731 Service

Supplementary Information

Cases – 732 Practice Quiz Answer – 813 Glossary – 835 Index – 849

© Springer Nature Switzerland AG 2021 M. R. Czinkota et al., Marketing Management, Springer Texts in Business and Economics, https://doi.org/10.1007/978-3-030-66916-4 732 Cases

Cases

Case 1: Yo Man! It’s Yao Ming!

Take one 22-year-old basketball player with a rare physical characteristic—a 296-­ pound physique spread over 7 feet, 6 inches. Stir in sleek mid-range jump shots, smooth passing skills, shot-blocking ability, court speed, and a plethora of low post moves. Add in charisma with a dash of humor. And, one more thing: Make him from China, the world’s most populous nation, with an untapped market of 1.393 billion people. From the casting comes Yao Ming— “the next big thing” for interna- tional services and global business.

Ming, the Next Big Thing Straight from the Basketball Association of the People’s Republic of China, Yao was the frst international player ever selected as the number one overall pick by the NBA’s Houston Rockets. Despite an expected lengthy adjustment period, Yao was a solid contributor to the Rockets almost immediately. In a November game against the Los Angeles Lakers in his frst year in the NBA, Yao scored 20 points; 4 days later, he had 30 points and 16 rebounds against the Dallas Mavericks. On December 3, against the San Antonio Spurs and two of the NBA’s foremost “big men,” David Robinson and Tim Duncan, Yao dazzled again: 27 points, 18 rebounds, and 3 blocks. Within 5 short months, Yao had become a star—ranking second in the league in shooting, with 56% accuracy and averaging 14 points per game. Yao’s NBA stardom stems from not only his talents but also his personality. His self-­deprecating charisma and humor make him hard to dislike. While describing a dunk he missed, Yao told his teammates, “When you have pitiful moments, that makes the good moments more valuable.” When fellow NBA star Shaquille O’Neal said to a reporter, “Tell Yao Ming ‘Ching chong yang wah ah soh’” while making kung fu moves, Yao quipped that Chinese is “a very diffcult language to learn.” With his talent and personality, Yao is the king, “the literal and fgurative center of attention, bestriding two continents and making hearts pound and cash registers ring in both.” Yao Ming, however, retired from his NBA career in 2011; “whenever anyone thinks about the NBA, the greats of the modern era are indisputable: Michael Jordan, Kobe Bryant, and LeBron James, just to name a few. Since its inaugural season in 1946, much of the NBA’s personality and perception is defned by some of its best players. For much of the league’s time, African-American and Caucasian players have been its fabric. However, one player changed all of this.” He is Yao Ming.

Looking Back to the Cross-Border Yao Ming Mania With fans’ interest in the NBA plummeting since the championship run of the Chicago Bulls in the 1990s, Yao arrived none too soon. In the United States, the Rockets’ television ratings and ticket sales had increased 65%. The Rockets distrib- 733 Cases

uted Yao “growth charts” and plastered the city with billboards bearing his image. ESPN ran commercials showing him dangling out of a tiny bunk bed and perform- ing tai chi with the Rockets’ mascot. Perhaps more signifcantly, Yao became a culture’s hero by breaking the Hollywood portrayal of Asian males as inscrutable and subservient and dispelling the popular stereotype of the Asian–American as a bookish, slight, overachieving pre-med student with little athleticism. In 2002, Asian-American ticket purchases accounted for less than 1% of Houston’s total sales. With Yao’s entrance a year later, that number had grown to 14%. “Yao Ming Mania” isn’t only domestic: Ripple effects were even shown in Toronto, Canada, the home of the Raptors and 500,000 Chinese. CCBC, the Raptors’ local Chinese radio broadcaster, hired a Mandarin reporter for postgame interviews, and ticket purchases by the Chinese-Canadian Youth Athletic Association increased by 150%.

NBA Going Global With basketball the world’s number two team sport, behind soccer, the former NBA commissioner David Stern had been laying the groundwork for global penetration for nearly 15 years, broadcasting to and recruiting from the international scene. Fans’ strong positive response to the infux of players from Germany (Dallas’ Dirk Nowitzki), Yugoslavia (Sacramento’s Peja Stojakovic), and Spain (Memphis’ Pau Gasol) propelled the NBA to recruit globally. “Yao came at the perfect time to the perfect league,” notes Rich Thomaselli, a sports marketing expert. “The NBA has wanted exponential global growth. Other foreign players have helped, but Yao, who is truly unique because of his size, personality, and background, will lead the way.” What better country to begin “exponential global growth” than China, home to 1.393 billion people? The Rockets and the NBA couldn’t be more grateful for “Yao Ming Mania.” As Rockets former President and CEO George Postolos said, “it’s incredible. In one week when we drafted Yao, we got more international attention than either of our two NBA championships. We think we’re on our way to becoming the most-watched team in the world.” Postolos was right: The level of international viewership is astounding. Yao’s NBA debut against the Indiana Pacers in October 2002 reached 287 million Chinese households—in contrast to 105 million in the United States. On a weeknight in December 2002, an NBA game between two strong teams drew a television viewer- ship of 1.1 million Americans. Compare that to an 8 A.M. broadcast game between the Rockets and the league’s worst team, the Cleveland Cavaliers, which pulled in 6 million Chinese viewers. Another 11.5 million tuned in for a repeat of the game that night—even a live broadcast of an NBA fnals game doesn’t attract an audience of that size in the United States. A few decades ago, fans in China were lucky to see one NBA game per week, usually from a month-old tape mailed to Beijing. Since the beginning of the Yao Ming Mania, the average Chinese viewer can watch four games weekly, and many can catch a ffth game on Hong Kong-based satellite channels. But the NBA isn’t just reeling in “Yao Ming Mania” fans for the short term: With a sixfold increase in NBA broadcasting, only a quarter are Rockets’ games showing Yao. “The league wants to 734 Cases

use the interest in Yao to build interest in all its teams,” Michael Denzel, the former managing director of NBA Asia, asserts. “We’re not the Rockets Channel. Even when the Chicago Bulls were at their peak, we didn’t focus exclusively on one team. We’re trying to create bounce.”

Corporate “Courtship” Regardless of the NBA’s long-term aspirations, the short-term effect is clear: Millions of Chinese, young and old, basketball buffs and novices, are dodging work, skipping class, and losing sleep to catch a glimpse of their hometown hero’s performance on the NBA stage. Clearly, the Asian market isn’t only going to watch; it’s also going to buy. “Asian and Asian-American consumers haven’t plugged in to sneakers and sports apparel,” says Thomaselli. “I could see a whole Yao line.” With the frst batch of NBA-licensed goods having arrived in China in April 2003, signature jerseys of the usual superstars—Kobe Bryant, Shaq, and Allen Iverson—and of the greatly anticipated Rockets’ Number 11 few off shelves. Unlike other professional leagues, the NBA has long had a global vision. Now, it has, at least in Asia, the main ingredi- ent to help reach that aspiration. For the corporate scene, Yao is more than just the “biggest Chinese import to hit the United States in years.” He’s the perfect vehicle for multinational corporations to enter the land of 1.393 billion potential consumers. Markets are opened, and young people have started to express themselves with purchasing power. One of the best ways to capture their purchasing power has been through sports fgures. A few Asian athletes, such as Michael Chang and Michelle Kwan, have attained prominence, but in individual sports. Marquee basketball players, like Yao, command the most lucra- tive and successful endorsements. Yet, unlike in the United States, where endorse- ment fgures like Tiger Woods and Michael Jordan are familiar, Yao is a marketing fgure who can dominate China’s still-emerging market without competition. Just halfway through Yao’s rookie season, he was everywhere: He sized up Austin Powers’ Mini-Me in TV ads for Apple computers; he played a confused New York tourist in a Visa commercial that double features Yogi Berra, and he graced the cover of Sports Illustrated twice in only 4 months. In China, he was the centerpiece of the print campaign from Nike and Gatorade. China is the most elusive market for the wireless industry, having the world’s largest mobile phone subscriber base, with 1.6 billion users, and the highest percent- age of online gamers. Because the Chinese public idolizes the athlete and embraces mobile technology, wireless companies were quick to enlist Yao as their spokesper- son. After signing a $5 million contract with China’s Unicom, Yao hawks its wireless service, and Sorrento, a California-based technology frm, combines the best of both the cell phone and gaming worlds by developing and marketing “Yao Ming Basketball,” a mobile phone game that renders the latest 3D animations.

Challenges for the “Great Wall” For all that Yao has accomplished, one stark difference remains between him and “the legends”: proven athletic ability that commands sky-high endorsement fgures. 735 Cases

In comparison to Michael Jordan, the NBA’s “sole infuencer” and member of a ­six-­time NBA championship reign, two gold-medal-winning US Olympic teams, and seven-time season leading scorer, Yao’s fgures on and off the courts become meager. According to Fortune, “the Jordan effect,” his impact on the economy since joining the NBA in 1984, is estimated at $10 billion. Jordan’s endorsement of Nike resulted in more than $2.6 billion in sales of Jordan-related products. Although at the start of Jordan’s career, the Bulls averaged only 6365 fans per game, in his third season the team began a string of sellouts that reached 542 consecutive games, culminating in $165 million in ticket revenue and netting another $366 million in NBA merchan- dise. And then there’s Yao’s slowly progressing English. In public, he rarely speaks without the help of his interpreter, Colin Pine. Although Apple and Visa endorse- ments capitalized on his “smile that transcends language,” how often can you use “nonverbal ads?” asks Bob Williams, president of Burns Sports and Celebrities.

“The Golden Bridge” Despite the media’s attention on Yao’s statistics, basketball fundamentals, and endorsement contracts, the NBA’s international services strategy reveals that Yao’s appeal is instead far more substantial. “Chinese citizens are closely following Yao for symbolic reasons not related to basketball,” said Steven Lewis, an Asia expert at the Baker Institute for Public Policy. “They are wondering: Yao is a Chinese person going abroad to live and work among foreigners.” Along with their hometown hero, the Chinese are watching and participating in demonstrating their interests and con- tribution to the NBA and the game itself. “By becoming the league’s most prominent player of Chinese heritage, Yao Ming provided a different look to the league and in doing so, vastly increased the popular- ity of the sport. Yao’s achievements are highly regarded as he recently became a member of the Basketball Hall of Fame. Now he will have his jersey retired by the team where he spent his legendary NBA career, the Houston Rockets.” However, the seed of the international interests that was rooted by Yao’s contribution to NBA has brought huge cultural benefts for NBA and the game itself. Also, “Yao has helped bring economic benefts to the NBA as well. For example, because of the booming popularity of the NBA in China after Yao joined in 2002, NBA China games were started in 2004. NBA games in the United States also began to see tremendous investment from Chinese enterprises when it came to advertising.” Since these US NBA games have huge viewership in China because of the Yao Ming mania, the Chinese companies started to “pay top dollar to have their logos appearing during games.” zz Questions 1. Discuss the statement “Yao Ming isn’t just China’s best basketball player. He’s the most persuasive symbol of globalization.” 2. Consider China’s current international business issues, such as intellectual prop- erty rights, logistical infrastructure, and the Roads and Belts initiative. How 736 Cases

should an international business manager consider these concerns before enter- ing the potentially proftable yet elusive Chinese market? 3. How would your understanding on promoting a business to cross-cultural cus- tomers help you promote and market NBA to cross-cultural customers? zz Sources Barron, D. (2002, November 3). The marketing machine behind Yao Ming. The Houston Chronicle, Section A1. Business Wire. (2003, January 7). Basketball star Yao Ming goes wireless.

Business Wire. 7 www.­businesswire.­com Law, N. (2003, January 21). Yao Wows fans. South China Morning Post, Section News, p. 5. Luo, M. (2003, January 21). Yao Ming carries Asians to new heights. Associated Press. Mania, Y. M. (2017). Video: Yao Ming jersey retirement ceremony. Yao Ming

Mania. 7 http://www.­yaomingmania.­com/blog/. Accessed 1 Sept 2020. McCallum, J. (2003, February 10). Sky rocket. Sports Illustrated. Pasick, A. (2003, February 2). Rookie Yao Ming, Apple of advertisers’ eye. Reuters. Statista. (2020). Number of mobile cell phone subscriptions in China from

September June 2019 to June 2020. Statista. 7 https://www.­statista.­com/statis- tics/278204/china-­mobile-­users-­by-­month/#:~:text=As%20of%20June%20 2020%2C%20about,had%20been%20registered%20in%20China.­&text=The%20 number%20of%20mobile%20phone%20subscribers%20in%20China%20has%20 been,billion%20users%20in%20November%202019. Accessed 1 Sept 2020. Stoda, G. (2003, January 19). Joking by Shaq Poor. Palm Beach Post, 18C. Thomsen, I. (2002, October 28). The New Mr. Big. Sports Illustrated. Wang, G. (2003, February 27). The Golden Bridge. The Washington Post, Section D1. Xi, W. (2017). Yao Ming’s jersey retires, but his infuence on two nations carries

on. The Global Times. 7 http://www.­globaltimes.­cn/content/1031588.­shtml. Accessed 1 Sept 2020. This case was prepared by Sabrina Nguyen, of Georgetown University, under the guidance of Professor Michael R. Czinkota.

Case 2: BMW Marketing Innovation

Since BMW’s competition started to imitate its advertising messages of outstanding quality, BMW came up with a unique way of reaching its target audience: It hired Fallon Worldwide, an advertisement agency based in Minneapolis, Minnesota, to create a new campaign. Fallon developed the concept of The Hire (a flm series con- sisting of fve different short flms). The agency’s responsibility included the way in which these movies were to be delivered to BMW’s target audience. It was also ques- tioned whether the campaign should be the same throughout the world or be local- ized to adapt to language and differences in consumer tastes. To attract highly 737 Cases

In € million

1,00,000 90,000 80,000 70,000

60,000 2019 50,000 2018 40,000 2017 30,000 20,000 10,000 0 AutomobileMotorcycle Financial ServiceOther entities

.. Fig. C2.1 BMW’s revenue sources. (Source: Annual Report 2019)

recognized directors as well as actors, BMW was willing to spend a large amount of money. In addition to creating a unique advertising campaign, BMW wanted to change its image. One of its goals was to make BMW look not only cool but also likeable, which the brand needs to do to combat negative perceptions that some people have based on old associations with the 1980s-style yuppie arrogance.

Company Profle

. Figure C2.1 shows the company’s revenue sources per its annual report.

Marketing Overview The majority of BMW’s success is attributed to its development of a consistent mar- keting policy: the market niche strategy. The company has built its brand on four core values: 55 Technology 55 Quality 55 Performance 55 Exclusivity

BMW has maintained these core values since the company’s inception. Coupled with WCRS (BMW’s advertising agency since 1979), the company has adopted a consis- tent advertising strategy. In addition to the message of these values being portrayed in advertising campaigns, the company explicitly expresses one or more of these values in all BMW advertisements. However, an important point is that BMW also relies on its sensitivity to the environment, which is clearly visible when you see how 738 Cases

the company’s advertisements have evolved in response to economic, environmental, and competitive changes. This design philosophy, which runs through every BMW design, has been com- municated through a number of TV and print ads. The brand image has been built up by using more than 300 color press advertisements and a total of 64 different television commercials in recent decades. Throughout this campaign, BMW has remained true to its beliefs in focusing on the substance of the cars themselves. In addition to the high-profle national color press and television advertising, individual dealers are encouraged to run their own local campaigns. Local press, radio, and bus advertisements are all available from BMW dealer marketing. In addi- tion, brochures, price lists, and dealership point-of-sale materials are made accessi- ble through the corporate offce. BMW encourages its dealers to make use of these services. By providing its dealers with a central source for advertising, BMW ensures that all communications remain standardized and maintain BMW’s brand values. BMW has embarked on a global advertising campaign. What differentiates this promotion is that it remains consistent throughout the company’s international cam- paign across the European, US, Asian, South African, and Middle Eastern markets. In more than 15 countries, there will be: 55 TV spots 55 Print advertisements 55 Megaposters 55 Radio spots 55 Events

In three James Bond flms, BMW, MGM, and EON Productions, Ltd. worked together on a cross-promotion project. They completed the project worldwide with TV commercials and print ads as well as with displays in BMW dealer showrooms.

BMW Film The best flm series, by the most cutting-edge directors, is not playing at your local theater. Instead, these flms are accessible through your home computer and mobile devices as well as at your local BMW dealership. Since the launch of The Hire at BMWFilms.com (the short flms also can be

retrieved from 7 https://www2.­bf.­org.­uk/flms-­tv-­people/4ce2b9a761aac), the short flm series has been singled out as the frst high-profle, big-budget, celebrity- laden internet marriage of advertising and entertainment. It has been reviewed, scru- tinized, deconstructed, and cited as evidence of a perilous future for traditional advertising. The New York Times flm critic Elvis Mitchell called the series “a mar- riage of commerce and creativity, straddling the ever-dwindling line between arts and merchandising.” BMW Films is simply the frst website to make use of stream- ing video to lure prospective customers into the automobile industry as a form of advertising. The Hostage, Ticker, Beat the Devil, Ambush, Powder Keg, Star, Chosen, and The Follow are all part of the flm series, which is presented in install- ments directed by some of Hollywood’s top directors. These flms are being adver- 739 Cases

tised on television in the same way as movie trailers are advertised; the difference is that rather than use the catch phrase “coming soon to a theater near you,” this catch

phrase reads “see it only on 7 BMWFilms.­com.” Actor Clive Owen (the star of the acclaimed British flm Croupier and, in the opinion of his growing legion of fans, the next James Bond) is the hire in the series title, a skilled mercenary driver who seems to specialize in risky assignments. Although he is certainly a smooth operator behind the wheel (he’s very “James Bond” like), the Ultimate Driving Machine always saves the day. The car is defnitely the star of the show. Each episode features a “driver” (in a BMW, naturally) who is on a mysterious nighttime mission along with a mysterious passenger. One incident shows the driver on the run with a small Buddhist boy, and another episode features an arro- gant superstar diva (played by Madonna) desperately wanting to escape the swarm of paparazzi. Filmgoers, thrill seekers, and potential customers have the option of watching these flms using digital channels, and these short flms are also available on YouTube. The flms are very popular as YouTube demonstrates. After the launch of these flms, 1 week following the advertising blitz of the BMW’s website flm, traffc to the site was up 55%, to 214,000 unique visitors, compared to only 138,000 the preceding week, according to the web-measurement frm Nielsen/ NetRatings. Although the flms all have differentiating styles, they have one thing in common: The majority of the action takes place in a BMW while the participants are in the middle of a car chase. The number of BMWs you will see is unlimited; you can see one, two, three, or even more Beemers speeding down alleyways and streets and screeching around corners. BMW did not randomly decide to initiate a web-based advertising campaign. The company clearly did its homework. Advertising frms know that more than 85% of potential car buyers will conduct most (if not all) of their initial research on the internet before they make a fnal purchase decision. Therefore, BMW has made it convenient for shoppers by adding to its flm site a link to BMWUSA.com. This site gives consumers basic information about the cars and the location and phone num- ber of local dealerships. Considering that the average cost of a BMW automobile starts at approximately $30,000, the company’s decision to design a classy flm series that can be viewed on a high-speed internet connection by an upscale, mostly male audience is clearly tar- geted. The simple concept of these flms: BMW wants to sell cars!

Film Concept Before launching this flm series, two issues were on the table at BMW: concern over the effectiveness of TV ads and the best way to exploit the popularity of the internet. BMW wanted to come up with an entirely new branding campaign; too many com- petitors were copying the “look and feel” of the BMW, and the company needed to do something different to distinguish itself. On a more basic level, it was growing 740 Cases

more concerned about its ability to reach its core market via traditional methods, such as network TV. The creative team of writer David Carter and art director Joe Sweet had com- pleted a project for Timex with director Tim Burton. This marketing campaign incorporated an internet portion that featured short videos shot specifcally for the web. BMW executives saw this situation as a way to differentiate their company from other auto manufacturers. They wanted something done exclusively for the Internet, something not only entertaining but also cinematic. A concept was born: A longer flm would be shot in segments and distributed via the Internet as a series. The series would combine product placement with entertainment. Most importantly, it would allow BMW to “push the envelope” in scripting the series. The Internet would allow the company to show what a BMW can do when it is pushed to its limits, under extreme conditions and circumstances. BMW would not be able to convey this type of advertising by using traditional TV ads, without a few hundred disclaimers. BMW Films has accomplished several objectives; the most important is creating tremendous buzz in both the entertainment and business presses. This achievement was important to BMW because, as mentioned, one of its goals was to make BMW look cool, without the old association with the 1980s style of yuppie arrogance. A fact not prominently mentioned in much of the coverage of The Hire was that all of its core creative concept—and its key strategic thinking, web development, and several scripts—came from one source: Publicis Troupe’s Fallon Worldwide, in Minneapolis. “I think we’re reinventing advertising,” said David Lubars, Fallon’s former president and executive creative director. Mr. Lubars added: “We’re not look- ing to make this a template, as though this is what advertising is [going to be]. I think what technology affords you is that every client can get their own customized media approach, and this was really right for this client.” “BMWFilms.com is a good example of blurring the lines between entertainment and advertising,” said Jarvis Mak, former senior internet analyst at NetRatings. “The site combines Hollywood’s intense car chase scenes and Internet video to deliver a new spin on product showcasing,” added Mak. “We think that a lot of the time when people view traditional advertising, they view it through a flter of disbelief,” said Jim McDowell, the former vice president of marketing for BMW of North America. “When people watch entertainment or a movie, then they’re watching in an entirely different way where they enjoy the fantasy and, hopefully, remember it and share it with others.” “We thought maybe instead of doing advertising we should be doing entertainment and doing something fun and interesting on the Web,” McDowell said.

Target Audience Initially, BMW had no real idea to whom the flms would appeal. BMW executives knew that they would have everyone from high school students to BMW 7 Series owners as viewers. BMW’s guess was that the viewers’ average profle would be 25-year-olds and a $100,000 median income. BMW and Fallon Research & 741 Cases

Communications indicated that many were tech-savvy and had fast, reliable access to the web. Most importantly, 85% of buyers had researched the vehicle on the web before stepping into a showroom.

Characteristics of the Typical BMW Target Audience Societal values are changing rapidly. Society will increasingly take its cue from mem- bers of Generation X and the dot-com era rather than from the baby boomers who have dominated its thinking for most of four decades. Associated with that demo- graphic shift will be a return to the appreciation of self-reliance and cooperation— self-reliance because the traditional safety platforms, such as social security and pensions, will no longer exist, and cooperation because it involves group action that is, in turn, the optimal strategy for the use of scarce resources. Family issues—such as long-term healthcare, day care, and antidrug campaigns—will remain dominant issues for quite some time. Generation X and dot-com will have major effects in the future. This Generation X cohort will be recognized for its entrepreneurial instinct because its members are starting businesses at unprecedented rates. They are economically conservative, begin saving at an earlier age, and seek the shallow information skimmed from CNN or USA Today rather than absorb in-depth reporting. Members of the dot-com generation now are gradually entering into the decision-­ making stage for different socioeconomic issues across the world and are proving to be even more business oriented. Twice as many say that they would prefer to own a business than to be a top executive. By a factor of 5 to 1, they would rather own a business than hold a key position in politics or government. In summary, the corporate and business culture of the baby boomers is a mis- match for these advancing generations who thrive on challenge and opportunity. They want more than cash: They understand the need for lifelong learning because that is the way life has always been for them. In addition, as both customers and employees, they will demand even more advanced telecommunications and net- based transactions. Consumerism is still growing rapidly. Because consumers will increasingly have access to and information about pricing, services, delivery time, and customer satisfaction through the Internet and their mobile devices, the con- sumer marketing battle will see a halt in the decline of prices and a counterprevailing shift to service improvement and salesmanship. In the end, however, fxed pricing will fall out of favor as goods and services are sold by way of online auctioning. The proponents of the need for improved cus- tomer service will be proven right. As prices fall to commodity levels and online stores can list virtually every product and brand in their industry without signifcant overhead, service is the only feld left in which marketers can compete effectively to signifcantly differentiate their offerings. Lorraine Ketch, the former director of planning in charge of the trendy Levi’s SilverTab line, explained, “this audience hates marketing that’s in your face. It eye- balls it a mile away, chews it up, and spits it out.” As expected, branded items with dominant reputations will remain powerful and in demand. 742 Cases

Marketing Channels Internet Auto manufacturers have taken some innovative approaches to draw inter- net users to their websites. However, you may be surprised at how quickly “innovative” becomes “ordinary.” Slide shows, fash animation, and surround video with voice over are common features of most manufacturer’s sites. In addition, contests have become so common that the possibility of winning a free car may not be enough to hold view- ers’ attention for more than a minute or less. Ad banners that measure 468 × 60 are sold on a run-of-site (ROS) basis, meaning that they will appear on every search results page and on an equal rotating basis with other advertisers’ banners. Advertising rates for 468 × 60 ad banners are computed on a cost-per-thousand (CPM) impression basis and are now priced between US $10 and $15. However, “CPM bids start at $0.25 per thousand impressions and rise to $100.” Flashing banners and other methods cost slightly more based on the website and technology involved. For online ads, each advertiser is given password-protected access to real-time advertising statistics, including how many impressions were served, how many click-­ throughs were achieved, and what click-through rate was achieved. The industry standard for the click-through rate is anywhere from 0.25% to 2%, for sites like CNN, ZDNet, and Yahoo!. The click-through rate will depend on the appearance of the ad and what it offers in terms of a marketing message and call to action. Just like running a television commercial during prime time or placing a full-page­ ad in Time magazine, these ads do not necessarily cause people to pick up the phone and order a product at that moment, whereas a web-based process that guides consumers through a systematic process makes a purchase more likely. Specifcally, these types of ads build name recognition for the company and establish it as a major force in the industry. Then, when consumers are ready to buy, your company will come to mind.

Television A 2018 report revealed that the average cost of a 30-second national com- mercial for an automobile was a whopping $389,000, plus $63,000 to $8 million setup cost of the ad, plus the cost of continue to run the TV commercial, e.g., the media cost and the agency rate. The percentages of viewers of MSNBC and Bravo who are in BMW’s target income bracket constitute 20.5%. The percentage of viewers in BMW’s target age group (25–34) is 26.5%. Print The advertising rates in a periodical like Time magazine range from $250,000 for a full-page mono to $360,000 for a full-page color ad, plus the media cost and the agency cost. The average age of a Time magazine sub- scriber is 45, and its readers have a median income of $69,000. The audience is twice the age and half the income in BMW’s intended target market. Time magazine is one of the premier periodicals on the market.

Competitive Analysis In recent decades, BMW was in danger of losing its long-standing lead in the import luxury car segment. Mercedes, Lexus, and Audi were coming on strong with great 743 Cases

new products and new marketing campaigns designed to dethrone BMW. Nearly half of those considering a luxury car rank “fun to drive” as their number one rea- son for purchasing the car. However, for the frst time since BMW had been tracking its image, consumers ranked BMW at virtually the same level as Mercedes or Lexus on attributes like “fun to drive” and “responsive handling.” BMW’s three biggest competitors had launched new advertising campaigns that highlighted what traditionally had been BMW’s greatest strength: performance. Therefore, BMW was not able to distinguish itself anymore as the only company that boasted the unparalleled standard of quality.

Mercedes The range of cars from the giant company Daimler AG traditionally rival BMW’s. In 2000, DaimlerChrysler (Daimler AG’s former merger with Chrysler) sold 1,155,000 units and had revenues of 43.7 billion euro. “In 2019, Mercedes-Benz sales worldwide increased by 1.3% to a record 2,339,562 cars.” Mercedes’ strengths are its global presence, strong brand presence, product range, and technology leadership. Mercedes marketing campaigns have always been subdued and low key. It allocates 25% of its annual marketing budget to innovative internet strategies, recognizing the power of the internet for delivering effective and precise marketing campaigns. When the car manu- facturer launched the new Mercedes C-Class Sports Coupe, it positioned the online cam- paign at the top of its marketing mix. Joining in a winning partnership with MSN, another global brand with similar values, Mercedes sponsored A-ha’s eagerly awaited homecoming concert.

Lexus Sparked by a decision from former Toyota chairman Eiji Toyoda in 1983 to challenge the best luxury vehicles, Lexus has since grown into one of the world’s most inspiring automobile companies. Lexus is a division of Toyota Motor Sales, USA, Inc. It is trying to leverage the Japanese technology to add brand value to its vehicle. Lexus is America’s top-selling luxury marquee. The tough task for Lexus is to lose the “cheap but reliable” Toyota image. The annual sales of Toyota vehicles in the United States have been on the order of $90 to $93 million in the beginning of the twenty-frst century. “In 2019, Toyota Motor North America (TMNA) reported sales of 2,383,349 vehicles.” According to Chris Conrad, Lexus’ former national advertising manager, Lexus is tar- geting its youngest buyers ever with the IS 300, roughly 75% male, between the ages of 35 and 40, married, highly educated, and with annual household incomes of $100,000. The average age of a Lexus owner is 50, with the median age of the brand’s hottest- selling vehicle, the RX 300 Sport Utility, at 48. The estimated $32 million campaign for the car broke on national TV and continued for another 6 months. Team One, from El Segundo, California, created the two national TV commercials as well as fve TV spots for regional dealer ad groups and two magazine ads. The agency also created billboards and six commercials that will be projected on buildings in three cities. Lexus’s online presence even for this campaign is limited, though it is one of the advertisers launching a rich media campaign on the Excite Network, which includes WebCrawler and Classifeds. Audi is an international developer and manufacturer of high-quality cars. In 2000, the company sold more than 650,000 Audi models. The sales revenues of the Audi Group totaled 39 billion Deutsche Marks. “In 2018, Audi sales worldwide fell 744 Cases

by 14% to 1,812,500 cars (in comparison to the preceding year) but reached a new record of 663,000 in China, Audi’s biggest market.” It has been trying to promote the exclusivity of their cars. In recent decades, Audi of America embarked on its most ambitious online mar- keting effort ever. The European car importer kicked off the “Double Take” “adver- tainment” online sweepstakes as part of its $25 million launch of the redesigned A4 sedan. Visitors to the site can try to solve mysteries after viewing clues from three short episodes involving the A4. They can also register to win prizes while learning about the car and its features. The grand prize was a 3-day trip for two to the Audi Driving Experience at the Panoz Driving School in Atlanta, Georgia. The sweep- stakes, run by Don Jagoda Associates, in Melville, New York, allows prospects to enter up to eight times. “The main thing is to educate and entice users to go to deal- erships,” said Steve Glauberman, president and CEO of Enlighten, the privately held creator of the site and sweepstakes in Ann Arbor, Michigan.

zz Questions 1. Should BMW be using a uniform global promotion strategy? 2. Should BMW demonstrated its marketing campaign on the internet exclusively, or should it be part of the media mix? 3. What are the implications of BMW’s marketing for dot-commers, Generation Xers, and ethical consumers?

zz Sources Becket, X. (2019). The cost of advertising nationally broken down by medium.

WebFX. 7 ­https://www.­webfx.­com/blog/business-­advice/the-­cost-­of-­advertising-­ nationally-­­broken-­down-­by-­medium/. Accessed 1 Sept 2020. Bekker, H. (2019). 2018 Global: Audi sales worldwide. Car Sales Statistics.

7 https://www.­best-­selling-­cars.­com/brands/2018-­global-­audi-­sales-­ worldwide/#:~:text=In%202018%2C%20Audi%20sales%20worldwide,less%20 than%20a%20year%20ago. ­Accessed 1 Sept 2020. Bekker, H. (2020). 2019 (full year) USA: Toyota and Lexus sales. Car Sales Statistics.

7 https://www.­best-­selling-­cars.­com/usa/2019-­full-­year-­usa-­toyota-­and-­lexus-­ sales/#:~: text=In%202019%2C%20Toyota%20Motor%20North,2%2C085%2C235 %20vehicles%2C%20down%202.­0%20percent.­ Accessed 1 Sept 2020.

BFI. (2020). BMW flms. 7 https://www2.­bf.­org.­uk/flms-­tv-­ people/4ce2b9a761aac. Accessed 1 Sept 2020. Johnson, K. (2020). A guide for setting up a banner ad campaign via Google.

Chron. 7 https://smallbusiness.­chron.­com/guide-­setting-­up-­banner-­ad-­campaign-­ via-­­google-­­34109.­html. Accessed 1 Sept 2020.

YouTube. (2020). BMW flm series. 7 https://www.­youtube.­com/results?search_ query=bmw+flm+series. Accessed 1 Sept 2020. This case was prepared by Martin Hellhake, Fabian Henault, and Josh Jacob, of Temple University, under the supervision of Professor Masaaki Kotabe for class discus- sion rather than to illustrate either effective or ineffective management of a situation described. 745 Cases

Case 3: It Is Not on the Shelf! Is It?: How Marketing Myopia Occurs

Marketing Overview The lack of foresight or intellectual analytical ability to proactively predict the cause and effect relationship between two or more variables is known as myopia. In market- ing, for example, we could plan to increase our promotional budget with a calculation that if we decrease the price by 0.25%, the enhanced promotion and subsequent awareness of price reduction will increase the future sales in the next 12 months up to 10%. In our plan, the breakeven point is 4% increase of sales; meaning that if sales increase minimum 4% in the next 12 months, we will be able to retrieve our investment for additional promotion and price reduction. Regrettably, at the end of 12 months, we have found that the sales increased only around 2.5%, and overall our initial plan to reduce the price and increase promotion has caused a net loss in the project. Twelve months ago, we were accurate in terms of our calculation in the cause and effect relationship between the anticipated impact of price reduction and enhanced promotion on the expected increase in sales; however we forgot to consider a universal rule of economic calculation while planning for this marketing project. The universal rule in economic calculation is to consider “if all other things remain unchanged.” It means, when we forecast based on the cause and effect relationships between any dependent and independent socioeconomic variables, we must need to consider that our plan will bring the expected result, only if “all other socio-­economic variables (that we are not generally considering in our calculation) remain unaf- fected.” Such variables would include but not be limited to the customers’ buying power that could be reduced, sudden political instability that could adversely impact on our product delivery channels (supply chain), or launch of a technologically enhanced new product by a competitor that could outplay the competitive advan- tage of our extant product. Therefore, we also need to consider all other prospective variables that could impact on our plan as accurately as possible, in order to be prepared with contingency plans “B” or “C,” so that if our plan “A” does not work, we could at least retrieve our investment. In this context, marketing myopia could be described as the marketers’ inability to consider all probable variables that could possibly impact on a project, in order to prepare with contingency plans as effectively as possible to proactively avoid any unforeseen project outcome. Therefore, in order to avoid marketing myopia, proac- tive marketers not only analyze the dependent and independent primary socioeco- nomic variables that could directly impact on their marketing project, but also they try to thoroughly analyze all other secondary socioeconomic variables that could possibly impact on their project, if all other socioeconomic conditions do not remain unchanged during the project implementation stages. Following this preliminary dis- cussion on marketing myopia, let’s have a look now on a real-life case example of how marketing myopia occurs.

Marketing Myopia: A Real-Life Example Suppose you went to a supermarket looking for a product brand that you always purchase. Since you buy this brand regularly from a particular supermarket, you 746 Cases

also know the location of the isle and shelf inside the supermarket where you can fnd the product. Like previous times, this time also you walked through that spe- cifc isle and looked at the right place in the shelf from where you always pick up the product to put in your shopping trolley; however you did not see the product on the shelf. Therefore, you thought the product is temporarily out of stock, and thus you picked up a supplementary brand from the next shelf to complete your shop- ping as quickly as possible, considering that you were in a rush as you needed to drive 20 minutes to go pick up your kid, or you had another urgent issue to attend to after this shopping. Now, let’s imagine a possible alternative situation that could occur during this particular shopping experience of yours. The alternative situa- tion would be that the supermarket did not actually run out of that particular product brand at the time when you were looking for it, nor did it rearrange the foor, isle, or shelf plans to move that particular product brand from where you always used to pick it up. Your desired product brand was available in the same isle and on the same shelf while you were walking through the isle and looking at the product to pick it up. Unfortunately, you did not notice that the product was there! It happens in real life, and because of this, many brands struggle to achieve their monthly sales target.

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For example, in the case of Tropicana Juice (7 https://www.­tropicana.­com/, 7 https:// tropicana.­co.­uk/), they lost signifcant sales after they implemented a new redesigned packaging for the bottle of their same existing juice as part of their rebranding (or repositioning) strategy. Tropicana is a popular brand. “In the 52 weeks ended on May 747 Cases

17, 2020, Tropicana Pure Premium was the leading refrigerated orange juice brand in the United States, based on sales of over 962 million U.S. dollars.” During this repack- aging project in 2009, Tropicana considered giving a new look to the bottle/package of their juice. “When Tropicana hired (the) legendary ad agency Arnell in 2008, they surely didn’t expect that, after 5 months of design work, launch planning, and $35 mil- lion in marketing spend, they’d lose 20% of their revenue within a month — about $20 million total in missed sales. But that’s exactly what happened.” Because, they failed to inform their target audience that soon they will see their favorite Tropicana juice with a new look. The look of the previous packaging of Tropicana juice included a picture of a fresh fruit with a straw plucked in the fruit. This picture was well known among Tropicana’s loyal customers. But Tropicana took off the image of the fruit and the straw from the new design and changed the color combination and the overall design (and look) of the appearance of their logo and text that includes other information from the old packaging to the new one. As a result, even the loyal customers of Tropicana did not recognize their favorite juice while they were looking for it on super- market shelves in a rush of shopping, and Tropicana’s sales dropped signifcantly dur- ing the initial months of this rebranding initiative. What Tropicana could not envisage during their repackaging plan is now clear to us. They failed to consider that “presenting even an old wine in a new pack” requires creating awareness among the target audience about the change, in order to help cus- tomers to recognize the product, so as to ensure that the sales target of the product could be achieved. Following this repackaging myopia, Tropicana has however retrieved its lost position today from the temporary drop in sales; the myopia has per- manently impacted on Tropicana’s image among its stakeholders as a big company that failed to effectively plan, implement, and monitor their promotional strategy.

