chap 9-15 Flashcards
1
Q
What determines the ceiling and floor of a product’s price?
A
The price ceiling is set by customer perceptions of value—if too high, there’s no demand. The price floor is set by product costs—if too low, the company suffers losses. The right price lies between the two.
2
Q
What are the three key factors companies must consider when setting price?
A
1) Customer value perceptions, 2) Company costs, and 3) Competitors’ strategies and pricing, plus the overall market and demand conditions.
3
Q
What is customer value–based pricing?
A
It is pricing based on buyers’ perceptions of value, not the seller’s cost. The price is set to reflect the value consumers place on the benefits received.
4
Q
How does customer value–based pricing differ from cost-based pricing?
A
Customer value–based pricing starts with customers’ value perceptions and sets the price accordingly. Cost-based pricing starts with product costs and adds a markup.
5
Q
What are the steps in value-based pricing vs cost-based pricing?
A
- Cost-based: Design product → Determine cost → Set price → Convince buyers of value
- Value-based: Assess customer value → Set price to match → Determine allowable cost → Design product to deliver value at that cost
6
Q
Is “good value” the same as “low price”?
A
No. “Good value” means the benefits justify the price, not that the price is low. Premium products like YETI coolers can still be good value.
7
Q
What makes YETI coolers a good example of value-based pricing?
A
Despite high prices, their durability, insulation, brand prestige, and rugged features justify the value to outdoor users—many would pay twice the price.
8
Q
Why is measuring customer-perceived value difficult?
A
Value is subjective and varies across individuals and situations. It’s influenced by both tangible and intangible elements like taste, atmosphere, and status.
9
Q
How do companies try to measure customer value perceptions?
A
Through consumer surveys, testing willingness to pay, and product experiments that assess the perceived value of features or benefits.
10
Q
What does the Russian proverb say about pricing too high or low?
A
“There are two fools: one who asks too much, and one who asks too little.” Pricing too high deters customers; pricing too low increases sales but reduces revenue.
11
Q
What are the two types of value-based pricing?
A
Good-value pricing and Value-added pricing.
12
Q
What is good-value pricing?
A
Offering the right combination of quality and good service at a fair price.
13
Q
Give examples of companies using good-value pricing.
A
- Loblaw’s low-price brands (President’s Choice, no name)
- Google Nest’s lower-priced thermostats
- Mercedes-Benz CLA as a luxury car at a lower price point
14
Q
What is value-added pricing?
A
Attaching value-added features or services to differentiate offers and justify higher prices (e.g., Canada Goose’s durable jackets, built for Arctic weather).
15
Q
What is cost-based pricing?
A
Setting price based on the cost of producing, distributing, and selling the product, plus a fair return (profit margin).
16
Q
How do companies use cost-based pricing for strategic positioning?
A
- Walmart aims for low cost and low prices.
- Apple/Steinway aim for higher costs to justify premium pricing and brand value.
17
Q
What are some pros and cons of cost-plus pricing?
A
- Pros: Simple, ensures profit, useful when demand is uncertain.
- Cons: Ignores customer demand and competitor pricing.
17
Q
What are fixed costs, variable costs, and total costs?
A
- Fixed costs: Don’t change with output (e.g., rent, salaries).
- Variable costs: Change with production level (e.g., parts, packaging).
- Total costs: Fixed + Variable costs.
17
Q
What is cost-plus pricing (markup pricing)?
A
Adding a standard markup to the cost of the product. Example: a $20 controller sold for $30 = 50% markup.
17
Q
What is break-even pricing / target return pricing?
A
Pricing to break even on costs or earn a target return. Requires calculating at what price and volume total costs are covered or profit goals met.
17
Q
What does a break-even chart show?
A
It compares total cost and total revenue at various sales volumes to determine when the company breaks even or achieves profit targets.
18
Q
What are the three major considerations when setting a product’s price?
A
Customer value perceptions (price ceiling), product costs (price floor), and competitors’ strategies/prices.
19
Q
What is Customer Value–Based Pricing?
A
A strategy where price is set based on the buyer’s perceived value of the product, not the seller’s cost.
20
Q
Why is good value not the same as low price?
A
A product can be expensive but still be good value if it offers strong benefits or high quality (e.g., YETI coolers).
21
How does Customer Value–Based Pricing differ from Cost-Based Pricing?
Value-based starts with customer perceptions of value and then sets the price; cost-based starts with product cost and adds a markup.
22
How do companies assess perceived value?
They use consumer surveys, experiments, or pricing tests to estimate how much customers are willing to pay.
23
What are two types of value-based pricing?
Good-value pricing (offering the right combo of quality and service at a fair price) and value-added pricing (attaching extra features to justify a higher price).
24
What is an example of good-value pricing?
Loblaw’s low-priced brands or Google Nest Thermostat offering a lower-cost alternative to high-end models.
25
What is value-added pricing?
Charging premium prices by adding features or services—e.g., Canada Goose jackets for Arctic weather.
26
What are fixed and variable costs?
Fixed costs stay constant regardless of output (e.g., rent), while variable costs change with production level (e.g., materials).
27
What is Cost-Based Pricing?
Setting price based on production/distribution costs plus a desired profit margin.
28
What is cost-plus pricing (markup pricing)?
Adding a standard markup to the cost—e.g., retailer buys for $20, adds 50% to sell at $30.
29
What is break-even pricing?
Pricing to cover all costs without profit—e.g., selling 600,000 units at $15 to break even.
29
What is Competition-Based Pricing?
Setting prices based on competitors’ prices, costs, and market strategies.
30
What is target return pricing?
Setting a price to achieve a specific profit—e.g., 800,000 units at $15 for $2M profit.
31
What is the main limitation of break-even analysis?
It ignores customer demand—raising prices reduces volume and may hurt profitability.
32
How does value perception affect competition-based pricing?
If your product offers more value, you can charge more; less value requires a lower price or improved perception.
33
What example shows the power of value-added pricing over competitors?
Caterpillar vs. Komatsu: Caterpillar’s bulldozer was more expensive but delivered $150,000 more in lifetime value.
33
How does marketing strategy affect pricing?
A company’s overall positioning (e.g., Tesla = premium, Spirit Airlines = ultra-low-cost) dictates its pricing approach.
34
What is target costing?
Starting with a desired price based on customer value and designing the product to meet that cost.
35
What is a nonprice positioning strategy?
Differentiating through features/services instead of lowering price—e.g., Sleep Number beds with sleep-tracking tech.
36
What are organizational considerations in pricing?
Small firms may have leaders set prices; large firms use divisional/product managers or pricing departments.
37
What is pure competition and its pricing freedom?
Many sellers offering identical products (e.g., wheat); no control over price, little marketing needed.
38
What is monopolistic competition and how does it affect pricing?
Many sellers offering differentiated products; firms use branding and quality to justify price variation.
39
What is oligopolistic competition?
A market with few sellers who are highly responsive to each other’s pricing and marketing. Each firm’s move directly affects the others.
Example: Canada’s telecom industry – Bell, Rogers, TELUS, and Shaw.
40
What is pure monopoly?
A market with only one seller. It could be:
* A government monopoly (e.g., Canada Post)
* A private regulated monopoly (e.g., Hydro-Québec)
* A private unregulated monopoly (e.g., De Beers)
41
What does the demand curve show?
It shows the quantity of a product that consumers will buy at various prices. Typically downward-sloping: as price increases, quantity demanded decreases.
42
Why do marketers study demand curves?
To estimate how pricing affects consumer buying behavior.
Example: Apple users are less price-sensitive, while Campbell’s Soup customers might switch to cheaper alternatives.
43
What is price elasticity of demand?
The degree to which demand responds to a change in price.
* Elastic = demand changes a lot (e.g., cereal)
* Inelastic = demand changes little (e.g., insulin)
44
What strategy works best when demand is elastic?
Lowering price can increase total revenue — but only if the gain in volume outweighs the drop in unit price. Firms must also avoid becoming a commodity.
45
How do economic conditions influence pricing strategy?
Recessions, inflation, interest rates, and consumer confidence impact:
* How much customers are willing to pay
* Their sensitivity to price
* A company’s costs and pricing flexibility
46
How did pricing strategies change during the Great Recession and COVID-19?
* Consumers became more price-conscious
* Brands emphasized affordability and value
* Firms avoided price cuts to protect image (e.g., offered “credits” instead)
47
How can companies offer value without slashing prices?
* Add lower-cost product lines (e.g., President’s Choice, no name)
* Offer bundled deals or perks (e.g., free night at a hotel)
* Use alternative offers instead of discounts (e.g., resort credits)
48
What are some risks of cutting prices during economic downturns?
* Damaging brand perception
* Eroding long-term profit margins
* Creating expectations for future discounts
Examples:
* Ritz-Carlton & Four Seasons avoided price drops and used added value
49
What are three key external factors that affect pricing?
1. Resellers – Must allow them a fair margin
2. Government – Regulates prices (e.g., rent control, price fixing laws)
3. Social concerns – Fair pricing, accessibility, ethics
50
What is market-skimming pricing?
Setting a high price initially to “skim” maximum revenue from early adopters.
Works when:
* Product has strong brand/image
* Early buyers are less price-sensitive
* Competitors can’t easily enter
Example: Apple iPhones.
51
What are the conditions needed for market-skimming pricing to work?
1. Product must support the high price
2. Demand must be strong enough
3. High price should not attract fast competitors
4. Lowering price later shouldn’t hurt brand
52
What is market-penetration pricing?
Setting a low price to attract a large number of buyers and gain market share quickly.
Example: Amazon Echo, Prime Video.
53
When is market-penetration pricing effective?
* When market is highly price-sensitive
* When production costs fall as volume rises
* When low price can deter new competitors
54
Compare market-skimming and market-penetration strategies.
* Skimming: High price, few buyers, high margin
* Penetration: Low price, many buyers, high volume
Use depends on product type, cost structure, competition, and goals.
55
What is product mix pricing and why is it important?
Product mix pricing involves setting a set of prices that maximize profits for the total product mix. It’s important because products in a mix are related in demand, costs, and competition levels, requiring careful coordination. Companies must find pricing strategies that work across all five situations: product line pricing, optional-product pricing, captive-product pricing, by-product pricing, and product bundle pricing.
56
What is product line pricing? Provide an example.
Product line pricing means setting price steps across a product line based on cost and customer-perceived value. For example, Microsoft offers a range of Surface devices at various price points (Surface Go at $399 to Surface Studio at $4799) to meet different customer needs and justify the price differences through value and feature differences.
57
What is optional-product pricing and what challenge does it pose?
Optional-product pricing involves setting prices for accessory or optional features sold with the main product (e.g., car GPS systems, laptop upgrades, refrigerator ice makers). The challenge lies in deciding what’s included in the base price versus what’s sold as an option, and how much to charge for each.
58
Explain captive-product pricing and give multiple examples.
Captive-product pricing sets low prices for the main product but high prices for necessary complements (e.g., razors and blades, consoles and games). Nintendo sells Switch consoles with low margins but profits from game sales. Gillette uses this by selling razors cheaply but making money on refill cartridges.
59
What is the risk of captive-product pricing and how is it handled in services?
Risks include customer resentment and competition from cheaper alternatives (e.g., Gillette lost share to Dollar Shave Club). In services, it’s known as two-part pricing—e.g., Canada’s Wonderland charges a base fee plus variable fees for food and experiences.
60
Define by-product pricing and its potential benefits.
By-product pricing seeks markets for low-value by-products to offset disposal costs and reduce the main product’s price. For instance, Gildale Farms turns waste wood into fuel and bedding pellets, while the Toronto Zoo turns manure into biogas for electricity.
61
What is product bundle pricing and what makes it effective?
Product bundle pricing combines several products at a reduced price (e.g., fast-food combos, Microsoft Office suite, or telecom bundles from Bell or TELUS). It works when the combined price encourages customers to buy items they otherwise wouldn’t.
62
What are the seven main price adjustment strategies?
The strategies are:
1. Discount and allowance pricing
2. Segmented pricing
3. Psychological pricing
4. Promotional pricing
5. Geographical pricing
6. Dynamic pricing
7. International pricing
These adapt prices to customer differences and market changes.
63
Explain the difference between discounts and allowances with examples.
Discounts are price reductions for behaviors like early payment (cash discount), volume purchases (quantity discount), or seasonal buying. Allowances reduce prices for trade-ins (e.g., old car for new), or dealer promotions (e.g., promotional allowances for advertising support).
64
What is segmented pricing and what forms does it take?
Segmented pricing sets different prices for the same product based on customer type, product form, location, or time. Examples include:
* Customer-segment: seniors, students, veterans
* Product form: economy vs. business class air travel
* Location-based: theater prices in different cities
* Time-based: matinee vs. weekend movie tickets
65
What must companies consider when using segmented pricing?
Segmented pricing must reflect real value differences, be legal, and not cause customer resentment. Example: The “pink tax” where women pay more for similar products due to gender-based packaging sparked backlash and brand credibility issues.
66
What are the long-term risks of poorly managed segmented pricing?
It can lead to customer resentment, perceived unfairness, and brand erosion. For example, airlines upset customers by offering dramatically different services and prices, leading to frustration from both economy and business class passengers.
67
What is the purpose of product mix pricing strategies?
To find a set of prices that maximizes total profits across a firm's product mix by considering related demand, cost structures, and competitive conditions for each product.
68
What are the five types of product mix pricing strategies?
1. Product line pricing
2. Optional-product pricing
3. Captive-product pricing
4. By-product pricing
5. Product bundle pricing
69
What is product line pricing and what should it consider?
It involves setting price steps between products in a line based on cost and customer-perceived value differences. Example: Microsoft Surface products range from $399 to $4799 depending on features.
70
What is optional-product pricing?
