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Marketing The Core Canadian 5Th Edition Kerin Solutions Manual Full Chapter PDF
Marketing The Core Canadian 5Th Edition Kerin Solutions Manual Full Chapter PDF
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STUDENT LEARNING OBJECTIVES ................................................................................ 7-2
KEY TERMS, CONCEPTS & MARKETING TIP ............................................................. 7-2
LECTURE NOTES & ANSWERS TO IN-TEXT QUESTIONS
• Opening Vignette – Rebranding the Toronto Raptors ................................................... 7-3
• Types of Products .......................................................................................................... 7-4
• Product Elements ........................................................................................................... 7-5
• Consumer & Business Products ..................................................................................... 7-5
• Branding ......................................................................................................................... 7-7
QUESTIONS AND ANSWERS TO END-OF CHAPTER MATERIAL ........................... 7-9
QUESTIONS AND ANSWERS TO ON-LINE ACTIVITIES
• Applying Marketing Concepts and Perspectives .......................................................... 7-10
• Discussion Forum ......................................................................................................... 7-11
• Internet Exercise ........................................................................................................... 7-11
BRING IT TO LIFE
VIDEO – GOOGLE: GOOGLE EVOLVED
• Synopsis & Teaching Suggestions ................................................................................ 7-13
• Video Case – Printout and Worksheets ........................................................................ 7-14
• Answers to Questions ................................................................................................... 7-17
NEWSFLASH / FOCUS ON ETHICS – PACKAGING THE BRAND/
#PROTECTYOURBRAND
• Synopsis and Discussion Questions .............................................................................. 7-18
• NewsFlash/Focus on Ethics – Printout and Worksheet ................................................ 7-19
IN-CLASS ACTIVITY – HARLEY-DAVIDSON
• Instructions, Handout, and Worksheet .......................................................................... 7-23
METRICS ASSIGNMENT
• Product Portfolio Analysis ........................................................................................... 7-28
MARKETING TIP
For this chapter we look to David Freeman, former head of brand marketing, Maple Leaf Sports
& Entertainment for his MARKETING TIP. You may wish to use this at the start of a class, after
a break, or to summarize the material at the end of a session. The quote for this chapter is as
follows:
“Identify the good and bad of your brand and own it, acknowledge it and don't apologize for
it. That’s the big advice I would give to people based on our experience.”
• The Raptors are part of the much larger Maple Leaf Sports & Entertainment (MLSE)
organization, whose franchises include the Toronto Maple Leafs of the National Hockey
League (NHL), the Toronto FC of Major League Soccer (MLS), and the Toronto Raptors
of the National Basketball Association (NBA). Winning championships is the highest
priority in the organization, and MLSE strives to ensure that each of its teams is set up for
success.
• David Freeman, the former head of brand marketing for MLSE, embarked on a four-year
plan to rebrand the Raptors. Nothing was sacred; this rebrand would shake up the brand
strategy, brand positioning, brand image, brand logo, and brand messaging. The
overarching objective was to create a brand story that all Canadians would respond to.
The foundation of this rebrand was building upon Canadian pride and embracing being
the “outsider” in the NBA.
• “We The North” was the rallying cry behind this rebrand. It was short, patriotic, and
inclusive. The Raptors set out to re-establish the brand, and one of the first tasks was to
rework the team logo, which historically had included a dinosaur in the image. The new
logo introduced in 2015, includes a claw image on a basketball as a nod to the dinosaur,
and the words “Toronto Raptors” in bold letters.
• Fan engagement is a huge priority for sports franchises. Connecting with fans to grow
and mobilize a fan base must span mobile, broadcast, experiential, and digital platforms.
The overall results of the rebranding were remarkable. Measurements of brand equity showed an
increase of 8 points from April 2014 to April 2016. Since the 2012–2013 season, the Raptors
have experienced a massive 72 percent growth in season-ticket sales, and a 7.5 percent growth in
the percentage of tickets sold came as a result of team performance and the brand awareness
gained from the rebrand.
