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CHAPTER 8: Customer Relationship Management (CRM)
This chapter begins with the learning outcome summaries, followed by a set of lesson plans for you to use to
deliver the content in Chapter 8.
• Lecture slides (for large sections) on page 3.
• Company Clips (video) on page 4.
• Group Work (for smaller sections) on page 6.
• Review and Assignments begin on page 7.
 Review/Discussion questions
 Application questions
 Application exercise
 Ethics exercise
 Video assignment—Method—Spreading the News
 Case assignments—Petco.com and Kroger
• Great Ideas for Teaching Marketing from faculty around North America begin on page 14.
We’ve also created integrated Company Clip video assignments and Part cases that cover the topics in
Chapters 4 through 8 starting on pages 20.
 Integrated Video assignment—Raleigh & R. J. Julia Booksellers
 Integrated Case assignments—Guns N’ Roses (Marketing Miscue Case) and Kiki magazine (Critical
Thinking Case)
Chapter 8 ♦ Customer Relationship Management (CRM) 8-1

LEARNING OUTCOMES
1 Define customer relationship management
Customer relationship management (CRM) is a company-wide business strategy designed to optimize profitability,
revenue, and customer satisfaction by focusing on highly defined and precise customer groups. This is accomplished by
organizing the company around customer segments, encouraging and tracking customer interactions with the company,
fostering customer satisfying behaviours, and linking all processes of a company from customers through suppliers (refer
to Exhibit 8.1 of the book).
Under this philosophy, the company customizes its product and service offering based on data generated through
interactions between the customer and the company. This philosophy transcends all functional areas of the business,
producing an internal system where all the company’s decisions and actions are a direct result of customer information.
2 Explain how to identify customer relationships within the organization

Companies that implement a CRM system adhere to a customer-centric focus or model. A customer-centric company
builds its system on what satisfies and retains valuable customers, while learning those factors that build long-lasting
relationships with those customers. Building relationships through CRM is a strategic process that focuses on learning,
empowerment, and managing customer knowledge.
Customer-centric companies continually learn ways to enhance their product and service offerings. Learning in a CRM
environment involves the informal process of collecting customer information through comments and feedback on
product and service performance.
3 Understand interactions with the current customer base

The interaction between the customer and the organization is considered to be the foundation on which a CRM system is
built. Only through effective interactions can organizations learn about the expectations of their customers, generate and
manage knowledge about them, negotiate mutually satisfying commitments, and build long-term relationships. Effective
management of customer interactions recognizes that customers provide information to organizations across a wide
variety of touch points (refer to Exhibit 8.2 of the book). Consumer-centric organizations are implementing new and
unique approaches for establishing interactions specifically for this purpose. They include Web-based interactions, point-
of-sale interactions, and transaction-based interactions.
4 Outline the process of capturing customer data

Based on the interaction between the organization and its customers, vast amounts of information can be obtained. In the
CRM system, the issue is not how much data can be obtained, but rather what type of data is acquired and how to
effectively use the data for relationship enhancement. In a CRM system, channel interactions are viewed as prime
information sources that are based on the channel selected to initiate the interaction rather than on the data acquired. The
channel, the transaction, and the product or service consumed all constitute touch points between a customer and the
organization. These touch points represent possible areas within a business where customer interactions can take place
and, hence, the opportunity for acquiring data from the customer. In this manner, much information can be captured from
one individual customer across several touch points.
5 Describe the use of technology to store and integrate customer data

Customer data are only as valuable as the system in which the data are stored and the consistency and accuracy of the
data captured. Customer data gathering is complicated because information needed by one unit of the organization (e.g.
sales and marketing) is often generated by another area of the business or even by a third-party supplier (e.g., an
independent marketing research firm). Because of the lack of standard structure and interface, organizations rely on
technology to capture, store and integrate strategically important customer information. The process of centralizing data
in a CRM system is referred to as data warehousing. A data warehouse is a central repository of customer information
collected by an organization.
8-2 Copyright © 2013 Nelson Education Limited

6 Describe how to identify the best customers
CRM, as a process strategy, attempts to manage the interactions between a company and its customers. To succeed,
organizations must identify customers that yield high profitability or potential profitability. In order to accomplish this
task, significant amounts of information must be gathered from customers, stored and integrated in the data warehouse,
then analyzed for commonalities that can produce segments that are highly similar yet different from other customer
segments. A useful approach to identifying the best customers is recency–frequency–monetary (RFM) analysis. Data
mining uses RFM, predictive modelling and other approaches to identify significant relationships among several
customer dimensions within vast data warehouses (refer to Exhibit 8.3 of the book). These significant relationships
enable marketers to better define the most profitable customers and prospects. Another significant aspect of the CRM is
that it looks at customers beyond a particular transaction and calculates their lifetime value (LTV), which depends on
successfully predicting the customer behaviour using predictive modelling.
7 Explain the process of leveraging customer information throughout the organization

Data mining identifies the most profitable customers and prospects. Managers can then design tailored marketing
strategies to best appeal to the identified segments. In CRM, this activity is commonly referred to as leveraging customer
information to facilitate enhanced relationships with customers. One of the benefits of a CRM system is the capacity to
share information throughout the organization. This allows an organization to interact with all functional areas to best
develop programs targeted for their customers. This process is commonly referred to as campaign management.
Campaign management involves developing customized product/service offerings for the appropriate customer segment
and pricing and communicating these offerings for the purpose of enhancing customer relationships. Once a company
has identified its best customers, it must make every effort to maintain and increase their loyalty. It is well understood in
marketing that loyal customers tend to be more profitable and cost a business significantly less. However, a loyalty
program is to be developed in a manner that customers find valuable.
TERMS
campaign management empowerment predictive modelling

compiled list interaction response list
customer-centric knowledge management touch point
customer relationship management learning
database lifetime value analysis (LTV)
data warehouse point-of-sale interactions
LESSON PLAN FOR LECTURE
Brief Outline and Suggested PowerPoint Slides:

Slides are available at www.icanmktg2.com.
Learning Outcomes and Topics PowerPoint Slides

1 Define customer relationship 2: Customer Relationship Management
management. 3: Learning Outcomes
1.1 What is Customer Relationship 4: Learning Outcomes (continued)
Management? 5-8: What Is Customer Relationship Management?
9 & 10: Customer Relationship Management Cycle
2 Explain how to identify customer 11 & 12: Identify Customer Relationships

relationships within the organization. 13: Customer-Centric Companies
2.1 Identify Customer Relationships 14: Identify Customer Relationships
Within the Organization

Learning Outcomes and Topics PowerPoint Slides
3 Understand interactions with the 15: Understand Interactions of the Current Customer Base
current customer base. 16–18: Interactions of the Current Customer Base
3.1 Establishing and Managing
Interactions with Current
Customer Base
4 Outline the process of capturing 19 & 20: Capture Customer Data
customer data. 21: Traditional Means of Capturing Customer Data
4.1 Capturing Customer Data 22: Capture Customer Data
23: Capturing Customer Data
5 Describe the use of technology to store 24–26: Store and Integrate Customer Data
and integrate customer data. 27: Data Warehousing
5.1 Use of Technology to Store and 28: Store and Integrate Customer Data
Integrate Customer Data
6 Describe how to identify the best 29 & 30: Identifying Best Customers
customers. 31 & 32: Data Mining
6.1 Analyzing Data for Profitable and 33 & 34: Recency–Frequency–Monetary (RFM) Analysis
Unprofitable Segments 35: Lifetime Value (LTV) Analysis
36: Predictive Modelling
7 Explain the process of leveraging 37–39: Leverage Customer Information

customer information throughout the 40: Privacy Concerns and CRM
organization. 41: Your Turn
7.1 Leveraging and Disseminating 42: Your Turn
Customer Information
Throughout the Organization
Suggested Homework:
• The end of this chapter contains assignments for the Company Clip video, Method-Spreading the News; the
Petco.com case and an alternate case, Kroger.
• There is also an integrated Company Clip video on Raleigh and integrated Part cases on Guns N’ Roses and Kiki
Magazine, with related assignments.
• The end of this chapter also contains numerous Great Ideas that can be assigned or used as the basis for longer
investigations into marketing.
LESSON PLAN FOR VIDEO
Company Clips
Segment Summary: Method—Spreading the News about Green Cleaning
In today’s fast-paced markets, much can be gained by turning ownership of the brand over to consumers. Method is a
company that understands the benefits to this risky proposition. Founders Eric Ryan and Adam Lowry created a brand
that its customers can take ownership of and have actually built a customer feedback channel that most businesses dream
of achieving. Method’s most enthusiastic customers—referred to as brand advocates—are the company’s most vocal
proponents and take an almost evangelical approach to sharing the benefits of green cleaning with the market.
These teaching notes combine activities that you can assign students to prepare before class, that you can do in-class
before watching the video, that you can do in-class while watching the video, and that you can assign students to
complete as assignments after the video class.
During the viewing portion of the teaching notes, stop the tape periodically where appropriate to ask students the
questions or to perform the activities listed on the grid. You may even want to give the students the questions before
starting the tape and have them think about the answer while viewing the segment. That way, students will be engaged in
active viewing rather than passive viewing.
PRE-CLASS PREP FOR YOU: PRE-CLASS PREP FOR YOUR STUDENTS:
• Preview the Company Clips video segment for • Have students review and familiarize themselves
Chapter 19. This exercise reviews concepts for LO1– with the following terms and concepts: customer
LO7. relationship management, customer-centric knowledge
management, empowerment, interaction, touch point,
• Review your lesson plan.
point-of-sale interactions, transaction-based
• Make sure you have all of the equipment needed to interactions, and acquiring and capturing customer
show the video to the class, including the DVD and a data.
way to project the video.
• Have students bring written definitions of the above
terms or concepts to class.
• Ask students to compose a list of three companies
that treat them extraordinarily well. They should be
prepared to discuss why when they come to class.
VIDEO REVIEW EXERCISE

ACTIVITY
Review the lists that students composed for Pre-Class Prep. Discuss what their favourite companies
do to provide them with great service. Ask students to be specific. Ask students how important they
Warm-Up consider how they are treated by a company’s sales force, compared to the actual products or services
that a company sells.
• Refer students to Exhibit 19.1, A Simple Flow Model of the Customer Relationship Management
System. Point out that CRM does not begin and end at the interaction with a customer that occurs
during a transaction. It starts with a philosophy within the organization, continues to the point
where customers and companies interact, and finishes with data collection, analysis, and
In-Class distribution throughout the organization.
Preview • Copy the graphic onto the board while discussing concepts: Review Learning Outcome LO7, The
process of leveraging customer information throughout the organization.
• Have copies of the Company Clips questions (below) available for students to take notes on
while viewing the video segment.
• How has Method identified customer relationships with the organization? What does the
company do to nurture those relationships?
Viewing
(solutions • Identify the touch points mentioned in the video and list the types of information Method could
below) gather at each one.
• What is the role of technology in Method’s CRM system?
Assigning • Company Clip Video Assignments can be distributed to students after they view the video. These
assignments and their solutions are located at the end of this chapter.
• Video assignments are also assignable in CourseMate where students can email their answers to
the instructor.
• What is the cornerstone of Method’s customer care? Does Method depend more on channel,
transaction, or product/service touch points to collect information from customers?
• Divide students into groups of 3 to 5 and have them pretend they are the new CTOs (Chief
Follow-Up Technology Officers) for Method. Give each group 10 to 15 minutes to outline a plan for using
technology to capitalize on Method’s customer-centric approach. What benefits will the new
system yield?