Pricing for accessory or optional products that accompany the main product, like laptop upgrades or car add-ons. Companies must decide what to include in the base price and how much to charge for extras.
71
What is captive-product pricing and what are some examples?
Pricing low for the main product and high for required complementary products, e.g., razor handles and blades, Nintendo Switch consoles and games. Can also involve two-part pricing (fixed fee + variable usage fee).
72
What risks are associated with captive-product pricing?
Consumer resentment due to high costs, market loss to cheaper private-label brands, and difficulty balancing prices between the main and captive products.
73
What is by-product pricing?
Selling low-value by-products to reduce disposal costs and increase competitiveness. Examples: sawdust into fuel pellets, manure into power at the Toronto Zoo.
74
What is product bundle pricing?
Combining several products at a reduced total price. Examples: fast-food combos, Microsoft Office software suite, and bundled telecom services. The total price must be attractive enough to encourage purchase.
75
What are the 7 price adjustment strategies?
1. Discount and allowance pricing
2. Segmented pricing
3. Psychological pricing
4. Promotional pricing
5. Geographical pricing
6. Dynamic and personalized pricing
7. International pricing
76
What are discounts and allowances in pricing?
Price reductions for customer actions like paying early or volume buying. Includes cash, quantity, functional (trade), seasonal discounts, and trade-in or promotional allowances.
77
What is segmented pricing and what are its four types?
Charging different prices not based on cost. Types:
* Customer-segment (e.g., student/senior pricing)
* Product-form (economy vs. business class)
* Location-based (theater pricing by city)
* Time-based (matinee vs. evening showtimes)
78
What are some challenges and ethical concerns with segmented pricing?
Must reflect true customer value. Issues like the “pink tax” (gender-based pricing) or treating low-tier customers poorly can damage trust and brand equity.
79
What is psychological pricing and how does it work?
Pricing that uses psychological cues to influence perception. Example: $999 seems cheaper than $1000. High prices may signal high quality when consumers lack expertise.
80
What are reference prices in psychological pricing?
Prices consumers carry in mind, formed by past experiences or context. Sellers can use them to influence perception. Example: displaying a higher-priced item to make others seem cheaper.
81
What are some specific psychological pricing tactics?
Using 9s or 99 endings ($999 vs $1000), setting reference prices, and using visual/mental cues like round numbers (8 is calming; 7 is jarring). Minor differences can have major psychological effects.
82
What is promotional pricing and what are its forms?
Temporarily lowering prices to boost sales. Forms include:
* Special-event pricing
* Flash sales
* Cash rebates
* Low-interest financing
* Extended warranties
* Free maintenance
83
What are potential drawbacks of promotional pricing?
Long-term profit margin erosion and consumer dependency on discounts (e.g., coupon culture at Bed Bath & Beyond).
84
What are the 5 types of geographical pricing?
1. FOB-origin pricing
2. Uniform-delivered pricing
3. Zone pricing
4. Basing-point pricing
5. Freight-absorption pricing
85
What is FOB-origin vs. uniform-delivered pricing?
FOB-origin: customers pay their own shipping from factory.
Uniform-delivered: all customers pay the same shipping, averaged across locations.
86
What is zone pricing and basing-point pricing?
* Zone pricing: customers pay a fixed price per region
* Basing-point: price based on distance from a chosen city, regardless of actual shipping origin
87
What is freight-absorption pricing?
Seller absorbs freight costs to attract customers or penetrate competitive markets, hoping for greater long-term business.
88
What is dynamic and personalized pricing?
Adjusting prices in real time based on customer behavior, demand, or competitor prices. Common in digital platforms, airlines, hotels, ride-sharing, etc.
89
What are benefits and risks of dynamic pricing?
Benefits: Maximized profit, real-time adaptability, customer targeting.
Risks: Customer resentment, confusion, perceived unfairness (e.g., Coca-Cola vending machine backlash).
90
How can consumers use dynamic pricing to their advantage?
By comparing prices through apps like ShopSavvy or Price.com, leveraging price-matching policies, or waiting for better online deals.
91
Q: How do retailers respond to cross-channel price comparisons?
With strategies like Best Buy’s “Price Match Guarantee” to neutralize online price advantages and leverage in-store benefits like immediacy and service.
92
Q: What is international pricing and why is it complex?
Companies must adjust prices across countries based on local market conditions, consumer preferences, laws, competitive context, and marketing goals.
93
How does Apple adapt its pricing strategy internationally?
Premium pricing in affluent markets; discounts and simplified models in developing markets (e.g., China) to stay competitive with brands like Huawei and Xiaomi.
94
What is psychological pricing and how does it influence consumer perception?
Psychological pricing considers how consumers perceive prices rather than just economic value. For example, consumers often associate higher prices with better quality. When quality can't be judged easily, price becomes a signal—e.g., a $100 perfume may only cost $3 to make but feels premium due to the price.
95
What are reference prices and how do sellers use them in psychological pricing?
Reference prices are what buyers carry in their minds, shaped by past prices or comparisons. Sellers influence these to make products seem like a better deal—for example, setting a store brand at $2.49 next to a $3.79 name brand to enhance perceived value.
96
What are common price-ending strategies used in psychological pricing?
Many retailers use endings like .99 to signal bargains (e.g., $9.99), while premium brands may use whole numbers (e.g., $200) to imply quality. Apple used $999 to stay under $1000, making a price seem less intimidating.
97
How do even small price differences impact consumer behavior?
A study showed that a $1 difference (e.g., $299 vs. $300) can lead to significantly different consumer preferences. Some digits are even believed to evoke different emotions—8 is soothing, 7 is jarring.
98
What is promotional pricing and how does it work?
Promotional pricing includes temporary price cuts to create urgency and boost demand. Forms include flash sales, rebates, low-interest financing, longer warranties, or free maintenance. For example, Microsoft offered $200–$650 trade-ins to push Windows PCs.
99
What are the risks of promotional pricing?
Overuse can hurt profit margins and brand perception. At Bed Bath & Beyond, heavy coupon use made discounts feel expected, which eroded profits.
100
What is geographical pricing and what strategies can be used?
It adjusts prices based on customer location. Strategies include:
* FOB-origin pricing: Buyer pays freight
* Uniform-delivered pricing: All pay average freight
* Zone pricing: Prices vary by region
* Basing-point pricing: Fixed freight cost from one city
* Freight-absorption pricing: Seller pays part/all freight to win business
101
What is dynamic and personalized pricing?
Prices are adjusted in real time based on customer data, demand, or location. Examples include Amazon personalizing offers or Uber using surge pricing. This strategy can increase revenue but risks confusion or accusations of price gouging.
102
What are the pros and cons of dynamic pricing for consumers?
Consumers benefit from comparison tools (ShopSavvy, Price.com) but may suffer from inconsistent pricing. Retailers like Best Buy use price-match policies to counter this advantage.
103
What are the key factors in international pricing?
Prices vary based on costs, competition, regulations, and buyer perceptions. For example, price escalation in China can lead to 50% higher luxury goods costs due to tariffs and taxes.
104
How do companies adapt pricing for the “bottom of the pyramid”?
To serve low-income markets, companies like Unilever shrink packaging and cut prices. Products are functional and aspirational, sold in single-use packs (e.g., Dove, Vaseline) to reach billions in emerging economies.
105
What challenges arise in pricing for emerging markets?
High prices or large packaging exclude many consumers. Success requires innovation: offering affordable, aspirational products while maintaining profitability.
106
When might a company initiate a price cut?
Situations include excess capacity, strong competition, or falling demand. Firms may cut prices to dominate through low cost or higher volume, like AGIT Global’s low-priced Wavestorm surfboards.
107
When and why might a company initiate a price increase?
Triggers include rising costs or high demand. A 1% price increase in a company with a 3% margin can raise profits by 33%. But price increases risk being seen as price gouging.
108
How can companies avoid being perceived as price gougers?
Be transparent. Communicate clearly why prices are rising and maintain fairness. Alternatives include “shrinkflation” (e.g., fewer toilet paper sheets), unbundling, or reducing features instead of raising prices.
109
How do customers perceive price increases or cuts?
A price increase can signal exclusivity or greed. A cut may suggest better value or reduced quality. Both influence brand image.
110
What competitor reactions must a company consider before changing prices?
Competitors may respond quickly, especially in small or uniform markets. They may assume a price cut means weakness, aggressive expansion, or industry-wide pricing pressure.
111
How should a company anticipate competitor reactions to price changes?
Analyze competitor size, policies, and behavior. If competitors behave similarly, predictability increases. If not, multiple scenarios must be prepared.
112
How should a company respond to a competitor’s price cut?
Options include:
* Reduce price to match
* Raise perceived value through better branding/communication
* Improve quality and increase price
* Launch low-price "fighter brand" like TELUS’s Koodo
113
What is a supply chain, and what are its upstream and downstream components?
A supply chain consists of all parties involved in producing and distributing a product or service. Upstream partners supply raw materials, components, information, and expertise. Downstream partners include marketing channels like wholesalers and retailers who deliver the product to the customer.
113
What is a “fighter brand” and when is it used?
A fighter brand is a lower-priced offering launched to compete in price-sensitive markets. It’s used when customers won’t be swayed by quality arguments—e.g., P&G's Charmin Basic or TELUS’s Koodo.
114
Why might the term “supply chain” be too limited? What is a better term?
"Supply chain" implies a make-and-sell view focused on production inputs. A better term is "demand chain," which follows a sense-and-respond model, starting with customer needs and building processes to deliver value accordingly.
115
What is a value delivery network and how is it different from a supply or demand chain?
A value delivery network includes the company, suppliers, distributors, and customers, all working together to improve system performance. It reflects a dynamic, interactive system rather than a linear, step-by-step process.
116
What is a marketing channel (or distribution channel)?
A marketing channel is a set of interdependent organizations that help make a product or service available for use or consumption by the end consumer or business user.
117
How do a company’s channel decisions affect other marketing elements like pricing and product placement?
Pricing influences where a product is sold, and marketing communications must align with the type of channel. Products need to match the capabilities of their distribution partners to succeed.
118
Why is it risky for companies to ignore their distribution channels? Give examples.
Poor channel design can damage competitiveness. Successful examples include Apple using iTunes, Uber disrupting taxis, and Amazon using the internet for direct sales and same-day delivery.
119
Why do producers use intermediaries instead of selling directly?
Intermediaries improve efficiency, reduce transaction numbers, and provide experience, specialization, and economies of scale. They reduce work for both producers and consumers.
120
How do intermediaries reduce the number of channel transactions?
Instead of each manufacturer contacting each customer, intermediaries serve as a central hub, reducing the total number of transactions (e.g., from 9 to 6 contacts, as shown in Figure 10.1).
121
What is the economic role of marketing intermediaries?
They transform narrow assortments of producer goods into broader assortments for consumers, bridging time, place, and possession gaps.
122
What functions do marketing channel members perform to complete transactions?
* Information: About the market and consumers
* Promotion: Spreading the offer
* Contact: Finding customers
* Matching: Fitting the offer to customer needs
* Negotiation: Agreeing on terms of sale
123
What functions do marketing channel members perform to fulfill transactions?
* Physical distribution: Transporting/storing goods
* Financing: Covering channel costs
* Risk taking: Managing uncertainties in the process
124
What determines which channel member performs a given function?
It depends on who can do it most efficiently. Shifting work to intermediaries can lower producer costs but increase intermediary fees. Tasks should be assigned based on value created per cost.
125
What is a channel level, and how does it relate to intermediary levels?
A channel level represents a layer of intermediaries that help bring the product closer to the buyer. The number of levels indicates the length of the channel.
126
What is a direct-to-consumer (DTC) channel?
A DTC channel has no intermediaries—producers sell directly to consumers via channels like online stores, social media, or home sales (e.g., GEICO, Mary Kay).
127
What are indirect marketing channels?
These involve one or more intermediaries between the producer and the customer, such as wholesalers and retailers (e.g., toothpaste sold at a pharmacy).
128
Describe three typical consumer marketing channels (Figure 10.2A).
1. Direct: Producer → Consumer
2. One-level: Producer → Retailer → Consumer
3. Two-level: Producer → Wholesaler → Retailer → Consumer
129
Describe three typical business marketing channels (Figure 10.2B).
1. Direct: Producer → Business customer
2. One-level: Producer → Business distributor → Business customer
3. Two-level: Producer → Manufacturer’s rep/sales branch → Distributor → Business customer
130
What are the different types of flows in a marketing channel?
* Physical flow: Movement of products
* Flow of ownership: Transfer of title
* Payment flow: Movement of money
* Information flow: Market data
* Promotion flow: Marketing messages
131
How do distribution channels function as behavioral systems?
They involve formal and informal relationships where firms collaborate (or conflict) to meet individual and shared goals. These systems evolve and adapt over time.
132
What is channel conflict, and why does it occur?
Channel conflict arises when members disagree on roles, goals, or rewards. It can stem from dependency, overlapping responsibilities, or divergent interests.
133
What is horizontal conflict in a distribution channel?
It occurs between firms at the same level (e.g., Ford dealers undercutting each other on price or territory).
134
What is vertical conflict in a distribution channel?
It happens between different levels (e.g., McDonald’s corporate vs. franchisees over profit margins and required upgrades).
135
What are some reasons behind the conflict between McDonald’s and its franchisees?
* Franchisees profit from margins, not royalties
* Aggressive discounting reduces their profits
* Complex menu items increase costs
* Required upgrades don’t add customer value
136
How does channel conflict affect performance, and when can it be healthy?
While some conflict fosters innovation and improvement, excessive or prolonged conflict can harm relationships and channel efficiency. Effective management is essential.
137
What is a conventional marketing channel?
A conventional marketing channel consists of independent producers, wholesalers, and retailers, each acting in their own interest. There's little coordination, and no formal structure exists to assign roles or manage conflict.