Reality Check
As you read Chapter 7, refer back to the opening vignette to answer the following questions:
1. Describe the Toronto Raptors in terms of its core, actual, and augmented product offerings.
Answer: Core product – entertainment, actual product –basketball game, arena, food and
beverage, augmented product – atmosphere, social interaction
2. Review the elements of a good brand name and discuss the strength of the Toronto Raptors
and its We the North branding in the sports and entertainment industry.
Answer: The advantage of the We the North branding is that it memorable, distinctive, uniting,
and unique.
• Nondurable Goods - items such as fast-food products and fuel which do not last and which
are consumed only once, or for a limited number of times.
• Durable Goods – items such as appliances or cars that last for an extended period of time.
• Services – intangible activities, benefits, or satisfactions offered for sale, such as banking,
visits to a doctor, taking a vacation, or going to a movie.
Most products are neither “pure goods” nor “pure services,” but range from the tangible to the
intangible on the service continuum.
B. Services
There are four unique elements to services: intangibility, inconsistency, inseparability, and
inventory. These four elements are referred to as the four I’s of services.
• Intangibility – services generally cannot be held, touched, or seen before purchase.
• Inconsistency – services are often hampered by inconsistency. Delivery of a service varies
according to the people who provide it.
• Inseparability – consumers do not usually separate the deliverer of the service from the
service itself.
• Inventory – inventory problems arise due to the fluctuating demand for services that occur
during the day.
Ask Yourself
1. Explain the difference between non-durable goods, durable goods, and services.
Answer: Non-durable goods do not last and are consumed, durable goods last for an extended
period of time, and services are intangible activities offered for sale.
Ask Yourself
Products are classified as either consumer or business products depending on their usage.
Consumer products are purchased by the ultimate consumer for their own personal use. Business
products are purchased to either run a business, or to be used as a component in another product
or service.
A. Consumer Products
These are categorized into convenience, shopping, specialty, and unsought products.
• Convenience Products – inexpensive items such as newspapers or chocolate bars that are
purchased frequently with minimal shopping effort and risk.
• Shopping Products – products such as jeans and airline tickets for which the consumer
comparison shops, assessing the attributes and prices of different products and brands.
B. Business Products
A major characteristic of business products is that their sales are often directly related to the
sales’ levels of the final product they are manufacturing or offering for sale. They are categorized
as follows:
• Production Goods – items used in the manufacturing process that become part of the final
product, such as raw materials or component parts.
• Support Goods and Services – items used to assist in producing other goods and services
and include:
o Installations - buildings and fixed equipment
o Accessory Equipment - tools and office equipment purchased in small-
order sizes by buyers
o Supplies - smaller items used continually to run the business such as
stationery, paper clips, and brooms
o Services - intangible activities needed to assist the business in its
operations such as transportation, maintenance and repairs
Ask Yourself
1. What are the differences between consumer products and business products?
Answer: A consumer product is purchased for use by the ultimate consumer while a business
product is purchased for use or inclusion in a business.
IV. BRANDING
A. Brands and Legal Protection
A brand is a name or phrase uniquely given by a company to a product to identify and
distinguish it in the market. Brand equity is the term used to describe the value of a brand that
B. Brand Loyalty
This refers to the degree consumers insist on purchasing a specific brand. Marketers try to create
connections between brands and consumers so that their brand loyalty remains high.
C. Brand Personality
Over time brands become associated with an image that has been developed over time. In this
way brands can take on a brand personality which can be describe in human terms.
D. Brand Names
A good brand name should include the following characteristics:
• The name should suggest the product benefits
• The name should be memorable, distinctive, and positive
• The name should fit the company or product image
• The name should have the ability to be legally protected
• The name should be simple to spell and remember
Ask Yourself
E. Types of Brands
There are three types of brands:
• Manufacturer’s Brand – a brand owned and produced by the manufacturer
• Private Label Brand – a store brand, contracted out for manufacturing
Brands are classified as either individual brands or family brands depending on whether their
name has been extended to cover more than one product category.