Solutions for Viewing Activities
1. How has Method identified customer relationships with the organization? What does the company do to
nurture those relationships?
Advocates for method—consumers who promote their products—have access to the organization through e-mail as
well as their own space on the Method website for blogs, comments, self-profiles, etc. This advocate relationship
was nurtured through e-mail responses and by requesting their feedback on products and especially the website.
2. Identify the touch points mentioned in the video and list the types of information Method could gather at
each one.
Touch points mentioned include a customer request online via e-mail, a comment section for a particular service
(gift baskets, gift wrapping), and advocates/customers interacting with other consumers via blogs and forums.
Eventually, Method will use tracking data to build surveys and better understand customer’s needs and wants.
3. What is the role of technology in Method’s CRM system?
Technology is the heart of Method’s CRM as they use e-mail and the Web to communicate with their consumers.
LESSON PLAN FOR GROUP WORK
In most cases, group activities should be completed after some chapter content has been covered, probably in the second
or third session of the chapter coverage. (See the “Lesson Plan for Lecture” above.)
Activity #1
Internet-based businesses (e-commerce) has been quick to adopt many concepts of CRM. A good example is
Chapters.ca, which gathers information about a customer each time the customer inputs data or purchases products.
In this exercise, students should select an Internet-based business that it believes has a good CRM program. It will be
easier if at least one of the students is a current customer of that particular business (or has purchased something from
that business in the past.) Divide the class into teams of four or five students and have them do the following:
• Visit a few Internet sites and select one that the team believes has a good CRM program.
• Define the elements of a good CRM program. What elements does this Internet business have?
• Describe the kinds of information the business requests of customers or potential customers. Which information is
required and which is optional?
• Describe how the business handles privacy and security issues.
• Explain what kinds of interactions the customer has with the business. What channels are used for these
interactions?
Students should prepare a short presentation to make to the class.
Activity #2
Divide class into groups of 3 to 5 and review the following characteristics of a good direct-mail letter, or ask the students
to list their own key considerations. (1) Its appeal is based on knowledge of the prospect. (2) It gets the reader’s attention
(makes a connection with the prospect). (3) It must highlight and dramatize the problem and the solution. (4) It’s brief.
(5) It provides specific examples of the value of the offer. (6) It states a believable promise or describes a reward the
prospect may receive. (7) It contains a personal salutation (make the letter resemble personal correspondence). (8) It has
facts, figures, testimonials, and illustrations to establish believability in a cause. (9) It is easy to participate in or respond
to the message (postage-free reply envelope). (10) It provides a reason to act now (it must encourage immediate action).
Then, give each group a direct mail letter to rewrite. See the Instructor Manual for three templates. Instruct students to
put themselves in the role of a “direct-mail marketing consultant.” They are to evaluate, improve, and rewrite their
team’s direct-mail letter. After students have reworked the letters, have them share the results with the class. Additional
discussion questions are in the teaching notes in the Instructor Manual.
Source: Keith Absher, University of North Alabama

REVIEW AND ASSIGNMENTS FOR CHAPTER 8
REVIEW/DISCUSSION QUESTIONS
1. Briefly explain the concept of a customer-centric focus. Why is this so important in customer relationship
management?
A customer-centric focus is a philosophy that an organization adopts that puts the customer at the centre of all
activities in the organization. The company customizes its product offering based on data generated through
interactions between the customer and the company and builds its system on what satisfies and retains valuable
customers. That is very important; in order to build a good customer relationship, the customer must be the most
important person to the organization. The concept is very similar to a marketing-oriented philosophy, which was
discussed earlier in the textbook.
2. What is meant by knowledge management? Why is it so important in a CRM system?
Knowledge management is a process by which learned information from customers is centralized and shared in
order to enhance the relationship between customers and the organization; it is important to a CRM system because
everyone in the organization must have access to customer information in order to gear their activities towards
satisfying the customer and building a relationship.
3. Develop a plan for establishing and managing interactions with a business’s customers. In this plan, identify
the key touch points for customers, how the knowledge centre would be designed, and the main interaction
methods that would be promoted to the customer.
Students should include both external and internal touch points in this plan. External touch points would include
such things as registration by a customer for a service, communication with customer service, warranty card
information, or conversations with salespeople, delivery people, or installers. Internal touch points include
marketing research for developing profiles of extended warranty products, production for analyzing recurring
problems, and accounting for establishing cost control models for repair service calls.
4. Briefly explain the concept of a data warehouse. In the context of a CRM framework, why is a data
warehouse such an important tool?
A data warehouse is a central repository of customer data collected by an organization. The data warehouse
contains data from various functional areas of the organization, which is stored and inventoried on a centralized
computer system for the purposes of sharing the resulting information across all functional departments of the
business. The data warehouse is very important because an organization must be able to understand many things
about the customer—such as simple contact information, needs and wants, and buying behaviour—in order to build
a relationship and provide what the customer wants. The data warehouse allows the organization to store the data in
an organized, accessible manner.
5. If the business wished to launch a CRM program, what are some of the benefits and limitations it might
expect to encounter? What can the business do to ensure it gains the benefits and minimizes the problems?
If a business were to launch a CRM program it could expect, in the end to have enhanced relationships with it’s
customers. This enhanced relationship should ultimately optimize profitability, revenue and customer
satisfaction by ensuring that the company efforts are focused on highly defined and precise customer groups.
The companies communication strategies are more effective as ultimately they should be reaching individual
customers with targeted messages. The effectiveness of a CRM system is the thoughtful attention paid to
information technology as the system is being created. The value of the data stored by the information
technology is very much dependent on the consistency and accuracy of the data captured. The key limitation is
the ability to collect this data accurately and then to leverage the data in a functional manner. To ensure the
business gains the benefits and minimizes the problems the business must ensure the customer takes centre
stage and the business must manage the customer relationship across all points of customer contact throughout
the whole organization.

6. Think of a business where you are a frequent/loyal customer. 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 lifetime value (LTV) to this business? What could the
business do to ensure you remain a loyal customer?
The answer to this question will vary by student: hairdresser - $65 per visit, visit 14 times per year and will
likely be their customer for 10 years so the LTV would be $65x14X10= $9100.00
APPLICATION QUESTIONS
1. Identify the six components of the CRM process.

The CRM process consists of these components: 1) the establishment of customer relationships within the
organization; 2) the establishment and management of interactions with the current customer base; 3) the acquisition
and capture of customer data based on interactions; 4) the use of technology to store and integrate customer data; 5)
the analysis of the data for profitable and unprofitable segments; and 6) the leverage and dissemination of customer
information throughout the enterprise.
2. Form a team and identify several local businesses that would benefit from a CRM strategy. Select one
business and outline a plan on how that business would implement a CRM strategy. You may want to visit
the company and interview managers about their current initiatives. When you have completed your CRM
plan, share it with the class—and the company.
Students’ answers will depend on the businesses that are identified, but they should include many of the elements
discussed in the previous question.
3. General Motors offers the “OnStar” system in many of its vehicles. OnStar is a location system, information
system, and communication system available to those drivers who wish to subscribe to the service. Go to the
OnStar website, www.onstar.com, and read over some of the services that are offered to consumers. Based on
your discovery, write a short report describing the various ways that OnStar can be used as a CRM tool,
specifically in the context of creating interactions, gathering customer data, and customizing service offerings
to customers.
Students’ reports will vary.
4. Assume you are the manager for a Boston Pizza. Your boss has asked you to evaluate how the company is
using its website to gather customer data. Go to the website for the Boston Pizza (www.bostonpizza.com) and
provide a detailed critique on how the website is used for capturing customer data. Comment on the types of
customer data that the website is designed to capture and on how that data would benefit your local Boston
Pizza operation.
Students’ answers will vary widely.
5. Explain the concept of data mining. Providing five examples of companies that are currently using data
mining, and explain why each is using it.
Data mining is the process of finding hidden patterns and relationships among variables and characteristics from
customer data stored in the data warehouse. Data mining is used to recognize significant patterns of variables and
characteristics as they pertain to particular customers or customer groups.
Students will come up with many different examples. Following are some examples:
• Insurance industry: Many insurers now use data mining to determine who buys their products and why. It may
also contain information about the risk factors for certain policyholders.
• Computer manufacturing industry: Companies like IBM use data mining software to determine customer
buying behaviour.
• Travelsavers agent consortium: A consortium consisting of travel agencies uses data mining to get leads of
potential customers. The consortium uses a third party for the data mining.
• Banking and credit unions: The financial services industry uses data mining to become more market-oriented
in general.
•Broadcasting industry: The broadcasting industry uses data mining to improve back-office functions,
employee performance, and sales performance.
6. Campaign management is a benefit derived by an organization’s ability to leverage and disseminate
information throughout the company. Briefly define campaign management and explain how a business may
be applying it to its daily operations. In your answer, select a particular business as an example of effective
campaign management.
Campaign management occurs when all functional areas in an organization participate in the development of
programs targeted for their customers. Campaign management involves outbound communications to customers
designed to sell a company’s product or service. Students’ answers will vary depending on the business they
choose.
7. What kind of product testing is currently going on at the Procter & Gamble website (www.pg.com)? Sign up
to participate and find out how the company implements its one-to-one marketing plan through its website.
Students’ responses will vary.
APPLICATION EXERCISE
Understanding how companies use consumer information can be difficult if you have never had a job or internship that
required you to use databases or customer profiles.
Activity
1. Save all the direct-mail advertising that comes to your mailbox for at least a week. You may ask your parents or
friends to collect direct mail that they receive as well.
2. Once you have your stack of mail, organize it according to the household that received it. For example, if friends
and family helped you collect mail, then keep mail sent to each address together. Make a list of all material in each
group.
3. To what kind of customer is each piece of mail targeted? What makes you think as you do?
4. Based on the content of the mail pieces, determine what kind of information the various companies have about you,
your friends, or your family in their databases. Are there indications on the mailers about what kind of interactions
the recipient has had with the sender of the marketing piece?
5. Write out an aggregate profile for each address. If you were a direct marketer, what kinds of products and services
would you market to each? What kinds of offers would you create?
Purpose: To allow students to analyze marketing materials and determine the kind of consumer they were intended to
reach. Students will also build a reverse profile based on the materials.
Setting It Up: The exercise in the text is formatted as an individual assignment. The original exercise (below) is
designed as an in-class activity based on students collecting direct mail that comes to their mailbox for one month.
This exercise was inspired by the following Great Idea in Teaching Marketing:
DIRECT MAIL ASSIGNMENT