138
What is a vertical marketing system (VMS)?
A VMS integrates producers, wholesalers, and retailers into a unified system. One member dominates or owns others, ensuring coordination and reducing conflict. It can be producer-, wholesaler-, or retailer-led.
139
What are the three types of VMS?
* Corporate VMS: Combines production and distribution under single ownership (e.g., Amazon, EssilorLuxottica).
* Contractual VMS: Independent firms join through contracts (e.g., franchising like Sport Clips).
* Administered VMS: Leadership comes from size/power, not ownership (e.g., Walmart or Home Depot influencing suppliers).
140
How does a corporate VMS operate? Give an example.
It controls successive stages through ownership. Example: EssilorLuxottica owns brands like Ray-Ban and retail chains like Sunglass Hut, integrating production and distribution under one firm.
141
How does Amazon represent a corporate VMS?
Amazon controls logistics through its Prime Air fleet, 20,000 truck drivers, and local delivery partners. It uses its infrastructure rather than relying solely on carriers like FedEx or UPS.
142
What is a contractual VMS and what is the most common form?
A contractual VMS uses legal agreements to coordinate firms at different levels. The most common type is a franchise organization, where the franchisor licenses the brand and system to franchisees (e.g., Sport Clips, Tim Hortons).
143
What are the three types of franchises under contractual VMS?
1. Manufacturer-sponsored retailer franchise (e.g., Ford and its dealers)
2. Manufacturer-sponsored wholesaler franchise (e.g., Coca-Cola bottlers)
3. Service-firm-sponsored retailer franchise (e.g., Tim Hortons, Holiday Inn)
144
What is an administered VMS?
An administered VMS is led by the size/power of a dominant member. There's no legal ownership or contracts, but coordination happens due to influence. Examples: Apple and P&G influencing how their products are sold, or Home Depot directing supplier behavior.
145
How does Home Depot act in an administered VMS?
With over $110 billion in sales, Home Depot can demand favorable terms from suppliers like RPM International, influencing display, promotion, and pricing despite not owning them.
146
What is a horizontal marketing system?
A system where two or more companies at the same level join forces to pursue a marketing opportunity. They may be competitors or not, and may collaborate temporarily or permanently.
147
Provide examples of horizontal marketing systems.
* Safeway and Starbucks: Coffee shops inside grocery stores.
* Airline alliances like Star Alliance or SkyTeam: Multiple carriers coordinate schedules, branding, and membership benefits globally.
148
What is a multichannel distribution system?
When a single firm sets up two or more channels to reach different customer segments. For example, a producer might sell directly to consumers online, use retailers, and also distribute to businesses via dealers and a sales force.
149
What are the benefits and challenges of multichannel distribution?
Benefits: Expanded market reach, serving multiple segments.
Challenges: Complex coordination, potential for channel conflict (e.g., direct sales competing with dealers).
150
What is disintermediation in marketing channels?
Disintermediation occurs when producers cut out intermediaries and sell directly to consumers, or when new types of intermediaries replace traditional ones (e.g., iTunes replacing music stores).
151
Give examples of disintermediation.
* iTunes, Amazon: Replaced music retailers
* Spotify, Apple Music: Replaced digital download models
* Uber and Lyft: Disrupted taxis and car-for-hire services
152
How has Lyft disrupted the traditional transportation model?
Lyft bypasses traditional taxi systems by using an app-based model where ordinary people drive their own cars. It provides convenience, real-time fare estimates, and automatic payments.
153
What is Lyft’s founding mission and why was it disruptive?
Lyft’s mission is to “reconnect people and communities.” It disrupted by offering friendly, low-cost service from nonprofessional drivers, appealing to a market tired of expensive, poor service.
154
What risks come with disintermediation?
It’s a double-edged sword. While companies like Lyft disrupt existing channels, they are also vulnerable to future disruption (e.g., by self-driving cars). Continuous innovation is essential to stay competitive.
155
What happened to Toys "R" Us and why?
Toys “R” Us failed to adapt to channel disruptions. Initially dominant, it lost business to Walmart, Target, and online sellers like Amazon because it didn’t adjust its model to shifting consumer habits.
156
What are direct-to-consumer (DTC) brands and why are they considered disruptors?
DTC brands sell directly to consumers via digital/mobile platforms, bypassing traditional retail channels. They’ve succeeded across sectors like beauty, fitness, and food. Their rise pushes established brands to create their own DTC channels to stay competitive.
157
What challenge does DTC growth create for traditional companies?
Traditional companies risk channel conflict when they introduce DTC channels that compete with their own retail partners. To avoid this, some, like Harley-Davidson, route online orders through existing intermediaries.
158
What factors influence channel design decisions for new firms?
New firms with limited resources often start with fewer intermediaries in limited areas. As they grow, they expand via retailers, distributors, or direct sales based on market conditions and opportunities.
159
What is the purpose of marketing channel design?
It involves analyzing consumer needs, setting objectives, identifying major channel alternatives (types, number, responsibilities), and evaluating them to align with the broader marketing strategy.
160
What consumer needs must be considered when designing a channel?
Preferences around location, delivery speed, assortment, service levels, and convenience. Companies must assess trade-offs—higher service adds cost. Some consumers prioritize low prices (e.g., Walmart), while others seek luxury service (e.g., Four Seasons).
161
How does Four Seasons tailor its service strategy to meet consumer needs?
Four Seasons offers high-touch, luxury service, hiring top talent and delivering consistently exceptional experiences to justify premium prices, thus positioning itself at the highest level of service.
161
What major alternatives must be identified in channel design?
1. Types of intermediaries (retailers, value-added resellers)
2. Number of intermediaries (intensive, selective, exclusive)
3. Responsibilities of channel members (service, territory, pricing)
161
What are channel objectives and what influences them?
Objectives define service levels for each target segment. They’re shaped by company characteristics, product nature, intermediaries, environment, and competition. Goals may include speed, exclusivity, or broad availability.
162
How do companies decide where to compete or avoid competition in channels?
Some prefer retail outlets with competitors (e.g., Maytag). Others avoid them—e.g., Pampered Chef uses a direct distribution network; Tesla sells through its own stores/galleries instead of dealers.
163
How do environmental factors like economic downturns affect channel design?
Companies may shorten channels or remove non-essential services to cut costs. Example: During COVID-19, many firms added or expanded online ordering and delivery services.
164
What are the pros and cons of using multiple types of intermediaries?
Pros: Wider market reach and customer access.
Cons: Difficult to manage, can cause internal conflict (e.g., Dell's direct sales vs. resellers).
165
What is intensive distribution and when is it used?
A strategy to distribute products in as many outlets as possible. Used for convenience goods like candy, toothpaste, and soda. Aim is broad availability.
166
What is exclusive distribution and what’s an example?
Limits the number of dealers with exclusive rights in certain territories. Used for luxury brands like Breitling, sold only through select authorized dealers to maintain brand prestige.
167
What is selective distribution and when is it appropriate?
Uses more than one but fewer than all possible outlets. Common for shopping goods like electronics and tools (e.g., STIHL). Balances control and coverage, enabling strong dealer relationships.
168
What are the responsibilities of channel members?
Channel members and the company must agree on pricing, service terms, territory rights, discounts, and performance expectations. Roles should be clearly defined to prevent conflict.
169
Give an example of clear channel member responsibilities in practice.
Subway provides franchisees with training, promotional support, and recipes. In return, franchisees must meet standards, buy certain ingredients, and pay fees (e.g., 8% royalty + ad fund).
170
How are channel alternatives evaluated?
1. Economic criteria: Costs, investments, and returns
2. Control criteria: How much control is retained or lost
3. Adaptability criteria: Flexibility to adjust to changes in the environment
171
What is a conventional marketing channel?
A conventional marketing channel consists of independent producers, wholesalers, and retailers, each seeking to maximize their own profits, often at the expense of the system as a whole. There is little coordination and no formal means to resolve conflicts or assign roles.
172
What is a vertical marketing system (VMS)?
A VMS is a unified distribution channel where producers, wholesalers, and retailers work together in a coordinated way. One member usually dominates and has power or contractual ties over the others. Types include corporate, contractual, and administered VMS.
173
What is a corporate VMS?
A corporate VMS combines production and distribution stages under single ownership. For example, EssilorLuxottica owns both the brands and the distribution outlets like LensCrafters and Sunglass Hut.
174
What is a contractual VMS?
In a contractual VMS, independent firms at various levels of production/distribution coordinate through contracts. The most common form is franchising, such as Sport Clips Haircuts.
175
What are the 3 types of franchises in contractual VMS?
1. Manufacturer-sponsored retailer (e.g., Ford dealerships)
2. Manufacturer-sponsored wholesaler (e.g., Coca-Cola bottlers)
3. Service-firm-sponsored retailer (e.g., Tim Hortons)
176
What is an administered VMS?
Leadership is assumed by a dominant channel member due to size/power, not ownership or contracts. Example: Home Depot influencing suppliers like RPM.
177
What is a horizontal marketing system?
Two or more companies at the same level join forces for marketing purposes. Example: Safeway and Starbucks co-locating. Globally: airline alliances like Star Alliance.
178
What is disintermediation in marketing channels?
When producers bypass traditional intermediaries and sell directly to consumers. Example: iTunes displacing music stores; Uber displacing taxis.
179
What is a multichannel distribution system?
A single firm sets up multiple marketing channels to reach different segments. Example: John Deere sells via catalogues, dealers, and retail stores.
180
What are the risks of disintermediation?
It creates new threats: innovators can become disrupted by newer models (e.g., ride-sharing firms fear self-driving cars).
181
What are direct-to-consumer (DTC) brands?
Brands that sell directly to consumers online without traditional retail intermediaries. Example: beauty and fitness brands. Established companies now create DTC channels too.
182
What decisions are involved in channel design?
Channel design involves analyzing consumer needs, setting objectives, identifying major alternatives, and evaluating alternatives.
183
How do you analyze consumer needs for channel design?
Consider preferences like proximity, online vs in-store, service levels, delivery speed, assortment, and cost trade-offs.
184
What is a channel objective?
A company’s goal regarding the level of service to offer customers through its distribution channel, shaped by company size, product type, competition, and environment.
185
What environmental factors affect channel objectives?
Legal, economic, and global conditions. Example: COVID-19 led to increased online channels.
186
What are the three major types of distribution strategies?
* Intensive distribution (many outlets, e.g., toothpaste)
* Exclusive distribution (few outlets, e.g., luxury watches)
* Selective distribution (some outlets, e.g., STIHL tools)
187
What are responsibilities of channel members?
Agree on pricing, territories, services, and conditions. Example: Subway supports franchisees with training and systems; franchisees follow quality standards and pay royalties.
188
How should a company evaluate channel alternatives?
Use:
* Economic criteria: Costs, returns
* Control criteria: Who controls the product/brand
* Adaptability: Long-term flexibility
189
How do international distribution channels differ?
Countries vary in intermediary structure and practices. For example, China uses in-store promoters vs. Western self-service.
190
What challenges exist in emerging markets?
Infrastructure gaps. Example: Domino’s digs wells in Nigeria, Nestlé uses a floating store in Brazil.
191
What does channel management involve?
Selecting, motivating, and evaluating intermediaries over time to ensure effective distribution.
192
What criteria are used when selecting channel members?
Years in business, product lines, location, performance history, cooperativeness, and reputation.
193
How can companies motivate channel members?
Partner relationship management (PRM), rewards, training, and close coordination. Examples: Amazon & P&G, Toyota & suppliers.
194
Why is Caterpillar’s distribution network effective?
Its 160 dealers act as inside partners, offering support, service, and customer relationship management.
195
How do companies evaluate channel members?
Assess quotas, inventory, delivery, service, cooperation, and training. Reward top performers and assist or replace low performers.
196
What legal issues affect channel relationships?
* Exclusive dealing and territorial agreements (allowed if they don’t harm competition)
* Full-line forcing (can be illegal if it reduces market competition)
* Sellers can usually only drop dealers “for cause.”
197
What is marketing logistics?
Also called physical distribution, it involves moving and storing goods efficiently from origin to final customer, meeting customer needs at a profit.
198
What are the three types of logistics involved in SCM?
* Inbound logistics: Suppliers to company
* Outbound logistics: Company to customers
* Reverse logistics: Reuse or return of products
199
What is supply chain management (SCM)?
Managing upstream and downstream flow of goods, materials, and info among suppliers, company, resellers, and consumers.
200
How does technology improve logistics and distribution?
* Companies use supply chain management software, cloud logistics systems, point-of-sale scanners, RFID tags, satellite tracking, and electronic data transfer.
* These tools enhance speed, accuracy, and efficiency in managing goods, information, and finances.
201
What are the key responsibilities of a logistics manager?
A logistics manager coordinates the activities of suppliers, purchasing agents, marketers, channel members, and customers. These responsibilities include forecasting, information systems, purchasing, production planning, order processing, inventory, warehousing, and transportation planning.
202
Why are companies emphasizing logistics more today?
1. Competitive advantage – Better logistics = better service or lower prices.
2. Cost savings – Efficient logistics cut costs for both company and customer.
3. Significance – Logistics can account for up to 20% of a product's price.
4. Scale – U.S. firms spend $1.6 trillion/year on logistics (7.6% of GDP); GM’s logistics overhaul saved $2 billion over 2 years.
203
How does product variety impact logistics management?
* Increased product variety (e.g., Walmart Supercentre has 142,000 products) complicates ordering, shipping, stocking, and controlling inventory.
* It presents sizable logistical challenges and increases the need for sophisticated logistics systems.
204
Why is logistics crucial to sustainability efforts?
* Logistics functions (transportation, warehousing, packaging) are the biggest contributors to a company’s environmental footprint.
* Many firms now focus on sustainable supply chains to reduce emissions, cut costs, and meet consumer/environmental expectations.