• Individual Brands – a brand name (such as YOP for yogurt drinks) that is used solely
for a specific product or product line.
• Family Brands – a brand name (such as Crest) that is sued for a number of different
products.
Ask Yourself
1. What are the advantages and disadvantages of using a family brand rather than an individual
brand to launch a new product?
Answer: A family brand can help leverage a new product into high awareness levels very
rapidly. This can also add a luster and credibility to the new product. The problem with using
a family brand is that sometimes the image is not quite appropriate for the new products.
There is also the risk of having an unproven new product associated with the already well-
established family brand.
3. What type of price differences would you expect to see for manufacturer’s brand, a private
label brand, and a generic brand for products within the same category?
Answer: Generally a manufacturer’s brand is more expensive than both a private label and
generic brand. A generic brand is the cheapest of them all.
Answer: These assignments give students the opportunity to apply chapter material to a real-life
example, using the chapter’s opening vignette as a foundation. There are no specific answers.
Video Clip…Questions
Google consistently ranks as one of the top brands in Canada and globally. Review the Google:
Google Evolved video to get insight into how the Google brand has evolved since its launch in
1998. Answer the following questions:
1. Outline Google’s product mix by defining its various product lines (see Figure 7–3 as an
example).
Answer: Students can reference the Google Canada website at
https://www.google.ca/intl/en/about/products/, where Google products are listed. Possible
Product Lines based upon the information on the site are “Get Answers” , Watch, Listen,
and Play”, “Devices”. “Stay in Touch”, and “Business”.
2. Define the core, actual, and augmented product for Google Search.
Answer: For Google Search, the core product could be finding answers, the actual product is a
search engine, and an example of the augmented product would include the mobile app.
1. Products can be classified as either consumer or business goods. How would you
classify the following products: (a) Pantene Pro V Shampoo, (b) a Black & Decker
cordless drill, and (c) an iPad?
Answers:
2. Are products such as KD Kraft Dinner and Beats by Dre headphones convenience,
shopping, specialty, or unsought goods for students?
Answers:
a. KD Kraft Dinner is a convenience good.
b. Beats by Dre headphones are shopping goods.
3. Compare the total product concept for (a) a Honda Civic, and (b) the Google search
engine by reviewing their products at their websites (www.honda.ca and
www.google.ca). Which layers from the total product concept are used by each
product? Specify how these layers are used to market the product.
Answer: The answers to these questions will vary depending on the content of the websites
and changes in marketing programs. You will need to check the websites prior to discussing
the answers in class.
4. Manufacturer’s brands, private label brands, and generic brands exist in the food
industry. Review the cereal category at a Loblaw (Loblaws/Superstore) store to
determine which types of brands exist in this category and identify their various
offerings and price points.
Answer: The answers to this question will depend on the stores and city where the students
live. In general terms these stores will carry a range of products in the cereal category which
may include a regular President’s Choice line of cereals, a line of healthy cereals under the
Blue Menu product line, a line of products from top manufacturers such as General Mills and
a line of nutritional cereals such as Kashi.
Answer: Presidents Choice™ and No Name™ products are both private label brands for the
Loblaw group of companies.
Answer: You will need to check the website before class to answer this question accurately.
These two brands are highly innovative and constantly bring new products to market under
variations of these trademarks.
Note: These discussions are meant to generate class discussion and a lively debate of issues
raised, as well as a general review of the concepts discussed within the chapter. There are no
correct or incorrect answers.
3. When were the trademarks for Magnum, Popsicle, and Vaseline registered in Canada?
Answer: Magnum – May 18, 2004, Popsicle – July 20, 1923, Axe – November 10, 2009
Synopsis
This video reviews the evolution of the Google brand over time and its future direction. Google
began in the dorm rooms at Stanford University in 1998 with two students: Larry Page and
Sergey Brin. Today Google is not just a business, it is a verb – Google it! Google has over
600,000 employees in 50 countries.