How We Could Avoid Marketing Myopia “In general, marketing plans encounter marketing myopia, if the corporate mission is too narrowly or two broadly defned, and too narrowly or two broadly incorpo- rated in the marketing plan.” For example, if a company does not consider sustain- ability issues in their corporate mission, or does not suffciently include precautionary measure related to sustainability concerns in their operational plan (e.g., production process), the consumers may not be interested to purchase the company’s product, considering that its production process negatively impacts on the environment or it uses child labor. Such marketing myopias are very damaging for a company’s image, reputation, and brand positioning in the long run. For more discussion on the dif-

ferent aspects and viewpoints of marketing myopia, see 7 Chaps. 1 and 2 of this book. Marketing myopia could occur in any context of overall marketing management, related to any of the Ps in the marketing mix. Also, it is very diffcult foresee with 100% accuracy all prospective primary and secondary socioeconomic variables and 748 Cases

their variations during the planning stage; however, two prospective lessons are shared here from the contexts of rebranding plan, in order to possibly avoid market- ing myopia. In general rebranding (or repositioning a brand in the mind of the existing target audience) is a complex task. As we have seen in the case of Tropicana juice, even their loyal customers were not able to recognize their favorite juice once Tropicana redesigned their product package. In redesigning an existing brand’s logo or a prod- uct’s package, it is instrumental to keep something memorable from the previous logo or package in the new logo or package. For example, Tropicana could have kept the picture of the fruit and the straw from their previous package in the new one, because this picture of Tropicana package is well-known among its customers. Keeping such an existing picture, sign, or symbol from the existing logo or package to the new one is really helpful for customers to remember the brand. In this context, Pizza Hut has been doing a great job in redesigning their brand logo. Pizza Hut from time to time has been updating (redesigning) their brand logo, in order to synchro- nize with trends in market environment (e.g., the changes in customers’ tastes or preferences). Pizza Hut’s logo consists of a “hat.” In all their redesigning (rebrand- ing) efforts for their logo, Pizza Hut changed the color combination, design of text, and its style (among others); however, they never ever removed their renowned “hat,” considering that this “hat” is the core feature of their brand logo, which helps their customers instantly recognize Pizza Hut in the new logo. Contrary to Pizza Hut, Tropicana removed all well-known features, including the fruit’s picture, color com- bination, design, and style of their old package, in order to design their new package. Furthermore, Tropicana did not undertake any awareness campaign to let their tar- get market know about the new look of Tropicana juice. Because of this myopia, Tropicana’s monthly sales reduced signifcantly, as their loyal customers could not recognize their favorite Tropicana. Another good example of rebranding to possibly avoid any myopia would be the city rebranding plan of Amsterdam city. “Facing international competition to attract people, jobs, frms and more, cities are establishing branding strategies. But to suc- ceed they must identify key factors and values, and especially address the central question of (their core brand) identity.” In this rebranding effort, to help maintain its position as a popular European destination, Amsterdam embraced marketing with “I amsterdam,” a brand campaign for the city and its residents” in 2004. In this branding campaign the Amsterdam City Council frst recognized what core social, cultural, and economic values and resources Amsterdam already has and what and how it needs to enrich (or modify such values and resources) over time to attract more international businesses in order to ultimately make the city more liveable for its existing and new residents. 749 Cases

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In this context, the Amsterdam City Council initially recognized the following 16 core social, cultural, and economic values and resources to reshape the future look of the city: 1. City of knowledge 2. Residential city 3. Hub function 4. Meeting place 5. City of canals 6. Capital 7. Business city 8. Sex, drugs, R&R 9. People 10. Liveable city 11. Architecture 12. Compact city 13. Artistic city 14. Night life 15. Shopping city 16. City of events

In their branding campaign, based on these 16 core social, cultural, and economic values and resources of Amsterdam city, they designed an easily comprehensible graph for the mass and their other target audiences (among socioeconomic local, national, and international stakeholders), in order to clarify the city’s current 750 Cases

­position based on these 16 dimensions and where (among these 16 dimensions) the city will increase and decrease its focus and resources to achieve their rebranding objective by reshaping the city within a particular time frame. It means the Amsterdam City Council clarifed to their target audience in advance how they are going to reform their city to make it more liveable, more business friendly, more eco- friendly, and more vibrant for living and doing business. The rebranding campaign was very successful. As a result, the Amsterdam city appeared “8th on the Global Power City Index.” As we know, foreseeing the context of prospective future myopia in management projects in order to avoid it is a very challenging task. To possibly foresee such future myopic contexts to avoid myopia, marketers need to explore and analyze as many relevant primary and secondary socioeconomic variables that could possibly impact on their marketing project, either directly or indirectly. Accordingly, along with plan “A,” marketers also need to equip with a plan “B” or “C” so that they could at least retrieve their investment to avoid any net loss from their marketing projects, if “other things (socioeconomic variables) did not remain unchanged” during their project implementation stage and adversely impacted the project. zz Discussions 1. Similar to Amsterdam city’s rebranding project, think about the different dimen- sions of your home city in order to plan how you could initiate a rebranding proj- ect for your city and avoid any marketing myopia in your rebranding project. 2. Think about a logo of your favorite brand, and let’s assume that you have been assigned as project leader to redesign the brand logo. Targeting the different cus- tomer segments of this brand, consider (a) the brand features that you would remove from the existing logo, (b) feature(s) that you would keep in the new logo from the existing logo, and (c) other new trendy features (e.g., color combination, style, look, or even a slogan related to a sustainability concern) that you would add in the new logo in a way that will enable you to avoid any future marketing myopia for your project. zz Sources Arifon, O. (2017). Rescaling through city branding: The case of Amsterdam. The

Conversation. 7 https://theconversation.­com/rescaling-­through-­city-­branding-­the-­­ ­case-­of-­amsterdam-­71956. Accessed 2 Sept 2020.

Flux. (2017). Rebranding established brands. YouTube. 7 https://www.­youtube.­ com/watch?v=8BEM3wiAgnY. Accessed 2 Sept 2020. Göke, N. (2020). The worst rebrand in the history of orange juice: They paid $35

million to then lose $20 million in sales. Better Marketing. 7 https://medium.­com/ better-­marketing/the-­worst-­rebrand-­in-­the-­history-­of-­orange-­juice-­1fc68e99ad81. Accessed 2 Sept 2020. Marion. (2015). What to learn from Tropicana’s packaging redesign failure? The

Branding Journal. 7 https://www.­thebrandingjournal.­com/2015/05/what-­to-­learn-­­ from-­tropicanas-­packaging-­redesign-­failure/. Accessed 2 Sept 2020. Merholz, P. (2009). Tropicana’s marketing Folly. Harvard Business Review. 751 Cases

7 https://hbr.­org/2009/02/tropicanas-­marketing-­folly.­html. Accessed 2 Sept 2020. Stamp, J. (2012). Rebranding Amsterdam and what it means to rebrand a city.

Smithsonian Magazine. 7 https://www.­smithsonianmag.­com/arts-­culture/rebranding-­­ amsterdam-­­and-­what-­it-­means-­to-­rebrand-­a-­city-­19539392/. Accessed 2 Sept 2020. Statista. (2020). Leading brands of refrigerated orange juice in the United States in

2020, based on sales. 7 https://www.­statista.­com/statistics/188749/top-­refrigerated-­ ­orange-­juice-­brands-­in-­the-­united-­states/. Accessed 2 Sept 2020. This case was prepared by Dr. Riad Shams, Newcastle Business School, Northumbria University, UK.

Case 4: Citibank N.A. in Japan

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The Japanese Banking Scene In 1986, when Citibank began opening branches in Japan to offer retail banking services, Japanese banks could be forgiven for yawning. There was a reason to do so, because until 1997, 7 of the top 10 banks in the world were from Japan. Citibank was seventh on the list. With just a handful of branches, Citibank was the fnancial equivalent of a bonsai tree in a forest of rosewoods. Moreover, Japanese consumers tended to regard foreign banks as less safe places to park their savings. “When I frst came here four and one-half years ago, the bank was very quiet,” said Hiroshi Yoshioka, a Citibank customer who works for a Japanese chemical company. “I had to summon up some courage to step in.” Times have changed, and the tables are turned. Following the recession in the Japanese economy, the domestic banks in Japan were burdened with about $1 trillion of nonperforming loans. In this context, Citibank made some serious inroads into the Japanese market. Citibank growth spurts have coincided with successive Japanese fnan- cial disasters, ranging from the 1995 bond-trading scandal that led the Federal Reserve to expel Daiwa Bank from the United States to the triple collapse in 1998 of Sanyo Securities, Yamaichi Securities, and Hokkaido Takushoku Bank. “You have seen a 180-degree turn in the way Japanese are thinking,” said Robert Berardy, the former Citibank vice president in charge of “virtual banking,” or telephone and computer bank- ing services. “The negative [of being a foreign bank] has become a positive.” Consumer confdence in domestic banks has eroded, and people are looking for new options.

Citibank Worldwide Citibank N.A. is signifcantly more international in scope than its international com- petitors. In 1997, it operated in more than 3400 locations in 98 countries and derived some 60% of its net income from foreign operations. In 2019, “over 200,000 Citi employees provide their unique insight to over 200 million customers all over the world,” and offer customer service in 4000 branches and 20,000 ATMs in more than 160 countries. With $74.3 billion revenues and $19.4 billion net income with $8.04 per diluted share, Citibank N.A. appeared as the world’s largest credit card issuer in 2019 with more than 200 million accounts, $564 billion in annual purchase sales and $164 billion in average receivables. The bulk of these income and revenue come from its emerging market operations. Citibank N.A. is now the consumer division of fnancial services multinational Citigroup, which is a result of the merger of Citicorp and Travelers Group in October 1998. As a result of this merger, Citigroup displaced Bank of Tokyo and Mitsubishi from the frst position to become the largest fnancial company in the world. The group earned a net income of $5.8 billion in 1998, which

was $19.4 billion in 2019 (see . Fig. C4.1). Citibank N.A. had not always been a world-class success story, however. The bank suffered through a very diffcult period in the late 1980s and early 1990s as a result of its decentralized decision-making structure and what Euromoney called a “near fatal brush with commercial real estate lending” in the United States. The reengineering efforts of former co-CEO John Reed (chairman and CEO until 1998) centralized the decision-making process, repaired the balance sheet, rebuilt the tier-­ one capital, and restored the credit ratings by 1996. 753 Cases

In Billions of Dollars, Except Per-Share Amounts

2000 1800 1600 2013 1400 2014 1200 2015 1000 2016 800 2017 600 2018 400 2019 200 0 Net RevenueNet IncomeAssets Book Value Per Share

.. Fig. C4.1 Selected fnancial data

The Citibank Global Network Citibank’s global presence can be judged by the following comment from Mr. Shaukat Aziz, former head of Asia/Pacifc global fnance operations: “When a multinational company wants to enter an emerging market, it calls its lawyers, its accountants, the embassy, and Citibank.” Citibank has a wide network of branches all over the world. Its presence in the emerging market economies is very strong. The Asia/Pacifc region (including Japan) brought 23% of the bank’s net proft in 1996. “During 2018, emerging markets rev- enues accounted for approximately 37% of Citi’s total revenues (Citi generally defnes emerging markets as countries in Latin America, Asia (other than Japan, Australia and New Zealand), Central and Eastern Europe, the Middle East and Africa).” Also, “Citi included in Dow Jones Sustainability Index for 18th consecutive year” in 2018.

Long Presence and Local Market Experience Citibank is a strong believer in the frst-mover advantage and always tries to be among the frst foreign banks to enter a prospective new foreign market. In some countries, Citibank has maintained its presence for almost a century. In Japan, Citibank started its frst offce in 1902. Even if it cannot provide all the services because of government regulations, it stays to provide corporate services to the mul- tinationals. In Japan also, it maintained its presence without offering full-scale ser- vices and began offering only retail services in 1986. The bank’s experience in foreign markets gives it the operational expertise that, in times of turbulence, is diffcult for 754 Cases

other banks to match. This experience is advantageous for Citibank to keep impor- tant multinational accounts.

Localization Commitment “We want to be totally global and totally local,” said John Reed, the former co-CEO, Citigroup. From this statement, Citibank’s commitment to local markets in various global locations is clear. Citibank tries to develop strong ties with the local commu- nity and with the local central bank. Locally hired staff members held around 95% of Citibank’s jobs outside the United States—technology is transferred, and local staff is trained. Citibank enters a market with a long-term objective and does not leave when profts are slow to materialize. The bank’s long-term commitment approach makes it very popular with the local governments. In Japan, after opening its retail banking operations in 1986, it operated proftably for only 3 years and then ran into losses for 8 straight years, but it stayed on to wait for the right opportunity in the long run. In 2019, Citibank in Japan earned 78,875 million Yen as operating revenue, with 9290 million Yen as operating income.

Technological Orientation Citibank was “ahead of the curve” with respect to technology and fnancial innova- tion in the mid-1990s. The strong focus on technology and innovative fnancial ser- vices have won Citibank many awards. Citibank has established technology development centers, which build global platforms to support customer needs from any location. Citibank aims to use technology not only for improving customer ser- vices but also to reduce costs. Citibank is pioneering how biometrics technologies like iris scanning might unobtrusively and reliably verify customers’ identities, which could make bank cards and PIN numbers things of the past. The bank’s “CitiConnect® API Developer Portal—A one-stop hub where clients can access the latest documentation on Citi APIs and sandbox environment. Usage of the Developer Portal is expected to shorten the client onboarding process, accelerate technical development, and improve the quality of technology integration between Citi and its clients.” In 2019, Citibank celebrated the 10 years of success of the Citi Innovation Labs, and “Citi named Celent’s 2019 Model Bank of the Year” as well as “Citi recognized for eight global treasury solutions initiatives”. In Japan, Citibank also wants to focus on technology to bring down its operating and transaction costs. Services such as telebanking and Internet banking are good examples. In addition to opening new branches, Citibank plans to expand by installing thousands of ATMs. Training and Development Citibank has one of the best training and develop- ment programs for its employees. Its employees are trained in general opera- tions of the bank and also in their area of specialization. The employees’ career path is well defned, and the progress is monitored. Mentor programs help in grooming future managers. In fact, Citibank people are in great demand in other banks and are often “poached” by them. 755 Cases

The Rise of Citibank in Japan For Citibank, it has been a long and at times bumpy road. Although the bank has maintained its presence in Japan since 1902, it became active in a small way in 1986 with retail banking operations. The true dynamism in Citibank’s life in Japan mate- rialized in the 1990s. Its dormant existence in the early years was a result of govern- ment regulations, powerful Japanese banks, and the unsafe image of foreign banks. Citibank’s success in Japan in the 1990s can be attributed to several factors—chiefy, weakened Japanese banks (nonperforming loans of approximately $1 trillion), the collapse of security companies and other fnancial institutions (mentioned earlier), and the “big bang” (a major overhaul of Japan’s fnancial regulations) in the Japanese fnancial sector. Along the progress of Citibank’s operations in Japan, it earned 5699 million yen as net income in 2019. Looking at how Citibank became the benefciary of Japan’s mounting fnancial turmoil is interesting. The series of disclosures of the fnancial problems by Japanese banks eroded consumer confdence, and the safe image of these banks took a big blow. Consumers started looking for alternatives. At the same time, Citibank—true to its image of being innovative—came up with services that were an instant hit with consumers. An example of its innovative services is its multicurrency account. When the value of the dollar plunged below 100 yen in 1995, many Japanese consumers understood that their currency was being priced into a stratosphere from which it would eventually descend, and Citibank offered the most convenient way for small-time savers to play the currency market. Multicurrency accounts attracted customers who could shift money into dollars and earn higher interest rates but switch the money back into yen with a phone call—at any time of day or night. In one day, Citibank logged a record 315,000 calls from prospective and current customers; the next day, people mobbed the bank’s branches in a scramble to buy dollars that were suddenly cheap. Seeing this success, Citibank developed ambitious plans for Japan. It expected to reach 35 million accounts by the year 2010 from its 1 million accounts in the beginning of this current century. That pace of growth has been enabling Citibank to become a main-

stream Japanese banking giant. . Table C4.1 presents a brief history of Citibank, including its operation in Japan. According to Berardy, customers do not come to Citibank just because of its safe image. Instead, he said, customers are looking at Citibank positively and evaluating its products on their own merit. With just some small number of branches, com- pared with many hundreds managed by its Japanese competitors, Citibank has earned the reputation as the country’s most innovative bank by offering services such as 24-hour ATMs, online banking, and telebanking. These services are taken for granted in the United States, but are a novelty in Japan. The bank has also become popular among customers and gained tremendous publicity by swallowing some of the fees that other banks charge when customers access their Citibank accounts on rival banks’ ATMs. By doing this, Citibank has in effect added thousands of ATMs using their rivals’ infrastructure. 756 Cases

.. Table C4.1 A brief history of Citibank and its operations in Japan

Year Milestones

1812 City Bank of New York established 1902 International Banking Corporation, later acquired by City Bank, establishes a presence in Japan with a branch in Yokohama 1972 Smith Barney opens a representative offce in Tokyo 1974 First National City Corporation is renamed Citicorp 1976 First National City Bank becomes Citibank, N.A. 1980 Smith Barney opens a branch in Tokyo Salomon Brothers opens a representative offce in Tokyo 1982 Salomon Brothers opens a branch in Tokyo 1997 Salomon merges with Smith Barney to form Salomon Smith Barney 1998 Name changed to Citigroup following a merger of Citicorp and Travelers Group, which includes Salomon Smith Barney 2012 Citi celebrates its 200th anniversary, and its 110th anniversary in Japan 2016 Citi expands its global Japan Desk Network with the opening of new desks in Vietnam and Mexico

Source: 7 https://www.­citigroup.­jp/en/about/history.­html

Strategic Alliances To have a better customer reach and to provide more services, Citibank entered into several strategic alliances in Japan. In a widely publicized deal that seemed to stamp Citibank with an offcial seal of approval, it became the frst bank of any kind to reach a cooperative business deal with Japan’s mammoth Post Offce Savings System, which most Japanese believe is the safest place to put their money. The deal adds thousands of remote access points for Citibank customers, making it more practical for the majority of the Japanese who live far from a Citibank branch to open accounts. Citigroup also bought 25% equity in Nikko Securities, the third largest brokerage house in Japan. In addition, Citibank considered entering into alliances with Asahi Bank and Tokai Bank. These alliances can increase Citibank’s access to huge savings, estimated to be around $9 trillion, that have been amassed by Japanese savers.

Financial Record Citibank’s trading volume has been increasing over the years even though the total trading volume for all banks has not been increasing worldwide. Citibank’s net income and earnings per share have been stable because it has focused on not only 757 Cases

In Billions of Dollars

340

320

300 2015 280 2017 2019 260

240

220

200 Total Loans Total Deposits

.. Fig. C4.2 Financial records—loans versus deposits

Loan to Deposit Percentage

150 140 130 120 110 100 90 80 70 60 50 2015 2017 2019

.. Fig. C4.3 Financial records—loan to deposit percentage

total revenues but also cost reduction for customers as a way to add more value to

bank services (refer to . Fig. C4.1). Citibank’s loans and deposits have also been

increasing steadily (see . Fig. C4.2). Citibank is very aggressive in expanding its market share globally, and at the same time, it is maintaining the loan-to-deposit

percentage at a manageable level (see . Fig. C4.3). 758 Cases

Globalization Quality Citibank

Japanese banks How can Japanese bank move to Citibank’s position?

Selective/Regional Broad/Mass Market

.. Fig. C4.4 Competitive position

Major Competitors Major Citibank competitors include domestic banks and foreign banks. Major domestic competitors are Bank of Tokyo–Mitsubishi and UFJ Bank. The foreign banks mainly include ABN AMRO, HSBC, and Deutsche Bank, among others. Citibank Japan has many competitive advantages: strong brand equity, globalized operations, innovations, and localized staff of very high quality. On a competitive positioning map, Citibank would show a broader product range and better quality

of service (see . Fig. C4.4).

Marketing Strategy Although the market may be getting smaller, the top players are taking bigger slices in Japan. The largest foreign exchange frms are having to work harder to carve out a point of difference in a mature market with thin margins. Considering that the banks cannot distinguish themselves from their competitors on the grounds of better interest rates (controlled by the government), the only area where the banks can make a difference is in their services and product (fnancial product) innovation. Citibank has been doing a good job of differentiating itself along these lines by (1) developing a product strategy designed as a “one-stop-shop” concept or fnancial supermarket in a global setting and (2) developing unique services and innovations. Product Under the umbrella of Citigroup, Citibank plans to provide several fnancial services. The “one-stop shop” offers retail banking, corporate bank- ing, investment banking, insurance, project fnancing, currency transactions, and a host of other products. To offer these services, Citibank uses the differ- ent arms of Citigroup. Special services, like credit advice and research, are being provided to add value. Price Customers recognize that in pricing terms, no difference exists between what Citibank can provide and what other banks can do. Therefore, Citibank 759 Cases

is trying to maximize the value-added offerings to its customers by adding more unique and creative services—such as providing unique offerings for telephone banking, internet banking, and direct mail for opening an account (among others)—while ­minimizing its customers’ costs and expenses. Promotion Citibank, in its effort to build strong brand equity and in its pur- suit to become the “Coca-Cola of fnance,” is using strategies such as co- branding, cross-marketing, and “Citibanking” as an experience. The Sony Citibank Card launched in the United States is an effort to be associated with the top names in the world. In the past, Citibank solicited the services of for- mer president of the United States George Bush to promote its global image. Although criticized as being discriminatory, Citibank effciently and proftably used an unusual approach toward its wealthy customers. In April 1998, Japan began deregulating its banks. Koichiro Kitade, the former head of Citibank’s private banking division in Tokyo, knew that it was time to try a new market- ing approach to expand its market share. Through newspaper advertisements, Citibank exclusively targeted rich people having more than $750,000. Although this strategy was discriminatory, Citibank succeeded with this creative and unique approach. Place Citibank is continually and actively expanding all kinds of distribution channels, such as new branches, internet banking, mobile banking, low-cost nationwide networks of ATMs, and telephone banking. With services like telebanking and internet banking, Citibank has in effect expanded the distri- bution channel to its customers’ homes. In the country, the local banks have widespread placement of their branches across the country. However, “the proliferation of branches that made these Japanese banks successful will be the thing that kills them in the future,” said Berardy. “They can’t cut costs. Even if they closed the branches, what would they do with the people?” Even after several years of economic stagnation, layoffs remain socially unaccept- able in Japan. In this context, Citibank operates with less branches in com- parison to its local counterparts and attempts to reach its Japanese customers more through different technology-enhanced banking platforms, which enables it to cost-­effectively expand its business in Japan.

Challenges for Citibank On the road to success, Citibank faces several challenges. One of its foremost chal- lenges is from within—that is, the question of the smooth amalgamation of Citicorp and the Travelers Group, which merged to form Citigroup. If their merger is man- aged and coordinated properly, it can give them the synergy to be a front-runner in world banking in the long run. On the contrary, bad management and lack of coor- dination can lead to a fasco. Problems can arise because of the different cultures of the two organizations. Already, differences and conficts of opinion between the two former co-CEOs, John Reed and Sanford Weill, have been reported. John Reed is known to have long-term objectives and favors market share over profts, whereas Sanford Weill is a hard-core, proft-oriented executive. His main focus is on quarterly 760 Cases

profts and maximization of shareholder wealth. For this reason, he is very popular on Wall Street. The other challenge is in the form of the competitors, both domestic (Japanese) and foreign. Even now, Japanese banks have formidable strength and, with their ­government’s help and successful alliances, can give their competitors a run for their money. Taking clues from the 1980s’ domination of US competition by Japanese manufacturing companies, the banks may also follow the same course. zz Questions 1. One question that comes to mind when talking about the rise of Citibank in Japan is whether it can maintain the same rate of growth and popularity as it has done in recent decades. Japanese banks may be encountering intense competition from their international counterparts, but it would be a serious mistake to dis- count their power. Japanese companies have overtaken the West in the manufac- turing industries and are known to be effective in managing distribution channels. Can Japanese banks also do the same in fnancial services? 2. What have been the market expansion strategies of Citibank? Will these strate- gies help it to achieve its “one-stop-shop” objective? zz Sources

Citi. (2019a). Treasury and trade solutions. 7 https://www.­citibank.­com/tts/about/ press/2019/2019-­0517.­html. Accessed 5 Sept 2020.

Citi. (2019b). Celebrating 10 Years of our Citi Innovation Labs. 7 https://blog.­ citigroup.­com/2019/06/celebrating-­10-­years-­of-­our-­citi-­innovation-­labs/. Accessed 5 Sept 2020.

Citi. (2020). Available at: 7 https://jobs.­citi.­com/by-­the-­numbers. Accessed 5 Sept 202.

Citi Group. (2015). Annual report. 7 https://www.­citigroup.­com/citi/investor/ quarterly/2016/annual-­report/. Accessed 5 Sept 2020.

Citi Group (2017). Annual report. 7 https://www.­citigroup.­com/citi/investor/ quarterly/2018/annual-­report/. Accessed 5 Sept 2020.

Citi Group. (2018). Annual report. 7 https://www.­citigroup.­com/citi/investor/ quarterly/2019/ar18_en.­pdf. Accessed 5 Sept 2020.

Citi Group. (2019a). Annual report. 7 https://www.­citigroup.­com/citi/investor/ quarterly/2020/ar19_en.­pdf. Accessed 5 Sept 2020.

Citi Group. (2019b). Annual report. 7 https://www.­citigroup.­com/citi/investor/ quarterly/2020/annual-­report/. Accessed 5 Sept 2020. Citigroup Global Markets Japan Inc. (2019). Financial report (in Japan) for the

20th business year. Available at: 7 https://www.­citigroup.­jp/en/fnancial-­data/ data/201912_cgmj_e.­pdf. Accessed 5 Sept 2020.

Citi Priority. (2020). 7 https://www.­citibank.­com.­my/citi-­priority/global-­ access/index.­htm. Accessed 5 Sept 2020.

Japan. (2020). History. 7 https://www.­citigroup.­jp/en/about/history.­html. Accessed 5 Sept 2020.

This case was prepared by Rajat Khanna and Sizhen Jiao, of the University of Hawaii at Manoa, under the supervision of Professor Masaaki Kotabe of Temple University. 761 Cases

Case 5: Gap Inc.

Since it started in 1969, Gap Inc. has been consistently growing and expanding. “Gap Inc. products are available for purchase worldwide through about 3200 company-­operated stores, about 600 franchise stores, and e-commerce sites.” Gap Inc. is now one of the largest-selling brands in the world and is ranked as one of the tops among all US retailers in sales.

Brief Background of Gap Inc. Gap Inc. was established in August 1969 by Donald G. Fisher, a real estate developer educated at the University of California, Berkeley. Fisher conceived the idea when he went to a department store to exchange a pair of Levi’s and was unable to because the jeans department was so disorganized. Backed by a $63,000 family investment and a $112,000 bank loan guaranteed by his father-in-law, Donald Fisher introduced the frst Gap store in San Francisco. His original idea was to focus on the mid-teen market with three types of goods: records, cassette tapes, and Levi’s jeans. Unlike the local department stores, which stocked only a limited number of styles and sizes of Levi’s jeans, the Gap store carried every size and style available. Furthermore, they were neatly arranged and easy to fnd. Donald Fisher and his wife had a discussion about the “generation gap” in 1969, and from that discussion came the name Gap Inc., under which the company was incorporated in California in July 1969. Gap Inc. was reincorporated in 1988 under the laws of Delaware.

Growth and Expansion Although the company’s original targeted customers were primarily young people, the convenience of a neatly organized jeans store with Levi’s products attracted cus- tomers of all ages. In less than 1 year, Gap’s business took off, and a second Gap store was opened in San Jose. In fewer than 2 years, there were six Gap stores in California. By 1972, Gap Inc. had 25 stores in 6 states. In 1973, Gap Inc. ventured into the East Coast market, opening 12 stores in New York, New Jersey, and Pennsylvania. In 1974, Gap Inc. expanded into Washington, Minnesota, Missouri, Oklahoma, Maryland, Virginia, Georgia, Arizona, Texas, and Illinois, with a total of 90 stores. In 1976, Gap Inc. went public with its stocks, offering 1.2 million shares on the New York and Pacifc stock exchanges, selling at 75 cents per share. In 1979, Gap Inc. opened a modern distribution facility in Denver, Colorado. By 1981, Gap Inc. had opened 500 stores nationwide. In 1983, Gap Inc. purchased Banana Republic, a travel clothing company that sold merchandise mainly through catalogs. By 1985, there were 613 Gap stores and 35 Banana Republics. The frst GapKids store was introduced in 1987, and then, in 1988, the Old Navy Clothing Company was introduced. In the same year, Gap opened two factory outlets, selling merchan- dise at discount prices. In 1990, GapKids formed a separate department for baby clothing, called BabyGap. In 1992, Gap stores also formed a separate department, named Gap Shoes. The year 1993 was marked by the opening of Gap warehouse or outlet stores as well as an entry into the French market. Old Navy was started in 762 Cases

1994, and the following years witnessed the introduction of online Gap Maternity and the launch of the e-businesses of Gap, Banana Republic, and Old Navy. During 1990–1999, Gap Inc. experienced exponential growth. During this period, Vogue magazine’s 100th anniversary issue placed supermodels wearing Gap clothes as their cover photo, and the Gap Inc. stock price reached a record high of $59. In 2000, “the frst Old Navy outlet store opens,” along with the OldNavy.com for online shopping, and in 2001, Old Navy expanded internationally, with stores in Canada. Banana Republic launched its frst outlet in Japan in 2005. In 2006, “Gap partners with (RED), a brand launched by Bono and Bobby Shriver, releasing a line of products from which half the profts support disease-fghting programs in Africa.” To underpin support for women who work in the garment factories, in 2007, “Gap Foundation, in partnership with vendors and non-governmental organizations, launches the P.A.C.E (Personal Advancement & Career Enhancement) program. Gap Inc. acquired the Athleta (a women’s activewear company that was founded in 1998) in 2008. In 2010, Gap Inc. entered into the Chinese market with stores in Beijing and Shanghai, along with Gap’s Chinese online store: Gap.cn. In 2011, Athleta launches its frst brick-and-mortar outlet in San Francisco. During 2011–2013, Banana Republic launched three collaborative projects with Emmy Award-winning TV show costume director Janie Bryant. Banana Republic started designing uniforms for Virgin America in 2012. In 2013, Intermix (a 32-store chain of luxury boutiques across North America that was founded in 1993) was acquired by Gap Inc. In the same year, “Gap Inc. forms Alliance for Bangladesh worker safety to improve factory conditions in Bangladesh.” Also, Gap Inc. declared that the minimum starting hourly wage in US store employees will rise to $9.00 in 2014 and $10.00 in 2015. In 2019, Gap Inc. acquires the Janie and Jack (a high-end children store). Also, this is the year Gap Inc. celebrated its 5th anniversary. As of 2019, the company operated 2502 stores in the United States, and alto-

gether 4200 stores worldwide, along with its e-commerce stores. . Table C5.1 pres- ents the global locations of Gap Inc. and its subsidiaries.

Selling Private, Store-Brand Product Within 3 months of opening Gap, Fisher realized that the real business was in selling Levi’s jeans, so he dropped the records and cassette tapes from his inventory. Until the end of 1973, Gap advertised and carried only Levi’s-brand products. In 1974, Gap introduced its frst private-label clothing into the merchandising mix. When price maintenance crumbled because of a Federal Trade Commission (FTC) direc- tive in 1976, Levi’s products began to sell at discount, and Fisher was convinced that Gap’s competitive advantage could not rely solely on the low prices of Levi’s prod- ucts. Since then, he has focused on reducing Gap’s reliance on the sales of Levi’s products. As a result, Levi’s products began to decrease as a percentage of Gap’s total sales. By 1987, Levi’s made up less than 50% of Gap’s total sales. By 1985, Levi’s sales dropped to 21% of Gap’s total sales and then 14% in 1987. Finally, in 1990, Gap dropped Levi’s and started selling only private-label products. 763 Cases

.. Table C5.1 Worldwide store numbers of Gap Inc. and its subsidiaries in 2019

Store Gap Gap Gap Old Navy Old Banana Banana locations North Europe Asia North Navy Republic Republic America America Asia North Asia America

Number 675 137 358 1207 17 541 48 of stores in 2019

Source: Statista (2020)

Gap Inc. Operating Components Gap Inc. is a specialty retailer that operates stores selling casual apparel, shoes, and other accessories for men, women, and children. It includes these well-known regis- tered trade names: Gap, GapKids, BabyGap, Gap Shoes, Gap Maternity, Banana Republic, and Old Navy Clothing Company. The company has continued to focus on developing and growing its brands, and it believes that its brands are among its most important assets. The company is tak- ing action to maintain and strengthen brand loyalty, including signifcantly increas- ing its investment in advertising and marketing. In addition to expanding the number of print ads placed in major metropolitan newspapers and their Sunday magazines, major news weeklies, and lifestyle and fashion magazines, the company’s ads appear in various outdoor venues, such as mass transit posters, exterior bus panels, bus shelters, and gigantic billboards span- ning entire buildings. Gap Inc. continues to run TV ads for all of its brands and radio ads for Old Navy. Gap Inc. continues to add fagship stores and increase televi- sion advertising to complement its in-store customer service focus. The company also continues to invest in store expansion and the development of new distribution channels (including online stores and promotions) to address changing market requirements. Its new channels of distribution include Gap Online, Old Navy Online, Gap Maternity Online, and a catalog for Banana Republic. The retail apparel business fuctuates according to changes in customer prefer- ences, dictated in part by fashion and season. These fuctuations especially affect the inventory owned by apparel retailers because merchandise usually must be ordered well in advance of the season and sometimes before fashion trends are evidenced by customer purchases. As a common factor in the fashion apparel industry, Gap is also vulnerable to changing fashion trends. In addition, the cyclical nature of the retail business requires the company to carry a signifcant amount of inventory, especially before peak selling seasons when the company and other retailers generally build up their inventory levels. Gap Inc. must enter into contracts for the purchase and manu- facture of apparel well in advance of the applicable selling season. As a result, the company is vulnerable to demand and pricing shifts and to suboptimal selection and timing of merchandise purchases. 764 Cases

Retail Divisions Gap operates under different divisions: Gap, Banana Republic, GapKids, BabyGap, GapBody, Gap Outlet, Old Navy, and International Division. The frst seven operate domestically, and the last one operates all the stores from the frst seven divisions that operate overseas. The company continues to expand internationally each year. It faces competition in European and Japanese markets from established regional and national chains. If international expansion is not successful, the company’s operations could be adversely affected. As a result, Banana Republic closed all their physical stores in 2017 in Europe; however they had ten in this region in 2015. The company’s ability to grow successfully in continental European markets will depend in part on determining a sustainable proft formula to build brand loyalty and gain market share in the especially challenging retail environments of France and Germany. Gap This division has by far the most stores—more than all the other divi- sions combined—with 1027 stores in 2002 and 2502 in 2019 operating in the United States. The Gap Shoes subdivision also operates under this division. All stores under the Gap division are called The Gap. The Gap stores are clas- sifed as clothing retail stores for men and women, with Standard Industrial Code 5651. The United States has more than 145 domestic competitors for The Gap; and in 1998, The Gap ranked third in sales and has been continuing to expand their business as a high performer. In the beginning, products under this division consisted of an assortment of unisex basics; more recently, they have evolved to become more gender specifc. Banana Republic When Banana Republic was purchased by Gap Inc. in February 1983, it was already famous for its travel and safari wear, although only two Banana Republic stores existed. After the purchase was completed, the parent company created a new division to operate all Banana Republic stores. Gap Inc. also invested capital to create product development and pro- duction teams for Banana Republic, allowing it to introduce its own new, pri- vate-label fashions. In addition, it rapidly expanded into other parts of the country. Products under the Banana Republic division are more upscale and more tailored and come in more refned fabrics than those in The Gap stores. Leather goods and jewelry goods have been introduced into the merchandise mix. Internationally, Banana Republic has operations in Canada and different locations in Asia. The company also offers these products online at www. bananarepublic.com. GapKids After the GapKids division was formed in 1986, it became the fast- est-growing division of Gap Inc. All stores under this division are called GapKids stores. Products in this division are essentially miniature versions of the Gap products, but with more focus on color variations. These products have also switched from unisex to more gender specifc. The formation of the BabyGap subdivision under GapKids is another reason for the rapid growth of this division. 765 Cases

Old Navy Clothing Company This division operates all Old Navy stores and Gap Warehouse. Old Navy now has more than 1100 stores operating world- wide under this division since its introduction in 1994. A Gap Warehouse also operates under this division. The formation of the Old Navy division came at a time when sales were down and Gap Inc. needed new ways to attract custom- ers. The strategy was to sell merchandise similar to what was in Gap stores, but at lower costs. This division is expected to surpass the GapKids division and become the fastest-growing division of Gap Inc. Internationally, Old Navy stores exist in different locations across North America and Asia. The com- pany also offers these products online at www.oldnavy.com. International Division All stores located in foreign countries are under the control of International Division.­ This division includes Gap stores, GapKids stores, Banana Republic stores, and Old Navy stores. The frst overseas store was established in 1987 in London, thus gaining entry into the British apparel market. In 1988, the frst store in Canada was established, and in 1993 the frst one in France was opened. The international locations of Gap Inc. and its

subsidiaries are presented in . Table C5.1. International Division also oper- ates Banana Republic in Canada and Australia. International Division shows strong growth potential and continues to expand existing markets into Europe and to gain major entry into two new markets: Germany and Japan.

Products and Customer Base The Gap division sells mainly men’s and women’s casual and active wear. Clothing items including jeans, sweat suits, sweatshirts, denim wear, and polo-style pocket T-shirts are marketed. The Gap division has also expanded its market to include handbags, shoes, and a higher-fashion line of evening wear. In addition, during the 1990s the Gap division entered the body care products and cosmetics market, intro- ducing soaps, body lotions, shower gels, shampoos, conditioners, aromatic candles, and other related items. In addition to selling travel and safari wear, the Banana Republic division sells men’s and women’s casual wear, made of fner fabrics and priced higher than those found in Gap stores. Together, the Gap stores and the Banana Republic divisions target mainly customers 20 years or older. GapKids, which sells miniaturized versions of Gap store products, originally aimed at children aged 2 to 12. With the introduction of BabyGap, however, it has been able to add even younger customers to its customer base. One of the most recently introduced Gap Maternity sells maternity wear only through its website. Old Navy Division, selling cheaper products, targets lower-income shoppers. International Division tar- gets foreign customers in similar age groups.

Sourcing Gap purchases merchandise from around 700 sources located in both the United States and approximately 50 countries overseas. This procurement strategy is designed to reduce each supplier’s importance so that no single supplier can affect Gap’s overall operations signifcantly. No supplier accounts for greater than 5% of the purchase. The suppliers manufacture Gap’s private-label merchandise according 766 Cases

to the company’s specifcations. Gap purchases are composed of 40% domestic- made merchandise and 60% foreign-made merchandise. Of the foreign sources, approximately 23% are from Hong Kong, and the remaining purchases are spread across 42 other countries. Hong Kong, Taiwan, South Korea, Singapore, Bangladesh, and China constitute more than 50% of Gap’s foreign merchandise sources. Sudden political instability in any of these countries could quickly have an adverse effect on Gap’s sourcing operations, as would any imposition of import restrictions, such as tariffs and quotas by the US government, on products made in these countries. Hong Kong is by far the most important foreign source of Gap’s merchandise. Hong Kong has a total population of 7,508,288, of which a signifcant percent are engaged in manufacturing and in either retail trade or wholesale. The Hong Kong government had to import labor from abroad to counter a shortage in domestic labor supply. Despite this labor shortage, the well-educated labor force in Hong Kong is relatively cheap to employ in comparison to the Western countries, and with the increased pressure of manufacturing companies moving across the border into China, even cheaper labor may result. US retailers, including Gap, Inc., have long been the target of criticism for selling goods imported from Hong Kong and other low-wage coun- tries such as Taiwan and South Korea. In addition to its low wage rate, Hong Kong is a favored apparel source for many retailers because of its fexible manufacturing and quick response strategies introduced by the Hong Kong Productivity Council and adapted by many of Hong Kong’s apparel producers. Both strategies reduce inventory costs for the retailers. Furthermore, the apparel industry in Hong Kong is adapting to many new technologies and production methodologies, all aimed at reducing apparel production costs.

Advertising Although Gap Inc. advertises mainly through major newspaper publications, it also advertises in fashion magazines and on mass transit posters, billboards, and exterior bus panels and in different online channels. All advertisements stress the central theme of American design, quality, and moderate pricing, although they are pro- duced separately in each country to suit local tastes.

Distribution All merchandise is shipped to distribution centers for distribution. These centers are in California, Kentucky, Maryland, Canada, and the United Kingdom.

Marketing The company has a separate marketing team for each brand. The teams are head- quartered in San Francisco’s Bay area in California. These headquarters are also responsible for advertising. 767 Cases

($ in millions)

18,000

16,000

14,000 2012 2013 12,000 2014 10,000 2015 8,000 2016

6,000 2017 2018 4,000 2019 2,000

0 Net Sales Net IncomeTotal Assets

.. Fig. C5.1 The fnancial performance of Gap Inc. (Source: Annual Report 2016, 2019)

Performance

. Figure C5.1 presents the fnancial performance of Gap Inc. Gap Inc. has however been performing quite consistently in terms of its net sales and total sales; its net income has been fuctuating, especially in 2019; the net income reached to the lowest fgure since 2012. Industry experts cited a variety of reasons for dipping perfor- mance, such as launching too many stores to having less differentiation between its brands. The company will have to fnd a way to get back on track to underpin its proftability to sustain itself in an economy characterized by ferce competition.

Conclusion As Gap Inc. continues to expand into the foreign markets, it should consider several options to reduce costs and thereby increase proft. First, because Gap Inc. does not produce or procure merchandise in any of the foreign markets it is now in, ­establishing free-trade zones in those countries might help increase profts by temporarily reduc- ing duty and value-added tax (VAT) costs, and no duties would be paid on extra merchandise. Second, attention should be paid to centralizing advertising to reduce cost. Third, the problems associated with sourcing from so many different regions should be considered and ways found to correct them. Finally, Gap Inc. should seek ways to take advantage of the free-trade agreements that are active with the US gov- ernment with other foreign countries. 768 Cases

zz Questions 1. Gap, Inc. conducts sourcing from 700 different sources, both domestically and abroad. What are some of the advantages for this type of sourcing strategy? What are the disadvantages? 2. The North American Free Trade Agreement (NAFTA) has benefted many US companies by reducing tariffs on NAFTA-country goods traded between each other. How has this agreement benefted Gap Inc.? How will it beneft Gap Inc. in the future? 3. Many US companies have been moving into Canadian apparel markets. Gap Inc. is facing more and more competition from apparel manufacturing compa- nies from its own country. How can it maintain its Canadian market share? 4. Canadian consumers are quite trendy in abandoning their name brands and buy- ing cheaper garments to save money. What can Gap Inc. do to take advantage of such market trends? zz Sources

Gap Inc. (2016). Annual report. 7 https://www.­annualreports.­com/HostedData/ AnnualReportArchive/g/NYSE_GPS_2016.­pdf. Accessed 5 Sept. 2020.