The purpose of this assignment is to make students aware of the direct mail that comes into their own homes and to allow
them the opportunity to see what the kind of mail a household receives tells about the consumers in that household.
For this assignment all students should save all direct mail advertising that comes into their homes for one month.
(Include all catalogues, brochures, product mailings, solicitations, etc.)
Students are then to remove all customer identifying information from each piece. Remove the information from the
mailing label and the order blank. Put all of this information in a box or bag on which you have put a fictitious name.
Bring this material to class on an assigned date.
Each student then chooses a package for someone else in the class that they do not know. Each student then analyzes
their “mystery package” as follows:
1. List all of the material in the package.
2. What kind of consumer do you think each piece in the package is targeted to? Why?
3. Develop a profile of the person/household that this package came from. What can you say about them? Be as
specific as possible.
4. If you were a direct marketer, what other types of products, publications, etc., might you send to this address?
After grading this assignment, if I have time, I will read the profiles and fictitious names in class to see how close the
students have come to the actual household. It is usually quite amazing for students to see how accurate they often are.
Students usually enjoy this assignment.
ETHICS EXERCISE
By combining several of its databases of parental purchasing behaviour and the results of its market research, Maxwell,
Inc., believes it has the tools to launch one-to-one marketing messages for the six- to nine-year-old fans of its JoyMax
educational toy products without violating the law. In spite of potential parental backlash, Maxwell believes the approach
will help it customize new children’s products and increase the company’s share of these profitable young customers.
Questions
1. What do you think? Should Maxwell Corp. use one-to-one marketing tools to communicate with children?
If Maxwell Corp. uses its one-to-one marketing tools to communicate with children, it will be on extremely unstable
footing. Even though its information will be derived and not collected directly from children, which would be in
violation of the Personal Information Protection and Electronic Documents Act (PIPEDA), Maxwell will still be in a
position to identify individual children in particular demographic segments. Since children are less capable of
discerning exaggerated or untrue statements, it will be extremely difficult to send direct marketing messages to
children aged six to nine without violating FTC regulations.
2. Does the CMA Code of Ethics address marketing to children in its Code of Ethics? Go to www.the-cra.org
and review the code. Then, write a brief paragraph on how the CMA Code of Ethics relates to Maxwell
Corp.’s dilemma.
The CMA code of does have a section on marketing to children that specifically lists the following:
• Age—Children are defined as someone who has not reached the age of 13 years.
• Responsibility—Marketing to children [places] a special responsibility on marketers. Children are not adults
and not all marketing techniques are appropriate for the children.
• Consent—Marketers must obtain parental/guardian consent when seeking any personal information for a child
under the age of 13 (see www.the-cra.org for further details).
• Credulity
• Age-appropriate language, and
• Commercial transactions.
COMPANY CLIP VIDEO ASSIGNMENT: Method—Spreading the News
It is not uncommon for companies to be a bit protective of their brands. As you read in Chapter 9, brand equity and
perception are indicators of marketing success. But in today’s fast-paced markets, much can be gained by turning
ownership of the brand over to consumers. Method is a company that understands the benefits to this risky proposition.
Founders Eric Ryan and Adam Lowry created a brand that its customers can take ownership of and have built a customer
feedback channel that most businesses dream of achieving. Method’s most enthusiastic customers—referred to as brand
advocates—are the company’s most vocal proponents and take an almost evangelical approach to sharing the benefits of
green cleaning with the market.
Questions
1. How has Method identified customer relationships with the organization? What does the company do to
nurture those relationships? LO1
Advocates for Method—consumers who promote their products—have access to the organization through e-mail
and their own space on the Method website for blogs, comments, self-profiles, and so forth. This advocacy
relationship was nurtured through e-mail responses and by requesting feedback on products and especially on the
website.
2. Identify the touch points mentioned in the video and list the types of information that Method could gather at

each one. Lo3
Touch points mentioned include a customer request online via e-mail, a comment section for a particular service
(gift baskets, gift wrapping), and advocates or customers interacting with other consumers via blogs and forums.
Eventually Method will use tracking data to build surveys and better understand customers’ needs and wants to
create new products and services.
3. What is the role of technology in Method’s CRM system? How has the technology enhanced the advocacy
program? What value is the advocacy program to Method? LO5
Technology is the heart of Method’s CRM system. They use e-mail and the Web to communicate with their
customers. This has led to the creation of the advocacy program and has ensured that they are able to respond and
react in real time to their advocates. The value of the advocacy program is that these people are Method’s most
enthusiastic customers and most vocal proponents and are almost evangelical in sharing the benefits of green
cleaning. They are online opinion leaders who generate word of mouth. For a brand like Method, which is up
against formidable competitors, this advocacy is invaluable for achieving awareness.
4. How can Method leverage the data they are collecting for future success? LO7
All data collected can help better understand the consumer, how they clean, how they use the products, and what
they like and dislike. Thus it can be used by Method for new product development, product revitalization, and
communication strategies.
(These video questions are assignable in CourseMate where students can email their answers to the instructor.)
CASE ASSIGNMENT: Petco.com
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.
Sources: Joan Voight, “Getting a Handle on Customer Reviews,” Adweek, June 25, 2007; “Online Shoppers Give
Thumbs Up to Customer Product Reviews,” Business Wire, January 9, 2007; Ken Magill, “Petco Tests Product
Reviews,” Direct, March 1, 2006; http://www.petco.com.
Questions
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.
Customer-centric companies like Petco follow an internal management philosophy that encourages the
customization of products and services based on data generated through interactions between the customer and the
company. Petco uses its loyalty program, which focuses on customers in its retail stores, and its Web site, which
focuses on customers that make purchases online, to better learn about its customers and what they want. The
customer reviews on Petco.com provide valuable feedback to the company about which products are not working
and why, enabling them to quickly assess problems and make changes.
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?
Students’ answers will vary, as will examples from the Web site. Four- and five-paw reviews tend to outnumber
those rated one and two paws.
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?
Students’ answers will vary. Customers most likely to write reviews on Web sites in general have been shown to be
empty nesters and “young transitionals” without children. On Petco.com, the reviewers have been further identified
as women with higher education and higher income who are passionate about their pets. They may have had a bad
experience with a product, but if they can steer someone else away from it, then they’re happy. They want to be
helpful and feel important in the community of animal lovers who gather at the Web site. Petco would do well to
appeal to these customers by assuring them of their importance, responding personally to complaints such as
Disgruntled Bunny’s, changing products that reviewers deem dangerous or faulty, and highlighting the importance
of their comments to other customers. Promotions that focus on pet lovers and their pets in a more emotional way
may prove to be more successful in capturing their attention than simply giving away money prizes in drawings. For
example, Petco could donate money to animal shelters or other charities of the customer’s choice, in her name, and
highlight or publicize some of her reviews.
4. Many mainstream retailers are still hesitant to post customer reviews on their Web sites. If you were
consulting with one of these companies, what arguments would you use to convince management to try them?
Students’ answers will vary. They may choose to show management examples of other Web sites that have
successfully used reviews, such as Petco.com. They could explain that it is better to have the negative word of
mouth on your own site rather than elsewhere on the Internet where you may not be aware of it or have a chance to
respond. They could show management the research that shows that peer reviews work, and that the future in online

sales seems to be heading further in that direction. Some analysts believe that sites without peer reviews lose
potential customers. Students may want to discuss the research that proves that reviews save companies money
because shoppers end up buying more expensive products and returning fewer of them in the long run. Reviews
provide valuable feedback and give companies an opportunity to instigate necessary changes that may keep them
from losing customers and sales in the future.
ALTERNATE CASE ASSIGNMENT: Kroger
They Should Have ‘DUNN’ This Much Sooner! U.K. Firm Leads Kroger Turnaround
Supermarkets have long engaged in an intense struggle to interpret the mountains of data they compile from customer
loyalty and frequent buyer cards. Though many are good at collecting information, few are actually effective at targeting
appealing promotions based on what they learn from those cards. Falling behind on this important aspect of such a
marketing-driven business almost cost Kroger its business life. Thankfully, little-known, London-based, relationship
marketing specialist DunnHumby was willing to come to the rescue.
Founded in 1989 by husband-and-wife team Edwina Dunn and Clive Humby, the firm gained acclaim for the work it did
with cutting-edge U.K. grocer Tesco. The key to their success was the Tesco Club Card program that DunnHumby
created. The program boasts a reach of 10 million U.K. households and drives 85 percent of weekly store sales.
Amazingly, the coupons Tesco sends to customers through the card program redeem at rates in the 20 to 40 percent
range, compared to 1 to 2 percent for mass-marketed coupons.
Inspired by the DunnHumby/Tesco success story, Kroger, the second largest U.S. retailer, convinced DunnHumby to
enter a joint venture based in the United States. In 2003, the two launched DunnHumbyUSA in an office down the street
from Kroger’s world headquarters in Cincinnati, Ohio, and immediately began the monumental task of trying to analyze
the data from every transaction made on a Kroger Plus card.
Kroger claims that of the 42 million households that shop at its stores, more than 40 million have Kroger Plus cards.
However, just 6.5 million of those provide over 50 percent of the company’s sales. About 100 DunnHumbyUSA
marketing strategists and mathematicians crunch Kroger’s data on a daily basis, examining 27 sample products and
developing categories by which to segment the top 15 percent of Kroger’s customer base. Considering when and how
they buy products from that special group, DunnHumby develops what it calls a shopper’s “DNA.”
Cardholders are then placed in one of seven segments. The Traditional Homes group is so named for its members’
affinity for scratch cooking and conventional fare; Budgeters are value-conscious shoppers; and the Finest category
includes customers who frequently purchase gourmet, fresh, and imported foods. Adding yet another level of
sophistication, DunnHumby cross-references the original seven groups by another seven interest groups with names such
as Family Care, Home Living, and Specialty Tastes shoppers.
Organizing shopper data into much more focused and detailed categories allows Kroger to send its core customers more
relevant product offers. Instead of blasting them with weekly mailers, Kroger now issues just four two-piece mailers a
year. The first piece is a letter to the shopper with several targeted coupons aimed at increasing spending in the store. The
second is a brochure designed especially for the interest group that the household belongs to. It contains a vendor-
sponsored page and a few more branded coupons based on the customer’s second set of segmentation characteristics.
DunnHumbyUSA provides Kroger with more than analytics, however. Its U.S. office houses graphic designers and
packaged goods specialists who work together with the technical staff to convert data tables into targeting strategies, in-
store promotions, and carefully chosen product selections. DunnHumbyUSA assists Kroger in working better with its
suppliers, too. The grocery giant has introduced its strategic partners to critical vendors such as Coca-Cola, Hershey, and
General Mills.
The close interaction between Kroger and its largest vendors allows all parties involved to review more data and react
quicker to developments in the marketplace so that they can create more value for the customer. DunnHumby doesn’t
stop there, either. The firm’s specialists coach Kroger’s upper management to develop a strong customer focus, offer
guidance in enhancing the effectiveness of Kroger employees, and supervise Kroger’s development of its employee
rewards program.
DunnHumby’s work is clearly paying off. After a miserable 2004, when Kroger lost over $100 million, the struggling
supermarket experienced a dramatic reversal of fortune. Its 2005 net income tally was an astounding $958 million, and
the company paid out is first dividend since 1988.

