Explain what are the major differences between consumer and industrial product markets? List and describe briefly the major classes of industrial products.

DE BUAD 116 Marketing

Assignment 1 Guidelines

(Revised Fall 2014)

COURSE ASSESSMENT OVERVIEW

This course has 4 assessment activities:

• Twenty online quizzes which examine your knowledge and understanding of all the chapters in the Lamb, et al, text;

• Two assignments which will test your ability to apply a range of theories, concepts and practices in marketing and apply them to business scenarios or ‘cases’; and

• A final exam consisting of M/C, T/F, short answer, and case analysis questions which test your knowledge, understanding and application of the theories, concepts and practices in marketing as presented in the Lamb, et al, text.

This assessment scheme incorporates the key elements of learning including remembering or knowledge, understanding, analyzing, applying and evaluating your mastery of the key theories, concepts and practices of marketing.

ASSIGNMENT 1 GUIDELINES

Assignment 1 consists of two sets of questions:

• 20 Questions based on the content of Chapters 1 through 11 in the text; and

• 10 questions relating to 3 Cases based on the content of Chapters 1 to 11.

These questions are found in three parts:

Part 1 (Chapters 1 through 3) consisting of Questions 1.1 through 1.7 and 3 questions relating to the Harmonix case;

Part 2 (Chapters 4 through 8) consisting of Questions 2.1 through 2.7 and 4 questions relating to the Petco case; and

Part 3 (Chapters 9 through 11) consisting of Questions 3.1 through 3.6 and 3 questions relating to the TerraCycle case.

This assignment will require you to submit a formal report of your responses to the questions as a Word document submitted through the Assignment 1 drop box on the course Moodle site. Make sure you number your responses consistently with the assignment. You may also repeat the question but do not count it in the suggested response length.

There is no formal minimum or maximum length for your reports but you should expect that a satisfactory submission for each assignment will be in the range of 3,000 words (100 words for each question on average). You may exceed this minimum but a satisfactory submission is not likely to be less than 3,000 words. Submissions graded at the ‘excellent’ or A level have typically been between 4,000 and 5,000 words.

Where you use published material not contained in the text, you must reference it as you would in any other report and I recommend that you use APA referencing and citation style. Where you use personal knowledge or experiences, no reference is necessary. Where you refer to material from the text, it is acceptable to simply provide a page reference in parentheses. Be very careful not to plagiarize the text, ie, do not to use the exact wording of the text to respond to questions but if you do, you must reference them properly in accordance with APA referencing guidelines.

The assignment is worth 20 final marks in the course. Each question carries equal worth. Submissions will be assessed on both content (approximately 75%) and professionalism including grammar, style, clarity and format (approximately 25%).

ASSIGNMENT 1 QUESTIONS

The following questions and case relate to Part 1 – Marketing (Chapters 1 through 3).

1.1 Describe the basic ideas underlying the marketing concept? Did this concept emerge in a buyer’s market or a seller’s market? How does the societal marketing orientation take this one step further? Why has this occurred?

1.2 To be successful today companies need an external market- orientated focus. Describe the five key elements in a company’s organizational focus that are needed to be successful today.

1.3 The president of a company has decided to restructure the firm and become more market-oriented. She is going to announce the changes at an upcoming meeting with the management team. What reasons and critical elements should she refer to in convincing the team that this is a good approach?

1.4 Why is it important for marketers and companies to undertake regular environmental scans? Describe the various areas they should be doing scans of.

1.5 Why are marketing managers paying more attention to ethnic dimensions of consumer markets in Canada? What are they doing to be more successful with this changing target market?

1.6 What is Marketing Strategy? How can a company develop a competitive advantage? Briefly describe the key parts of a strategy that you see that would be needed for the successful of the development of a marketing plan for a new energy drink.

1.7 What is Situational Analysis? What can a company [marketer] do to achieve a sustainable competitive advantage [SCA]? If you owned a small sporting goods store in the Interior of BC and you heard a large box sporting goods store [e.g.. Big Bass or Sports Chek] plans to move into your town, what competitive analysis and planning would you do and why?