Gap Inc. (2019). Annual report. 7 https://www.­annualreports.­com/HostedData/ AnnualReports/PDF/NYSE_GPS_2019.­pdf. Accessed 5 Sept 2020.

Gap Inc. (2019). US store locations. 7 https://www.­gapinc.­com/CMSPages/ GetAzureFile.­aspx?path=~\gapcorporatesite\media\images\investors\realestate\ locations-­by-­­state-­4q19.­pdf&hash=4ba9864e0450114081c01c165a9e22305ac42ae 50d87c9c1b4b94128db87786c. Accessed 5 Sept 2020.

Gap Inc. (2020). Real estate. 7 https://www.­gapinc.­com/en-­us/investors/real-­ estate. Accessed 5 Sept 2020.

Gap Inc. (2020). History. 7 https://www.­gapinc.­com/en-­us/about/history. Accessed 5 Sept 2020.

Old Navy. (n.d.). 7 https://www.­businessoffashion.­com/organisations/old-­ navy. Accessed 5 Sept 2020. Satista. (2020). Number of stores of The Gap, Inc. worldwide from 2010 to 2019,

by store brand and region. 7 https://www.­statista.­com/statistics/242596/number-­of-­­ stores-­of-­the-­gap-­inc-­by-­store-­brand-­and-­region/. Accessed 5 Sept 2020.

Worldometer. (2020). Hong Kong population. 7 https://www.­worldometers.­info/ world-­population/china-­hong-­kong-­sar-­population/. Accessed 5 Sept 2020.

This case was prepared by Masaaki Kotabe and updated by Sonia Ketkar for class discussion rather than to illustrate either effective or ineffective management of a situ- ation described (2003). 769 Cases

Case 6: The Value-Breeding Bond Network of Hawthorn: A Relationship Marketing Context in a Business-to-Business Setting

Background Hawthorn Football Club is one of the popular clubs in the Australian Rules Football League (AFL). AFL is neither rugby nor soccer in terms of the rules to play. Players use both their hands and feet to play the game. “Australian rules football is known by several nicknames (across Australia), including Aussie rules, football and footy. In some regions, it is marketed as AFL after the Australian Football League.” In terms of popularity of a particular sport in Australia, the extent of popularity could vary from region to region in Australia among some of their favorite sports. Also, “the sports that are popular in Australia can be very different to elsewhere around the world, and in addition there are regional differences in the popularity of sports, for example the most popular football code in Sydney is Rugby League, while in Melbourne it is Australian (Rules) Football.” AFL, rugby, cricket, soccer, tennis, and golf are among the top most popular sports in Australia, in general; however, in 2019, AFL appears as the most searched and most attended sports in Australia. Hawthorn is a Melbourne-based AFL club in Victoria. Victoria is among one of the eight Australian states and territories located within the Australian mainland. Hawthorn was established in April 1902 and enjoys an enormous fan base not only from Melbourne and greater Victoria but also from other parts of Australia. Hawthorn has been performing successfully since its inauguration both on the feld (on the AFL pitch) and off the feld (on the marketplace). However, Hawthorn’s marketplace success was not so easy. During 1996, the club was planning for a merger with another AFL club to deal with its AU$1.7 million debt. Finally, the then Hawthorn board did not pass the merger plan, but decided to face the business chal- lenges in the AFL market. By 2002, Hawthorn established themselves as one of the most fnancially strong clubs in AFL. Since then Hawthorn has been escalating up their marketplace successes with diverse business stakeholders from both inside and

outside of Victoria. . Figure C6.1 demonstrates that Hawthorn’s assets and reve- nues have been increasing steadily, and irrespective to some ups and downs in proft margin, Hawthorn has been proftable continuously. Most importantly, Hawthorn has turned a business with net loss and increased debt in 1996 into a proftable ven- ture by 2002. In this success story of Hawthorn, their business partnership with the Tasmanian State Government has played a signifcant role. Tasmania is another Australian state but outside the Australian mainland. From 2001 to 2019, the Hawthorn–Tasmania relationship has created, increased, and sustained socioeconomic value for both partners; however upon taking this prolifc relationship to its 20th anniversary in 2020, it looks like that the happy marriage between these two partners would come 770 Cases

Australian Dollar

800,00,000 2008 700,00,000 2009 2010 600,00,000 2011 500,00,000 2012 2013 400,00,000 2014 300,00,000 2015 200,00,000 2016 2017 100,00,000 2018 0 2019 Net Assets Total RevenueProfit

.. Fig. C6.1 Financial performance of Hawthorn. (Source: Annual Report 2009, 2011, 2013, 2015, 2017, 2019). to its end (e.g., separation) from the 2021 AFL season. In this case study, we will discuss this Hawthorn–Tasmania relationship’s “sweet and sour” story. From Value Network to Value-Breeding Bond Network: A Relationship Marketing Context The extended value network of a branded grocery item starts from the source of its raw materials (e.g., farmers who produce the item), and the entire value network comprises all other associated stakeholders, for example, the suppliers who deliver the grocery item from farmers to the factory where it is packaged as a branded product. The value network also includes the retailers who sell that branded grocery item, the customers, and all other stakeholders who could infuence or be infuenced by the entire procedures of sourcing raw grocery item to delivering the branded grocery to the end users, the ultimate consumers. Value network is a combination of social, business, and expertise resources formed by the key stakeholders in order to create value within the network. Extending the value network concept, the value-breeding bond (VBB) network concept can be evolved as a network that is able to uninterruptedly generate further value from the reproductive nature of the existing value on an ongoing basis. For example: VBB network could be a signifcant value proliferating network, centered on a steady and continuously re-processable approach “to identify, establish, maintain and enhance value” within and sometime beyond the value network or group of stake- holders, so that value can be generated repeatedly through the reproductiveness of existing value, while each stakeholder plays some value-added role by way of working interdependently toward mutually benefcial, multifarious goals. A VBB network nurtures long-term trust, commitment, understanding, respect, reciprocity, interdependence, and shared prosperities among the involved stakehold- ers. Such a long-term collaboration of a VBB network could initially be instigated 771 Cases

from an initial win-win result of two or more key stakeholders as their frst collective success. One of the key characteristics of such VBB networks is to generate supple- mentary socioeconomic value from a collaborative venture within or some time beyond the extant value network, centered on the existing value’s prospective capa- bility to reproduce new value. Such VBB networks could be initiated, and their growth could be underpinned through the infuence of one or several relationship marketing (RM) factors. Let’s have a look at the example of how the Hawthorn– Tasmania marriage established such a VBB network to reproduce new value from the extant value of their business relationship on an ongoing basis and to reveal the infuence of RM in the progress of this particular VBB network.

The Hawthorn–Tasmania Marriage: An Example of a Value-Breeding Bond Network

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The value, which was initially originated in 2001 through the joint power (as a RM factor) of Hawthorn and its core sponsor (the Tasmanian State Government) had been breeding further value for the stakeholders of the Hawthorn value network. For example, the preliminary value among Hawthorn, Tasmanian State Government as Hawthorn’s naming rights partner, and the people in Tasmania (as prospective customers) was initially rooted in 2001, while Hawthorn as a club from Melbourne played one of their home matches frst ever in Tasmania, which is another Australian state/province across the Tasman Sea. All of the stakeholders (Hawthorn, Tasmania State Government, people of Tasmania) of Hawthorn’s Tasmania value network have different goals here. For example, the aspiration of Hawthorn was to enter intensively into the Tasmanian AFL market. Tasmanian State Government’s aim was to use the Hawthorn obsession to underpin their community projects, support the Tasmanian tourism sector, and grow a strong AFL culture in Tasmania aiming to strengthen the physical activities of Tasmanian young people, among others. The goal of the Tasmanian customers (the people of Tasmania) could be enjoying the Australian mainstream sport in their hometown, considering that before Hawthorn started playing some of their home matches in Tasmania instead of Victoria, there 772 Cases

were no AFL matches in Tasmania. However, Tasmanians love AFL; Tasmania does not have their own home team in AFL, until Hawthorn from Victoria made Tasmania their second home. The initial value (playing in Tasmania for the frst time), which was rooted in 2001 among the three stakeholders, has been breeding further value for them through the steady and continuously reprocessable approach of identifying, establishing, maintaining, and enhancing the initial value. As a result, further value has been generating repeatedly through the reproductiveness of that initial value. For example, the Tasmania State Government became naming rights sponsor of the Hawthorn Football Club in 2006 after supporting Hawthorn several years through various minor sponsorship deals, prior to attaining Hawthorn’s highly competitive naming rights title in 2006. Following this exclusive sponsorship of the Tasmanian Government, the Hawthorn membership sales reached to a record level. Hawthorn offers a unique membership deal for the Tasmanian market, which is different from other Australian mainland states. In return for the Tasmanian Governments’ title sponsorship, Hawthorn delivers signifcant value to the Tasmanian State’s local com- munities. For example, Hawthorn developed important community profle camps in Tasmania. The camps see Hawthorn players visit communities across the state, actively contributing to the efforts of local charities, community groups, and football club fun- draising activities. In July 2009, the Tasmanian State Government and Hawthorn announced the Hawks in Schools program, aimed at encouraging school kids to have fun being active. As part of this program, kids in Tasmanian primary schools receive free sports pack around Tasmania. In addition to the sports packs, all grade four stu- dents in Tasmania received a booklet, developed by Hawthorn’s major partner MBF (a leading insurance company in Australia), in association with the Tasmanian Department of Education. The booklet is fun and engaging, full of interesting sports- and health-related information for kids. Tasmania has also grown its appeal as a tour- ism destination through the Hawthorn sponsorship and Hawthorn’s matches in Tasmania, considering that many Australians from other mainland Australian states used to fy to Tasmania on weekends to watch the Hawthorn matches in Tasmania. Tasmania has been receiving signifcant returns on its investment. For example, AUS $15.136 million was brought into the Tasmanian economy directly from the travel and hospitality industry’s enhanced position in Tasmania by Hawthorn’s contribution. An increased number of full-time equivalent employments was created in Tasmania as a result of the Hawthorn sponsorship, where the increased tourist visitation because of Hawthorn has a signifcant infuence in creating new employments in Tasmania. Following this Hawthorn–Tasmania partnership, the Tasmanian people have been fulflling their need to enjoy Australian mainstream sports at their hometown. According to Hawthorn’s former marketing director, “not only did Tasmania seem to take a shining to Hawthorn as their team but also membership sales has been growing signifcantly in Tasmania, all of the Hawthorn’s matches in Tasmania have been selling out, as well as Hawthorn has been receiving blanket media coverage in Tasmania since its very beginning to penetrate into the Tasmanian market.” The marketing director also added that the Tasmanian market, starved of Australian Rules football but with passionate viewers from distance, is now dominated by Hawthorn. “Hawthorn’s capturing of the Tasmanian market is a landmark for 773 Cases

Australian Rules given that other clubs from the Australian mainland had attempted to capture other parts of the country in the past with no real success.” Following the 20 years of marriage from 2001 to 2020, the preliminary value that was initially entrenched in 2001 because of playing Hawthorn’s frst ever AFL match in Tasmania has been uninterruptedly breeding further value through that initial val- ue’s prospective reproductiveness of further value. As a consequence, Hawthorn chose Tasmania as their second home besides Victoria. The 2001’s initial value created ­additional value for Hawthorn based on the Tasmanian State Government’s naming rights sponsorship in 2006. It helped Hawthorn to enter deep into the Tasmanian market, which directly increases Hawthorn’s membership sales in Tasmania. At the same time, the Tasmanian local communities were benefting from that initial value of 2001 as they were enjoying additional value, which was generated for the Tasmanian economy based on that initial value of 2001. For example, the Tasmanian people have received Hawthorn as their frst ever AFL home team and have been enjoying AFL matches at their home, and the Tasmanian Government has been underpinning their different socioeconomic projects (e.g., health, education, job creation, among others) through Hawthorn partnership. The 20 years of this VBB network among these three stakeholders enhances long-­ term understanding, commitment, interdependence, respect, and mutual benefts (as other RM variables) among them through a preliminary commercial bond. This initial commercial bond created the platform for further value-proliferating opportu- nities for them from greater contexts. As a result, at the end of 2009, the then CEO of Hawthorn, Stuart Fox, evaluated the further value proposition with the Tasmanian government to AUS $20 million over another 5 years. Following this ongoing prolifc relationship, in 2015, “the Hawks (the nick name of Hawthorn) have enjoyed a strong and long-standing relationship with the (Tasmanian) government and are midway through (another) 5-year deal worth $20 million to play four premiership matches and a pre-season game in Tasmania each year until 2021.” In this context, the VBB network among these three associated stakeholders (Hawthorn, the Tasmanian Government, and the Tasmanian people) has been contribut- ing mutually benefcial value among the key stakeholders and has transformed Hawthorn’s value network into a VBB network by recurrently identifying, establishing, maintaining, and enhancing further value from the reproductiveness of the 2001’s initial value.

Irresolution About the Future of the Hawthorn–Tasmania Partnership Tasmania did not have their own home team in AFL before Hawthorn adopted Tasmania as their second home. The absence of a Tasmanian home team in AFL enabled Hawthorn to extensively penetrate into the Tasmanian AFL market. However in 2020, a discussion to launch Tasmania’s own AFL team was started. “Hawthorn were looking to extend their current deal amid growing pressure that arose earlier this year (in 2020) for the AFL to give Tasmania a provisional license to have their own team in the competition later this decade.” The Tasmanian govern- ment presented a business proposal to the AFL Board in order to launch the Tasmanian team to join the AFL competition. As a consequence, “in a statement the 774 Cases

Tasmanian premier said Hawthorn had agreed to ‘defer any post 2021 contractual negotiations until towards the end of the year (2020)’.” In fact, “the arrangement with Tasmania has been an important factor in Hawthorn’s fnancial stability (in) this century as they grew into one of the competition’s power- houses winning four premierships between 2008 and 2015.” However, the opportunity to launch Tasmania’s own home team later in the 2020s has brought doubt about the future of the 20 years’ prolifc relationship of Hawthorn and Tasmania. In this uncertain situa- tion, Hawthorn is trying to negotiate a deal for a future relationship with Tasmania (at least to some extent) where possible. This endeavor of Hawthorn is also receiving sup- port from the Tasmanian Labor party. However, it is a big question to explore whether the Hawthorn–Tasmania marriage will be broken in the near future, or how the relation- ship could remain active to some extent. zz Discussions and Questions 1. Identify and discuss the infuence of different RM factors that are discussed in this case study to establish and grow the Hawthorn–Tasmania VBB network. 2. How could Hawthorn protect its relationship with Tasmania? 3. What would be the implications of the discussed RM factors to explore the pos- sible options to extend the Hawthorn–Tasmania relationship in the changing business environment (i.e., Tasmania is trying to register its own home team in AFL competition in near future)? 4. What would be the implications of Hawthorn’s relationships with other stake- holders (e.g., political party, Tasmanian local community, among others) to infuence the future of the Hawthorn–Tasmania relationship? 5. Following your knowledge on business-to-business marketing, sales and promo- tion, relationship marketing, and other marketing management theories and concepts that are discussed in this book, develop a business plan for Hawthorn to present to the Tasmanian Government, in order to infuence the Hawthorn– Tasmania future relationship in favor of Hawthorn. zz Sources

Babylon. (2009). Defnition of value network. Babylon. 7 http://dictionary.­babylon.­ com/Value%20network. Accessed 09 Mar 2010.

Footy. (n.d.). 7 footy.­com.­au. Accessed 19 Feb 2010.

Fox, S. (2009). Hawthorn could soar to 75,000. 7 ­http://www.­perthnow.­com.­au/ sport/af/hawthorn-­could-­soar-­to-­75000/story-­e6frg1xu-­1225809727957. Accessed 22 Jan 2010. Grönroos, C. (2004). The relationship marketing process: Communication, inter- action, dialogue, value. Journal of Business & Industrial Marketing, 19(2), 99–113. Hawthorn FC. (2010). United 2010-one for all, all for one’, Hawthorn FC.

7 http://www.­hawthornfc.­com.­au/. Accessed 02 Jan 2010.

Hawthorn FC. (2010). Help me decide. 7 http://membership.­hawthornfc.­ com.­au/HelpMeDecide.­aspx. Accessed 02 Jan 2010.

Hawthorn FC. (2010). Naming rights partner. 7 http://www.­hawthornfc.­com.­au/ naming%20rights%20partner/tabid/7709/default.­aspx. Accessed 02 Jan 2010.

Hawthorn Football Club Limited. (2009). Annual fnancial report. 7 https://s.­af.­ com.­au/staticfile/AFL%20Tenant/Hawthorn/PDFs/09_annualreport.­pdf. 775 Cases

Accessed 7 Sept 2020.

Hawthorn Football Club Limited. (2011). Annual fnancial report. 7 https://s.­af.­ com.­au/staticfile/AFL%20Tenant/Hawthorn/PDFs/2011_Annual_Report.­pdf. Accessed 7 Sept 2020.

Hawthorn Football Club Limited. (2013). Annual fnancial report. 7 https://s.­af.­ com.­au/staticfile/AFL%20Tenant/Hawthorn/PDFs/HFC%20-­%20Annual%20 Report%202013.­pdf. Accessed 7 Sept 2020.

Hawthorn Football Club Limited. (2015). Annual fnancial report. 7 https://s.­af.­ com.­au/staticfile/AFL%20Tenant/Hawthorn/PDFs/2015_HFC%20Annual%20 Report%202015.­pdf. Accessed 7 Sept 2020.

Hawthorn Football Club Limited. (2017). Annual fnancial report. 7 https://s.­af.­ com.­au/staticfle/AFL%20Tenant/Hawthorn/PDFs/2018%20PDFs/2016-­0328%20 Annual%20Report_297x210_DIGITAL.­pdf. Accessed 7 Sept 2020.

Hawthorn Football Club Limited. (2019). Annual fnancial report. 7 https://s.­af.­ com.­au/staticfile/AFL%20Tenant/Hawthorn/Articles/2019-­2622%202019%20 Annual%20Report_297x210_WEB[1].­pdf. Accessed 7 Sept 2020. Inglis, R. (2020). Labor backs Hawthorn deal as transition to Tasmanian team.

The Examiner. 7 https://www.­examiner.­com.­au/story/6644156/labor-­backs-­new-­­ hawthorn-­deal-­as-­transition-­to-­tasmanian-­af-­team/. Accessed 7 Sept 2020. Institute of Chartered Accountants in Australia (ICAA). (2002). Annual survey of AFL club’s fnancial reporting, Media release in September. Canberra: ICAA.

Rohan, C. (2012). Name of the game is up in the air in NSW. The Age. 7 https:// www.­smh.­com.­au/sport/af/name-­of-­the-­game-­is-­up-­in-­the-­air-­in-­nsw-­20120321-­ 1vkbw.­html. Accessed 4 Apr 2012. Ryan, P. (2020). Tasmanian government puts Hawthorn contract talks on hold.

The Age. 7 https://www.­theage.­com.­au/sport/af/tasmanian-­government-­puts-­ hawthorn-­contract-­­talks-­on-­hold-­20200423-­p54mqj.­html#:~:text=By%20 Peter%20Ryan&text=The%20Hawks%20have%20enjoyed%20a,Tasmania%20 each%20year%20until%202021. Accessed 7 Sept 2020. Shams, S. M. R. (2013). Implications of relationship marketing indicators to enable organisational growth: A stakeholder causal scope analysis. In H. Kaufmann & M. F. A. K. Panni (Eds.), Customer centric marketing strategies: Tools for building organizational performance (pp. 214–244). Hershey: Business Science Reference. Shams, S. M. R., & Lombardi, R. (2016). Socio-economic value co-creation and sports tourism: Evidence from Tasmania. World Review of Entrepreneurship, Management and Sustainable Development, 12(2/3), 218–238. Stavros, C. (2005). Relationship marketing in Australian professional sport: an organisational perspective (PhD thesis). Griffth University.

Timeline. (n.d.). Google history of hawthorn football club. 7 http://www.­google.­ com.­au/search?q=History+of+Hawthorn+Football+Club&hl=en&rlz=1R2SUNC_ enAU356&tbs=tl:1&tbo=u&ei=rbBSS6S6A8GGkAX4v4G5Cg&sa=X&oi=timel ine_result&ct=title&resnum=11&ved=0CDoQ5wIwCg. Accessed 17 Jan 2010.

Top End Sports. (2020). Most popular sports in Australia. 7 https://www.­topendsports.­ com/world/lists/popular-­sport/countries/australia.­html. Accessed 7 Sept 2020. This case was prepared by Dr. Riad Shams, Newcastle Business School, Northumbria University, UK. 776 Cases

Case 7: Marketing and the Environment: Tuna Versus Dolphins

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In the eastern tropical areas of the Pacifc Ocean (a major tuna-fshing area), schools of yellowfsh, skipjack, and bigeye tuna often swim beneath schools of dolphins. To catch quantities of tuna, fshermen cast purse seines (nets pulled into a baglike shape to enclose fsh) around both tuna and dolphins. When tuna is harvested with the purse seine method, fshermen can effciently and reliably catch a high number of good-size tuna. Unfortunately, dolphins are also trapped in the nets. Because dol- phins are mammals, they must surface in order to breathe oxygen. Entangled in the net, they can asphyxiate and die unless they are released. In the late 1960s and early 1970s, the “incidental” catch of various species of dolphins by tuna fshers in the Eastern Tropical Pacifc (ETP) was in the hundreds of thousands. Because of society’s growing and vociferous concern for these senseless deaths, new fshing techniques were developed to reduce dolphin mortality. Perhaps the most important newer technique is the “backdown operation.” After “setting on” dolphins to catch tuna—that is, encircling both tuna and dolphins with the purse seine—the ship backs away, elongating the net, which submerges the cork- line in the back and pulls the net out from under the dolphins. If the operation works correctly, the tuna remain at the bottom of the net and the dolphins swim free. However, if the operation is fawed, dolphins are injured or killed and discarded from the catch as waste. Rather than rely on this imperfect correction of the purse seine method, some environmental groups think that entirely different methods of fshing for tuna should be employed. Alternatives could include using a pole and line or setting on tuna not associated with dolphins. According to marine scientists and fshermen, however, the alternative methods also have serious drawbacks. Some people catch many sexually immature tuna, which for some reason don’t associate with dolphins. Juvenile tuna often are too small to be marketed. If too many are caught, the sustainability of the population could be jeopardized. In addi- tion, alternative methods frequently catch high numbers of other incidental species, 777 Cases

such as sharks, turtles, rays, mahimahi, and many kinds of noncommercial fsh. Finally, all fshing methods expend energy. The practice of setting on dolphins uses the least amount of energy per volume of tuna caught. According to many of the experts involved, including the Inter-American Tropical Tuna Commission, the US National Marine Fisheries Service, and the sci- entifc advisor to the American Tunaboat Association, the most effcient method for fshing tuna, in terms of operational cost yield and the conservation of tuna popula- tion, is to set on dolphins with a purse seine. From the canning industry’s point of view, only purse seine fshing provides the volume of catch necessary for the growth of the industry. Many experts also believe that, with current technology, abandoning the practice of setting on dolphins without bringing on other, more grave problems is not possi- ble, although research to develop better techniques continues, with an aim to pursue an effective method to address this problem.

Trade Implications This tuna–dolphin problem has been the source of serious friction at the interna- tional level. The United States and Mexico, two countries sensitive to marine mam- mal protection and with solid laws in place for many years, have gone “head to head” over the issue. The confict between environmental concerns and free trade for the United States and Mexico is further complicated by the existence of the North American Free Trade Agreement (NAFTA). In 1988, the United States amended the US Marine Mammal Act to prohibit the incidental killing of dolphins during commercial tuna fshing. The amendment required the banning of tuna imports from any country that did not implement sev- eral specifc measures to reduce dolphin mortality and achieve a kill-per-set rate (the number of dolphins killed in each casting of the fshing net) of no more than 1.25 times the US rate. In February 1991, a US trade embargo was imposed on tuna caught by foreign fshing feets using the purse seine method in the ETP, with Mexico as a prime target. This harsh step was seen as necessary because, over the preceding 15 years, an esti- mated 7 million dolphins died in tuna nets. The embargo cost tuna-exporting coun- tries such as Mexico, Costa Rica, and Ecuador hundreds of millions of dollars. To avoid future losses, the embargoed nations met with US offcials in 1992 to deter- mine ways in which they could improve their fshing methods, end the embargo, and regain access to the lucrative US market. Several changes in fshing methods were introduced after these negotiations. Although foreign fshers did not abandon the purse seine method, they learned to dip their nets deeper to allow dolphins to escape. Dolphin safety panels were installed in many nets, serving as escape hatches for the dolphins. Divers are now deployed to assist dolphins unable to fnd their way out of the nets. A biologist is assigned to every ship to observe fshing methods and to record dolphin mortality. The partici- pating governments also adopted a vessel quota system in which the overall yearly quota for dolphin mortality is equally divided among the boats fshing in the region. This way, each boat is individually held responsible for its dolphin kill. Otherwise, a 778 Cases

few careless ships could destroy the entire fshery’s attempts to meet lower mortality rates for the year. The effect of these changes on dolphin survival was major. In 1986 more than 20,000 dolphin mortalities were caused by US vessels in the ETR. By 1998, the esti- mated amount was 738. The amount of dolphin mortalities caused by non-US ves- sels also dropped drastically from 112,482 in 1986 to an estimate of 1477 for 2003, a greater than 99% reduction in reported dolphin mortality. As of the mid-1990s, the total yearly mortality for each dolphin species was less than 1% of its population, a number that can be sustained without reducing the total number; in fact, the dolphin population was increasing. However, the concern for dolphin conservation is yet a critical issue. A report in August 2018 “reveals that more than 100,000 dolphins, small whales and porpoises (small cetaceans) are slaughtered globally…each year—many to be used as fshing bait…(which are mostly) unregu- lated, illegal, and unsustainable, with potentially wide-ranging adverse impacts on small cetacean populations.” Most scientists started to view the mortality of dolphins incidental to tuna fshing not as an environmental problem but, rather, as one of avoiding unnecessary killing. In fact, a National Marine Fisheries Service scientist stated that if Mexico had money for research, it would be better invested on behalf of the vaquita, a species in real danger of extinction, than in the tuna–dolphin issue because no danger to the dolphin population as a whole exists. In November 1996, it was a priority of President Clinton to revise the US tuna– dolphin legislation. A revision was necessary in order to appease Mexican discontent about restrictions on their tuna imports to the United States. The International Dolphin Conservation Program Act (IDCPA) was the result and became law in August 1997. This act served to weaken the US Marine Mammal Act of 1988. The legislation called for the lifting of the US embargo on tuna imports from countries that continued to use the purse seine nets during fshing operations. However, these nations had to be certifed by the US State Department as having joined a binding international program and having domestic legislation in place to enforce interna- tional dolphin protection efforts. The program consists of nations working together by having international observers on board when the purse seine nets are tossed to see whether any dolphins are killed. The IDCPA also allowed “dolphin-deadly” tuna (or tuna caught by the purse seine method) to be sold in the US market. Eventually, such a catch would even be allowed to use a “dolphin-safe” label. However, until a study could be completed by the US Department of Commerce concerning the positive or negative impact of purse seines on dolphin populations, dolphin-safe labels were still restricted to non- purse seine tuna. The purpose of the study was to ensure that consumers knew which brands of tuna use fshing methods that threaten dolphin conservation efforts. In April 1999, the US Secretary of Commerce decided that “catching tuna by chasing and ensnaring dolphins in large encircling nets does not cause a signifcant 779 Cases

adverse impact on the dolphin population.” This decision enabled the enactment of new dolphin-safe standards under the IDCPA. Thus, dolphin-safe labels can now be used for purse seine tuna, as long as an international observer and a captain do not see dead or injured dolphins in the nets. A number of environmental organizations, including the Center for Marine Conservation, Greenpeace, and the World Wildlife Fund, support the change. But other groups feel the dolphin-safe label will now become meaningless. Representatives from countless environmental groups and organizations, such as Earth Island Institute, the Humane Society of the United States, Dolphin Safe/Fair Trade Campaign, and Sierra Club, say that the decision was made contrary to all available scientifc information. David Phillips, of the Earth Island Institute, states: “scientists, U.S. tuna companies, and the public know that chasing and netting dol- phins is not safe for dolphins ... the decision is consumer fraud and a death warrant for thousands of dolphins.” Patricia Forkan, the former executive vice president of the Humane Society, states, “the decision by the Secretary is an outrageous attack on environmental protection laws in order to allow Mexico and other dolphin-killing nations access to the lucrative U.S. tuna market. Once again, trade trumps science.”

The Ongoing Debate Despite the controversy surrounding labeling, the three major US tuna processors— StarKist, Chicken of the Sea, and Bumble Bee—said that they will continue to use only tuna caught by methods other than encirclement. This decision does not seem to greatly affect the growth in the sales or volume of these three major processors. In the midst of the legal action and debate, the National Marine Fisheries Service com- pleted its study, from which the Secretary of Commerce made the determination that “intentional chase and encirclement of dolphins is not having a signifcant adverse impact on any depleted dolphin stock.” As a result, the defnition of “dolphin-safe” changed to allow tuna caught by the chase and encirclement of dolphins to be con- sidered dolphin-safe as long as there were no observed dolphin mortalities or serious injury.

Current Actions to Protect Marine Animals from Vessel Collision The National Oceanic and Atmospheric Administration (NOAA) under the US Department of Commerce encourage “responsible vessel practices and understand- ing the distribution of marine mammals (e.g., whale, dolphins, and seals) and sea turtles are two key components to reducing the risk of vessel strikes.” NOAA has 780 Cases

been implementing many actions to minimize collisions between vessels and marine animals. For example: 55 Applying vessel speed restriction 55 Collaborating with the US Coast Guard to suggest safer marine routes 55 Recommending provisional protective areas, which are known as Dynamic Management Areas 55 Informing ships and other watercraft operators to the risk of collisions 55 Exploring and applying new approaches, guidelines, and rules for vessel operators 55 Building and disseminating placards, brochures, interactive materials, and post- ing signs in marinas 55 Building and applying Mandatory Ship Reporting Systems in collaboration with the US Coast Guard 55 Collaborating with other key stakeholders to adapt to safer shipping channels 55 Monitoring vessel–mammals collisions through carcass examinations by the Marine Mammal Stranding Network 55 Introducing apps and tools that offer data and information to mariners zz Questions 1. Is the denial of market access an appropriate tool to enforce a country’s environ- mental standards? 2. Did the US denial of market access ultimately work? 3. What is your view on the quote “Once again, trade trumps science”? Is this case study an example of that? 4. Is a goal of zero dolphin deaths realistic? zz Sources Animal Welfare Institute. (2018). 100,000+ dolphins, small whales and porpoises

slaughtered globally each year. Report. 7 https://awionline.­org/press-­releases/ report-­100000-­­dolphins-­small-­whales-­and-­porpoises-­slaughtered-­globally-­ each-­year#:~:text=Home-­, Report%3A%20100%2C000%2B%20Dolphins%2C%20 Small%20Whales%20and,Porpoises%20Slaughtered%20Globally%20Each%20 Year&text=Washington%2C%20London%2C%20Munich %E2%80%94A,be%20 used%20as%20fshing%20bait. Accessed 11 Sept 2020. Department of Commerce. (1999, June 14). Tuna purse seine vessels in Eastern Tropical Pacifc Ocean. Federal Register, 64(113). National Marine Fisheries Services. (2003). Report to the congress on the status of International Dolphin Conservation Programs. National Oceanic and Atmospheric Administration. (n.d.). Understanding ves-

sel strikes. 7 https://www.­fsheries.­noaa.­gov/insight/understanding-­vessel-­strikes# what-­­is-­­being-­done-­to-­prevent-­vessels-­from-­striking-­marine-­animals? Accessed 11 September 2020. The National Council for Science and the Environment. (1999). Dolphin protec-

tion and tuna seining. 7 www.­starkist.­com/insideskt/corp/press/index.­html. Accessed Dec 1999. This case was written by Professor Michael Czinkota with George Garcia and Kristen M. Mehlum. 781 Cases

Case 8: The Embryonic Phase of Spectrum Color

Anthony Cordera, the former executive vice president of Spectrum Color, sighed as he hung up the phone. The conversation still raced through his mind as he surveyed the fall foliage outside his offce window. Cordera went over every nuance of the telephone conversation he had just completed with Roberto Cortez, the former vice president of European operations at BASF International. BASF had been a good customer for Spectrum, but Cortez now spoke with disdain, accusing Spectrum of questionable practices in its dealings with BASF. Cordera hated to see such a proft- able relationship sour, but he saw no solution. As he turned back toward his desk, he wondered whether Spectrum might soon face similar sentiment from other large, multinational clients. At the same time, he wondered how to address this issue at the upcoming board meeting without alarming the company president and the board of directors.

History Spectrum Color Systems is a medium-sized industrial frm with headquarters in the United States. The frm was founded in 1952 when Daniel Clark, a government sci- entist working on techniques to measure aspects of color and appearance, was approached by Procter & Gamble (P&G). P&G recognized that customers held a perception of quality related to the color of its products. To be able to offer consistency to its customers, and as part of its quality control program, P&G sought a process to help standardize the color and appearance of the products it manufactured. Clark balked at the request to work for P&G building a machine that could quantify aspects of color, but, because he recog- nized the widespread commercial applications of such a machine, Clark went into business for himself. Spectrum Color started with the simple philosophy of provid- ing solutions to customers’ problems relating to measurement and control of color and appearance attributes. The frst machines were developed under contract with P&G. As the quality control movement developed throughout the industrialized world, the demand for Spectrum’s products grew. Spectrum Color Systems remained privately held; majority ownership and con- trolling voting rights remain in the Clark family. In 1990, Daniel Clark passed away. His son Paul became CEO and president; he runs domestic sales, fnance, and human resources. Anthony Cordera joined Spectrum in 1985. As executive vice president, he is responsible for manufacturing, engineering, international sales, shipping, and receiving. He reports directly to Paul Clark. The Clark family retained approximately 55% of company stock, including all voting stock. The executive and associate staff participated in an employee stock ownership plan and together owned the remaining 45% of shares.

Product Line Spectrum Color generally manufactures and sells an extensive array of colorimeters and spectrophotometers. These machines quantify aspects of color and appearance. As Case 8 Appendix discusses, such measurements are important, but no easy task. 782 Cases

A colorimeter is the most basic instrument. Most large manufacturers choose spec- trophotometers, which are more exacting in their measurement ability, providing better performance and more options. These are generally integrated systems that can cost as much as $150,000. Spectrum offers both online products and lab products. Online products are designed for use on a production line, where products run under the instrument, which continuously monitors the product’s appearance. These systems are manufac- tured in batch operations and customized to meet customer specifcations. Typically, custom features are oriented to specifc user applications and include hardware com- ponents, such as moving optical scanners, that measure lateral color variance as well as software components designed to meet the needs of specifc industries. The frst instruments, built in the 1950s, provided users with numerical values via a primitive screen and tape printer system with a 15- to 30-second lag between measurement and numerical output. All Spectrum products are driven by user-friendly software that monitors color trends throughout a production run with real-time output. Lab prod- ucts are used when a customer takes a sample from a production line and brings it to the instrument for measurement. Spectrum instruments are used in a wide variety of industries. Large food prod- uct companies measure the color of their products and packaging to ensure consis- tency. Paint companies purchase instruments to match colors and lease the machinery to paint stores. Automobile companies use Spectrum products to ensure that the color of interior cloth material, plastic molding, and exterior paint match. Some companies forced suppliers to provide color variance data sheets with all shipments. Spectrum supplied several instruments to a large bakery that produces buns for McDonald’s. McDonald’s had stipulated in its contract that buns be produced not only on time, but within certain color specifcations. The bakery approached Spectrum to help meet these color standards. A major manufacturer and supplier of denim uses Spectrum’s “color probe” spectrophotometer in its dye house to measure and grade the color of every strand of denim it produces. Color determines the value of the denim; it has tremendous impact when millions of yards of denim are produced, and the price fuctuates sig- nifcantly depending on color.