205
What are the benefits of sustainable supply chains?
* Help fight climate change by lowering carbon emissions.
* Meet growing consumer and client demands for eco-friendliness (e.g., 70% of North Americans want sustainable brands).
* Reduce costs (e.g., Levi Strauss’s logistics changes cut both emissions and expenses).
* Enhance brand image and competitive advantage.
206
What is Levi Strauss’s Water
* Water
207
What are the primary goals of a logistics system?
* Targeted customer service at lowest cost.
* Balance high service (fast delivery, liberal returns, large inventories) vs. low cost (slower delivery, small inventory).
* Maximize profits, not sales, by weighing service level benefits against costs.
208
What logistics challenges arise from after-purchase use of products like Levi’s jeans?
* The greatest environmental impact comes from consumers washing/drying jeans.
* Levi created Water
209
What are the types and functions of warehouses?
* Two main types:
o Storage warehouses (hold goods long-term).
o Distribution centres (receive, process, and ship quickly).
* Example: Amazon has 800+ fulfillment centers. Tracy, CA center covers 1.2 million sq. ft, ships 700,000 packages/day, and uses over 100,000 robots.
* Warehouses are becoming highly automated and efficient, making logistics faster and cheaper.
210
How is Amazon transforming warehousing operations?
* Amazon uses over 100,000 robots in its fulfillment centers to assist human workers.
* Robots retrieve items, bring them to workers, and make processes more efficient.
* Robots work 16 hours/day, 7 days/week, reducing labor strain and increasing order accuracy.
* Example: On Prime Day, Amazon ships over 1000 items/second globally.
211
How does inventory management affect logistics performance and customer satisfaction?
* Too little inventory = stockouts and lost sales.
* Too much inventory = high carrying costs and tied-up cash.
* Many firms use just-in-time (JIT) systems: deliver small quantities frequently and only when needed, reducing warehouse space and handling costs.
212
How does Walmart handle inventory delivery and variability?
* Demands “On-Time, In-Full” delivery from suppliers.
* Penalizes early, late, or incorrectly packed shipments.
* Prioritizes inventory precision to reduce costs and lost sales.
* Says "inventory variability is the No. 1 killer in the supply chain.”
213
What technology is used to improve inventory management?
* RFID (radio-frequency identification) or "smart tags" are embedded in or attached to products/packages.
* Allow real-time tracking of products across the supply chain.
* Used by firms like Walmart, P&G, IBM to automate and optimize inventory flow and logistics.
214
What are the five main transportation modes used in logistics?
1. Trucks – Flexible, fast, and used for 90% of freight in Canada.
2. Railroads – Handle 9% of freight; efficient for bulk, long-distance shipping.
3. Water – Low-cost for bulky, nonperishable goods; slow.
4. Pipelines – Specialized for oil, gas, chemicals.
5. Air – Fastest, expensive, ideal for perishables and high-value items.
215
What are the advantages and disadvantages of water and air transportation?
* Water: Low cost, ideal for bulky items, but very slow and weather-sensitive.
* Air: Fastest, reduces inventory needs, ideal for perishable/high-value goods, but expensive. Less than 1% of total freight by volume.
215
What role do railroads play in logistics in Canada?
* Railroads account for 9% of Canadian freight.
* Cost-effective for bulk materials like coal, sand, minerals.
* Offer services like piggyback (truck-on-rail), in-transit rerouting, and specialized flatcars for unique goods.
216
How does the internet act as a logistics channel?
* Carries digital goods like media, software, music, and education.
* Uses satellite, phone wire, cable, or wireless to deliver content.
* Eliminates physical handling and shipping, lowering distribution costs.
217
What is multimodal transportation, and what are some examples?
* Combines two or more transport types for efficiency and flexibility.
* Types include:
o Piggyback – rail + truck
o Fishyback – water + truck
o Trainship – rail + water
o Airtruck – air + truck
* Reduces cost, increases flexibility, and improves service.
218
What are the benefits of multimodal shipping for logistics companies?
* Each mode covers another’s weakness (e.g., piggyback is cheaper than truck alone but more flexible than rail alone).
* Provides cost savings, speed, reliability, and convenience.
* Many logistics firms offer single-source solutions for multimodal transportation.
219
What is the role of logistics information management in supply chains?
Logistics information management involves capturing, processing, and sharing data such as transactions, billing, inventory levels, and customer data to improve logistics decisions. Efficient sharing often relies on EDI (Electronic Data Interchange) and systems like vendor-managed inventory (VMI), enabling real-time coordination between suppliers and customers.
220
What is Electronic Data Interchange (EDI), and how is it used in logistics?
EDI is the digital exchange of data between organizations. It's commonly used by companies like Walmart to connect with suppliers, requiring EDI links to access systems like Retail Link. EDI enhances data accuracy and decision-making across the supply chain.
221
What are vendor-managed inventory (VMI) systems?
VMI systems allow suppliers to manage inventory and deliveries based on real-time sales and inventory data shared by the customer. This reduces delivery costs and shifts inventory responsibility to suppliers, requiring strong buyer-seller collaboration.
222
What is integrated logistics management?
Integrated logistics management emphasizes teamwork across departments (e.g., marketing, finance, operations) and among external partners (suppliers, customers) to coordinate logistics decisions and improve the performance of the entire distribution system.
223
What is the importance of cross-functional teamwork in logistics?
Departments like warehousing, inventory, and transport must coordinate logistics activities. Isolated efforts can cause inefficiencies, while integrated efforts improve service and reduce trade-offs such as stockouts or excessive costs.
224
How do companies implement integrated supply chain management?
Companies create logistics committees or appoint supply chain managers/VPs to oversee logistics activities. Tools like supply chain management software (e.g., Oracle, SAP) help optimize inventory, transport, and coordination across the value chain.
225
What are logistics partnerships, and why are they important?
Logistics partnerships involve collaboration across the supply chain to reduce costs and improve service. Companies like IKEA and Nestlé (Purina) work with suppliers and retailers (e.g., Walmart) in cross-functional, cross-company teams to boost efficiency.
226
What is third-party logistics (3PL) and why do companies use it?
3PL involves outsourcing logistics to firms like UPS, FedEx, or DHL for transport, storage, customs, and order processing. Companies use 3PLs to cut costs, improve speed, and focus on core operations. Over 90% of Fortune 500 firms use 3PLs.
227
What advantages do 3PL providers like UPS offer companies?
UPS manages not just shipping but also complex operations like reverse logistics (e.g., Toshiba repairs). 3PLs improve service, reduce inventory, and manage returns efficiently. The 3PL market is expected to grow from $1B in 2019 to $1.7T by 2027.
228
Why is outsourcing logistics a strategic decision for many companies?
Outsourcing logistics is more efficient and cost-effective. It allows companies to focus on their strengths while relying on expert logistics providers to handle increasingly complex logistics environments.
229
What was the traditional approach to mass marketing?
Marketers used mass-media strategies like TV and magazines to sell standardized products to a large audience, often reaching millions with one ad.
230
Why is mass marketing less effective today?
Consumers now have curated newsfeeds and personalized media; they no longer consume the same content, reducing the impact of broad, one-size-fits-all ads.
231
What is the new marketing communications model based on?
It is shaped by changes in consumers (who are more informed and empowered), strategies (moving from mass to micro-markets), and technology (digital and social media).
232
What are the three main shifts in the new communications model?
1. Empowered consumers
2. Shift from mass marketing to micro-markets
3. Rise of digital technologies and social media
233
What is the "marketing trifecta"?
It's the combination of owned (brand-controlled), earned (customer-generated), and paid (advertised) media that together replace the traditional promotional mix.
234
What is the role of a modern marketing communicator?
They act as content marketing managers who inspire and share brand messages across owned, earned, and paid media, focusing on customer journeys.
235
Why is integrated marketing communication (IMC) important?
IMC ensures all brand messages across channels are clear and consistent, avoiding confusion and reinforcing customer relationships and brand image.
236
What challenge does IMC help solve?
It prevents mixed messages from different departments or media channels that confuse consumers and dilute the brand.
237
Give an example of an effective IMC campaign.
Land Rover’s “Above and Beyond” campaign used both traditional media and digital storytelling to deeply engage consumers.
238
What is a cross-platform campaign?
A campaign that combines different media (TV, digital, social) to leverage each one’s strengths, creating a more engaging and unified brand experience.
239
What are the goals of using owned, earned, and paid media together?
To build brand awareness, reach users with consistent messages, and engage them deeply for long-term loyalty and advocacy.
240
What is Customer Experience (CX) Marketing?
A strategy focused on improving every point of contact a customer has with a brand to foster loyalty, trust, and advocacy beyond just making a sale.
241
What are the benefits of CX marketing?
Increased loyalty, better social proof, stronger engagement, higher retention rates, and revenue growth.
242
How does CX marketing lead to advocacy?
Positive customer experiences create emotional connections, encouraging customers to promote the brand and repeat purchases.
243
What is the biggest challenge in CX?
Consumers don’t view their brand relationship as separate interactions—they expect a continuous, seamless experience across all touchpoints.
244
How important is a good customer experience?
Very—customers are 5.2 times more likely to buy from companies with excellent CX, and many companies see major sales growth as a result.
245
What is a customer journey map?
A visual tool that outlines a customer's full experience with a brand, from awareness to advocacy, showing emotions, actions, and touchpoints.
246
What are the key stages in the customer journey map?
Awareness → Findability → Reputation → Conversion → Advocacy.
247
How does journey mapping help marketers?
It reveals what customers feel at each touchpoint, uncovers insights, and helps prevent problems while improving loyalty and decisions.
248
What should effective journey maps be based on?
Data-driven research that shows emotions, goals, and behaviors at each stage of the customer experience.
249
What are owned marketing communications?
Content fully controlled by the brand, including websites, emails, newsletters, and social media accounts, used to build long-term customer relationships.
250
What is the role of owned media in the marketing trifecta?
It helps retain loyalty and interest among existing customers by providing consistent and branded content.
251
What types of content are considered owned media?
Blogs, tweets, podcasts, infographics, and YouTube videos posted on the brand’s own platforms—not ads.
252
What is content marketing?
A strategic process of creating and distributing valuable, relevant, and consistent content to attract a clearly defined audience and drive profitable customer action.
253
Why is content marketing considered foundational?
Seth Godin said, "Content marketing is the only marketing left," emphasizing its role in meeting consumer information needs.
254
What example shows effective content marketing?
Lululemon created downloadable training plans (instead of just ads) for its running shoes, offering valuable content aligned with consumer goals.
255
Why is the traditional advertising model no longer effective?
Media consumption has shifted from well-defined TV and print channels to a fragmented digital landscape.
256
What makes today's brand messages effective?
They must be social, mobile, interactive, and span across many platforms like streaming, apps, and branded content.
257
How has the marketer’s role changed in the digital age?
Marketers are now content strategists who create and share compelling, always-on content across digital and traditional platforms.
258
What is the POEM model?
It classifies media as Paid, Owned, and Earned—representing how content is created, controlled, and distributed.
259
Define owned media.
Channels owned and controlled by the company (e.g., websites, emails, communities).
260
Define earned media.
Shared by consumers or third parties, such as social media posts, blogs, or TV news.
261
Define paid media.
Any content the brand pays to promote (e.g., display ads, TV spots, paid search).
262
What is the Intuit "Giant Story" campaign and why is it effective?
It integrated POES channels, earned 22M YouTube views, and boosted ad recall, awareness, and brand favorability.
263
What was the second Intuit campaign?
“A Prosperity Story,” where a giant helps a young entrepreneur; supported by social and traditional media for high engagement.
264
Why can’t we just call it “advertising” anymore?
Advertising has evolved into content marketing and storytelling; marketers now facilitate conversations, not just push messages.
265
What is inbound marketing?
A strategy to attract consumers by providing content that draws them in and converts them into leads and customers.
266
What are the stages of inbound marketing?
Attract → Convert → Close → Delight → Promoters
267
How does inbound marketing align with the customer journey?
It maps content to each stage, ensuring the right message reaches the right person at the right time.
268
What does the V in the VISION model stand for?
Vivid – A content vision must be descriptive and easy to visualize. Ex: Lululemon's "The Sweat Life" paints a vivid picture of a healthy lifestyle.
268
What is a content vision?
A unifying theme driven by the brand’s “why” (purpose), guiding all marketing content across platforms.
269
How should a content vision connect with consumers?
Emotionally, not just functionally—by aligning with lifestyles and values.
270
What is Herschel’s content vision example?
“Well Travelled” – a blog and hashtag series highlighting stories of travel and freedom, connecting emotionally with audiences.
270
What does the I (first) in the VISION model stand for?
Inspirational – The vision should be meaningful and ambitious. Ex: Nike’s “There is an athlete in everyone” motivates action.
271
What does the S in the VISION model stand for?
Significant – The vision must matter to the target audience. Ex: Shopify’s “Celebrating entrepreneurs” speaks to its core audience.
272
What does the I (second) in the VISION model stand for?
Infectious – It should spread easily, with social currency. Ex: Duolingo’s “learning should be fun” encourages sharing.
273
What does the O in the VISION model stand for?
Out of the ordinary – It must be distinctive and help the brand stand out. Ex: Dove’s “empowering self-advocacy and self-esteem.”
274
What does the N in the VISION model stand for?
North Star – A lasting, guiding content vision that remains constant over time. Ex: Disney’s “Spontaneous moments of happiness.”
275
What are the three main types of websites in owned content strategy?
1. Lead-generating/Marketing websites
2. E-commerce websites
3. Brand community websites
276
What is the purpose of lead-generating websites?
To capture contact information and convert visitors into long-term leads (Ex: Hyundai’s website).
277
What is the focus of e-commerce websites?
To convert visitors into immediate purchasers (Ex: SSENSE, for direct fashion sales).
