of corrections; talking to managers
and were talking about fear. One guy in audience had moved his
chair away from everyone in the back. He was a chewer and was
spitting in a can. Harvey had started as a guard in a prison and was
now a supervisor. He had tremendous credibility. They were
talking about this topic and Harvey raised his hand and Harvey
said this was the way it was in the prison. If there isn’t fear
between prisoners and guards, you cant control them. If there’s
too much fear, there is hatred between the two and they cant
control them. There needs to be the right amount of fear.
Harvey also said you have groups within the prison. There’s
tension between these groups. If there isn’t tension or respect,
can’t control them. Too much, can’t control them.
o Sex appeal
 In contrast, this suggests the product will increase the
attractiveness of the user.
 Can be found in almost any product category.
 Works better when it applies directly to the product, but also used
for industrial tools.
o Comparative advertising appeal
 Compare your brand directly to another
 Ex. Cheer comparing itself to brand X- how it used to be.
 Now they compare directly to another brand. People used to not
want to do this because it was like comparing apples and apples
and you had to prove your brand is superior.
 People didn’t want to do this because if you have a Pepsi ad and
compare yourself against Coke, you’re also advertising for Coke.
  Ex. Pepsi diner commercial
Page 486
Executing the advertising program
 When you pay out money, you want something in return.
 When you advertise, what value do you get??
o Difficult to determine.
o John Wanamaker- “I know half of my advertising is wasted, but I don’t
know which half.”
 Outline
 Pretesting
o To determine whether advertising communicates intended message or to
select among alternative versions, pretests are conducted before the ads
are placed in any medium.
o One way is to create it and show it to an audience and see how they
decoded it.
o AT&T had a package called Friends call Friends; ad called a fishing camp.
Each ad had a name. The idea was that these buddies would go off and
have a good time fishing. The problem was that at the last minute, one of
the guys couldn’t go. The opening scene was a guy calling his buddy. His
buddy was at work. Why would guys call guys like that? They’re calling
him to make fun of him. That’s why guys do it. The other guy says he
wishes he was there and the other guy brags about how great the trip is.
They back off and the show how awful the trip actually is. They cut away
and say friends call friends. It got well until people asked what people
saw in the frying pan and people said fish when it was hamburger. They
redid it and made it more visible.
o This is an example of pretesting.
 Post-testing
 After you have put it out there, you test it.
 Really interested in sales due to it.
o This is extremely difficult to determine.
o You have advertising and you measure communication that you hope is
related to sales.
o Communication effect- try to measure this; the more communication, the
more sales.
o You measure exposure. How many people are exposed to the ad?
 o Recall/Awareness is good to measure. Can you recall the ad? This is
similar to recall on a marketing test.
o The more the exposure, the more the communication the more the sales.
o There’s aided and unaided:
 Aided- do you remember the BMW ad?
 Unaided- do you remember any ads?
o Attitude
 Involve asking respondents questions to measure changes in their
attitudes after and advertising campaign.
 Sales Effect
 Some people don’t want to measure intermediates, but just want to know what
they’re getting for it.
o When times go tough for companies and they have to reduce costs, the
first things that go is training and advertising. Why?
 Because it is difficult to measure the results of it.
Review Sheet- 1 question from each topic.
 No questions on stories on the review part
 Questions on stories on new material
 Don’t pick questions off previous exams
 All comes from the notes besides those with a page number listed.

Business to Business Sales

 Many of us will be in this type of job.
 If you want to get to the top, one good way is impersonal sales.
o It’s a line position- personal selling is in line
o Visible position- people know who you are
o If you want to get a job and you want to hide, you need not to be in
industrial sales.
o You can measure- Easier to measure sales people
 Page 533- Roles of Salespeople
 Critical link between people & company
 You are the company