CASE STUDY (Chapters 1, 2 and 3)

‘Harmonix: Embrace Your Inner Rock Star’

A few years ago you had probably never heard of Harmonix, and you may still not know who they are, but you have likely heard of one of their most successful products, Guitar Hero. In 2005 Harmonix, the videogame design studio, released Guitar Hero, which subsequently became the fastest videogame in history to top $1 billion in North American sales. The game concept focuses on a plastic guitar-shaped controller. Players press coloured buttons along the guitar neck to match a series of dots that scroll down the TV in time with music from famous rock tunes. Players score points based on their accuracy. Just two years later, Harmonix released Rock Band, adding drums, vocals, and bass guitar options to the game. Rock Band has sold over 3.5 million units with a $169 price tag (most videogames retail at $50 to $60). Between the launch of Guitar Hero and Rock Band, Harmonix’s founders sold the company to Viacom for $175 million. The terms of the sale allowed Harmonix to retain operational autonomy while providing them greater budgets for product development and licensing music for their games. Harmonix’s success, however, did not come overnight.

The company was founded by Alex Rigopulos and Eran Egozy in 1995, and focused on some demo software they had created in grad school and a company vision of providing a way for people without much musical training or talent to experience the joy of playing and creating music. The founders believed that if people had the opportunity to create their own music, they would jump at the chance. Their software, which they eventually dubbed The Axe, provided basic music composition tutorials and allowed participants to use a joystick to improvise solos along to popular music tracks. They attempted to market their creation through an interface with Japanese karaoke machines, a demo package deal with Intel, and even an exhibition at Disney’s Epcot. And while the software always proved technically impressive, people generally expressed little initial interest in trying it out, or else it just didn’t seem like they were having much fun.

In 2000, Rigopulos and Egozy hit on a concept that would engage consumers, and Harmonix became a videogame company. The Axe software provided an improvisation program with no set goal, whereas most videogames are designed with a purpose and offer competition, which helps engage, direct, and motivate players. At the time, the market for music-based games had not fully developed, but especially in Japan, rhythm-based games, in which players tapped different combinations of buttons in time with a beat or a tune, were becoming increasingly more popular. Harmonix created two games, Frequency and Amplitude, in which players hit buttons along with a beat, unlocking tracks for different layers of instruments in a song. Neither of the games proved especially successful, however, as both were very complex and the expense of generating initial interest proved too high for their publisher, Sony, to continue funding them.

Harmonix finally found some success with its 2004 release of Karaoki Revolution, in which players used a microphone or headset peripheral to score points singing along to pop songs. It allowed gamers to play the role and be a part of the music. In 2005, a new but relatively successful peripheral videogame controller manufacturer named Red Octane contacted Harmonix to consider co-manufacturing gaming products, as they believed that the two companies had a similar philosophy for attracting gamers. This relationship led to the creation and launch of Guitar Hero.

Guitar Hero put players in the role of the lead guitarist in a rock band climbing its way to stardom. The game soundtrack, filled with remixes of classic American rock‘n’roll hits, appealed to a broader musical audience, and the guitar controller put the iconic instrument of American rock‘n’roll directly in player’s hands. The game was released in November 2005. When retailers set up in-store demo kiosks, game sales went through the roof. After the success of Guitar Hero came Rock Band, which expanded on the rock star concept of Guitar Hero by adding additional instruments, providing an even more exciting rock‘n’roll experience. Real rock stars began to pick it up, demonstrating its broad appeal. Music labels jumped on the bandwagon by allowing the licensing of actual songs rather than just composition rights. September 2008 saw the launch of Rock Band 2, which included songs by AC/DC and Bob Dylan. Gamers could download additional songs, like The Who’s greatest hits, onto their Xbox 360s and PlayStation 3s at $1.99 per song, only a dollar more than purchasing a song from Apple’s iTunes music store. Licences for Rock Band were even secured for songs by the Beatles, which at the time had yet to be licensed to iTunes or other electronic media stores. The success of Rock Band and Rock Band 2 led to a variety of product line extensions. The Rock Band franchise has sold over 5 million units, and the hits just keep on coming.