278
What are brand community websites designed for?
To create brand engagement and community, not sales. Ex: TSN.ca builds a sports fan community with customizable content.
279
How can brands increase visits to their websites?
By integrating owned, earned, and paid tactics to drive traffic and keeping content useful, engaging, and visually appealing.
280
Why is email marketing still important?
It has low cost, high ROI ($42 per $1), and allows for personalized, targeted communication. 87% of marketers use it.
281
What is earned media?
Unpaid content shared by third parties (e.g., social posts, reviews, news), trusted more than brand-originated content.
281
What makes email marketing effective?
Relevance, personalization, and timing. B2B and B2C brands both benefit. ESPs allow targeted relationship-building.
282
Give an example of effective email marketing.
Fisher-Price sends personalized birthday emails with parenting tips and links to age-specific play ideas.
282
How can owned and paid media support earned media?
By inviting users to share branded content (owned), and boosting it with promotion (paid), leading to wider earned distribution.
282
How does Warby Parker use email marketing?
It sends a sequence of 9 emails for try-ons, follow-ups, and personal milestones like birthdays to build connection.
282
Why is earned media valuable?
It drives reach and trust organically, with no cost to the brand, and often spreads through word-of-mouth and sharing.
283
What is user-generated content (UGC)?
Any content (text, video, reviews) made by individuals, not brands, and shared online. It brings trust and organic reach.
284
Why is UGC powerful for brands?
It incorporates customers’ voices, boosts credibility, and helps brands reach new audiences via customers' networks.
285
Give an example of successful UGC.
Doritos’ “Crash the Super Bowl” contest let fans create video ads, which were broadcast and won awards, boosting engagement.
286
How does West Elm use UGC?
It collects #MyWestElm photos and uses them in website and social promotions to show how real customers use their products.
287
What is viral marketing?
When content spreads rapidly through sharing, usually via social media, often generating earned media and massive exposure.
288
What example shows successful viral marketing?
Google Android’s “Friends Furever” video with unlikely animal pairings got 24M views and 6.4M shares, spreading positivity.
289
Can marketers control virality?
Not fully. Content must strike an emotional chord. Brands can "seed" content but can't force it to go viral.
290
What makes viral content effective?
Emotional appeal, shareability, timing, and relevance to cultural or personal values.
291
What is the significance of TikTok in earned media opportunities?
TikTok has revolutionized earned media by allowing any user’s content to go viral through the "For You" page, which tailors content to users’ interests. Its algorithm promotes authenticity, especially when users share product experiences without compensation.
292
Give an example of TikTok influencing product sales through earned media.
TikTok user #kaelynwhitee posted a video showing her transformation using The Ordinary's peeling serum. The video went viral, leading to more than 637,000 likes, 1 million views, and the sale of over 52,000 units within two weeks.
293
What are traditional public relations tactics in earned media?
Traditional PR includes press releases, product publicity, public affairs, lobbying, investor relations, and development efforts to build public trust and support across various audiences.
294
What is the impact of public relations in earned media strategy?
PR builds long-term relationships and brand engagement with minimal cost. It fosters conversation, brand visibility, and emotional connections, often leading to high returns with little financial investment.
295
Describe the 'Fearless Girl' campaign and its significance.
The 'Fearless Girl' statue campaign by State Street promoted gender diversity in leadership. It became a viral symbol, leading to widespread global impressions and prompting over 420 companies to add women to their boards. It demonstrated PR's ability to spark global impact.
296
How is PR evolving with social media?
PR professionals now engage directly with audiences using storytelling and content creation, shifting from behind-the-scenes roles to being integral to brand development and customer engagement.
297
What is paid media?
Paid media includes any content promoted through a financial investment, such as ads on TV, social media, or websites. It aims to generate awareness, traffic, and conversions.
298
How is paid media different from traditional advertising?
While both require investment, advertising often uses traditional mass-media with a direct call to action, whereas paid media includes decentralized digital formats and focuses on strategic placement within the content plan.
299
List key distinctions between advertising and paid media.
* Advertising is often a standalone tactic; paid media integrates into content strategy.
* Paid media uses both traditional and decentralized channels (e.g., influencers).
* Advertising focuses on action post-ad; paid media focuses on strategic placement.
* Paid media is part of the marketing trifecta.
300
Why must paid media efforts be strategic and data-driven?
Because paid media involves cost, it must be carefully planned to maximize ROI. Data guides where, when, and how to place content for maximum impact, often as part of an integrated media strategy.
301
What is a retargeting campaign?
A campaign that uses data from past user interactions to show relevant ads again. E.g., a hot sauce company might retarget users who downloaded recipes containing hot sauce.
301
What are some key considerations in media selection?
* Context (prestige or fit)
* Budget and ROI
* Availability and lead times
* Competition and share of voice
* Reach and frequency
* Seasonality and timing
302
What is an example of seasonality and timing in media selection?
Campbell’s times its chicken noodle soup ads to coincide with seasonal spikes in cold and flu mentions, maximizing relevance and response.
303
What should a paid media recommendation include?
1. Scheduling
2. Exposure/frequency
3. Costs
4. Media blocking chart
5. Media not chosen and why
6. Supporting data (research, quotes, reports)
304
What should the rationale section of a media plan explain?
1. Why concentrate on specific media or a mix
2. Why each medium was chosen
3. Advantages/disadvantages
4. Advertising weight/exposure levels
305
How does digitization enhance audience targeting in media?
Digital platforms like Facebook or Google allow precise targeting based on data. Marketers can tailor content and use retargeting campaigns to re-engage users based on their past interactions.
306
What is the significance of social media in paid media planning and buying?
Social media is cost-effective and dominant in advertising, especially on platforms like Meta. Organic reach is disappearing, so brands must “pay to play” to gain visibility and engagement.
307
How have social platforms evolved in format and function?
Platforms copy each other’s features (e.g., Vine → TikTok → Reels → YouTube Shorts), so mastering one can help brands adapt across others.
308
What trend is shown in the Social Media Ad Spending in Canada chart (2017–2025)?
Social media ad spend (mobile + desktop) in Canada increased steadily from $1.7B in 2017 to a forecasted $4.3B in 2025, with mobile dominating spend.
309
What insights are shown in the global digital ad spend forecast (Figure 12.4)?
In 2021, online video had the highest growth (26%), followed by social media (25%) and paid search (19%). Social and paid search were nearly equal in total spend ($137B and $135B).
310
What are key paid media metrics?
Key metrics include ROAS (return on ad spend), conversion rate, CPC (cost-per-click), and impressions (measured in CPM). These help assess campaign effectiveness.
311
What is a display ad and what are some real-world examples?
Display ads are visual or interactive online ads (e.g., GIFs, videos). Example: Boeing’s 3D ISS ad or Sonic’s daily countdown quiz for summer promos.
312
What are different formats of display ads?
Formats include rich media (interactive), interstitials (between content), overlays (within page), and video ads (pre-roll, mid-roll, post-roll, e.g., YouTube ads).
313
What are common display ad sizes according to IAB standards ?
Sizes include Leaderboard (728×90), Medium Rectangle (300×250), Half-page (300×600), Pop-under (720×300), Skyscraper (120×600), Square (250×250), and many more.
314
What is programmatic advertising and why is it important?
It automates ad buying and placement via software, accounting for 84% of digital display spend in the U.S. It’s efficient, data-driven, and essential for digital marketers.
315
What defines traditional media in advertising, and what are its main types?
Traditional media includes print (e.g., newspapers, flyers), broadcast (TV/radio), and out-of-home (billboards, bus shelters). It's best for early-stage awareness and still widely used despite digital dominance.
316
What is search engine optimization (SEO)?
SEO is the process of optimizing a website or page to improve its visibility in search engine results pages (SERPs). It involves on-page and off-page techniques to increase organic (unpaid) traffic, leading to more visibility, leads, and conversions.
317
What is the difference between on-site and off-site SEO?
On-site SEO improves a site’s content, structure, and keyword use to help it rank. Off-site SEO builds the site’s credibility through external links, social media marketing, and PR to boost search engine rankings.
318
What are keywords in the context of SEO?
Keywords are words or phrases that describe the content of a website and help search engines determine what it’s about. Using the right keywords helps pages appear in search results.
319
Why are relevant and specific keywords important in SEO?
Specific keywords attract more qualified traffic and are less competitive than broad terms. For example, “waterproof running shoes” is more targeted than “running shoes.”
320
What are the five basic steps for identifying keywords for SEO?
1. Start with a keyword list using tools like Google Keyword Planner.
2. Analyze search volume and competition.
3. Consider intent (informational vs. commercial).
4. Use long-tail keywords (specific phrases).
5. Mix broad and specific keywords for balance.
321
What is a long-tail keyword and why is it useful?
A long-tail keyword is a detailed, specific phrase with lower competition but higher conversion rates. Example: “best waterproof running shoes for marathon training in Vancouver.”
322
How can you improve a page’s relevance for a keyword?
1. Use the keyword in titles and headings.
2. Use it naturally in the content.
3. Include it in the URL.
4. Add it to the meta description.
5. Use variations of the keyword.
6. Use anchor text with keywords for internal and external links.
323
What technical issues can harm SEO and quality score?
* Slow loading times
* Poor mobile responsiveness
* Broken links
* Lack of HTTPS security
324
What are anchor text and its role in SEO?
Anchor text is the clickable text in a hyperlink. When it includes keywords, it helps search engines understand the context and relevance of the linked content.
324
What tools help identify SEO technical issues?
Tools like Google’s PageSpeed Insights and Mobile-Friendly Test help detect problems like slow load times, broken links, and non-mobile-friendly pages.
324
What is off-site SEO and what are some common strategies?
Off-site SEO improves a site’s ranking via external efforts, including backlink building, social media promotion, and PR. It boosts credibility and authority.
324
How does social media marketing support off-site SEO?
Promoting content on social media increases visibility and encourages sharing and backlinks, helping to improve search rankings.
325
What is backlink building and why is it important?
Backlink building gets high-quality external websites to link to yours. These links are seen as votes of confidence, improving your SEO authority.
325
How can online public relations help off-site SEO?
Press releases, guest blogs, and media mentions build trust and authority, improving your reputation and boosting SEO.
325
What are internal links and their SEO purpose?
Internal links connect pages within the same site. They improve navigation, guide search engine crawlers, and distribute page authority.
326
What are the five other types of links found on web pages besides internal links?
* Hyperlinks: Click to go to other pages
* Anchor links: Jump to a section on the same page
* Image links: Use images instead of text
* External links: Point to other websites
* Internal links: Stay within the same website
327
What are anchor links and how are they used?
Anchor links navigate to a specific section of a page (like a table of contents). They're helpful in long pages for easy navigation.
327
What are image links in SEO and how are they identified?
Image links use clickable images as links. They are identified using the img tag in HTML and can improve visual engagement.
328
What are external links and how do they help SEO?
External links point to outside websites. They build credibility, offer additional resources, and may increase ranking if linked to high-quality sites.
329
Why do backlinking strategies in SEO focus on external links only?
Because external links act as third-party endorsements of your content, they’re key to building authority—internal links help with structure, but external links boost trust
330
What are the steps to determine weaknesses in a website’s link profile?
1. Use link analysis tools like Ahrefs or Majestic to evaluate link quantity, quality, and anchor text.
2. Look for a low ratio of high-quality to low-quality links.
3. Check for lack of diversity in anchor text—repetitive anchor text can appear spammy.
4. Identify broken links that can hurt credibility and ranking.
331
What are the steps to improve search engine rankings through link-building?
1. Identify websites relevant to your content.
2. Research their linking behavior.
3. Offer high-quality content or guest posts.
4. Make a list of target websites and tactics.
5. Reach out with link-building proposals.
6. Follow up to check on opportunities.
7. Monitor and adjust link-building strategies.
332
What is the difference between SEO and SEM?
SEO is a free, organic method focused on optimizing website structure, content, and user experience.
SEM (Search Engine Marketing) involves paying for ads to appear in search results, using pay-per-click (PPC) models.
333
What are the types of search engine ads?
* PPC ads: Headline, description, display URL; marked as “sponsored.”
* PLAs (Product Listing Ads): Show images, prices, and product info.
* LSAs (Local Service Ads): For local businesses, with name, location, and ratings.
* Google Maps Ads: Appear in map searches with location and business info.
334
What is the Google Ads Auction and how does it work?
1. Google matches ads to a user’s search.
2. It removes ineligible ads (e.g., violating policies or wrong geography).
3. Remaining ads go through Ad Rank, which factors in bid, ad quality, and relevance. High quality can win even with a lower bid.
335
What factors determine Ad Rank in the Google Ads auction?
* Bid amount
* Ad relevance
* Landing page quality
* Context of the user’s search
* Impact of ad extensions
336
How can advertisers improve ad position in search results without increasing bid?
1. Improve ad relevance (headline, description, keywords).
2. Improve ad and landing page quality.
3. Use ad extensions (e.g., phone, site links).
4. Use negative keywords to block irrelevant queries.
337
What are the steps to analyze a search engine ad campaign’s effectiveness?
1. Set specific goals (traffic, conversions, leads).
2. Use analytics tools (e.g., Google Analytics) to track metrics.
3. Analyze performance data vs. goals.
4. Identify top-performing and underperforming keywords and groups.
5. Optimize based on insights—tweak copy, targeting, or budget.
338
What’s the advantage of high ad quality in the Google Ads auction?
High ad quality can result in a lower cost per click (CPC) and better ad position—even with a lower bid—by increasing your Ad Rank.
339
What’s the purpose of using negative keywords in Google Ads?
Negative keywords block your ad from appearing in irrelevant searches, improving targeting and ad position.
340
What are the five steps to creating a categorized list of keywords for an ad campaign?
