CHAPTER 1 DEFINING MARKETING FOR 21ST CENTURY 1-1
MARKETING SPOTLIGHT COCA-COLA
Coca-Cola is the most ubiquitous brand in history. Each day, people in 200
countries around the world drink some 1.2 billion 8-ounce servings of the cola.
Marketing for the twenty-first century means leveraging the longtime marketing
principles that work, while inventing new ways to stay relevant. Coca-
Cola, which got its start in 1883, has successfully kept its brand relevant for
over 100 years. Revenues in 2003 topped $21 billion.
Coke’s first president, Asa Candler, instituted many of the marketing tactics
that are entrenched principles now. To gain new customers, he printed coupons
offering free first tastes of the Coca-Cola drink. To build brand recognition, he
gave clocks, calendars, and weighing scales with the Coca-Cola logo to pharmacists
who sold the drink. He hired the company’s first celebrity, music hall
performer Hilda Clark, in the 1890s.
During the heyday of mass-market TV advertising, Coke was the master of
the 30-second TV spot. Its legendary “I’d like to buy the world a Coke” and
“Mean Joe Greene” ads were rated as two of the best ads ever by Advertising
Age.
Coca-Cola also expanded overseas. During World War II, when the army
shipped Cokes to soldiers in Europe and Asia, Coke cemented its image as the
“All-American beverage.” But over time, Coke realized it would need a more
local feel in each country. So, although it uses its signature red-and-white wave
and lettering worldwide, the company uses different ad agencies in different
countries in order to make the brand feel local. For example, the local versions
of the “Mean Joe Greene” ad used sports figures famous in those regions, such
as soccer stars. Similarly, ads for Coca-Cola in Spain show it as a mixer with
wine, reflecting how consumers use the product in that country.
Coke also sells a wide range of different-flavored sodas in different countries.
Visitors to the company’s museum in Atlanta can try these beverages—
everything from cool watermelon (China), to an intensely bitter herbal soda
(Italy), to a zingy ginger soda (South Africa). In 2004, Coke launched a beerflavored
carbonated beverage in Japan.
Coca-Cola now gets two-thirds of its revenues from outside the United States.
It’s easier to name the countries where Coke is not: Myanmar, Cuba, and Syria.
Everywhere else—including such tricky markets as Pakistan, Cambodia, Liberia,
Zimbabwe, and Colombia—Coke is a beloved consumer staple. In fact, the brand
is so strong and so entrenched that even the anti-American sentiments of 9/11
and after have not hurt sales. Coca-Cola’s brand valuation actually increased from
$68.95 billion in August 2001 to $70.45 billion in August 2003. (By comparison,
rival Pepsi-Cola’s brand value is a mere $11.78 billion.) Coca-Cola remains the top
global brand, achieving the top ranking in BusinessWeek’s Global Brand Scorecard
once again in 2003.
Despite its powerhouse status, Coke must continue to evolve its marketing.
For example, the effectiveness of TV ads is declining due to media fragmentation
and use of devices like TiVO that let viewers zap commercials.
Ads that reached 70 percent of Americans during prime time in the 1960s
only reached 15 percent in 2004. So Coke is diverting money previously
spent on TV toward more experiential activities. For example, it’s testing
Coke Red Lounge gathering areas for teens in malls. The lounges offer exclusive
music videos and video games and sell Coke drinks from a see-through
Coke machine. In Britain, Coke’s mycokemusic.com Web site lets surfers
legally download over 250,000 songs.
Chris Lowe, a Coke marketing executive, explained how the company stays
on top: “You can never betray the core values of the brand, but you can work to
make those values fresh and relevant. If you can’t speak to people in these
times, then you become an old icon.” Lowe described the iterative steps of generating
a fresh ad campaign: “There’s the communication strategy that you
want to put across. You test it with consumers for validity and resonance. Then
you take that core meaning and make it come alive with advertising. Then you
take it back to consumers to test it again.”
The results of Coke’s latest marketing shift aren’t known yet, but in 2003 its
then Chairman, Douglas Daft, told investors that Coca-Cola Company has
“arguably the strongest and most pervasive marketing and distribution system
in the world.” And with Coke being the first soda drunk in outer space, even the
sky may not be the limit.
Discussion Questions
1. What have been the key success factors for Coca-Cola?
2. Where is Coca-Cola vulnerable? What should they watch out for?
3. What recommendations would you make to their senior marketing executives
going forward? What should they be sure to do with their marketing?
Sources: Dean Faust, “Coke: Wooing the TiVo Generation,” BusinessWeek, March 1, 2004,
p. 77; Paul Klebnikov, “Coke’s Sinful World,” Forbes, December 22, 2003, p. 86; “Coca-Cola
Japan to Debut Beer-flavored Soda Next Month,” AsiaPulse News, February 13, 2004; “How
Coke Moulded our View of Santa Claus to Fuel Winter Sales,” Marketing, December 18,
2003; Gerry Khermouch and Diane Brady, “The Top 100 Brands,” BusinessWeek, August 4,
2003; Fara Warner, “Chris Lowe Time to Get Real,” Fast Company, April 2003; and www.
coca-cola.com.
NOTES :::
1. Sam Hill and Glenn Rifkin, Radical Marketing (New York:
HarperBusiness, 1999); Gerry Khermouch, “Keeping the Froth on
Sam Adams,” BusinessWeek, September 1, 2003, pp. 54–56.
2. American Marketing Association, 2004.
3. Peter Drucker, Management: Tasks, Responsibilities, Practices
(New York: Harper and Row, 1973), pp. 64–65.
4. Philip Kotler, “Dream Vacations: The Booming Market for
Designed Experiences,” The Futurist (October 1984): 7–13;
B. Joseph Pine II and James Gilmore, The Experience Economy
(Boston: Harvard Business School Press, 1999); Bernd Schmitt,
Experience Marketing (New York: Free Press, 1999).
5. Irving J. Rein, Philip Kotler, and Martin Stoller, High Visibility
(Chicago: NTC Publishers, 1998).
6. Philip Kotler, Irving J. Rein, and Donald Haider, Marketing Places:
Attracting Investment, Industry, and Tourism to Cities, States, and
Nations (New York: Free Press, 1993); and Philip Kotler, Christer
Asplund, Irving Rein, Donald H. Haider, Marketing Places in
Europe: Attracting Investment, Industry and Tourism to Cities,
States and Nations (London: Financial Times Prentice-Hall,
1999). Marketing Places Europe (London: Financial Times
Prentice-Hall, 1999).
7. Carl Shapiro and Hal R. Varian, “Versioning: The Smart Way to Sell
Information,” Harvard Business Review (November–December
1998): 106–114.
8. John R. Brandt, “Dare to Be Different,” Chief Executive,May 2003,
pp. 34–38.
9. Jeffrey Rayport and John Sviokla, “Managing in the Marketspace,”
Harvard Business Review (November–December 1994): 141–150.
Also see their “Exploring the Virtual Value Chain,” Harvard
Business Review (November–December 1995): 75–85.
10. Mohan Sawhney, Seven Steps to Nirvana (New York: McGraw-
Hill, 2001).
11. Jean-Marie Dru, Beyond Disruption: Changing the Rules in the
Marketplace (New York: John Wiley & Sons, 2002); Hill and Rifkin,
Radical Marketing.
12. Scott Kirsner, “5 Tech Innovators,” Fast Company, December 2003,
pp. 93–100.
13. Adam Lashinsky, “Shoutout in Gadget Land,” Fortune, November
10, 2003, pp. 77–86.
14. Gerry Khermouch, “Breaking into the Name Game,”
BusinessWeek, April 7, 2003, p. 54; Anonymous, “China’s
Challenge,” Marketing Week, October 2, 2003, pp. 22–24.
15. Bruce I. Newman, ed., Handbook of Political Marketing (Thousand
Oaks, CA: Sage Publications, 1999); and Bruce I. Newman,
The Mass Marketing of Politics (Thousand Oaks, CA: Sage
Publications, 1999).
16. John B.McKitterick, “What Is theMarketingManagement
Concept?” In Frank M. Bass ed. The Frontiers ofMarketing Thought
and Action (Chicago: AmericanMarketing Association, 1957),
pp. 71–82; Fred J. Borch, “TheMarketing Philosophy as aWay of
Business Life,” TheMarketing Concept: ItsMeaning toManagement
(Marketing series, no. 99) (New York: AmericanManagement
Association, 1957), pp. 3–5; Robert J. Keith, “TheMarketing
Revolution,” Journal ofMarketing (January 1960): 35–38.
17. Levitt, “Marketing Myopia,” Harvard Business Review (July
August), 1960. p. 50.
18. Ajay K. Kohli and Bernard J. Jaworski, “Market Orientation: The
Construct, Research Propositions, and Managerial Implications,”
Journal of Marketing (April 1990): 1–18; John C. Narver and
Stanley F. Slater, “The Effect of a Market Orientation on Business
Profitability,” Journal of Marketing (October 1990): 20–35;
Stanley F. Slater and John C. Narver, “Market Orientation,
Customer Value, and Superior Performance,” Business Horizons,
March–April 1994, pp. 22–28; A. Pelham and D.Wilson, “A
Longitudinal Study of the Impact of Market Structure, Firm
Structure, Strategy and Market Orientation Culture on
Dimensions of Business Performance,” Journal of the Academy
of Marketing Science 24, no. 1 (1996): 27–43; Rohit Deshpande
and John U. Farley, “Measuring Market Orientation:
Generalization and Synthesis,” Journal of Market-Focused
Management 2 (1998): 213–232.
19. John C. Narver, Stanley F. Slater, and Douglas L. MacLachlan,
“Total Market Orientation, Business Performance, and
Innovation,” Working Paper Series, Marketing Science Institute,
Report No. 00-116, 2000, pp. 1–34. See also, Ken Matsuno and
John T. Mentzer, “The Effects of Strategy Type on the Market
Orientation–Performance Relationship,” Journal on Marketing
(October 2000): 1–16.
20. John R. Brandt, “Dare to Be Different,” Chief Executive,May 2003,
pp. 34–38.
21. Christian Homburg, John P.Workman Jr., and Harley Krohmen,
“Marketings Influence Within the Firm,” Journal of Marketing
(January 1999): 1–15.
22. Jochen Zeitz, “This Shoe’s One Cool Cat,” Brandweek, October
20, 2003, pp. M58–M61; Kevin J. O’Brien, “Focusing on
Armchair Athletes, Puma Becomes a Leader,” NewYork Times,
March 12, 2004.
23. Evert Gummesson, Total Relationship Marketing (Boston:
Butterworth-Heinemann, 1999); Regis McKenna, Relationship
Marketing (Reading, MA: Addison-Wesley, 1991); Martin
Christopher, Adrian Payne, and David Ballantyne, Relationship
Marketing: Bringing Quality, Customer Service, and Marketing
Together (Oxford, U.K.: Butterworth-Heinemann, 1991).
24. James C. Anderson, Hakan Hakansson, and Jan Johanson, “Dyadic
Business Relationships within a Business Network Context,”
Journal of Marketing (October 15, 1994): 1–15.
25. Laura Mazur, “Personal Touch is Now Crucial to Growing
Profits,” Marketing, November 27, 2003, p. 18.
26. Kim Cross, “Fill It to the Brim,” Business 2.0, March 6, 2001,
pp. 36–38.
27. Neil H. Borden, “The Concept of the Marketing Mix,” Journal of
Advertising Research 4 (June): 2–7. For another framework, see
George S. Day, “The Capabilities of Market-Driven Organizations,”
Journal of Marketing 58, no. 4 (October 1994): 37–52.
28. E. Jerome McCarthy, Basic Marketing: A Managerial Approach,
12th ed. (Homewood, IL: Irwin, 1996). Two alternative classifications
are worth noting. Frey proposed that all marketing decision
variables could be categorized into two factors: the offering
(product, packaging, brand, price, and service) and
methods and tools (distribution channels, personal selling,
advertising, sales promotion, and publicity). See Albert W. Frey,
Advertising, 3rd ed. (New York: Ronald Press, 1961), p. 30. Lazer
and Kelly proposed a three-factor classification: goods and services
mix, distribution mix, and communications mix. See
William Lazer and Eugene J. Kelly, Managerial Marketing:
Perspectives and Viewpoints, rev. ed. (Homewood, IL: Irwin,
1962), p. 413.
29. Robert Lauterborn, “New Marketing Litany: 4P’s Passe; C-Words
Take Over,” Advertising Age, October 1, 1990, p. 26.
30. Gregory Solman, “Trailers, Bots and Emails Tout Gory Movies to
Teens,” Adweek, October 6, 2003, p. 10.
31. William Greider, “Victory at McDonald’s,” The Nation,
August 18, 2003.
32. Hamish Pringle and Marjorie Thompson, Brand Soul: How Cause-
Related Marketing Builds Brands (New York: John Wiley & Sons,
1999); Richard Earle, The Art of Cause Marketing (Lincolnwood,
IL: NTC, 2000).
33. Private conversation with Carpenter.
34. Larry Selden and Geoffrey Colvin, Angel Customers & Demon
Customers, Portfolio (Penguin), 2003.
35. Goran Svensson, “Beyond Global Marketing and the Globalization
of Marketing Activities,” Management Decision 40, no. 6 (2002):
574–583.
36. Jonathan Glancey, “The Private World of the Walkman,” The
Guardian, October 11, 1999.
37. Joann Muller, “Ford: Why It’s Worse Than You Think,”
BusinessWeek, June 25, 2001; Ford 1999 Annual Report; Greg
Keenan, “Six Degrees of Perfection,” The Globe and Mail,
December 20, 2000.
1-2 CHAPTER 1 DEFINING MARKETING FOR 21ST CENTURY
CHAPTER 2 DEVELOPING MARKETING STRATEGIES AND PLANS 2-1
MARKETING SPOTLIGHT NIKE
Nike hit the ground running in 1962. Originally known as Blue Ribbon Sports, the
company focused on providing high-quality running shoes designed especially
for athletes by athletes. Founder Philip Knight believed that high-tech shoes for
runners could be manufactured at competitive prices if imported from abroad.