The following questions relate to the case ‘Harmonix: Embrace Your Inner Rock Star’.

C1-1 What marketing management philosophy did Harmonix use at first and how did their philosophy change?

C1-2 How do you think Harmonix would describe its business?

C1-3 To whom was Harmonix’s product directed and how did it create a product that would appeal to that audience?

The following questions and case relate to Part 2 – Analyzing Market Opportunities (Chapters 4 through 8).

2.1 What is the role of Marketing Research in Marketing? How should a marketer determine if marketing research or more research should be done? You have been asked by to conduct research on the potential for a “Family Recreation Centre” for your region. Explain what different forms/means of research you would recommend be used and why.

2.2 Describe five major Psychological Influences that affect their buying behaviour of a consumer and the implications that each of these may have to marketing actions taken by companies.

2.3 Describe the steps of a recent extensive buying purchase made by yourself or your family. What marketing activities at the various steps were done by the business[s] to help you to make the final decision? What could they have done better and how?

2.4 What is a reference group? What are the important characteristics /criteria of products [goods or services] that determine if a product will be influenced by a reference group?

2.5 What are the major characteristics of the B2B markets that make them different from the B2C markets? Explain the different roles people may have in the B2B buying process and how each role may affect a purchase decision in a business.

2.6 Why in today’s marketplace is Customer Relationship management becoming more important for businesses? If a business wished to launch a CRM program what are some of the benefits and limitations it might expect to encounter and what can the business do to ensure it gains the benefits and minimizes the problems?

2.7 Think of a business you are a frequent/loyal customer of. What would you spend on average each time you shop there? How many times would you shop there in an average year? How many years will/would you estimate that you will be their customer? What is your Life Time Value [LTV] to this business? What could the business do to ensure you remain a loyal customer?

CASE STUDY (Chapters 4, 5, 6, 7, and 8)

Petco.com: Turning Negative Reviews into Positive Sales

On Petco.com, you can buy a soft-sided travel carrier for your cat for only $19.99. You might think twice, though, after seeing that customers gave it only two “paws” out of five overall for pet satisfaction, appearance, and quality. The reviews reveal more serious reasons to hesitate before adding the product to your cart. A customer with the screen name “Disgruntled Bunny” reports: “The mesh on the sides was such poor quality that my cat was able to rip it to shreds and escape in a matter of seconds!” Another customer recommends buying a carrier with stronger sides, adding, “It costs more but is safer for your pet, so it’s worth it.”

Products have long been rated on sites like Amazon.com and on those that exist entirely for customer reviews, but Petco was one of the first mainstream retailers to create a forum on its own website for criticism. The risk was obvious: customers could pan products and send buyers running. But Petco reports that business is booming, even with bad reviews like Disgruntled Bunny’s.

New research is proving what Petco had already learned: peer reviews work. Shoppers are turning to everyday people for product advice. The 2007 Edelman Trust Barometer reports that over half of Americans said they trust “a person like me” for information about a company or product. David Brain, CEO of Edelman, urges companies to stop relying on “top-down communications delivered to an elite audience and move to peer-to-peer dialogue.”

Making customer reviews public has an immediate impact on sales and brand loyalty. Data from ForeSee Results in 2007 revealed that 40 percent of online shoppers said peer ratings on websites influenced their purchasing decisions. Furthermore, this group was 21 percent more satisfied with its purchases than other buyers and was 18 percent more likely to buy from the same site again. According to Petco executive John Lazarchic, most users who search for products by customer ratings shop longer, buy more, and return less: “The savings in returns alone pays for all the technology involved in the review and ratings feature.” And if one product gets too many bad reviews, it usually prompts customers to buy higher-rated, more expensive merchandise instead.

Other advantages? Reviews build camaraderie with an online community where shoppers can connect. They can boost a site’s ratings on search sites. And they establish credibility. As long as the reviews aren’t overwhelmingly negative, positive reviews have been shown to outweigh the negatives in shoppers’ minds. For example, a four-paw review on Petco.com would outnumber one-paw ratings by seven to one.