Sources: Laura Baverman, “Kroger’s Card Sharks,” Cincinnati Business Courier, November 4, 2005, 1, 46; Lucia
Moses, “Diving for Data; With DunnHumby’s Loyalty Marketing Know-How, Kroger Hopes to Unlock Valuable
Secrets of Its Loyalty Card Data,” Supermarket News, September 26, 2005, 72; “Kroger Ups 2005 Earnings; Will Pay
Dividend,” Columbus Business First, March 6, 2006, 11; Steven Gray, “Kroger Fights Goliath, and Investors Freeze,”
Wall Street Journal, June 14, 2006, C1.
Questions
1. Describe the CRM system, including each of its components, that DunnHumbyUSA has implemented with
Kroger.
Kroger’s CRM system starts with a customer loyalty card that allows shopping data to be collected via a bar coding
system at the point of sale. Data analysts then scour the data and work with marketers to segment the top 15 percent
of the store’s customers into one of seven primary, then seven secondary, categories. Finally, four two-piece mailers
are sent to the customer’s house each year to generate interest and sales for specific items. Kroger also introduced
DunnHumby to its vendors so that they could more closely integrate their promotion strategies with Kroger’s CRM
strategy.
2. What types of lists does DunnHumbyUSA interpret to better its Plus Card program?
DunnHumby interprets response lists for Kroger.
3. Describe DunnHumbyUSA’s approach to data mining.
DunnHumby mines the data generated from the Kroger Plus Card system to identify the top 15 percent of Kroger
shoppers’ “DNA” and segment that group by seven primary categories that describe what those shoppers buy, and
seven secondary categories that define shoppers’ interests or motivations.
4. How does DunnHumbyUSA leverage customer information? What other opportunities do you think exist for
them to explore in the future?
DunnHumby leverages customer information to provide highly targeted and more personal offers to Kroger’s best
customers. By focusing on the share of the customer base the provides the majority of revenue dollars for the store,
DunnHumby is maximizing the value of the information it collects. Students’ answers will vary regarding future
opportunities.
Additional Example
Relationship marketing is practised in one form or another by many Canadian businesses. However, Home Depot
Canada does something to take it to the next level. Not only does Home Depot Canada have workshops for its adult
customers, but it also organizes summer fun-workshops for children of all ages. In the weekend workshops, children are
given free product kits and tools to assemble the products, such as CD cases, bird feeders, and so on, under the
supervision of the store experts. The idea behind these free product kits and workshops is to prepare the next generation
of customers for DIY projects and to initiate a relationship with Home Depot. Research on consumer socialization shows
that children are influenced by the brands their parents purchase and on what they experience as children.
(Instructors are free to create their own questions for this additional example.)
GREAT IDEAS FOR TEACHING CHAPTER 8
Great Idea #1
ANALYZING AN ORGANIZATION’S WEB PRESENCE
Assignment Overview
The rapid proliferation of the World Wide Web (Web) has seen the emergence of a multitude of websites accompanied
by a multitude of business models. While there is no certainty as to who will survive in the competitive Web
environment, one thing is for certain: the Web has changed the way business is conducted. The intent of this assignment
is to heighten student awareness and understanding of an organization’s Web strategy by critically evaluating their online
presence. The assignment may be completed by students working in teams or individually depending the desired level of
rigour in the analysis.

Project Objective
Company websites should mirror the “marketing strategy” of the business those sites drive. This assignment serves the
dual purpose of:
1. making students critically evaluate an organization’s Web presence. Students are expected to identify the key
elements of an organization’s Web presence; and
2. requiring students to evaluate an organization’s Website from the integrated marketing communications (IMC)
perspective.
Students are assigned specific websites and are required to evaluate the key elements driving an organization’s Web
strategy.
Overview of the Website
• Identify the nature of the site (product/service) provider? Develop a brief industry profile.
• What is the value source from the customer vantage point?
• Identify their revenue model, i.e., how do they generate revenue? Is their path to profitability clearly identified?
• Source of volume: Which non-Web-driven activity is being replaced (substituted) by the Website?
• Target Market: Develop a detailed profile of consumers attracted to Website and why? What share of the existing
business volume do they represent?
• If this is a Website for a traditional business, what is the value addition for the current or new customer base?
• Traffic/Growth: What are the primary methods used to drive traffic to the Website? What is the implication of this
strategy on profitability?
Competitor Analysis
• Who are the main non-Web competitors? What are their main competitive strengths?
• Who are the Web competitors? What is their Web strategy? What are their unique strengths? Is their source of
volume and target market share different from ours?
• How does this Website “rate/rank” relative to the respective competitors’ strengths?
• Is this Website crossing “traditional” competitive boundaries and forming a new basis of competition?
• What is the main competitive threat to this Web business?
Competitive Advantage—Is It Sustainable?
• The Web brand: provide a Brand Positioning Statement (the value proposition).
• How are the end users’ (and intermediary users’) value propositions redefined? Compare the “old” benefits
structure with the new, website-driven benefits structure.
• How is the delivery system redefined?
• What is the economic benefit (to the customer and to the business)?
• What benefits provided by the website (individually or in combination as a bundle) are truly unique and provide the
potential for sustainable competitive advantage?
• What is the likely competitor response to this Web benefit structure?

Consumer Perspective
• Does this website provide a personalized and convenient shopping experience? Does it build a customer profile?
Is this profile automatically deployed on subsequent visits?
• Is the website easy to use? Is it involving? Can it generate loyalty? Will it be in business five years from now
(why)?
• Evaluate customer service/contact options provided.
• Is the website actively involved in conducting marketing research?
• What is the adopted privacy policy of the organization?
• What are some suggested improvements/modifications? How will they make for a more competitive/profitable
and sustainable business?
Web Presence from the Integrated Marketing Communications (IMC) Perspective
• Discuss how this Web presence parallels the organization’s overall marketing strategy.
• Identify and match common elements of the creative strategy along with the media utilized in the promotional
process.
• Evaluate the clarity and consistency of message components
• Evaluate the tonality of the promotional campaign.
Great Idea #2
DIRECT-MAIL MARKETING CONSULTANT
Instruct students to put themselves in the role of a “direct-mail marketing consultant.” They are to evaluate, improve and
rewrite each of the following direct mail letters. The instructor may want to review the following characteristics of a
good direct mail letter or ask the students to list their own key considerations. (1) Its appeal is based on knowledge of the
prospect. (2) It must get the reader’s attention (makes a connection with the prospect). (3) It must highlight and
dramatize the problem and solution. (4) It must be brief. (5) It must provide specific examples of the value of the offer.
(6) It must state a believable promise or describe a reward that the prospect may receive. (7) It must contain a personal
salutation (to make the letter resemble personal correspondence). (8) It must have facts, figures, testimonials, and illu-
strations to establish believability in a cause. (9) It must be easy to participate in or respond to the message (postage-free
reply envelope). (10) It must provide a reason to act now (i.e., encourage immediate action).
Additional study questions that may be proposed to the students: How would you help these organizations in developing
or updating their mailing list? How should the envelope look to get the most readers? How should the letterhead look for
each of these organizations? What other forms of direct marketing may be appropriate for these campaigns?
Save the Slugs, Inc.

Box 5176
Halifax, NS
Mrs. Aida Lester
Tobacco Rd.
Fullerton, ON
Dear Mrs. Aida Lester

There is a crisis occurring in your backyard and you may not even be aware of it. Every year, millions of slugs are
killed by the chemicals applied to gardens, yards, and crops. These chemicals are depleting the slug population at
alarming speeds. Mrs. Lester, you may wonder how this affects you. As an avid gardener you probably realize how
destructive aphids can be to your roses and other foliage. Did you know that slugs are the major predator of these
aphids? Not only do they control the aphid population, but they also control several other parasites that chemicals
often do not control.
How can you help? Your tax-free donations to the Save the Slugs foundation will help educate farmers,
gardeners, and others on the often overlooked importance of slugs to the environment. Training on the use of safe,
natural based herbicides and pesticides will also be funded through this foundation. This will not only help protect
slugs, but your family will also benefit greatly from the diminished use of potentially harmful chemicals.
Enclosed is a self-addressed envelope for your convenience in sending your tax-deductible gift. Please do not put this
off. Tomorrow could be too late.
Sincerely,
Joseph Liberal
Save the Slugs, Inc.
February 27, 1997
Ms. Linda Latchkey

1101 Market Street
Saskatoon, SK
Dear Ms. Latchkey
Every day in our neighbourhoods in the Saskatoon area, children are left unprotected and uncared for in
their own homes. Many parents are in the situation that they must work and have no choice but to leave their small
children at home. Our research has found this is happening in an alarming number of homes.
Our Organization, with your help, can offer these families an alternative. We can provide the care and
protection that the children in our area need and deserve. I know you are concerned with the future of our area and
these children are the future.
Would you please return the envelope with your donation today so that Childreach can begin immediately to
correct this serious problem in our area?
Sincerely,
Pamela K. Baker
P.S. Ms. Latchkey, thanks for caring for our children.
The Society of Animal Protection