The company’s commitment to designing innovative footwear for serious athletes
helped it build a cult following among American consumers. By 1980, Nike had
become the number-one athletic shoe company in the United States.
From the start, Nike’s marketing campaigns featured winning athletes as
spokespeople. The company signed on its first spokesperson, runner Steve
Prefontaine, in 1973. Prefontaine’s irreverent attitude matched Nike’s spirit.
Marketing campaigns featuring winning athletes made sense. Nike saw a “pyramid
of influence”—it saw that product and brand choices are influenced by the preferences
and behavior of a small percentage of top athletes. Using professional athletes
in its advertising campaigns was both efficient and effective for Nike.
In 1985, Nike signed up then-rookie guard Michael Jordan as a spokesperson.
Jordan was still an up-and-comer, but he personified superior performance.
Nike’s bet paid off: The Air Jordan line of basketball shoes flew off the
shelves, with revenues of over $100 million in the first year alone. Jordan also
helped build the psychological image of the Nike brand. Phil Knight said: “Sports
are at the heart of American culture, so a lot of emotion already exists around
it. Emotions are always hard to explain, but there’s something inspirational
about watching athletes push the limits of performance. You can’t explain much
in 60 seconds, but when you show Michael Jordan, you don’t have to.”
In 1988, Nike aired its first ads in the “Just Do It” ad campaign. The $20 million
month-long blitz—subtly encouraging Americans to participate more actively
in sports—featured 12 TV spots in all. The campaign challenged a generation of
athletic enthusiasts to chase their goals; it was a natural manifestation of Nike’s
attitude of self-empowerment through sports. The campaign featured celebrities
and noncelebrities. One noncelebrity ad featured Walt Stack, an 80-year-old longdistance
runner, running across the Golden Gate bridge as part of his morning
routine. The “Just Do It” trailer appeared on the screen as the shirtless Stack ran
on a chilly morning. Talking to the camera as it zoomed in, and while still running,
Stack remarked, “People ask me how I keep my teeth from chattering when it’s
cold.” Pausing, Stack matter-of-factly replied, “I leave them in my locker.”
As Nike began expanding overseas to Europe, it found that its Americanstyle
ads were seen as too aggressive. The brand image was perceived as too
fashion-oriented. Nike realized that it had to “authenticate” its brand in Europe
the way it had in America. That meant building credibility and relevance in
European sports, especially soccer. Nike became actively involved as a sponsor
of soccer youth leagues, local clubs, and national teams. Authenticity required
that consumers see the product being used by athletes, especially by athletes
who win. The big break came in 1994, when the Brazilian team (the only
national team for which Nike had any real sponsorships) won the World Cup.
The victory led Nike to sign other winning teams, and by 2003 overseas revenues
surpassed U.S. revenues for the first time. Nike also topped $10 billion in
sales for the first time in that year as well.
Today, Nike dominates the athletic footwear market. Nine of the 10 top-selling
basketball shoes, for example, are Nikes. Nike introduces hundreds of shoes each
year for 30 sports—averaging one new shoe style every day of the year. Swooshes
abound on everything from wristwatches to golf clubs to swimming caps.
Discussion Questions
1. What have been the key success factors for Nike?
2. Where is Nike vulnerable? What should it watch out for?
3. What recommendations would you make to senior marketing executives
going forward? What should they be sure to do with its marketing?
Sources: Justin Ewers and Tim Smart, “A Designer Swooshes In,” U.S. News & World
Report, January 26, 2004, p. 12; “Corporate Media Executive of the Year,” Delaney
Report, January 12, 2004, p. 1; “10 Top Non Traditional Campaigns,” Advertising Age,
December 22, 2003, p. 24; Chris Zook and James Allen, “Growth Outside the Core,”
Harvard Business Review (December 2003): 66(8).
NOTES :::
1. Keith H. Hammonds, “Michael Porter’s Big Ideas,” Fast Company,
March 2001, pp. 150–154.
2.http:///www.H&M.com, and Eric Sylvers, “Cut-Rate Swedish
Retailer Enters the Italian Market,” New York Times, August 27,
2003, p. W1.
3. Louise Lee, “Thinking Small at the Mall,” BusinessWeek, May 26,
2003, pp. 94–95.
4. Nirmalya Kumar, Marketing As Strategy: The CEO’s Agenda for
Driving Growth and Innovation (Boston: Harvard Business School
Press, 2004).
5. Frederick E.Webster Jr., “The Future Role of Marketing in the
Organization,” in Reflections on the Futures of Marketing, edited
by Donald R. Lehmann and Katherine Jocz (Cambridge, MA:
Marketing Science Institute, 1997), pp. 39–66.
6. Michael E. Porter, Competitive Advantage: Creating and
Sustaining Superior Performance (New York: The Free Press, 1985).
7. Robert Hiebeler, Thomas B. Kelly, and Charles Ketteman, Best
Practices: Building Your Business with Customer-Focused
Solutions (New York: Simon and Schuster, 1998).
8. Hammer and Champy, Reengineering the Corporation: A Manifesto
for Business Revolution (New York: Harper Business, 1993).
9. George Stalk, “Competing on Capability: The New Rules of
Corporate Strategy,” Harvard Business Review (March–April 1992):
57–69; Benson P. Shapiro, V. Kasturi Rangan, and John J. Sviokla,
“Staple Yourself to an Order,” Harvard Business Review
(July–August 1992): 113–122.
10. Jon R. Katzenbach and Douglas K. Smith, The Wisdom of Teams:
Creating the High-Performance Organization (Boston: Harvard
Business School Press, 1993); Hammer and Champy,
Reengineering the Corporation.
11. Michael Johnsen, “Profiting from a First-Place Focus,” Drug Store
News, January 20, 2003, p. 26.
12. Myron Magnet, “The New Golden Rule of Business,” Fortune,
November 28, 1994, pp. 60–64.
13. C. K. Prahalad and Gary Hamel, “The Core Competence of the
Corporation,” Harvard Business Review (May–June 1990): 79–91.
14. Alan Cohen, “The Great Race,” Fortune Small Business, December
2002/January 2003, pp. 42–48.
2-2 CHAPTER 2 DEVELOPING MARKETING STRATEGIES AND PLANS
15. George S. Day, “The Capabilities of Market-Driven
Organizations,” Journal of Marketing (October 1994): 38.
16. Pew Internet and American Life Project Survey,
November–December 2000.
17. Kasuaki Ushikubo, “A Method of Structure Analysis for Developing
Product Concepts and Its Applications,” European Research 14,
no. 4 (1986): 174–175.
18. Jesus Sanchez, “Kodak Cuts Dividend; Shifts Strategy,” Los Angeles
Times, September 26, 2003, p. C3.
19. Susan Kuchinskas, “The Tao of Wow,” Adweek Magazines’
Technology Marketing, June 2003, p. 10.
20. Yoram J.Wind and Vijay Mahajan with Robert E. Gunther,
Convergence Marketing: Strategies for Reaching the New Hybrid
Consumer (Upper Saddle River, NJ: Prentice Hall PTR, 2002).
21. Peter Drucker, Management: Tasks, Responsibilities and Practices
(New York: Harper and Row, 1973), ch. 7.
22. Ralph A. Oliva, “Nowhere to Hide,” Marketing Management,
July/August 2001, pp. 44–46.
23. Pew Internet and American Life Project Survey,
November–December 2000.
24. Chuck Martin, Net Future (New York: McGraw-Hill, 1999).
25. Leah Nathans Spiro, “Pitney Goes for Growth,” Chief Executive,
October 2003, pp. 38–42.
26. Jeffrey F. Rayport and Bernard J. Jaworski, e-commerce (New York:
McGraw-Hill, 2001), p. 116.
27. Tilman Kemmler, Monika Kubicová, Robert Musslewhite, and
Rodney Prezeau, “E-Performance II—The Good, the Bad, and the
Merely Average,” an exclusive to mckinseyquarterly.com, 2001.
28. The same matrix can be expanded into nine cells by adding modified
products and modified markets. See S. J. Johnson and Conrad
Jones, “How to Organize for New Products,” Harvard Business
Review (May–June 1957): 49–62.
29. ; Howard Schultz, Pour Your Heart into It
(New York: Hyperion, 1997); Andy Serwer, “Hot Starbucks to Go,”
Fortune, January 26, 2004, pp. 60–74.
30. Tim Goodman, “NBC Everywhere?” San Francisco Chronicle,
September 4, 2003, p. E1.
31. Catherine Fredman, “Smart People, Stupid Choices,” Chief
Executive, August/September 2002, pp. 64–68.
32. “Business: Microsoft’s Contradiction,” The Economist (January 31,
1998): 65–67; Andrew J. Glass, “Microsoft Pushes Forward, Playing
to Win the Market,” Atlanta Constitution, June 24, 1998, p. D12.
33. Ben Elgin, “Yahoo! Act Two,” BusinessWeek, June 2, 2003,
pp. 70–76.
34. Daniel Howe, “Note to DaimlerChrysler: It’s Not a Small World
after All,” Detroit News, May 19, 1998, p. B4; Bill Vlasic, “The First
Global Car Colossus,” BusinessWeek, May 18, 1998, pp. 40–43;
Pamela Harper, “Business ‘Cultures’ at War,” Electronic News,
August 3, 1998, pp. 50, 55.
35. Bill Vlasic and Bradley Stertz. “Taken for a Ride,” BusinessWeek,
June 5, 2000; Jeffrey Ball and Scott Miller, “DaimlerChrysler Isn’t
Living Up to Its Promise,” Wall Street Journal, July 26, 2000; Eric
Reguly, “Daimler, Chrysler Still a Culture Clash,” The Globe and
Mail, January 30, 2001.
36. E. Jerome McCarthy, Basic Marketing: A Managerial Approach,
12th ed. (Homewood, IL: Irwin, 1996).
37. Ian Wylie, “Calling for a Renewable Future,” Fast Company, May
2003, pp. 46–48.
38. Paul J. H. Shoemaker, “Scenario Plannning: A Tool for Strategic
Thinking,” Sloan Management Review (Winter 1995): 25–40.
39. Philip Kotler, Kotler on Marketing (New York: Free Press, 1999).
40. Kotler, Kotler on Marketing.
41. Eric A. Taub, “Drawing Stares and the Police but Not Many
Buyers,” New York Times, August 9, 2003, p. C1; Faith Keenan, “Is
Segway Going Anywhere?” BusinessWeek, January 27, 2003, p. 42.
42. George Stalk, Philip Evans, and Lawrence E. Shulman,
“Competing Capabilities: The New Rules of Corporate Strategy,”
Harvard Business Review (March–April 1992): 57–69.
43. Ram Charan and Noel M. Tichy, Every Business Is a Growth
Business: How Your Company Can Prosper Year after Year (New
York: Times Business, Random House, 1998).
44. Michael E. Porter, Competitive Strategy: Techniques for Analyzing
Industries and Competitors (New York: The Free Press, 1980), ch. 2.
45. Michael E. Porter, “What Is Strategy?” Harvard Business Review
(November–December 1996): 61–78.
46. For some readings on strategic alliances, see Peter Lorange and
Johan Roos, Strategic Alliances: Formation, Implementation and
Evolution (Cambridge, MA: Blackwell, 1992); Jordan D. Lewis,
Partnerships for Profit: Structuring and Managing Strategic
Alliances (New York: The Free Press, 1990); John R. Harbison and
Peter Pekar Jr., Smart Alliances: A Practical Guide to Repeatable
Success (San Francisco: Jossey-Bass, 1998); Harvard Business
Review on Strategic Alliances (Cambridge, MA: Harvard Business
School Press, 2002).
47. Anonymous, “Trends Report: Looking for the Pharmaceutical-
Biotechnology Alliance Creates a Win–Win,” Health and Medicine
Week, December 29, 2003, p. 726.
48. Robin Cooper and Robert S. Kalpan, “Profit Priorities from Activity-
Based Costing,” Harvard Business ReviewMay–June 1991): 130–135.
49. Robert S. Kaplan and David P. Norton, The Balanced Scorecard:
Translating Strategy into Action (Boston: Harvard Business School
Press, 1996), as a tool for monitoring stakeholder satisfaction.
50. Thomas J. Peters and Robert H.Waterman Jr., In Search of
Excellence: Lessons from America’s Best-Run Companies (New
York: Harper and Row, 1982), pp. 9–12.
51. Terrence E. Deal and Allan A. Kennedy, Corporate Cultures: The
Rites and Rituals of Corporate Life (Reading, MA: Addison-Wesley,
1982); “Corporate Culture,” BusinessWeek, October 27, 1980,
pp. 148–160; Stanley M. Davis, Managing Corporate Culture
(Cambridge, MA: Ballinger, 1984); John P. Kotter and James L.
Heskett, Corporate Culture and Performance (New York: The Free
Press, 1992).
52. Nitin Nohria, William Joyce, and Bruce Roberson, “What Really
Works,” Harvard Business Review 81, No. 7 (2003): 42–53.
53. Lawrence M. Fisher, “With a New Smart Suite, Lotus Catches Its
Rivals’ Success,” New York Times, June 15, 1998, p. 6.
54. Sarah Ellison, “Kraft’s Stale Strategy: Endless Extensions of Oreos,
Chips-Ahoy and Jell-O Brands Created a New-Product Void,”
Wall Street Journal, December 18, 2003, p. B1.
55. Marian Burk Wood, The Marketing Plan: A Handbook (Upper
Saddle River, NJ: Prentice Hall, 2003).
56. Donald R. Lehmann and Russell S.Winer, Product Management,
3rd. ed. (Boston: McGraw-Hill/Irwin, 2001).
57. Reproduced from Marian Burk Wood, The Marketing Plan: A
Handbook. (Upper Saddle River, NJ: Prentice Hall, 2003)
58. Rubbermaid, Annual Report, 1997.
CHAPTER 3 GATHERING INFORMATION AND SCANNING THE ENVIRONMENT 3-1
MARKETING SPOTLIGHT BUDWEISER
Budweiser Lager was first brewed in 1876 by E. Anheuser & Co., St. Louis.