Major function of Industrial salespeople

 Survey reveals that building long term relationships with people is the most
important activity
Page 535
 There are so many sales positions  must be put into categories
 Personal selling assumes many forms
1. Order takers- processes routine orders or reorders for products that are
already produced by the company
o Outside order takers- out in the field with customers
 Campbell soup- you go to grocery stores
 How much and what type?
 Friend worked for wholesale company. He asked his friend what
he was doing today and Don said he was making $1500 today. He
would bring in a binder and try to sell.
o Inside order takers-
 Call the office and take orders
2. Order GETTER
o Involves a high degree of creativity and is typical for selling complex
products
 Personal selling process
3. Support personnel- augment selling efforts by performing a variety of services
o Support the order getters
o Son is financial planner- sometimes he deals with people who have very
complex situations; he has someone who knows all the rules and
understand so they will work together. He is the order getter and the
other guy is the support.
4. Missionary sales people- focus on introducing new products
o Dow developed new product- Guyster (a salesman) agreed to do this. He
would fly out to san Francisco, go into those companies, and tell them
about the product. He would give them a card of an order getter (the local
salesperson in the San Francisco area). Then he’d go back to Michigan and
go to another area. The guy hated this job. Why? Because he had no place.
He would go away but it was better to come home.
Page 538 – Personal Selling Process
 This is what an order getter does- gets paid more than the order taker
 There are jobs out here when you don’t do all stages. You shouldn’t turn your
nose up at something that you know nothing about.
 Xerox- guy wanted to quit but waited and stuck it out and ended up loving it.
 Involves building buyer-seller relationships in 6 stages:
 1. Prospecting
i. Search for a qualified prospect
2.

Handling objections-
 Excuses for not making a purchase commitment or decisions
o Some are valid and some aren’t.
o You’re a stock broker and you recommend to buy a stock. Client says no
because it’s been falling. This is an objection.
o M used to be an advisor- brought in a pharmaceutical man and he gave a
presentation then asked for questions. Girl said she’s been interested for
years and every time she talks to a company, they say she has no
experience. How do you overcome it?
 You say you have none but point out experience on resume that
would apply. Change the objection to a positive one.
Page 543
 Asking for customers order or business
o Closing study involves asking for a commitment
 Most important and most difficult
Salesperson must determine when the prospect is ready to buy

What they’re looking for is the perfect time to ask for the order

a. There is no perfect time
 M gets calls and students say they interviewed and the company
hasn’t gotten back to them. Should they call? They’re looking for
the perfect time. There is no perfect time. He said that if you’re
going to mistake, its better to be too aggressive than too passive.
o When he came off to school, he roomed with a guy named Jim Ray. People
called him Aldo after an actor. People changed it to Waldo. Most people
thought this was his real name. M noticed something about him—he
always had a girl. M assumed it was because he was older. One night they
were studying and M turned off light and asked Waldo how he got all
those girls? Waldo said he asked them. Waldo wasn’t afraid to close the
deal.
 1/16/2017 8:13:00 PM

Sales Management (p 552)

Difference between managing salespeople and managing other people:
 If you’re an accountant for Williams and you manage the tax department; more
than likely, the offices of the people will be near you.
 If you’re managing salespeople, the salespeople are normally located around the
world or your area of commerce.
o The people you manage aren’t near you.
 It’s easier to manage people who are near you.
Page 544
What Sales managers do-
 Creating sales territories
o Lets say you’re a sales manager of people in Oklahoma.
o Sales territories- physical territories where a salesperson is restricted.
o You have a salesperson in each territory. You may have territories but
also be organized around different types of customers.
 Retail, education, government divisions for Xerox
 If you have a very technical product (such as pharmaceuticals),
you may specialize.
Recruitment and Selection
 Effective recruitment is one of the crucial tasks of sales management
 Entails finding people who match requirements by firm
 Most of us in this room believe there are certain people with certain skills who
can sell anything to anyone. This is not true.
o Different selling situations require different skills.
 The guy who sells manure spreaders has different skills than someone who sells
moving equipment to airport.
 How do they determine who they hire out of the people they interview?
o They try to determine if you match what they want through things such
as interviews, tests, gut feeling, etc.
o AT&T gave a math test; Dow did too
 When he went to AT&T in Kansas City they offered him a job. The guy called and
asked if he’d made a decision. Manzer told them yes. Why hasn’t he said anything
about this job? The guy said he needed a physical. Manzer told them he was
blind in one eye. The guy then says he will still offer the job but he couldn’t drive
a car or be around industrial equipment.
  He has a friend in the state that is a manager for distribution center in the state.
They give people a drug test. What percentage fail? 80%.
 Lazy eye- to fix, put patch over good eye and let bad eye catch up.

