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Kotler Pom15 Im 03
Kotler Pom15 Im 03
Synopsis
YouTube, the Internet video-sharing giant, burst onto the scene only a few short years ago. Last year, it captured
more than 1 trillion video views worldwide, giving it a 43 percent share of the online video market. Rather than
simply surviving in its chaotic environment, YouTube is thriving, leading the way in shaping how video is
produced, distributed, and monetized. Instead of simply providing more access to traditional Hollywood-type
content, YouTube created its Partner Program, which encourages aspiring Web video producers to create original
new content for YouTube. More than 30,000 partners in 27 countries now participate in the Partner Program,
producing new content and sharing the revenue that YouTube generates from ads that accompany their videos. Not
only is YouTube generating mind-numbing traffic, it’s also making money. YouTube generates more than $1 billion
in annual revenue for Google, its parent company. YouTube is also developing an advertising model that’s built
around the way people use the site, a model that best suits the needs of users, content providers, advertisers, and its
own bottom line. To remain on top, YouTube will have to be nimble in adapting to the ever-changing marketing
environment—or better, in leading the change. Change will be the only constant.
Discussion Objective
A brief discussion of the YouTube story will help to illustrate how leading companies don’t just react to changes in
the environment – they lead those changes. Going far beyond mere survival, YouTube reinvents itself regularly with
new, forward-thinking ideas on how to produce, distribute, and monetize online video. The company’s humble
beginnings and nimble marketplace approach paint a clear picture of the impact of the marketing environment on
marketing strategy. Here, the discussion goal is to link YouTube’s threats, opportunities, and performance to the
rapid changes occurring in the firm’s microenvironment and macroenvironment. This discussion provides a useful
transition from the marketing management model provided in Chapter 2 to the concepts of analyzing the marketing
environment presented in Chapter 3.
Discussion Questions
1. What appear to be YouTube’s unique strengths in analyzing the marketing environment? Which key
principles from this chapter did company planners put to especially good use in anticipating, capitalizing on
and even helping shape the new marketing environment? (Here, you will want to focus the discussion on
competitors and publics, along with the demographic, economic, technological, can cultural environments.
CHAPTER OVERVIEW
Use Power Point Slide 3-1 Here
This chapter shows that marketing does not operate in a vacuum but rather in a complex and
changing environment. Other actors in this environment—suppliers, intermediaries, customers,
competitors, publics, and others—may work with or against the company. Major environmental
forces—demographic, economic, natural, technological, political, and cultural—shape marketing
opportunities, pose threats, and affect the company’s ability to build customer relationships. To
develop effective marketing strategies, you must first understand the environment in which
marketing operates.
CHAPTER OBJECTIVES
Use Power Point Slide 3-2 Here
1. Describe the environmental forces that affect the company’s ability to serve its customers.
2. Explain how changes in the demographic and economic environments affect marketing
decisions.
3. Identify the major trends in the firm’s natural and technological environments.
4. Explain the key changes in the political and cultural environments.
5. Discuss how companies can react to the marketing environment.
Assignments, Resources
Use Additional Project 1 here
Use Discussion Question 1 here
Use Web Resource 1 here
Use Video Case here
Troubleshooting Tip
This is an intense chapter, and it presents a lot of
information that might make some students’ heads
swim. If it hasn’t happened before, this is where
students really begin to get the picture that
marketing managers need to be highly analytical
people. It helps to present the in-depth discussion of
current macro trends as something that needs to be
understood, but not memorized.
Assignments, Resources
Use Real Marketing 3.1 here
Use Small Group Assignment 1 here
PPT 3-18 Generational marketing. Rather than risk turning off one
generation in favor of another, marketers need to form
precise age-specific segments within each group.
Assignments, Resources
Use Individual Assignment 1 here
Use Think-Pair-Share 1 here
Use Web Resources 2, 3, 4 here
Assignments, Resources
Use Additional Project 4 here
Use Think-Pair-Share 2 here
Assignments, Resources
Use Think-Pair-Share 3 here
Use Discussion Question 2 here
Use Outside Example 2 here
p. 81 Economic Environment
p. 81
PPT 3-23 The economic environment consists of factors that affect Key Term:
consumer purchasing power and spending patterns. Economic
Environment
Industrial economies constitute rich markets for many
different kinds of goods.