1951 Golden Ave.
Montreal, PQ
Mr. Bill Cash

1902 Treasury Lane
Edmonton, AB
Mr. Cash:
Millions of animals are homeless each year and suffer abuse and starvation at the hands of a society that do not need
these animals. For the past ten years The Society of Animal Protection has strived to help animals by supporting an
adopt-a-pet program. This program involves the spaying and immunization of stray pets that are then offered for
adoption free-of-charge in exchange for a promise to provide the animals a good home. The Society of Animal
Protection has placed over 50,000 pets in the last ten years.
Mr. Cash, your contribution will help give the gift of life and freedom to an animal. Please show which of the
following amounts you could contribute and return this form to The Society of Animal Protection.
__ $5.00
__ $10.00
__ $25.00
__ $50.00

___Other, specified amount_________
Your donation is tax deductible and documentation of your contribution will be sent to you upon receipt of your gift.
Thank you for joining us in this vision of a brighter future for all animals.
Sincerely,
Dr. Rott Weiler, DVM

The Society of Animal Protection
Great Idea #3
EVALUATING COMPUTER SIMULATIONS
Selecting the best simulation for your students is not an easy task. Of course, you will consider its realism, its ease of
learning/complexity, its administrative requirements, and so on. But when you get down to the “final four,” how do you
pick the best? Here’s a simple procedure that can help.
Test each simulation by setting up four competing companies, each with the following “no-brain” strategies.
1. No change. Each quarter, or whatever period is used, just enter the same decisions as the last period.
2. Random. The opposite of the above, no thought is given to the decisions that are entered.
3. Low cost. Although this is close to being a real strategy, it involves little thinking on the part of the student. Also,
spending “zero” on some option (e.g., advertising) should not produce winning results.
4. Teacher’s Pet. Since the teacher has an instructor’s manual, he/she should know what the best strategy is. And, if
you can’t beat the other three, there’s something wrong with the simulation. The Option 4 winner is the best
simulation.
Lastly, when you’re running these sample programs, if a simulation “locks up” or gives you a weird screen message, it’s
cause for disqualification. Imagine what would happen if you ran into a “glitch” halfway through your course!
Great Idea #4
THE WEEKLY READER:
AN INTERNET BASED NEWSLETTER
Course Objectives:
• To have students review and comment on articles, and share their comments and insights with other students in the
course.
• To encourage the use of e-mail communication by providing an electronic forum for intellectual and social
discourse.
Student Contribution
Twice each semester every student is required to produce an original summary of an article he has found either in print or
on the Internet. The summary must be correctly attributed, including the URL if it is a Web article. The student
summarizes the article in one paragraph and then in a second paragraph draws out implications or original insights as
they apply to the course. The student sends the summary via e-mail to the editor. In addition to these “sound bites,”
students may submit notes for three other Weekly Reader columns: “Social Graces” includes announcements about
students and their families, “Hot Sites” includes the URLs of interesting websites along with a brief description of the
site, and “Funnies” is for those little e-mail jokes that are passed around and are in good taste.
Editor
One student is selected as the newsletter editor, perhaps in lieu of having to contribute summaries. Alternatively, the
editor may be a graduate assistant or an independent study student. The editor is responsible for preparing a schedule of

submissions, assembling the submissions, reporting omissions to the professor, creating a contents page, and then
distributing the assembled newsletter back to the other class members.
Additionally, the editor may place the newsletter on a Web page so that class members can refer to back issues.
Newsletter production is quite simple using the editing functions of Eudora mail software. We currently ask students to
submit on a Thursday by midnight, then the editor assembles the edition by Saturday night, and finally, the students read
it before class the following week.
Student Evaluation
Each week, the Weekly Reader is discussed in class. Students describe interesting findings and ask questions of the
student who submitted the article. While this classroom participation is noted for grading purposes, the actual sound bites
are also graded. Each one receives up to ten points for a total of 3 percent of the class evaluation scheme.
Side Benefit
This project is helpful for enticing students to use their e-mail accounts. Because students are regularly checking their
mailboxes, faculty can depend on the e-mail distribution list for class announcements, and students are more likely to use
e-mail for communication with the instructor for questions that usually result in telephone tag

PART 2—Integrated Video Assignments—ch. 4-8
COMPANY CLIP VIDEO - RALEIGH
RALEIGH
Raleigh bikes was founded in 1887 and over its 125 year history has been known as the manufacturer of quality bikes for
years. A combination of modern innovation and old world charm ensure Raleigh stand out in the highly competitive
bicycle market. This video looks at how Raleigh innovatively capture customer data to continue to meet consumer needs.
Questions
1. Considering the consumer decision-making process, discuss the importance that is being placed on getting the
Raleigh into the hands of the rider. Discuss the key influences on the consumer that have been both positive
and negative for Raleigh.
The bike is a significant purchase—high-involvement purchase—the consumer will deliberate on the decision—will
need to evaluate the alternatives and must want to ride the bike.
The key influences on the consumer—Raleigh name is both a positive and a negative (learning, beliefs, and
attitudes). The name stands for an old, workhorse type bike, and today’s consumer is looking for a light, fast bike.
Reference groups—aspirational groups like Lance Armstrong and other Tour de France riders—light fast bikes;
personality and self-concept—fast bike versus touring bike—what I want the bike for.
2. How is Brian collecting the necessary research to innovate the Raleigh bike and to ensure that the bike
remains relevant? What is the value of the research being collected in this fashion?
He is going out to the consumer, getting the bike into the hands of the consumer, and talking to them. Extremely
valuable research—real-time, real-life answers, but very limited in scope/numbers.
3. Brian describes the target as already owning a bike. After viewing the video and learning of the difference
between a Raleigh bike and the lighter, faster bikes out there, how would you describe the Raleigh market
segment? Use all segmentation variables in your descriptor that you feel are appropriate. What target
marketing strategy is Raleigh using in its approach to marketing the bikes?
Raleigh segment are touring bikers, avid cyclists but not racers. Ride for pleasure and ride a lot. Males and females,
slightly older, established in their careers, university-educated, active lifestyles, suburban living, outgoing and
strong personalities, looking for quality and durability and comfort. Raleigh is using a multisegment target market
strategy.
4. How would you describe Raleigh’s positioning?
Attribute based—benefit of comfort and durability but also price and quality—premium price for a premium bike.
COMPANY CLIP VIDEO - R. J. JULIA BOOKSELLERS
R. J. JULIA BOOKSELLERS
RJ Julia opened 21 years ago as an independent bookstore whose mission was, and is, to be a place where words matter,
where writer meets reader, where the ambiance and selection and merchandising of books creates an atmosphere that is
welcoming and presents the opportunity for discovery. This little bookstore in the town of Madison, Connecticut grew to
be a major force in the retail bookstore industry, even with the assault of the large box format retail bookstores because
to achieve their mission they dedicated themselves to customer service. They created relationships with their customers
and provided their customers with unprecedented literary experiences. As technology began to revolutionize the retail
book industry, R.J. Julia embraced the technology as a means to learn more about the customer and to create mutually
satisfying customer experiences. What a unique retailer in a highly competitive retail environment!

Questions
Describe the competitive advantage of R.J. Julia booksellers. Why have they been able to withstand the
formidable competition of the larger booksellers?
Key advantage of R.J. Julia—the personal touch. Why have they been able to withstand competition of larger
booksellers—personal touch—the relationship they create with the customer, the knowledge they acquire on the
customer and how they are able to use that knowledge. They have accepted the role of technology in the bookseller
industry and used it to their advantage.
1. How has R.J. Julia leveraged customer information to provide a better reading experience for the consumer?
They have created new products and services that are based on customer information. The services are unique and
what every avid reader wants—book reviews and book recommendations.
2. Visit the R.J. Julia website, www.rjjulia.com, and discuss the various ways she is advancing the business
through CRM.
Answers will vary but students will see very clearly how even a small retailer can have a large presence through the
appropriate use of technology.
PART 2—Integrated Case Assignments—ch. 4-8
MARKETING MISCUE
A MARKETING OPPORTUNITY MIREFIRE BETWEEN DR. PEPPER AND GUNS N’ ROSES
Guns N’ Roses is an American hard rock band that formed in the mid-1980s and grew to become one of the world’s
biggest rock bands during the 1990s, selling more than 100 million albums. In 1994, Guns N’ Roses began recording for
a new album called Chinese Democracy. Despite accruing recording expenses in excess of $13 million, the album had
not been released by early 2008. In March 2008, Dr. Pepper announced that it would give every man, woman, and child
in the United States a free can of Dr. Pepper if the Chinese Democracy album was released by the end of 2008. When Dr.
Pepper made their announcement, the Guns N’ Roses website (www.gunsnroses.com) expressed the opinion (supposedly
via Axl Rose, the band’s lead singer) that the band was both surprised and happy to have Dr. Pepper’s support as they
made their latest album.
Dr. Pepper never released information revealing how they would implement their ambitious promotion, and many people
thought this was a promise that Dr. Pepper would not have to keep. A spokesperson for Dr. Pepper said that plans for the
promotion would not be released until Guns N’ Roses confirmed the album’s release date. It was suggested that the
planned promotion would involve an online coupon system in which consumers would be able to request a free can of
Dr. Pepper from Dr. Pepper’s website.
In October 2008, Guns N’ Roses confirmed a release date of November 23, 2008, for Chinese Democracy. The album
was released as planned, and Dr. Pepper followed through on its marketing promise. The company posted the coupon for
a can of soda on its website. The catch was that fans had a 24-hour window of opportunity to visit the site and print out
the coupon.
Unfortunately, the site was unprepared for the traffic and crashed. Rather than blaming Dr. Pepper for the malfunction,
some disgruntled fans (bloggers) blamed Axl Rose! Dr. Pepper tried to appease angry website visitors by extending the
promotion, adding a toll-free line to handle disgruntled consumers, and setting up an interactive voice recorder to accept
coupon requests, but Axl Rose was not satisfied. Through his lawyers, Rose demanded that Dr. Pepper place a full-page
apology in the New York Times, the Los Angeles Times, USA Today, and the Wall Street Journal. Additionally, the
lawyers sought payment for the “unauthorized use of and abuse of their [Guns N’ Roses] publicity and intellectual
property rights.” Dr. Pepper was accused of profiting from the band’s name and failing to implement its promised
giveaway.
All the while, Chinese Democracy was not receiving the acclaim the band had hoped for. Some sources blamed Axl
Rose, saying that he had not done the necessary promotional work on the album. On top of the less-than-stellar reception
and Dr. Pepper’s promotional snafu, the Chinese Communist Party described the album as a venomous attack on China.
Sources: “Axl Rose Demands Apology, Payment from Dr. Pepper,” New Zealand Herald, November 27, 2008,
http://www.nzherald.co.nz/music/news/article.cfm?c_id=264&objectid=10545353, accessed March 19, 2009; “Dr.
Pepper Issues Challenge to Guns N’ Roses,” MSNBC.com, March 27, 2008, http://www.msnbc.msn.com/id/23830713,
accessed March 19, 2009; “Guns N’ Roses Dr Pepper Promo Misfires,” CNNMoney.com,
http://money.cnn.com/2008/12/02/news/companies/guns_drpepper/index.htm, accessed December 10, 2008; Chris
Harris, “Guns N’ Roses Chinese Democracy Release Means Free Dr. Pepper for All,” MTV, October 16, 2008;
http://www.mtv.com/news/articles/1597200/20081016/guns_n_roses.html, accessed March 19, 2009; Andre Paine,
“Guns N’ Roses Lawyer Blasts Dr. Pepper,” Reuters, November 26, 2008,
http://www.reuters.com/article/idUSTRE4AP9NM20081126, accessed March 19, 2009; Karen Robinson, “Dr. Pepper
‘Disappointed’ by Guns N’ Roses’ Lawsuit Threat over Free Soft Drinks,” Dallas Morning News,
http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/120308dnmetdrpeppersuit.27890a50.html, accessed
March 19, 2009.
Questions
1. Who is the consumer in this situation—Dr. Pepper consumers or Guns N’ Roses fans? Are they one and the
same? Explain.
The professor could open this discussion by asking the students the following questions:
a. Who in the room is a fan of Guns N’ Roses?
b. Who in the room drinks Dr. Pepper?
c. Who responded positively to each of the first two questions?
One would suspect that the “thought process” on this one would have begun with the Guns N’ Roses fan—
otherwise, who would have known that the album was so long in the making and be following the reports on it?
These fans would then likely know about the Dr. Pepper promotion, particularly since Axl Rose mentioned it on his
website.
However, once the word got out that anyone could get a coupon for a free Dr. Pepper, it is likely that the people
going to the website were not all Guns N’ Roses fans. Some of them might have just been Dr. Pepper consumers.
Thus, it is difficult to say that consumers are one (and which one) or both. Initially, it was likely both—Guns N’
Roses and Dr. Pepper—but word-of-mouth about the promotional giveaway diluted that with folks just seeking a
coupon for a free drink. It is unlikely, however, that a person who does not like Dr. Pepper went through the hassle
of obtaining the coupon, even if they were a Guns N’ Roses fan.
This could lead to a very interesting discussion as to promotional value from Dr. Pepper’s perspective. It seems that
the publicity surrounding the promotion occurred after Dr. Pepper’s failure to deliver the coupons as planned. In this
case, was the negative publicity actually a strong payback for Dr. Pepper?
2. Would any type of marketing research have helped prepare Dr. Pepper for the amount of activity on its
website?
There is a chance that the promotional offer was made “off the cuff” and that it was never a true part of a Dr. Pepper
brand building strategy or integrated marketing campaign. If it had been, then Dr. Pepper would have gathered data
on the following variables:
• Do Guns N’ Roses fans drink Dr. Pepper?
• Is Dr. Pepper the drink of choice for hard rock fans? Does it want to be?
• What is the size of the Guns N’ Roses fan base?
• How many consumers tend to respond to online promotional giveaways?
Much of this information could be gathered via secondary research. For example, a quick search of the Internet
resulted in the following:
Thanks to the increase in the number of Americans online (more than 70 percent of the population), consumers are
embracing online coupons as a quick and easy alternative to spending an entire Sunday clipping them from the
newspaper. Since 2005, online coupon usage has grown 39 percent, according to Simmons/Experian Research and
Coupons Inc.; and businesses are cashing in on the myriad ways online coupons can be used to reach consumers.
[Source: http://www.linearsc.com/index.php?option=com_content&view=article&id=314:how-to-win-customers-
with-online-coupon-programs&catid=86:how-to-articles&Itemid=109, retrieved March 25, 2009.]