Emotional Intelligence
 Successful selling requires a high degree of emotional intelligence
o Ability for one to understand own emotions and those of others
o People who have high emotional intelligence are better managers,
relationship builders, etc.; tend to be more successful than those with
high IQ.
o Hard to measure but it can be measured.
Page 550
Sales Force Training
 Sometimes they’re trained in good depth and some aren’t. Train you on history
of company, legal aspects, selling techniques, product knowledge.

Sales force motivation & compensations

 Most of us will get a job paying a salary
o Straight salary- get same amount no matter how you perform
How it was when he worked for Dow; they did a lot of non-selling

activities.
o Straight Commission- pay completely based on how you sell; percentage
varies
o Combination of both
Motivation
 Everyone is trying to motivate people all the time
 Theory of motivation- Expectancy theory
o You expect to receive something
o Three parts:
 You and the people you’re trying to motivate must believe all three
parts
1. Increased effort  increased performance
a. If you put out more effort into the task, the results will
be better.
2. Increased performance  Reward
 a. Most don’t believe this because they believe the reward
has to be money.
b. There’s all kinds of rewards
3. Reward is desirable
a. Their son mowed the lawn in high school and didn’t like it.
You’d look out their sometimes and he would be running
pushing it. M said to slow down and increase effort so his
performance would look better.
 If he did that, M would give him his undying
gratitude as an award. This isn’t desirable. Instead
he offers him his mom’s car for a few days. It
worked.
Pricing
 of the four P’s, price is the most flexible.
 Place is the least flexible.
o Stan clark comes into eskimo joes and wants to change the price of the
fowl thing. He can do this pretty easily.
o When they talk about this, they often talk about elasticity.
o When you talk about elasticity, they talk about elastic demand and
inelastic demand.
 Elastic demand
o There is an inverse relationship between price and total revenue. (TR=
price x quantity)
 If price increases, TR goes down.
 If price decreases, TR goes up.
 Inelastic Demand
o Direct relationship between price and total revenue.
o They move in the same direction.
o If I raise my price, then total revenue also increases.
o If I lower my price, the total revenue also decreases.
 If I raise my price and total revenue goes down, people aren’t buying as much.
o This tell you that you probably have competitors.
o Hideaway. Is dominoes pizza a competitor of Hideaway? Yes. Is Eskimo
Joes?
o Famous court case. DuPont chemical developed celephane (sp?). The
federal government came to them and told them they have a monopoly.
 DuPont said they didn’t. They manufactured 75% of it in the world and
control and additional 20%. DuPont says they don’t compete with other
celephane produces, but they compete with anyone who make flexible
packing material. In that market, they are not a monopoly.
 The point- competition.
Pricing Strategies
 Strategy for a new product- how are you going to price it?
 Price Skimming
o When you introduce a product, you’re going to set a high price and get the
people who are willing to pay the high price for that item.
o If you lower the price, you sell more.
o When he graduated with his doctorate, they leased a townhouse in
Memphis. It had 3 dead end streets. They didn’t lease very well. They