Income Distribution
Assignments, Resources
Use Individual Assignment 2 here
Use Think-Pair-Share 4 here
Use Marketing by the Numbers here
Assignments, Resources
Use Small Group Assignment 2 here
Use Marketing Technology here
Assignments, Resources
Use Discussion Question 3 here
Use Critical Thinking Exercise 1 here
Assignments, Resources
Use Real Marketing 3.1 here
Use Discussion Question 4 here
Use Company Case here
Discussion Questions
Answer:
The microenvironment consists of the actors close to the company that affect its ability to
serve its customers—the company, suppliers, marketing intermediaries, customer markets,
competitors, and publics. The macroenvironment consists of the larger societal forces that
affect the microenvironment—demographic, economic, natural, technological, political, and
cultural forces.
Answer:
The company might target any or all five types of customer markets. Consumer markets
consist of individuals and households that buy goods and services for personal consumption.
Business markets buy goods and services for further processing or use in their production
processes, whereas reseller markets buy goods and services to resell at a profit. Government
markets consist of government agencies that buy goods and services to produce public
services or transfer the goods and services to others who need them. Finally, international
markets consist of these buyers in other countries, including consumers, producers, resellers,
and governments.
Answer:
Core beliefs and values are passed on from parents to children and are reinforced by schools,
churches, business, and government. Secondary beliefs and values are more open to change.
Believing in marriage is a core belief; believing that people should get married early in life is
a secondary belief. Marketers have some chance of changing secondary values but little
chance of changing core values.
Answer:
1. The Wall Street Reform and Consumer Protection Act of 2010 created the Consumer
Financial Protection Bureau (CFPB). Learn about this act and the responsibilities of the
CFPB, then write a brief report of how it impacts businesses and consumers. (AACSB:
Communication; Use of IT)
The CFPB is an independent regulatory agency within the Federal Reserve, and its mission is
to help consumers regarding financial products and services. At the time of this writing, the
CFPB still was not officially operating, and the advisor, Elizabeth Warren, still had not been
nominated by the President nor confirmed by Congress. There is controversy surrounding
the focus and power this new regulatory body will have, which causes uncertainty for
businesses. Students should not have difficulty finding information the Act and CFPB, and
some resources follow:
2. Cause-related marketing has grown considerably over the past ten years. Visit
www.causemarketingforum.com to learn about companies that have won Halo Awards for
outstanding cause-related marketing programs. Present an award-winning case study to your
class. (AACSB: Communication; Use of IT)
Answer:
Students’ responses will vary. Students can click on “Events/Awards” tab at the top of this
Web site to learn about past winners of this award. Past recipients are highlighted with short
explanations of their campaigns.
3. Various federal agencies impact marketing activities. Research each agency below, discuss
the elements of marketing that are impacted by that agency, and present a recent marketing
case or issue on which each agency has focused. (AACSB: Communication; Reflective
Thinking)
a. Federal Trade Commission (www.ftc.gov)
b. Food and Drug Administration (www.fda.gov)
c. Consumer Product Safety Commission (www.cpsc.gov)
Answer:
All of these federal agencies have some authority over marketing activities. Clicking on the
“About…” link on most of these Web sites provides information concerning each agency’s
jurisdiction. Searching the news releases provides information on recent cases or issues dealt
with by each agency.
If you have a great product idea but no money, never fear, there’s Kickstarter, an online
crowdfunding site. Founded in 2008, Kickstarter enables companies to raise money from
multiple individuals and has helped launch more than 60,000 projects. Pebble Technology
Corporation created a “smart” wristwatch called Pebble, which works with iPhones or Android
phones, but didn’t have the funding to produce and market the device. So young CEO Eric
Migicovsky turned to Kickstarter for crowdfunding. His modest goal was to raise $100,000, but
the company raised $1 million in only one day and a total of $10.27 million in just over one
month! Nearly 70,000 people pre-ordered the $115 watch, and Pebble now has to deliver on the
promise. Kickstarter takes a 5 percent fee on the total funds raised and Amazon Payments
handles the processing of the funds. Kickstarter charges pledgers’ credit cards and the project
creator receives the funds within only a few weeks. The JOBS Act legislation signed into law in
2012 provides a legal framework for this type of financing, which is expected grow even faster
as a result. However, Kickstarter and similar sites don’t guarantee that the projects will
delivered as promised, and some people are concerned that crowdfunding will beget
crowdfrauding.