The Internet has a wealth of information that can save valuable time and money with respect to research programs.
Additionally, Dr. Pepper would need a profile of the Guns N’ Roses fan. Demographic variables such as age, income,
education, gender, and marital status would provide the company with some straightforward descriptors. Then, focus
groups would be an interesting format for understanding the Guns N’ Roses fan in relation to their interests in Dr.
Pepper.
CRITICAL THINKING CASE
KIKI MAGAZINE
Kiki magazine, a quarterly publication, was established in the fall of 2007 for tween girls. Since there are around 10
million females between the ages of 10 and 14 in the United States, the founders saw an opportunity to capture a niche
market of girls who wanted a magazine that looked like the glossy newsstand magazines geared to older girls but that
featured design-based content rather than pop-culture based content.
Magazines, newspapers, and books are the three major forms of print media. In 2007, the print publishing market had a
value of $157.9 billion, with magazines representing 9.4 percent of that total. Around 6,800 consumer magazines and
12,725 business magazines were produced that year in the United States. Magazines generate income through advertising
and circulation revenues, with advertising, on average, accounting for 55 percent of revenues. Circulation revenues are
derived from both subscriptions and single-copy sales. The top 300 magazines in 2006 generated $34.4 billion in
revenues. The 10 largest consumer titles had combined circulation and advertising revenues of $7.7 billion.
There are around 250 magazines in the United States targeted exclusively to children (8 years and younger), youth (9 to
12 years), and teens (13 to 19 years). Kiki competes in the youth and early teen segment of the magazine marketplace,
which has a readership of about 48 percent of the segment. There are three major types of magazines in this age range:
sexualized girls’ magazines, kids/fun magazines for both boys and girls, and educational magazines for girls. There were
two major magazines in the sexualized girls category—CosmoGirl! with 1.5 million in circulation, and Teen Vogue with
a circulation of almost 1 million. Content in both magazines includes fashion, celebrity interviews and gossip,
dating/relationship advice, and beauty tips. Advertising is comprised largely of ads for perfume, makeup, and clothing.
Despite its high circulation, however, CosmoGirl! printed its final issue in December 2008.
Popular titles in the kids/fun product segment are Highlights for Children, Nickelodeon Magazine, and National
Geographic Kids. All three magazines contain games, cartoons, and very short articles. Highlights for Children does not
contain advertising, though Nickelodeon Magazine and National Geographic Kids do. Nickelodeon Magazine printed its
final issue in 2009.
Two prominent girls’ magazines in the educational product segment are American Girl and New Moon. American Girl,
with a circulation of around 700,000, does not contain any advertising and encourages girls to be creative. New Moon,
with the tagline “The Magazine for Girls and Their Dreams,” attempts to empower females as they transition from girls
to women. In existence for 15 years, the magazine has a circulation of 30,000. There are two girls’ magazines that fall
between the sexualized and educational content segments. Discovery Girls, with a circulation of about 186,000, and
Girl’s Life, with a circulation of 367,000, focus on school, growing up, beauty, fashion, and self-esteem. Both have
content related to dating and relationships.
Kiki is a quarterly magazine, an interactive “creativity” journal targeted to the 9- to 14-year-old female market segment.
Kiki is designed to appeal to girls with style and substance and follows the fashion design curriculum used in colleges
and universities as its springboard to topics such as finance, geography, entrepreneurship, history, and fine arts. Its goal
is to demonstrate that having fun with style and artistry is compatible with intelligence and creativity. The driving
philosophy behind the magazine is the promotion of self-confidence among young girls. Currently, Kiki does not accept
ads. The Kiki team has an overall discomfort with exposing young girls to commercialism and is concerned that outside
influences might force Kiki to compromise on its philosophy. Kiki has a goal of showing a profit in year five, with a
circulation of 30,000 magazines.
Source: Kiki Business Plan, B-Books Ltd., 2008.

Questions
1. Conduct online research and compare how successful Kiki has been in 2012 compared to its initial market
potential.
Student answers will vary but research indicates that it appears that the magazine is still publishing and still
committed to the original mandate of offering an independent, ad-free magazine for tween girls. It is available in
over 300 schools in the US and is available at newsstands in both Canada and the US. It has a Facebook site with
over 800 likes.
2. What types of marketing research would help Kiki better understand its potential readership?
Secondary research can provide Kiki with considerable information about its market segment. For example, there are
numerous organizations that collect and report statistics on this age group. Students should be asked to conduct an
online search to find:
• Spending power of the tween segment
• Percentage of dollars spent by parents versus tweens’ personal money
• Where the tween spends money
• How tweens spend their time
• What tween girls enjoy
Students will likely be surprised about the type of information they can find just via online searches (and they need
to learn how to search extensively online). Here are some links:
• http://www.accessmylibrary.com/coms2/summary_0286-3470308_ITM
• Tweens spending power totals $38 billion
• http://www.marketresearch.com/product/display.asp?productid=186560&g=1
• Trendsetters
• http://www.reuters.com/article/pressRelease/idUS148688+21-Jan-2008+BW20080121
• Youth culture & spending globally
• http://www.dallasnews.com/sharedcontent/dws/bus/stories/081607dnbusbacktoschool.35a6ced.html
• How tweens spend money
• http://www.marketingcharts.com/interactive/one-third-of-us-tweens-own-a-mobile-phone-2598/
How tweens spend their time
Naturally, these links and their timeliness will change and students will come up with a variety of findings. Students
could be asked to “tell a story” about the tween market in relation to magazine readership based upon secondary
research.
Secondary data can also provide the Kiki founders with information as to competitors. Questions such as: Who are
they? How many are there? What type of material is published in their magazines? What is each competitor’s
circulation? The case tells the student the following: CosmoGirl! = circulation of 1.5 million; Teen Vogue = around
1.0 million; American Girl = around 700,000; New Moon =30,000; Discovery Girl = 186,000; Girl’s Life = 367,000.
By already knowing these competitors, much secondary data could be gathered related specifically to these six
magazines.
Gathering primary data from this market segment would be a bit difficult because of the age of the group of
consumers. It is not easy to obtain the name and address of minors, nor is it always considered the “right thing to
do” when it comes to attempting to contact individuals at this age level. However, given the spending power and
how tweens spend their time, it might be worthwhile to conduct mall intercept interviews. This is being done quite
often by market research firms working with clients who want to have a better understanding of their target
customer (e.g., clothing manufacturers/retail outlets targeting this segment).