come back and realize a lot had been leased. What happened to cause
this? M suspected they lowered the price. He called and asked and they
were charging a lower price to others. They said no. They’d been
skimmed.
o You can only do this if certain things are true:
 You have to be operating in inelastic part of your demand curve.
a. You want total revenue to go up. When you do this, you are
going to producing small quantities.
 You need a product where cost of production isn’t too high.
 Need barriers to entry
 Penetration Pricing
o Setting a low initial price
o When you introduce product, you introduce with a low price. Sell to the
mass market.
o Then, people are attracted and like it.
o After awhile, you raise your price and gain revenue.
o Only works if certain things are true:
 Operating in the elastic part of your curve.
 Low production costs because you have economies of scale
 No barriers to entry
Page 369- Laws
 Laws that affect marketing:
o Consumer protection laws
 o Pro-competition laws- promote competition in US
 Price discrimination (page 370; read this)
o Practice of charging different prices to different buyers of the same
quality
o We’re going to charge one party one price and another party a different
price for the same good.
o Car insurance- males always pay more.
 Price discrimination is only illegal if the process of doing it hurts or eliminates
competition.
o How does it hurt competition if you charge different prices?
 If you and I are competitors and he charges you more than he
charges me, the other has to charge more for his goods.
o Let’s say you do charge different prices and it does hurt competition. You
can go to court and there’s some justifications for this.
o If I’m selling to two competitors and I charge one more than I charge the
other, this is price discrimination. Is it illegal? Yes if it hurts competition.
Unless he can justify. If it costs seller more to sell to one than the other,
then it is legal.
o You have a manufacturing site in Stillwater. One customer is in Perkins.
The other is in San Diego. They are competitors. You charge Perkins guy
$1 and the San Diego guy $1.75. This is price discrimination. Is this legal?
Yes if you can show that it costs more to sell to San Diego. If you don’t
have data, you’re guilty.
 When he was in grad school, he took a few courses from this instructor.
Sometimes you want to be an effective price discriminator. For example, if dow
sold latex to paint and paper industry, they’d charge different prices. They can
do this because they’re not competitors. To do it, three things have to be true.
o You have to have market power.
o Be able to divide the markets.
o Prevent arbitrage
 In Philadelphia, there was a famous court case. Concerned Rohm
and Haus. They made a hard practice. They were a major producer
of this (market power). They sold it to a variety of places. They
sold it to a glass place and a false teeth manufacturer (divide
market). They were selling this to the glass place for about .50 a
pound. To the teeth manufacturers, they were selling it for $10 a
 pound. Price discrimination? Yes. Illegal? No. they weren’t
competitors.
 You are the glass manufacturer. You’re buying this stuff for .50 a
pound. You discover someone else is buying it for $10 a pound.
You are a shrewd business man. What thought may occur to you?
a. They could sell it 20 miles away from much more to that
other company.
b. This is called arbitrage.
 Rohm and Haus thought they could put something in the teeth
plastic that they didn’t in the glass.
 1/16/2017 8:13:00 PM