Today, Anheuser-Busch is the largest brewer in the world in terms of volume,
and it competes across a diverse range of markets. The company oversees
more than 30 different beer brands, including the domestic market leader
Budweiser, a number of other alcoholic and nonalcoholic beverages, a group of
theme parks, and a real estate enterprise.
While retaining its brewing traditions, the company has adopted new technological
traditions that improve its business and marketing effectiveness. In
1997, chairman August Busch III vowed to make his company a leader in mining
its customers’ buying patterns. The key to Anheuser-Busch’s real-time
analysis of marketing effectiveness is timely data: getting information back from
wholesalers and retailers on what is selling where and when.
“Wholesaler and store-level data has become the lifeblood of our organization,”
said Joe Patti, Anheuser’s vice president for retail planning and category
management. Therefore, Anheuser-Busch created BudNET to connect to wholesalers,
retailers, and other Anheuser-Busch business partners. The system handles
sales reporting, customer development, retail promotion notices, and
weekly sales forecasting, as well as a wide array of logistics-related functions.
BudNET is the information channel for an Anheuser-Busch system called
WEARS (Wholesaler Equity Agreement Reporting System). Through BudNET, the
delivery people of the 700 U.S. distributors of Budweiser can become the eyes
and ears of the brewer.
WEARS and BudNET do much more than just keep tabs on the flow of icycold
Bud off retailers’ refrigerated shelves. Using portable transaction computers,
the delivery people also log data on competing products, identifying what
else is on the retailers’ shelves. At the end of the day, Anheuser-Busch gets the
data and looks for trends. “If Anheuser-Busch loses shelf space in a store in
Clarksville, Tennessee, they know it right away,” said Joe Thompson, president
of Independent Beverage Group, a research and consulting firm. “They’re better
at this game than anyone, even Coca-Cola.”
Understanding consumers means more than just gathering data on your
own product or on your competitor’s product. Anheuser-Busch also analyzes
syndicated bar-code scan data gathered by Information Resources Inc. (IRI), to
track consumer purchasing behavior across a full range of products. Anheuser-
Busch successfully launched low-carb Michelob Ultra after seeing data on consumer
shifts in dietary habits in other food groups.
Timely, fine-grain data also help sharpen Anheuser-Busch’s marketing
and product assortment. With store-level data, the company can create targeted
marketing materials. For example, gay models appear on posters in
San Francisco’s Castro district, but not on those in the Mission district. Better
data also help predict local sales during holidays, such as knowing that
Atlantans celebrate Fourth of July more than St. Patrick’s Day. Demographic
data help Anheuser-Busch know where cans sell better than bottles (bluecollar
neighborhoods), and helped the company launch a range of Latininspired
beverages such as Tequiza and Sauza Diablo for the growing
Hispanic market.
Anheuser-Busch uses a variety of internal and external data sources—
including consumer demographics, POS, and market data—to guide product
assortment decisions. Anheuser-Busch uses the six-step, industry-standard,
best practice called Efficient Item Assortment (EIA) that is published by the Food
Marketing Institute. Software, co-developed with an outside software vendor,
creates a top-line master assortment product list for individual stores and store
clusters. This tool won a Technology Leadership Award from Consumer Goods
Technology (CGT) magazine.
Anheuser-Busch’s use of IT is international. Budexchange.co.uk,
hosted on BudNET, tracks key data and sales of 5,000 British outlets. The
system rewards the loyalty of trade customers with Budweiser-branded
support materials. Anheuser-Busch uses the data provided by the outlets
in its proactive segmented marketing communications program. In a market
in which overall sales are down 5.7 percent, Budweiser sales are up
7 percent.
Anheuser-Busch continues to expand its use of datalinks, using its market
clout to improve data gathering and data sharing. August Busch IV, president
for domestic operations, promised that “brewers and wholesalers with
a clear, data-driven focus will have a distinct competitive advantage.” Market
share data confirm the success of the company’s strategy—Anheuser-Busch
now commands 50.1 percent of the market in 2003, up from 48.9 percent
in 2002.
Discussion Questions
1. What have been the key success factors for Anheuser-Busch?
2. Where is Anheuser-Busch vulnerable? What should it watch out for?
3. What recommendations would you make to senior marketing executives
going forward? What should the company be sure to do with its
marketing?
Sources: Kevin Kelleher, “66,207,896 Bottles of Beer on the Wall: Anheuser-Busch’s Top-
Secret Data Network Tracks Inventory,” Business 2.0, February 25, 2004; “Website
Development, Reward Systems and eCRM,” ; and
.
3-2 CHAPTER 3 GATHERING INFORMATION AND SCANNING THE ENVIRONMENT
NOTES :::
1. Sonia Reyes, “Fighting the Fat Backlash,” Brandweek, May 5,
2003, pp. 24–30; Louise Witt, “Why We Are Losing the War
Against Obesity,” American Demographics (December
2003/January 2004): 27–31; Brian Steinberg, “Food Marketers
Playing Up Nutrition,” Wall Street Journal, March 26, 2004;
Deborah Ball, “With Food Sales Flat, Nestlé Stakes Future on
Healthier Fare,” Wall Street Journal, March 18, 2004, pp. A1–2;
Susan Orenstein and Matthew Maier, “Can Atkins Exploit
Success,” Business 2.0, March 2004, pp. 33–34; Timothy
K. Smith, “We’ve Got to Stop Eating Like This,” Fortune,
February 3, 2003, pp. 58–70.
2. Rebecca Gardyn, “The Shape of Things to Come,” American
Demographics (July/Augyst 2003): 25–30; Stephanie Kang,
“Retailer Prospers with Sexy Clothes for the Plus-Sized,” Wall
Street Journal, April 27, 2004, pp. A1, A8.
3. Susan Warren, “Pillow Talk: Stackers Outnumber Plumpers; Don’t
Mention Drool,” Wall Street Journal, January 8, 1998, p. B1.
4. Steve Weinstein, “Realistic Partnering: How to Do Business
Better,” Progressive Grocer 71, no. 2 (February 1992): 80–85;
Charles Fishman, “The Wal-Mart You Don’t Know,” Fast Company,
December 2003, pp. 68–80.
5. Heather Green, “TaylorMade,” BusinessWeek, November 24,
2003, p. 94.
6. Jennifer Brown, “Pizza Hut Delivers Hot Results Using Data
Warehouse,” Computing Canada, October 17, 2003, p. 24.
7. Mara Der Hovanesian, “Wells Fargo,” BusinessWeek, November 24,
2004, p. 96.
8. Jennifer Esty, “Those Wacky Customers!” Fast Company, January
2004, p. 40.
9. Julie Forster, “You Deserve a Better Break Today,” BusinessWeek,
September 30, 2002, p. 42.
10. Kevin Helliker, “Smile: That Cranky Shopper May Be a Store Spy,”
Wall Street Journal, November 30, 1994, pp. B1, B6; Edward F.
McQuarrie, Customer Visits: Building a Better Market Focus, 2nd
ed. (Newbury Park, CA: Sage Press, 1998).
11. Kim Girard, “Strategies to Turn Stealth into Wealth,” Business 2.0,
May 2003, p. 66.
12. Andy Serwer, “P&G’s Covert Operation,” Fortune, September 17,
2001, pp. 42–44.
13. Amy Merrick, “Counting on the Census,” Wall Street Journal,
February 14, 2001, p. B1.
14. Girard, “Strategies to Turn Stealth into Wealth,” p. 66.
15. Robin T. Peterson and Zhilin Yang, “Web Product Reviews Help
Strategy,” Marketing News, April 7, 2004, p. 18.
16. See for examples of fads and collectibles
through the years.
17. John Naisbitt and Patricia Aburdene, Megatrends 2000 (New York:
Avon Books, 1990).
18. World POPClock, U.S. Census Bureau, ,
September 1999.
19. Although over 10 years old, this breakdown provides useful
perspective. See Donella H. Meadows, Dennis L. Meadows,
and Jorgen Randers, Beyond Limits: (Chelsea Green
Publishing Company, 1993) for some commentary.
White River Jt., VT.
20. Sally D. Goll, Marketing: China (Only) Children Get the Royal
Treatment,” Wall Street Journal, February 8, 1995, p. B1.
21. “Survey: Forever Young,” The Economist, March 27, 2004,
pp. 53–54.
22. Michael J.Weiss, “Chasing Youth,” American Demographics
(October 2002): 35–40; Becky Ebenkamp, “When They’re 64,”
Brandweek, October 7, 2002, pp. 22–25; Linda Tischler, “Where the
Bucks Are,” Fast Company, March 2004, pp. 71–77.
23. “Further Along the X Axis,” American Demographics (May 2004):
21–24.
24. Daren Fonda, “A Pitch to the Rich,” Time, November 24, 2003, but
see Neal E. Boudette, “As VW Tries to Sell Pricier Cars, Everyman
Image Holds It Back,” Wall Street Journal, May 13, 2004.
25. David Leonhardt, “Hey Kids, Buy This,” BusinessWeek, June 30,
1997, pp. 62–67; Don Tapscott, Growing Up Digital; The Rise of the
Net Generation (New York: McGraw-Hill, 1997).
26. Brian Grow, “Hispanic Nation,” BusinessWeek, March 15, 2004,
pp. 58–70.
27. For descriptions on the buying habits and marketing approaches
to African Americans and Latinos, see Alfred L. Schreiber,
Multicultural Marketing (Lincolnwood, IL: NTC Business Books,
2001); M. Isabel Valdes, Marketing to American Latinos: A Guide
to the In-Culture Approach, Part II (Paramount Market
Publishing, 2002). Ithaca, N. Y.
28. Hassan Fattah, “Asia Rising,” American Demographics
(July/August 2002): 38–43.
29. Jacquelyn Lynn, “Tapping the Riches of Bilingual Markets,”
Management Review (March 1995): 56–61; Mark R. Forehand and
Rohit Deshpandé, “What We See Makes Us Who We Are: Priming
Ethnic Self-Awareness and Advertising Response,” Journal of
Marketing Research (August 2001): 336–348.
30. Robert M. Moore, “The Rising Tide,” Change, pp. 56–61. May/June
2004 Vol. 36, ISSOP #3.
31. Michelle Conlin, “Unmarried America,” BusinessWeek, October
20, 2003, pp. 106–116; James Morrow, “A Place for One,” American
Demographics (November 2003): 25–30.
32. Angela Phillips, “Friends Are the New Family,” The Guardian,
December 12, 2003, p. 1.
33. Kris Oser, “Friendster Uses Imaginary Pals to Lure Real Ones,”
Advertising Age, July 19, 2004, pp. 3, 33; Vanessa Hua, “Bound
Together,” San Francisco Chronicle, June 27, 2003, p. B1.
34. Rebecca Gardyn, “A Market Kept in the Closet,” American
Demographics (November 2001): 37–43.
35. Laura Koss-Feder, “Out and About,” Marketing News, May 25,
1998, pp. 1, 20.
36. Karlin Lillington, “ Dream Ticket: Big Name Companies Are
Increasingly Targeting the Gay Market,” The Guardian, October
16, 2003, p. 25.
37. “Rural Population and Migration: Overview,” Economic Research
Service, U.S. Department of Agriculture.
CHAPTER 3 GATHERING INFORMATION AND SCANNING THE ENVIRONMENT 3-3
38. Lauri J. Flynn, “Not Just a Copy Shop Any Longer, Kinko’s Pushes
Its Computer Services,” New York Times, July 6, 1998, p. D1;
.
39. Christopher Reynolds, “Magnetic South,” Forecast, September
2003, p. 6.
40. John-Thor Dahlburg, “A Fountain of Youth in Florida,” Los Angeles
Times, March 27, 2004, p. A1.
41. Manjeet Kripalani and Pete Engardio, “The Rise of India,”
BusinessWeek, December 8, 2003, pp. 66–76; Joanna Slater, “Call of
the West,” Wall Street Journal, January 2, 2004, p. A1.
42. David Leonhardt, “Two-Tier Marketing,” BusinessWeek, March 17,
1997, pp. 82–90; Robert H. Franc, “Yes the Rich Get Richer, but
There’s More to the Story,” Columbia Journalism Review,
November 1, 2000.
43. Louise Lee, “The Gap has Reason to Dance Again,” BusinessWeek,
April 19, 2004, p. 42.
44. Stephen Baker and Manjeet Kripalani, “Software: Will Outsourcing
Hurt America’s Supremacy?” BusinessWeek, March 1, 2004,
pp. 84–94; Jennifer Reingold, “Into Thin Air,” Fast Company, April
2004, pp. 76–82.
45. Alison Stanley and Paul Argenti, “Starbucks Coffee Company,”
case study, Tuck School of Business at Dartmouth, .
46. Pamela Paul, “Corporate Responsibility,” American Demographics
(May 2002): 24–25.
47. Paul Wenske, “You Too Could Lose $19,000!” Kansas City Star,
October 31, 1999; “Clearing House Suit Chronology,” Associated
Press, January 26, 2001.
48. Laura Zinn, “Teens: Here Comes the Biggest Wave Yet,”
BusinessWeek, April 11, 1004, pp. 76–86.
49. Rebecca Gardyn, “Eco-Friend or Foe,” American Demographics
(October 2003): 12–13. See also, Rebecca Gardyn, “Being Green,”
American Demographics (September 2002): 10–11.
50. Françoise L. Simon, “Marketing Green Products in the Triad,”
Columbia Journal of World Business (Fall and Winter 1992):
268–285; Jacquelyn A. Ottman, Green Marketing: Responding to
Environmental Consumer Demands (Lincolnwood, IL: NTC
Business Books, 1993); Ajay Menon and Anil Menon,
“Enviropreneurial Marketing Strategy: The Emergence of
Corporate Environmentalism as Market Strategy,” Journal of
Marketing (January 1997): 51–67; Michael Rothschild, “Carrots,
Sticks, and Promises: A Conceptual Framework for the
Management of Public Health and Social Issue Behaviors,”
Journal of Marketing (October 1999): 29–37.