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CHAPTER VI
“Illustrious Mr. Pinocchio,” began Globicephalous, “if you do not
wish to stay with me, I can walk by myself. We can meet to-night.”
“No, Globicephalous, do not leave me,” begged the
brave son of Mr. Geppetto, the carpenter. The idea of
being alone with all those fish gave him the shivers.
“But you may be ashamed,” began Globicephalous.
“Please forget that. Now listen to me. You are a
servant, and you can’t have studied much. Still you
may know this: Mr. Tursio does not want me to call him
a fish. What is he, if not a fish?”
“Do you think Mr. Tursio would dare tell a lie to such an important
personage as you are?” said Globicephalous, who was having some
fun all by himself. “Neither Mr. Tursio nor Master Marsovino should
be called fish. Nor I either, for that matter.”
“What are you, then? Birds? You have about their shape, and you
live in the water. I know that in the sea there are only fish.”
“But you are mistaken. To many animals that live in the sea you
cannot give the name fish,” continued Globicephalous. “Fish have a
flat body, wedge-shaped fore and aft, as the sailors say, so that they
may move rapidly both forward and backward. They are each
provided with fins and a tail. These fins and the tail enable the fish to
swim about in the water. Some fish have only a few fins, others have
more. Then the fish has no lungs. It breathes in the water by means
of gills. These are the chief characteristics of fish. But in the sea are
many animals which do not possess them.”
“Please explain yourself,” said Pinocchio, who had understood little.
“Very well. Listen. There are the cetaceans, to which belong the
whales, the narwhals, and the dolphins; the amphibians, to which
belong the frogs and the seals; the mollusks, which is what the little
animals that live in shells are called; the crustaceans, which is the
correct name for the lobsters, crayfishes, and crabs; and the
zoöphytes, among which are the corals, sponges, and the many
varieties of polyps. All these, you must know, are not fish.”
“What hard names!” said Pinocchio, to whose wooden head these
big names meant but little. “What are you, then?”
“My masters and I are all cetaceans. We cannot stay in the water all
the time. We must often come to the surface, because we need air.
We have no scales like fishes nor fur like seals, but we have a
smooth thick skin under which is a layer of fat.”
“Thank you. But why, if you and your masters are all dolphins, are
you so unlike?”
“For the simple reason that there are different kinds of dolphins, just
as on the earth there are different kinds of dogs. As you have
noticed, we are of different shapes and sizes. We have different
names, too. I am a globiceps, my master is a tursian, and the young
master is a marsouin.”
“Who would ever think the sea is full of so
many wonderful things!”
“Still you have not seen anything of what
there is to see! On all sides there are new
things. Look at this,” continued
Globicephalous, picking up a shell and
showing it to Pinocchio.
“Well, what is it? A lobster with a flower
riding on its back?”
“Almost that. It is a small crustacean called
the hermit crab.”
“Hermit?”
“Yes. It is called that because it shuts itself up in a shell as a hermit
does in his cell. This crab’s cell is the empty shell of a mollusk. And
do you know why it shuts itself up?”
“No. Please tell me.”
“Because the back part of its body has no hard covering. So the
crab, to protect itself, uses the shell as a house and thus goes about
safely.”
“He must be a clever little fellow to think of that! But this flower on
the top—is that a part of the crab’s body?”
“That is not a flower; it is an animal.”
“An animal! But don’t you see that it has leaves all around?”
“Yes, and in fact it has the name of a flower. It is
called a sea anemone. But if you look closely you
will see the little leaves, as you called them, moving
busily.”
“It is really true!”
“They are tiny arms which the anemone uses to get
its food. Throw a piece of meat near them, and you
will see them gather themselves together. In a second the meat will
disappear into the body of the animal.”
“It seems hardly possible,” said Pinocchio again and again, as he
watched the anemone closely.
“This anemone,” continued Globicephalous, “is a great friend of the
hermit crab. Whenever you find one of these crabs you will find an
anemone on its back. When the crab grows and has to move to a
larger shell, do you think, my illustrious Mr. Pinocchio, that he
abandons his tenant? Never! The anemone has no legs, so the crab
takes her very carefully in his claws and carries her to his new
home.”
“It sounds like a fairy story!” Pinocchio exclaimed, wonderstruck.
“Still these things are real, Your Honor, and are seen here every
day.”
Pinocchio, who had liked the idea of being called “Illustrious” was
delighted to hear himself addressed as “Your Honor.”
“So this servant thinks me a great man,” he thought proudly to
himself. He strutted round as if the whole world belonged to him.
While he was walking with his head in the air and his hands in his
pockets, he struck a round, flat object with his foot. Picking it up, he
looked it over carefully.
“Does Your Honor know what that is?” the cetacean asked him
mockingly.
“Of course. It is the bellows my cook lost a few weeks ago, and this,”
he continued, picking up another object, “is the crumb brush our
maid lost last Sunday and looked all over the house for. I wonder
how they came to be here?”
Globicephalous turned a somersault, the better to hide his laughing
face.
Pinocchio, thinking that the dolphin believed all his tales, continued
his proud walk.
“Globicephalous turned a Somersault, the better to hide
his Laughing Face.”
Lying on top of a rock not far off was a transparent object of beautiful
colors. It was closely woven like a net work, and looked like a fan.
Pinocchio, having started on the road of story-telling, did not feel like
turning back.
“Just see how careless that maid was,” he began again. “Last
summer I gave her this beautiful lace fan, and now see where I find
it! Good care she takes of my gifts!”
Globicephalous continued his somersaults.
“Look again! These are surely the plants that were stolen from my
conservatories last winter,—”
Globicephalous had had too much. He interrupted Pinocchio with:
“And this, if it weren’t so small, might be used to whip boys who sell
tinsel for gold.”
Globicephalous was holding up a small object, which really looked
like a whip.
“What do you mean?” haughtily asked Pinocchio. “Do you dare to
doubt my word?”
“I don’t doubt it. I know there is not a word of truth in anything you
have said.”
“How do you know? Isn’t it possible for me to have a palace and
servants?”
“You might have, but you haven’t.”
“Who told you so?”
“I know it without being told.”
“How?”
“Listen. Do you want to know what these two things are,—the
bellows and the brush?”
“The bellows is a horseshoe crab. If you turn it over you will see it
has ten legs like a lobster. The brush is a sea fan. The little plants,
which were stolen from your conservatories, are simply coral polyps.
All except the crab are zoöphytes.”
“Now do you see, my great Mr. Pinocchio, why I cannot very well
believe all your tales?”
Pinocchio was simply breathless. “Zoöphyte! Zoöphyte!” he
exclaimed. “What does that big word mean?”
“Oh,” replied Globicephalous, with a learned air. “That word means
an animal that looks like a plant.”
“By the way, I remember you asked Mr. Tursio for a feather to put in
your cap. Here it is.” And Globicephalous gave the marionette a
long, delicate, feathery object of a bright yellow color.
“And what is this?”
“Another beautiful zoöphyte. And to finish the trimming of your cap
you might use this five-pointed starfish.”
“What? Is this a fish, also? Surely you are mistaken!”
“Oh, no, Mr. Pinocchio, I am perfectly sure that I am not mistaken.
The starfish is just as much an animal as the coral is.”
“It was a long time before people learned that coral is made by tiny
living animals. But now everybody knows that there are hundreds of
the little coral animals living and working together on the same
branch.”
“These little animals grow and multiply very quickly. In a short time
they even make mountains under the sea.”
“You know how to tell fanciful tales better than I, Globicephalous.”
“But my tales happen to be true ones, though they do seem fanciful.
That mountain you see there is made by coral polyps. If you should
climb to the top of it, you would find yourself on an island.”
“Very well. I’ll try it. I might find my father.”
“Yes, or you might meet some one, and ask whether he has been
seen.”
“Ask! Do people live on islands in the middle of the sea? What are
you talking about?”
“Let me explain. After the islands are made, little by little they are
covered with earth. Then plants begin to appear from seed blown by
the wind or dropped by the birds. Then man may come. Why not, my
boy?”
“I have enough to think over just now. Good-by for a time.”
“Good-by. I will stay here. Do not lose your way.”
Without answering, Pinocchio began to climb. He was as agile as a
monkey, and was soon far up.
“I do hope I shall not lose my way,” he thought. “What a joke it would
be to be lost at the bottom of the sea!”
CHAPTER VII
Pinocchio climbed and climbed. The poor boy was
getting very tired. Still he wanted to be sure the
dolphin was right. So he went on bravely.
At last the water began to grow lighter, and even his
wooden head could understand that he must be
near the surface.
“It must be the light of the sun which I see,” he
thought. “On, my brave Pinocchio, and the top will
soon be reached. Hurrah! Here I am!”
With a bound he was—yes, the dolphin was right—on the shore of a
real island.
Shaking the water out of his clothes, he looked around. Those little
beings, the corals, had certainly worked wonders.
“Shaking the Water out of his Clothes, he looked Around.”
The island was rather bare of trees and grass, but there was a cave
near the shore which soon attracted Pinocchio’s attention. He went
into it. It was not very large, but one could easily see that a man had
been there.
“People must certainly be living here. From now on I shall have to
believe Globicephalous,” thought the marionette.
When he came out, he walked around and started to explore the
island. He came to a small pond. In it lived not only frogs, but also
thousands of other tiny animals.
Pinocchio stopped to look at the water. It looked as green as grass.
He certainly would have had another shock if some one had told him
that the tiny animals that lived in it made it green. Yet that was really
the case.
These animals are not visible to the naked eye. Still they are present
in such great numbers that water sometimes looks green, sometimes
red, and at other times even black, on account of them and their
color.
This was not what interested Pinocchio most, however. He saw other
animals swimming around very quickly. Some were very tiny, very
long, and had no legs.
Others, a little larger, had two legs. Others had four legs, and still
larger ones had a short bit of a tail.
Perhaps you have guessed, children, what Pinocchio was looking at.
The small black animals were tadpoles.
When he was tired of looking at the pond, Pinocchio turned toward
the sea. He thought he might see his father, but he was
disappointed. Suddenly he gave a great shout of surprise.
And no wonder! As if by magic a fleet of tiny boats had appeared on
the surface of the water. They were no larger than an egg shell. Nor
was this all. From each little skiff rose two little rose-colored sails,
and each tiny boat put out three pairs of oars as long as knitting
needles.
“I wonder where the little boats came from,” cried Pinocchio. “Surely
this must be fairyland.”
“No, my boy, you are not in fairyland,” he heard a voice behind him
saying. “Those are simply shells.”
Turning quickly, Pinocchio saw a little fat man standing before him,
looking him over.
“Shells!” repeated the marionette, too surprised to think of anything
else to say.
“Turning quickly, Pinocchio saw a Little Fat Man standing