Google prides itself on its “relentless search for better answers”. It currently has hundreds of
product offerings and billions of customers. Google focuses on staying ahead of the tech curve
by focuses on continuous innovation and technological disruption.
Teaching Suggestions
This video is can be used as an interesting spring-board for in-class discussions on how brands
become trusted and influential. . Many students will find this video interesting as they are
familiar with the Google brand. The written case adds additional facts and information about the
brand and its future direction which demonstrates how marketers manage brands for future
success.
If you have an Internet-capable classroom you may wish to link to the Google Canada website to
show how the range of products that Google offers. It demonstrates the brand’s success and
dominance.
The pace of innovation is fast in technology and Google focuses on continuous innovation to
stay ahead of the competition. Google has hundreds of different products available from search
to entertainment to devices to business products. Its product line that helps consumers “Get
Answers” includes Google Search, Google Maps, Google Translate, and Google Chrome. Its
“Entertainment” product line includes YouTube, Google Play, and Chromecast. Its Devices
include the Pixel Phone, Chromebook, Google WiFi and Google Home. For businesses, Google
offers AdWords, AdSense, and Google Analytics. Google prides itself on its “relentless search
for better answers”.
Google has ranked as one of 2016’s most influential brands in Canada as noted by Ipsos’ Most
Influential Brands study. This is an annual study conducted by market research firm Ipsos that
specializes in the research of advertising, customer loyalty, marketing, media, and public affairs.
Its Most Influential Brands study looks at five elements considered crucial for an influential
brand: trust, corporate citizenship, presence, engagement, and being leading edge. The 2016
study was conducted online with 6,030 Canadians and is accurate within +/- 1.4 percentage
points.
1
“The Most Influential Brands,” Ipsos, accessed July 2016 at https://www.ipsos.com/en/most-influential-brands-
canada-2016; “Our Story”. Google. Accessed Sept 2017 at https://www.google.com/intl/en/about/our-story/;
“Best Global Brands 2016,” Interbrand website, accessed March 2017 at http://interbrand.com/best-brands/best-
global-brands/2016/ sumer’s minds and as the competition heats up, the Google brand is ready to meet the
challenge.
Questions
1. What type of product is Google Chromebook (1) a convenience product, (2) a shopping
product, (3) a specialty product, or (4) an unsought product?
2. Evaluate the strength of the “Google” brand name by reviewing the components of a
good brand name. Remember a good brand name should (1) suggest product benefits,
(2) be memorable, distinctive, and positive, (3) fit the product image, (4) have no legal
restrictions, and (5) be simple.
3. Visit the Google website and list 3 of its product lines as well as, the products that make
up the product line.
The video will provide insights into the success of the Google brand. Please answer the
following questions once you have watched the video and read the case:
1. What type of product is Google Chromebook (1) a convenience product, (2) a shopping
product, (3) a specialty product, or (4) an unsought product?
2. Evaluate the strength of the “Google” brand name by reviewing the components of a
good brand name. Remember a good brand name should (1) suggest product benefits, (2)
be memorable, distinctive, and positive, (3) fit the product image, (4) have no legal
restrictions, and (5) be simple.
3. Visit the Google website and list 3 of its product lines as well as, the products that make
up the product line.
Answer: Google should score well on each of these brand name attributes with some
variability from students on each attribute.
3. Visit the Google website and list 3 of its product lines as well as, the products that make
up the product line.
Answer: Students can use any of the product lines listed on the site including:
• Entertainment (Watch, Listen, and Play) – YouTube, Google Play, Chromecast
• Devices – Pixel phone, Google Home, Daydream View, Google WiFi, Chromebook
• Communication (Stay in Touch) – Gmail, Allo, Duo, Google+
• Organization – Photo, Contacts, Calendar, Docs, Slides
• Answers – Search, Maps, Translate, Chrome
Questions
1. Which packaging trend do you believe will have the most lasting influence?
2. Give an example of how packaging can encourage brand loyalty.
Answers:
1. The answers to this question will vary but students should provide rationale for their choice.
2. Since packaging is the first image of a brand that a consumer will have, marketers can use
packaging to engage the customer with the brand. This could be done primarily through the use
of clearly branded packaging, but can also include the use of packaging innovations such as
environmentally-friendly packaging, and interactive packaging (such as, NFC).