1. Identify the target audience for the campaign.
2. Conduct keyword research using tools like Google Keyword Planner or Ahrefs.
3. Organize keywords into thematic categories.
4. Determine the search intent of each keyword.
5. Use keyword categories to create ad groups for targeting specific audiences.
341
How has social media disrupted traditional marketing communication?
Social media shifted communication from businesses to consumers, offering instant, 24/7 interaction, global reach, and consumer-created content. Traditional media like TV, print, and radio are no longer primary touchpoints.
342
What are key advantages of social media marketing?
* Interactivity: Real-time communication with consumers.
* Targeting: Access to consumer data allows personalized content.
* Immediacy: Faster than traditional media.
* Flexibility: Easily editable content.
* Cost-effectiveness: Lower cost compared to traditional marketing.
343
What is the concept of ‘network value’ in social media marketing?
Network value refers to community building on social media. According to Reed’s Law, a network's value grows exponentially with its size, making social networks powerful for brand communication and audience engagement.
344
What are two major challenges in social media marketing?
1. Challenging to Measure: Difficult to attribute ROI, especially during the consideration phase.
2. Challenging to Manage: Fast-paced environment where consumers dominate the conversation; requires skillful and adaptive strategy.
345
What are common metrics used to measure social media marketing performance?
Metrics include applause rate, conversation rate, amplification rate, and analytics tools like Google Analytics to track conversions, clicks, and impressions.
346
Why is social media marketing often underestimated despite its complexity?
Because people think being a social media user equals marketing expertise. In reality, successful campaigns require strategic planning, value creation, and technical knowledge to align with business goals.
347
What is a key caution when planning a social media campaign?
Avoid “bright shiny object syndrome” — getting excited about a new platform without strategy. Focus on long-term value creation for customers rather than jumping on every new trend.
348
What are the three categories of social media tactics, and how should they be balanced?
1. Owned media: Content you control (website, blog).
2. Earned media: Exposure from users (shares, mentions).
3. Paid media: Sponsored content or ads.
All three should work together—without one, the effectiveness of others weakens.
349
What strategic questions should you answer before launching a social media campaign?
1. What are your objectives?
2. How will you achieve them?
3. Who is your audience?
4. What value-creating actions do you expect from them?
5. What are their touchpoints?
6. How will you integrate owned, earned, and paid content?
350
What are the five steps to selecting social media platforms for your campaign?
1. Identify the target audience.
2. Research platform features and demographics.
3. Consider campaign goals.
4. Evaluate internal resources.
5. Test different platforms to find the best fit.
351
What are the universal best practices for social media content creation?
Use a content mix of ~10% promotional (sales), 30% owned (valuable original), and 60% curated (relevant third-party). Post consistently and match content type to each platform’s style.
352
Why is it hard to redirect users from social platforms to a website?
Users often prefer to stay on the social media platform, making it hard to convince them to click external links.
353
What types of content tend to perform best on social media?
Video > photos > links > text, in terms of engagement.
354
What’s the key mindset shift for social media communication?
Treat it as a dialogue, not a monologue. Be human, responsive, consistent, and on-brand. Let go of full control—users shape your brand too.
355
How should marketers adapt to increased mobile use?
Optimize websites for mobile, develop apps, and create mobile-specific ad campaigns.
355
Why is mobile usage crucial for digital marketers?
Mobile usage dominates modern life. People use phones throughout the day and expect on-the-go, personalized digital experiences.
355
What are the 5 steps for analyzing a social media campaign’s effectiveness?
1. Identify the campaign’s goals
2. Consider the target audience
3. Research tools for measurement (analytics, feedback, etc.)
4. Determine specific metrics (traffic, engagement, conversions)
5. Set benchmarks to track progress and areas of improvement
356
What does mobile device usage tell marketers about consumer intent?
Searches on mobile devices are often local and intent-driven. E.g., “Canadian Tire Vancouver” on mobile likely means the user wants directions or a store nearby.
356
How does mobile usage differ from desktop usage?
* Mobile: Smaller screens, on-the-go tasks, quicker interactions
* Desktop: Larger screens, longer sessions, in-depth browsing
357
Why is mobile marketing essential today?
With smartphone penetration exceeding 88% in North America and users spending ~4 hours/day on phones, mobile is the “first screen” for many.
358
What are some behaviors enabled by mobile marketing?
Instant purchases, app engagement, coupon redemption, price comparison, consumer reviews.
359
How did Gatorade use mobile marketing effectively?
They created a Snapchat filter mimicking a Gatorade dunk, which led to over 165 million views in 48 hours — despite never airing on TV.
360
Why do mobile ads need to be responsible?
Users are ad-weary and don’t want to be interrupted—ads should be opt-in and offer real value.
361
What’s the role of mobile apps in marketing?
Apps like Benjamin Moore’s and Starbucks’ allow customer engagement, purchases, and experience personalization.
362
What are 5 unique mobile marketing opportunities?
1. Location-based targeting
2. Personalization using user data
3. Push notifications for real-time messaging
4. Mobile apps for brand interaction
5. Mobile-specific ads tailored for smaller screens and user behaviors
363
Why is mobile a powerful marketing frontier?
Mobile is always-on, personal, and real-time. Great for fast responses, time-sensitive offers, and engaging younger consumers.
364
Why is measurement critical in digital marketing?
“If you can’t measure it, you can’t manage it.” Data allows marketers to track, evaluate, and optimize campaigns.
365
What types of data are used in analytics?
* Quantitative: Metrics like traffic, conversions, ROI
* Qualitative: Surveys, interviews, focus groups
366
What’s the role of analytics in marketing strategy?
It guides decisions about budget, messaging, and campaign improvements for better outcomes.
367
What is web analytics in digital marketing?
Web analytics involves tracking data about website traffic (e.g., page views, bounce rates, and conversion rates) to understand how visitors interact with a website and identify areas for improvement.
368
What do social media analytics tools track?
They track likes, shares, comments, reach, and engagement to measure the performance of social media campaigns.
369
What is search engine analytics used for?
To track how a website performs in search engines, including keyword performance and page rankings.
370
What do email marketing analytics tools measure?
Open rates, click-through rates, and conversion rates for email campaigns.
371
What do marketing automation analytics tools provide?
Insights into the customer journey, including how often, when, and why people interact with a brand and how effective strategies are at driving conversions.
372
What are KPIs in digital marketing?
KPIs (Key Performance Indicators) are metrics used to evaluate the performance of marketing strategies and campaigns.
373
What are some common digital marketing KPIs?
* Website traffic: Page views, unique visitors, bounce rate
* Conversion rate: % of visitors who complete a desired action
* ROI: Profitability based on revenue vs. cost of the campaign
* Lead generation: Capturing customer information via forms/landing pages
* Engagement rate: Likes, shares, comments, and views
* Customer Lifetime Value (LTV): Net profit from a customer's future relationship
* Market share: Brand performance compared to competitors
374
What are 6 guidelines for selecting the best KPIs?
1. Define your website’s goals.
2. Understand your target audience.
3. Identify key business metrics.
4. Consider multiple stakeholder perspectives.
5. Measure only what you can collect and analyze.
6. Monitor KPIs regularly and adjust as needed.
375
What is a conversion funnel in digital marketing?
A visual representation of the customer’s journey from awareness to purchase, used to optimize user actions on a website.
376
What are the 5 stages of a conversion funnel?
1. Awareness – Learning about the product or service
2. Interest – Exploring and wanting to learn more
3. Evaluation – Comparing the product with alternatives
4. Purchase – Taking action (buying, signing up)
5. Post-purchase – Customer satisfaction and retention actions
377
How can marketers improve conversion funnels?
* Use SEO and social media for awareness
* Educate via content marketing at interest stage
* Use retargeting ads during evaluation
* Simplify checkout and follow up after purchase
378
What are the steps to improve an ecommerce site using funnel analysis?
1. Collect data with tools like Google Analytics.
2. Identify drop-offs in the funnel.
3. Analyze visitor behavior.
4. Identify potential causes of drop-offs.
5. Prioritize improvements.
6. Test and optimize.
379
What is the purpose of attribution methods?
To assign credit to marketing touchpoints that lead to conversions, helping businesses understand which actions contribute to sales.
380
What are the 8 common attribution models?
1. Last-click attribution – 100% credit to the last touchpoint before conversion.
2. First-click attribution – 100% credit to the first touchpoint.
3. Linear attribution – Equal credit to all touchpoints.
4. Time decay attribution – More credit to recent touchpoints.
5. Position-based attribution – 40% to first and last, 20% distributed among middle.
6. U-shaped attribution – Extra credit to first and last, moderate to middle.
7. Custom attribution – Marketer-defined weights and rules.
8. Data-driven attribution – Machine learning assigns credit based on data.
381
What is global marketing?
Global marketing is the process of marketing products and services within and across multiple countries. It involves understanding global markets, developing strategies for segmentation and positioning, and balancing standardization with customization for different markets.
382
How is global marketing different from global trade?
Global trade refers to making or sourcing products in one country and selling them in another. Global marketing is broader, involving integrated strategies, consumer understanding, and cross-country coordination of marketing efforts.
383
What has fueled the growth of global marketing?
The explosion of global trade, faster communication, transport, and financial flows. Global trade grew from $3.5 trillion in 1990 to $25 trillion in 2020, accounting for about 18% of global GDP.
384
Name some successful global marketers from North America.
Coca-Cola, McDonald’s, Tim Hortons, lululemon, Starbucks, Nike, Netflix, Amazon, Google, Caterpillar, Boeing.
385
How much of McDonald’s revenue comes from foreign markets?
Nearly two-thirds of its revenue comes from foreign markets.
386
What is a global company?
A global company operates in more than one country and benefits from marketing, production, R&D, financial, and strategic advantages across borders.
387
What risks do global companies face when entering new markets?
Risks include political instability, currency fluctuations, corruption, trade barriers, and restrictive government policies.
388
What is global niching?
A strategy where companies target a small set of carefully chosen countries instead of going global on a large scale.
389
What are the 5 steps of the global marketing process?
1. Looking at the global marketing environment
2. Deciding whether to go global
3. Deciding which markets to enter
4. Deciding how to enter the market
5. Deciding on the global marketing program and organization
390
What is the PESTLE framework used for in global marketing?
It’s used to analyze macroenvironmental factors—Political, Economic, Sociocultural, Technological, Legal/Institutional, and Environmental/Ecological—that impact marketing decisions globally.
391
What are key political challenges global companies might face?
Geopolitical tensions, government restrictions, policy changes, corruption, import quotas, and unexpected regulatory amendments.
392
What did Vodafone experience in India politically?
Vodafone faced a retroactive tax law change and multiple court/arbitration disputes with the Indian government over a $2.2 billion tax claim.
393
Why can democratic political systems sometimes pose more uncertainty than autocratic ones?
Democratic governments can change policies frequently due to electoral agendas, while autocratic regimes can maintain consistent policies over time.
394
What two economic dimensions should be evaluated in global marketing?
1. Level of industrial development
2. Pattern of income distribution
395
Why is industrial development important for global marketing?
It influences supply chains, infrastructure, customer base, and access to technology and skilled labor.
396
How does income distribution impact marketing decisions?
A more equal distribution supports greater consumer spending. High inequality may limit market potential and lead to social unrest.
397
What challenges does income inequality pose for global marketing?
It can lead to social instability, political unrest, and unequal access to products or services across segments.
398
What are the three major technological advances driving global marketing?
1. Electronic networks (internet, data cables)
2. Global adoption of smart devices
3. Rise of digital commerce platforms
399
Why are smart devices crucial for global marketing?
They connect users to the internet and apps, making even low-income consumers accessible to mobile and digital marketing.
400
How do ecommerce platforms like Amazon and Alibaba impact global marketing?
They enable companies to sell directly to customers worldwide and offer cost advantages and convenience.
401
What is the “Amazon effect” in global marketing?
It refers to the negative impact Amazon’s dominance has on small, local sellers, who struggle to compete with its scale and reach.
402
What challenges do technological advances pose in global marketing?
The digital divide between income groups and unfair competition from large platforms that leverage data and scale.
403
What is the sociocultural context in global marketing, and why must companies understand it?
Sociocultural context includes norms, customs, values, and taboos of different countries. Understanding it helps marketers tailor strategies to local consumer behavior, avoiding cultural insensitivity and enhancing success in foreign markets.
404
Why should marketers not assume consumer behavior is the same across cultures?
Because cultural differences influence how consumers perceive and use products. Example: A clock is a nice gift in the West but symbolizes death in China; Valentine's Day customs vary greatly between North America and Japan.
405
What was the significance of Valentine’s Day examples from Japan vs. North America?
In North America, it's mutual exchange of romantic gifts. In Japan, women give chocolates to men: giri-choco (non-romantic) and honmei-choco (romantic), showing how product use differs culturally.
406
What are consequences of violating sociocultural norms in marketing? (Nike & Marriott examples)
Nike’s ad offended Chinese officials with cultural insensitivity, leading to a formal apology. Marriott called Taiwan a “country,” triggering Chinese backlash and a shutdown of its site in China for over a week.
407
How can business etiquette differ across cultures? Give examples.
* Japan: Direct bargaining may offend.
* Middle East: Handshakes may be refused.
* South Korea: Keeping a hand in a pocket during a handshake is disrespectful.
* Finishing all food = bad in some cultures; good in others.
* Smiling: friendly in most cultures, insecure in Russia.
408
How can businesses gain advantage by aligning with local customs? (Marks & Spencer example)
Marks & Spencer adapted to Saudi norms by:
* Employing only female staff
* Using headless mannequins
* Respecting local attire rules
Result: Strong success despite strict cultural restrictions.
409
What are Hofstede’s Six Cultural Dimensions used for?
They help marketers evaluate national cultural traits to adjust messaging, branding, and strategies accordingly across countries.
410
What is Power Distance Index?