Lazarchic insists that reviews provide valuable feedback. Critical comments are shared within the company and can instigate changes. In fact, they’re finding that the risk is not in receiving too many negative comments on a product, but too few. When no one is responding, it looks like no one is buying it. Or, if they are, they don’t care enough about it to talk about it. Petco had that problem at first. In the beginning, when the company posted a small link for users to click and write a review, the silence was deafening. So they added promotional banners to the site and advertised drawings in which lucky reviewers would receive cash prizes. Within a couple of weeks, they’d gotten 4,500 new comments.

Analysts warn that to maintain credibility, reviews shouldn’t be edited unless necessary. Petco removes the names of rival brands, URLs, and personal information, but less than 10 percent of the reviews they receive are deleted. Now they’re experimenting with the idea of using customer comments as marketing tools in print catalogues, offline ads, e-mail messages, and point-of-purchase displays. In print circulars, for example, Petco highlights its five-paw rated products.

Many of their customers’ e-mail addresses are collected through a loyalty program in Petco stores, which means those shoppers may not have visited the website. By including customer comments in e-mail ads, it expands the reach of the review program and boosts sales of products those shoppers may not have considered in the store.

According to a Nielsen BuzzMetrics study, the customers most likely to write reviews on websites are empty nesters and “young transitionals” without children. Petco found that on their site, reviewers tend to be women with higher levels of education and income who are passionate about their pets. It is generally someone who wants to be helpful, share her opinion, and feel important. Someone, perhaps, like Disgruntled Bunny, who wants to warn others of the dangers of defective travel carriers before another cat escapes.

The following questions relate to the case ‘Petco.com’.

C2-1 A customer-centric company builds long-lasting relationships by focusing on what satisfies and retains valuable customers. Discuss how Petco follows this customer-centric philosophy.

C2-2 Go to Petco.com and read some of the customer reviews for various types of products. Do the one- and two-paw ratings tend to outnumber those with four and five paws, or the other way around? Can you find a customer review that Petco could use to market a product in a company circular or e-mail ad?

C2-3 Now that Petco has identified the type of customer most likely to write reviews of their products, discuss the kinds of promotions that might encourage continued loyalty and response online from them in the future. What could they do to appeal to these customers?

C2-4 Many mainstream retailers are still hesitant to post customer reviews on their websites. If you were consulting with one of these companies, what arguments would you use to convince management to try them?

The following questions and case relate to Part 3 – Product Decisions (Chapters 9 through 11).

3.1 Identify each of the following as a convenience good, a shopping good, specialty good, or an unsought product. For convenience goods, state whether they are staple, impulse or emergency items. For shopping goods, identify if they are homogeneous or heterogeneous. Explain you reason[s] for classifying it as such.

• The digital camera Jeffrey bought when it was on sale..

• The bottle of ASA Jim bought when his head began to ache.

• The rare Bordeaux wine Sally bought for a business dinner she was planning.

• The newspaper Jennifer bought when the headline caught her eye

• The dips for the potato chips Bob bought as snacks to have during the Grey Cup

3.2 What are the major differences between consumer and industrial product markets? List and describe briefly the major classes of industrial products.

3.3 What is the difference between a trade mark and a service mark? What advantages or disadvantages are there for a company to brand their products? A company can choose different branding strategies to brand their products such as a Family brand, Individual brand, Co-Brand or Generic brand. What factors for each type of branding strategy should be considered before a company uses it?

3.4 In each stage of a product’s lifecycle, the marketer must be aware of numerous internal and external changes. Explain how the types of customers change as product moves through the four stages of a product’s lifecycle. Also discuss how these changes in consumers and other internal or external factors affect both the revenues and cost factors and ultimately the businesses profits in each stage of the life cycle.

3.5 In what ways do Services differ from Goods?

3.6 You have taken a position with Canadian Blood Services and your boss asks your opinion on the issues and tactics she might need to make decisions on in order to get more people to donate blood. Outline what areas of marketing strategy that you might make [and why] as to how they may more effectively market their service.