B. #PROTECT YOUR BRAND
With the rapid uptake in social media usage and the subsequent popularity of digital marketing
tools, brands need to be even more vigilant about protecting their intellectual property and
ultimately protecting brand equity online.
Questions
1. It is important for companies to monitor social media for trademark infringement. Can you
suggest how this could be done?
2. While companies and brands have faced issues with cybersquatting, celebrities have as well.
What is the main motivator for cybersquatters?
Answers:
1. Companies can proactively and regularly conduct searches (or hire a professional watching
service), not only to detect potential trademark infringement, but to monitor potential
defamation and to be aware of how your brand is being perceived.
2. The main motivator is to sell the domain name back to the rightful owner.
Packaging provides the marketer with the opportunity to catch the attention of the consumer, and
to convey the image and positioning of the brand. Packaging has come under the spotlight as a
key component and communicator of a brand message, in addition to being a driver of brand
loyalty and equity. Some interesting trends have been driving packaging innovation, including
the following:
- Personalization: The success of Coca-Cola’s “Share a Coke” campaign has put a focus on
the capability of digital printing technology to more easily produce customized packaging.
Coke’s campaign alone is credited for increasing its sales by 2 percent in a declining market.
As a follow-up, Coke launched the “One of a Kind” program, spotlighting millions of
unique images on Diet Coke bottles. Canadians can find that one design that reflects who
they are. Recent studies have shown that 61 percent of consumers feel more positive about a
brand when its messages are personalized. In addition, 20 percent of millennials seek out
personalized packaging, and this number is even higher in China. Many companies are
following suit, with Oreo introducing its “Colourfilled” campaign that allows customers to
design their own packaging. Bud Light and Corona have both customized their bottles, with
Bud Light focusing on NFL-themed cans and Corona highlighting boxers on its bottles.
- Flexibility and right-sizing: Larger family sizes, smaller trial sizes, resealable packages,
pouches and bags—all are in great demand by consumers. There has been a 56 percent
growth in the use of flexible packaging (such as bags, pouches, zip seals, and spouts). Soups
and sauces have increasingly become available in pouches with resealable spouts. Not only
does this mean that consumers can use only what they need, but the packaging is also more
environmentally friendly and convenient. Simultaneously, marketers are busy trying to
determine the right package size for their consumers. With snacks, health-conscious
consumers would like to have smaller-pack sizes, and with family-oriented products such as
cereal and milk, consumers are demanding larger-value containers.
- Clarity: Consumers don’t want too much information on packaging, but they want important
information clearly communicated so that purchasing decisions can be easily made. Product
transparency is a necessity for the 58 percent of consumers who check ingredient
information on labels before purchasing. Providing clear information on packaging builds
trust in a brand.
- Mobile engagement: QR codes are a thing of the past; new technology (using Bluetooth and
near-field communication) can be integrated into packaging design with little infringement
on branding or creative components. Consumers can locate the product in a store, and obtain
ingredient information, usage instructions, allergy warnings, and a plethora of other
information through company websites, apps, and even customer service lines. The near-
field communication (NFC) technology is already being used by Diageo on its liquor bottles,
allowing the product to communicate with the consumer via smartphone. This technology
takes brand engagement to a whole new level.
Marketers must not forget that packaging is a key component of the product/brand and can play
an integral role in driving not only sales but also loyalty.