PROMOTION
 Communication arm of marketing
 Page 441- the promotional element consists of 5 communication
tools; the combination of one of more of these tools is called the
promotional mix. You choose how you’re going to communicate.
 All of these tools can be used to inform, persuade, and remind.
o Whatever you’re doing, you must integrate and be consistent.
 Today, the concept of designing marketing communication
programs that incorporate all aspects to provide a consistent
message is referred to Integrated Marketing
Communications (IMC).
o OSU used to be terrible at this. All schools were doing their
own things. For years there wasn’t even a standard orange
color. Now it’s coordinated.
o This says inform, persuade, and remind; lets use some logic.
You have a small business and are struggling. Someone says
for $500 they’ll do advertising. You’re broke but you hope the
$500 will bring you sales. Question: Sales isn’t informing,
persuading, or reminding. What happened to selling? What
you hope happens is that if you inform  sales, if you
persuade  sales, remind  sales. This is the communication
goal.
o Some people don’t think we have the right to persuade
people.
4 Persuasion Models
 Rhetorical Model
o When you say this is a rhetorical question, it means you don’t require an
answer.
o Someone trying to persuade through emotion, logic, charisma, etc.
 Charisma  presence
o Having the ability to do that, you need style but the MESSAGE you deliver
is much more important.
o The civil war began in April of ‘61. Midway through the way, significant
battle took place. This battle was Gettysburg in PA. Idea was that Robert
E. Lee would come across Virginia and circle Washington DC and what
would happen is fit hey did that the north would be tired of the war and it
 would end and the south would get some conditions. These plans were
intercepted and Lee met them at Gettysburg. Vicksburg fell at the same
time. They battlefield was dedicated 4 months later. Lincoln went up by
train and there were nearly 15,000 people. The speaker was senator from
Massachussetts. He held audience in palm of his hand. Lincoln spoke less
than 30 minutes and many people didn’t even hear it. There were no
photographs of him. Until he told us Edwards Evarts was the major
speaker, we didn’t know. Lincoln’s was most important although he didn’t
have style and that’s the one we remember.
 Propaganda model
o Win you to the cause
o Companies like Conoco show TV commercials of a pristine mountain
valley and talk about environment then will zoom in to a hidden natural
gas head and say they’re concerned about the environment
 Negotiation model
o Threats and inducements to persuade people
 Labor negotiation
 If you don’t give us this raise or benefits, we’ll strike
o We all negotiate whether we know it or not
o How to be a good negotiator: be prepared
o Students come in wanting to negotiate their grade
 Students don’t have power, the syllabus does
 Communication model
o Number of years ago they did a survey of people who hired our graduates
and they didn’t like our verbal communication abilities.
o School decided to have 3 hours of written/verbal communication to help
 Students thought they were being punished, but they were
actually being helped
o Model has a sender (source) that sends a message; on the other side there
is a receiver of the message.
 In business this is seller and buyer, respectively.
 Message is a set of meanings. In other words, it means something.
 You want people to get the message that you intended.
 The problem: when you communicate, you put the message in a
code.
a. Encode- putting message in a code
 b. If this is true, for the receiver to get the correct message,
they will have to decode it.
c. Putting it in a code makes it seem like you’re hiding the
meaning. So why do it?
 All communication is in code; its all symbolic
 Words are just symbols; meanings aren’t in words,
meanings are in people.
 Perfect communication would be that your audience decodes the
message the way it was encoded to get the correct meaning
 There are some circles on the model around the sender; tells what
that circle is. Calls it a field of experience
a. What is that?
 The background, education, values, experiences, etc
that makes up the sender
 Circle around receiver
a. Background, education, values, experiences, etc of whoever
the receiver is
 If you want to increase probability that people will decode the way
its encoded, the field of experiences should overlap.
a. The more the overlap, the greater the possibility of correct
encoding.
o If you’re a seller and a buyer and there’s a miscommunication between
seller and buyer, the seller will likely be blamed.
o Ex. God
 If you have the same experiences, religion, etc . as Manzer, you
would decode it similarly to him.
o Proctor and Gamble spends over 4 billion dollars advertising their
products
 They’re trying to communicate with the audience
 Do you think for that 4 billion dollars, they would like their
audience to get the intended message?
a. Of course.