The Embryonic Phase of Spectrum: Market Competition and Expansion The color and appearance measurement market is generally considered a niche mar- ket with approximately $130 million to $140 million in annual sales worldwide during the early years of twenty-frst century. During those years, Spectrum averaged $20 million annually in both retail and wholesale sales revenue over a period of 3 years, placing it second in terms of market share. The industry became concentrated in 1990 when Color Value, a Swiss company with $3 million to $10 million in annual sales revenue, decided to dominate the color business. Color Value International, owned by a large Swiss brewery, purchased two competitors: Color Systems (CS), based in the United States and representing $35 million in annual sales, and International Color (IC), based in the United Kingdom and representing $20 million in annual sales. Two smaller companies occupy the third and fourth market share 783 Cases

positions: Speare accounts for approximately $12 million a year in sales, and Scientifc

Color generates about $9 million a year in sales (see . Fig. C8.1). Although Color Value International owned almost 50% of world market share, Cordera believes that Spectrum had a unique window of opportunity. The confusion associated with integrating three companies and the loss of goodwill caused by

Spectrum Before 1990 Color Systems (14.3%)

CS (25%) IC (14.3%)

Speare (8.6%) Other (24.3%) Color Value International Scientific (7.1%) Color (6.4%)

After 1990 Color Value International (46.4%)

Spectrum Color Systems Other (14.3%) (24.3%)

Speare Scientific (8.6%) Color (6.4%)

.. Fig. C8.1 Color industry concentration during the embryonic phase of spectrum 784 Cases

changing CS’s company name, a well-established and respected brand, to Color Value International gave Spectrum a sales advantage. In addition, Spectrum entered the color-matching and formulation market, one of Color Value’s most proftable product lines. To gain market share in the United States, Spectrum’s management decided to become the low-cost vendor and offered its new machines and color- matching software at prices of about one-half the competition’s. Whereas the typical color-matching spectrophotometer by Color Value International was priced at $50,000, Spectrum offered a simpler $25,000 machine. To compete, Color Value International was forced to drastically reduce its prices to meet those of Spectrum, thus cutting deeply into profts. International Expansion In the 1950s and 1960s, Spectrum’s management spent most of its time building the instruments and getting them out the door to meet the demand rather than developing a strategy to expand the company domestically and internationally. Spectrum’s expansion into international markets succeeded despite its lack of strategic planning. In the early years, Spectrum simply responded to requests from large companies such as P&G to provide instruments to overseas subsidiaries. As the Clarks became more comfortable with this process, they decided to begin selling actively in Europe. By 1984, international sales comprised about one-fourth of total corporate sales. By 1992, the share had grown to more than one-third. Sales Force Management Spectrum Color used independent sales agents domestically from its inception until 1986, when it developed an internal sales force. Cordera, drawing on his experience in marketing, established the domes- tic sales force to provide more direct control over the marketing and sales strategies. After touring a number of agent offces, Cordera began to calculate the real cost of such a sales relationship. Working closely with Bob Holland, Spectrum’s former chief fnancial offcer, Cordera tried to quantify some of the intangible and hidden costs of the agent relationship. Spectrum spent sig- nifcant resources lobbying for agents’ time and attention to the sales of Spectrum products and provided all the technical support because few of the agents had technical expertise. Additionally, although Spectrum was respon- sible for billing customers and paid 15% of the sales price to the agent as com- mission, it had no access to lists of end users and decision-makers within the client’s organization. Spectrum is an application-oriented company; thus, access to decision-makers and end users within client organizations provided valuable information for product development and sale of transferable appli- cations to current and future clients. A detailed fnancial analysis was useful compared the true cost of using sales agents to the anticipated cost of an internal sales force. The analysis indicated that Spectrum could increase sales, reduce cost, and increase its control by developing its own sales force. Internationally, Spectrum relied mainly on independent distributors for its sales. Spectrum sold instruments outright to distributors at wholesale prices. Spectrum billed the distributors 30-day net terms. Spectrum provided its distributors with sales 785 Cases

brochures and manuals in English. Distributors then translated these brochures as needed. In the early years, distributors were selected largely through happenstance. Distributors of other products would have had heard about Spectrum and wrote a letter to the Clarks expressing interest in the distribution of their instruments. The Clarks would have had invited the distributor to the United States to see the prod- ucts and be trained in their operation and thus become a Spectrum distributor. Spectrum established a number of distributors all over the world, with extensive market penetration in Europe and the Far East. Although the company encountered a steady international demand for its products, it continued to encounter problems with international distributors. In 1984, Spectrum’s sole French distributor, Gerard Bieux, abruptly closed his operation for medical reasons. Bieux had kept his sales operation close to his vest and thus maintained no customer lists or sales records. No one could fll the void Bieux left, and Spectrum’s management was forced to start over again, building up its French distribution. Cordera spent a great deal of time locating another French distributor and developing a proftable relationship. The relationship served Spectrum well until 1990, when a major competitor purchased the distributor. Again Cordera was left without a French representative for Spectrum instruments. Cordera realized that the distributor selection process was critical to Spectrum’s international expansion and decided to become more proactive in selecting distribu- tors. He worked closely with Holland to establish selection criteria for distributors based on fnancial stability, formal training programs, and fnancial goals. Additionally, Spectrum insisted that all distributors have service technicians trained at its US facility. The distributor was responsible for paying the airfare for the techni- cian, and Spectrum supplied food, lodging, and training. This strategy was not pur- sued so much for fnancial reasons, but to force the distributor to make both a fnancial and emotional investment in selling Spectrum products. With the domestic direct sales force up and running, Cordera decided that if he was going to put the effort into forging an international presence, Spectrum should move toward an international direct sales force. In 1991, Spectrum opened its frst European sales offce in Paris. It opened an offce in Germany in 1992. Development of an International Direct Sales Force In spite of the detailed planning, fnancial budgeting, and strategy analysis that preceded the opening of both European offces, each showed a net loss in its frst year of operation. Cordera consulted with large accounting frms in both France and Germany to gain insight into European business law and to develop frst-year budget projections. In addition, Spectrum management solicited information from its state Department of Economic Development on issues of taxation, interna- tional shipping, work permits, and Visa restrictions for US nationals working abroad. Despite such effort, the combination of operating costs, which exceeded Spectrum’s estimates, and slow sales associated with the European recession resulted in frst-year losses in both France and Germany. 786 Cases

Cultural differences contributed to rising costs. Unlike the US sales force, where the majority of sales representatives’ compensation consists of commission, European sales representatives are traditionally paid high salaries and relatively low commissions. In addition, employees are paid an annual salary bonus equiva- lent to 1 month’s salary regardless of performance. Terminated employees can receive as much as 1 year of severance pay based on the longevity of their relation- ship and position with the company. Middle managers and higher expect to be provided with company cars, which was particularly diffcult for Spectrum man- agement to swallow because neither Cordera nor Clark was provided with a com- pany car. Despite his uneasiness, Cordera agreed to provide these benefts because he felt that it was important to attract high-quality employees for the new offces. All these benefts were stipulated in the long-term employment contracts required in Europe. Diffculties soon became apparent with Spectrum’s sales representatives in Paris. In staffng the Paris offce, Cordera, largely out of a desire to get someone out on the road in France, settled for an individual who, although the most qualifed of the candidates, lacked the aggressiveness, sales orientation, and technical competence for the position. Cordera was disappointed by the sales representative’s performance but found the process of terminating the employee a long and arduous one. Spectrum began working with an attorney in Paris, providing the employee with written docu- mentation detailing the reasons for dissatisfaction, as well as sales goals that were to be met in order to retain the position. In the end, Spectrum was forced to negotiate an expensive severance package. Following this initiative, the international activities seemed to be back on track. The Paris offce consisted of the international sales director, one sales representative, one service technician, and two secretaries. From that offce, Spectrum conducted marketing activities, sales, installation, and service for France. The German offce employed two sales representatives, one secretary, and one service technician cover- ing the German market. To avoid future hiring diffculties, Cordera instituted a program that brings key individuals from European operations to its headquarters facility. The mission of this program was to integrate those individuals into Spectrum’s corporate culture and create a team environment. On this point Cordera remarked, “the fax machine and telephone are great pieces of equipment, but nothing beats a face-to-face dinner or lunch where we can sit down and talk to each other.” Commitment to European Customers Spectrum management had historically marketed the same products throughout the world. Over time, Spectrum rec- ognized that the European market and the US market had different needs and preferences in both hardware and software. For example, Spectrum sales rep- resentatives frequently found their sales efforts focusing on the software that accompanies the instruments because that is the part the customer sees, feels, and touches. To achieve market success, Spectrum management felt that it had to design prod- ucts to meet the needs of European customers. It had two choices. The frst was to 787 Cases

translate existing software and then add the nuances the Europeans wanted. This proposition promised to be time-consuming and very costly. The second option was to acquire a software company abroad. In 1991, Cordera located a small software company in Switzerland that already had software written in German, French, Italian, and Spanish that was very appli- cable to the Spectrum system. Spectrum purchased the company for $275,000. Along with the company’s assets and software copyrights, Spectrum also acquired the ser- vices of the company’s founder. This decision proved invaluable because he spoke fve languages and could adapt Spectrum’s software products to meet the needs of the European market. Spectrum Color paid for its acquisition with the cash it had generated from oper- ations. Spectrum management historically followed a conservative view of fnancing. The focus is on cash management, trying to generate enough cash to fnance any expansion. In fact, Spectrum would not have made the purchase unless it had the cash. Spectrum maintained a line of credit, but did not use loans for fnance expan- sion. Occasionally, management borrowed $500,000 on its credit line and paid back the loan early just to show activity on its account. zz Questions 1. How did Spectrum deal with market competition in their domestic market? 2. What were the key challenges that impacted on Spectrum’s international sales force management? How did Spectrum address these challenges?

Case 8 Appendix: The Basics of Color and Appearance

What words would you use to describe a school bus? Yellow or slightly reddish yel- low or perhaps orange? You might add the word shiny or maybe even glossy. But could the person on the other end of a telephone be expected to make, based on these words, a gallon of this paint for touch up? Most likely, no. To further complicate matters, is your color vision the same as the person mak- ing the paint? What about the lighting under which you made the initial judgment of color? Have you ever noticed how some colors appear quite different under the lamps used in your home or offce compared to outdoors? Appearance characteristics are diffcult to communicate objectively. Certainly a sample of the product could be sent to another person, but what is “close enough” when you’re deciding whether a match exists?

The Language of Color Color is a three-dimensional characteristic of appearance consisting of a lightness attribute, often called value, and two chromatic attributes, hue and chroma. Colors can be distinguished from one another by specifying these three visual attributes.

. Figure C8.2 shows a common arrangement of these three attributes, often termed color solid or color space. 788 Cases

.. Fig. C8.2 Three-dimensional color coordinate system

Hue Hue is often the frst attribute of color that is mentioned. Consider the school bus. The most obvious thing is that it is a shade of yellow rather than blue or green. Hue is the attribute of color perception by which an object is judged to be red, yellow, green, or blue, for example. Chroma A color specifcation requires more than just a designation of hue. How concentrated is the yellow? That is, how much color does there appear to be? Words such as depth, vividness, purity, and saturation have been used to convey how different the color is from gray. Chroma, the more accepted term, is used to specify the position of the color between gray and the pure hue. Value A third dimension is necessary to complete the specifcation. This luminous or lightness attribute distinguishes “light” colors from “dark” col- ors. Value is the term commonly used to express this attribute and is shown as

the vertical axis in . Fig. C8.2. This case was developed by Professor Michael R. Czinkota and MBA candidate Marc S. Gross.

Case 9: Implications of the Ancient Business Concepts for Contemporary Markets: Background and a Case Example

Context Based on “microcredit” as an ancient business concept for socioeconomic development, Case 8 shares an approach of exploring the different historical business concepts and 789 Cases

practices from various past societies and markets, in order to understand whether learn- ing from those historical concepts would be useful to successfully infuence the markets in the twenty-frst century. Eventually, the goal here is to look back with an aim to enable the twenty-frst century’s marketers to move forward in support of additional resources from the past that could offer considerable insights to address the contemporary socioeco- nomic challenges, in a way that could conceivably inspire today’s customers.

Implications of Business History In order to understand the ever-evolving market dynamics to contribute to the prog- ress of its ongoing thought and practice, scholars acknowledge that “determining the direction of where a feld (e.g., marketing) is headed often requires a refection of its founding principles, the transformation it has endured, and the driving forces that shape its existence.” As a result, exploring the diverse market dynamics that have been evolving on an ongoing basis since the primitive era and learning from the historical developments of different alternative markets are useful even for the twenty-frst cen- tury’s marketers. For instance, it could be referenced that a good number of academic studies and managerial assignments addressed different contemporary socioeconomic issues, based on ideas from past socioeconomic settings and marketplaces and the rel- evant business concepts and practices of those eras. It indicates that “looking back to move forward” is an acceptable form in social science that includes business, manage- ment, marketing, and organization, among others. As a consequence, scholars and refective marketers acknowledge that “enterprise(s) in the UK (for example) cannot be properly examined without an historical perspective.”

Looking Back at Diferent Previous Market Dynamics The instinctual nature of post-modern marketers would further be proactive based on learning from various enterprising ideas and practices from the socioeconomic settings of the primeval, medieval, pre-modern, and modern eras. For this it would be instrumental to carefully analyze why and how such enterprising ideas and prac- tices originated in past socioeconomic environments and what are the core factors linked to such ancient enterprising thoughts and practices. Such analyses of the valuable competitive variables that reciprocally support the evolvement and progress of specifc commercial policy and scheme in the previous markets and societies, and realizing the fundamental approach of comprehension of those primitive enterpris- ing concepts would be useful to recognize the traditional school of thought. In the same vein, the lessons that would be learnt based on such analyses could conceivably be useful to understand how those valuable socioeconomic competitive factors or variables were formed, exploited, and supplemented in the ancient/primeval, medi- eval, pre-modern, and modern socioeconomic environments across the world, for example, in the Inca society, ancient Greece, ancient Mesopotamia, ancient India, ancient Roman society, ancient China, and other previous markets, societies, and economies. Following this viewpoint, additional exploration would be useful to recognize how those valuable market competitive variables or factors were further stimulated 790 Cases

and exploited throughout the economic and societal development in different centu- ries in human civilization; how those key competitive factors or variables were planned, implemented, and monitored in modern socioeconomic settings, in partic- ular, to contribute to the general progress of marketing dynamics; and, last but not least, how those competitive variables or factors propel marketing frms to transform into the contemporary postmodern corporations that deal with the concurrent mar- keting environment.

Microcredit: A Case Example of the Implications of Historical Business Concepts for Contemporary Markets

Early Stages of Microcredit in the Postmodern Era An exceedingly pertinent example of the benefts of learning different business concepts from history to proactively and effectively infuence the contemporary customers is the notion of “microcredit” in postmodern markets. Microcredit as a concept of banking for disadvantaged people has received signifcant interest since the middle of the frst decade of this current century, when Dr. Yunus, the chief explorer of this concept in the postmodern society, received the Nobel Prize in 2006 for his work on microfnance in association with his own organization, Grameen Bank, that was also launched by him. Since 2006, microcredit and the relevant societal business initiatives and social marketing thought have become an inherent part of contemporary marketing dynamics. However, researchers acknowledged that “the birth of microfnance in Europe dates back to tremen- dous increases in poverty since the 16th and 17th century.” However, “the case of India shows that the origins of microfnance predate those reported above in Ireland and Germany by more than two and perhaps even three millenniums.” Similar to borrowing the “microcredit” concept from past societies to implement it in the contemporary postmodern market, more attempts to recognize such histori- cal business concepts and practices would be instrumental to effectively envisage dif- ferent alternative enterprising concepts, plans, and tools from the past, in order to implement in the contemporary markets, as well as would be prolifc to competitively address the contemporary socioeconomic challenges. The implementation of the microcredit concept from the past society into the contemporary market also sup- ports the idea of many other scholars that the “historical implications in relation to the contemporary…development have often an infuential role for the progress of… idea and practices.” Therefore, marketers today should supplement their knowledge with historical lessons from previous societies and market dynamics, with an aim to explore phenomena from the thoughts and practices of previous societies and mar- kets, in order to possibly recognize, transform, implement, and monitor the right his- torical enterprising ideas and practices in the contemporary market. The Implementation of the Microcredit Concept in the Postmodern Market We know that if someone wants to borrow some money from a bank, she or he needs to mortgage a property as a security for that bank loan. Around the world, there are many disadvantaged people who cannot afford to mortgage a property in order to borrow money from the traditional banks, with an 791 Cases

aim (for example) to launch a new startup business even at a very small scale. However, many of these disadvantaged people throughout the world would have innovative ideas and entrepreneurial knack and passion, which they cannot implement because of the lack of fnancing. As a result, they cannot transform their lives for a better future. Dr. Yunus started to think how he could help such disadvantaged people to launch their startups in order to pursue their dreams. As a professor of economics, Dr. Yunus learnt the microcredit concept from the primeval economies and started to offer loans in small scale (e.g., $10 to $100) to different individuals in Chittagong District, Bangladesh, since 1973. Even such small amounts (e.g., $10 to $100) are quite good money in many emerging economies in the world to launch a small business (e.g., selling street food, etc.). The disadvantaged people in many countries cannot save or source even a small amount of money (e.g., $10 to $100) after carrying out their living expenses to fnance a small-scale business. Upon receiving this small-scale loan (which is given merely based on trust without any mortgage), the disadvantaged people (mostly women) in rural areas in Chittagong started work on their micro-businesses either individually or as a group of some borrowers together. Eventually, these micro-entrepreneurs (or entrepreneurial marketers) succeeded with their micro-­enterprises, paid back the bor- rowed amount to Dr. Yunus’ Grameen Bank, and also expanded their businesses, in order to ultimately transform their lives for a better future. Microcredit Today Across the World The microcredit concept that was frst implemented in the postmodern economy in 1973 has now transformed into a global industry today. “The shifting dynamics supporting this growth makes it critical for businesses in this space to keep abreast of the changing pulse of the market...(that is) poised to reach over US$174.4 Billion by the year 2025... (and) will bring in healthy gains adding signifcant momentum to global growth.” In fact, throughout the world in 2018, “139.9 million borrowers ­benefted from the services of MFIs (microfnance institutions), compared to only 98 million in 2009. Of these 139.9 million borrowers, 80% are women and 65% are rural borrowers, proportions that have remained stable over the past 10 years, despite the increase in the number of borrowers.” Considering the socioeconomic signifcance of the microcredit concept, microcredit is taught directly through the 84 Yunus Centres which are hosted by 84 universities around the world and indirectly (without direct contribution of Yunus Centres) almost in all universities in the world. Consideration to Implement an Ancient Business Concept in the Contemporary Market In terms of implementing such historical business concepts into today’s market environment, a key consideration would be to fgure out an implementa- tion plan for a particular old business concept to ensure that the concept could suffciently be able to satisfy the latent needs, wants, and expectations of the con- temporary customers, in order to contribute to the ongoing development of the overall marketing dynamics to profoundly, proactively, and prolifcally address the contemporary socioeconomic and ecological issues while making proft. 792 Cases

zz Questions 1. Is it valuable to learn historical enterprising concepts, with an aim to implement them in the twenty-frst century market? Justify your answer. 2. What are the benefts and challenges of implementing historical enterprising ideas in the contemporary marketplace? 3. Similar to the microcredit concept, can you think of a particular historical enter- prising concept that would be useful to introduce for the twenty-frst century’s customers? zz Sources Brooks, R. R. W., & Deffains, B. (2013). Four means of assurance for trade: Self-­

governance, reputation entrepreneurs, courts & arbitrators. 7 http://www.­law.­yale.­ edu/documents/pdf/BrooksDeffains2013c.­pdf. Accessed 23 May 2015. Bruton, G., Khavul, S., Siegel, D., & Wright, M. (2015). New fnancial alterna- tives in seeding entrepreneurship: Microfnance, crowdfunding, and peer-to-peer Innovations. Entrepreneurship Theory and Practice, 39(1), 9–26. Brouwer, M. T. (2002). Weber, Schumpeter and Knight on Entrepreneurship and Economic Development. Journal of Evolutionary Economics, 12, 83–105. Counts, A. (2008). Small loans, big dreams: How the Nobel Prize winner Muhammad Yunus and Microfnance are changing the world. Hoboken: Wiley. Dorado, S. (2013). Small groups as context for institutional entrepreneurship: An exploration of the emergence of commercial microfnance in Bolivia. Organization Studies, 34(4), 533–557. Eisenstadt, S. N. (1980). Cultural orientations, institutional entrepreneurs, and social change: Comparative analysis of traditional civilizations. American Journal of Sociology, 8(4), 840–869. Gebremariam, Y. (2010). Small loans, big dreams: how the Nobel Prize Winner Muhammad Yunus and Microfnance are changing the world. Eastern Economic Journal, 36(1), 142–144. Greenfeld, M. (2017). Perspectives on the historical evolution of the people side of business. In B. Christiansen, and H. C. Chandan (Eds.), Handbook of research on organizational culture and diversity in the modern workforce (pp. 1–22). Hershey: Business Science Reference. High, J. (2009). Entrepreneurship and economic growth: The theory of emergent institutions. The Quarterly Journal of Austrian Economics, 12(3), 3–36. Karlan, D., & Valdivia, M. (2011). Teaching entrepreneurship: Impact of busi- ness training on microfnance clients and institutions. The Review of Economics and Statistics, 93(2), 510–527. Neal, L., & Williamson, J.G. (2014). The Cambridge history of capitalism. Cambridge: Cambridge University Press. 793 Cases

Nega, B., & Schneider, G. (2014). Social entrepreneurship, microfnance, and economic development in Africa. Journal of Economic Issues, 48(2), 367–376. Nwankwo, S. (2013). Entrepreneurship among British Africans: Moving for- ward by looking backward. Journal of Enterprising Communities: People and Places in the Global Economy, 7(2), 136–154. Majidov, T., & Ghosh, D. (2008). Entrepreneurship and business in Uzbekistan:

Historical perspective and current obstacles. 7 https://dspace.­stir.­ac.­uk/ handle/1893/321#.­VCuUm_mSwrU. Accessed 03 Apr 2014. Microfnance Barometer. (2019). 10 years already! A look back at the trends in micro-

fnance. 7 http://www.­convergences.­org/wp-­content/uploads/2019/09/Microfnance-­ Barometer-­­2019_web-­1.­pdf. Accessed 12 Sept 2020. Moss, T., Neubaum, D.O., & Meyskens, M. (2015). The effect of virtuous and entrepreneurial orientations on microfnance lending and repayment: A signalling theory perspective. Entrepreneurship Theory and Practice, 39(1), 27–52.

ReportLinker. (2020). Global microfnance industry. 7 https://www.­globenewswire.­ com/news-­release/2020/04/02/2010777/0/en/Global-­Microfinance-­Industry.­html. Accessed 12 Sept 2020. Roy, M. J., MacLeod, R., Baglioni, S., & Sinclair, S. (2014). Social enterprise,

social innovation and social entrepreneurship in Scotland: A national report. 7 https:// www.­researchgate.­net/profile/Michael_Roy2/publication/271073260_Social_ Enterprise_Social_Innovation_and_Social_Entrepreneurship_in_Scotland_A_ National_Report/links/54bcf3b00cf29e0cb04c58b9.­pdf. Accessed 06 Jan 2018. Seibel, H. D. (2005). Does history matter? The old and the new world of microf- nance in Europe and Asia. (Working Paper, 2005, 10). Development Research Center, University of Cologne, Cologne. Shams, S. M. R., & Kaufmann, H. R. (2016). Entrepreneurial co-creation: a research vision to be materialised. Management Decision, 54(6), 1250–1268. Shams, S. M. R., Vrontis, D., Belyaeva, Z., Thrassou, A., & Christof, M. (2018). Historical perspectives on social business enterprises: Looking backward to move forward. Journal of Social Entrepreneurship, 9(3), 288–293. Siqueira, A. C. O., Mariano, S. R. H., & Moraes, J. (2014). Supporting innova- tion ecosystems with microfnance: Evidence from Brazil and implications for social entrepreneurship. Journal of Social Entrepreneurship, 5(3), 318–338. Washington, M. L., & Chapman, Z. (2014). Impact of microfnance on entrepre- neurial activity in emerging economics: Panel data from Argentina, Brazil, Colombia & South Africa. International Journal of Entrepreneurship, 18, 59–67.

Yunus Centre. (2018). List of Yunus Social Business Centre. 7 https://www.­ muhammadyunus.­org/pages/1712/ysbc. Accessed 12 Sept 2020.

This case was prepared by Dr. Riad Shams, Newcastle Business School, Northumbria University, UK. 794 Cases

Case 10: Will Natural Diamonds Remain Forever?

.. (Source: 7 pexels.­com/royalty-­free-­images/)

Would you still admire the glitter of a diamond if you knew that it is merely carbon in its most concentrated form? That’s right—a diamond is merely carbon, the ele- ment that makes up 18% of the human body and is one of the most abundant ele- ments in the world. What’s different about diamonds, however, is that they are formed 100 miles below the Earth’s surface. At that depth, the molten rock of the Earth’s mantle provides just the right environment to transform carbon into dia- monds: Pressure is at least 435,113 pounds per square inch, and the temperature is above 750 degrees Fahrenheit. If conditions were to drop below either of these two points, graphite would be created.

Diamonds Take Forever Most diamonds now on the market were formed billions of years ago and were brought to the surface by powerful magma eruptions. Diamonds have been exca- vated since 1866, and since then, sophisticated procedures have been adopted for grading them. Although thousands of categories are based on the four C’s of dia- mond evaluation—cut, clarity, color, and carat—only two broad groups exist: gem- and industrial-grade. Approximately 59% of the diamonds produced in 2003 were of gem quality; however, on an average of all diamond mining, only “around 30% of the diamonds mined worldwide are gem-quality,” and most of the remaining indus- trial-grade diamonds were used in the medical feld and to make diamond tools. In 2019, around “142 million carats of diamonds were estimated to have been produced from mines worldwide…Major producing countries include Australia, Canada, the Democratic Republic of Congo, Botswana, South Africa, and Russia. Worldwide reserves are estimated to be some 1.2 billion carats. Russia has the largest reserves, estimated at some 650 million carats.”

The Gem of the Diamond Industry: De Beers A single company has controlled the diamond industry for more than a century: De Beers. In the mid-1980s, the company produced more than 90% of the world’s dia- monds. Since then, rival producers have entered the market, but in 2003, De Beers 795 Cases

.. Table C10.1 The percentage of diamond production and sale by major companies in 2014

Companies Global percentage of diamond Global percentage of diamond production sale

Alrosa 29% 29% De Beers Group 26% 38% Rio Tinto 13% 5% DRC 13% Angola 8% 11% Marange 4% 2% Other 3% 6% Dominion 2% 6% Diamond Petra Diamonds 2% 3% Total 100% 100%

Source: Diamond Shades (2020)

was still able to command $5.5 billion in diamond jewelry sales, control about 50% of the world’s diamond mines, and value 70% of the world’s annual supply of rough diamonds through its subsidiary, the Diamond Trading Company (DTC). In addi- tion to the diamonds that De Beers excavates from its own 20 mines in South Africa, Namibia, and Botswana, it purchases diamonds in the market. Many people believe that this practice creates an artifcial supply scarcity, which produces the perception of diamond rarity and may support De Beer’s ability to demand premium market

prices for the diamonds. . Table C10.1 presents the percentage of diamond produc- tion and sale by major companies in 2014. It shows that the global diamond market has become much more competitive in comparison to the last century. However, diamonds have long held a certain mystique, thanks in large part to De Beers’ skillful marketing efforts. Before the 1930s, diamond rings were rarely given as engagement rings: Opals, rubies, sapphires, and turquoise were deemed much more exotic gems to give as tokens of love. De Beers changed the world diamond market with its 1947 launch of its “A Diamond Is Forever” campaign. The company’s wildly successful advertisements connected diamonds to romance, convinced women that diamonds represent an eternity of love, and convinced young men that spending “2 months’ salary” for a ring was the ultimate way to show affection. Now, more than 1.7 million diamond engagement rings are sold in the United States each year, and 85% of all American women own at least one diamond. 796 Cases

.. (Source: 7 pexels.­com/royalty-­free-­images/) Technology “Rocks” the Industry: Gemesis and Apollo In its more than a century-long history, De Beers has survived African insurrections, shrugged off American antitrust litigation, sidestepped criticism that it exploits third- world workers, and contended with Australian, Siberian, and Canadian diamond dis- coveries. In response to a backdrop of severe acute respiratory syndrome (SARS), war, terrorism, a general global economic downturn, and irrespective of more competitive global diamond market since the beginning of the current century, De Beers is still able to produce diamond as the second largest producer and sell it as the top largest seller

of diamond worldwide (see . Table C10.1). However, along the progress of technol- ogy, two US companies—Gemesis and Apollo—shocked the diamond industry in 2003 by announcing their ability to produce manufactured (artifcial) diamonds that have the exact chemical, physical, and optical composition of natural diamonds. Synthetic diamond production in earlier decades had been modestly successful. In 1954, General Electric engineers managed to produce diamond crystals the size of sesame seeds for industrial purposes. In early 2004, however, the frst wave of gem-­ quality manufactured diamonds began to hit the market. They are produced by either Gemesis, in Florida, by a roomful of Russian-designed machines that spit out three-carat roughs, 24 hours a day, seven days a week, or at Apollo’s Boston labora- tory, where engineers have perfected the process for making fawless diamonds. This sudden arrival of multicarat gems in the consumer market jeopardizes De Beers’ grasp on the industry and threatens to alter consumers’ perception of diamonds.

Gemesis Retired brigadier general Carter Clarke, the founder of Gemesis, did not set out to become a gem baron. At a 1995 technology conference in Moscow, he was approached by Yuriy Semenov, the director of the High Technology Bureau in Russia. Semenov claimed that, unlike GE’s capital and time-intensive technology, his machines used less energy than a dozen light bulbs and could produce a three-carat gem in a few days. Clarke was skeptical, but the machine’s $57,000 price tag was worth the gamble. Clarke few three machines back to Florida and found that they did not produce diamonds reliably. With the help of the Mineral Science Department at the University 797 Cases

of Florida and a crew of Russian scientists, Clarke stabilized the production process by upgrading the machine’s power supply and installing a computer control system to track the slightest variation in each diamond synthesis. After 3 years of research and upgrades, the machines were programmed to control more than 200 parameters, and Gemesis was ready to mass-produce diamonds. Each machine is capable of pro- ducing a three-carat yellow diamond every 3 days at a cost of $100 per stone.

Apollo Apollo Diamond, a laboratory run by the father–son team of Robert and Bryant Linares, is in a discreet Boston suburban strip mall. Around 4 decades ago, Robert Linares became a well-known researcher in advanced semiconductor materials. His company, Spectrum Technology, forged the commercialization of the gallium arse- nide wafer, the microchip that succeeded silicon and is now used in mobile phones. In 1985, Linares sold his company to pursue the research and production of the ultimate semiconductor—diamonds. In addition to being a “girl’s best friend,” diamonds are the envy of the computer industry. As the hardest substance on earth, diamonds also have the highest thermal conductivity. Microprocessing performance is limited because faster computers would liquefy silicon microchips, which already reach temperatures of 200 degrees Fahrenheit. The use of diamond microchips, however, would usher in an era of vir- tually unlimited semiconducting speed and reshape the high-technology industry. Unlike Gemesis diamonds, Apollo diamonds are produced by way of chemical vapor distillation (CVD). To put it simply, although the Gemesis ceramic chambers create the ideal temperature and air pressure to turn carbon into diamonds, Apollo’s rooms have the exact combination of temperature, gas composition, and air pressure to make freed carbon “rain” on the wafers, on which minibricks of diamonds accu- mulate at the rate of half a millimeter a day. Apollo’s technology allows it to produce a fawless diamond at a cost of only $5 per carat.

Marketing “Cultured” Diamonds Although Gemesis and Apollo have announced that their goal is not to reshape the diamond industry, both companies plan to use the diamond jewelry business to fnance their attempt to transform the semiconducting world. A key question then is how to position synthetic diamonds to consumers who, for the past half-century, have wanted to own diamonds because of their high cost, natural beauty, and supposed rarity. Gemesis may have found the following positioning: astute marketing to the edu- cated public concerned about issues that relate the diamond industry to worker exploi- tation, environmental destruction, civil wars, and terrorism. Foremost, Gemesis asserts that it produces “cultured” diamonds, not synthetic stones. This assertion is made in hopes that synthetic diamonds will follow the trend of wildly successful cultured pearls, some of which—specifcally, Tahitian black and nonround pearls—have higher market value than natural pearls. For environmentally conscious consumers, cultured diamonds, unlike natural gems, are not excavated from the earth. Therefore, no envi- ronmentally hazardous mines exploit workers in the emerging economic countries. More importantly, cultured gems have no chance of being “blood diamonds.” As shown in United Nations Security Council reports, blood or confict diamonds are 798 Cases

mined illegally by African rebels and sold to diamond-trading centers to fund wars and revolutions. Evidence has emerged showing that confict diamonds have been used by extremists as a channel for transferring wealth globally. According to US and European intelligence offcials, rebels from Sierra Leone were desperate for cash and unable to sell directly to diamond-trading centers. Instead, they sold the gems at a high discount to extremists’ middlemen who, in turn, smuggled the diamonds into Liberia, Monrovia, and other countries where they could sell the diamonds through legitimate channels. In particular, UN experts report that extremist organizations obtained dia- monds from war-torn Sierra Leone and sold at least $19 million worth of the gems on the Antwerp market in the year before the September 11, 2001, attacks.

De Beers Diamonds Feel the Pressure With the announcement of the Gemesis and Apollo technological breakthrough, De Beers began the Gem Defensive Program (GDP), a campaign to warn jewelers about the arrival of multicarat, gem-quality synthetic diamonds. The GDP provided the world’s largest gemology labs with free high-technology machines, named DiamondView and DiamondSure, designed to distinguish between man-made and natural stones. The rest of the industry, however, lags in this type of high-technology testing. Only a small percentage of larger stones are lab-certifed, and diamonds that weigh less than a ffth of a carat are almost never sent to labs, because of the tests’ high cost. These smaller stones, however, represent a signifcant portion of the diamond market because jewelers use them regularly for watches, earrings, rings, and pendants. While the Federal Trade Commission has passed laws that require man-made diamonds to be laser-inscribed as “synthetic,” unscrupulous jewelers can sand off the inscriptions easily. Furthermore, fear still remains that the technology to make synthetic diamonds could fall into rogue hands or frms that do not have the same commitment to disclosure. On a more proactive front, De Beers is exercising its innovative strength by fnd- ing commercial uses for synthetic diamonds in the semiconductor industry. Through a joint research venture with the Swedish engineering group ABB, the De Beers research group believes that it has a 2-year lead in semiconductor development. A possible reaction is for De Beers to exercise its stranglehold on the global dia- mond distribution system. De Beers could negotiate with Gemesis and Apollo and “adopt” them, resulting in a seamless global cartel of natural and synthetic dia- monds. This strategy would assure Gemesis and Apollo that the market value of synthetic diamonds will not fall precipitously and ensure that De Beers can maintain natural diamonds’ high market value and allure.

Diamonds’ Fifth C: Consumers Although the battle between David and Goliath continues in the diamond industry, it is consumer sovereignty that reigns. Assuming that synthetic diamonds will be freely available in the market, consumers and their purchasing decisions will deter- mine who will survive and succeed in the diamond industry. De Beers was able to change consumer behavior in 1947, and it is determined to keep its market domi- nance by again targeting consumers. 799 Cases

More than 50 years later, and in the face of increasingly successful synthetic dia- mond producers, the De Beers “A Diamond Is Forever” campaign is still strong. The advertisement series positions diamonds as the foundation of lifelong love and attacks the conscience of the buyer: Even if you could depend on the expectation that your part- ner could never distinguish your synthetic stone from a natural diamond, would you really want to build your eternal love on a lie? According to a De Beers study, more than 95% of women say that they want the “real thing” from their partner (Johnston). De Beers is also tapping into the market of powerful and fnancially independent women as portrayed in such hit television series as Sex and the City. With its $40 million “Right Hand Ring” campaign, De Beers asserts that the twenty-frst-century woman can declare her strength, success, and independence with a self-purchased,­ right-hand diamond ring. The age at which people marry is now later than ever, and “Women won’t wait for prince charming to get her a diamond,” says Susan Farmer, of the Diamond Trading Company, the De Beers marketing arm (Taylor). De Beers’ “Right Hand Ring” advertisements sport bold statements differentiating between diamonds for the marrying and nonmarrying hands:

»» Your left hand loves candlelight. Your right hand loves the spotlight. Your left hand declares commitment. Your right hand is a declaration of independence. Women of the world, raise your right hand.

The wave of De Beers’ advertisements focuses on the emerging trend of non-bridal diamond purchases by females, which accounts for 33% of retail diamond sales (Taylor). More importantly, the “Right Hand Ring” campaign is a strategic market- ing tool that targets the “evolved” woman who does not hesitate to reward herself for her accomplishments by purchasing her own luxury items. Women who ft into this niche are least likely to buy Apollo’s or Gemesis’ laboratory-created gems to make a social statement of their power and independence.

Conclusion The success of Gemesis and Apollo in the diamond industry is yet to be determined. Early fgures indicate that both jewelers and buyers are still quite hesitant about purchasing laboratory-created diamonds because of their lack of knowledge about the production process and the quality of synthetic diamonds. Although the long-­ term future popularity, technological progress, and success of laboratory-created diamonds are uncertain, such diamonds have defnite implications for the diamond market. Synthetic diamonds serve the niche of consumers who seek a more afford- able alternative in quality costume jewelry. To survive and succeed in the diamond industry, natural and synthetic diamond producers must focus their marketing strat- egies on, and target, consumer attitudes. zz Questions 1. Respond to the following statement: Although the proliferation and advance- ment of technology have threatened the external De Beers environment, they can also be used to underpin the company’s competitive position in the changing competitive dynamics of the global diamond industry. 800 Cases

2. Which specifc factors, at the time of purchase, may affect the diamond-­buying deci- sion? How can synthetic-diamond producers use this knowledge to their advantage?

3. Internet Question: go to De Beers’ “A Diamond is Forever” ad link: 7 https:// theeyeofjewelry.­com/de-­beers/de-­beers-­jewelry/de-­beers-­most-­famous-­ad-­­­ campaign-­marked-­the-­entire-­diamond-­industry/, and review the relevant

news articles (7 https://www.­nytimes.­com/2013/05/05/fashion/weddings/how-­

americans-­learned-­to-­love-­diamonds.­html, 7 https://www.­theatlantic.­com/ international/archive/2015/02/how-­an-­ad-­campaign-­invented-­the-­diamond-­­ engagement-­­ring/385376/). To what degree do you think the ads refect or impose the image of “today’s female purchasers” as potential consumers? zz Sources

BBC. (2004). Diamond labs. BBC science and nature transcript. 7 http://www.­bbc.­ co.­uk. Accessed 4 Mar 2004.

Bonsor, K. (2004). How diamonds work. 7 http://people.­howstuffworks.­com/ diamond.­htm. Accessed 4 Mar 2004.

Diamond Shades. (2020). 7 http://www.­diamondshades.­com/statistics-­ diamond-­­production-­­and-­supply/. Accessed 14 Sept 2020.

Davis, J. (2003). The new diamond age. Wired (Issue 11.09). 7 http://www.­wired.­ com. Accessed Mar 2004.

GIA. (2015). Diamond: Fun facts. 7 https://www.­gia.­edu/gia-­news-­research-­­ diamond-­fun-­facts. Accessed 14 Sept 2020. Johnston, I. (2004, February 8). Dazzled by a girl’s next best friend. Scotland on Sunday. Accessed July 2004, from Lexis Nexis. Marshall, M. (2004, February 13). Day to day: Florida company manufactures diamonds. National Public Radio transcript. Accessed Mar 2004, from Lexis Nexis. Pessler, M. (2004, February 14). You can’t tell the difference. The Washington Post, E01. Ryan, B. (2003, October 3). Synthetic barbarians at the Gate. Financial Times South Africa, p. 4. Simpson, G. R. (2004, June 28). U.N. ties A1 Qaeda fgure to diamonds. Wall Street Journal, A3.

Statista. (2020). Diamond industry. 7 https://www.­statista.­com/topics/1704/ diamond-­­industry/. Accessed 14 Sept 2020. Taylor, S. (2004, February 13). A right to sparkle. The Washington Times.

7 http://www.­washingtontimes.­com. Accessed Mar2004. Twitchell, S. (2000). Twenty ads that shocked the world. New York: Crown Publishing. United Nations Security Council. (2002). Report of the Panel of Experts appointed pursuant to Security Council Resolution 1306 (2000), Paragraph 19, in

Relation to Sierra Leone. 7 http://www.­un.­org. Accessed July 2004. United Nations Security Council. (2001). Report of the Panel of Experts on the illegal exploitation of natural resources and other forms of wealth of the Democratic

Republic of the Congo. 7 http://www.­un.­org. Accessed July 2004. This case was written by Sabrina Nguyen under the guidance of Professor Michael R. Czinkota, both of Georgetown University. 801 Cases

Case 11: Does Mattel Sell Dolls or Dreams?

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Introduction Mattel Inc., the manufacturer and seller of the world’s most marketed doll, was established in 1945 in the United States by Ruth and Elliot Handler and Harold “Matt” Matson. As designers, the Handlers and Matson wanted to empower chil- dren by integrating creative thinking and innovative imagination into kids’ child- hood activities. In this attempt, they designed toys and combined themes and activities with the toys in a way that could empower kids to be creative and imagina- tive while playing with Mattel’s toys. Over the decades, “Mattel has grown into a leading global toy company and creator of franchises beloved by children and fami- lies around the world.” Barbie, a popular brand of Mattel’s toys, targets young girls to play with Barbie as a source of inspiration. Barbie has 45 product categories with different themes and concepts including ftness, food, and clothing. The Barbie Dreamhouse was frst launched in 1962, with 802 Cases

one selling every 2 minutes today. “It is estimated that over a billion Barbie dolls have been sold worldwide in over 150 countries, with Mattel claiming that three Barbie dolls are sold every second.”

Brief History: A Story of Marketing Success Barbara Millicent Roberts is the full name of Barbie, who is named after Ruth Handler’s daughter. The offcial birthday of Barbie is March 9, 1959, when Barbie

was frst launched during the New York toy fair. . Table C11.1 presents the brief history of Barbie and Mattel and their marketing success.

The timeline in . Table C11.1 demonstrates that focusing on “collectivism” and “communal spirit” and addressing the society’s needs have signifcantly contributed to the progress of Mattel and Barbie. For example, from the very beginning of their marketing and promotional campaigns, Mattel did not start promoting Barbie just as a doll, but as a character of woman empowerment that Mattel wanted to engrain in the mind and heart of each young girl since their early childhood in support of Barbie as the young girls’ role model. Empowering women is generally a social mes- sage considering that it is instrumental for socioeconomic development and equality. Mattel transformed this social message of empowering women as their core brand

message. Underlying this core brand message, the timeline in . Table C11.1 also demonstrates that Mattel has been contributing to different socioeconomic needs (i.e., the Children Foundation) and socioeconomic dreams or aspirations (i.e., Barbie as the frst astronaut to land on the moon before Armstrong and Aldrin). As a result, Barbie today as a brand has developed “99% brand awareness globally.” It means Mattel believes that out of their 100 target customers in the world, 99% customers know about Barbie! In terms of branding goal, it is a remarkable success for a brand, for a marketer, indeed!