51. Brad Stone, “Your Next Computer,” Newsweek, June 7, 2004, p. 65.
52. Moon Ihlwan “Wireless Wonders: Samsung Gets Wired on
Wireless,” BusinessWeek, April 26, 2004; Richard Shim and
Michael Kannelos, “Networked Homes Move Closer to Reality,”
CNET News.com, May 28, 2004.
53. See Dorothy Cohen, Legal Issues on Marketing Decision Making
(Cincinnati: South-Western, 1995).
54. Rebecca Gardyn, “Swap Meet,” American Demographics (July
2001): 51–55.
55. Pamela Paul, “Mixed Signals,” American Demographics (July
2001): 45–49.
CHAPTER 4 CONDUCTING MARKETING RESEARCH AND FORECASTING DEMAND 4-1
MARKETING SPOTLIGHT SONY
Sony started as a radio repair shop, founded by Masuru Ikura and Akio Morita
after World War II. The company began its long history of producing compact
consumer electronics in 1957, when it introduced the world’s first pocket-sized
all-transistor radio. The company’s name, Sony, was taken from sonus, the
Latin word for “sound.” Sony went on to invent a series of transistor-based TVs
and increasingly smaller audiocassette recorders. In 1979, the Sony Walkman
introduced the world to a new, portable way of listening to music. Sony became
a world leader in consumer electronics and was the first Japanese company to
have its shares traded on the New York Stock Exchange.
In the late 1980s, Sony began expanding into media, purchasing a U.S.
record company (CBS Records for $22 billion in 1988) and a major Hollywood
studio (Columbia Pictures for $4.9 billion in 1989). The purchases made Sony
a major force in the entertainment industry.
The importance of marketing at Sony started with Akio Morita, who said that
for a company to be successful, it must have three kinds of creativity: creativity
to make inventions, creativity in product planning and production, and creativity
in marketing.
Creativity in marketing at Sony means not just clever ads, but deep insight
into its customers. For example, Sony knows its PlayStation customers like to
find clues and to decode things. So Sony’s ads for PlayStation 2, like “Signs,”
feature a young man walking the streets of a city where he encounters various
signs foreshadowing the events. Mannequins appear in a store window, arms
outstretched, and point enigmatically to something that’s about to happen. “The
lead character is almost in the midst of his own role-playing game. He needs to
follow clues to save the heroine,” said Andrew House, Sony’s executive vice
president of marketing. In the ads, “we were essentially trying to tap into a
range of emotions that we think we deliver in the games—intrigue, foreboding,
excitement, panic, relief and achievement at the end.”
Sony’s marketing also includes careful measurement of each campaign’s
effectiveness. For example, Sony runs 30-second commercials for its
PlayStation as part of the previews in more than 1,800 theaters and on 8,000
movie screens. The ads appear before such films as “The Cat in the Hat.” Sony
Computer Entertainment America has been running movie ads for six years.
“Cinema advertising has been very effective for us,” said Ami Blaire, director of
product marketing. “The reason why we have committed to cinema every year
is the tremendous unaided recall shown by our own research and Communicuscommissioned
ad tracking.”
Another example of measurement is Sony’s GenY youth marketing efforts.
“The online program promoting the NetMD, ATRAC CD Walkman and Cybershot
U30 ran July 1 through September 30 2003, and we found that more than 70
percent of the clickthroughs were spurred by rich media ads via Eyeblaster, versus
static banners,” said Serge Del Grosso, Director of Media and Internet
Strategy, Sony Electronics.
In fact, Sony has even developed a direct-marketing solution which it sells
to other companies who want to measure marketing effectiveness. The product,
called eBridge[TM], allows marketers to use video, measure the effectiveness
of the campaign, and gain insight into the target audience, all in one
package.
Sony expects that the next big breakthrough will not come from a single
new electronic device. Rather, Sony president Kunitake Ando says that the
future lies in making a whole range of devices more useful by linking them in
a networked home-entertainment system. The company believes that its clout
in consumer electronics, combined with its media content, will allow it to
steer that convergence in a way that suits it. Whether the future of convergence
resides in TVs or PCs or devices, $62-billion Sony makes every one of
them—with a strong brand name that gives them an extra push off retail
shelves around the world.
Discussion Questions
1. What have been the key success factors for Sony?
2. Where is Sony vulnerable? What should it watch out for?
3. What recommendations would you make to senior marketing executives
going forward? What should they be sure to do with its marketing?
Sources: John Teresko, “ASIA: Yesterday’s Fast Followers Today’s Global Leaders,”
Industry Week, February 2004, pp. 22–28; Gregory Solman, “Sony’s Got Game on Movie,
TV Screens,” Adweek, November 26, 2003, p. NA; “Sony Launches Holiday Ad Blitz,”
Technology Advertising & Branding Report, December 1, 2003; Tobi Elkin, “Sony Rolls
Cinematic PS2 Push.”Advertising Age, September 2, 2002, p. 4; “Digital Player: Serge Del
Grosso,” Advertising Age, October 27, 2003, p. 44; “The Complete Home Entertainer?”
The Economist, March 1, 2003; .
4-2 CHAPTER 4 CONDUCTING MARKETING RESEARCH AND FORECASTING DEMAND
NOTES :::
1. Allison Fass, “Bear Market,” Forbes, March 1, 2004, p. 88.
2. 1994 Survey of Market Research, edited by Thomas Kinnear and
Ann Root (Chicago: American Marketing Association, 1994).
3. Emily Sweeney, “Karmaloop Shapes Urban Fashion by Spotting
Trends Where They Start,” Boston Globe, July 8, 2004, p. D3.
4. Kevin J. Clancy and Robert S. Shulman, Marketing Myths That Are
Killing Business (New York: McGraw-Hill, 1994), p. 58; Phaedra
Hise, “Comprehensive CompuServe,” Inc. (June 1994): 109;
“Business Bulletin: Studying the Competition,” Wall Street
Journal, pp. A1–A5.
5. Kate Maddox, “The ROI of Research,” B to B, April 5, 2004,
pp. 25, 28.
6. For some background information on in-flight Internet service,
see “In-Flight Dogfight,” Business2.Com, January 9, 2001,
pp. 84–91; John Blau, “In-Flight Internet Service Ready for
Takeoff,” IDG News Service, June 14, 2002; “Boeing In-Flight
Internet Plan Goes Airborne,” The Associated Press, April 18, 2004.
7. For a discussion of the decision-theory approach to the value of
research, see Donald R. Lehmann, Sunil Gupta, and Joel Steckel,
Market Research (Reading, MA: Addison-Wesley, 1997).
8. Allison Stein Wellner, “Look Who’s Watching,” Continental, April
2003, pp. 39–41; Linda Tischler, “Every Move You Make,” Fast
Company, April 2004, pp. 73–75.
9. Bruce Nussbaum, “The Power of Design,” BusinessWeek, May 17,
2004, pp. 86–94.
10. Roger D. Blackwell, James S. Hensel, Michael B. Phillips, and Brian
Sternthal, Laboratory Equipment for Marketing Research
(Dubuque, IA: Kendall/Hunt, 1970); Wally Wood, “The Race to
Replace Memory,” Marketing and Media Decisions (July 1986):
166–167. See also, Gerald Zaltman, “Rethinking Market Research:
Putting People Back In,” Journal of Marketing Research 34, no. 4
(November 1997): 424–437; Andy Raskin, “A Face Any Business
Can Trust,” Business 2.0, December 2003, pp. 58–60; Louise Witt,
“Inside Intent,” American Demographics (March 2004): 34–39.
11. Maddox, “The ROI of Research,” pp. 25, 28.
12. Peter Fuller, “A Two-way Conversation,” Brandweek, February 25,
2002, pp. 21–27.
13. Catherine Arnold, “Hershey Research Sees Net Gain,” Marketing
News, November 25, 2002, p. 17.
14. Witt, “Inside Intent,” pp. 34–39.
15. Will Wade, “Care and Feeding of Cyberpets Rivets Tag-Along
Marketers,” New York Times, February 26, 2004, p. G5.
16. Kevin J. Clancy and Peter C. Krieg, Counterintuitive Marketing:
How Great Results Come from Uncommon Sense (New York: The
Free Press, 2000).
17. John D. C. Little, “Decision Support Systems for Marketing
Managers,” Journal of Marketing (Summer 1979): 11. See “Special
Issue on Managerial Decision Making,” Marketing Science, 18, no.
3 (1999) for some contemporary perspectives.
18. Leonard M. Lodish, “CALLPLAN: An Interactive Salesman’s Call
Planning System,” Management Science (December 1971): 25–40.
19. Christine Moorman, Gerald Zaltman, and Rohit Deshpandé,
“Relationships Between Providers and Users of Market Research:
The Dynamics of Trust Within and Between Organizations,”
Journal of Marketing Research 29 (August 1992): 314–328.
20. Quote excerpted from: Arthur Shapiro, “Let’s Redefine Market
Research,” Brandweek, June 21, 2004, p. 20.
21. John McManus, “Stumbling into Intelligence,” American
Demographics (April 2004): 22–25.
22. John Gaffney, “The Buzz Must Go On,” Business 2.0, February
2002, pp. 49–50.
23. Tim Ambler, Marketing and the Bottom Line: The New Metrics of
Corporate Wealth (London: FT Prentice Hall, 2000).
24. Bob Donath, “Employ Marketing Metrics with a Track Record,”
Marketing News, September 15, 2003, p. 12.
25. Kusum L. Ailawadi, Donald R. Lehmann, and Scott A. Neslin,
“Revenue Premium as an Outcome Measure of Brand Equity,”
Journal of Marketing 67 (October, 2003): 117.
26. Ambler, Marketing and the Bottom Line: The New Metrics of
Corporate Wealth; Tim Ambler, “What Does Marketing Success
Look Like?” Marketing Management (Spring 2001): 13–18.
27. Fred Vogelstein, “Mighty Amazon,” Fortune, May 26, 2003,
pp. 60–74.
28. Jeffrey Schwartz, “New Digital Dashboards Help Drive Decisions,”
B to B, July 14, 2003, pp. 1, 26.
29. Robert S. Kaplan and David P. Norton, The Balanced Scorecard
(Boston: Harvard Business School Press, 1996).
30. Richard Whiteley and Diane Hessan, Customer Centered Growth
(Reading, MA: Addison-Wesley, 1996), pp. 87–90; Adrian
J. Slywotzky, Value Migration: How to Think Several Moves Ahead
of the Competition (Boston: Harvard University Press, 1996),
pp. 231–235.
31. Marion Debruyne and Katrina Hubbard, “Marketing Metrics,”
working paper series, Conference Summary, Marketing Science
Institute, Report No. 00-119, 2000.
32. Alfred R. Oxenfeldt, “How to Use Market-Share Measurement,”
Harvard Business Review (January–February 1969): 59–68.
33. There is a one-half chance that a successive observation will be
higher or lower. Therefore, the probability of finding six successively
higher values is given by (1/2) to the sixth, or 1/64.
34. Alternatively, companies need to focus on factors affecting shareholder
value. The goal of marketing planning is to increase shareholder
value, which is the present value of the future income
stream created by the company’s present actions. Rate-of-return
analysis usually focuses on only one year’s results. See Alfred
Rapport, Creating Shareholder Value, rev. ed. (New York: The Free
Press, 1997).
35. For additional reading on financial analysis, see Peter L. Mullins,
Measuring Customer and Product Line Profitability (Washington,
DC: Distribution Research and Education Foundation, 1984).
36. The MAC Group, Distribution: A Competitive Weapon (Cambridge,
MA: MAC Group, 1985), p. 20.
37. Robin Cooper and Robert S. Kaplan, “Profit Priorities from
Activity-Based Costing,” Harvard Business Review (May–June
1991): 130–135.
38. Jack Neff, “P&G, Clorox Rediscover Modeling,” Advertising Age,
March 29, 2004, p. 10.
39. Laura Q. Hughes, “Econometrics Take Root,” Advertising Age,
August 5, 2002, p. S-4.
CHAPTER 4 CONDUCTING MARKETING RESEARCH AND FORECASTING DEMAND 4-3
40. “Hitting the Bulls-Eye: Target Sets Its Sights on East Coast
Expansion,” Newsweek, October 11, 1999; Janet Moore and Ann
Merrill, “Target Market,” Minneapolis-St. Paul Star Tribune, July
27, 2001; Clarke Canfield, “Anticipation Builds as Fast-Growing
Target Enters Another State,” AP Newswire, August 6, 2001.
41. For a good discussion and illustration, see Roger J. Best, Market-
Based Management, 2nd ed. (Upper Saddle River, NJ: Prentice
Hall, 2000), pp. 71–75.
42. “Will the Have-Nots Always Be with Us?” Fortune, December 20,
1999, pp. 288–289.
43. For further discussion, see Gary L. Lilien, Philip Kotler, and
K. Sridhar Moorthy, Marketing Models (Upper Saddle River, NJ:
Prentice Hall, 1992).
44. .
45. Brian Sternthal and Alice M. Tybout, “Segmentation and
Targeting,” in Kellogg on Marketing, edited by Dawn Iacobucci
(New York: John Wiley & Sons, 2001), pp. 3–30.
46. Norman Dalkey and Olaf Helmer, “An Experimental Application of
the Delphi Method to the Use of Experts,” Management Science
(April 1963): 458–467. Also see Roger J. Best, “An Experiment in
Delphi Estimation in Marketing Decision Making,” Journal of
Marketing Research (November 1974): 447–452. For an excellent
overview of market forecasting, see Scott Armstrong, ed.,
Principles of Forecasting: A Handbook for Researchers and
Practitioners (Norwell, MA: Kluwer Academic Publishers, 2001),
and hisWeb site: .