before Him.”
“Yes, shells.”
“And are they also animals?” Pinocchio had asked this question so
many times that it came from him unconsciously.
“Yes, they are. They are small mollusks of strange form. When they
come to the surface of the sea, they turn the opening of their shells
upwards. Then they raise their sails, put out their oars, and float
away. They are called argonauts. Aren’t they pretty?”
“How beautiful they are! But see! They are disappearing!”
“Yes, because clouds are gathering. It looks as if a storm were
coming up, and these little animals don’t like storms. So they are
taking refuge under the water.”
“By the way,” began Pinocchio, “will you please tell me whether or
not you have met a little old man looking for his son?”
“No, I have not.”
“Well, then, good-by. It is getting late, and I must meet some friends
of mine.”
But the little man did not wish him to go, so he held him by the arm.
“Listen here, my little man, where did you come from?”
“From the sea.”
“Really?”
“Yes, I am taking a trip under the sea with three dolphin friends of
mine.”
“Under the sea! How can you live there?”
“One of the dolphins made me an antibian.”
“You mean amphibian, my boy. What a wonderful experience you
must be having.”
“Yes, but please let me go now. I must meet my friends, or they will
go without me.”
“You Won’t?”
“In a minute. But first tell me where you got that beautiful shell you
have on your head.”
“The dolphin Tursio gave it to me. He called it a long name, and said
it was very rare.”
“I know it. Will you give it to me?”
“No, I like it too much myself.”
“You won’t? Well, then, I shall have to take it,” and the man quickly
put out a hand for it.
But Pinocchio was quicker still. He gave a great jump, but oh! poor
fellow, he did not know how near the edge of the rock he was. Before
he could realize it, he fell headfirst into the water.
CHAPTER VIII
Down—down—Pinocchio sank, straight to the
bottom of the sea.
And here we must remember that we are to think of
Pinocchio as a real boy of flesh and blood. Only the
shell was of wood. Otherwise he would have floated
away on the surface of the water.
When he finally touched sand he felt half dead. It
was not a very pleasant experience to fall through
so much water.
After a while, feeling better, he got up and looked around. He was in
a strange place, a place he had never seen before. Of
Globicephalous there was no sign.
The poor boy was frightened almost to death. He thought a trick had
been played upon him. But if he had had his wits about him, he
would not have been so puzzled.
Poor thoughtless marionette! He did not remember how he had
walked around in his explorations. He had fallen into the sea on the
eastern side of the island, and Globicephalous was waiting for him
on the southern side. But Pinocchio’s wooden mind knew nothing of
east or south.
“Oh! poor me,” he could not help crying, “and now what shall I do? I
cannot climb this steep rock. If I remain here, I shall be eaten in no
time by some of these fish I see swimming around.”
In fact, immense tunnies were passing near him. Enormous rays,
looking like giant fans, dashed by. Over him glided horrible
uranoscopes, or stargazers.
These fish, like the halibut, have both eyes on the tops of their
heads, and so can only see above them. Luckily, Pinocchio was
under them, otherwise—
“I am afraid I am not very safe here,”
observed Pinocchio, whose knees were
beginning to feel weak. “If these fish
notice me, I shall disappear. I do wish I
could find dear old Globicephalous.”
Thoroughly frightened, he started to run
madly along. Of course he ran in the
wrong direction.
“I wonder what this is,” he grumbled. He
had stepped on something large and
hard.
He pushed the thick seaweeds aside. In
their midst he found a large turtle. For a
wonder Pinocchio knew what it was.
“How fortunate you are!” sighed the
marionette. “At least you have a house.
In that armor of yours you are safe from
anybody.”
But such did not seem to be the case. The harmless reptile was lying
quietly in the weeds trying to sleep. But even though Pinocchio was
in such a plight as to be lost in the sea, still the love of mischief had
not left him. Taking the poor animal by its hind legs he turned it over
on its back.
The poor thing struggled and tried to right itself, but all in vain. When
a turtle is on its back, it has to stay there.
This is so well known that when fishermen catch them they turn them
over, sure of finding them in the same position even a day later.
Seeing another shell near by, Pinocchio was about to treat it in the
same manner. But as it felt very light he examined it closely. It was
empty. The animal had probably been dead a long time, and the
shell alone was left. It was almost a yard long.
As he was looking at it, he chanced to
turn his head upward. Horrors! What did
he see? An enormous animal was about
to throw itself upon him!
No one had ever told Pinocchio what
this fish was. Still, even he could easily
guess its name. Its strange shape is so
much like that of a large hammer that it
is unmistakable. It was the terrible
hammer that Tursio had spoken about.
“I am lost,” breathed Pinocchio, closing
his eyes and throwing himself flat
amongst the seaweed.
Who could have blamed the poor boy for
being frightened? He had seen that
large gray mass coming nearer and
nearer with wide-open mouth. He had
seen the large black and gold eyes at
the ends of the head, gleaming brightly
with thinking of the coming feast. Poor
fellow!
But just as he was imagining himself in
the shark’s mouth Pinocchio realized
that the minutes were passing and that
he was still alive.
“He may have changed his mind about
committing a marionetticide,” he
reflected with eyes still closed.
Time passed, and thinking that the shark
had not courage enough to attack him,
Pinocchio had the courage to—open his
eyes. He could hardly believe what he
saw. The shark was moving away. Still, he could see that the fish
was going because he had to, not because he wanted to. Looking
more carefully then, he saw a strange sight. Three small fish were
sticking to the sides of the hammerhead, and were pulling him away.
Our hero had never seen such strange-looking animals as those
three fishes. They were small and narrow, and on their heads each
had a large flat object, which looked just like a dish.
If the dolphins had been there, they would have told Pinocchio that
these dark-colored fish are called remora. With the flat disk they can
attach themselves to other fish. Sometimes they let themselves be
carried. At other times, when they feel in the mood for mischief, they
pull others along wherever they wish. This is what happened to the
shark.
“Those fish certainly saved my life,” thought Pinocchio. “But I hope
the shark won’t do to them what he wanted to do to me.”
Feeling in need of a place of safety, he tried to hide himself in a large
hole in a rock. But he had hardly put one foot in, when he felt his
shoe being pulled off by a large claw. Two eyes at the ends of two
long sticks glared ferociously at him. It was a large lobster. Pinocchio
had disturbed Mr. Lobster while he was looking for dinner, and so
had been punished. Happily for Pinocchio the lobster was satisfied
with the shoe! If the claw had taken hold of the foot also, it might
even have gone through the wood, and then, poor Pinocchio!
In disturbing the lobster our hero must certainly have offended its
whole family. Before he could realize it, the sand before him was full
of horrible crustaceans. Frightened out of his wits, he could just look
and wonder when they would stop coming. From every hole in the
rock they came, little ones, big ones, flat ones, round ones.
And ready to fight they certainly were! With claws in the air and eyes
roving madly they approached. Very carefully they looked the boy
over. A lobster or a crab never begins to fight unless he knows what
he has to deal with.
And still they kept coming! Wherever Pinocchio turned, there was a
horrible creature. To the right the large mouth of a common lobster
threatened him. To the left an ugly spiny lobster shook his claws at
him. Behind and before him the sand was covered with them, large
green crabs, common crabs, porcelain
crabs, common lobster, spider crabs,
glass crabs, tiny fiddlers, and others.
As if these were not enough, out of a
hole came a crab larger than any of the
others. He was rapidly coming nearer,
but before long one of his claws was
grasped by one lobster, the other by
another. Without the least movement to
fight, the crab just pulled off his claws,
and quickly went back to his hole.
Pinocchio was thunderstruck. How could
the crab do this so calmly? For the
simple reason that the crab preferred
losing his claws to being killed and
eaten up. In a few months he would
grow another set of claws as good as
those he had lost. Yes, a crab can do
that, children. Think of it!
“Oh, dear me!” thought Pinocchio, who was getting rather nervous by
this time. “What is going to become of me? If only I had a shell as
has a turtle I could hide away and be safe.”
“Oh! what a splendid idea!” he suddenly burst out. “Why didn’t I think
of it before? I shall have a shell to hide in!”
And without another word he slipped into the shell he had been
looking at. In a moment nothing could be seen of him, not even his
nose.
The crustaceans did not understand with what kind of a being they
had to deal. So after examining the shell all over, they slowly
disappeared into their holes.
With a great sigh of relief Pinocchio dared to stick his head out of the
shell. Seeing his shoe lying on the ground, he quickly put his foot in
it. It was not very pleasant to walk on the sand without a shoe.

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Chapter 8 ♦ Customer Relationship Management (CRM) 8-1

1 Define customer relationship management

2 Explain how to identify customer relationships within the organization

3 Understand interactions with the current customer base

4 Outline the process of capturing customer data

5 Describe the use of technology to store and integrate customer data

8-2 Copyright © 2013 Nelson Education Limited

7 Explain the process of leveraging customer information throughout the organization

campaign management empowerment predictive modelling

LESSON PLAN FOR LECTURE

Brief Outline and Suggested PowerPoint Slides:

Learning Outcomes and Topics PowerPoint Slides

2 Explain how to identify customer 11 & 12: Identify Customer Relationships

Chapter 8 ♦ Customer Relationship Management (CRM) 8-3

7 Explain the process of leveraging 37–39: Leverage Customer Information

LESSON PLAN FOR VIDEO

VIDEO REVIEW EXERCISE

Chapter 8 ♦ Customer Relationship Management (CRM) 8-5

LESSON PLAN FOR GROUP WORK

8-6 Copyright © 2013 Nelson Education Limited

Chapter 8 ♦ Customer Relationship Management (CRM) 8-7

1. Identify the six components of the CRM process.

DIRECT MAIL ASSIGNMENT

COMPANY CLIP VIDEO ASSIGNMENT: Method—Spreading the News

8-10 Copyright © 2013 Nelson Education Limited

CASE ASSIGNMENT: Petco.com

Petco.com: Turning Negative Reviews into Positive Sales

Chapter 8 ♦ Customer Relationship Management (CRM) 8-11

8-12 Copyright © 2013 Nelson Education Limited

ALTERNATE CASE ASSIGNMENT: Kroger

Chapter 8 ♦ Customer Relationship Management (CRM) 8-13

GREAT IDEAS FOR TEACHING CHAPTER 8

8-14 Copyright © 2013 Nelson Education Limited

• What is the value source from the customer vantage point?

• What is the main competitive threat to this Web business?

Competitive Advantage—Is It Sustainable?

• How is the delivery system redefined?

• What is the likely competitor response to this Web benefit structure?

Chapter 8 ♦ Customer Relationship Management (CRM) 8-15

Save the Slugs, Inc.

Dear Mrs. Aida Lester

February 27, 1997

Ms. Linda Latchkey

Dear Ms. Latchkey

P.S. Ms. Latchkey, thanks for caring for our children.

The Society of Animal Protection

Mr. Bill Cash

Chapter 8 ♦ Customer Relationship Management (CRM) 8-17

Dr. Rott Weiler, DVM

8-18 Copyright © 2013 Nelson Education Limited

Chapter 8 ♦ Customer Relationship Management (CRM) 8-19

COMPANY CLIP VIDEO - RALEIGH

COMPANY CLIP VIDEO - R. J. JULIA BOOKSELLERS

8-20 Copyright © 2013 Nelson Education Limited

PART 2—Integrated Case Assignments—ch. 4-8