Imagine the Possibilities The frst Barbie TV commercial was launched in 1959. Along the progress of Barbie, Mattel has been attracting their target markets with different fun, engaging, and stimulating commercials related to woman empowerment. In late 2015, based on the catcphrase “Imagine the Possibilities,” Mattel launched a 1.45 minute online com- mercial. The goal of this commercial was to inspire young girls by creating a sense of self-belief that they can be anything that they want to be and they can pursue and excel in their desired dream career. The commercial shows 5–6-year-old girls playing roles as real-life professionals of different careers. For example, the commercial starts with “a little girl walked to the front of a lecture hall to teach a class of distinctly grown-up (college) students” and continues her lecture in a fun and engaging way. Next, it shows other girls play- ing the role of a real-life doctor, sports coach, high-fying business leader, pet doctor, and a historian at a museum. Along the progress of the commercial with different real-life professional role-plays in a stimulating way, the commercial switches between different roles by different girls, and the last 20 seconds of the commercial takes the audience back to the classroom, where the little lecturer continues her 803 Cases

.. Table C11.1 Brief history of Barbie and Mattel

Time- Milestones line

1945 Mattel is established 1947 Mattel earns their frst considerable big awareness through their Uke-A-Doodle, a music instrument of a small size for a child to create more accessible and interactive music 1948 Mattel moves to their Los Angeles corporate head offce 1955 First ever TV commercial of Mattel through the Mickey Mouse Club, which changed the way toys were marketed before 1959 “Ruth Handler is inspired by observing her daughter, Barbara, play with paper dolls for hours, and recognizes the opportunity to champion and inspire girls by introduc- ing a three-dimensional doll that shows them that they can be anything.” As a consequence, Barbie is born 1960 Mattel listed as a public limited company for the frst time 1965 The fantasy goes on: The themed “Barbie astronaut goes to the moon. She gets there four years before Neil Armstrong and Buzz Aldrin become the frst people to land on the moon” 1971 Malibu, a new theme of Barbie, is launched to refect on the contemporary fashion culture in California “with a forward-face glance to represent women’s empowerment” 1978 The Mattel Children’s Foundation is launched. Since then, it has been supporting millions of children and thousands of organizations around the world 1985 “We Girls Can Do Anything” campaign is launched. Girls everywhere hear “We can dream dreams and make them come true because nothing’s worth doing that we girls can’t do, your moms know it too. We girls can do anything, right Barbie?” 1990 Mattel moves to their current corporate head offce in El Segundo in California 1993 Mattel purchases Fisher-Price 1998 American Girl is acquired by Mattel 1998 Mattel begins landmark collaboration with UCLA Health and becomes the proud namesake of UCLA Mattel Children’s Hospital. Barbie joins the National Toy Hall of Fame 2004 American Girl launched “its frst made-for-TV movie based on historical character Samantha Parkington, played by Anna Sophia Robb” 2011 Mattel acquires HIT Entertainment 2014 Mattel purchases the Mega Brands 2016 “With the background of the frst (US) woman presidential candidate, Barbie releases an all-female ticket with a President and Vice President doll set to inspire girls to believe they can be anything—including leader of the free world” in this year, Barbie also launches the “New Body Types to better refect the world girls see today,” which was featured as the cover image of Time magazine (continued) 804 Cases

.. Table C11.1 (continued)

Time- Milestones line

2018 Thomas & Friends (a key stakeholder of Mattel) launches association with the United Nations to motivate the next generations of global citizens 2019 The Creatable World as the frst line of gender-neutral dolls in the world is launched by Mattel. Barbie celebrates her 60th birthday by “honouring global role models and lighting up major landmarks in pink” 2020 “Play it Forward is launched as a response to the COVID-19 pandemic. Its frst campaign ‘Thank you Heroes’ pays homage to the front line and medical workers that carried on bravely for the duration of the crisis”

Source: History (2020)

­session explaining to her grown-up students that “we can think and do lots of stuff with our brain. Now, does anybody know how big the brain is?” While the lecturer says “does anybody know how big the brain is,” the commercial takes it audience to the last scene showing a girl playing at home with Barbie dolls and asking the same question (does anybody know how big the brain is?) to her Barbies. The commercial ends with the tagline: “when a girl plays with a Barbie she imagines everything she can become.”

Diagnosis of Imagine the Possibilities Industry experts argue that “a push into content marketing is indicative of how Mattel is trying to navigate changes to the media landscape.” Focusing on different real-­life professional careers (e.g., doctor, coach, historian, business leader), Mattel, on the one hand, is relating different real-life contents with Barbie in their “Imagine the Possibilities” commercial. On the other hand, in the commercial, in support of such real-life professions as the content, Mattel also is educating and inspiring little girls through Barbie about the enormous possibilities in life while underpinning the girls’ self-belief that they can be anything in life that they want. In fact, “it was rec- ognising the consumer demand for a content-frst approach, where children really expect to see their toys come to life”. Balsam-Schwaber (Mattel’s frst chief content offcer) added to “learn about the things they (children) might want to buy through content.” In this way, Mattel has integrated content marketing in this commercial to not only promote Barbie but also to inspire young girls’ self-belief.

Conclusion “When you go back to your old home, you fnd it wasn’t the old home you missed but your childhood – Sam Ewing…Similarly, other childhood memories, emotions and attributes of people would have an impact on the decisions that would be taken later during the older age.” In a similar vein, Barbie’s Imagine the Possibilities commercial would be able to infuence the minds and hearts of young girls that would leverage 805 Cases

their life at a grown-up stage by pursuing their dream career. In this context, Mattel is not actually trying to sell their dolls through this commercial, but dreams. Another important aspect of this commercial is its media choice to reach to its target audience. “This is particularly pressing given how young Mattel’s audience is – there’s little point investing millions in TV ads if fve-year-olds are always watching YouTube on the family tablet.” Such creative contents and pragmatic decisions related to Barbie’s branding make Barbie the number one girls’ brand on YouTube with over fve million YouTube subscribers. Also, “Barbie has a powerful social media presence (in other channels) with over 14 million fans on Facebook, 267,000 followers on Twitter, and 1.2 million followers on Instagram.” Do you think only the young children follow Barbie on social media in this big number? Is Barbie attracting interests of older adults as well? To refect on their mission statement, Mattel attempts to “create innovative prod- ucts and experiences that inspire, entertain and develop children through play.” The way Mattel has focused to empower woman worldwide and the way Mattel has transformed the socioeconomic need of empowering woman as their core brand message has been not only contributing to Mattel’s fnancial bottom line but also bringing recognitions. Imagine the Possibilities commercial “devised by BBDO New York/San Francisco for Mattel’s Barbie doll brand, has won the Grand Prix at the 2017 APG Creative Strategy Awards.” zz Discussions and Questions 1. Who are the core target audience of the Imagine the Possibilities commercial? Is it only the young girls? Or is it also the parents? Justify your views.

2. Go to the Imagine the Possibilities website (7 https://barbie.­mattel.­com/en-­us/ about/you-­can-­be-­anything.­html) and discuss your views on how Barbie is try- ing to empower young girls while promoting the doll. 3. Describe your views on the impact of Mattel’s social commitment on their success. zz Sources

Barbie. (2020). Imagine the possibilities. 7 https://barbie.­mattel.­com/en-­us/about/ you-­can-­be-­anything.­html. Accessed 14 Sept 2020.

BBC. (2006). Vintage Barbie struts her stuff. 7 http://news.­bbc.­co.­uk/1/hi/ business/5370398.­stm. Accessed 14 Sept 2020. Brannan, D. (2014). Unpackin’ – the baggage of life: Live-learn-grow. Bloomington: Balboa Press. CISION PR Newswire. (2020). Thomas & Friends launches collaboration with the

United Nations to inspire the next generation of global citizens. 7 https://www.­ prnewswire.­com/news-­releases/thomas%2D%2Dfriends-­launches-­collaboration-­ with-­the-­­­united-­nations-­to-­inspire-­the-­next-­generation-­of-­global-­citizens-­ 300709116.­html. Accessed 14 Sept 2020.

Fast Facts. (2016). 7 http://www.­barbiemedia.­com/about-­barbie/fast-­facts.­ html#:~:text=More%20than%20100%20dolls%20are,sold%20in%20150%20 countries%20worldwide. Accessed 14 Sept 2020.

Ghosh, S. (2016). How Mattel is evolving beyond the ad. 7 https://www.­campaignlive.­ co.­uk/article/mattel-­evolving-­beyond-­ad/1406220. Accessed 14 Sept 2020.

History. (2020). 7 https://corporate.­mattel.­com/en-­us/about/history. Accessed 14 Sept 2020. 806 Cases

Mattel. (2020a). Our mission. 7 https://corporate.­mattel.­com/en-­us/about. Accessed 14 Sept 2020.

Mattel. (2020b). 7 https://corporate.­mattel.­com/en-­us. Accessed 14 Sept 2020. Shams, S. M. R. (2016). Capacity building for sustained competitive advantage: A conceptual framework. Marketing Intelligence & Planning, 34(5), 671–691.

WARC. (2017). Mattel’s Barbie campaign wins APG Grand Prix. 7 https://www.­ warc.­com/newsandopinion/news/mattels-­barbie-­campaign-­wins-­apg-­grand-­ prix/39438. Accessed 14 Sept 2020.

This case was prepared by Dr. Riad Shams, Newcastle Business School, Northumbria University, UK.

Case 12: The Changing Global Context: A Philosophical Approach to Deal with the Embryonic Market Environment

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New Policy for a New World We have often heated discussions on trade policy shifts. To make reasonable argu- ments, we must consider that the fundamental composition of trade has been chang- ing. For example, from the 1960s to 1990s, the trade role of primary commodities has declined precipitously while in parallel; the importance of manufactured goods has increased. This has meant that those countries and workers who had specialized in commodities such as rubber or mining typically fell behind those that had 807 Cases

embarked on strengthening their manufacturing sector. With sharply declining world market prices for commodities and rising prices for manufactured goods, com- modity producers were increasingly unable to keep pace. Some commodity-­ dependent countries realized temporary windfalls as prices of oil, wheat, and corn rose dramatically, only to watch them evaporate as prices dropped in recent years. Recently, there has been a shift in manufacturing locations to nations, which are newly emerging in the world market as both customers and suppliers. In the mid- 1800s, manufacturing accounted for about 17% of employment in the United States. This proportion grew to almost 30% by the 1960s, only to decline at a rising rate. In mid-2009, US manufacturing employment fell to 9%, with the loss of some 2 million manufacturing jobs in the recession. The decline continues until 2014. Despite this loss in employment, the US manufacturing industry is in the process of signifcant transformation as productivity gains and skills upgrading have created a leaner and more skilled manufacturing workforce. We need to consider that due to innovation, a smaller-sized workforce can manufacture more and better products. For example, US value-added manufacturing output has been increasing even though there have not been major increases in employment or number of facilities. The US share of global manufacturing output has remained stable at about 25% over the past two decades. Manufacturing changes during that time were not confned to the United States. In the past 30 years, German manufacturing employment has dropped by 13% points, while in Japan, the decrease was 6.5% points. Such shifts in employment refect a transfer of manufacturing away from traditional manufacturers toward the emerging economies. During the times of large decline in the United States, Germany, and Japan, the manufacturing proportion of the gross domestic product (GDP) has more than doubled in Malaysia, Thailand, and Indonesia, helping their economies and global participation grow. Considering the large scale of benefts that have been transferred, it is sensible to ask whether such economic transfers need to continue to be subsidized by the United States and other key industrialized nations. In an era of freedom and global opportunity, most countries should be able to use their own resources to support their growth and understand the possible disadvantages ema- nating from trade or investment overhangs. Freedom and Globalization: Simultaneously Possible Globalization, trade, and investment deserve our “Thank You” for their achieve- ments. Yes, in Europe and the United States, popular discontent is forcefully expressed. An introvert trend has emerged, fed by nationalism, populism, xenopho- bia, and anti-globalization rhetoric. Globalization is not new; it has existed for centuries. What is different today is the speed of globalizing the world, made possible by new technologies, transporta- tion networks, media, and marketing across borders. Many claim that never before in history has there been so much evidence about strong opposition to globalization. However, any comparison with the past is highly inaccurate. Only a few records of resistance to globalization have been preserved for us today. One main feature of globalization in our age is the conveyance of freedom, which in turn becomes the foundation of the good life. There are three dimensions 808 Cases

to this freedom. For one, the opportunity to collaborate with others, to streamline processes and procedures, and to increase the variety of products and services offers great freedom of choice. There is the freedom conveyed by sovereignty, where nations and their governments maintain and exercise preferences for their citizens. Individual countries will always seek to have sovereign freedom. Then there is the freedom of principles and options. Such freedom of choice is primarily expressed by the recourse to deeply rooted principles which provide the boundaries of the playing feld. If there is no limitation and no alternative, then there is no freedom. A true alternative requires a decision and the exercise of virtue. If there are no principles to which one can seek recourse, there is no freedom. In reciprocal causality, freedom both causes and facilitates international market- ing, while international marketing is a key support of the cause of freedom. The focus and aim of international marketing is on crossing borders, with the goal of providing more choice for consumers and letting them be the ones to maximize their satisfaction. International marketing does so in all corners of the globe, the glamor- ous ones, as well as the small and remote ones where its efforts are not seen by others. When the long-standing rivalry between socialism and market economy came to an end, market forces directly improved human rights and the extent of freedom. Exchanges through markets have clearly demonstrated greater effciency and effec- tiveness in their ability to satisfy the needs of people. Now they must demonstrate their ability to persist through continuity and balance. In spite of complaints about slowness of change, biases in wealth distribution, and economic disparities and inequalities, a majority of the participants in market-­ oriented conditions are now better off than they were before. World poverty has been reduced signifcantly. Only around 30 years ago, almost 2 billion people, 43% of the world population, lived in extreme poverty with less than $1 a day. Today, the poor have been reduced to 700 million people, or 9.6% of the world population, that live with less than $1.9 a day. Research shows that globalizing developing countries grew 3.5 faster than non-globalizing ones over the last decades. Average incomes per capita have more than doubled in 25 years, from $4192 in 1990 to $10,433 in 2015, and have increased 13 times from the 1970s, when they had an average income of $802. One of the main discontents of globalization is low incomes in formerly success- ful regions and a high level of inequality within and between countries and between the world’s economic classes. People at large will not tolerate such glaring inequality anymore. One key dimension of freedom is to allow people to think outside the box. National borders are where business, government, and people usually fnd their limits. Freedom knows no international boundaries. It thrives on how to successfully cross national borders, on coping with local differences once the crossing is done, and on proftably reconciling any conficts. Domestic borders limit economic expansion, while international approaches contain the freedom of much wider opportunities. International activities encourage people all around the world. The anti-­ globalization narrative in Western Europe and the United States is caused by 809 Cases

­imbalances in both people and goods, as well as an intransigent enforcement of rules from disconnected centers. Migration and refugee pressures force people to move from rural homes into urban areas, from their developing countries into industrial- ized ones, and to take any measure to be relieved of wartime conditions. For both sides, little freedom is involved here. Most individuals who do the moving would much rather stay home but cannot afford to do so. The recipient countries might not want to welcome the refugees and migrants but have to do so in response to human- itarian pressures. Globalization may have been part of what triggered some of these shifts and migrations, but it also can be instrumental in restoring the freedom to stem the tide. Globalization can provide economic opportunity and alternatives for individuals in their home countries, free from pressures to shift locations, so they can become pro- ductive economic contributors. To make globalization work, governmental, manage- rial, and corporate virtue, vision, and veracity are required. Trading and investment partners need to understand the current context and longer-term effect of policy and business actions taken. Joint actions based on mutual interests but also accepting divergent interests will make better outcomes not just possible but likely.

The Impact of Trust Bridges on Business Trust bridges are increasingly emphasized in business relations and partnerships. They not only help to fght corruption but also establish a sense of community that binds people together. Corruption continues to be a major issue in business and is more prevalent than most people acknowledge. The baseline standard of corruption, defned by the nonproft Transparency International, is an “abuse of entrusted power for private gain.” The group sees cor- ruption as the pursuit of selfsh, individual gains and the desire to get ahead. Of course, corruption is an individual, as well as a corporate (group), choice. Transparency International’s latest study reports that 25% of people used a bribe in the past year, which means that corruption infltrates a signifcant portion of busi- ness transactions, which is crucial to take into consideration. Corruption interrupts corporate culture because it destroys previously estab- lished trust that has been earned on a long-term basis. Trust is a valuable corporate asset since it typically translates into fulflled expectations, which allow for better forecasts, less uncertainty in the future, and more realism. Trust bridges, developed by shared expectations and experiences, allow people to get to know each other quicker and help establish fair business practices on global terms. Thus, trust is one of the best ways to combat corruption. Connections that bring people together and lead to greater trust can be built upon a shared alma mater, military service, same work experience, sports fans for the same team, and even practicing the same religion. People are more likely to bond over these personal preferences and organizations because they already share a similar interest; therefore they expect to share similar values. If two companies operate in similar environments and share similar values, they are more likely to connect and establish warm and trusting relationships. This ulti- mately establishes credibility and allows business to select patterns based on trust 810 Cases

rather than strictly on proximity or fnancial measures. Trust is developed through interaction, although there are other spillover effects that come into play. An exam- ple would be two organizations that are led by former sports champions might be more likely to trust each other, particularly when it comes to sports. This may also connote, but does not necessarily require, trust in fnancial matters. It is important to note that trust is an extension of confdence, so high expecta- tions often accompany trust. One such trust-enhancing activity is especially present in the German model for developing trust, which due to its reliance on standardized training and internships, focuses on keeping processes fowing due to confdence in and reliance on others’ work. In contrast, less training in the United States often leads to a lack of trust and little confdence in work. Therefore trust bridges may not be as visible in the American corporate world. Political connections often have a greater impact on communities that experi- ence very little corruption. This means that people are not relying on bribes or other forms of under-the-table compensation to make business and personal deci- sions. Also, this may partially explain research on municipalities, which found that established trust bridges led to government growth and increased proftability of frms. Relationships that are rooted in trust discourage people from engaging in dis- honest behavior. One can therefore argue that corruption inhibits the foundation of relationships. When discovered, corruption can ruin a reputation. Once trust bridges are destroyed, they are diffcult to rebuild. In today’s global economy that is ruled by rapid, if not constant, communication and connection through technology, global trust standards can converge where peo- ple hold each other to the same standards. This makes international business easier because it reduces the necessity of local standards, which often results in greater costs for companies since they have to meet different standards in every country of operation. If a global standard were in place, every country would more likely partake in international business interactions and therefore would have a better chance of establishing trust bridges. Additionally, companies and managers making crucial decisions based on current trust bridges need to exercise less oversight. All this trans- lates into more effective and effcient use of resources. Thus, trust bridges not only reduce the likelihood of corruption but also lead to more effcient and proftable business transactions.

Let the Soul Lead the Way To honor God in all we do, to underpin moral values, to help people develop, to pursue excellence, and to grow proftably are the espoused values of ServiceMaster Company, a leading company delivering world-class service. The frst two items in its motto are the ends, and the second two “to” are the means. Below are the thoughts of a practical nature, which help executives capture the opportunity to call on the soul for a strong foundation in our quickly changing times. Here are intermediary steps for marketers to reapproach the soul: 811 Cases

Understand the four new core areas of truthfulness, simplicity, expanded par- ticipation, and personal responsibility. These are every feld’s pillars for a shining business position. Frontline marketers need to understand how a product works and provide uncomplicated experiences to customers. In the meantime, distance cannot mean abdication of responsibility. Having a positive boardroom culture where dis- cussion respects different views is required. Though the chair of a multinational corporation may feel herself/himself far removed from local issues, the locals them- selves take all of the frm’s actions very personally. Introduce a mindful practice in the workplace. Leading corporations like Google, Intel, and General Mills have used the concept of mindfulness. Through meditation practice, speaker Paul Ryan in the House and Dean Almeida at Georgetown have also been working to reinvigorate core American values. Meditation is believed to not only unlock the productive habits of staff but also to build conscious profes- sionalism as well as leadership. Consider the introduction of guiding key tenets in the educational curriculum of business schools. One approach could be the transference and implementation of Jesuit thought. Could one think of a reliable, productive, and high-quality merce- nary as output of business schools? Education by members of the society of nature-­ driven spiritual spirit could be characterized by the distinctive imperatives of ethic and honesty. At present, Jesuit colleges teaching and understanding business should offer no less than Ignatius intended. They need to ensure that the students that they honor with an MBA degree are vigorous promoters and defenders of an honest and straightforward business mission and practice. For business, there is no need to call for ghost busters when engaging the service of a Jesuit MBA. Enhanced collabora- tion with Jesuit education could help future executives to know and see leadership, as well as clarify, even for distanced owners, the means and ends of business and marketing. A key auto industry executive, Bob Lutz, used to describe two kinds of people in automobile companies: carmakers and bean counters. Car guys are those who work at General Motors, Ford, or Chrysler during the day and then work at night on their cars as a hobby. On weekends, they would race them. During their free time, they would talk cars with other car folks. That is what built General Motors and Detroit in general. The rise of the non-makers to positions of dominance in the domestic car industry almost destroyed carmakers. While carmakers pursued manufacturing per- fection for pleasure, non-makers focused on fnancial manipulation over product excellence. As the Austrian-born English philosopher Wittgenstein stated: “A phi- losopher who is not taking part in discussions is like a boxer who never goes into the ring.” It is time for all of us to approach the ring with slow steps, having prepared the body for the event, and letting the soul lead the way.

zz Discussion 1. Marketers as change agents: Think about how your soul could lead the way to establish trust with your business stakeholders at home and abroad to underpin the freedom and globalization of the product or service that you market in the changing global market environment. 812 Cases

zz Source Czinkota, M. R. (2018). In search for the soul of international business. New York: Business Expert Press. This case was developed by Professor Michael R. Czinkota, Georgetown University, USA; Courtlyn Cook, an undergraduate student at the Georgetown University; and Dr. Valbona Zeneli, College of International Security Studies, George C. Marshall European Center for Security Studies, Gernackerstrasse, Garmisch, Germany. 813 Practice Quiz Answer

Practice Quiz Answer vvPractice Quiz Answer: Chapter 1

The correct answer is highlighted in bold and italic font.

1. Which of the following contextual elements does NOT substantially affect the nature and scope of marketing theory? (a) Societal norms (b) Political affliations (c) New technology (d) Economy

2. In which time span did the great surge of demand in the United States serve as a catalyst for the development of marketing in its modem form? (a) Late 1950s to early 1960s (b) Early 1920s to 1930s (c) 1980s to late 1990s (d) Late 1940s to early 1950s

3. To succeed, marketers must understand the customer in all the following contexts EXCEPT: (a) Political forces (b) Economic forces (c) Social forces (d) Familial forces

4. To most effectively assert social responsibility and ethics, the marketing man- ager must: (a) Comply with existing standards (b) Be sensitive to societal expectations (c) Cater to each country’s policies (d) Implement standards of the highest level

5. Predictions of an internet-based economy have the most effect on the mar- keter’s interaction with which of the following customers? (a) Industrial (b) Individual (c) Generation Y (d) Generation Z

6. The main difference in marketing goods versus services is: (a) Goods require coordination of distribution, whereas services do not. (b) Goods are promoted on the basis of physical features, whereas services are associated with the quality of the organization providing them. 814 Practice Quiz Answer

(c) Goods are bought in greater quantity, whereas services are less often purchased. (d) Goods must be altered to be compliant to international safety and envi- ronmental standards, whereas services do not.

7. Which of the following is NOT a key difference between consumer and industrial markets? (a) Industrial markets often require face-to-face interaction. (b) Consumer purchases require multiple decision-makers. (c) Industrial negotiations are longer in length. (d) Industrial negotiations require higher technical demands from market- ing professionals.

8. When a frm shifts from domestic to international marketing, which of the following enters its marketing horizon? (a) Logistics (b) Cultural values (c) Government policies (d) Firm’s capabilities and resources

9. How can a marketer more closely match a product to the customers’ needs? (a) Offering a tailor-made product (b) Modifying the product’s features (c) Changing the product’s descriptions (d) Entering a market in which the product is demanded

10. The major criticism of McCarthy’s 4 Ps is that it: (a) Emphasizes an inside-out view (b) Emphasizes an outside-in view (c) Emphasizes only four of the six major marketing activities (d) Emphasizes only the domestic issues, not international concerns

11. Which of the following is the key difference between selling and marketing? (a) Selling is inward-looking, whereas marketing is outward-looking. (b) Selling is outward-looking, whereas marketing is inward-looking. (c) Selling is a function of proft maximization, whereas marketing is a function of market understanding. (d) Selling delivers market opportunities, whereas marketing creates prod- uct solutions.

12. All the following have been proclaimed reasons for which marketing princi- ples do not apply to services EXCEPT: (a) Lack of direct competition (b) Lack of tangibility (c) Lack of mass marketing (d) Lack of professional organizations 815 Practice Quiz Answer

13. What are the two elements of the double bottom line oriented marketing management approach? (a) Proft and social welfare (b) Proft and corporate welfare (c) Proft and entrepreneurial welfare (d) Proft and marketer’s welfare

14. What are the three different types of internal resources of marketers? (a) Physical resources, technological resources, and environmental resources (b) Legacy-based resources, knowledge-based resources, and industrial resources (c) Physical resources, organizational resources, and human resources (d) Human resources, physical resources, and environmental resources vvPractice Quiz Answer: Chapter 2

The correct answer is highlighted in bold and italic font.

1. Which of the following is NOT a beneft of an organization’s marketing plan? (a) Consistency (b) Commitment (c) Cost-saving (d) Communication

2. In which of the following approaches for involvement of the organization do the most problems of coordination occur? (a) Top-down planning (b) Bottom-up planning (c) Goals-down-plan-up planning (d) Plan-down-goals-up planning

3. The marketing manager uses the 4 Ps of the marketing mix to answer which of the following questions? (a) Where is the organization now? (b) Where does the organization intend to go in the future? (c) How will the organization organize its resources? (d) When does the organization want to implement its strategy?

4. The benefts of marketing planning does NOT include: (a) Consistency (b) Communication (c) Criticism (d) Commitment 816 Practice Quiz Answer

5. A nonproft organization’s objectives may be less clear than a commercial organization for all the following reasons EXCEPT: (a) Environmental turbulence (b) Measurable outputs (c) Ambiguous goals (d) Unknown effects of management intervention

6. A corporate mission should NOT include which of the following dimensions? (a) Customer groups to be served. (b) Customer needs to be served. (c) Customer locations to be served. (d) Technologies to be utilized.

7. To be most effective, marketing strategies must be converted into a _____. (a) Long-term vision (b) Long-term consistency (c) Short-term proft maximizer (d) Short-term harmonizer

8. A traditional product-based format for auditing includes all the following materials EXCEPT: (a) Advertising data (b) Market research (c) Financial data (d) Competitor research

9. What is the aim of the marketing audit? (a) To identify existing factors that have a signifcant impact on the future plans of the company (b) To allocate resources such that the future plans of the company will be achieved (c) To minimize the cost of acquiring factors needed for the company’s future (d) To check for mistakes in the marketing plan

10. A review of the marketing environment includes a study of all the following EXCEPT: (a) Customers (b) Political environment (c) Developing trends (d) Marketing organization

11. Which of the following is the most often overlooked aspect of strategy? (a) Pricing (b) Placement (c) Promotion (d) Timing 817 Practice Quiz Answer

12. A marketing plan, no matter how detailed and well planned it is, may not work as expected for all the following reasons EXCEPT: (a) Lack of support from top management (b) Once-a-year ritual (c) Separation of operational planning from strategic planning (d) Contingency plan

13. Which of the following CANNOT be used to measure relationship-based­ outputs? (a) Proftability (b) Customer loyalty (c) Customer satisfaction (d) Return on investment vvPractice Quiz Answer: Chapter 3

The correct answer is highlighted in bold and italic font.

1. Which of the following technologies is NOT restructuring the way frms now do business? (a) EDI (b) Scanning (c) Data sharing (d) Standard hardware

2. The use of information technology at the _____ represents a crucial node of information. (a) Point of production (b) Point of distribution (c) Point of purchase (d) Point of collection

3. Information provides greater _____ the market and therefore enhances the customer’s ability to make better decisions. (a) Transparency of (b) Cost reductions in (c) Communication within (d) Proftability in

4. All the following are benefts of global integration EXCEPT the: (a) Reduction of red tape (b) Reduction of transportation diffculties (c) Increase in effciency (d) Increased opportunities of marketing activities 818 Practice Quiz Answer

5. In dealing with onerous laws, the marketer can do all the following EXCEPT: (a) Ignore prevailing rules (b) Accept traditional rules (c) Accept rules of other markets (d) Implement change

6. Marketers must perform a/an _____ analysis to discover an organization’s opportunities and threats. (a) Environmental (b) External (c) Internal (d) International

7. Environmental scanning can help the manager in all the following EXCEPT: (a) Incorporating new dimensions (b) Assisting in the development of short-term policies (c) Helping in the formulation of action plans (d) Aiding in the development of operating programs

8. All the following are benefts of Delphi studies EXCEPT: (a) Overcome distances (b) Maintain relatively low cost (c) Decrease participants’ interaction (d) Increase individuals’ accessibility

9. All the following are included in Porter’s framework for assessing competi- tion EXCEPT: (a) Rivalry among frms (b) Threat of substitutes (c) Bargaining power of buyers (d) Bargaining power of potential entrants

10. All the following are potentially successful strategic approaches to outper- forming other frms in an industry EXCEPT: (a) Low-cost leadership (b) High-cost leadership (c) Differentiation (d) Focus vvPractice Quiz Answer: Chapter 4

The correct answer is highlighted in bold and italic font.

1. The most infuential promotion and recommendation usually comes from all the following EXCEPT: (a) Friends (b) Opinion leaders 819 Practice Quiz Answer

(c) Family (d) Innovators

2. In which strategy of evaluating a product does the consumer set minimum standards for all attributes? (a) Lexicographic decision. (b) Conjunctive decision. (c) Cooperative decision. (d) Attribution decision. (e) The feedback loop can help suppliers increase consumer traffc.

3. New opinion leadership now initiates from: (a) The upper class (b) Peers in the same class (c) Innovators (d) Achievers

4. According to the Values and Lifestyles System (VALS), which of the follow- ing does NOT belong to the VAL group with greater resources? (a) Actualizers (b) Fulflleds (c) Achievers (d) Believers

5. Which of the following is NOT true about the marketing of industrial products? (a) They are purchased by governments. (b) They are purchased in large quantities. (c) They have lesser value than consumer products. (d) They gain rapid acceptance.

6. Which of the following is NOT an industrial product type? (a) Raw materials (b) Capital goods (c) Complements (d) Supplies

7. In which level of the industrial buying decision are funds allocated for the purchase? (a) Economic buying infuence (b) User buying infuence (c) Technical buying infuence (d) Approver buying infuence 820 Practice Quiz Answer

8. Which of the following typical patterns of loyalty behavior is the weakest? (a) Hard-core (b) Split (c) Shifting (d) Switchers

9. Customer franchise is: (a) A frm’s operations in multiple locations (b) A frm’s relationship with its buyers (c) A frm’s fxed assets (d) A frm’s investment in its sales professionals vvPractice Quiz Answer: Chapter 5

The correct answer is highlighted in bold and italic font.

1. Data that has/have been selected and ordered with some specifc purpose in mind is: (a) Data (b) Information (c) Intelligence (d) Statistics

2. How are reports sorted in ABC analysis? (a) Alphabetical order (b) Level of sales volume (c) Effectiveness of marketing campaigns (d) Level of meeting performance criteria such as budgets

3. All the following are sources of secondary data EXCEPT: (a) Libraries (b) Directories (c) Trade associations (d) Consumers

4. Before too many resources are spent obtaining secondary data, all the follow- ing should be taken into account EXCEPT: (a) Quality of data source (b) Quality of actual data (c) Quantity of actual data (d) Compatibility of data with information requirements

5. Before data are acquired, both data sources and data quality must be care- fully checked in terms of all the following EXCEPT: (a) Coverage (b) Availability (c) Accuracy (d) Historical grounding 821 Practice Quiz Answer

6. Which of the following is NOT a possible level of research? (a) Exploratory (b) Analytical (c) Descriptive (d) Causal

7. Which level of research should be used if the primary objective is to defne problems? (a) Exploratory (b) Analytical (c) Descriptive (d) Causal

8. Which level of research should be used if the primary objective is to provide information about market phenomena? (a) Exploratory (b) Analytical (c) Descriptive (d) Causal

9. All the following are types of qualitative data-gathering techniques EXCEPT: (a) Observation (b) In-depth interviews (c) Focus groups (d) Experiments

10. Which method of contacting respondents is most effective if time is of the essence? (a) Mail (b) Telephone (c) Personal interviews (d) Samples

11. Which type of sampling is most subject to bias? (a) Random (b) Cluster (c) Strata (d) Quota vvPractice Quiz Answer: Chapter 6

The correct answer is highlighted in bold and italic font. 1. Which of the following is input to the normal business planning and control processes? (a) Tactical (b) Strategic (c) Medium-term (d) Long-term 822 Practice Quiz Answer

2. All the following are types of decisions associated with long-term forecasts EXCEPT: (a) Strategic direction (b) Resource planning (c) Communication (d) Control

3. Budget variants include all the following EXCEPT: (a) Resource forecasts (b) Manufacturing forecasts (c) Salesforce forecasts (d) Proft forecasts

4. Microforecasting builds on the predictions of: (a) The market (b) National economies (c) Customer behavior (d) Proftability

5. Which of the following forecasts is most important for an organization with high market shares? (a) Global (b) National (c) Industry (d) Product

6. Qualitative forecasts can be compiled from all the following sources EXCEPT: (a) Individual opinion (b) Panel opinion (c) Decision tree (d) Time-series models

7. Members of a Delphi study are not brought together primarily because it reduces: (a) Costs (b) Interaction (c) Bandwagon effects (d) Specifcity

8. Mathematical techniques allow for all the following components for forecast- ing EXCEPT: (a) Trend (b) Cyclical (c) Seasonal (d) Planned effects 823 Practice Quiz Answer vvPractice Quiz Answer: Chapter 7

The correct answer is highlighted in bold and italic font.

1. In the long run, it is customers with their _____ who decide what the market really is. (a) Needs (b) Purchasing power (c) Suppliers (d) Market responses

2. _____ is the proportion of individuals in the market who are users of the specifc product or service. (a) Market share (b) Brand share (c) Penetration (d) Market segment

3. Consumer behavior can be divided into which of the following? (a) Consumer characteristics and consumer responses (b) Consumer characteristics and consumer purchases (c) Consumer responses and consumer purchases (d) Consumer purchases and consumer values 4. _____ are the most powerful tools for segmentation. (a) Consumer responses (b) Consumer characteristics (c) Consumer purchases (d) Consumer values 5. To address the shortcomings of the country segmentation approach, all the following alternative procedures should be considered EXCEPT: (a) Criteria development (b) Preliminary screening (c) Microsegmentation (d) Geographic groupings 6. To be viable, a segment needs to meet all the following broad criteria EXCEPT: (a) Size (b) Identity (c) Relevance (d) Price-ft 7. The most productive bases for segmentation are those that relate to the cus- tomer’s _____ in the market. (a) Own grouping (b) Fit to the product (c) Proftability (d) Relevance 824 Practice Quiz Answer

8. In cyberspace, the _____ model is replaced by the _____ model. (a) Sales push, market pull (b) Market pull, sales push (c) Market push, sales push (d) Sales pull, market pull

9. Which of the following positions characterizes a niche product? (a) High quality, low price (b) High quality, high price (c) Low quality, low price (d) Low quality, high price

10. The positioning process includes all the following steps EXCEPT: (a) Market segmentation (b) Product segmentation (c) Target marketing (d) Product positioning

11. In _____, the product is given a character, an image, almost like a personality. (a) Product segmentation (b) Product positioning (c) Product branding (d) Product differentiation

12. All the following are levels of branding strategy EXCEPT: (a) Company name (b) Family name (c) Family branding (d) Individual branding vvPractice Quiz Answer: Chapter 8

The correct answer is highlighted in bold and italic font.

1. The ______indicates elements such as design, color, and packaging. (a) Core product (b) Intangible product (c) Tangible product (d) Augmented product

2. All the following questions are answered in product auditing EXCEPT: (a) What market segment does this brand address? (b) Who are the prospective customers? (c) How does it compare with competitive products? (d) How can the price be adjusted to best ft the customers’ needs? 825 Practice Quiz Answer

3. _____ involves modifcation of quality, style, performance, or variety. (a) Market penetration (b) Product development (c) Market development (d) Diversifcation

4. _____ involves fnding new uses for an existing product. (a) Market penetration (b) Product development (c) Market development (d) Diversifcation

5. _____ involves offering a new product in a new market. (a) Market penetration (b) Product development (c) Market development (d) Diversifcation

6. According to the Ansoff Matrix, all the following are elements of product strategy EXCEPT: (a) Market penetration (b) Market development (c) Diversifcation (d) Collaboration

7. Which of the following is NOT a part of the product life cycle? (a) Growth (b) Maturity (c) Decline (d) Rejuvenation

8. Maximum sales acceleration is the goal at which product life-cycle stage? (a) Growth (b) Maturity (c) Decline (d) Rejuvenation

9. All the following are organizational strategies for a market in decline EXCEPT: (a) Leadership (b) Niche (c) Harvest (d) Investment 826 Practice Quiz Answer

10. In which international product life-cycle stage are proft margins thin and competition ferce? (a) New product (b) Maturing product (c) Standardized product (d) Declining product

11. According to the Boston Consulting Group Matrix, _____ are characterized with high market share and low market growth rate. (a) Stars (b) Questions (c) Cash cows (d) Dogs vvPractice Quiz Answer: Chapter 9

The correct answer is highlighted in bold and italic font.

1. All the following are elements of the planning gap EXCEPT: (a) Usage gap (b) Distribution gap (c) Product gap (d) Collaborative gap

2. All the following are new product strategies EXCEPT: (a) Technology-driven (b) Broad (c) Low-budget (d) Balanced

3. Which of the following is NOT a type of product modifcation? (a) Feature (b) Value (c) Style (d) Image

4. Perceived quality changes are also known as which of the following type of modifcation? (a) Feature (b) Quality (c) Style (d) Image

5. A frm’s greatest source of new product ideas is its _____ (a) Marketing managers (b) Product engineers (c) Customers (d) Test feld 827 Practice Quiz Answer

6. The frst consideration in determining a new product’s proftability is exam- ining its ft with the frm’s: (a) Strategy (b) Capital resources (c) Human resources (d) Supply

7. All the following affect a frm’s marketing response to a new product EXCEPT: (a) Match with existing product lines (b) Price (c) Quantity (d) Seasonality

8. The aim of the product development process is to: (a) Minimize risk (b) Maximize proft (c) Maximize effciency (d) Minimize production lags

9. According to Booz Allen Hamilton Inc.’s research, _____ percent of all new product ideas fail. (a) 20 (b) 40 (c) 60 (d) 80

10. Which “area” of test marketing is known as feld trials and serves as a useful device for debugging some of the potential problems in advance of the new product launch? (a) Test sites (b) Residential neighborhoods (c) Test city (d) Lead countries

11. Which of the following has been the most important change to the product development process over recent decades? (a) Cost (b) Speed (c) Supplier networks (d) Distribution systems 828 Practice Quiz Answer vvPractice Quiz Answer: Chapter 10

The correct answer is highlighted in bold and italic font.

1. The most important decision in marketing is _____. (a) Price (b) Product (c) Place (d) Promotion

2. What is a major problem posed by the traditional economic approach to pricing? (a) Supply is diffcult to determine. (b) Demand is diffcult to determine. (c) Supply is inelastic to price. (d) Demand is inelastic to price.

3. Inelastic demand is characterized by: (a) Demand sensitive to price change (b) Demand insensitive to supply change (c) Demand sensitive to supply change (d) Demand insensitive to price change

4. All the following are theoretical ways to measure the demand curve EXCEPT: (a) Regression analysis (b) Survey research (c) Experiment (d) Product life cycle analysis

5. All the following are factors that affect prices and are under direct control of the organization EXCEPT: (a) Product life cycle (b) Product portfolio (c) Product line pricing (d) Product competition

6. If price competition is severe, the frm should undertake which of the follow- ing to offer a degree of protection? (a) Segmentation (b) Differentiation (c) Penetration (d) Collaboration

7. Which of the following is NOT a strategy to cope with geographical pricing? (a) Uniform (b) FOB (c) Zone (d) Peak 829 Practice Quiz Answer

8. Which of the following is NOT a beneft of penetration pricing? (a) Growth of demand (b) Earlier economies of scale (c) Increased market share (d) Higher proft margins

9. Market-based pricing is also called _____. (a) Quality pricing (b) Customer group pricing (c) Perceived value pricing (d) Competitive pricing

10. All the following are dangers of initiating a price war EXCEPT: (a) Low-quality image (b) Temporary advantage (c) Decreased proftability (d) Excess capacity vvPractice Quiz Answer: Chapter 11

The correct answer is highlighted in bold and italic font.