CHAPTER 5 CREATING CUSTOMER VALUE, SATISFACTION, AND LOYALTY 5-1
MARKETING SPOTLIGHT DELL
“We have a tremendously clear business model,” says Michael Dell. “There’s no
confusion
MARKETING SPOTLIGHT COCA-COLA
Coca-Cola is the most ubiquitous brand in history. Each day, people in 200
countries around the world drink some 1.2 billion 8-ounce servings of the cola.
Marketing for the twenty-first century means leveraging the longtime marketing
principles that work, while inventing new ways to stay relevant. Coca-
Cola, which got its start in 1883, has successfully kept its brand relevant for
over 100 years. Revenues in 2003 topped $21 billion.
Coke’s first president, Asa Candler, instituted many of the marketing tactics
that are entrenched principles now. To gain new customers, he printed coupons
offering free first tastes of the Coca-Cola drink. To build brand recognition, he
gave clocks, calendars, and weighing scales with the Coca-Cola logo to pharmacists
who sold the drink. He hired the company’s first celebrity, music hall
performer Hilda Clark, in the 1890s.
During the heyday of mass-market TV advertising, Coke was the master of
the 30-second TV spot. Its legendary “I’d like to buy the world a Coke” and
“Mean Joe Greene” ads were rated as two of the best ads ever by Advertising
Age.
Coca-Cola also expanded overseas. During World War II, when the army
shipped Cokes to soldiers in Europe and Asia, Coke cemented its image as the
“All-American beverage.” But over time, Coke realized it would need a more
local feel in each country. So, although it uses its signature red-and-white wave
and lettering worldwide, the company uses different ad agencies in different
countries in order to make the brand feel local. For example, the local versions
of the “Mean Joe Greene” ad used sports figures famous in those regions, such
as soccer stars. Similarly, ads for Coca-Cola in Spain show it as a mixer with
wine, reflecting how consumers use the product in that country.
Coke also sells a wide range of different-flavored sodas in different countries.
Visitors to the company’s museum in Atlanta can try these beverages—
everything from cool watermelon (China), to an intensely bitter herbal soda
(Italy), to a zingy ginger soda (South Africa). In 2004, Coke launched a beerflavored
carbonated beverage in Japan.
Coca-Cola now gets two-thirds of its revenues from outside the United States.
It’s easier to name the countries where Coke is not: Myanmar, Cuba, and Syria.
Everywhere else—including such tricky markets as Pakistan, Cambodia, Liberia,
Zimbabwe, and Colombia—Coke is a beloved consumer staple. In fact, the brand
is so strong and so entrenched that even the anti-American sentiments of 9/11
and after have not hurt sales. Coca-Cola’s brand valuation actually increased from
$68.95 billion in August 2001 to $70.45 billion in August 2003. (By comparison,
rival Pepsi-Cola’s brand value is a mere $11.78 billion.) Coca-Cola remains the top
global brand, achieving the top ranking in BusinessWeek’s Global Brand Scorecard
once again in 2003.
Despite its powerhouse status, Coke must continue to evolve its marketing.
For example, the effectiveness of TV ads is declining due to media fragmentation
and use of devices like TiVO that let viewers zap commercials.
Ads that reached 70 percent of Americans during prime time in the 1960s
only reached 15 percent in 2004. So Coke is diverting money previously
spent on TV toward more experiential activities. For example, it’s testing
Coke Red Lounge gathering areas for teens in malls. The lounges offer exclusive
music videos and video games and sell Coke drinks from a see-through
Coke machine. In Britain, Coke’s mycokemusic.com Web site lets surfers
legally download over 250,000 songs.
Chris Lowe, a Coke marketing executive, explained how the company stays
on top: “You can never betray the core values of the brand, but you can work to
make those values fresh and relevant. If you can’t speak to people in these
times, then you become an old icon.” Lowe described the iterative steps of generating
a fresh ad campaign: “There’s the communication strategy that you
want to put across. You test it with consumers for validity and resonance. Then
you take that core meaning and make it come alive with advertising. Then you
take it back to consumers to test it again.”
The results of Coke’s latest marketing shift aren’t known yet, but in 2003 its
then Chairman, Douglas Daft, told investors that Coca-Cola Company has
“arguably the strongest and most pervasive marketing and distribution system
in the world.” And with Coke being the first soda drunk in outer space, even the
sky may not be the limit.
Discussion Questions
1. What have been the key success factors for Coca-Cola?
2. Where is Coca-Cola vulnerable? What should they watch out for?
3. What recommendations would you make to their senior marketing executives
going forward? What should they be sure to do with their marketing?
Sources: Dean Faust, “Coke: Wooing the TiVo Generation,” BusinessWeek, March 1, 2004,
p. 77; Paul Klebnikov, “Coke’s Sinful World,” Forbes, December 22, 2003, p. 86; “Coca-Cola
Japan to Debut Beer-flavored Soda Next Month,” AsiaPulse News, February 13, 2004; “How
Coke Moulded our View of Santa Claus to Fuel Winter Sales,” Marketing, December 18,
2003; Gerry Khermouch and Diane Brady, “The Top 100 Brands,” BusinessWeek, August 4,
2003; Fara Warner, “Chris Lowe Time to Get Real,” Fast Company, April 2003; and www.
coca-cola.com.
NOTES :::
1. Sam Hill and Glenn Rifkin, Radical Marketing (New York:
HarperBusiness, 1999); Gerry Khermouch, “Keeping the Froth on
Sam Adams,” BusinessWeek, September 1, 2003, pp. 54–56.
2. American Marketing Association, 2004.
3. Peter Drucker, Management: Tasks, Responsibilities, Practices
(New York: Harper and Row, 1973), pp. 64–65.
4. Philip Kotler, “Dream Vacations: The Booming Market for
Designed Experiences,” The Futurist (October 1984): 7–13;
B. Joseph Pine II and James Gilmore, The Experience Economy
(Boston: Harvard Business School Press, 1999); Bernd Schmitt,
Experience Marketing (New York: Free Press, 1999).
5. Irving J. Rein, Philip Kotler, and Martin Stoller, High Visibility
(Chicago: NTC Publishers, 1998).
6. Philip Kotler, Irving J. Rein, and Donald Haider, Marketing Places:
Attracting Investment, Industry, and Tourism to Cities, States, and
Nations (New York: Free Press, 1993); and Philip Kotler, Christer
Asplund, Irving Rein, Donald H. Haider, Marketing Places in
Europe: Attracting Investment, Industry and Tourism to Cities,
States and Nations (London: Financial Times Prentice-Hall,
1999). Marketing Places Europe (London: Financial Times
Prentice-Hall, 1999).
7. Carl Shapiro and Hal R. Varian, “Versioning: The Smart Way to Sell
Information,” Harvard Business Review (November–December
1998): 106–114.
8. John R. Brandt, “Dare to Be Different,” Chief Executive,May 2003,
pp. 34–38.
9. Jeffrey Rayport and John Sviokla, “Managing in the Marketspace,”
Harvard Business Review (November–December 1994): 141–150.
Also see their “Exploring the Virtual Value Chain,” Harvard
Business Review (November–December 1995): 75–85.
10. Mohan Sawhney, Seven Steps to Nirvana (New York: McGraw-
Hill, 2001).
11. Jean-Marie Dru, Beyond Disruption: Changing the Rules in the
Marketplace (New York: John Wiley & Sons, 2002); Hill and Rifkin,
Radical Marketing.
12. Scott Kirsner, “5 Tech Innovators,” Fast Company, December 2003,
pp. 93–100.
13. Adam Lashinsky, “Shoutout in Gadget Land,” Fortune, November
10, 2003, pp. 77–86.
14. Gerry Khermouch, “Breaking into the Name Game,”
BusinessWeek, April 7, 2003, p. 54; Anonymous, “China’s
Challenge,” Marketing Week, October 2, 2003, pp. 22–24.
15. Bruce I. Newman, ed., Handbook of Political Marketing (Thousand
Oaks, CA: Sage Publications, 1999); and Bruce I. Newman,
The Mass Marketing of Politics (Thousand Oaks, CA: Sage
Publications, 1999).
16. John B.McKitterick, “What Is theMarketingManagement
Concept?” In Frank M. Bass ed. The Frontiers ofMarketing Thought
and Action (Chicago: AmericanMarketing Association, 1957),
pp. 71–82; Fred J. Borch, “TheMarketing Philosophy as aWay of
Business Life,” TheMarketing Concept: ItsMeaning toManagement
(Marketing series, no. 99) (New York: AmericanManagement
Association, 1957), pp. 3–5; Robert J. Keith, “TheMarketing
Revolution,” Journal ofMarketing (January 1960): 35–38.
17. Levitt, “Marketing Myopia,” Harvard Business Review (July
August), 1960. p. 50.
18. Ajay K. Kohli and Bernard J. Jaworski, “Market Orientation: The
Construct, Research Propositions, and Managerial Implications,”
Journal of Marketing (April 1990): 1–18; John C. Narver and
Stanley F. Slater, “The Effect of a Market Orientation on Business
Profitability,” Journal of Marketing (October 1990): 20–35;
Stanley F. Slater and John C. Narver, “Market Orientation,
Customer Value, and Superior Performance,” Business Horizons,
March–April 1994, pp. 22–28; A. Pelham and D.Wilson, “A
Longitudinal Study of the Impact of Market Structure, Firm
Structure, Strategy and Market Orientation Culture on
Dimensions of Business Performance,” Journal of the Academy
of Marketing Science 24, no. 1 (1996): 27–43; Rohit Deshpande
and John U. Farley, “Measuring Market Orientation:
Generalization and Synthesis,” Journal of Market-Focused
Management 2 (1998): 213–232.
19. John C. Narver, Stanley F. Slater, and Douglas L. MacLachlan,
“Total Market Orientation, Business Performance, and
Innovation,” Working Paper Series, Marketing Science Institute,
Report No. 00-116, 2000, pp. 1–34. See also, Ken Matsuno and
John T. Mentzer, “The Effects of Strategy Type on the Market
Orientation–Performance Relationship,” Journal on Marketing
(October 2000): 1–16.
20. John R. Brandt, “Dare to Be Different,” Chief Executive,May 2003,
pp. 34–38.
21. Christian Homburg, John P.Workman Jr., and Harley Krohmen,
“Marketings Influence Within the Firm,” Journal of Marketing
(January 1999): 1–15.
22. Jochen Zeitz, “This Shoe’s One Cool Cat,” Brandweek, October
20, 2003, pp. M58–M61; Kevin J. O’Brien, “Focusing on
Armchair Athletes, Puma Becomes a Leader,” NewYork Times,
March 12, 2004.
23. Evert Gummesson, Total Relationship Marketing (Boston:
Butterworth-Heinemann, 1999); Regis McKenna, Relationship
Marketing (Reading, MA: Addison-Wesley, 1991); Martin
Christopher, Adrian Payne, and David Ballantyne, Relationship
Marketing: Bringing Quality, Customer Service, and Marketing
Together (Oxford, U.K.: Butterworth-Heinemann, 1991).
24. James C. Anderson, Hakan Hakansson, and Jan Johanson, “Dyadic
Business Relationships within a Business Network Context,”
Journal of Marketing (October 15, 1994): 1–15.
25. Laura Mazur, “Personal Touch is Now Crucial to Growing
Profits,” Marketing, November 27, 2003, p. 18.
26. Kim Cross, “Fill It to the Brim,” Business 2.0, March 6, 2001,
pp. 36–38.
27. Neil H. Borden, “The Concept of the Marketing Mix,” Journal of
Advertising Research 4 (June): 2–7. For another framework, see
George S. Day, “The Capabilities of Market-Driven Organizations,”
Journal of Marketing 58, no. 4 (October 1994): 37–52.
28. E. Jerome McCarthy, Basic Marketing: A Managerial Approach,
12th ed. (Homewood, IL: Irwin, 1996). Two alternative classifications
are worth noting. Frey proposed that all marketing decision
variables could be categorized into two factors: the offering
(product, packaging, brand, price, and service) and
methods and tools (distribution channels, personal selling,
advertising, sales promotion, and publicity). See Albert W. Frey,
Advertising, 3rd ed. (New York: Ronald Press, 1961), p. 30. Lazer
and Kelly proposed a three-factor classification: goods and services
mix, distribution mix, and communications mix. See
William Lazer and Eugene J. Kelly, Managerial Marketing:
Perspectives and Viewpoints, rev. ed. (Homewood, IL: Irwin,
1962), p. 413.
29. Robert Lauterborn, “New Marketing Litany: 4P’s Passe; C-Words
Take Over,” Advertising Age, October 1, 1990, p. 26.
30. Gregory Solman, “Trailers, Bots and Emails Tout Gory Movies to
Teens,” Adweek, October 6, 2003, p. 10.
31. William Greider, “Victory at McDonald’s,” The Nation,
August 18, 2003.
32. Hamish Pringle and Marjorie Thompson, Brand Soul: How Cause-
Related Marketing Builds Brands (New York: John Wiley & Sons,
1999); Richard Earle, The Art of Cause Marketing (Lincolnwood,
IL: NTC, 2000).
33. Private conversation with Carpenter.
34. Larry Selden and Geoffrey Colvin, Angel Customers & Demon
Customers, Portfolio (Penguin), 2003.
35. Goran Svensson, “Beyond Global Marketing and the Globalization
of Marketing Activities,” Management Decision 40, no. 6 (2002):
574–583.
36. Jonathan Glancey, “The Private World of the Walkman,” The
Guardian, October 11, 1999.
37. Joann Muller, “Ford: Why It’s Worse Than You Think,”
BusinessWeek, June 25, 2001; Ford 1999 Annual Report; Greg
Keenan, “Six Degrees of Perfection,” The Globe and Mail,
December 20, 2000.
1-2 CHAPTER 1 DEFINING MARKETING FOR 21ST CENTURY
CHAPTER 2 DEVELOPING MARKETING STRATEGIES AND PLANS 2-1
MARKETING SPOTLIGHT NIKE
Nike hit the ground running in 1962. Originally known as Blue Ribbon Sports, the
company focused on providing high-quality running shoes designed especially
for athletes by athletes. Founder Philip Knight believed that high-tech shoes for
runners could be manufactured at competitive prices if imported from abroad.