1. Find another crowdfunding site and describe two projects featured on that site. (AACSB:
Communication; Use of IT; Reflective Thinking)
Answer:
There are several crowdfunding platforms. RocketHub.com and AngelList.com are two
examples. Crowdfunding is used for all sorts of projects such as supporting the arts,
reducing deforestation, and sending high-schoolers to competitions as well as supporting
startup businesses.
Answer:
Students will be able to find articles about this topic and the JOBS Act by searching “JOBS
Act and crowdsourcing.” For example, the following article discusses how crowdsourcing
platforms and the Crowdfunding Professional Association
(http://crowdfundingprofessional.org/) are preparing for the crowdfunding elements of the
implementation of the JOBSA Act in 2013:
www.forbes.com/sites/alanhall/2012/06/28/hearings-on-jobs-prepare-the-u-s-for-expanded-
crowdfunding. The following article discusses limits placed on crowdfunding that restricts
how much can be invested to limit how much each investor could potentially be defrauded:
www.businessweek.com/articles/2012-04-26/will-crowdfunding-beget-crowdfrauding
The almost 24 percent of the U.S. population under 18 years old wields billions of dollars in
purchasing power. Companies such as eBay and Facebook want to capitalize on those dollars—
legitimately, that is. EBay is exploring ways to allow consumers under 18 years old to set up
legitimate accounts to by buy and sell goods. Children already trade on the site, either through
their parents’ accounts or through accounts set up after they lie about their ages. Similarly, even
though children under 13 are not allowed to set up Facebook accounts, about 7.5 million of them
have accounts, and nearly 5 million account holders are under 10 years old. That translates to
almost 20 percent of U.S. 10-year-olds and 70 percent of 13-year-olds active on Facebook.
Many of these accounts were set up with parental knowledge and assistance. Both eBay and
Facebook say that protections will be put in place on children’s account and that parents will be
able to monitor to their children’s accounts.
1. Debate the pros and cons of allowing these companies to target children. Are these efforts
socially-responsible behavior? (AACSB: Communication; Reflective Thinking; Ethical
Reasoning)
Answer:
One argument in favor of allowing children’s accounts is the fact that parental involvement
will be necessary to set up such an account and parents will be able to monitor their
children’s activities. Even though many parents help their children set up illegitimate
accounts, once they do that they do not have access to the account unless the child gives it to
them. So the proposed system is actually better for parents. Of course, the issue of privacy
will be a major concern. Furthermore, there is child-inappropriate content on both of these
sites. The companies claim they will be able to block a child’s access to that content, so
having a minor account would be better because currently, children with illegitimate
accounts are not blocked from anything. One could argue that the companies are being
Copyright© 2014 Pearson Education
socially responsible because the kids are already on these sites, and if the companies had
minor accounts, parents would be able to monitor their children’s behavior and some content
will not be accessible to these children. However, the fact that the companies will be actively
marketing to children raises issues.
2. Review the Children’s Online Privacy Protection Act at www.coppa.org/. Explain how eBay
and Facebook can target this market and still comply with this act. (AACSB:
Communication; Use of IT; Reflective Thinking)
Answer:
This rule applies to the online collection of personal information of children under the age of
13. The rule applies to information that can identify an individual, such as name, address, e-
mail address, and phone number. Web sites must seek verifiable consent from a parent,
which is one of the biggest hurdles for eBay and Facebook. However, there are identity
verification providers that can assist these companies, and Facebook was purportedly
consulting with these companies.
Do you know Danica from the Philippines, Peter from London, Nargis from India, Marina from
Russia, Chieko from Japan, or Miran from the United States? These are some of the babies
whose parents claimed they were the 7th billion human born into the world. The world
population continues to grow, even though women are having fewer children than before.