1. The _____ channel is used when contact between the manufacturer and the end user is direct and no intermediaries are involved. (a) Three-level (b) Two-level (c) One-level (d) Zero-level

2. All the following are factors that determine the channel decision EXCEPT: (a) Corporate strategy (b) Marketing strategy (c) Product cost (d) Consumer location

3. Which of the following forms of discounts given to distribution chains is usually expressed as a fxed percentage? (a) Trade discounts (b) Quantity discounts (c) Promotional discounts (d) Cash discounts

4. Which of the following is the key aim of all discounts or bonuses to distribu- tion chains? (a) To motivate the channel members to support the supplier’s strategy (b) To motivate the channel members to support the producer’s strategy (c) To motivate the channel members to deliver superior customer service (d) To motivate the channel members to minimize a frm’s distribution costs 830 Practice Quiz Answer

5. Forward or backward integration is best pursued at which stage of the mar- ket or product? (a) Introduction (b) Growth (c) Mature (d) Decline

6. Retailers can be categorized in all the following ways EXCEPT: (a) Type of product sold (b) Type of customer service (c) Type of organization (d) Type of country of origin

7. The production decision concerns all the following issues EXCEPT: (a) Quantity (b) Quality (c) Lead time (d) Buffer stock

8. All the following are benefts of the just-in-time approach EXCEPT: (a) Minimized stock (b) Increased effciency (c) Improved performance (d) Increased fexibility

9. What is the foremost reason why a frm would NOT want to maximize its service level? (a) High costs (b) Limited human resources (c) Decreased customer complaints (d) Decreased customer satisfaction

10. _____ is used to optimize the use of a frm’s human resources. (a) Internal marketing (b) Employer marketing (c) Labor relations marketing (d) Human resource marketing vvPractice Quiz Answer: Chapter 12

The correct answer is highlighted in bold and italic font.

1. The promotional mix includes all the following EXCEPT: (a) Direct contact (b) Indirect contact (c) Customized support (d) Complementary support 831 Practice Quiz Answer

2. The most important element of the marketing mix is the: (a) Product (b) Price (c) Promotion (d) Placement

3. All the following characterize industrial advertising EXCEPT: (a) Purchase decisions are short range. (b) Advertising supports the sales infuence. (c) Product usage cycle is long. (d) Test marketing is uncommon.

4. All the following are part of a consumer’s psychological stages for a purchase decision EXCEPT: (a) Awareness (b) Interest (c) Opinion leading (d) Buying decision

5. A unique selling proposition (USP) can be found through all the following ways EXCEPT: (a) Physical features (b) Intangible features (c) Psychological features (d) Benefcial features

6. Which type of USP message is particularly easy to target, communicate, and monitor? (a) Product features (b) Psychological features (c) Benefcial features (d) Association

7. The cost of cumulative coverage: (a) Decreases linearly (b) Decreases exponentially (c) Increases linearly (d) Increases exponentially

8. Which of the following is the major challenge to cyberspace advertising? (a) Cost (b) Coverage (c) Measuring results (d) Extent of interaction 832 Practice Quiz Answer

9. The advertising budget can be determined through all the following ways EXCEPT: (a) Percent of sales (b) Affordability (c) Parity (d) Quality of product

10. Which of the following is NOT an advertising objective? (a) Informing (b) Introducing (c) Persuading (d) Reinforcing vvPractice Quiz Answer: Chapter 13

The correct answer is highlighted in bold and italic font.

1. Which of the following has most contributed to the viability of precision marketing? (a) Minimized costs (b) Higher coverage (c) Increased data (d) Larger market

2. Which of the following is the aim of direct mail communication? (a) Personalized messaging (b) Immediate sales inquiries (c) Increased market share (d) Greater salesforce effciency

3. All the following are advantages of direct mail EXCEPT: (a) Personalization (b) Variation (c) Cost (d) Specifc Targeting

4. Which of the following has shown to signifcantly increase the direct mail response rate? (a) Offer (b) Timing (c) Letter (d) Sample

5. The door-to-door approach of direct mailing has the advantage of: (a) Specifc targeting (b) Personalization (c) Wide coverage (d) Precision 833 Practice Quiz Answer

6. _____ refers to retail selling channels that use independent distributors to recruit new distributors over time. (a) Telemarketing (b) Network marketing (c) Channel marketing (d) Direct marketing

7. All the following are advantages of sales promotion EXCEPT: (a) Lower costs (b) Sales increase (c) Defned target (d) Defned roles

8. Which type of sales promotion is often used to extend the penetration or trial of the product to new customers? (a) Free goods (b) Tied offers (c) Coupons (d) Cash refund vvPractice Quiz Answer: Chapter 14

The correct answer is highlighted in bold and italic font.

1. Which of the following is a characteristic of geographical territories? (a) Steeped salesforce knowledge (b) Absent national barriers (c) Decreased contention (d) Ease of defning territories

2. All the following are benefts of territory based on industry EXCEPT: (a) Steeped salesforce knowledge (b) Absent national barriers (c) Decreased contention (d) Ease of defning territories

3. The specifc sales objectives should include all the following elements EXCEPT: (a) Total shares to be achieved (b) Product mix (c) Market mix (d) Promotion mix

4. The product mix element of the sales objective states: (a) The volume to be achieved (b) The relative contribution of each product to total sales (c) The proportion of total sales in each market (d) The percentage over competitors to achieve 834 Practice Quiz Answer

5. The market mix element of the sales objective states: (a) The volume to be achieved (b) The relative contribution of each product to total market (c) The proportion of total sales in each market (d) The percentage over competitors to achieve

6. Which of the following industrial buying situations requires the most effort by both buyers and sellers? (a) Straight rebuy (b) Dissatisfed rebuy (c) Modifed rebuy (d) New task rebuy

7. Which of the following buyers is the ultimate decision-maker? (a) Economic (b) User (c) Technical (d) Direct

8. All the following are benefts of sales proposals EXCEPT: (a) Increased competitiveness (b) Time effciency (c) Documented agreements (d) Better communication

9. All the following are elements of Hofstede’s scale of cultural dimensions EXCEPT: (a) Power distance (b) Individualism (c) Masculinity (d) Purchase power

10. Motivating a team of salespeople can be diffcult for all the following reasons EXCEPT: (a) Complexity of roles (b) Entrepreneurship (c) Lack of contact (d) Lack of motivation techniques 835 Glossary

Glossary

Agents The link between producers and retailers that represent one or more sup- pliers on the basis of a formal agreement and proft by earning a commission on sales.

AIDA model The attention, interest, desire, action model that describes consumers’ psychological stages prior to a purchase decision.

Alliances One of the physical outcomes of collaboration, resulting in frms’ increased coverage to customers and decreased expenses.

Augmented product A product enriched by characteristics such as its warranty and service benefts, the reputation of the frm, and the psychological benefts con- veyed by the product.

Backward integration The channel management approach in which the retailer owns its own suppliers.

Beneft segmentation A type of segmentation in which different customers are grouped based on their needs of a different combination of benefts.

Boston Consulting Group Matrix A map of an organization’s product strengths and weaknesses varying on two dimensions: market growth and relative market share.

Brand equity Consumers’ and investor’s image of the frm as a whole, which can translate into higher prices and which is valued most apparently at the initial public offering of the frm’s stocks.

Branding The epitome of product differentiation; a process in which a product is given a character or an image that is almost like a personality.

Budgets The classic quantifcation of a marketing plan; the most powerful tool by which managers can analyze the relationship between desired results and available means.

Bypass attack A strategy in which a challenger puts its efforts into leap-frogging existing technology and winning the battle for the next generation of technology to be brought to the market.

Category pricing The pricing strategy in which the supplier aims to cover the range of price categories with a range of brands based on the same product.

Causal research The research level most appropriate when the primary objective is to identify precise cause-and-effect relationships present in the market. 836 Glossary

Cluster analysis A type of factor analysis in which a specifed number of maxi- mally different clusters, or segments, of consumers is identifed and the resulting product is a set of prioritized position maps.

Coach The person in the buying decision process who provides the salesperson with information needed to close the sale, thus guaranteeing not only the order but satisfed customers and repeat business.

Cognitive dissonance The postpurchase stage during which tension arises due to conficting elements in the original purchase decision.

Collaboration Joint agreements developed by frms to ensure their greater competi- tiveness in the marketplace.

Competitive gap The differences in the effectiveness of a frm’s marketing strategy relative to its competitors in the same product market.

Complementary promotions Activities such as direct marketing, sales promotion, and public relations, which complement advertising and personal selling.

Concept test The frst true consumer flter applied in testing a new product in which the aim is to fnd out what consumers’ attitudes will be and whether they would be likely to purchase it.

Conglomerate diversifcation The riskiest diversifcation of all, in which a frm moves into completely new areas.

Conjunctive decision rule A process of evaluating products in which minimum standards are set for all attributes and only those products that meet all the stan- dards are chosen.

Consumer advertising Promotion that is directed to the end-user audience.

Consumer behaviorists The forerunners of modem marketers who evaluated con- sumers and their behavior in the context of business decisions.

Consumption system The postpurchase cycle in which consumers alternate between expecting product and service satisfaction.

Content analysis A technique that investigates the content of communication in a society and entails counting the number of times preselected words, themes, sym- bols, or pictures appear in a given medium.

Core product The good or service itself, without any amenities. 837 Glossary

Core services The necessary outputs of an organization that consumers seek.

Corporate advertising The form of promotion in which the overall organization rather than its individual brands is promoted.

Corporate mission A defnition of what the organization is and of what it does.

Corporate plan The starting point and context for the marketing plan; it contains three main components: where the organization is now, where the organization intends to go in the future, and how the organization will organize its resources to get there.

Corporate vision The most important factor in successful marketing; the driver of organizational progress.

Cost-beneft relationship The notion that the value of a decision with the beneft of research should be greater than the value of the same decision without research by an amount exceeding the cost of the research.

Counter-segmentation The process of consolidating several segments by launch- ing a brand, repositioning a brand, or integrating several existing brands to cover several segments.

Coverage The maximum number of the target audience that is reached by adver- tising.

Customer focus The fundamental marketing tenet in which customers reign supreme because their purchasing decisions determine the winners of competition between frms.

Customer franchise The prime asset of the relationship between a frm and its buyers.

Customer group pricing The pricing strategy in which different categories of prices are set to match various groups’ ability to pay.

Customer-consumer orientation The key to successful marketing; the focus on understanding and responding to the wishes and needs of the buyer.

Data Collection of facts.

Decision-makers Individuals in the buying decision who determine the purchase transaction.

Decision trees An aid to qualitative forecasting in which the main factors affecting an organization’s environment, for example, are plotted, and possible alternatives or decisions are shown at each stage (or branch). 838 Glossary

Decoding The portion of the communication process during which the receiver interprets the received message, which was encoded by the sender.

Delphi studies A type of research that aims at qualitative rather than quantitative measures by collecting information from a small group of experts.

Derived demand Demand that depends on some other product or process.

Derived forecast A specifc forecast based on information from global forecasts.

Descriptive research The research level most appropriate when the primary objec- tive is to provide information about existing market phenomena.

Detailed plans The most important elements in the overall marketing strategy that spell out exactly what programs and individual activities will take place over the period of the plans and constitute the “marketing” of the organization.

Dialogue Marketers’ strive to understand customers’ needs via market research and the communication of specifc exchange advantages to potential customers.

Difusion The pattern that describes how a new idea or product spreads to different groups.

Digital age The current era in which all kinds of information—numbers, text, sound, and video—can be put into digital form such that any computer can store, process, and forward.

Direct mail A personalized means of advertisement that contributes largely to tar- geted precision marketing campaigns.

Dissatisfers Characteristics that prevent a product’s purchase by a given customer.

Distribution gap The limits in the distribution of a frm’s goods or services.

Distributor A wholesaler that deals with industrial establishments and business-to-­ business marketing.

Economic buyers The ultimate decision-makers; these people or this group holds the “purse strings” and must approve the purchase decision.

Economic integration A process where countries engage in economic cooperation to use their respective resources more effciently and reduce barriers between them- selves in order to achieve larger markets for members.

Economies of scale An economic condition in which unit cost decreases as produc- tion increases. 839 Glossary

Electronic data interchange An electronic data entry system that allows manufac- turers, logisticians, and vendors to communicate to maximize effciency in produc- tion, delivery, and sales.

Electronic-point-of-sale (EPOS) systems Electronic systems that track the details and buying habits of an individual transaction but not the identity of the pur- chaser.

Encirclement attack A strategy in which a grand offensive against the enemy is taken out on several fronts such that the aggressor is able to break the opponent’s will to resist.

Encoding The portion of the communication process during which the sender cre- ates the message that the receiver (consumer) obtains.

Envelope curve A model of extrapolation that expects technology to develop by quantum leaps, with new techniques gradually being improved until they reach the ceiling of their performance, at which point they are overtaken by the next development.

Equilibrium price The point at which the quantity demanded by consumers matches the quality supplied by sellers; thus, the market sets the price.

Errors of commission A failure that results from actively introducing research mistakes such as slanting questions to produce the answers that the organization expects or desires.

Exclusive distribution The level of distribution in which only a few resellers are allowed to sell the product to ensure that the product is properly supported and seen as special.

Explanatory models Models that try to explain how systems work so that the effect of future changes can be predicted.

Exploratory research The research level most appropriate when the primary objec- tive is to identify problems, to defne problems, or to investigate the possibility of new, alternative courses of action.

External environment The context of federations, associations, government agen- cies, customers, suppliers, and competitors on which the organization’s profts are dependent.

Fad An extremely short version of a fashion; a product with a rapid growth and decline phase, which are separated by only a very short maturity phase. 840 Glossary

Fishbone efect A sales projection in which a signifcant mismatch exists between organizational resources and opportunities.

Flank attack A strategy in which the challenger zeros in on a segment where the market leader is most vulnerable.

Forecasts Predictions of what will happen in the future.

Foreign concern The phenomenon in which those who have achieved high levels of needs fulfllment begin to focus on individuals in other countries.

Forward integration The channel management approach in which the supplier owns its own retail outlets.

Free on board (FOB) pricing The pricing strategy in which the cost of all transporta- tion is charged to the customer.

Frontal attack A very resource-intensive strategy in which the challenger takes on the opponent directly on its strongest market position.

Gap analysis The technique used to identify the difference between what the exist- ing products offer the consumer and what the consumer demands.

Generation X Those who were born in the 1970s and tend to live at home through their late 20s, which results in becoming the designated decision-makers for parents and relatives.

Generic brands Unbranded goods.

Guerrilla warfare A strategy in which the attacker makes intermittent forays so that the cost to the attacker is minimized and that of the opponent is maximized.

Hard information Quantitative data about shipments, inventory levels, and retail sales.

Hierarchy of needs Maslow’s pyramid-shaped diagram that defnes human require- ments ranging from immediate physical needs to luxurious nonessentials.

Hockey stick efect The mistake of changing a forecast’s starting point due to fail- ure to meet previous forecasts without changing the slope of the forecast line.

Industrial advertising Business-to-business promotion, which is designed to cre- ate the initial awareness and generate leads before the face-to-face process is con- ducted by the producer’s salesforce. 841 Glossary

Industry A group of organizations that offer products that are near substitutes for each other; in economic terms, these products have a high cross-elasticity of demand.

Infuences Individuals in the buying decision who can affect the decision-maker in his or her purchase transaction.

Information Data that have been selected and ordered with some specifc purpose in mind.

Information foat The amount of time information spends traveling through com- munication channels.

Innovators A consumer group including those who are adventurous and willing to take risks.

Intelligence The interpretation of the analysis of information.

Intensive distribution The level of distribution in which the majority of resellers stock the product.

Intermediaries Actors such as retailers and wholesalers that provide the product to the end user or other members of the channel.

Joint demand Demand for two or more products that are interrelated.

Just-in-time (JIT) The inventory approach in which components are delivered from the suppliers directly to the production line just as they are needed.

Leading indicators Certain factors that provide advance warning about future trends.

Lexicographic decision strategy A process of evaluating products in which only the most important attributes of similar products are compared.

Life cycle Individuals’ and families’ varying stages of activities, needs, and pur- chases over time.

Lifestyle classifcation A method that links different dimensions of consumers, such as activities, interests, and opinions, with their spending or product use patterns.

Line rationalization The product mix decision in which items are removed to reduce costs and improve proftability.

Line stretching The product mix decision in which additional items are added to tap potentially proftable extra business. 842 Glossary

Lobbyists Well-connected individuals and frms that can provide access to policy- makers and legislators.

Longitudinal measures Measurements repeated over time because after-the-fact measurements alone cannot fully explain the effect of causality.

Marginal analysis The decision which determines the beneft that is derived from the investment of an additional unit of effort.

Market The group of all potential customers who share particular needs and wants and may be willing to engage in exchange to satisfy their needs and wants.

Market Information Systems (MIS) Computerized databases that collect and orga- nize data that are relevant to the marketer in terms of planning, implementation, and control.

Market orientation The organization-wide generation of market intelligence per- taining to current and future customer needs, dissemination of the intelligence across departments, and organization-wide responsiveness to it.

Market space The context in which a frm competes; a new context offers the frm unprecedented new opportunities to serve and satisfy customers without changing its content.

Marketing An organizational function and a set of processes for creating, commu- nicating, and delivering value to customers and for managing customer relation- ships in ways that beneft the organization and its stakeholders.

Marketing audit A comprehensive, systematic, independent, and periodic exami- nation of a company’s marketing environment, objectives, strategies, and activities.

Marketing mix McCarthy’s 4 Ps—product, price, promotion, and place— that can serve as a preliminary framework for assessing marketing activities. (Promotion is often referred to as communication and place as supply chain management.) A very- company-oriented approach.

Marketing myopia The marketing mistake in not differentiating the key difference between a product’s features and its benefts.

Marketing objectives The crux of the marketing process; the match between prod- ucts and markets based on realistic customer behavior.

Marketing plan A formal strategy that encompasses the overall objectives of an organization, from general goals to individual action steps. 843 Glossary

Marketing strategy A pattern or plan that generally encompasses the 4 Ps and inte- grates an organization’s major goals, policies, and action sequences into a cohesive whole.

Marketing system The relationship between a frm and its suppliers and customers that has the purpose of increasing the frm’s competitiveness in meeting customers’ needs.

Micro-analysis The management process of investigating detailed problems and the individual elements that are failing to meet targets specifed in the marketing plan.

Modifed rebuy The reevaluation of a previous buying decision that resulted in dissatisfaction.

Multinational corporations Firms that operate facilities outside their home coun- try, which is the location of the headquarters.

Narrowcast The ability to advertise messages to more targeted audiences due to the explosive growth of specialized communication channels, such as cable television.

National forecasts 4 or 5-year forecasts based on a country’s cycles of economic activity, moving from boom to recession and back again.

Need recognition The stage of consumer behavior in which the consumer searches for fulfllment of a need, which is triggered either internally or by outside stimuli.

Net contribution A frm’s marginal proft from its products, services, or activities.

Net proft The optimal point at which the marginal costs of the products, services, or activities added are exactly matched by the marginal revenues they generate.

Network marketing The retail selling channels that use independent distributors not only to buy and resell products at retail but also to recruit new distributors into a growing network over time.

New task buying The buying situation in which there is no previous purchase his- tory; therefore, all suppliers begin with the same chance of winning the contract.

Not Invented Here (NIH) syndrome The phenomenon in which managers do not scan the outside resources available, particularly the literature, to fnd ideas for new products.

Omnibus surveys Market research where space on a questionnaire is “sublet” to different researchers, which results in a mini-survey within a survey. 844 Glossary

Opinion leaders Those who are more apt to try new products or services and suc- cessfully carry their message to those who are less exposed to the frms’ promotions.

Overhead costs Any fxed costs, which are normally allocated via “absorption costing” to a frm’s products or services.

Panel research Market research aimed to create consumer profles; usually col- lected via home audit or the diary method.

Partnership techniques Marketers’ strategy of involving both suppliers and pur- chasers in the decision-making process.

Pattern standardization The process of synchronizing advertisement messages in different countries while using each country’s respective locally popular features such as movie and sport stars.

Peak pricing The pricing strategy in which the price is matched to the demand; high prices are demanded at peak times, while lower prices are offered at off-peak times.

Penetration The proportion of individuals in the market who are users of the spe- cifc product or service.

Perceptual maps An alternative graphical approach to the static positioning map in which a computerized plotting compression technique is used.

Physical environment The surroundings in which organizations must operate.

Planning gap The difference between actual outcome and expected outcome.

Postpurchase evaluation The stage after consumption during which the consumer becomes satisfed or dissatisfed.

Precision marketing A form of direct marketing in which frms make use of the increasing availability of consumer data to target individual consumers.

Price elasticity of demand The degree to which demand is sensitive to price changes.

Private brand A retailer’s own branded product.

Product depth The number of variations of one particular product.

Product diferentiation A product strategy in which products are given unique identities to distinguish them from their competitors. 845 Glossary

Product gap The part of the market from which the individual organization is excluded because of product or service characteristics.

Product life extension A marketing practice in which the aim is to extend the life cycle of the product by lengthening the growth phase as far as possible.

Product line length The number of products within a product line.

Product testing A consumer flter that is much like concept testing but is more detailed and may lead to modifcation of the product itself to match consumers’ needs.

Public relations A valuable secondary source of communication that is based on what is perceived as impartial, independent recommendations.

Pull promotion A form of communication in which the supplier focuses the pro- motional effort, typically advertising, on the consumer in the belief that demand will “pull” the product through the channel.

Push promotion A form of promotion in which the supplier directs the bulk of the communication effort at selling the product into the channel to persuade members of the channel that supply pushes the product forward to the fnal consumer.

Reference groups Individuals’ desire to belong to certain social cliques, which results in pressures on them to conform to certain purchasing patterns.

Regression analysis Models that determine the strength of the relationship of one variable with other variables involved.

Rejuvenation The redesign of a product’s features to bring it in line with current tastes without signifcantly changing its performance.

Relationship marketing An interdependent buyer–seller relationship that helps build an opportunity share in the future, if not a market share immediately.

Repeat purchases The “marriage” between a customer and the frm; repeat pur- chasers are a frm’s most valuable customers because their lifetime value far over- shadows any specifc transaction.

Retail audits Market research in which an auditor regularly visits each retail outlet on the panel and carries out a physical stock check on the products being surveyed.

Retailing The largest part of the service sector; all the activities involved in selling goods or services directly to fnal consumers for their personal, nonbusiness use. 846 Glossary

Reverse marketing The process in which frms need to collaborate to accommodate the fow of products from the end user back to the manufacturer, for reasons such as safety or environmental responsibility.

Rolling forecasts Forecasts in which a new time period is added at the end of each period; thus at any given time, a full forecast is available.

Sales promotion A short-term activity used to stimulate some specifc action by consumers, the salesforce, or channel members carrying a product.

Sales-wave research A technique used to analyze consumers’ trial, frst repeat, adoption, and purchase frequency behavior to ensure that the product will have a life beyond the frst purchase.

Sampling The most powerful form of promotion in the early stages of a new prod- uct launch, which has the immediate aim of obtaining trial by users.

Satisfcing A solution that reaches corporate objectives without maximizing per- formance satisfactorily due to the inability to know the optimum solution with perfect precision.

Satisfers Characteristics that will positively persuade the customer to choose that brand.

Segment The frst stage of market positioning in which the market itself is divided into smaller parts based on key variables chosen by customers and identifed by frms.

Segmentation The separation of consumers based on demographic, lifestyle, and consumption information.

Selective distribution The level of distribution in which only specially chosen resellers stock the product, with the selection being a function of location, image, or other reseller attributes important to the product.

Sensitivity analysis A process in which responsiveness of variable to change can be analyzed.

Service level The percentage of product availability.

Service level pricing The pricing strategy in which the level of service determines the price.

Simulation Role playing in which experts attempt to deduce how they might react in real-life situations. 847 Glossary

Skimming The alternative pricing strategy in which the initial price is set high to maximize proft and the image of “quality.”

Soft data Data that are obtained from visits to dealers and other channel members.

Sovereignty The notion that consumers’ purchasing decisions determine who will survive in the market.

Straight rebuy The repeat purchase of an existing product or service that has given satisfactory performance.

Superordinate goals The cult-like devotion to accomplish diffcult tasks as if they were a corporate driving principle.

Supplementary services The indispensable outputs of an organization that are available only to improve the overall quality of service offerings.

SWOT Strengths, weaknesses, opportunities, threats—A useful technique in the analysis of the material contained in the marketing audit that groups key informa- tion into categories of internal and external factors and sorts again by their dual positive and negative aspects.

Symbolic analysts A new class of workers who concentrate not on the production but on analysis.

Syndicated research The practice of obtaining research information from a few customers and applying the information to the rest of the customer population; usually carried out as retail audits, panel research, and omnibus surveys.

Tangible product Elements such as design, color, packaging, and any other physi- cal dimensions that provide benefts to the customer.

Target marketing Placing a product such that its most critical features to users have optimal position relative to its competitors.

Technical buyers Those in the buying decision process who examine the specifca- tions of the product or service for technical conformance.

Technological forecasting A series of techniques used to plot long-term trends with changes in technology.

Telemarketing The personal and interactive technique of direct marketing in which calls are made to individual potential consumers.

Test marketing The technique of replicating everything—from promotion to dis- tribution—as well as “product” but on a smaller scale to extrapolate national and international results. 848 Glossary

Trade shows Trade fairs for manufacturers, distributors, and other vendors who display their products or describe their services to current and prospective custom- ers, suppliers, other business associates and the press.

Uniform pricing The pricing strategy in which the same price is offered at all loca- tions, regardless of delivery costs, exchange rates, or tax rates.

Usage gap The difference between a frm’s market potential and its products’ exist- ing usage.

User buyers Those in the buying decision process who will use whichever product is being offered.

Variable costs Any additional or marginal costs incurred by a frm associated with the production of one additional unit.

Verbal data The most prevalent type of data within an organization that is avail- able only as memos or reports and does not provide numerical information.

Worker’s councils A group of nonexecutive employees who have the power to share decisions in personnel and social matters.

Yield management A strategy used to maximize revenue under uncertainties of customer purchase by discounting, overbooking, and limiting early sales for capac- ity-contained services.

Yield pricing A variant of peak pricing in which the price of each product is matched by the benefts it provides.

Zone pricing The pricing strategy in which the price is different for each geographi- cal region, or “zone,” to incorporate the average transport costs incurred in ship- ping to that region. 849

Name Index1

Baker, M.J., 89, 237, 395, 549, 604 A Baker, T.L., 90 Ball, G., 280 Aaker, D.A., 318t Ballou, R.H., 533t Abell, D.F, 89 Balu, R., 551 Abraham, M.M., 162, 572, 593 Barber, L., 157 Acland, H., 645 Bartels, Robert., 41 Adams, W.C., 647 Bartels, Rupert, 41 Aeppel, T., 387 Bass, F.M., 162f Agarwal, S., 692 Batra, R., 605 Agassi, A., 573 Bayus, B.L., 396 Aguilar, L., 175 Beatty, S., 378 Ahlstrand, B., 89 Begley, S., 4 Alberts, W.W., 396 Bellenger, D.N., 237 Albrecht, K., 550 Benjamin, D., 692 Alden, D.L., 605 Berardy, R., 752, 755, 759 Alpert, W., 280 Bernhardt, K.L., 237 Ambler, T., 603, 606 Berra, Y., 734 Andelman, D.A., 237 Berry, L.L., 396 Anders, G., 175 Bharadwaj, S.G., 449 Anderson, A., 449 Bissell, J., 604 Anderson, A., 603 Black, H.A., 339 Anderson, E.W, 550 Blackwell, R.D., 139f Andraski, J.C., 550 Blair, E., 41, 237 Andreasen, A.R., 56, 121f Blenkhom, D.L., 691 Andrews, K.J., 611f Blishchok, T.J., 550 Andrews, W., 455 Blois, K.J., 89, 395 Anheuser, E., 336 Boehm, T.P., 339 Ansoff, H.I., 95f, 96f, 351f, 359, 426f Bonoma, T., 76, 592, 636f Appel, D., 99 Bower, M., 42 Appleman, J.E., 647 Bowman, D., 134 Argenti, J., 89 Bowonder, B., 415 Armstrong, R.W, 802, 803t Bradford, K.D., 691, 693 Arnett, D.B., 691 Brenkert, G.G., 339 Arriola, R., 338 Brinkhoff, T., 728 Asato, C., 175 Brooker, K., 551 Athos, A.G., 89, 448 Brown, S.W., 550 Auster, E., 133 Brugaletta, Y., 566t Aziz, S., 753 Bryant, K., 732, 734 Buell, V.P., 475f B Burke, R., 549 Burrows, P., 403f Baily, M., 387 Burton, T., 740

1 An italic t next to a page number (e.g., 177t) identifes information that appears in a table and an italic f next to a page number (e.g., 177f) identifes information that appears in a fgure 850 Name Index

Buse, D.D., 549 D Bush, G., 759 Butkevich, B., 280 Danko, W.D., 174 Buzzell, R.D., 90, 550 Darrell, D., 175 David, R., 196t, 348 Davis, Stanley M., 615f C Davis, T., 550 Davison, D.., 34 Calantone, R.J., 550 Dawar, N., 41 Carlton, J., 541 Day, G.S., 318f Carson, D., 41 Day, K., 133 Carter, D., 740 de Gaulle, C., 32 Carter, L., 505 Deans, C., 728 Cavusgil, S.T., 396 Degenholtz, A., 403f Cebrzynski, G., 194 DeGennaro, R.R, 339 Cecil, M., 280 Delbecq, A., 134 Cesca, R., 528 Dell, M.., 23, 267 Chae, M.-S., 88 Deogun, N. 410 Chambers, V., 603 DeSarbo, W.S., 303t, 304t Champion, D., 513 Desiraju, R., 75 Chandrashekran, M., 550 Devine, L., 175 Chang, M., 734 Dhalla, N.K., 396 Charles, R., 15 Dickinson, V., 657t Choo, C.W., 133, 134 Dickson, P., 132 Chowdhury, J., 90 Dobbins, G., 89 Chung, K.H., 692 Donaldson, T., 677 Churchill, G.A.Jr., 692 Dosi, G., 89 Clark, D., 781 Doyle, P., 448 Clark, P., 781 Dreze, X., 646 Clarke, C., 796 Druckenmiller, G., Jr., 479 Cleaver, J., 703 Drucker, P.F., 6, 29, 60, 216, 351, 359, Clemons, E.K., 133 415, 422 Clinton, B., 778 Dubinsky, A.J., 684, 685 Cohen, A., 692 Duncan, T., 732 Collins, T.L., 729 Dunn, S.C., 550 Conner, K.R., 449 Dvorak, J.C., 496 Conrad, C., 743 Dwyer, S., 603 Cook, P.J., 728 Cook, V., 354f Cooper, A.C., 396 E Cooper, R.G., 395, 397 Copeland, T.E., 133 Earl, Robert, 346 Cordera, A., 781 Eliashberg, J., 134 Corey, E.R., 448Cortese, A.E., 479 Englis, B.G., 174 Cortez, R., 781 Enis, B.M., 146, 366 Cosby, B., 306 Erickson, G.M., 495 Coughlan, A.T, 646 Erramilli, M.K., 388t Coulson, J., 237 Estell, L., 611f Cowell, D., 389t Evans, J.R., 691 Cox, J.L., 455 Crittenden, V.L., 76 Cromie, S., 41 F Crosier, K., 604 Fagiano, D., 168 Cyert, R.M., 495 Fahey, L., 448 Czinkota, M.R., 24, 138, 201f, 366, 415, 490, 503f, Fahy, J., 449 504t, 524f, 529, 725, 736, 780, 788, 800, 812 Faletra, R., 89 851 Name Index

Fallon, J., 736 Gumpert, D.E., 396, 647 Fargo, J., 325 Gurley, W., 551 Farmer, S., 799 Gustafson, D.H., 134 Farrell, D., 387 Guttman, M., 395 Farris, C.W., 691 Festinger, L., 576 Fisher, D.G., 761 H Fisher, G., 60 Ford, H., 288t Hakim, D., 344 Fornell, C., 550 Haley, R.I., 301, 302t Foster, M., 526 Hamel, G., 95 Foster, R.N., 133 Handheld, R.B., 396 Francella, B.G., 338 Harris, B.F., 339 Frank, R.M., 728 Harris, F.H., 75 Fraser, C., 603 Hart, C.W.L., 550 Frazier, G.L., 549 Hartley, R.F., 692 Frederick, J., 15 Hassell, G., 586 Freudman, A., 529 Hatch, D., 603 Fry, A., 417 Hathcote, J.H., 604 Fukukawa, S., 133 Hauf, C.H., 496 Hawthorne, T., 604 Haywood, R., 647 G Heath, R.P., 175 Heiman, S.E., 666 Gaimon, C., 395 Hein, K., 317 Galbraith, J.K., 55, 106 Hellhake, M., 744 Galbreath, J., 646 Hellofs, L.L., 396 Gale, B.T., 90 Helsen, K., 302, 303t, 304t, 420, 471, 557, 582, 640 Garcia, G., 780 Hemmasi, M., 396 Garda, R.A., 42 Henault, F., 744 Garrett, S.A., 49 Henderson, B.D., 134 Garvey, W., 338 Herzberg, F., 162 Gasol, P., 733 Heskett, J.L., 550 Gates, B., 59, 102, 697, 726 Hill, John S., 88 Gatignon, H., 160 Hill, Sidney, Jr., 652 Geisbauer, H., 549 Hirschheim, R., 40 Gellerman, S.W., 692 Hite, R.E., 603 Gelphman, R., 563 Hoch, S.J., 646 German, S.D., 691 Hofstede, G.H., 680t Gilly, M.C., 146 Holland, B., 784, 785 Goh, C., 603 Holley, R., 692 Goldberg, A., 338 Homburg, C., 40, 693 Goldman, K., 237 Horwitz, T., 692 Goldstucker, J.L., 237 Houston, W., 167, 411 Gomory, R.E., 449 Howe, K., 134 Goodman, J.A., 543f Huey, B., 603 Grant, C., 692 Hughes, A., 550 Grant, E.X., 241 Hunt, S.D., 691, 730 Grayson, K., 646 Hwang, S.L., 513 Greco, S., 496 Greenspan, A., 549 Gregor, W.T., 89 Grewal, D., 174, 550, 730 I Grimes, A., 175 Inglehart, R., 99 Gross, M.S., 788 Iverson, A., 734 Grover, R., 352 Ives, B., 728 852 Name Index

J L Jacob, J., 744 Lach, J., 633 Jacobson, R., 396 Lagarce, R., 396 James, K., 348 LaLonde, B., 550 Jarisch, D., 255 Lampel, J., 89 Jarvenpaa, S.L., 728 Lancaster, G., 549 Jatusripitak, S., 448 Laskin, R.L., 691 Jaworski, B.J., 42, 89 Lazer, W., 396 Jayachandran, S., 110 Lazonick, W., 728 Jedidi, K., 303t, 304t Lee, H.C., 497, 692 Jennings, D.F, 134 Lee, W.A., 495 Jiao, S., 760 Leenders, M.R., 691 Johansson, J.K., 176, 237, 449 Lehman, D.R., 550 John, E., 411 Leland, J., 603 Johnson, J.C., 550 Lere, J.C., 657t Johnson, R., 339 Letterman, D., 288 Johnston, I., 799, 800 Leverhulme, L., 593 Jordan, M., 573, 732, 734, 735 Levey, R.H., 611 Jurison, J., 728 Levine, J., 691 Levitt, T., 61, 314, 671t Levy, M., 550 K Lewis, S., 735 Kale, S.H., 338 Li, T., 550 Kanner, B., 89 Lieberman, D., 448 Kanter, R.M., 728 Lieberson, S., 132 Kaplan, C.S., 237 Likert, R., 209 Kates, S.M., 603 Lim, C.U., 692 Keegan, W., 12 Lim, P.J., 449 Keen, P.G.W., 241 Linares, B., 797 Keenan, W.F, 324 Linares, R., 797 Kelly, A.O., 475f Lint, O., 448 Kennedy, C., 448 Lodish, L.M., 572 Ketch, L., 741 Long, J.K.T., 182 Ketkar, S., 768 Lontos, P., 682 Khanna, R., 760 Lorge, S., 31 Khermouch, G., 448 Losee, S., 237 Kiely, T., 208 Lovell, M., 603 Kim, W.C., 396 Lovelock, C.H., 42, 339, 340, 397, 604 Kitade, K., 759 Low, G.S., 604, 605 Klein, A., 134, 396 Lubars, D., 740 Klitsch, J., 604 Lumpkin, J.R., 134 Kogane, Y., 261t Lundegard, K., 237 Kohli, A.K., 42, 89 Lunn, T., 341 Kondratieff, N.D., 249 Lusch, R.F., 395, 549 Koretz, G., 250 Lusch, V.N., 395, 549 Kotabe, M., 471, 557, 744, 760, 768 Kotler, P., 30f, 56, 121f, 721 Krishnan, R., 174 M Kroc, R., 23 Macarthur, K., 603 Krohmer, H., 40 Macpherson, E., 575 Kuman, V., 318f Maddox, K., 646 Kumar, A., 89 Madonna, 411, 556, 575, 739 Kumar, P., 174 Mägi, A.W., 645 Kumar, V., 42, 397, 646, 691, 730 Mahajan, V., 162f Kwan, M., 734 Mahmoud, E., 237 853 Name Index

Maier, M., 338 Mostafa, K., 604 Mak, J., 740 Mui, K., 455 Makridakis, S., 256f, 266f, 272t, 273t Muller, E., 162f Malech, A.R., 543f Muller, J., 551 Mandel, M.J., 280 Munk, N., 551 March, J.G., 495 Murphy, W.H., 692 Marlatt, D., 386 Murray, C.J., 338 Marmorstein, H., 455 Murray, J.Y., 339 Martin, R., 568 Myers, J.H., 155f Maruca, R.F., 31 Maslow, A., 162 Mason, R.O., 728 N Massingham, L., 549 Naccarato, N., 603 Mauborgne, R.A., 396 Narver, J.C., 42 Mayer, C.E., 611 Nash, E.L., 645 Mazis, M.B., 604 Naughton, J., 508 Mazur, L., 133 Nayyar, P.R., 134 McCarthy, E.J., 41 Neam, G., 158 McCue, S.S., 132 Neff, J., 437 McDonald, G.M., 339 Nelson, E., 237 McDonald, M.H.B., 51f, 66f, 359f Neuendorf, K.A., 603 McDonald, O., 604 Nguyen, S., 736, 800 McDonnell, E.J., 97f, 98f Niedrich, R.W., 89 McDowell, J., 740 Nohria, R., 692 McEnroe, J., 573 Nolan, A.V., 426f McGuire, C., 645 Nonaka, I., 237, 449 McHugh, A.K., 274 Novack, R.A., 550 Mclvor, B., 89 Nowitzki, D., 733 McMath, R., 339 McWilliams, G., 280 Mehlman, B., 387 O Mehlum, K.M., 780 Menon, A., 90 O’Brien, J., 267 Mercer, D., 502 O’Connor, J.F., 132 Metz, C., 496 Ody, P., 645 Michaels, R.E., 692, 693 Ogilvy, D., 565 Miller, J., 630 Ohmae, K., 449, 729 Miller, R.B., 175 O’Neal, S., 732 Miner, A.S., 401 Orme, G., 338 Ming, Y., 732–736 Ortmeyer, G., 550 Miniard, P.W., 174 Osgood, E.C., 209 Mintzberg, H., 89 Ouchi, W., 88 Mitchell, E., 556, 738 Owen, C., 556, 739 Mittal, V., 174, 496 Oxenfeldt, A.R., 474, 475 Miyake, T., 415 Moffett, M.H., 524f Mohr, J.J., 604, 605 P Monieson, D.D., 11 Paley, N., 396 Monroe, K.B., 455 Pannesi, R.T., 396 Moon, H.-C., 692 Parasuraman, A., 396 Moorman, C., 401, 403 Parker, P., 41 Morgan, G., 42 Parker-Pope, T., 396 Morgan, R.M., 691 Parry, M.E., 449 Morita, A., 216, 420 Pascale, R.T., 89, 448 Morton, L.R., 289 Patterson, J., 654 Moses, L., 646 Peacock, P., 75 854 Name Index