b. The problem is that they’re trying to communicate with
110 million households with all different fields of
experience.
 c. Would it be better to assume there is more overlap or less
overlap?
 Its better to assume very little overlap.
 Not true of all. If you’re advertising automobile in Road & Track
magazine, you can talk about call in explicit detail because their
field of experience knows a lot about cars.
 Same car is People magazine- needs very simple message because
of broad audience with little overlap in the field of experience
o Daughter was walking through the woods on a path and the little girl kept
steering off the path getting into the woods. Finally, he kept telling her to
get back on the path. She said “Daddy, what’s a path?”
 She didn’t know what a path was.
 Unsuccessful decoding.
o Piece of advice- let’s say that I am a plant manager and we have Jordan
who works for him as a line supervisor. M calls Jordan in and says there’s
problems on the #3 line and to fix it. They’ve worked together 12 years.
Jordan finds out it’s the timer so he shuts down the line and tries to fix it.
M gets mad that he shut it down. Jordan said that’s what M told him to do.
This is a miscommunication even though they have similar field of
experiences. Another way would be for Manzer to ask “Do you
understand?”; but Jordan still would think he understood
 When you ask people if they understand, all the pressure is on the
person to say yes.
 M probably had taught 40,000 students. At many of the end of
classes, he asks if there’s any questions. In 44 years, there have
never been any questions. Why aren’t there any questions?
a. Maybe the material is simple—not true cause exams don’t
reveal that
b. It’s not because all are brilliant
c. It’s because if you ask any questions, you don’t understand.
 Besides that, your desire to leave is greater than
your desire to know.
 There’s a problem with asking people to repeat back what they’re
going to do:
a. You may offend people if they’re asking that. You’re
inferring people don’t understand if you ask.
 b. Instead, you say you want to make sure you communicated
it correctly and ask what they’re going to do. Once they tell
you, you give your input. This works because M is taking
the blame. Called the apology. Apologies are signs of
strengths.
o One of his favorite philosophers, Charles Schultz, drew peanuts in Charlie
Brown. He said this was the most popular cartoon he drew in 50 years:
 Sunday cartoon with number of panels- 3 characters: lucy (strong
willed female), Lionas (philosopher), & Charlie brown who is
dumb.
a. See profiles of both lucy and Lionas but you can see charlies
face. Lucy ask lions about complex shapes in cloud. Charlie
begins to look as they name things they see in the clouds.
b. Lucy asks Charlie what he sees and he said duckies and
horses.
c. Its more important to see duckies and horses than nothing
at all.
o Source credibility/sender credibility- believable, trustworthy source
 If you have someone speaking for you, you want them to be
credible.
 Things you can look at:
a. Get credibility if people believe you’re an expert of some
sort or have power/position
 Lets say Camille has a boyfriend. She goes home on the weekend
and he stays here. Someone tells her that while she was gone, her
bf was running around with some other female.
a. It would matter who told Camille in order for her to believe
it
 Study: 3 rooms of people; each room did not know the others
existed. They gave them a questionnaire measuring outlook on
juvenile delinquent. Speaker was an advocate on being lenient
with them. After speaker spoke, they gave questionnaire again.
Measured which group was influenced the most by the speaker.
The speaker spoke to them over an audio system. How they
introduced him was the difference in each group. One group they
 called him a judge, the other as someone in audience with interest,
and last as a juvenile delinquent.
a. The judged moved them quite a bit, second a little bit, and
the last moved them the other way.
 BUT credibility can go away/decrease.
a. For Manzer, it has either increased or decreased.
b. This is called the affective component.
c. Your personal experience
d. You have credibility, but you must also deliver.
 He saw this 25 years ago in the newspaper:
a. They did a national survey of most recognizable athletes
and what they associated with them.
 Took list of 400 athletes and you would tell them
what they did
 #1 was Joe
 Top 5 was mohammad Ali
 Sportscaster-Howard
b. 2nd part of study was study on who you liked:
 Howard did horribly- this is why we wouldn’t do
commercials
 #2 on recognition and likeability- OJ Simpson
o Source Consistency
 Says you have a better chance of influencing people if you’re
consistent
 Parents are source for message- say don’t smoke but they smoke
a. They aren’t consistent
 If you have a spokesperson, you’re not going to get a top model for
a cleaning supply. They need ordinary looking people so it’s
consistent.
 Remington rifle- not going to get Lady Gaga but you’ll get John
Wayne
o Promotional elements