Questions
1. Which packaging trend do you believe will have the most lasting influence?
#PROTECTYOURBRAND
With the rapid uptake in social media usage and the subsequent popularity of digital marketing
tools, brands need to be even more vigilant about protecting their intellectual property and
ultimately protecting brand equity. With over 1.65 billion monthly users of Facebook, 310
million active Twitter users, and 330 million domain names registered globally, the world of
social media and the Internet can be challenging for marketers. Dell, for example, currently
manages 26 pages/groups on Facebook and 34 Twitter feeds. In the past, the protection of
trademarks and copyrights was fairly straightforward, but with companies supporting dozens of
different social media sites, websites, and tweets throughout any given day, there are many
questions to be asked:
- Does my company have rights to the social media usernames, hashtags, and domain names that
are needed to promote the company’s products?
- How can my company monitor social media for trademark infringement?
- Are trademark policies clearly outlined on the social media sites my company uses?
Cybersquatting is the registering of an Internet name with the intent of profiting on another
company’s name. Domain names using a trademark are protected in Canada by the Canadian
Internet Registration Authority (CIRA), and complaints are resolved through the CIRA Domain
Name Dispute Resolution Policy (CDRP) for .ca domain names. Using this process, Papa John’s
gained the rights to the domain name papajohns.ca. Someone had registered the domain name
that did not have any rights to the trademarked name, and so the rights to the domain name
reverted back to the company that owned the trademark.
Companies are more frequently focusing on the value of a branded hashtag in their social media
marketing campaigns. Hashtags can quickly spread globally, and since hashtags can be used by
anyone, including competitors, they can create positive or negative viral discussions about a
brand. Marketers are now including hashtags in their brand strategy, which begs the question:
Can hashtags be protected so that marketers can manage their brand messages? Well, companies
are certainly attempting to register their hashtags as close to 2,900 trademark applications for
hashtags have been made globally since 2010. Coca-Cola is a leader in trademark protection, and
the social media platform is no different. It has begun to trademark its hashtags, including
#smilewithacoke and #cokecanpics. PepsiCo has registered #SayItWithPepsi; Reckitt Benckiser
has registered #blamemucus for its Mucinex brand of cough and cold products; and Procter &
Gamble has registered #LikeAGirl for its Always line of products. Only a small number of
decisions on hashtag trademarks have been resolved to date.
On social media sites such as Twitter, Instagram, and Facebook, usernames are assigned on a
first-come, first-served basis and cannot be reserved. Therefore, someone could take your
trademark as a username, and unless they are misleading people to believe that they are affiliated
In the case of trademark protection on social media, prevention is the best policy. It is also
recommended that companies develop clear policies on how to deal with each potential source of
infringement. Here are some tips to protect your brand in social media:
1. Protect company names, logos, slogans, and brand names using trademarks.
2. Consult a professional regarding the need for and use of trademarks and copyright in
social media.
3. Use defensive registration by registering all trademark domain names and usernames
(including common misspellings) up front.
4. Create trademark use guidelines to ensure that the company is consistent in its use of
trademarks, preventing confusion.
5. Regularly conduct searches (or hire a professional watching service), not only to detect
potential trademark infringement, but to monitor potential defamation and to be aware of
how your brand is being perceived.
6. Claim your trademarks as usernames as soon as possible.
Marketers must include social media in their intellectual property strategy to maximize as well as
protect their brand messaging and brand equity.
Questions
1. It is important for companies to monitor social media for trademark infringement. Can
you suggest how this could be done?
2. While companies and brands have faced issues with cybersquatting, celebrities have as
well. What is the main motivator for cybersquatters?
1. To understand the three different levels of product – core product, actual product, and
augmented product.
2. To understand the concepts of product mix, product line width and product line depth..
Description of In-Class Activity
• Provide groups of students with a handout on the activity and link to three Harley-Davidson
websites in Canada at https://motorcycles.harley-davidson.com/ca/en/2018/index.html (for
motorcycles and http://motorclothes.harley-davidson.ca/?locale=en_CA&bmLocale=en_CA
(for merchandise) to show students the types of products sold under this brand name.