CASE STUDY (Chapters 9, 10, and 11)

TerraCycle—Turning Trash into Products

Environmentally friendly products have never been as hot as they are now, and the number of brands touting their “green” credentials has never been higher. TerraCycle products, though, may be the ultimate organic products to hit the market. A 19-year-old Princeton student named Tom Szaky founded TerraCycle in 2003 after visiting Montreal with friends in 2001. There, he saw how worm poop was being converted into fertilizer. The business started out as an idea for Princeton’s Business Plan Contest. Tom placed fourth in that contest and decided to go ahead and start producing fertilizers based on worm poop casting. Tom borrowed money from friends and family to buy a massive worm poop conversion unit.

In April 2003, TerraCycle won the prestigious Carrot Capital Business Plan Challenge, which came with a million-dollar investment. Investors wanted to move TerraCycle away from its broad waste-management mission to exclusively focus on plant food. Tim rejected the investment in order to maintain his vision of the company. He based his business model on recycling, starting with the trash that TerraCycle turned into compost and fed to millions of red worms. The worm castings were then liquefied and put into previously used plastic water and soda bottles. Even the company’s shipping cartons come from recycled materials. TerraCycle’s organic plant food hit the shelves in 2004 with labels boasting that it “Contains Liquefied Worm Poop!” It didn’t take long for the products to take off. By 2006 the company had been named “The Coolest Little Start-Up in America” by Inc. magazine and had passed the $1 million mark in sales, growing as much as 300 percent from the previous year.

TerraCycle received orders, though small, from such Canadian retailers as Walmart and Home Depot, which provided the company with a shelf presence. These initially small orders were followed by much larger orders, and with that came the need to expand the company. After the initial success in the Canadian market, Tom focused on getting business from U.S. retailers, which was not hard to generate, given society’s interest in environmentally friendly products. Tom realized there was a need to grow the company’s product mix, so he introduced new product lines to the market.

TerraCycle achieved its million-dollar sales mark in 2006. By 2007, TerraCycle was offering nine different product lines at Walmart and Home Depot and was attracting the attention of the larger fertilizer companies. Scotts Miracle-Gro sued TerraCycle for infringement of its business ideas and false advertising.

The lawsuit provided huge amounts of positive publicity to TerraCycle, and in August 2007 it joined hands with Honest Tea to launch Drink Pouch Brigade. This program was developed to encourage schools of collect used drink pouches for nominal sums. Subsequently, TerraCycle introduced the Urban Art Pot, which was made from electronic waste, and the Rotary Composter and Rain Barrel, which were made out of wine bottles. Given TerraCycle’s previous success with the Drink Pouch Brigade, it introduced the Yogurt and Energy Bar Wrapper brigades, which led to the idea of “Sponsored Waste.” The Sponsored Waste idea involves partnerships with consumer packaged goods (CPG) companies to undertake waste collection programs for a small payment. After a series of successes introducing a number of different waste programs, Tom sold the pilot for a TV show, called Garbage Moguls.

By 2011, TerraCycle had 100 employees and offices in 20 countries in Europe and South America as well as Israel. TerraCycle donated $3 million in 2011 to different charities. It actively partners with various businesses, such as Old Navy and Home Depot, to collect used products sold by these organizations recycle them into new products. Currently, TerraCycle has 1,500 different products, which are available at a variety of stores, such as Walmart.

The following questions relate to the case ‘TerraCycle – Turning Trash into Products’.

C3-1 Go to www.terracycle.net and look at the types of products the company sells. Describe their product mix. How wide is it? Which basic product lines does it sell? How long are they?

C3-2 Classify different products manufactured by TerraCycle into the types of consumer product categories that you learned in this chapter.

C3-3 How well do TerraCycle’s bottles perform the four packaging functions discussed in this chapter?

CONCLUSION

DO NOT ask for an extension of the deadline for any reason other than valid medical circumstances. Extensions will only be granted in such cases if a valid medical certificate is presented to me within 24 hours of the deadline. Reports submitted after the deadline will be assessed as ‘0’ in the absence of an approved extension by me.

Dr Michael Conlin

E222

mconlin@okanagan.bc.ca

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