Markets are made up of people, and to stay competitive, marketers must know where populations
are located and where they are going. The fertility rate in the United States is declining and the
population is aging, creating opportunities as well as threats for marketers. That is why tracking
and predicting demographic trends are so important in marketing. Marketers must plan to
capitalize on opportunities and deal with the threats before it is too late.
1. Develop a presentation on a specific demographic trend in the United States. Explain the
reasons behind this trend and discuss the implications for marketers. (AACSB:
Communication; Analytical Reasoning)
Answer:
Students’ selection of demographic trends will vary and instructors may want to assign
specific trends to obtain more diversity in trends. Some recent newsworthy trends include
that racial and ethnic groups are growing more rapidly than the non-Hispanic population. In
fact, the percentage of minority births outnumbered white births in 2011. An overall trend is
the reduction in the fertility rate in the United States from 2.12 children per woman in 2007
to 1.87 in 2012. This has been attributed to the poor economic climate since 2008. Fewer
births mean fewer future customers for marketers.
2. Discuss global demographic trends. What are the implications of those trends and how
should marketers respond to them? (AACSB: Communication; Reflective Thinking)
Answer:
Students’ responses will vary. There are several excellent resources on global demographic
trends and their impact. For example, the working-age population (ages 20-59) will grow
rapidly in Asia but not in western cultures such as the United States and Europe. See
www.rand.org/publications/randreview/issues/2011/winter/world.html for an interactive map
of the world showing the fall and rise of the working-age population. U.S. companies must
plan to expand in the regions with the greatest growth potential.
Other excellent sources on the impact of global demographic trends include http://business-
transition.com/article/how-demographic-trends-are-driving-economic-changes and
www.minyanville.com/business-news/editors-pick/articles/bug-2526-hedge-hedging-hedge-
funds/6/20/2012/id/41864.
Synopsis
For many years, Xerox was synonymous for “photocopy.” And in certain respects, it still is. But
that has become more of a detriment than a benefit. As new technologies quickly and
dramatically reduced the need for copying hard documents in the late 1990s, Xerox found itself
in trouble. This case illustrates how Xerox made some bold and difficult decisions to both cut
costs and redefine the nature of its business. Today, Xerox is more about business services and
solutions than it is about copying documents. With a much broader market that has various
growth opportunities, Xerox has the potential to remain one of the top business-to-business
corporations.
Teaching Objectives
Discussion Questions
1. What microenvironmental factors have affected Xerox’s performance since the late
1990s?
Company – Xerox lost its way for a time. It took new leadership (Burns), an some fast
moves cost-cutting moves to avoid bankruptcy. But the biggest changes at Xerox revolved
around the question, “What business is Xerox really in?” Xerox needed to begin the
process of redefining itself in terms of the products it made and the markets where it
competed.
Marketing Intermediaries – Xerox needed a way to establish new channels in order to
get into back office of the business world. It acquired Affiliated Computer Services for
that purpose. ACS essentially becomes a division of Xerox rather than a true
intermediary. However, ACS plays the role that intermediaries play.
Competitors – The shift in strategy took Xerox into competition with new companies like
HP and IBM.
Customers – One could easily argue that the nature of customer needs changed with so
many changes in the macroenvironment as noted below. As the case points out, “while
Xerox was busy perfecting copy machines, customers were looking for more sophisticated
‘document management solutions.’”
2. What macroenvironmental factors have affected Xerox’s performance during that same
period?
Economic – Just as Xerox was beginning to see sings of life, the Great Recession hit
causing the company’s revenues and stock prices to plummet.
Technological – This is probably the biggest category for this case. With the advent of e-
mail and telecommuting technologies, documents had gone digital. With that, there was
far less need for regular old photocopies. On the positive side, Xerox has made massive
efforts to acquire and develop new technologies, like those that allow it to analyze real-
time parking and traffic data.
Cultural – One point here might simply be to point out that in the past 10 years, the
patterns of communication for the cultures of the world have shifted. People do not think
to stick things in the mail the way they used to. They send things electronically instead.
People do more texting than talking. Shifts such as this have major implications for the
old, new, and potential businesses where Xerox competes.