Measures acceptance of unequal power distribution. High = comfortable with hierarchy (e.g., China), Low = prefer equality (e.g., Canada).
410
What is Toughness vs. Tenderness?
Toughness = achievement, assertiveness. Tenderness = cooperation, modesty, caring for others. Affects tone of marketing campaigns.
411
What is Individualism vs. Collectivism?
Individualism emphasizes self and family (e.g., Canada). Collectivism values loyalty and social networks over personal goals (e.g., China).
412
What is Uncertainty Avoidance?
High = prefers structure, avoids risk (e.g., Japan). Low = embraces ambiguity and change. Affects how much innovation a society tolerates.
413
What is Long-Term vs. Short-Term Orientation?
Long-term = future-focused, change-embracing (e.g., China). Short-term = tradition-focused, resistant to rapid change.
414
What is Indulgence vs. Restraint?
Indulgent societies promote enjoyment and gratification (e.g., Canada). Restrained societies value discipline and suppress gratification (e.g., China).
414
How do Canada and China compare on Hofstede’s cultural dimensions?
China = high power distance, long-term orientation, low individualism, indulgence.
Canada = opposite on most traits, except similar in toughness. Highlights need for strategy adaptation.
415
How can marketing strategies influence local cultures?
Marketing affects cultural values, consumer habits, and social norms. It can promote standardization or trigger resistance and backlash.
416
How did McDonald’s marketing influence global culture?
Promoted fast food convenience and affordability worldwide, contributing to obesity concerns and erosion of local dietary practices.
417
How did Patagonia align marketing with cultural values?
Focused on sustainability, environmentalism, and ethical consumption—attracting consumers who value social responsibility.
418
What is the cultural impact of Coca-Cola’s marketing?
Promotes joy and togetherness but can also reinforce U.S.-centric values and stereotypes, raising concerns about cultural homogenization.
418
How does Dove’s ‘Real Beauty’ campaign reflect cultural awareness?
Promotes diversity, body positivity, and self-acceptance, challenging narrow beauty standards and empowering women globally.
419
How does Airbnb promote cultural immersion—and what criticism has it faced?
Airbnb highlights local culture and authenticity but is criticized for contributing to over-tourism and displacement of local residents.
420
How did KFC succeed in Japan through cultural adaptation?
KFC’s “Kentucky for Christmas” campaign made fried chicken a holiday tradition in Japan—now a beloved custom over 45 years later.
421
What is cultural influence on North America from other global sources?
Examples include Pokémon, Hello Kitty, British shows, Harry Potter. Immigrants use tech to access native content—globalization is two-way.
422
What are the risks and responsibilities of marketing on global culture?
Poorly executed campaigns can promote unhealthy habits or stereotypes. Culturally sensitive strategies support sustainability, empowerment, and global harmony.
423
What are the two perspectives from which marketers should evaluate legal and institutional contexts?
Marketers should evaluate legal/institutional contexts from:
1. The global trade perspective — involving tariffs, trade agreements, and international regulations.
2. The internal legal perspective — involving local laws like labor rules, currency restrictions, and contract regulations.
424
What role does the World Trade Organization (WTO) play in global marketing?
The WTO reduces tariffs, sets global trade rules, mediates disputes, and promotes transparency. It evolved from GATT and has helped lower average tariffs on goods globally from 45% to 5%.
425
What are five major criticisms of the WTO?
1. Unequal benefits favoring developed countries.
2. Lack of transparency.
3. Non-inclusive decision-making.
4. Ignoring environmental and labor concerns.
5. Inflexibility in adapting to modern trade issues.
426
What are five major criticisms of the WTO?
1. Unequal benefits favoring developed countries.
2. Lack of transparency.
3. Non-inclusive decision-making.
4. Ignoring environmental and labor concerns.
5. Inflexibility in adapting to modern trade issues.
427
What are regional free trade zones and give an example.
Free trade zones are agreements among countries to reduce trade barriers. Example: The EU, formed in 1957, promotes the free flow of goods, services, and labor across 27 member countries with 448 million consumers.
428
What is the USMCA and what did it replace?
The USMCA (2020) replaced NAFTA (1994). It created a free trade zone between the US, Canada, and Mexico. It eliminated many trade barriers and modified rules on product origin, pharmaceutical protection, and import limits.
428
What is the CPTPP and its significance?
The CPTPP includes 11 Pacific Rim countries and covers 500 million people. It accounts for 13.5% of global GDP and promotes trade liberalization and cooperation across Asia-Pacific economies.
429
What are some internal legal barriers that companies may face?
Internal legal barriers include:
* Currency restrictions (e.g., forced use of local currency).
* Bartering systems due to cash scarcity.
* Labor laws restricting layoffs.
* Non-tariff barriers like biased standards or exclusive local deals.
430
What does the PESTLE framework analyze in global marketing?
PESTLE analyzes six macroenvironmental factors:
* Political
* Economic
* Sociocultural
* Technological
* Legal/Institutional
* Environmental/Ecological
It helps marketers assess country-specific risks and opportunities.
430
How has India created barriers for Amazon and Flipkart?
India restricted foreign e-commerce platforms from selling directly to consumers and forming exclusive seller deals. This protects small Indian retailers, who control 88% of the retail market.
430
What are some environmental regulations affecting global marketers?
Regulations include:
* California banning gas vehicles by 2035.
* India mandating CSR spending for large companies.
* Companies like UPS and FedEx adopting low-emission fleets to meet country-specific environmental laws.
430
What are disadvantages of licensing?
Less control over the licensee, risk of losing profits if licensee is successful, and the licensee might become a future competitor after the contract ends.
430
What were the main challenges Netflix faced in India?
* Fierce competition (e.g., Amazon Prime, Hotstar)
* Linguistic and cultural diversity
* Regulatory, political, and infrastructure hurdles
* 35+ local streaming services already operating
* High price point compared to competitors
430
What must companies consider when deciding how many countries to enter?
Companies must avoid spreading themselves too thin by expanding into too many countries at once. They should assess each country's attractiveness based on factors like income, geography, population, and political climate.
430
What should companies define before entering global markets?
Companies should define their global marketing objectives and policies, including the volume of foreign sales they want. Some plan to stay small, while others see global sales as a major part of their business.
430
Why did Netflix see India as an attractive market?
India had a large population of 1.4 billion, a booming online video market, and represented the world’s second-largest internet market. The Indian video market was expected to triple in size over four years.
430
How did content and language impact Netflix's strategy in India?
Most Netflix content was in English, while Indian viewers preferred Hindi, Tamil, and other languages. Netflix invested in local productions (e.g., Sacred Games, Delhi Crime) to appeal to regional audiences.
430
How did Netflix adapt its pricing for the Indian market?
Netflix introduced a mobile-only plan for just US$3/month and offered other plans at $8, $9, and $12. StreamFest gave users free access for two days before subscribing.
430
What was the outcome of Netflix’s strategy in India?
Netflix grew its subscriber base to over 4.5 million in India. CEO Reed Hastings predicted India would drive a large portion of their next 100 million global users, calling it the “most phenomenal opportunity.”
430
What are some PESTLE factors under the economic and technological contexts?
* Economic: Country size, GDP/growth, income distribution, market access, resources
* Technological: Electronic networks, smart device adoption, e-commerce platforms
431
What sociocultural and legal factors should be assessed when entering a market?
* Sociocultural: Norms, values, lifestyles, business practices, language
* Legal: Trade membership, currency/labor restrictions, non-tariff barriers
431
What is exporting as a global market entry strategy?
Exporting involves producing goods in the home country and selling them abroad. It’s the simplest and least risky way to enter foreign markets and requires the least change in a company’s product, organization, or mission.
431
What is joint venturing and what are its types?
Joint venturing involves partnering with a foreign company to produce or market abroad. Types include:
* Licensing
* Contract Manufacturing
* Management Contracting
* Joint Ownership
431
What is the difference between indirect and direct exporting?
Indirect exporting uses intermediaries and has lower risk, while direct exporting involves the company handling its own exports, requiring more investment but offering potentially higher returns.
431
What is licensing in global marketing?
Licensing is when a company grants rights to another firm to use its manufacturing process, brand, or other IP in exchange for fees or royalties. It allows low-risk market entry and access to established markets.
431
Give examples of licensing in global markets.
Examples include Coca-Cola licensing bottlers worldwide, Disney licensing Tokyo Disneyland to Oriental Land Company, and Budweiser brewed by Kirin in Japan.
431
What is contract manufacturing?
Contract manufacturing is when a firm hires local manufacturers to produce goods. It reduces risk and investment, meets local requirements, and can speed up market entry.
431
What are examples and advantages of contract manufacturing?
P&G uses nine contract sites in India to serve 650M people. Apple assembles iPhones locally in India to avoid a 20% import duty. Benefits include cost savings and regulatory compliance.
432
What is management contracting?
The domestic company provides managerial expertise while the foreign partner provides capital. It’s low-risk and yields income from the start, ideal for companies with strong brands and processes.
433
Provide an example of management contracting.
Hilton manages hotels like DoubleTree in countries such as the UK, Italy, Peru, China, and more. Properties are locally owned, but Hilton manages them using its hospitality expertise.
434
What is joint ownership and when is it used?
Joint ownership involves co-owning a local business with a foreign firm or investor. It’s used when companies lack full resources or when required by foreign governments for entry.
435
Give examples of joint ownership ventures.
* Disney’s Shanghai Disneyland (43% Disney, 57% Shanghai Shendi Group)
* Walmart’s stake in Flipkart to navigate Indian restrictions
* Kellogg’s 50% stake in Tolaram Africa Foods in Nigeria and Ghana
436
What are potential drawbacks of joint ownership?
Partners may disagree over strategy, investment, or marketing. Local firms might prefer taking out earnings instead of reinvesting, and differences in marketing philosophy may arise.
437
What is direct investment in global marketing?
Direct investment involves a company developing foreign-based assembly or manufacturing facilities, offering the most intense level of foreign market involvement.
438
What are the benefits of direct investment?
Access to lower-cost labor, raw materials, government incentives, freight savings, better adaptation to local markets, stronger relationships with stakeholders, and full control over manufacturing and marketing policies.
439
What are the risks of direct investment?
Exposure to restricted/devalued currencies, falling markets, and political changes in the host country.
439
What is an example of direct investment?
Intel invested over $20 billion in Israel for manufacturing/research, helping them serve the Chinese market indirectly despite strained U.S.-China trade.
440
What is the goal of the global marketing program?
To decide how to adapt marketing strategies and the marketing mix for different global markets.
441
What is standardized global marketing?
Applying the same marketing strategy and mix globally to achieve brand consistency and economies of scale.
442
What is adapted global marketing?
Modifying marketing strategies and mix elements to fit the unique needs of each market, which increases costs but may raise market share and profits.
442
Why is a balance important between standardization and adaptation?
Because global convergence exists, but cultural differences remain—marketers should "think globally, act locally.
443
How does IKEA balance global standardization with local adaptation?
IKEA maintains a consistent brand and store format globally but adapts products, store operations, and marketing to local cultures and needs.
444
How does IKEA adapt to local preferences in China?
Stocks firm mattresses, rice cookers, compact appliances, and promotes the brand as "Yi Jia" ("comfortable home"). Stores serve as social spaces, enhancing customer comfort and familiarity.
445
What’s the overall insight from IKEA's strategy?
Most consumers live local lives, so even global brands must align with local culture and consumer behavior.
446
What are the 5 global strategies?
* Straight Extension: Same product and communication.
* Product Adaptation: Change product, keep communication.
* Communication Adaptation: Change message, keep product.
* Dual Adaptation: Change both product and message.
* Product Invention: Create an entirely new product.
447
What is straight product extension?
Marketing a product abroad with no changes to the product or how it's communicated.
448
What are its pros and cons?
Pros: Cost-saving and simple.
Cons: Risky if consumer preferences differ significantly.
449
Examples of success and failure?
Success: Apple iPads, Gillette, Black & Decker.
Failure: JELL-O in Britain (consumers preferred solid desserts).
450
What is product adaptation?
Modifying a product to match local preferences while keeping positioning/communication the same.
451
How was Alexa adapted for India?
Alexa speaks "Hinglish," understands Indian festivals, traditions, and provides culturally specific content like cricket chants and Bollywood quizzes.
452
What is product invention?
Creating new products specifically for a foreign market’s needs, especially in low-income or developing economies.
453
Examples of product invention?
* Chinese washing machines adapted for muddy conditions in rural areas.
* P&G’s waterless shampoos for areas with water shortages.
* d.light’s solar-powered lanterns for regions without reliable electricity.
454
What are two major global promotion strategies?
* Standardized promotion: Same global message (e.g., Coca-Cola's "Taste the Feeling").
* Localized promotion: Adapts to cultural nuances, language, and local events.
455
What are some risks with standardized campaigns?
Language and cultural differences can cause misinterpretations (e.g., KFC's “finger-lickin’ good” became “eat your fingers off” in Chinese).
456
What is communication adaptation?
Changing advertising messages to suit the local market while keeping the product the same.
456
Examples of communication adaptation?
* Mattel's Barbie campaign in China emphasized emotional intelligence and success.
* Crayola used a virtual children’s art gallery in China.
* LEGO highlighted logic and motor skill benefits, shared a WeChat post showing a father using LEGO to teach math.
457
What are three main pricing strategies companies consider when setting global prices?
1. Uniform Global Price: One price worldwide — often too high for developing markets and too low for developed ones.
2. Market-Based Pricing: Price based on what each country’s consumers can bear — leads to wide price variances.
3. Standard Markup: Uniform cost-based markup — simplifies pricing but may price out some markets.
458
Why are foreign product prices often higher than domestic ones?
Due to tariffs, import duties, and local taxes. For instance, the iPhone 12 costs much more in India (US$1636) than in the U.S. (US$1071) because of high import tariffs.