Pereira, J., 646 Rogers, M., 609 Perkins, J., 158 Roman, E., 646 Perreaultjenoud, W., 41 Romeo, J., 495 Peters, T.J., 416 Ronkainen, I.A., 42, 550, 727, 730 Phillips, D., 779 Rosenberg, L.J., 133 Pine, C., 735 Rosenzweig, P.M., 692 Pittman, B., 89 Rossomme, J., 455 Polli, R., 354 Roth, M.S., 603 Ponprasert, S., 550 Row, M.C., 133 Porter, M.E., 395, 496 Rowland, C., 387 Postolos, G., 733 Rudnitsky, H., 729 Prell, A.E., 366 Ruebeck, C., 280 Prohaska, C.R., 133 Ruggiero, R., 727 Purk, M.E., 646 Rugman, A.M., 449 Rumelt, R., 89 Rutenberg, D., 134 Q Ryan, E.F., 134 Quelch, J., 727 Rymon, T., 134 Quinn, J.B., 71 S R Sampler, J., 95 Ramachandran, K., 237 Samuelson, J.B., 573 Ramaswamy, V., 487 Sanchez, D., 666 Ranganathan, R., 175 Sarel, D., 455 Rao, A.R., 175 Sasser, W.E., 550 Rao, C.P., 396, 729 Sasser, W.E., Jr., 550 Rapp, S., 729 Schaninger, C.M., 174 Rasmusson, E., 692 Schmid, F., 552 Rayport, J.F., 41, 497 Schneider, G., 344, 793 Read, B.B., 175 Schuman, D.W., 604 Rebello, K., 89 Seidel, W., 550 Reed, D., 691 Seitz, S.R., 324 Reed, J., 752, 754, 759 Sellers, P., 551 Reich, R., 99 Semenik, R.J., 42 Reichheld, F.F., 550, 729 Semenov, Y., 796 Reinartz, W.J., 691 Shaprio, B.P., 134 Rice, G., 237 Sharma, A., 397, 550, 693 Richards, B., 578 Sharma, S., 89 Richter, B., 157 Sharp, B.M., 339 Rieck, D., 645 Shaw, E.H., 396 Ritchie, K., 175 Shea, I., 289 Rivkin, S., 646 Sheard, P., 448 Roberts, C.J., 339 Sheth, J.N., 40, 396, 549 Roberts, K., 61, 71 Shostack, G.L., 396 Robertson, T.F., 395 Shugan, S.M., 89 Robertson, T.S., 160 Shultz, G., 709 Robinson, D., 732 Siguaw, J.A., 90 Robinson, P., 237, 727 Silver, S., 417 Robinson, P.J., 691 Silverman, G., 603 Robinson, W.T., 395 Simon, H.A., 55 Rodgers, W.H., III, 89 Simons, J., 134 Rodgers, Z., 182 Simpson, P.M., 90 Rogers, E.M., 161 Singh, R., 126 855 Name Index

Singhal, V., 395 Taylor, S., 800 Sisodia, R.S., 40, 396, 549 Taylor, S.A., 396 Slater, S.F., 42 Tedeschi, B., 719 Slywotsky, A.J., 134 Teece, D.J., 89 Smith, S.C., 396 Teresko, J., 267 Smith, S.D., 496 Thomas, J.S., 646 Smith, W., 411 Thomas, M.J., 540 Soberman, D., 95 Thomaselli, R., 733, 734 Solomon, M., 174 Thomke, S., 421 Song, X.M., 449 Thompson, M.J., 586 Sonnack, M., 448 Thompson, S., 410 Sparkes, J.R., 274 Toyoda, E., 743 Spears, B., 288t, 411 Trout, J., 339, 646 Springer, R., 41, 728 Tsiros, M., 174, 605 Srinivasan, S.S., 487 Tuleja, T., 666 Stafford, S., 280 Twain, M., 413, 701 Stalk, G. Jr., 449 Tynan, N., 280 Standing, M., 550 Stapinski, H., 603 Steenkamp, J.E.M., 175, 605 U Steere, J., 175 Ulrich, D., 670 Stepanek, M., 479 Stephen, T., 728 Stern, D., 733 V Stewart-Allen, A.L., 603 Vakratsas, D., 603, 606 Stojakovic, P., 733 Van de Ven, A.H., 134 Stoughton, S., 148 Varadarajan, P.R., 339, 340, 449 Stout, H., 646 Vasilash, G.S., 338 Strafford, J., 692 Vavra, B., 338 Strauss, B., 550 Vernon, R., 363 Streisand, B., 175 Vesey, J.T., 395 Strong, K.C., 396 von Hippel, E., 421 Strong, R.A., 339 Vranica, S., 646 Stroud, D., 218 Succi, G.J., 237 Sudharshan, D., 134, 338 W Sudman, S., 41, 237 Sviokla, J.J., 41 Walgreen, C.R. Sr., 15 Swan, K.S., 496 Waterman, R.H., 60, 416 Swan, P., 633 Waterman, Robert H. Jr., 60, 416 Sweat, J., 691 Watkins, T., 396 Sweeney, J., 41 Watson, T.J., 654 Sweet, J., 740 Webster, F.E., 175, 691 Webster, F.E. Jr., 495 Wedel, M., 175 T Weill, S., 759 Weissman, R., 208 Tack, A., 692 Weitz, B.A., 691, 693 Tan, K.-H., 550 Wells, W.D., 237 Tannenbaum, P.H., 237 West, S., 604 Tanouye, E., 134 Whai, Q.H., 124 Tanzer, A., 339 Wheeler, D.R., 133 Taylor, A. III, 89 Wheelwright, S.C., 256, 266 Taylor, J.R., 237 Whinston, A.B., 182 Taylor, M.B., 339 White, G., 134 856 Name Index

Whittle, S., 691 Y Williams, B., 735 Williams, R.R., 550 Yoshioka, H., 752 Wind, Y., 175, 495, 691 Young, C., 31 Winkler, J., 605 Yuspeh, S. Winter, L.G., 133 Winter, S., 89 Wintermeyer, P., 550 Z Woo, C.Y., 396 Zachary, G.P., 89 Woods, T., 574, 734 Zeithaml, V., 396 Workman, J.P., 40 Zemke, R., 550 Workman, J.P. Jr., 448, 450 Zhan, S., 646 Wriston, W.B., 728 Ziegler, J.A., 496 Wu, H.-J., 550 Wyner, G.A., Zinkhan, G.M., 40 449, 495 Zou, S., 396 857

Subject Index2

–– expense analysis, 81 A –– fnancial analysis, 81, 82 –– market share analysis, 81 ABC analysis, 185, 222, 820 –– micro-analysis, 80 Account planning, 254, 658, 662, 663, 672, 673, –– relationship analysis, 82 686, 687 –– for research results, 205 Accuracy, of research fndings, 215 –– sales analysis, 79, 80 Achievers, 159, 173, 819 –– SWOT, 66–68 Acquisitions See Mergers and acquisitions –– variance analysis, 185 Adaptation, of products Ansoff Matrix, 351–353, 359, 391, 392, 394, 825 Additive opportunity, product strategy and, 351 Arbitrage, preventing, 73, 74 Advertising ASEAN, 107, 224 –– by cell phone, 181, 734 Asian American market, 151, 152 –– consumer, 564, 566t Attitudes, promotional messages and, 571 –– corporate, 560 Audits –– industrial (business-to-business), 564, 566t –– marketing, 62–65 –– on Internet, 597, 598 –– product, 346, 347, 391 –– objectives of, 591566 –– retail, 195, 198, 199, 219, 220, 439, 845, 847 Advertising plan Augmented product, 345, 346, 393, 824, 835 –– advertising effectiveness and, 592, 594 Automated translation, of websites, 157 –– agency selection and, 595–597, 596t Automobile industry –– budget decisions and, 591, 592 –– collaboration in, 353 –– coupon response and, 594 –– forecasting and, 247 The Affuent Society (Galbraith), 55 –– mergers and acquisitions in, 62 Agents, 10, 12, 240, 300, 308, 476, 504, 506, 507, –– product development in, 189 519, 520, 544, 564, 624, 679, 706, 718, 726, Auto-Regressive Moving Average (ARMA) 784, 811, 835 techniques, 264 Age of consumer, decision making and, 139 Awareness, promotional messages and, 576, 577 AIDA model, 571, 572, 835 Airline industry, yield management in, 73 Alliances, 74, 85, 353, 371, 378, 491, 708, 711, 756, 760, 762, 835 B Allowances, 79, 482, 492, 658 Baby boomers, Generation Y versus, 285–289, Alternatives, evaluation of, in consumer 288t, 289t decision-making process, 142–144 Backward integration, 512, 548, 830, 835 Analytic techniques Bandwagon effect, 255, 279, 355, 822 –– ABC analysis, 185 Bayes’ Theorem, 258 –– break-even point, for new product idea Before-and-after experimental research, 205 screening, 430, 431 Believers, 159, 173, 753, 819

2 Note: Page numbers in italics identify an illustration. An italic n next to a page number (e.g., 177n) indicates information that appears in a footnote or endnote. An italic t next to a page num- ber (e.g., 177t) identifes information that appears in a table 858 Subject Index

Beneft segmentation, 301, 302t, 835 Capacity confguration, competition and, 120 Bias, in research fndings, 215 Capital goods, 16, 165, 169, 173, 367, 439, 468, Billboards, 568, 581, 585, 599, 601, 733, 743, 492, 564, 571, 588, 658, 684, 819 763, 766 Cash-and-carry wholesalers, 520 Biotechnology, 105 Cash cows, 371–373, 375, 376, 391, 395, Blueprinting, 385 418, 826 Boston Consulting Group Matrix Cash discounts, 482, 509, 548, 829 –– cautions regarding use of, 374 Cash fow, product life cycle and, 368, 369 –– criticisms of, 373 Cash refunds, 626, 630, 631, 645, 833 Bottom-up planning, 52, 53, 86, 815 Catalogs, 763 Brand equity, 49, 170–174, 328, 334, 563, 758, Category management, 520 759, 835 Category pricing, 478, 480, 835 Branding Causal research, 202, 203, 219, 835 –– brand extension and, 328, 329 Cell phone advertising, 181, 734 –– branding policies and, 328 Cell phone surveys, 179–181 –– brand monopoly and, 327 Channel integration, 512, 547 –– cannibalization and, 330 Channel management –– co-branding and, 330–332 –– membership and, 510–511 –– company name, 328, 334, 338, 824 –– monitoring channels and, 511–514 –– family, 328, 334, 338, 824 –– motivation and, 511 –– generic brands and, 332, 333 Channels See Distribution channels Channel –– individual, 328, 334, 338, 824 strategy –– multibranding and, 329 Chinese American market, 152 –– multibrand promotions and, 633 Cigarette industry, gray marketing in, 513 –– private brands and, 332, 333 Cluster analysis, 214, 299, 300, 302, 311, 836 Brand monopoly, 327 Coaches, industrial sales and, 667 –– price and, 327 Co-branding, 330–332, 334, 759 Brand share, falling, price and, 195, 486 Cognitive dissonance, 144, 145, 576, 836 Brand-switching model of Markov, 251, 277 Collaboration, 24, 45, 119, 326, 353, 355, 394, Break-even point analysis, for new product idea 495, 512, 514, 528, 535, 538, 546, 675, 697, screening, 430, 431 704, 711, 713, 717, 771, 780, 803, 811, 825, Breakthrough opportunity, product strategy 828, 835, 836 and, 351, 559 Commercial information providers, as data Budget pricing, 478 sources, 189, 219 Budgets Communications decisions, 537, 538 –– advertising, 591, 592 Communications strategy, 717–719 –– forecasts into, 246 Compact Disk/Read-Only Memory (CD-ROM) –– forecasts versus, 242 technology, 189, 191 –– high and low, 246 Company name branding, 328, 334, 338, –– in promotional mix, 587 784, 824 Buffer stock, 527, 537, 548, 830 Compensation, of sales personnel, 682 Bundling Competition –– of products, 482, 492 –– competitive response and, 120, 121 –– of services, 485 –– competitive strategies and, 121, 122 Business-to-business advertising, 564, 617 –– competitive structure and, 118–120 Buyers See Consumer entries –– industry and, 117, 118 Buying decisions, promotional messages and, –– leaders and followers and, 122–132 571 –– price and, 119, 125, 311, 327, 355, 356, 462, Bypass attacks, 125, 127, 835 465, 468, 485, 486, 488, 492, 493, 495, 510, 561, 828 –– in promotional mix, 588 C Competitive environment, changes in, 707 Competitive gap, 406, 412–415, 443, 836 Call targets, 663 Competitive pricing, 65, 71, 165, 456, 457, 476, Cannibalization, 330, 331 477, 491, 492, 495, 829 859 Subject Index

Competitive strategies, 97, 117, 121, 122, 129 –– of inventory, 244, 536 Complaints, 17, 82, 115, 118, 184, 187, 188, 201, –– of sales personnel, 659, 684 390, 540–543, 546, 547, 549, 576, 589, 611, Core product, 53, 345–347, 379, 391, 393, 419, 630, 808, 830 824, 836 Complementary opportunity, product strategy Core services, 333, 837 and, 352 Corporate advertising, 560, 837 Complementary promotions, 611, 612, 836 Corporate chain stores, 516 Components, 8, 9, 11, 24, 27, 34, 50, 54, 69, 73, Corporate leadership, 710 83, 140, 164, 165, 205, 259, 260, 266, 267, Corporate location, 707, 709, 710 271, 279, 345, 350, 361, 365, 378, 379, 384, Corporate mission, 56–59, 61, 83, 84, 87, 352, 391, 425, 442, 446, 469, 523, 536, 540, 545, 747, 816, 837 560, 613, 623, 670, 702, 709, 715, 763, 779, Corporate objectives, 54–56, 83–86, 846 782, 822, 837, 841 Corporate plan Concentration strategy, 63t –– mission and, 56–59 Concept testing, 46, 428, 430, 432–435, 437, –– objectives and, 54, 55 443, 845 –– vision and, 59, 60 Conglomerate diversifcation, 353, 836 –– marketing myopia and, 61, 62 Conjunctive decision rule, 143, 836 –– non-proft organization objectives and, 56 Consistency, service promotion and, 589 Corporate restructuring, 707, 708 Consumer advertising, 80, 564, 565, 566t, 836 Corporate strategy, 31, 32, 37, 49, 59, 116, 117, Consumer behavior 357, 423, 507, 531, 548, 829 –– decision-making process and, 140, 141 Corporate vision, 59, 60, 83, 84, 837 –– evaluation of alternatives and, 142–144 Cost-beneft relationship, 183, 837 –– information search and, 142 Costing, marginal, for new product idea –– postpurchase, 144, 145 screening, 431, 432 –– problem/need recognition and, 141 Cost-plus pricing, 474–476, 491, 492 –– purchase decision and, 144 Costs –– segmentation on basis of, 144 –– interrelated, 465 Consumer behaviorists, 11, 12, 836 –– marginal, 430–432, 591, 658, 843, 848 Consumer Confdence Index, 268 –– opportunity, 475 Consumer decision making diffusion and –– overhead, 118, 432, 475, 656, 844 –– lifestyle and, 146–148 –– sunk, 475 –– process of, 161 –– of test marketing, 438 Consumer goods, 13, 16–18, 24, 119, 120, 141, –– of transportation, 530, 532–534 165, 221, 244, 367, 378, 379, 470, 473, 504, –– variable, 431, 432, 476, 632, 716t, 848 505, 510, 538, 564, 565, 571, 667, 687 Counter-segmentation, 323, 837 Consumer markets, industrial markets versus, 17 Country segmentation, 302, 304, 337, 823 Consumers Coupons, 38, 105, 367, 390, 454, 487, 493, 587, –– age and life cycle infuences on, 146–149 594, 600, 612, 628t, 627–630, 634, 645, 833 –– cultural infuences on, 151–155 –– determining response to, 594 –– diffusion of innovation and, 160–162 Coverage, 192, 193, 211, 222, 321, 323, 353, 367, –– economic infuences on, 146 439, 578–581, 584, 590, 592, 598, 602, 623, –– factors infuencing, 145 644, 655, 740, 820, 831, 832, 835 –– geographic infuences on, 149, 150 Credit, 119, 129, 148, 157, 165, 168, 189, 297, –– lifestyle of, 158–160 307, 324, 332, 386, 482, 487, 509, 515, 518, –– peer infuences on, 155–158 614–617, 626t, 631, 665, 675, 702, 752, –– psychological infuences on, 162–164 758, 787 –– social class of, 150, 151 Cross-segment marketing, 321, 322 –– values of, 158–160 Cuban American market, 152 –– See also Customer entries Culture Consumption profle, segmentation by, 301, 302 –– consumer decision making and, 161, 162 Consumption system, 143, 161, 836 –– ethical perceptions and, 684, 685 Content analysis, 114, 836 –– as external environmental factor, 97, 98 Contests, 628t, 627, 631, 742 –– sales team management and, 677–680, 680t Control Cumulative totals, forecasting and, 262 860 Subject Index

Customer-consumer orientation, 138, 139, 837 Decline stage of product life cycle, 410 Customer focus, 6, 8, 12, 508, 651, 837 Decoding, 558, 559, 598, 838 Customer franchise, 61, 170–174, 820, 837 Defning Advertising Goals for Measuring Customer group pricing, 479, 480, 495, 829, 837 Advertising Results (DAGMAR) model, Customer relationship management (CRM), 571, 572 100, 101, 609, 611, 612, 651–653 Delphi technique, 116, 255, 275, 277 Customer(s) Demand and supply –– information technology and, 105 –– customer factors affecting, 466–468 –– in market, 182, 748 –– derived demand and, 166, 171, 838 –– as new product idea source, 421, 443, –– estimation of demand curve and price 447, 826 elasticity and, 461, 462, 462t –– price and, 31, 489, 683 –– forecasting demand and (See Forecasting; –– satisfaction, 6, 55, 61, 82, 88, 187, 347, 523, Forecasts) 542–544, 547–549, 627, 670, 719, 720, 741, –– joint demand and, 166, 841 817, 830 –– market factors affecting, 468–470 –– See also Consumer entries defning –– organization-controlled factors affecting, Customer service 462–466 –– complaints and, 541, 542 –– price elasticity of demand and, 460, 461 –– customer satisfaction and, 542–544 Department stores, 332, 505, 512, 515, 516, 518, –– managing service attitudes for, 544, 545 520, 542, 614, 761 –– organizing for, 544–549 Derived demand, 166, 171, 838 –– service levels and, 540, 541 Derived forecasts, 249, 251, 838 –– type of, 514–516, 548, 830 Descriptive research, 201, 202, 219, 838 Customized marketing, 242, 320, 321, 615 Detailed plans, 75–88, 785, 838 Custom research, 195, 198, 199, 219 Dialogue, 7, 8, 35, 103, 194, 208, 218, 503, 518, Cycles, forecasting, 260, 261 519, 557–560, 598, 653, 717, 719, 838 Diffusion, consumer decision making and, 161 Digital age, 102, 103, 838 D Direct mail –– advantages and disadvantages oft, DAGMAR model, 571, 572 617–619, 618t Data –– letters used for, 620, 621 –– collection of, 209–213 –– offers for, 619, 620 –– manipulation of, for precision marketing, –– structuring campaigns using, 619–622 615, 616 –– timing of, 621, 622 –– primary, 188, 193, 209, 210, 218, 219, 221 Direct marketing –– secondary, 188–190 –– direct mail for, 616, 617 –– soft, 187, 847 –– door-to-door, 623 –– verbal, 185–187, 848 –– Internet-based, 622, 623 Databases –– precision marketing as, 616 –– online, 190 –– publications for, 623 –– retailing and, 517 Direct Marketing List Source, 595 Data services, for marketing research, 191 Directories, as data sources, 189, 219 Decision makers, 17, 47, 48, 110, 111, 120, 158, Directory of Mailing List Sources, 595 166, 167, 171, 286, 617, 664–668, 690, 784, Discount retail outlets, 515 834, 837, 838, 840, 841 Discounts –– multiple, 24, 36, 39, 814 –– cash, 482, 509 Decision making –– to channel members, 481 –– consumer decision-making process and, –– promotional, 482, 509 140, 141 –– quantity, 481, 507, 508 –– distribution channels and, 506, 507 –– seasonal, 482 –– industrial sales and, 665 –– trade, 481, 507 –– organizational purchasing and, 166 Dissatisfers, 162, 163, 838 –– promotional messages and, 440, 611 Distribution Decision trees, 257, 258, 275, 279, 822, 837 –– exclusive, 510, 511 861 Subject Index

–– gap, 406, 409–411, 443, 446, 826, 838 468, 472, 473, 473t, 485, 495, 516, 522, 526, –– intensive, 510, 511 713, 829, 838 –– management, 523, 524 80/20 rule, 65, 76, 169, 185, 296, 377, 410, 489 –– of new products, 438 Elastic demand, 460–462, 462t –– in promotional mix, 588 Elasticity of demand, 460–462, 462t –– selective, 510, 511 –– estimation of, 461, 462, 462t –– of services, 536 Electronic data interchange (EDI), 102, 130, –– strategy, future of, 716–717 142, 143, 523, 528, 546, 675, 817, 839 Distribution channels Electronic information services, 190–192, 219 –– channel decisions and, 506–507 Electronic mail –– compensation and, 507–509 –– e-mail marketing and, 623, 624 –– competition and, 760 –– marketing research and, 623, 624 –– levels of, 504–506 Electronic point-of-sale (EPOS) systems, 516, –– management of, 509–510 614, 616, 619, 839 –– members of, 504–506 Employees –– price and, 299, 440 –– marketing executives, 30 –– for producers, 467 –– new products and, 424 –– for services, 390 –– sales (See Sales force; Sales professionals; –– See also Channel entries Sales team management) Distributors, 27, 48, 63t, 110, 119, 142, 165, –– service promotion and, 589 190, 243, 244, 298, 402, 409, 410, 467, 468, –– services and, 389, 389t 493, 502, 508, 511, 513, 519, 520, 528, 531, Encirclement attacks, 125, 126, 839 547, 624, 625, 635, 640, 644, 688, 700, 709, Encoding, 558–559, 598, 599, 839 711, 784, 785, 833, 838, 843, 848 End users, intermediaries versus, 19 Diversifcation Enterprise marketing optimization (EMO), 702 –– conglomerate, 353, 836 Envelope curve extrapolation, 256, 257 –– as product strategy, 347 Environmental analysis Diversifcation strategy, 352 –– Delphi studies for, 115–116 Divestiture strategy, 63t –– environmental scanning for, 114–115 Dogs, 33, 79, 341, 343, 371–373, 376, 391, 395, –– scenario building for, 116–117 428, 517, 629, 683, 826 Environmental changes Domestic markets, international markets versus, 20 –– competitive, 707–711 Dominican American market, 152 –– fnancial, 703 “Do-not-call” registry, 609–611, 624 –– regulatory, 704 Door-to-door delivery, direct marketing using, 623 –– societal, 704–707 Door-to-door selling, 518 –– technological, 699–703 Durable consumer goods, 16 Environmental forecasts, 249 Environmental scanning, 113–115, 128, 131, 818 Environmental Superfund, 704 E Equilibrium price, 458, 459, 492, 839 Errors of commission, 200, 839 E-commerce Ethics –– distribution and, 411, 547 –– cultural infuences on perceptions of, 684, 685 –– forecasting and, 239–241 –– industrial buying and, 167 Econometric models, 247, 265–267, 276 –– in promotional mix, 589 Economic buyers, 666, 667, 838 –– segmentation and, 323–325 Economic buying infuence, 166, 174, 819 EUROPA, 157, 158 Economic environment, 106–108, 113, 738 Excess capacity, 374, 486, 495, 629, 829 –– price and, 106, 108, 738 Exchange rates Economic factors, consumer decision making –– price and, 108, 469, 848 and, 146 –– target, 471 Economic integration, 106, 107, 119, 513, 838 Exclusive distribution, 510, 511, 839 Economic order quantity (EOQ), 527, 536 Expense analysis, 81, 84 Economies of scale, 63, 103, 104, 107, 118, 120, Experiences, 12, 25, 28, 53, 57, 59, 72, 104, 115, 122, 128, 129, 323, 370, 371, 373–375, 391, 120, 127, 129, 140, 148, 154, 164, 169, 171, 862 Subject Index

179, 184, 185, 188, 204, 207, 208, 218, 254, Focus, 6, 8, 9, 12, 18, 21, 22, 35, 47, 58, 62, 63t, 273t, 274, 278, 326, 350, 353, 356, 361, 364, 71, 75, 80, 99, 100, 111, 113, 115, 120–122, 373, 374, 390, 417, 422, 430, 434, 465, 508, 132, 138, 139, 147, 152, 158, 163, 170, 171, 529, 534, 572, 589, 595, 600, 615, 616, 618, 190, 199, 208, 210, 214–217, 241, 290, 291, 633, 658, 659, 720, 722, 724, 744, 746, 753, 307, 328, 352, 364, 374, 410, 412, 414, 416, 754, 759, 784, 809, 810 430, 437, 490, 494, 508, 512, 514, 516, 519, Expert opinion, forecasting and, 258 542, 577, 643, 653, 671t, 682t, 688, 699, 709, Expert panel method, 254–256, 275 710, 713, 714, 734, 750, 754, 759, 761, 763, Explanatory models, for forecasting, 259, 260 764, 787, 799, 808, 818, 837, 840 Exploratory research, 201–203, 219, 839 Focus groups, 80, 158, 203, 204, 206–208, 219, Exponential smoothing, 262, 263, 276, 277 223, 309, 310, 409, 558, 821 Extended families, 156, 250 –– online, 206, 207 Extension, of product life cycle, 358 Follower products, 79 External environment Followers, competition and, 122, 125 –– analysis of, 113 (See Environmental analysis Forecasting competition and. See Competition) –– alternatives to, 271, 272 –– economic, 106–108 –– in e-commerce market, 239–241 –– legal, 108–113 –– qualitative methods for, 254–259 –– political, 108–113 –– quantitative methods for, 259–269 –– sociocultural, 98–101 –– sales trend, 260 –– technological, 101–106 (See Also Information –– spreadsheets for, 269–271 technology; Internet) –– technological, 253, 256, 257 Forecasts –– into budgets, 246 –– budgets versus, 242 F –– derived, 249 Facility decisions, 535 –– environmental, 249 Factor analysis, 214, 299, 300, 302, 311, 836 –– factors limiting, 272–274, 272t, 273t –– segmentation and, 302 –– high and low, 246 Fads, product life cycle and, 359 –– long-term, 244, 245 Family branding, 328, 334, 338, 824 –– macro-and macroforecasts, 246–249 Family, consumer decision making and, 141 –– of market, 250, 251 Fashion, product life cycle and, 359 –– medium-term, 244 Feature modifcation, of products, 403, 419, 443 –– national, 249, 250 Financial analysis, 81, 82, 84, 428, 430, 784 –– product, 251, 251t, 252, 252t –– for new product idea screening, 428 –– by product type, 252 Financial environment, changes in, 703 –– rolling, 245 Financial performance, new –– sales, 260 products and, 424 –– salesforce, 243, 246, 254, 279 Financial services, online, 109, 123, 507, 673, –– short-term, 243, 244 754, 758 –– world, 249, 250 Financing, for services, 390 Foreign concern, 163, 840 Firms Foreign Corrupt Act, 167 –– multinational corporations, 107, 811, 843 For-proft organizations, non-proft organiza- –– Original Equipment Manufacturers tions versus, 10 (OEMs), 298 Forward integration, 119, 512, 840 –– relations between, 13, 24, 165, 170 4Ps, 713, 721 –– size of, 20 –– See also Place; Price; Products: Promotion –– See also Corporate entries; Industrial entries; Franchises Organizational purchasing; Producers; Free gifts, 293, 612, 626t, 627, 631, 632, 635 Service organizations Free goods, 626t, 628, 645, 833 Fishbone effect, 247, 260, 840 Free on board (FOB) pricing, 470, 495, 828, 840 Flank attacks, 125, 126, 840 Frontal attacks, 125, 126, 840 Flexibility, as alternative to forecasting, 271 Full coverage, 322, 323 863 Subject Index

G Horizontal integration, 63t Hypermarkets, 518 Game theory, 268, 276, 488 Gap analysis –– competitive gap and, 412–415 –– distribution gap and, 409–411 I –– focus and, 409, 416 Ideal brand, segmentation and, 310 –– market gap and, 415 Image modifcation, of products, 419, 443 –– product gap and, 412 Imitation, innovative, 422–423, 443 –– usage gap and, 407–409 In-depth interviews, as research method, 203, Generation X, 158, 285, 286, 568, 575, 741, 204, 219 744, 840 Individual branding, 328, 334 Generation Y, baby boomers versus, 285–289 Individual pricing, 482 Generic brands, 332–334, 840 Individuals, forecasting by, 243, 247, 250, 252, Geographical pricing, 470, 495, 828 254, 258, 275 Geographical sales territories, 655 Industrial advertising, 564–565, 840 Geography, consumer decision making and, 149 Industrial markets, consumer markets versus, 17 Global factors, 25, 26 Industrial products, 165, 379, 565, 656, 668 Globalization –– See also Organizational purchasing –– facility decisions and, 535 Industrial sales –– international product cycle and, 361 –– buying situations and, 664–665 –– market development and, 358 –– decision makers and infuences and, 665–668 –– segmentation across national boundaries and, –– project management and, 668, 669 302–305, 303t, 304t –– proposals and, 669 –– supply chain management and, 523–526 Industry –– technological advances and, 723 –– competition and, 20, 117–121 –– See also International entries ethics and –– sales territories based on, 653, 660, 685 Goals-down-plans-up planning, 52 –– See also Specifc industries Goals, superordinate, 60 Industry sector specifcity, 20 Goods Inelastic demand, 460, 494, 828 –– capital, 16, 165, 169, 367, 439, 468, 492, 538, Infuences, 6, 9, 25–27, 31, 69, 97, 102, 108, 111, 564, 571, 588, 658, 684, 819 120, 127, 137, 139–141, 145–164, 166, 167, –– consumer, 16–18, 24, 119, 120, 141, 165, 221, 171, 204, 208, 253, 270, 273, 285, 294, 325, 244, 367, 378, 379, 470, 473, 504, 505, 510, 326, 347, 374, 385, 390, 418, 437, 462, 484, 538, 564, 565, 571, 667, 687 507, 513, 519, 531, 557, 566t, 575, 598, 600, –– services versus, 16 617, 621, 625, 639, 640, 666, 684, 685, 687, Government regulation See Regulation Gray 698, 703, 704, 711, 715, 770–772, 774, 789, marketing 790, 804, 819, 841 Growth stage of product life cycle, 588 Information Guarantees, 3, 4, 187, 211, 213, 333, 350, –– hard, 187, 840 480, 652 –– power of, 621 Guerrilla warfare, 125, 127, 840 –– See also Data; Marketing research Information foat, 98, 99, 841 Information search, in consumer decision-­ H making process, 140–141, 161 Hard-core loyals, 169 Information technology Hard information, 187, 840 –– customer and, 105 Heavy users, 169, 302 –– impact on marketers, 102–103 Hierarchy of needs, 162, 163, 840 –– internal effects of, 104 Hispanic American market, 152, 194 –– retail structure changes related to, 516 Historical pricing, 476, 491 –– upstream relationships and, 103–104 The History of Advertising, 11 –– See also Internet; Online entries Hockey stick effect, 272, 274, 840 Initial Public Offerings (IPOs), 154, 170, 171, 835 864 Subject Index

Innovation strategy, 422 J Insurance, as alternative to forecasting, 271 Intangibility, of services, 382, 384, 387, 390, 391 Joint demand, 166, 841 Intelligence, 11, 31, 32, 53, 115, 148, 160f, Joint ventures, 63t, 199, 586, 708, 709 182, 184, 218, 402, 613, 652f, 689, 717, 798, Junk mail, 618–620 841, 842 Just-In-Time (JIT) approach, 99, 523, 536, Intensive distribution, 510, 511, 841 546, 841 Interest groups, 108, 111, 112, 127, 130, 189 Interest, promotional messages and, 556, 559 Intermediaries K –– end users versus, 19 Kondratieff Cycle, 249, 261 –– wholesale, 505f, 520, 521 Korean American market, 152 Internal resources, 21–24, 26, 54 International Data Base (IDB), 114 International markets L –– domestic markets versus, 20, 38 Large frms, small frms versus, 20 –– See also Globalization Leaders, competition and, 122–127 International product life cycle Leadership International trade restriction, 490, 704 –– corporate, 710–711 –– price and, 489, 491, 704 –– of sales personnel, 681, 686 Internet Leading indicators, 247, 268, 276, 841 –– automated translation of websites and, 157 Leased departments, 520 –– channel management and, 510, 513, 514 Legal environment, 108–113 –– direct marketing using, 613, 622–624, Lexicographic decision strategy, 143, 841 632–633, 637, 641 Libraries, as data sources, 189 –– forecasting and, 243, 248, 259, 267, 276, 632 Life cycle –– gray marketing and, 513 –– of consumer, consumer decision making and, –– impact on marketing, 96, 138, 713 140, 841 –– multilingual websites and, 157, 158 –– of products (See Product life cycle) –– online fnancial services and, 12, 123, 622, 754 Life span, of products, 366–368 –– online pharmacies and, 15 Lifestyle classifcation, 158, 159, 841 –– product development and, 267, 352, 401, Lifestyle segmentation, 158 402, 404 Light users, 169 –– rewarding loyalty on, 632 Line rationalization, 377, 391, 841 –– segmentation and, 308–309 Line stretching, 377, 391, 841 –– short-term forecasting and, 243 Liquidation strategy –– virtual gifts on, 632 –– corporate, 63t –– See also E-commerce; Online entries –– retailing and, 240 advertising on Logistics Interorganizational relations –– communications and, 27, 102 –– account planning and, 672–673 –– environment and, 102 –– relationship marketing and, 670–672 –– See also Supply chain management Interviews Long-term forecasts, 243–245, 275, 277, 278 –– as data collection method, 207, 209, 210 Loss-leader pricing, 477, 626, 631 –– in-depth, 203, 204, 219 Loyalty Introduction stage of product life cycle, –– patterns of loyalty behavior and, 169 462–463 –– rewarding on Internet, 170 Inventory, as strategic tool, 537 Inventory control, 536–537 Inventory decisions, 536–537 M IPOs. See Initial Public Offerings (IPOs) ISO certifcation, 522 Macroforecasts, 246–249, 253, 275, 407 ISO- standards, 522 Magazines, advertising in, 592, 597 865 Subject Index

Mail, as data collection method, 207, 209 –– corporate plan and, 49, 51f, 54–62 Make or buy decision, 533 –– inadequate, reasons for, 76 Makers, 60, 255, 539 –– marketing audit and, 62–69 Marginal analysis, 591, 658–659, 842 –– marketing objectives and, 55, 64, 70–71, 79, 83 Marginal costing, for new product idea –– marketing strategies and, 54, 60, 71–75, screening, 431–432 78, 83 Marginal costs, 430–432, 843, 848 –– performance analysis and, 79–82 Market-based pricing, 477–478, 491 –– in pharmaceutical industry, 45–49 Market demand See Demand and supply; –– process of, 31, 32, 45, 50–55, 62, 64, 65, 70, Forecasting; Forecasts Market development 76, 83 strategy –– progress measurement and, 79 Market forecasts, 240, 250, 251 –– See also Marketing plan Market gap, 405, 415 Marketing research Market growth rate, 370–373, 391 –– on advertising effectiveness, 199, 205, 217 Market Information System (MIS) –– analyzing results of, 213–214 –– panel, 219 –– benefts of, 182–183, 218 –– primary, 218, 219 –– causal, 202–203, 219 –– qualitative, 219 –– custom, 195, 198–199 –– quantitative, 187, 219 –– data collection for, 180, 184, 192, 193, 198, –– reporting fndings of, 185–187, 218, 219 201, 207, 209, 210, 218, 219 –– secondary data and, 218, 219 –– defning objectives for, 199–201, 219 –– for segmentation, 74 –– descriptive, 200–203, 219 –– syndicated, 219 –– determining approach for, 203–209, 219 –– use of, 185–187, 219 –– determining level of, 200–203 Marketing –– electronic information services and, 190–192 –– complexity of, 24–26 –– exploratory, 200–203, 219 –– defnitions of, 8–10, 35 –– inadequate, risks of, 183 –– history of, 10–14 Marketing strategies, 54, 60, 71–75, 78, 83, 112, –– overview of, 3–40, 557 115, 148, 221, 352, 371, 379, 428, 429, 799 –– selling versus, 28–31 –– product life cycle and, 63t, 71 Marketing audit Marketing system, 13, 64, 65, 83, 512, 566t, –– analytical techniques for, 65 616, 843 –– assumptions in, 69, 77, 83, 84 Marketing theory –– SWOT analysis for, 66–69, 77, 83, 84 –– domestic versus international markets and, Marketing executives, 29, 30, 278, 324, 575, 613 19, 20 Marketing management, future challenges for, –– frm size and, 20 24, 697–727 –– goods versus services and, 16 Marketing mix, 26–28, 36, 54, 64, 67, 345, 367, –– industry sector specifcity and, 20 391, 440, 441, 458, 477, 478, 481, 491, 502, –– intermediaries versus end users and, 19 559–560, 564, 637, 714, 721–723, 725, 726, –– market types and, 21 743, 747, 842 –– product categories and, 16 Marketing myopia, 22, 32, 61–62, 69, 82, 182, –– proft versus non-proft organizations and, 292, 404, 528, 745–750, 842 17–19 Marketing objectives, 23, 55, 64, 70–71, 79, 83, Market leadership targeting, 486 415, 493, 587, 842 Market orientation, 31, 32, 842 Marketing plan –– product orientation versus, 32 –– contingency plans and, 77, 745, 817 Market penetration, 183, 217, 302, 347–349, –– detailed, 64, 76 390, 658, 785 –– structure of, 11, 14–21 –– strategy, 347–349 Marketing planning Markets –– approaches to, 50, 52, 53, 64, 78, 79, 81 –– capacity confguration of, 120 –– benefts of, 47, 49, 63t, 71–73, 81 –– channels and, 291–292 –– budgets and, 47, 48, 77–79 –– consumer versus industrial, 17 866 Subject Index

–– customers in, 290–293 Needs hierarchy, 162, 163, 840 –– defnition of, 292 Negotiation, of price, 483–484 –– entry into, timing of, 305, 316–317, 320 Net proft, 81, 430, 432, 456, 596t, 753, 843 –– penetration and, 295, 302 Network marketing, 624–625, 833, 843 –– segments of, 290, 296–312 (See Also New products, 3, 29, 45–47, 71, 82, 109, 115, Segmentation Market share) 121, 161, 162f, 163, 189, 251, 265, 266, 274t, –– See also Specifc markets boundaries of 305, 315, 330, 348–351, 354, 355, 358, 362, Market share analysis, 81, 84 363, 366, 367, 391, 401–446, 456, 470, 471, Market space, 14, 453, 700, 701, 723, 842 542, 574, 591, 620, 631, 633, 634, 670, 714, Markov model, 251 715, 745 Mass marketing, 34, 322–323 –– development of (See Product development Materials management, 523, 524 pricing) Materials supply, new products and, 423, 425, 443 Newsletters, as data sources, 189, 219, 639 Mathematical forecasting techniques, 260–262 Newspapers, advertising in, 581, 592, 594, 596, Maturity stage of product life cycle, 354, 759, 763, 766 356, 360 New task buying, 665, 843 Media selection New York City apartment prices, 462, 706 –– coverage and, 578–580 Niche marketing, 34, 118, 125, 277, 307, 320, –– frequency and, 580–581 374, 465 –– media types and characteristics and, 581–587 Nondurable consumer goods, 16, 354 Medium-term forecasts, 244 Nonprice promotions, 631–633 Mercosur, 107 Non-proft organizations Mergers and acquisitions, 62, 353, 424, 707 –– markets for, 18, 21, 35, 81, 291, 573 –– in automobile industry, 62 –– objectives for, 56 Mexican American market, 107, 152, 250, 534 –– prices and, 458 Micro-analysis, 80, 843 –– for-proft organizations versus, 35 Minor brands, pricing, 485, 486 –– promotion in, 590 MIS See Market Information System Normal distribution, 211, 212f Mission, corporate, 56–59, 61, 83, 352, 747, 837 North American Free Trade Agreement MNC See Multinational corporations (NAFTA), 107, 768, 777 Models Not Invented Here (NIH) syndrome, 421, 843 –– econometric, 247, 265–267, 276 Nuclear families, 156 –– forecasting and, 242, 265, 276 –– See also Specifc models Modifed rebuy, 665, 843 O Money off next purchase, 627, 631 Objectives Motivation, of sales personnel, 511, 653, 682 –– of advertising, 593, 599, 602, 832 Movies, advertising in, 585, 599, 736 –– corporate, 54–56, 83, 846 Moving annual total (MAT), 262, 263 –– marketing, 23, 55, 64, 70–71, 79, 83, 415, 493, Multibrand promotions, 633 587, 842 Multilingual websites, 157, 158 –– for marketing research, defning, 199–200 Multinational corporations (MNC), 107, 409, –– for non-proft organizations, 56 677, 701, 734, 811, 843 –– sales, 663, 686, 833 Multiple decision makers, 24, 36, 814 Observation, as research method, 203–204 Multiple regression analysis, 214, 264, 265, 276 Omnibus surveys, 195, 198, 219, 843, 847 Online –– advertising, 583, 586, 588, 592, 622 N –– coupon services, 630 NAFTA See North American Free Trade –– databases, 190 Agreement –– fnancial services, 622 National forecasts, 249, 250, 843 –– focus groups, 206–208 National Trade Data Bank (NTDB), 191, 230 –– pharmacies, 15 Natural gas industry Open questions, 209 –– price elasticity of demand in, 460 Opinion leaders, 141, 155, 161, 574–575, 598, –– selective pricing in, 478 819, 844 Need recognition, 140, 141, 843 Opportunity costs, 475 867 Subject Index