The company’s commitment to designing innovative footwear for serious athletes
helped it build a cult following among American consumers. By 1980, Nike had
become the number-one athletic shoe company in the United States.
From the start, Nike’s marketing campaigns featured winning athletes as
spokespeople. The company signed on its first spokesperson, runner Steve
Prefontaine, in 1973. Prefontaine’s irreverent attitude matched Nike’s spirit.
Marketing campaigns featuring winning athletes made sense. Nike saw a “pyramid
of influence”—it saw that product and brand choices are influenced by the preferences
and behavior of a small percentage of top athletes. Using professional athletes
in its advertising campaigns was both efficient and effective for Nike.
In 1985, Nike signed up then-rookie guard Michael Jordan as a spokesperson.
Jordan was still an up-and-comer, but he personified superior performance.
Nike’s bet paid off: The Air Jordan line of basketball shoes flew off the
shelves, with revenues of over $100 million in the first year alone. Jordan also
helped build the psychological image of the Nike brand. Phil Knight said: “Sports
are at the heart of American culture, so a lot of emotion already exists around
it. Emotions are always hard to explain, but there’s something inspirational
about watching athletes push the limits of performance. You can’t explain much
in 60 seconds, but when you show Michael Jordan, you don’t have to.”
In 1988, Nike aired its first ads in the “Just Do It” ad campaign. The $20 million
month-long blitz—subtly encouraging Americans to participate more actively
in sports—featured 12 TV spots in all. The campaign challenged a generation of
athletic enthusiasts to chase their goals; it was a natural manifestation of Nike’s
attitude of self-empowerment through sports. The campaign featured celebrities
and noncelebrities. One noncelebrity ad featured Walt Stack, an 80-year-old longdistance
runner, running across the Golden Gate bridge as part of his morning
routine. The “Just Do It” trailer appeared on the screen as the shirtless Stack ran
on a chilly morning. Talking to the camera as it zoomed in, and while still running,
Stack remarked, “People ask me how I keep my teeth from chattering when it’s
cold.” Pausing, Stack matter-of-factly replied, “I leave them in my locker.”
As Nike began expanding overseas to Europe, it found that its Americanstyle
ads were seen as too aggressive. The brand image was perceived as too
fashion-oriented. Nike realized that it had to “authenticate” its brand in Europe
the way it had in America. That meant building credibility and relevance in
European sports, especially soccer. Nike became actively involved as a sponsor
of soccer youth leagues, local clubs, and national teams. Authenticity required
that consumers see the product being used by athletes, especially by athletes
who win. The big break came in 1994, when the Brazilian team (the only
national team for which Nike had any real sponsorships) won the World Cup.
The victory led Nike to sign other winning teams, and by 2003 overseas revenues
surpassed U.S. revenues for the first time. Nike also topped $10 billion in
sales for the first time in that year as well.
Today, Nike dominates the athletic footwear market. Nine of the 10 top-selling
basketball shoes, for example, are Nikes. Nike introduces hundreds of shoes each
year for 30 sports—averaging one new shoe style every day of the year. Swooshes
abound on everything from wristwatches to golf clubs to swimming caps.
Discussion Questions
1. What have been the key success factors for Nike?
2. Where is Nike vulnerable? What should it watch out for?
3. What recommendations would you make to senior marketing executives
going forward? What should they be sure to do with its marketing?
Sources: Justin Ewers and Tim Smart, “A Designer Swooshes In,” U.S. News & World
Report, January 26, 2004, p. 12; “Corporate Media Executive of the Year,” Delaney
Report, January 12, 2004, p. 1; “10 Top Non Traditional Campaigns,” Advertising Age,
December 22, 2003, p. 24; Chris Zook and James Allen, “Growth Outside the Core,”
Harvard Business Review (December 2003): 66(8).
NOTES :::
1. Keith H. Hammonds, “Michael Porter’s Big Ideas,” Fast Company,
March 2001, pp. 150–154.
2.http:///www.H&M.com, and Eric Sylvers, “Cut-Rate Swedish
Retailer Enters the Italian Market,” New York Times, August 27,
2003, p. W1.
3. Louise Lee, “Thinking Small at the Mall,” BusinessWeek, May 26,
2003, pp. 94–95.
4. Nirmalya Kumar, Marketing As Strategy: The CEO’s Agenda for
Driving Growth and Innovation (Boston: Harvard Business School
Press, 2004).
5. Frederick E.Webster Jr., “The Future Role of Marketing in the
Organization,” in Reflections on the Futures of Marketing, edited
by Donald R. Lehmann and Katherine Jocz (Cambridge, MA:
Marketing Science Institute, 1997), pp. 39–66.
6. Michael E. Porter, Competitive Advantage: Creating and
Sustaining Superior Performance (New York: The Free Press, 1985).
7. Robert Hiebeler, Thomas B. Kelly, and Charles Ketteman, Best
Practices: Building Your Business with Customer-Focused
Solutions (New York: Simon and Schuster, 1998).
8. Hammer and Champy, Reengineering the Corporation: A Manifesto
for Business Revolution (New York: Harper Business, 1993).
9. George Stalk, “Competing on Capability: The New Rules of
Corporate Strategy,” Harvard Business Review (March–April 1992):
57–69; Benson P. Shapiro, V. Kasturi Rangan, and John J. Sviokla,
“Staple Yourself to an Order,” Harvard Business Review
(July–August 1992): 113–122.
10. Jon R. Katzenbach and Douglas K. Smith, The Wisdom of Teams:
Creating the High-Performance Organization (Boston: Harvard
Business School Press, 1993); Hammer and Champy,
Reengineering the Corporation.
11. Michael Johnsen, “Profiting from a First-Place Focus,” Drug Store
News, January 20, 2003, p. 26.
12. Myron Magnet, “The New Golden Rule of Business,” Fortune,
November 28, 1994, pp. 60–64.
13. C. K. Prahalad and Gary Hamel, “The Core Competence of the
Corporation,” Harvard Business Review (May–June 1990): 79–91.
14. Alan Cohen, “The Great Race,” Fortune Small Business, December
2002/January 2003, pp. 42–48.
2-2 CHAPTER 2 DEVELOPING MARKETING STRATEGIES AND PLANS
15. George S. Day, “The Capabilities of Market-Driven
Organizations,” Journal of Marketing (October 1994): 38.
16. Pew Internet and American Life Project Survey,
November–December 2000.
17. Kasuaki Ushikubo, “A Method of Structure Analysis for Developing
Product Concepts and Its Applications,” European Research 14,
no. 4 (1986): 174–175.
18. Jesus Sanchez, “Kodak Cuts Dividend; Shifts Strategy,” Los Angeles
Times, September 26, 2003, p. C3.
19. Susan Kuchinskas, “The Tao of Wow,” Adweek Magazines’
Technology Marketing, June 2003, p. 10.
20. Yoram J.Wind and Vijay Mahajan with Robert E. Gunther,
Convergence Marketing: Strategies for Reaching the New Hybrid
Consumer (Upper Saddle River, NJ: Prentice Hall PTR, 2002).
21. Peter Drucker, Management: Tasks, Responsibilities and Practices
(New York: Harper and Row, 1973), ch. 7.
22. Ralph A. Oliva, “Nowhere to Hide,” Marketing Management,
July/August 2001, pp. 44–46.
23. Pew Internet and American Life Project Survey,
November–December 2000.
24. Chuck Martin, Net Future (New York: McGraw-Hill, 1999).
25. Leah Nathans Spiro, “Pitney Goes for Growth,” Chief Executive,
October 2003, pp. 38–42.
26. Jeffrey F. Rayport and Bernard J. Jaworski, e-commerce (New York:
McGraw-Hill, 2001), p. 116.
27. Tilman Kemmler, Monika Kubicová, Robert Musslewhite, and
Rodney Prezeau, “E-Performance II—The Good, the Bad, and the
Merely Average,” an exclusive to mckinseyquarterly.com, 2001.
28. The same matrix can be expanded into nine cells by adding modified
products and modified markets. See S. J. Johnson and Conrad
Jones, “How to Organize for New Products,” Harvard Business
Review (May–June 1957): 49–62.
29. ; Howard Schultz, Pour Your Heart into It
(New York: Hyperion, 1997); Andy Serwer, “Hot Starbucks to Go,”
Fortune, January 26, 2004, pp. 60–74.
30. Tim Goodman, “NBC Everywhere?” San Francisco Chronicle,
September 4, 2003, p. E1.
31. Catherine Fredman, “Smart People, Stupid Choices,” Chief
Executive, August/September 2002, pp. 64–68.
32. “Business: Microsoft’s Contradiction,” The Economist (January 31,
1998): 65–67; Andrew J. Glass, “Microsoft Pushes Forward, Playing
to Win the Market,” Atlanta Constitution, June 24, 1998, p. D12.
33. Ben Elgin, “Yahoo! Act Two,” BusinessWeek, June 2, 2003,
pp. 70–76.
34. Daniel Howe, “Note to DaimlerChrysler: It’s Not a Small World
after All,” Detroit News, May 19, 1998, p. B4; Bill Vlasic, “The First
Global Car Colossus,” BusinessWeek, May 18, 1998, pp. 40–43;
Pamela Harper, “Business ‘Cultures’ at War,” Electronic News,
August 3, 1998, pp. 50, 55.
35. Bill Vlasic and Bradley Stertz. “Taken for a Ride,” BusinessWeek,
June 5, 2000; Jeffrey Ball and Scott Miller, “DaimlerChrysler Isn’t
Living Up to Its Promise,” Wall Street Journal, July 26, 2000; Eric
Reguly, “Daimler, Chrysler Still a Culture Clash,” The Globe and
Mail, January 30, 2001.
36. E. Jerome McCarthy, Basic Marketing: A Managerial Approach,
12th ed. (Homewood, IL: Irwin, 1996).
37. Ian Wylie, “Calling for a Renewable Future,” Fast Company, May
2003, pp. 46–48.
38. Paul J. H. Shoemaker, “Scenario Plannning: A Tool for Strategic
Thinking,” Sloan Management Review (Winter 1995): 25–40.
39. Philip Kotler, Kotler on Marketing (New York: Free Press, 1999).
40. Kotler, Kotler on Marketing.
41. Eric A. Taub, “Drawing Stares and the Police but Not Many
Buyers,” New York Times, August 9, 2003, p. C1; Faith Keenan, “Is
Segway Going Anywhere?” BusinessWeek, January 27, 2003, p. 42.
42. George Stalk, Philip Evans, and Lawrence E. Shulman,
“Competing Capabilities: The New Rules of Corporate Strategy,”
Harvard Business Review (March–April 1992): 57–69.
43. Ram Charan and Noel M. Tichy, Every Business Is a Growth
Business: How Your Company Can Prosper Year after Year (New
York: Times Business, Random House, 1998).
44. Michael E. Porter, Competitive Strategy: Techniques for Analyzing
Industries and Competitors (New York: The Free Press, 1980), ch. 2.
45. Michael E. Porter, “What Is Strategy?” Harvard Business Review
(November–December 1996): 61–78.
46. For some readings on strategic alliances, see Peter Lorange and
Johan Roos, Strategic Alliances: Formation, Implementation and
Evolution (Cambridge, MA: Blackwell, 1992); Jordan D. Lewis,
Partnerships for Profit: Structuring and Managing Strategic
Alliances (New York: The Free Press, 1990); John R. Harbison and
Peter Pekar Jr., Smart Alliances: A Practical Guide to Repeatable
Success (San Francisco: Jossey-Bass, 1998); Harvard Business
Review on Strategic Alliances (Cambridge, MA: Harvard Business
School Press, 2002).
47. Anonymous, “Trends Report: Looking for the Pharmaceutical-
Biotechnology Alliance Creates a Win–Win,” Health and Medicine
Week, December 29, 2003, p. 726.
48. Robin Cooper and Robert S. Kalpan, “Profit Priorities from Activity-
Based Costing,” Harvard Business ReviewMay–June 1991): 130–135.
49. Robert S. Kaplan and David P. Norton, The Balanced Scorecard:
Translating Strategy into Action (Boston: Harvard Business School
Press, 1996), as a tool for monitoring stakeholder satisfaction.
50. Thomas J. Peters and Robert H.Waterman Jr., In Search of
Excellence: Lessons from America’s Best-Run Companies (New
York: Harper and Row, 1982), pp. 9–12.
51. Terrence E. Deal and Allan A. Kennedy, Corporate Cultures: The
Rites and Rituals of Corporate Life (Reading, MA: Addison-Wesley,
1982); “Corporate Culture,” BusinessWeek, October 27, 1980,
pp. 148–160; Stanley M. Davis, Managing Corporate Culture
(Cambridge, MA: Ballinger, 1984); John P. Kotter and James L.
Heskett, Corporate Culture and Performance (New York: The Free
Press, 1992).
52. Nitin Nohria, William Joyce, and Bruce Roberson, “What Really
Works,” Harvard Business Review 81, No. 7 (2003): 42–53.
53. Lawrence M. Fisher, “With a New Smart Suite, Lotus Catches Its
Rivals’ Success,” New York Times, June 15, 1998, p. 6.
54. Sarah Ellison, “Kraft’s Stale Strategy: Endless Extensions of Oreos,
Chips-Ahoy and Jell-O Brands Created a New-Product Void,”
Wall Street Journal, December 18, 2003, p. B1.
55. Marian Burk Wood, The Marketing Plan: A Handbook (Upper
Saddle River, NJ: Prentice Hall, 2003).
56. Donald R. Lehmann and Russell S.Winer, Product Management,
3rd. ed. (Boston: McGraw-Hill/Irwin, 2001).
57. Reproduced from Marian Burk Wood, The Marketing Plan: A
Handbook. (Upper Saddle River, NJ: Prentice Hall, 2003)
58. Rubbermaid, Annual Report, 1997.
CHAPTER 3 GATHERING INFORMATION AND SCANNING THE ENVIRONMENT 3-1
MARKETING SPOTLIGHT BUDWEISER
Budweiser Lager was first brewed in 1876 by E. Anheuser & Co., St. Louis.