 Public relations
a. Form of communication management that seeks to
influence feelings, opinions, or beliefs of consumers.
 Event planning is part of public relations
  Publicity- non-personal INDIRECTLY paid presentation of an
organization’s product or service
a. You make a 4.0 and you’re from Altus. They send that to the
Altus newspaper. This is publicity. If OSU announces that
they’re going to have a new building and put it in
newspaper, that’s publicity.
b. When Mt. Dew has an ad, you know someone paid for it.
c. Publicity- you don’t pay to get them in there, but you
indirectly do. OSU has public relations department. They
get paid.
 Plus of publicity is credibility. If we’re trying to hire someone on
our faculty to come here, we’re trying to influence them. Someone
not from Oklahoma saying Oklahoma is a great place has more
credibility than someone who is from here.
 Negative- we don’t have control over it. We can’t make someone
put stuff like student 4.0s in their papers.
o Sales Promotions
 A short term inducement of value offered to arouse interest in a
product or service. (look up definition)
 Coupons, rebates, samples, contest
 Disadvantage- loses effectiveness over time
 Store that has coupons every single week- Belk
a. After awhile, it’s not a big deal and loses its effectiveness
o Page 493-
 Product placements
a. A final consumer promotion tool
b. Involves use of brand name product in movie, show,
commercial, video game; show someone utilizing the brand
c. You pay to do this.
d. sunglasses- got a lot of interest when Tom Cruise used it
e. After Toy Story Etch a sketch, sales increase 405%
f. Annual value of all product placements- $8.3 billion
g. You take something like Seinfeld, you used to see jerry
eating cereal and you wouldn’t know what it is. Now, on
reruns, you can see that it’s cheerios. This is photo
shopping.
o Page 292
 Packaging
a. Consumer packaging has a promotional communication
aspect
b. Package communicates to you through its physical
characteristics
c. Lets say you wish to grab people’s attention; colors grab
attention
 Warm colors are more attention-getting
 Yellow is most attention grabbing color because it’s
harshest to the human eye.
d. When he was a teenager, all stop signs were yellow. They
were changed to red. Why?
 Colors also mean things to us.
 Wouldn’t package meat in a green package or
prunes in a clear package
 Red is international symbol of danger
e. Communicates by its shape & lettering
 The point- packaging has a communication emotional component.
a. In Cleveland, he worked with a packaging company.
o Page 448
 Communication and product life cycle
a. Biggest deal is that you wish to change the market strategy
over time
b. Need to change communication over lifecyle
c. 452-453- Channels of communication
 using communication, there are 2 general strategies
o Push Strategy
 Like you’re at the top and pushing it down
 If you make a product, you’re going to push it through channel
(producer, wholesaler, retailer, consumer)
a. Give rebates, etc. Once others have it, they will try to
continue selling it down
o Pull Strategy
 At the bottom, you’re going to pull it through chain
 Going to come up with new product
 a. Advertise to consumer, they’ll go to retailer and ask for it. If
enough people as for it, they will go up and up asking for it.
You’ve pulled it through.
o Example
 Pharmaceuticals
a. Sales people go to doctors and they promote a new
medicine
b. You want the doctor to give it to the patient- this is called a
push strategy
c. What they’re also doing now- they advertise directly to
consumer (through commercials, etc.)
d. They’re hoping you will go to doctor and ask by brand
name for a medication  Pull strategy
 Page 455
 How much money are we going to spend on this communication?
o When he first went to Dow, they paid him $700 a month. They needed a
budget. When he decided to come back to school, they had money for it.
o There are 4 general ways of doing it:
1. Percentage of sales
b. Funds are allocated and percentage of past or intended sales
c. Lets say its 2013 and you have $100,000 in sales; in 2014, you want to allocate
7% of past sales to allocate to advertising. So, he’ll spend $7,000.
d. This is illogical. Why?
e. Should advertising create your sales or should advertising create your sales?
 Your advertising creates your sales. This doesn’t make sense with the percentage
of sales theory.
2. Competitive Comparative
You have two companies- they’re competitors.
a. Here’s company x and here’s company Y
b. This guy looks at what other guy is doing and does the same; when other raises,
he raises.
c. In other words, he believes other guy knows more than he knows.
d. Lets say both companies do this
 Advertising war- both end up spending more and more on advertising
 Similar to Arms race during Cold War
 1/16/2017 8:13:00 PM

Exam
Chapter 15 (400-406)- 3 questions
Chapter 17 (440-459)- 20
Chapter 18 (470-474; 486-489)- 8 questions
Chapter 19 (506)- 1
Chapter 20 (All)- 15
Chapter 14 (353-353;369-371)- 8
Review- 23
Other- 2