Students are then asked a number of questions on Harley Davidson’s product mix, product
mix width, product line depth, and product line length.
• This activity should be conducted individually or in pairs. The estimated class time is 45 - 60
minutes.
Preparation before Class
• Relevant Chapter Content - Prior to conducting this in-class activity you will need to
review the following chapter material with your students:
o Discuss the term total product concept and the elements of core product, actual product,
and augmented product, ensuring the students understand the terms.
Core Product - the fundamental benefit a consumer derives from having the product.
Actual Product - the physical good or the service a consumer purchases when buying a
product. It includes the product’s branding, design, and features.
Augmented Product - the additional features and attributes that accompany a product,
such as a warranty, a service contract, delivery options, installation assistance, or a
website used to distinguish the product from competitive offerings.
o Define product line, product mix, product mix width, product line length, and product
line depth as explained below:
Product Line – a group of similar products that are closely related because they satisfy a
similar need and are marketed to the same general target market.
Product Mix Width – refers to the number of different product lines offered by the
company.
Product Line Length – the total number of products or brands in a product line
Product Line Depth –the assortment of different versions of each product sold within
its product lines.
• Provide examples of companies that have extensive product mixes such as Coca-
Cola. The concept of product line, product mix, product depth, and product width
can all be clearly demonstrated by linking to the worldwide Coca-Cola website at
http://www.thecoca-colacompany.com/ and navigating to the area where the
products are shown. Here students can see Coca-Cola’s brands such as Powerade,
Sprite, Coca-Cola Classic, Barq’s root beer, Dasani, Full Throttle, Fanta, Minute Maid,
and Tab. (Please note this site does change frequently so you will need to check
specifically where in the site you can see these brands).
1. Navigate to the Harley-Davidson motorcycle website and identify what elements are
included in; (1) core product, (2) actual product, and (3) augmented product.
• Core product
• Actual product
• Augmented product
3. Harley-Davidson sells the following products. Is this an example of product line depth or
product mix width?
• Harley-Davidson motorcycles
• Harley-Davidson clothing and accessories
• Harley-Davidson financial services
• Harley-Davidson Genuine Parts
As discussed in the chapter, companies often have several product lines that they market.
Analysis must be completed to determine which product the company should focus on. A first
step is to analyze the Profit and Loss (P&L) statements for each of the company’s product lines.
The P&L below is for a clothing company that has 3 main product lines: clothing, footwear, and
accessories. Review the P&L and answer the questions about the product lines.
Tasks:
Calculate the average selling price for one unit of clothing, one unit of footwear and one
accessory.
Calculate the gross margin percentages for each product line. Based upon gross margins,
which product line is most profitable? Which is least profitable?
3. Marketing Expenditures
What % of sales does the marketing expenditure represent for each product line? Which
product line has the highest marketing spend as a % of sales?
4. From your analysis, what conclusions can you draw about your product mix? What
further questions do you have?
Tasks:
Calculate the average selling price for one unit of clothing, one unit of footwear and one
accessory.
2. Gross Margins
Calculate the gross margin percentages for each product line. Based upon gross margins,
which product line is most profitable? Which is least profitable?
Accessories are the most profitable and footwear is the least profitable.
3. Marketing Expenditures
What % of sales does the marketing expenditure represent for each product line? Which
product line has the highest marketing spend as a % of sales?
4. From your analysis, what conclusions can you draw about your product mix? What
further questions do you have?
Footwear brings in the most revenue, requires a relatively low marketing spend, but has a high
COGS. Can COGS be reduced? Can unit sales be increased by increasing the marketing spend?
Clothing requires a relatively high marketing spend which impacts its profitability. Can the
spend be reduced and sales be maintained?
Accessories have a low marketing spend and a low COGS. Can volume of sales be increased?
A good discussion can be had with the students regarding the various markets and the factors
affecting profitability, sales, and spend. Companies must make decisions about the allocation of
spends across brands.
EPOCH IV.
CHAPTER I.