3. By focusing on the business services industry, has Xerox pursued the best strategy? Why
or why not?
It is clear that Xerox had to do something. Any company that sticks with a business model
as the market changes because that is what it has always done will sooner or later face
extinction (Consider Kodak). The In-N-Out case for chapter 1 illustrates a company that
There may not be an easy answer to this question as it certainly implies subjectivity.
However, there are a couple of things that provide justification that Xerox did the best
thing. First, business services was an area of growth at the time. With so many changes
in technology, businesses were desperate for companies to help them manage the parts of
their business that didn’t relate to their actual products and services. Second, business
services and solutions was a step that built upon Xerox’s background and strengths. They
were essentially a document company. They just had to break out from the parameters of
a traditional photocopy machine.
4. What alternative strategy might Xerox have followed in responding to the first signs of
declining revenues and profits?
As noted above, “riding out the storm” really wasn’t an option. At least, it was not an
option that would have led to any kind of future for the company. Students may have
various suggestions for this. One option might have been to take its core imaging
technologies and find new uses in other markets, like the medical field or digitally
archiving the libraries and documents of the world. However, both of those options are
mature and full of competition.
5. Given Xerox’s current situation, what recommendations would you make to Burns for the
future of Xerox?
Xerox needs to remain open to new market possibilities. As it has acquired and developed
many new technologies, it should consider any options for such. It should also remain
focused on areas with growth potential. The mobile market is booming. How can Xerox
expand its competencies and technologies into business and consumer markets through
mobile devices?
Teaching Suggestions
As a business-to-business case, this one may be a bit more difficult for students to relate to. Start
by having students visit (during or prior to class) www.xerox.com. Have them browse the
“services” and “products” tabs to become familiar with the nature of Xerox’s current business
world.
This case also works well with the marketing strategy chapter (Chapter 2).
a. How has Internet technology, especially social media, shifted the power differential away
from large organizations and toward individual consumers?
b. How has this change enhanced the marketplace for consumers? How might it also
damage the marketplace?
c. As an officer of a major bank or corporation, what would be your philosophical approach
to dealing with highly visible, noisy consumer complaints online? Would you give in to
the angry consumers’ demands every time? Explain.
2. Form students into groups of three to five. Each group should read the opening vignette to
the chapter on YouTube. Each group should answer the following questions and share their
finding with the class. (Objective 3)
Think-Pair-Share
Consider the following questions, formulate and answer, pair with the student on your right,
share your thoughts with one another, and respond to questions from the instructor.
Outside Examples
1. Take a look at Wendy’s (www.wendys.com). How is this company attempting to set
themselves apart from their primary competitors of McDonald’s (www.mcdonalds.com)
and Burger King (www.burgerking.com)? What publics do they appear to be
concentrating on? Why do you believe this is the case? (Objective 1)
2. Most students taking this class and reading the text have probably never watched Spanish
language programming. But as the Hispanic population in the United States has grown at
a feverish pace, one conglomerate has gone about its business quietly. In the process,
Univision Communications, Inc. has the lion’s share of the media market for this
burgeoning demographic group.
Possible Solution:
a. Univision’s growth has both reflected and facilitated the Hispanic population growth
in the United States. It has facilitated Hispanic growth by providing a communication
vehicle for those entering (or contemplating entering) the country. It has reflected
Hispanic growth by continually expanding its reach within the United States and
proving more content to its viewers.
b. Any company interested in reaching this growing market should consider advertising
through this outlet. In this country, Spanish language advertising has become much
more mainstream and accepted over time. Today, it is not at all uncommon to see
and/or hear messages directed specifically to Hispanics through “traditional” English-
language media.
Web Resources
1. http://247.prenhall.com
This is the link to the Prentice Hall support link.
2. www.mcdonalds.com
This is the place to go to learn all about McDonald’s marketing strategies.
3. www.wendys.com
Wendy’s homepage.
4. www.bugerking.com
Go here to learn about the King.
5. www.youtube.com
Go here to learn about how this Internet video-sharing giant continually seeks out and
exploits new marketplace opportunities.
6. www.univision.net
This is Univision’s home. Take a look at the wide variety of marketing tools available.