Today, Anheuser-Busch is the largest brewer in the world in terms of volume,
and it competes across a diverse range of markets. The company oversees
more than 30 different beer brands, including the domestic market leader
Budweiser, a number of other alcoholic and nonalcoholic beverages, a group of
theme parks, and a real estate enterprise.
While retaining its brewing traditions, the company has adopted new technological
traditions that improve its business and marketing effectiveness. In
1997, chairman August Busch III vowed to make his company a leader in mining
its customers’ buying patterns. The key to Anheuser-Busch’s real-time
analysis of marketing effectiveness is timely data: getting information back from
wholesalers and retailers on what is selling where and when.
“Wholesaler and store-level data has become the lifeblood of our organization,”
said Joe Patti, Anheuser’s vice president for retail planning and category
management. Therefore, Anheuser-Busch created BudNET to connect to wholesalers,
retailers, and other Anheuser-Busch business partners. The system handles
sales reporting, customer development, retail promotion notices, and
weekly sales forecasting, as well as a wide array of logistics-related functions.
BudNET is the information channel for an Anheuser-Busch system called
WEARS (Wholesaler Equity Agreement Reporting System). Through BudNET, the
delivery people of the 700 U.S. distributors of Budweiser can become the eyes
and ears of the brewer.
WEARS and BudNET do much more than just keep tabs on the flow of icycold
Bud off retailers’ refrigerated shelves. Using portable transaction computers,
the delivery people also log data on competing products, identifying what
else is on the retailers’ shelves. At the end of the day, Anheuser-Busch gets the
data and looks for trends. “If Anheuser-Busch loses shelf space in a store in
Clarksville, Tennessee, they know it right away,” said Joe Thompson, president
of Independent Beverage Group, a research and consulting firm. “They’re better
at this game than anyone, even Coca-Cola.”
Understanding consumers means more than just gathering data on your
own product or on your competitor’s product. Anheuser-Busch also analyzes
syndicated bar-code scan data gathered by Information Resources Inc. (IRI), to
track consumer purchasing behavior across a full range of products. Anheuser-
Busch successfully launched low-carb Michelob Ultra after seeing data on consumer
shifts in dietary habits in other food groups.
Timely, fine-grain data also help sharpen Anheuser-Busch’s marketing
and product assortment. With store-level data, the company can create targeted
marketing materials. For example, gay models appear on posters in
San Francisco’s Castro district, but not on those in the Mission district. Better
data also help predict local sales during holidays, such as knowing that
Atlantans celebrate Fourth of July more than St. Patrick’s Day. Demographic
data help Anheuser-Busch know where cans sell better than bottles (bluecollar
neighborhoods), and helped the company launch a range of Latininspired
beverages such as Tequiza and Sauza Diablo for the growing
Hispanic market.
Anheuser-Busch uses a variety of internal and external data sources—
including consumer demographics, POS, and market data—to guide product
assortment decisions. Anheuser-Busch uses the six-step, industry-standard,
best practice called Efficient Item Assortment (EIA) that is published by the Food
Marketing Institute. Software, co-developed with an outside software vendor,
creates a top-line master assortment product list for individual stores and store
clusters. This tool won a Technology Leadership Award from Consumer Goods
Technology (CGT) magazine.
Anheuser-Busch’s use of IT is international. Budexchange.co.uk,
hosted on BudNET, tracks key data and sales of 5,000 British outlets. The
system rewards the loyalty of trade customers with Budweiser-branded
support materials. Anheuser-Busch uses the data provided by the outlets
in its proactive segmented marketing communications program. In a market
in which overall sales are down 5.7 percent, Budweiser sales are up
7 percent.
Anheuser-Busch continues to expand its use of datalinks, using its market
clout to improve data gathering and data sharing. August Busch IV, president
for domestic operations, promised that “brewers and wholesalers with
a clear, data-driven focus will have a distinct competitive advantage.” Market
share data confirm the success of the company’s strategy—Anheuser-Busch
now commands 50.1 percent of the market in 2003, up from 48.9 percent
in 2002.
Discussion Questions
1. What have been the key success factors for Anheuser-Busch?
2. Where is Anheuser-Busch vulnerable? What should it watch out for?
3. What recommendations would you make to senior marketing executives
going forward? What should the company be sure to do with its
marketing?
Sources: Kevin Kelleher, “66,207,896 Bottles of Beer on the Wall: Anheuser-Busch’s Top-
Secret Data Network Tracks Inventory,” Business 2.0, February 25, 2004; “Website
Development, Reward Systems and eCRM,” ; and
.
3-2 CHAPTER 3 GATHERING INFORMATION AND SCANNING THE ENVIRONMENT
NOTES :::
1. Sonia Reyes, “Fighting the Fat Backlash,” Brandweek, May 5,
2003, pp. 24–30; Louise Witt, “Why We Are Losing the War
Against Obesity,” American Demographics (December
2003/January 2004): 27–31; Brian Steinberg, “Food Marketers
Playing Up Nutrition,” Wall Street Journal, March 26, 2004;
Deborah Ball, “With Food Sales Flat, Nestlé Stakes Future on
Healthier Fare,” Wall Street Journal, March 18, 2004, pp. A1–2;
Susan Orenstein and Matthew Maier, “Can Atkins Exploit
Success,” Business 2.0, March 2004, pp. 33–34; Timothy
K. Smith, “We’ve Got to Stop Eating Like This,” Fortune,
February 3, 2003, pp. 58–70.
2. Rebecca Gardyn, “The Shape of Things to Come,” American
Demographics (July/Augyst 2003): 25–30; Stephanie Kang,
“Retailer Prospers with Sexy Clothes for the Plus-Sized,” Wall
Street Journal, April 27, 2004, pp. A1, A8.
3. Susan Warren, “Pillow Talk: Stackers Outnumber Plumpers; Don’t
Mention Drool,” Wall Street Journal, January 8, 1998, p. B1.
4. Steve Weinstein, “Realistic Partnering: How to Do Business
Better,” Progressive Grocer 71, no. 2 (February 1992): 80–85;
Charles Fishman, “The Wal-Mart You Don’t Know,” Fast Company,
December 2003, pp. 68–80.
5. Heather Green, “TaylorMade,” BusinessWeek, November 24,
2003, p. 94.
6. Jennifer Brown, “Pizza Hut Delivers Hot Results Using Data
Warehouse,” Computing Canada, October 17, 2003, p. 24.
7. Mara Der Hovanesian, “Wells Fargo,” BusinessWeek, November 24,
2004, p. 96.
8. Jennifer Esty, “Those Wacky Customers!” Fast Company, January
2004, p. 40.
9. Julie Forster, “You Deserve a Better Break Today,” BusinessWeek,
September 30, 2002, p. 42.
10. Kevin Helliker, “Smile: That Cranky Shopper May Be a Store Spy,”
Wall Street Journal, November 30, 1994, pp. B1, B6; Edward F.
McQuarrie, Customer Visits: Building a Better Market Focus, 2nd
ed. (Newbury Park, CA: Sage Press, 1998).
11. Kim Girard, “Strategies to Turn Stealth into Wealth,” Business 2.0,
May 2003, p. 66.
12. Andy Serwer, “P&G’s Covert Operation,” Fortune, September 17,
2001, pp. 42–44.
13. Amy Merrick, “Counting on the Census,” Wall Street Journal,
February 14, 2001, p. B1.
14. Girard, “Strategies to Turn Stealth into Wealth,” p. 66.
15. Robin T. Peterson and Zhilin Yang, “Web Product Reviews Help
Strategy,” Marketing News, April 7, 2004, p. 18.
16. See for examples of fads and collectibles
through the years.
17. John Naisbitt and Patricia Aburdene, Megatrends 2000 (New York:
Avon Books, 1990).
18. World POPClock, U.S. Census Bureau, ,
September 1999.
19. Although over 10 years old, this breakdown provides useful
perspective. See Donella H. Meadows, Dennis L. Meadows,
and Jorgen Randers, Beyond Limits: (Chelsea Green
Publishing Company, 1993) for some commentary.
White River Jt., VT.
20. Sally D. Goll, Marketing: China (Only) Children Get the Royal
Treatment,” Wall Street Journal, February 8, 1995, p. B1.
21. “Survey: Forever Young,” The Economist, March 27, 2004,
pp. 53–54.
22. Michael J.Weiss, “Chasing Youth,” American Demographics
(October 2002): 35–40; Becky Ebenkamp, “When They’re 64,”
Brandweek, October 7, 2002, pp. 22–25; Linda Tischler, “Where the
Bucks Are,” Fast Company, March 2004, pp. 71–77.
23. “Further Along the X Axis,” American Demographics (May 2004):
21–24.
24. Daren Fonda, “A Pitch to the Rich,” Time, November 24, 2003, but
see Neal E. Boudette, “As VW Tries to Sell Pricier Cars, Everyman
Image Holds It Back,” Wall Street Journal, May 13, 2004.
25. David Leonhardt, “Hey Kids, Buy This,” BusinessWeek, June 30,
1997, pp. 62–67; Don Tapscott, Growing Up Digital; The Rise of the
Net Generation (New York: McGraw-Hill, 1997).
26. Brian Grow, “Hispanic Nation,” BusinessWeek, March 15, 2004,
pp. 58–70.
27. For descriptions on the buying habits and marketing approaches
to African Americans and Latinos, see Alfred L. Schreiber,
Multicultural Marketing (Lincolnwood, IL: NTC Business Books,
2001); M. Isabel Valdes, Marketing to American Latinos: A Guide
to the In-Culture Approach, Part II (Paramount Market
Publishing, 2002). Ithaca, N. Y.
28. Hassan Fattah, “Asia Rising,” American Demographics
(July/August 2002): 38–43.
29. Jacquelyn Lynn, “Tapping the Riches of Bilingual Markets,”
Management Review (March 1995): 56–61; Mark R. Forehand and
Rohit Deshpandé, “What We See Makes Us Who We Are: Priming
Ethnic Self-Awareness and Advertising Response,” Journal of
Marketing Research (August 2001): 336–348.
30. Robert M. Moore, “The Rising Tide,” Change, pp. 56–61. May/June
2004 Vol. 36, ISSOP #3.
31. Michelle Conlin, “Unmarried America,” BusinessWeek, October
20, 2003, pp. 106–116; James Morrow, “A Place for One,” American
Demographics (November 2003): 25–30.
32. Angela Phillips, “Friends Are the New Family,” The Guardian,
December 12, 2003, p. 1.
33. Kris Oser, “Friendster Uses Imaginary Pals to Lure Real Ones,”
Advertising Age, July 19, 2004, pp. 3, 33; Vanessa Hua, “Bound
Together,” San Francisco Chronicle, June 27, 2003, p. B1.
34. Rebecca Gardyn, “A Market Kept in the Closet,” American
Demographics (November 2001): 37–43.
35. Laura Koss-Feder, “Out and About,” Marketing News, May 25,
1998, pp. 1, 20.
36. Karlin Lillington, “ Dream Ticket: Big Name Companies Are
Increasingly Targeting the Gay Market,” The Guardian, October
16, 2003, p. 25.
37. “Rural Population and Migration: Overview,” Economic Research
Service, U.S. Department of Agriculture.
CHAPTER 3 GATHERING INFORMATION AND SCANNING THE ENVIRONMENT 3-3
38. Lauri J. Flynn, “Not Just a Copy Shop Any Longer, Kinko’s Pushes
Its Computer Services,” New York Times, July 6, 1998, p. D1;
.
39. Christopher Reynolds, “Magnetic South,” Forecast, September
2003, p. 6.
40. John-Thor Dahlburg, “A Fountain of Youth in Florida,” Los Angeles
Times, March 27, 2004, p. A1.
41. Manjeet Kripalani and Pete Engardio, “The Rise of India,”
BusinessWeek, December 8, 2003, pp. 66–76; Joanna Slater, “Call of
the West,” Wall Street Journal, January 2, 2004, p. A1.
42. David Leonhardt, “Two-Tier Marketing,” BusinessWeek, March 17,
1997, pp. 82–90; Robert H. Franc, “Yes the Rich Get Richer, but
There’s More to the Story,” Columbia Journalism Review,
November 1, 2000.
43. Louise Lee, “The Gap has Reason to Dance Again,” BusinessWeek,
April 19, 2004, p. 42.
44. Stephen Baker and Manjeet Kripalani, “Software: Will Outsourcing
Hurt America’s Supremacy?” BusinessWeek, March 1, 2004,
pp. 84–94; Jennifer Reingold, “Into Thin Air,” Fast Company, April
2004, pp. 76–82.
45. Alison Stanley and Paul Argenti, “Starbucks Coffee Company,”
case study, Tuck School of Business at Dartmouth, .
46. Pamela Paul, “Corporate Responsibility,” American Demographics
(May 2002): 24–25.
47. Paul Wenske, “You Too Could Lose $19,000!” Kansas City Star,
October 31, 1999; “Clearing House Suit Chronology,” Associated
Press, January 26, 2001.
48. Laura Zinn, “Teens: Here Comes the Biggest Wave Yet,”
BusinessWeek, April 11, 1004, pp. 76–86.
49. Rebecca Gardyn, “Eco-Friend or Foe,” American Demographics
(October 2003): 12–13. See also, Rebecca Gardyn, “Being Green,”
American Demographics (September 2002): 10–11.
50. Françoise L. Simon, “Marketing Green Products in the Triad,”
Columbia Journal of World Business (Fall and Winter 1992):
268–285; Jacquelyn A. Ottman, Green Marketing: Responding to
Environmental Consumer Demands (Lincolnwood, IL: NTC
Business Books, 1993); Ajay Menon and Anil Menon,
“Enviropreneurial Marketing Strategy: The Emergence of
Corporate Environmentalism as Market Strategy,” Journal of
Marketing (January 1997): 51–67; Michael Rothschild, “Carrots,
Sticks, and Promises: A Conceptual Framework for the
Management of Public Health and Social Issue Behaviors,”
Journal of Marketing (October 1999): 29–37.