Opportunity to see (OTS), 580, 598 Political environment, 127, 253 Optional features, 482 Population growth, 116, 704 Organizational purchasing Portfolio planning, 65, 66f –– decision makers and infuencers in, 166–167 Positioning –– demand patterns in, 166 –– in marketing planning, 47, 65, 290, 296, 311, –– ethics and, 167–169 384, 465 Original Equipment Manufacturers (OEMs), –– over time, 316–317, 316f 298, 402, 560 –– perceptual maps and, 317–319, 844 Overhead costs, 118, 432, 475, 656, 844 –– price and, 297, 299, 300, 302t, 305, 306, 308, 311, 314, 315, 317, 320, 325, 327, 330, 465, 478, 486 P –– product space maps and, 309, 312, 314, 315f Packaging, 27, 47, 48, 64, 71, 85, 100, 102, 116, –– segmentation and, 285–338 129, 198, 325, 327, 332, 345, 346, 349, 360, –– target marketing and, 319 380–382, 391, 393, 419, 437, 482, 528, 538, Postmortem stage of product life cycle, 357 627, 628, 630, 631, 634, 746, 747, 782 Postpurchase Panel research, 195, 198, 219, 408, 844 –– behavior, 144–145 Pareto effect, 296 –– evaluation, 140, 844 Partnership techniques, 25, 844 Precision marketing Pattern standardization, 579, 599, 844 –– availability and consolidation of secondary Payoffs, 258 data for, 613–614 Peak pricing, 469, 479–481, 844, 848 –– data manipulation for, 615–616 Peer pressure, consumer decision making and, –– point-of-sale data for, 614–615 155, 156, 171 Price elasticity of demand Penetration –– estimation of, 461–462 –– pricing, 34, 472, 473, 486 –– price lining, 464t, 465, 476 –– strategy, 347–349 Price(s) People management, sales team management –– demand and supply and, 458–470 and, 653, 681–685 –– discounts and, 481–484 Percentage changes, forecasting and, 262, –– equilibrium, 458, 464f, 839 300, 460 –– increases in, 300, 458, 460, 461, 464, 466, 467, Perceptual maps, 317–319, 844 469, 471, 476, 477, 485, 488–490 Performance analysis, 79–82 –– Internet and, 478, 479, 487, 493 Period actuals, forecasting and, 262, 276 –– negotiation of, 457, 483–484 Personalized service, 515, 516 –– of new products, 470–481 Personal selling, service promotion and, 589, 598 –– non-proft organizations and, 458 Personnel See Employees; Sales force; Sales pro- –– positioning, 478 fessionals –– reductions of, 25, 63, 361, 374, 377, 418, 465, Pharmaceutical industry 469, 472, 485–487, 627–628, 630, 631, 745 –– marketing planning in, 45–49 –– of services, 457, 470, 477, 478, 482 –– online pharmacies and, 15 –– See also Ps Physical environment, 100, 116, 844 Price wars Pioneer products, 442, 443 –– avoiding, 488 Place, 5, 54, 94, 144, 183, 240, 286, 345, 414, –– reactions to price challenges and, 486–487 454, 502, 556, 653, 704, 739 –– stimuli for, 485, 486 –– See also Location; Ps Pricing Place, Price, Products, Promotion Franchises –– budget, 476, 478, 491 (4Ps), 27, 28, 36, 39, 49, 54, 64, 66, 67, 71, 75, –– individual, 482, 485 83, 87, 299, 559, 597, 721, 722, 747, 814, 815, –– loss-leader, 477, 626, 631 842, 843 –– of new products, 456, 470–481, 491 Plan See Advertising plan; Marketing plan –– promotional, 482, 612, 627–631 Planning See Marketing plan; Marketing –– psychological, 476, 482 planning –– quality, 478, 491 Planning gap, 405, 406, 412, 844 –– of services, 457, 470, 471, 473t, 475t, 480–481 Point-of-sale data, for precision marketing, Pricing policy, future of, 715–716 614–615 Pricing strategies 868 Subject Index

–– category pricing, 478, 480, 835 –– test marketing and, 428, 437–441 –– competitive pricing, 71, 476–477, 491 –– time required for, 425–426, 436, 437, 439, 440 –– cost-plus pricing, 474–476, 491 Product development strategy, 349 –– FOB (free on board) pricing, 470, 840 Product differentiation, 122, 290, 312, 325, –– geographical pricing, 470 453, 844 –– historical pricing, 476, 491 –– See also Branding –– market-based pricing, 477–478, 491 Product forecasts, 250–252, 275 –– peak pricing, 479–481, 844, 848 Product gap, 406, 409, 412, 415, 443, 845 –– penetration pricing, 472, 473, 486 Product ideas, screening of, 420, 421, 432, –– price wars and, 485–486 433, 443 –– product line pricing, 476, 491 Production capabilities, for new products, –– selective pricing, 478–481, 491 423, 443 –– service level pricing, 480, 481 Production decisions, 526–529 –– target pricing, 476, 491 Product life cycle –– uniform pricing, 470, 479, 848 –– cash fow and, 359, 361, 368–369 –– yield pricing, 480, 481, 848 –– decline stage of, 356, 360, 368, 391 –– zone pricing, 470, 848 –– extension of, 354, 358–359 Primary data, 188, 193–199, 209, 210, 218, –– fashion and fads and, 359–361 219, 221 –– growth stage of, 354, 355, 367, 391 –– suppliers of, 195–199 –– international, 358, 361–366 Prisoner’s dilemma, 488 –– introduction stage of, 354, 355, 357, 367, 391 Privacy, telemarketing as invasion of, 609–612 –– marketing strategy and, 367–368 Private brands, 332–334, 844 –– maturity stage of, 354, 356, 358–361, PRIZM, 149 367–368, 391 Problem children, 371, 372, 376, 391 –– new product development and, 358, Problem recognition, 141 362, 363 Producers –– postmortem stage of, 354, 357, 367, 368, 391 –– distribution channels for, 467, 503–505, –– price and, 355, 356, 361, 362, 368, 373, 507, 509 374, 390 –– markets for, 164, 292, 293, 296, 297, 301, –– product life and, 354–357, 366–368 306–308 –– product portfolios and, 369–377 Product audit, 346–347, 391 –– in promotional mix, 355, 367, 391 Product bundling, 482, 492 –– technological, 360–362, 368, 388 Product churning, 443 Product life extension, 358, 845 Product development Product line length, 376, 377, 845 –– cannibalism and, 423, 425 Product line, new product match with, 427 –– concept testing in, 432–435 Product line pricing, 462, 465, 476, 491 –– customers and, 421, 435, 439 Product mix, 27, 67, 376–377, 379, 391, 663, 841 –– development stage of, 323, 362 Product names, 3, 4 –– fnancial performance and, 423, 424 Product orientation, market orientation –– gap analysis for (See Gap analysis human versus, 32 factors and) Product policy, future of, 715 –– innovative imitation for, 422–423, 443 Product portfolios –– Internet and, 349, 401–403 –– as alternative to forecasting, 271 –– investment potential and, 423, 424, 443 –– Boston Consulting Group Matrix and, 370 –– Japanese-style, 442–443 –– cautions regarding use of, 375 –– launch stage of, 435, 436, 441 –– price and, 463 –– marketing response to, 428 –– product life cycle and, 354 –– materials supply and, 423, 425 –– product mix and, 376 –– production capabilities and, 423, 443 Products –– product modifcation for, 418–419, 430, –– adaptation of, 379–380 436, 443 –– augmented, 345, 346, 835 –– product testing and, 428, 430, 435–438, –– categories of, 16 440, 845 –– core, 345–347 –– strategic screening of ideas for, 428–432 –– development of (See Product development) 869 Subject Index

–– industrial (See Also Organizational Promotional pricing, 482, 612, 627–631 ­purchasing) Promotions –– launch of, 441 –– complementary, 611, 612, 836 –– life cycle of (See Product life cycle) –– multibrand, 633 –– modifcation of, 418–419 –– nonprice, 631–633 –– packaging of, 380 –– pricing, 627–631 –– portfolios of, 376 –– sampling for, 633 –– positioning (See Positioning product audit and) Proposals, industrial sales and, 663–664 –– product package and, 345–346 Prospects, defning, 294–295 –– in promotional mix, 587–589 Psychological factors, consumer decision –– quality of, 419 making and, 162–163 –– replacement of, 441 Psychological pricing, 482 –– sales territories based on, 80, 660 Publications, direct marketing using, 623 –– standardization of, 379–380 Public relations (PR) –– strategy and (See Product strategies tangible) –– corporate, 639–641 –– See also Ps –– defensive, 639–640 Product strategies –– media contact for, 637 –– Ansoff Matrix and, 351–353 –– news stories and, 637–638 –– diversifcation, 350–351 –– press offce and, 638 –– market development, 349–350 –– proactive, 640–641 –– market penetration, 347–349 Puerto Rican American market, 152 –– for new products, 347 Pull promotion, 561, 845 –– product development, 349 Purchase decision, 144 –– refning, 377–379 Purchasing, 521–523 Product testing, 428, 430, 435–438, 440, 443, 845 Push promotion, 561, 845 Proft Impact of Management Strategies (PIMS), 81 Progress, measurement of, 79 Project management, 653, 668, 669, 686 Promotion Q –– AIDA model and, 571, 572, 835 Qualitative forecasting methods, 257, 275 –– corporate versus brand, 560 Qualitative research, 203–204, 309 –– marketing mix and, 54, 64, 67, 559 –– segmentation and, 309 –– media for, 584 Qualitative screening, of new product ideas, –– messages for (See Promotional messages in 428–430 non-proft organizations) Quality –– promotional mix and, 587–589 –– of new products, 427 –– push versus pull, 561–564 –– of products, 427 –– of services, 295 Quality modifcation, of products, 419, 443 –– See also Advertising; Ps Quality pricing, 478 Promotional discounts, 439, 509, 627 Quantitative forecasting methods, 275, 276 Promotional messages Quantitative research, 205, 215, 310 –– attitudes and, 571 –– segmentation and, 311–312 –– awareness and, 565–568 Quantity discounts, 481, 507 –– buying decision and, 571 Question marks, 371, 391 –– cognitive dissonance and, 576 Questionnaire-based research, 205 –– consistency of, 589 Quota samples, 213 –– dialogue and, 558 –– encoding and decoding and, 558–559 –– interest and, 568 R –– opinion leaders and, 574–575 Rack jobbers, 520 –– in promotional mix, 587–589 Radio, advertising on, 584 –– selection of, 578 Random events, forecasting, 262 –– understanding and, 570–571 Random samples, 211, 213 –– word of mouth and, 575 Rapid payback, 472 Promotional mix, 557, 558, 587–589, 598 870 Subject Index

Raw materials, 165, 425, 491, 521–524, 536, Sales objectives, 30, 663, 686 710, 770 Sales professionals Recruitment, of sales personnel, 659, 681 –– management of sales by, 660 Recycling, 357, 382, 538, 546, 714 –– sales objectives for, 663 Reference groups, 155, 156, 845 –– territory sales plan for, 660–662 Regional economic integration, 106, 107 Sales promotion Regression analysis, 264, 265, 276, 461, 845 –– advantages and disadvantages of, 625–627 Regulation –– promotional pricing and, 627–631 –– changes in, 189 Sales reports, 184, 185, 218 –– price and, 476 Sales team management –– in promotional mix, 557, 558, 587–589 –– cultural issues in, 677–678 Rejuvenation, 359, 360, 845 –– marketing management and, 674–677 Relationship analysis, 82, 84 –– people management and, 681–685 Relationship marketing, 82, 165, 653, 670–672, Sales territories 686, 723, 769–771, 845 –– annual calls available and, 657–658 Relevance, of research fndings, 211 –– geographical, 655 Reliability –– sales personnel plan and, 658 –– of research fndings, 215 –– sales plans for, 658–659 –– of transportation, 530 –– territory plans and, 656–657 Repeat purchases, 7, 169, 295, 625, 845 Sales trend forecasting, 260 Reporting, of research fndings, 211 Sales variance, 79 Repositioning, 71, 311, 323, 378, 418, 746, 748 Sales-wave research, 436, 846 Research See Marketing research Samples, for data collection, 209–213 Resources, internal, 21–23, 54 Sampling, 633–634, 846 Restructuring strategy, 707 Satisfcing, 55, 846 Retail audits, 195, 198, 199, 219, 439, 845 Satisfes, 55 Retailing Scenario building, 113, 116–117, 128, 258 –– customer service and, 514 –– for forecasting, 116 –– location and, 514 Screening, of new product ideas, 420 –– organization type and, 514 Seasonal discounts, 482 –– product or service type and, 514 Seasonality Retrenchment strategy, 63t –– forecasting, 252, 428 Reverse logistics, 538 –– of new products, 428 Reverse marketing, 165, 166, 846 Secondary data Role playing, for forecasting, 287, 288 –– compatibility of, 193–194 Rolling forecasts, 245, 846 –– for precision marketing, 195–199 –– quality of, 193 –– source quality for, 192–193 –– sources of, 192–193 S Segmentation Sales –– across national boundaries, 302, 303t–304t –– analysis, 79–80 –– beneft, 301, 302t –– customer relationship management and, 609, –– consumer characteristics as basis of, 298 651, 653 –– by consumption profle, 301–302 –– industrial, 439, 617, 653, 663, 665–669, 689 –– counter-segmentation, 323 –– interorganizational relations and, 669–672 –– cross-segment, 321–322 –– sales professionals and, 170, 654–658, –– ethics and, 323–324 660–662, 665, 666, 681, 686–687 –– full coverage, 322–323 –– sales team management and (See Sales team –– Internet and, 308–309 management) –– lifestyle, 302 –– territory management and planning for, 654 –– market boundaries and, 292, 314 Sales force –– markets and, 296 –– individual members of, 510, 545 –– market segments and, 296 –– sales personnel plan and, 658–659 –– methods for, 309–312 Salesforce forecasts, 254 –– multiple segments and, 321 Sales forecasts, 243, 247, 249, 536, 660, 662, 686 –– positioning and, 312–316 871 Subject Index

–– price and, 308 Simulation, for forecasting, 255 –– segment viability and, 305–306 Skimming, 186, 355, 462, 472, 473, 473t, 491, –– single segment, 320–321 723, 847 –– yield management and, 73, 74 Small frms, large frms versus, 20 Segments, 65, 141, 290, 297–301, 305–307, 309, Social class, consumer decision making and, 311, 319, 322, 323, 327, 334, 377, 407, 412, 150–151 473t, 740 Societal environment, changes in, 704–707 –– identity of, 333 Sociocultural environment, 98–101 –– relevance of, 333 Soft data, 187, 847 –– size of, 333 Sovereignty, 141, 798, 808, 847 –– target marketing and, 333 Specialty retail outlets, 763 –– viability of, 333 Split loyals, 169 –– See also Segmentation access to Split-run experimental research, 205 Selective distribution, 510, 511, 846 Sponsorship, 634–635, 641, 772, 773 Selective pricing, 478–479 Spreadsheets, for forecasting, 269–271 Self-selection concept, 515 Stakeholders, multiple, 112–113 Self-service concept, 515 Standard Directory of Advertising Self-supporting offers, 632–633 Agencies, 595 Selling Standard Directory of International Advertisers –– door-to-door, 623 and Advertising Agencies, 595 –– marketing versus, 28–31 Standard Industrial Classifcation (SIC) codes, 298 –– personal, service promotion and, 625 Standardization of products, 379 –– unique selling proposition (USP) and, Stars, 290t, 372f, 371, 372, 376, 376f, 391, 579 572, 598 Status quo, 63t, 109, 486, 527 Sensitivity analysis, 69, 271, 430, 846 Steel imports, 165, 166, 254, 379 –– for new product idea screening, 433, 443 Straight rebuy, 664, 665, 847 Service level pricing, 480–481, 846 Strategic alternatives, 63t Service levels, 375, 379, 536, 540–541 Strategies Service merchandisers, 520 –– channel, 457, 507 Service organizations –– communications, 717–718 –– intangibility of services and, 34 –– competitive, 97, 117, 121–122, 457 –– lack of direct competition and, 35 –– concentration, 63t –– lack of mass marketing by, 34 –– corporate, 32, 49, 51f, 59, 116, 117, 423, –– professional status of, 35 507, 531 Services –– distribution, future of, 717 –– categories of, 382–384 –– diversifcation, 63t –– core, 333, 837 –– divestiture, tinnovation, 63t –– development of, 409 –– inventory as strategic tool and, 537 –– differentiation of, 333 –– lexicographic decision strategy, 143, 841 –– distinctive features of, 384–385 –– liquidation, 63t –– distribution channels for, 390 –– market development, 349–350 –– goods versus, 16, 626t –– marketing, 14, 20, 49, 71–73, 102, 113, 123, –– marketing repercussions of, 387–390, 388t 140, 166, 297, 308, 412, 507, 675, 758, 846 –– markets for, 16 –– pricing (See Pricing strategies) –– positioning (See Positioning) –– product (See Product strategies) –– pricing, 164, 741 –– product development, 349 –– in promotional mix, 587 –– restructuring, tretrenchment, 63t –– promotion of, 589 Strivers, 160f –– supplementary, 333, 847 Structured questions, 209 SERVQUAL model, 385 Style modifcation, of products, 419, 443 Shelf life, 531, 532 Substitutes, competition and, 120 Shelf space monopoly, 329 Sunk costs, 475 Shifting loyals, 169 Supermarkets, 55, 103, 329, 362, 420, 478, 509, Short-term forecasts, 243–244 520, 559, 698 “Simulated store technique”, 436 Superordinate goals, 60, 847 872 Subject Index

Supplementary services, 333, 847 Time frame, 25, 719, 750 Supplies, 27f, 103, 165, 516, 522, 639, 657, 714 Time-series analysis, 259 Supply and demand See Demand and supply Time/timing Supply chain management –– of direct mailings, 587, 612, 617 –– communications decisions and, 537–538 –– in marketing strategy, 102, 113, 393, 507, 759 –– facility decisions and, 535 –– positioning and, 316, 316f –– inventory as strategic tool and, 537 –– for product development, 443 –– inventory decisions and, 536–537 –– product forecasts and, 251 –– production decisions and, 526–527 –– product life cycle and (See Product life cycle) –– transportation decisions and, 529–531 –– risk versus, with new products, 442 Surveys –– transit, 530–531 –– cell phone, 179 Top-down planning, 51 –– omnibus, 195, 198, 219, 843, 847 Trade associations, as data sources, 189, 190, 219 Survivors, 159, 160f Trade discounts, 481, 507 Sweatshops, 525 Trade restriction, 766 Switchers, 169 –– price and, 724 SWOT analysis, 51f, 66–68, 67f, 68, 69, 77, 83, 84 Trade shows, 190, 612, 632, 635–636, 636f, 641, Symbolic analysts, 99, 847 657, 848 Syndicated research, 195, 219, 847 Transit time, 530–531, 546 Transportation decisions, 529–530 Trends, forecasting, 243 T Tangibility, service promotion and, 34, 589 Tangible product, 345, 346, 847 U Target exchange rate, 471 Understanding, promotional messages and, Target Group Index (TGI), 301 570–571 Target marketing, 250, 296, 319–320, 706, 847 Uniform pricing, 470, 479, 848 Target pricing, 476, 491 Unique selling proposition (USP), 572, 598 Technical buyers, 667, 847 Unstructured questions, 208 Technical buying infuence, 166 Usage rate, 169, 295, 350 Technological environment, 101–106, 113–114, Usage status, 169 699–701, 726 User buyers, 666, 667, 848 –– changes in, 101 User buying infuences, 166 –– See also Information technology; Internet; Users, 35, 56, 57, 59, 122, 157, 163, 167, 169, Online entries 217, 242, 251, 261t, 274, 302t, 306, 312, 333, Technological forecasting, 253, 256, 275, 847 349, 350, 358, 361, 379, 419, 421, 441, 626, Technological life cycle, 360, 361 633, 634, 640, 667, 668 Technology, marketing opportunities due to, –– defning, 293 163–164 Telecommunication market, price wars in, 485–486 Telemarketing V –– invasion of privacy and, 609 Value packages, 482 –– network marketing and, 624–625 Value, perceived by customer, price and, 385 Telephone Values and Lifestyles System (VALS), 158 –– cell phone advertising and, 734 Values, consumer decision making and, 140 –– cell phone surveys and, 179, 181 Variable costs, 431, 432, 476, 632, 716t, 848 –– as data collection method, 180, 193, 208 Variance analysis, 185 Television, advertising on, 565 Verbal data, 185–187, 848 Television shopping networks, 519 Vertical integration, 63t Test marketing, 152, 393, 417, 428, 429f, Videos, advertising in, 556 437–441, 443, 566t, 582, 847 Vietnamese American market, 151 Theory See Marketing theory Thinkers Virtual coupons, 628–629 Tied offers, 628t, 628 Vision, corporate, 59–60, 83, 837 873 Subject Index

Volume sales, 30, 70, 78, 165, 249, 361, 373, 430, Y 456, 465, 485–486, 492, 651, 684 Yield management, 72–75, 454, 455, 480, 848 Yield pricing, 480, 481, 848 W Websites See Internet Wholesaler’s representatives Z Wholesaling, 519–521 Word of mouth, 27f, 28, 161, 169, 542, 575, 589, Z charts, 262 598 Zone pricing, 470, 848 –– service promotion and, 575 Worker’s councils, 112, 848 875

Company Index3

AT&T Wireless, 74, 181, 485, 624, 627, 672 A Autobytel, 129, 248, 308, 591 Avis, 565–567, 577, 630 ABB, 99, 798 Avon, 518, 624, 654, 658, 675–677 Abercrombie and Fitch Co., 147, 148 Abt Associates Inc., 197 A.C. Nielsen, 592 Acura, 3, 323, 427 B Adidas, 575 BabyGap, 147, 761, 763–765 Ahold Zaandam, 103 Bacardi, 589 Airbus, 108, 269, 362 Bain & Co., 671 Albertson, 614 Banana Republic, 86, 147, 761–765 Allstate Insurance Co., 624 Banco do Brasil, 111 Amazon.com, 242, 454, 505, 588, 700, 701 Bank of America, 386, 582 American Airlines, 73, 75, 332, 488 Banter, 719 American Express, 386, 457, 542, 579, 616 Bath & Body Works, 329 American Hawaii Cruises, 74 Bausch & Lomb, 478 American Homeowners Association, 632 Bell Labs, 422 American Marketing Association, 8, 37, 162, Ben & Jerry’s, 299, 640, 641 190, 224, 237, 302–304, 383, 388 Bic, 478 American Red Cross, 56 BICC Cables, 255 American Trans Air, 488 Black & Decker, 328 America Online, Inc. (AOL), 152, 375, 378, 514 Blockbuster Entertainment, 24, 85, 349 Amnesty International Amstrad, 82, 83, 707 Bluefy.com, 505 Amway, 518, 624 BMG, 411 Anheuser-Busch Co., 579, 635 BMW, 62, 149, 288, 335, 427, 555–557, 561, 736, Anheuser-Busch International 739f–746f ANYwhere Online, 583 The Body Shop International PLC, 508 AOL See America Online, Inc. Boeing, 353, 362, 366, 421, 422 AOL Time Warner, 152 Bombardier Inc., 306 Apple Computer, 22, 349, 580, 708, 734 Booz Allen Hamilton Inc., 418, 432–434, 441 Arbitron Inc., 586 Bose, 670 Architectural Digest, 149 Boston Consulting Group, 127, 354, 370, 373, Arden B. Zutopia, 147 374, 391, 392, 424 Arm & Hammer, 347 Brand Marketing Magazine, 634 Arts and Entertainment Channel, 581 British Aerospace, 353 ASB Bank of New Zealand, 30 British Airways, 369, 707 ASI Market Research, 583 British Leyland, 427 Asklt, 719 Budweiser, 336, 469, 573, 591 Aston Martin, 306 Bureau of Labor Statistics, U.S., 386 Atari, 96 Burger King, 194

3 Note: An italic t next to a page number (e.g., 177t) indicates information that appears in a table and an italic f next to a page number (e.g., 177f) indicates information that appears in a fgure 876 Company Index

C Daniels Insurance Agency, 309 D.A. Stuart Company, 675 Cadbury, 328 Dell Computers, 386 Cadillac, 25, 317, 465, 625 Department of Commerce, U.S., 191, 778–780 Calgene, 105 Digital Equipment Corporation, 192 Campbell, 325, 345 Direct Marketing Association (DMA), 609, 611, Canon, 69, 298, 443 618, 623 Capital Incentives, 487 Disney Company, 352 Captain Morgan’s, 589 Disney Cruise Line, 352 CarMax, 718 Disneyland Resort, 352 Carrefour, 518 Disney’s Animal Kingdom, 352 Casio, 421 Dodge, 594 Catera, 25, 709 Dole, 531 Cater Air Domino’s Pizza, 512 Caterpillar, 544 Doubletree Inns, 187 Catholic Health System, 80 Dow Jones News/Retrieval, 75 Charles Schwab, 435 Dr. Care Toothpaste, 311 Chevrolet, 307, 465 Drugstore.com, 15 Chiquita, 531 Dun and Bradstreet, 189 Chrysler, 129, 413, 707, 708, 743, 811 Du Pont, 321 Cincom, 652 Cisco Systems, 505 Citibank, 332, 616, 751f–755f, 756, 756t, 757t, E 758, 758f, 759, 760 Eastern Transport Corporation, 675 Citicorp, 707, 752, 756, 759 Eastman Kodak, 386 Citigroup, 327t, 752, 754, 756, 756t, 758–760 EDS, 707 City Year, 707 Eisner & Associates, 586 CIX, 74 Electrolux, 682 Clairol, 311 Embassy Suites, 187 Claritas, 149 EMI, 368, 411 CMS, 157, 487, 768 Energy Marketplace, 479 CNN, 291t, 581, 611, 741, 742 Enova Corporation, 479 Coca-Cola, 3, 4, 30, 142, 288t, 322, 326–328, Enron, 167 350, 376, 379, 410t, 437, 534, 538, 547, 565, Erie County Medical Center, 80 569, 570, 579, 594, 759 Ernst & Young, 250, 386 Cochlear, 700 ESPN, 152, 352, 409, 582, 733 Colgate-Palmolive, 307 ESPN Classic, 352 Commerce Department, U.S., 191, 778, 779 ESPN Zone, 352 Commercial Union, 291 Esprit, 539 Compaq, 65, 265–267, 345, 494 Estée Lauder, 288t CompareNet, 94 E*Trade, 435 Conference Board, 268 Euromonitor, 613, 614 Convergence Group, 324 European Central Bank (ECB), 150 Converse, 575 European Commission, 157, 580, 588, 589 Coopers and Lybrand, 523 European Court of Justice, 588 Coors Brewing, 419 European Union (EU), 157, 407, 469, 489, 589, 610 Country Clutter, 517 Expedia, 239–241 Country Visions Inc., 517 Exxon, 22, 297 Crested Butte Ski, 479 ExxonMobil, 296, 297, 311 CVS, 15, 642 E&Y Kenneth Leventhal Real Estate Group, 250 Cybrgold, 632

D F Daimler-Benz, 707 Fairfeld Inns, 329 DaimlerChrysler, 708, 743 Fair Labor Association (FLA), 525 877 Company Index

Farm Journal, 623 Heineken, 103, 243, 244 Federal Communications Commission Heinz, 325, 332, 350, 409, 466 (FCC), 268 Henley Center for Forcasting, 300 Federal Communications Commission, Hershey Foods, 330 U.S., 268 Hewlett-Packard (HP), 103, 265, 267, 298, 401, Federal Express (FedEx), 199, 534, 541 443, 469, 494, 617, 627, 670 Federal Trade Commission, U.S., 129, 189, 609, Hilton Hotels, 187, 478 762, 798 H & M., 290t Fiat, 307 Holiday Inns, 62, 422, 512 First National Supermarket, 55 Hollister Co., 147 First Union Bank, 615 Home Depot, 547, 657 Food and Drug Administration (FDA), Home Shopping Network, 330 45, 47, 532 Honda, 3, 61, 122, 307, 323, 423, 427, 443, 688 Ford Motor Company, 215, 344, 419 Hoover, 311, 326 Forrester Research, 718, 719 HotWired, 582 FOX, 181, 773, 774 HSBC, 122–124, 758 Freightliner, 269 Human Rights Watch, 707 Frito-Lay, 534 Hyatt Hotels, 317 Frontier Airlines, 488 Hyundai, 467, 478

G I Gap Inc., 86, 761–763, 763t, 764–767, 767f, 768 IBG, 105 GapKids, 86, 147, 761, 763–765 IBM, 22, 57, 60, 65, 77, 246, 266, 323, 328, 345, Gateway, Inc., 267 401, 411, 421, 422, 425, 466, 494, 560, 580, 589, Gatorade, 534, 734 615, 627, 654, 655, 657, 672, 673, 707, 708 Gemex Bottling Group, 534 Infniti, 323, 427 General Electric Company, 81 Infonet, 75 General Foods, 122, 292, 330, 428 Information Resources Inc., 196t, 490 General Mills, 328, 811 Infoseek, 352 General Motors, 62, 129, 317, 412, 423, 465, InsightExpress LLC, 622 476, 524, 537, 547, 629, 811 Intel Corp., 57, 59, 560, 563 Giant, 241, 325, 343, 445, 507, 509, 519, 525, Interbrand, 218 528, 568, 585, 587, 642, 673, 701, 707, 743, International Monetary Fund, 291 755 International Red Cross, 56 Gillette, 361, 473 International Standards Organization, 522 Go Network, 352 International Trade Administration, 294 Goodyear, 640 International Trade Centre, 522 Google, 94, 95, 217, 218, 725, 811 International Trade Commission, 432 Gourmet (magazine), 149, 173 Internet Profles, 199 Greenpeace, 111, 112, 639, 706, 779 Intuit, 514 GTE, 591 Iomega, 591 Gulfstream Aerospace Corp., 306 iPods, 288t Ipsos, 196t Isetan Corporation, 382 H Ito-Yokado, 709 Häagen Dazs, 327, 640 Hallmark, 23, 505, 638, 710 Hampton Inn, 187 J Hard Candy, 288t Jaguar Car Company, 419 Hardee’s Food Systems, Inc., 194 Jeep, 288t Harley-Davidson, 477 Jiffy Lube, 542 Harris Interactive Inc., 288t Johnson & Johnson, 313 Harvard Business School, 81, 351t Jupiter Communications, 586 Heileman Brewing Company, 323 Jupiter Research, 583 878 Company Index

K Maytag, 332 McDonald’s, 23, 105, 194, 326, 379, 380, 421, Kaleida Health System, 80 523, 528, 529, 544, 565, 579, 589, 643, 782 The Kantar Group, 196t MCI, 122, 332, 485, 610 Kellogg’s, 323, 332, 576 McKinsey, 387, 403 Kenmore, 332 McLane, 709 Kiwi, 329 MediaPost Communications, 622 Kleenex, 326, 421 Mellon Financial Corporation, 697 Kmart, 104, 278 Mercedes-Benz, 37, 38, 94, 269, 353, 412, 462, Knickerbocker Condominiums, 464 640, 743 Kodak, 386, 440 Microsoft, 57–59, 71, 102, 271, 300, 306, 362, Konica, 683 371, 378, 386, 445, 460, 542, 585, 655, 657, Kraft General Foods, 122 697, 708, 711 Miller Brewing Company, 419 Millward Brown Interactive, 584 L MIT, 71, 363f Laker Airways, 22 Mitsubishi, 358, 752, 758 L’Eggs, 329 Mobil Oil, 296, 297 LEGO Company, 718 Mobliss, 181 Levi Strauss & Co, 393, 525 Monsanto Company, 105 Lexmark International, 298 Mothers Against Drunk Driving (MADD), 18 Lexus, 143, 147, 148, 288t, 292, 321–323, 412, Motorola, 60, 670 427, 465, 511, 742, 743 MRB, 301 Lieberman Research Group MTV, 181, 182, 581, 582 Lieberman Research Worldwide, 197t Lincoln-Mercury, 317, 478 L.L. Bean, 288t N Logan Airport, 469 National, 55, 189, 191, 226, 230, 249–250, 276, Logility, 243, 244, 275t 279, 302, 344, 405, 422, 480, 504t, 581, 689, Lotus Developement Corp, 72 756t, 797–780, 805t, 808, 822, 843 National Association of Manufacturers, 190, 225 M National Association of Wholesale March of Dimes, 18, 19, 327 Distributors, 190 Maritz Research, 197t National Register Publication Co, 595 Marketing Analysts Inc, 703 National Turkey Federation, 626 Marketing and Planning Systems Inc, 64 NBC, 336, 582 Marketing Research Services Inc, 7, 47, 110, NCR, 654 151, 177–237, 290, 291, 318f, 334, 408, 413, NEC, 439, 445 544, 558, 568, 570, 571, 576, 579, 592, 664 Nestlé S.A, 410 The Marketing Workshop Inc, 301 NetGrocer, 378 MarketSoft Corp, 657 Netscape, 326 Market Strategies Inc, 99, 412 NFL, 152 MarketSwitch Corporation, 702 NFO WorldGroup, 634 MarketVision Research, 22, 49 Nielsen Media Research, 199, 583 Marks & Spencer, 332, 512, 560 Nielsen/NetRatings, 739 Marriott Corporation, 159 Nike, 290t, 362, 565, 573, 575, 577, 578, 591, Mary Kay Cosmetics, 625 734, 735 Massachusetts General Hospital, 386 Nissan, 323, 427, 428, 443 Massachusetts Port Authority (MPA), 469 Nordstrom, 542 MasterCard, 332, 457 The North Face, 288t Matsushita, 60, 373, 422, 445 Novell, 74 Mattel, Inc, 329, 330, 801, 802, 803t, 804–806, 804t The NPD Group Inc, 196t Maxwell House, 122, 172, 234 Nucleus Research, 624 879 Company Index

O Rand Corporation, 255 Reebok, 525, 526, 575 Ocean Spray, 634 Reefs, 288t Odyssey, 158 Reese’s, 332 Offce of Consumer Affairs, 543 Rite Aid, 15 The Old Farmer’s Almanac, 255 Ritz Carlton, 541 Old Navy, 147, 761–795, 763t Rodeway, 329 Organization for Economic Cooperation and Rolls-Royce, 478 Development (OECD), 167, 190, 226, Roswell Park Cancer Institute, 80 249, 275 Rover, 307, 427 Orient Overseas Container Line (OOCL), 530 Royal Ahold, 509 Orlando Bloom, 288t Royal Dutch Shell, 707 Oscar Meyer, 580 Rubbermaid, 657

P S Pacifc Enterprises, 479 Saatchi & Saachi, 61, 71, 643 Palisades Corporation, 271 Safeway, 614 Palm Pilot, 288t Sara Lee, 329 Panasonic, 60, 422, 472, 594 Saturn, 423 Paramount Pictures, 61 Save the Children, 638 PepsiCo, 307, 534, 535, 587, 591 SBi & Company, 157 Perrier, 327 Scient, 157 Peugeot, 307 Scotch Tape, 326 Philip Morris, 513 Sears, Roebuck and Co, 614 Philips, 408, 445, 472 Sempra Energy, 479 Phillips-Van Heusen, 525 7-Eleven stores, 709 Pillsbury, 640, 641 Seven-Up, 328 Planet Hollywood, 346 Shell Oil, 111 Plank Road Brewers, 419 Shiseido, 718 Porsche, 467, 617, 618 Siemens, 652 Premier Hospital Alliance, 74, 80, 148, 194, 675, Siena Condominiums, 464 742, 773, 774 Sierra Club, 111, 779 The PreTesting Co. Inc, 437, 576 Silicon Graphics, 192 Price Waterhouse, 232, 523 Sisters Hospital, 80 Procter & Gamble, 121, 129, 307, 328, 329, 376, Six Flags, 633 393, 420, 425, 436, 437, 465, 520, 561, 586, Smirnoff, 487, 589 594, 600, 628, 635, 714, 781 Sony, 85, 216, 327, 408, 409, 411, 420, 422, 445, Promotion Marketing Association, 634 472, 655, 759 Public Opinion Strategies, 721 Southern California Gas Company, 479 Southland Corporation, 709 Southwest Airlines, 478 Q Spare Parts Inc, 324 Spectrum Color Systems, Inc, 781, 783f Quaker, 534 Sprint, 485, 591 Quasar, 60, 422 Standard Rate and Data Service, 595 The Queer Eye Guys, 288t Starbucks, 151, 153–155, 173, 288t QVC, 716 Starwave, 352 Stelent, 157 Strategic Marketing Research R Institute, 151 Radio Disney, 352 Sun Microsystems, 192, 306 Rainbow Endowment, 325 Sunset Direct, 69 Ramada, 329 Supply Management (magazine), 195, 255 880 Company Index

Swatch, 252 V Symmetrical Resources Inc, 211 Vaseline, 326 Victoria’s Secret, 329 T Virgin Mobile, 181, 182 Visa, 277, 325, 457, 591, 616, 734, 735, 785 Tabasco, 591 Volkswagen, 414, 420, 428 Taco Bell, 565, 566, 571, 633 Volvo, 467, 570 Talbots, 517, 518 Volvo Construction Equipment, 638 Tantra, 32–34 VTech, 313 Technics, 60, 422 Tecnol Medical Products, 313 Tesco, 104 W Texaco, 582 Texas Instruments, 422 Wachovia, 615 TIAC, 309 Walgreens, 15–16 Ticketmaster, 411 Walker Information, 8, 489 Timberland, 707 Walls, 231, 235, 236, 268, 428, 454, 513, 534, Tim Horton’s, 19 547, 642, 734–735, 760 TiVo, 163, 164 Wall Street Journal, 231, 236, 268, 454, 534, Tokyo Disneyland, 352 547, 642 Tomorrowland, 352 Wal-Mart, 85, 129, 220, 278, 381, 507, 512, Toshiba, 408, 445, 472 518, 520 Totes, 714 Walt Disney Company, 352 Toyota, 147, 148, 204, 218, 292, 307, 321–323, Walt Disney World, 352 412, 423, 427, 443, 465, 471, 511, 536, 561, Warner Music, 411 591, 708, 743 Washington Opera Co, 480 Toyota-GM, 708 WCRS, 555, 737 Toys ”R” Us, 313, 330 Weight Watchers, 350 Transparency International, 111, Wendy’s, 19, 194 226, 809 Westat, Inc, 196t Travelers, 74, 325, 707, 752, 756t, 759 Wet Seal Inc, 147 Tropicana, 534, 746–748 Weyerhaeuser, 299 Whirlpool, 332 Williams-Sonoma, 518 U Wipro Ltd, 386 World Bank, 101f, 114, 225, 232, 759 Ugly Duckling Rent-A-Car, 321, 322 World Trade Organization, 704 UNICEF, 707 Wrangler, 290t, 527 Unilever, 328, 345, 353, 376–378, 561, 579, 593, 678 Union Carbide Corporation, 258 X United Nations, 114, 190, 228, 229, 232, 234, 797, 804t Xerox, 326, 541, 544 United Parcel Service (UPS), 199, 528, 534 United Way, 327, 590 Universal Music, 411 Y U.S. Bureau of Labor Statistics, 386 Yahoo, 217, 742 U.S. Department of Commerce, 191, 229, 230, Yankelovich Partners, 583 234, 236, 778, 779 Yellow Freight System, 74 U.S. Federal Communications Commission (FCC), 268 U.S. Federal Trade Commission, 129, 189, 230, Z 609, 762, 798 Zimay, 386 U.S. Food and Drug Administration (FDA), 45, 47