51. Brad Stone, “Your Next Computer,” Newsweek, June 7, 2004, p. 65.
52. Moon Ihlwan “Wireless Wonders: Samsung Gets Wired on
Wireless,” BusinessWeek, April 26, 2004; Richard Shim and
Michael Kannelos, “Networked Homes Move Closer to Reality,”
CNET News.com, May 28, 2004.
53. See Dorothy Cohen, Legal Issues on Marketing Decision Making
(Cincinnati: South-Western, 1995).
54. Rebecca Gardyn, “Swap Meet,” American Demographics (July
2001): 51–55.
55. Pamela Paul, “Mixed Signals,” American Demographics (July
2001): 45–49.
CHAPTER 4 CONDUCTING MARKETING RESEARCH AND FORECASTING DEMAND 4-1
MARKETING SPOTLIGHT SONY
Sony started as a radio repair shop, founded by Masuru Ikura and Akio Morita
after World War II. The company began its long history of producing compact
consumer electronics in 1957, when it introduced the world’s first pocket-sized
all-transistor radio. The company’s name, Sony, was taken from sonus, the
Latin word for “sound.” Sony went on to invent a series of transistor-based TVs
and increasingly smaller audiocassette recorders. In 1979, the Sony Walkman
introduced the world to a new, portable way of listening to music. Sony became
a world leader in consumer electronics and was the first Japanese company to
have its shares traded on the New York Stock Exchange.
In the late 1980s, Sony began expanding into media, purchasing a U.S.
record company (CBS Records for $22 billion in 1988) and a major Hollywood
studio (Columbia Pictures for $4.9 billion in 1989). The purchases made Sony
a major force in the entertainment industry.
The importance of marketing at Sony started with Akio Morita, who said that
for a company to be successful, it must have three kinds of creativity: creativity
to make inventions, creativity in product planning and production, and creativity
in marketing.
Creativity in marketing at Sony means not just clever ads, but deep insight
into its customers. For example, Sony knows its PlayStation customers like to
find clues and to decode things. So Sony’s ads for PlayStation 2, like “Signs,”
feature a young man walking the streets of a city where he encounters various
signs foreshadowing the events. Mannequins appear in a store window, arms
outstretched, and point enigmatically to something that’s about to happen. “The
lead character is almost in the midst of his own role-playing game. He needs to
follow clues to save the heroine,” said Andrew House, Sony’s executive vice
president of marketing. In the ads, “we were essentially trying to tap into a
range of emotions that we think we deliver in the games—intrigue, foreboding,
excitement, panic, relief and achievement at the end.”
Sony’s marketing also includes careful measurement of each campaign’s
effectiveness. For example, Sony runs 30-second commercials for its
PlayStation as part of the previews in more than 1,800 theaters and on 8,000
movie screens. The ads appear before such films as “The Cat in the Hat.” Sony
Computer Entertainment America has been running movie ads for six years.
“Cinema advertising has been very effective for us,” said Ami Blaire, director of
product marketing. “The reason why we have committed to cinema every year
is the tremendous unaided recall shown by our own research and Communicuscommissioned
ad tracking.”
Another example of measurement is Sony’s GenY youth marketing efforts.
“The online program promoting the NetMD, ATRAC CD Walkman and Cybershot
U30 ran July 1 through September 30 2003, and we found that more than 70
percent of the clickthroughs were spurred by rich media ads via Eyeblaster, versus
static banners,” said Serge Del Grosso, Director of Media and Internet
Strategy, Sony Electronics.
In fact, Sony has even developed a direct-marketing solution which it sells
to other companies who want to measure marketing effectiveness. The product,
called eBridge[TM], allows marketers to use video, measure the effectiveness
of the campaign, and gain insight into the target audience, all in one
package.
Sony expects that the next big breakthrough will not come from a single
new electronic device. Rather, Sony president Kunitake Ando says that the
future lies in making a whole range of devices more useful by linking them in
a networked home-entertainment system. The company believes that its clout
in consumer electronics, combined with its media content, will allow it to
steer that convergence in a way that suits it. Whether the future of convergence
resides in TVs or PCs or devices, $62-billion Sony makes every one of
them—with a strong brand name that gives them an extra push off retail
shelves around the world.
Discussion Questions
1. What have been the key success factors for Sony?
2. Where is Sony vulnerable? What should it watch out for?
3. What recommendations would you make to senior marketing executives
going forward? What should they be sure to do with its marketing?
Sources: John Teresko, “ASIA: Yesterday’s Fast Followers Today’s Global Leaders,”
Industry Week, February 2004, pp. 22–28; Gregory Solman, “Sony’s Got Game on Movie,
TV Screens,” Adweek, November 26, 2003, p. NA; “Sony Launches Holiday Ad Blitz,”
Technology Advertising & Branding Report, December 1, 2003; Tobi Elkin, “Sony Rolls
Cinematic PS2 Push.”Advertising Age, September 2, 2002, p. 4; “Digital Player: Serge Del
Grosso,” Advertising Age, October 27, 2003, p. 44; “The Complete Home Entertainer?”
The Economist, March 1, 2003; .
4-2 CHAPTER 4 CONDUCTING MARKETING RESEARCH AND FORECASTING DEMAND
NOTES :::
1. Allison Fass, “Bear Market,” Forbes, March 1, 2004, p. 88.
2. 1994 Survey of Market Research, edited by Thomas Kinnear and
Ann Root (Chicago: American Marketing Association, 1994).
3. Emily Sweeney, “Karmaloop Shapes Urban Fashion by Spotting
Trends Where They Start,” Boston Globe, July 8, 2004, p. D3.
4. Kevin J. Clancy and Robert S. Shulman, Marketing Myths That Are
Killing Business (New York: McGraw-Hill, 1994), p. 58; Phaedra
Hise, “Comprehensive CompuServe,” Inc. (June 1994): 109;
“Business Bulletin: Studying the Competition,” Wall Street
Journal, pp. A1–A5.
5. Kate Maddox, “The ROI of Research,” B to B, April 5, 2004,
pp. 25, 28.
6. For some background information on in-flight Internet service,
see “In-Flight Dogfight,” Business2.Com, January 9, 2001,
pp. 84–91; John Blau, “In-Flight Internet Service Ready for
Takeoff,” IDG News Service, June 14, 2002; “Boeing In-Flight
Internet Plan Goes Airborne,” The Associated Press, April 18, 2004.
7. For a discussion of the decision-theory approach to the value of
research, see Donald R. Lehmann, Sunil Gupta, and Joel Steckel,
Market Research (Reading, MA: Addison-Wesley, 1997).
8. Allison Stein Wellner, “Look Who’s Watching,” Continental, April
2003, pp. 39–41; Linda Tischler, “Every Move You Make,” Fast
Company, April 2004, pp. 73–75.
9. Bruce Nussbaum, “The Power of Design,” BusinessWeek, May 17,
2004, pp. 86–94.
10. Roger D. Blackwell, James S. Hensel, Michael B. Phillips, and Brian
Sternthal, Laboratory Equipment for Marketing Research
(Dubuque, IA: Kendall/Hunt, 1970); Wally Wood, “The Race to
Replace Memory,” Marketing and Media Decisions (July 1986):
166–167. See also, Gerald Zaltman, “Rethinking Market Research:
Putting People Back In,” Journal of Marketing Research 34, no. 4
(November 1997): 424–437; Andy Raskin, “A Face Any Business
Can Trust,” Business 2.0, December 2003, pp. 58–60; Louise Witt,
“Inside Intent,” American Demographics (March 2004): 34–39.
11. Maddox, “The ROI of Research,” pp. 25, 28.
12. Peter Fuller, “A Two-way Conversation,” Brandweek, February 25,
2002, pp. 21–27.
13. Catherine Arnold, “Hershey Research Sees Net Gain,” Marketing
News, November 25, 2002, p. 17.
14. Witt, “Inside Intent,” pp. 34–39.
15. Will Wade, “Care and Feeding of Cyberpets Rivets Tag-Along
Marketers,” New York Times, February 26, 2004, p. G5.
16. Kevin J. Clancy and Peter C. Krieg, Counterintuitive Marketing:
How Great Results Come from Uncommon Sense (New York: The
Free Press, 2000).
17. John D. C. Little, “Decision Support Systems for Marketing
Managers,” Journal of Marketing (Summer 1979): 11. See “Special
Issue on Managerial Decision Making,” Marketing Science, 18, no.
3 (1999) for some contemporary perspectives.
18. Leonard M. Lodish, “CALLPLAN: An Interactive Salesman’s Call
Planning System,” Management Science (December 1971): 25–40.
19. Christine Moorman, Gerald Zaltman, and Rohit Deshpandé,
“Relationships Between Providers and Users of Market Research:
The Dynamics of Trust Within and Between Organizations,”
Journal of Marketing Research 29 (August 1992): 314–328.
20. Quote excerpted from: Arthur Shapiro, “Let’s Redefine Market
Research,” Brandweek, June 21, 2004, p. 20.
21. John McManus, “Stumbling into Intelligence,” American
Demographics (April 2004): 22–25.
22. John Gaffney, “The Buzz Must Go On,” Business 2.0, February
2002, pp. 49–50.
23. Tim Ambler, Marketing and the Bottom Line: The New Metrics of
Corporate Wealth (London: FT Prentice Hall, 2000).
24. Bob Donath, “Employ Marketing Metrics with a Track Record,”
Marketing News, September 15, 2003, p. 12.
25. Kusum L. Ailawadi, Donald R. Lehmann, and Scott A. Neslin,
“Revenue Premium as an Outcome Measure of Brand Equity,”
Journal of Marketing 67 (October, 2003): 117.
26. Ambler, Marketing and the Bottom Line: The New Metrics of
Corporate Wealth; Tim Ambler, “What Does Marketing Success
Look Like?” Marketing Management (Spring 2001): 13–18.
27. Fred Vogelstein, “Mighty Amazon,” Fortune, May 26, 2003,
pp. 60–74.
28. Jeffrey Schwartz, “New Digital Dashboards Help Drive Decisions,”
B to B, July 14, 2003, pp. 1, 26.
29. Robert S. Kaplan and David P. Norton, The Balanced Scorecard
(Boston: Harvard Business School Press, 1996).
30. Richard Whiteley and Diane Hessan, Customer Centered Growth
(Reading, MA: Addison-Wesley, 1996), pp. 87–90; Adrian
J. Slywotzky, Value Migration: How to Think Several Moves Ahead
of the Competition (Boston: Harvard University Press, 1996),
pp. 231–235.
31. Marion Debruyne and Katrina Hubbard, “Marketing Metrics,”
working paper series, Conference Summary, Marketing Science
Institute, Report No. 00-119, 2000.
32. Alfred R. Oxenfeldt, “How to Use Market-Share Measurement,”
Harvard Business Review (January–February 1969): 59–68.
33. There is a one-half chance that a successive observation will be
higher or lower. Therefore, the probability of finding six successively
higher values is given by (1/2) to the sixth, or 1/64.
34. Alternatively, companies need to focus on factors affecting shareholder
value. The goal of marketing planning is to increase shareholder
value, which is the present value of the future income
stream created by the company’s present actions. Rate-of-return
analysis usually focuses on only one year’s results. See Alfred
Rapport, Creating Shareholder Value, rev. ed. (New York: The Free
Press, 1997).
35. For additional reading on financial analysis, see Peter L. Mullins,
Measuring Customer and Product Line Profitability (Washington,
DC: Distribution Research and Education Foundation, 1984).
36. The MAC Group, Distribution: A Competitive Weapon (Cambridge,
MA: MAC Group, 1985), p. 20.
37. Robin Cooper and Robert S. Kaplan, “Profit Priorities from
Activity-Based Costing,” Harvard Business Review (May–June
1991): 130–135.
38. Jack Neff, “P&G, Clorox Rediscover Modeling,” Advertising Age,
March 29, 2004, p. 10.
39. Laura Q. Hughes, “Econometrics Take Root,” Advertising Age,
August 5, 2002, p. S-4.
CHAPTER 4 CONDUCTING MARKETING RESEARCH AND FORECASTING DEMAND 4-3
40. “Hitting the Bulls-Eye: Target Sets Its Sights on East Coast
Expansion,” Newsweek, October 11, 1999; Janet Moore and Ann
Merrill, “Target Market,” Minneapolis-St. Paul Star Tribune, July
27, 2001; Clarke Canfield, “Anticipation Builds as Fast-Growing
Target Enters Another State,” AP Newswire, August 6, 2001.
41. For a good discussion and illustration, see Roger J. Best, Market-
Based Management, 2nd ed. (Upper Saddle River, NJ: Prentice
Hall, 2000), pp. 71–75.
42. “Will the Have-Nots Always Be with Us?” Fortune, December 20,
1999, pp. 288–289.
43. For further discussion, see Gary L. Lilien, Philip Kotler, and
K. Sridhar Moorthy, Marketing Models (Upper Saddle River, NJ:
Prentice Hall, 1992).
44. .
45. Brian Sternthal and Alice M. Tybout, “Segmentation and
Targeting,” in Kellogg on Marketing, edited by Dawn Iacobucci
(New York: John Wiley & Sons, 2001), pp. 3–30.
46. Norman Dalkey and Olaf Helmer, “An Experimental Application of
the Delphi Method to the Use of Experts,” Management Science
(April 1963): 458–467. Also see Roger J. Best, “An Experiment in
Delphi Estimation in Marketing Decision Making,” Journal of
Marketing Research (November 1974): 447–452. For an excellent
overview of market forecasting, see Scott Armstrong, ed.,
Principles of Forecasting: A Handbook for Researchers and
Practitioners (Norwell, MA: Kluwer Academic Publishers, 2001),
and hisWeb site: .
CHAPTER 5 CREATING CUSTOMER VALUE, SATISFACTION, AND LOYALTY 5-1
MARKETING SPOTLIGHT DELL
“We have a tremendously clear business model,” says Michael Dell. “There’s no
confusion