459
What is the price escalation problem in international markets?
When selling abroad, companies must add transportation, tariffs, and multiple margins (importer, wholesaler, retailer) to their factory price, possibly doubling or quintupling the product’s cost.
460
How do companies adapt pricing for emerging markets?
By offering smaller or simpler product versions at lower prices to appeal to less affluent consumers.
461
How do companies compete with low-end competitors in emerging markets?
Example: Samsung’s Galaxy A line, priced under US$200, offers a recognizable brand with fewer features.
462
How can local manufacturing reduce product prices?
Producing locally avoids tariffs. Example: Motorola and Xiaomi build in India to lower prices and gain market share.
463
What has Apple done to compete in emerging markets like India?
Built manufacturing facilities in India and promoted slightly older models to reduce costs.
464
How is the internet influencing global pricing?
Consumers now compare global prices and buy from low-cost foreign retailers, pressuring companies to standardize prices.
464
What are the two major global distribution links in the whole-channel view?
1. Channels Between Nations: Move products from production to the country border.
2. Channels Within Nations: Move products from entry point to final consumer.
465
What is the "whole-channel view" in global marketing?
A strategy to manage the complete global value delivery network effectively—from production to the end user.
466
Why is India’s distribution system challenging for Western companies?
It's complex and fragmented; traditional retail dominates, with small kirana shops offering home delivery and credit.
466
What issues do global firms face in China’s distribution system?
It's decentralized, fragmented, and expensive—logistics costs are nearly 15% of GDP versus 7.5% in the U.S.
467
How does Nestlé adapt its distribution strategy in Brazil?
Uses door-to-door sales with self-employed salespeople in low-income neighborhoods.
467
How do fast food chains adapt to big cities in Asia and Africa?
McDonald’s and KFC rely on motorbike delivery due to impracticality of drive-thrus and space constraints.
468
What are the key distribution challenges for global marketers?
Designing effective and efficient systems across varying countries and infrastructure conditions.
469
What are the three major stages in building a global marketing organization?
1. Export Department
2. Global Division
3. Truly Global Organization
469
What triggers the shift from an export department to a global division?
Growth in foreign sales, leading to expanded roles and marketing services.
470
What types of global expansion can companies use?
Exporting, licensing, joint ventures, and establishing subsidiaries.
471
What are the three ways global divisions can be structured?
1. Geographical Organizations (country managers)
2. World Product Groups (product-based global sales)
3. Global Subsidiaries (independent global units)
472
How does L’Oréal exemplify a truly global organization?
No clear home market or central office; brand teams are globally diverse and culturally experienced.
473
What are characteristics of management in global organizations?
Recruited from many countries, trained in global operations, and focused on cost efficiency and high-return markets.
473
What defines a truly global organization?
They think as global marketers, plan globally, and their operations report to the chief executive, not a division head.
474
How does sustainable marketing compare with other concepts?
* Marketing concept: Focuses on current needs of consumers and business.
* Societal marketing concept: Focuses on future consumer needs.
* Strategic planning concept: Focuses on future business needs.
* Sustainable marketing concept: Balances both present and future needs of consumers and business.
474
Why must companies embrace global operations today?
To compete effectively as foreign firms enter domestic markets, they must treat global strategy as core, not secondary.
475
What did the Greenpeace study reveal about McDonald's carbon footprint?
McDonald's operations produce greenhouse gas emissions comparable to 20 million cars annually, largely due to beef reliance and energy consumption.
475
What is sustainable marketing?
Sustainable marketing calls for socially and environmentally responsible actions that meet the present needs of consumers and businesses while preserving the ability of future generations to meet their needs.
475
What was McDonald’s early marketing strategy and what were the consequences?
McDonald's focused on immediate consumer satisfaction and company profits with fast, tasty but unhealthy food. Critics say this contributed to long-term health issues and declining sales as consumers shifted to healthier options.
476
What environmental criticisms were directed at McDonald's?
Critics cited its large environmental footprint, including packaging waste, inefficient energy use, and the emissions from beef production.
476
What sustainability goals has McDonald's set?
It aims to reduce greenhouse gas intensity by 36% by 2030, though critics argue this target is not enough.
477
What plant-based changes has McDonald's made?
Introduced limited plant-based menu items with lower emissions, though availability and promotion are limited.
478
How has McDonald's responded to health concerns?
Added healthier options like salads and fruits, partnered with the Alliance for a Healthier Generation, and highlighted “under 400 calorie” meals.
479
What packaging-related sustainability goal has McDonald’s made?
Committed to sourcing all packaging from renewable or certified sources and making recycling available in all locations by 2025.
479
What is needed for truly sustainable marketing?
Collaboration among consumers, companies, policy makers, and others to ensure responsible marketing actions that serve long-term societal and business interests.
480
What are common criticisms of marketing?
Critics say marketing can harm individual consumers, society, and other firms through high prices, deception, unsafe products, and poor service.
481
What impact does marketing have on individual consumers?
It may lead to high prices, deceptive practices, pressure selling, unsafe or shoddy products, and poor service especially for disadvantaged consumers.
481
Why do critics say marketing leads to high prices?
Due to high costs of distribution, heavy advertising/promotion, and excessive markups.
482
What is the argument about high retail markups?
Critics say markups exceed the value provided. Marketers argue they reflect services consumers value like convenience and service.
483
What’s the issue with brand-name pricing vs. store brands?
Critics argue branding adds only psychological value. Marketers claim branding provides consistent quality and awareness.
484
What is the drug industry example used to explain high markups?
Pills costing a few cents may be sold for dollars. Marketers say this covers R&D, testing, and distribution of new drugs.
484
What are the three main types of deceptive practices?
1. Deceptive promotion – misleading claims or fake sales.
2. Deceptive packaging – exaggerated size/design.
3. Deceptive pricing – false discounts or misleading “factory prices.”
485
What are some Canadian examples of deceptive marketing enforcement?
* FlightHub fined for misleading online pricing.
* Ticketmaster Canada fined for hidden fees.
* The Competition Bureau acts as a watchdog.
485
What legal measures address deceptive practices in the US?
The Wheeler–Lea Act gives the FTC authority to regulate deceptive marketing.
485
What was the LifeLock example?
FTC fined LifeLock $100 million for falsely claiming it protected identity "around the clock" with financial-level safeguards.
485
What is "puffery" in advertising?
Innocent exaggeration (e.g., “rock your world”). Critics say it may encourage harmful spending habits (e.g., Mastercard’s “Priceless” ads).
485
How do marketers defend against claims of deception?
They argue most companies act responsibly, build long-term trust, and avoid unsustainable deceptive tactics.
486
What is high-pressure selling?
Persuading customers to buy products they didn’t intend to through aggressive tactics, e.g., contests, infomercials.
487
Why is high-pressure selling criticized?
It damages long-term customer relationships and usually doesn’t work in major B2B contexts.
488
What are the criticisms related to product quality and safety?
* Products may be poorly made or perform badly.
* Some are unsafe due to company negligence or complexity.
489
What is the Canada Consumer Product Safety Act (CCPSA)?
Introduced in 2011, it requires manufacturers to report safety incidents, and retailers to maintain traceable product records. Health Canada provides info and search tools for recalls.
490
Why is the soft-drink industry often criticized?
It is blamed for contributing to obesity and health issues through high-calorie products and for targeting vulnerable consumers in emerging markets like China, India, and Mexico.
491
What ethical concerns arise from marketing soft drinks in emerging markets?
Critics liken this to tobacco industry tactics—promoting harmful products where awareness and regulation are lower. Others argue it's the consumer’s choice.
492
Why do manufacturers aim to produce quality goods?
Poor quality harms reputation, risks lawsuits, and spreads negative reviews—especially in the age of social media. Quality supports long-term customer trust and sustainable marketing.
492
Q: What is planned obsolescence?
A tactic where products are designed to break, wear out, or become outdated faster than necessary, forcing consumers to replace them sooner.
493
What is perceived obsolescence?
Companies constantly change style trends to encourage early replacement of still-usable items, especially in fashion (e.g., fast fashion industry).
494
How does planned obsolescence appear in electronics?
Frequent product upgrades, and software updates (e.g., Apple slowing older iPhones), pressure consumers to buy newer models even when the old ones work.
495
What’s the marketer response to planned obsolescence criticism?
Consumers like style changes and innovation. Most companies improve products to stay competitive, not to cause early breakdowns.
495
Is planned obsolescence entirely bad?
Some argue it’s a result of competitive innovation. If long-lasting products don't appeal to consumers, they fail. Market demand drives change, not manipulation.
496
What is 'redlining' in retail, and why is it controversial?
Retailers avoid setting up in low-income areas, creating food deserts with fewer stores, higher prices, and less healthy food access—disproportionately affecting BIPOC communities.
497
What are food deserts and who is most affected?
Areas with limited access to healthy, affordable food. Impact is higher among low-income, Black, Indigenous, and people of color (BIPOC), especially in urban centers.
498
What is the scale of food insecurity in Canada?
In 2022, 18.4% of Canadians (6.9M) experienced food insecurity—especially high among Northern and Indigenous communities due to remoteness, poverty, and systemic barriers.
499
What is Loblaw's pledge to address food insecurity?
In 2022, it committed 1 billion pounds of food by 2028 to reduce waste and improve food access for vulnerable Canadians.
499
What does the Fresh Routes program do?
Operates mobile food markets in Calgary and Edmonton to provide nutritious, affordable food to underserved communities, including Indigenous populations.
500
How does Fresh Routes operate sustainably?
It reinvests profits, buys wholesale, sells at 40–60% discount, and uses retrofitted buses to reach 70+ communities.
500
What role does government play in serving low-income consumers?
When marketers fail to address inequity, regulators like the Competition Bureau step in against false claims or discriminatory pricing.
501
What broad societal issues is marketing accused of causing?
Too much materialism, few social goods, cultural pollution, and overconsumption.
502
What is the criticism around false wants and materialism?
Marketing pushes consumers to value possessions over identity, creating a cycle of overconsumption rooted in the “American dream.”
502
Who is Adbusters and what do they promote?
A Vancouver-based activist group that leads anti-consumption campaigns like Buy Nothing Day to counter marketing-driven overconsumption.
503
What is New Dream’s mission?
To empower people and communities to consume more consciously for the planet’s well-being through education and activism.
504
How do marketers respond to accusations of creating needs?
They say people have defenses, seek information, and are only influenced when products deliver value. High failure rates show demand can’t be forced.
505
What influences consumer wants beyond marketing?
Culture, family, peers, religion, education, and socioeconomic conditions all shape material values more than marketing alone.
506
How can balance be restored between private and public goods?
1. Make producers cover full social costs (e.g., fuel-efficient car requirements).
2. Make consumers pay via congestion charges, like Singapore’s ERP system.
506
What is the issue with overselling private goods?
It creates social costs. E.g., cars require public infrastructure like roads and police, which aren’t sufficiently funded.
507
What is cultural pollution in marketing?
The overexposure of consumers to marketing messages—through ads, spam, billboards—leading to mental clutter and shallow values.
508
How do marketers justify mass advertising?
They argue that:
* Ads are targeted.
* Consumers can avoid them.
* Ads fund free media (e.g., TV, news).
* Ads entertain (e.g., Super Bowl).
509
What are three ways marketing practices can negatively impact other businesses?
1. Acquisitions of competitors (reducing competition),
2. Creating barriers to entry (e.g., heavy promotion, patents),
3. Unfair competitive practices (e.g., predatory pricing or supplier pressure).
510
Why are frequent acquisitions in industries like tech and healthcare seen as problematic?
They reduce competition by absorbing young competitors, shrinking the number of major players in each industry.
511
Can acquisitions also have positive effects?
Yes. Acquiring companies may gain economies of scale, reduce costs, and improve poorly managed businesses, potentially making the industry more competitive.
512
What is an example of proposed regulation to reduce barriers to entry?
A progressive tax on advertising spending, to lessen selling costs as an entry barrier.
512
How do large firms create barriers to entry for new companies?
Through patent control, high advertising budgets, exclusive supplier/dealer agreements, and exploiting economies of scale.
513
What are unfair competitive practices, and why are they hard to prove?
Practices like setting prices below cost or pressuring suppliers to harm rivals. They're hard to prove because they may resemble legitimate tactics.
514
What did the EU accuse Google of in relation to predatory marketing?
Manipulating search results to favor Google Shopping over competitors, violating EU antitrust laws.
515
What is the focus of “Pathways to Sustainable Marketing”?
Driving responsible actions by consumers, businesses, and governments to promote sustainability in marketing.
516
What are the two main grassroots movements promoting sustainable marketing?
Consumerism and Environmentalism.
517
What are traditional buyer rights?
The right not to buy, the right to safety, and the right to expect product performance as claimed.
517
What are traditional seller rights in marketing?
Sellers can introduce, price, promote, message, and offer incentives for products, as long as they’re not misleading or unsafe.
518
What additional consumer rights are advocated by critics?
* The right to be well-informed,
* The right to be protected from harmful practices,
* The right to influence marketing,
* The right to consume sustainably for future generations.
519
What are examples of specific proposals from consumer rights advocates?
Truth in lending, unit pricing, ingredient/nutritional labeling, open dating, truth in advertising, greater safety, privacy, sustainable packaging, and reduced advertising noise.
520
How does consumerism promote sustainable marketing?
By empowering consumers to demand accountability, pursue remedies, and make responsible consumption choices.
521
What is the difference between consumerism and environmentalism?
Consumerism focuses on buyers’ rights and fairness in the market; environmentalism focuses on minimizing harm to the environment caused by marketing.
522
What is the core goal of environmentalism in marketing?
To protect and improve environmental quality, now and for future generations, by promoting more responsible consumption.
523
Define carbon footprint in a marketing context.
The total greenhouse gas emissions associated with a product’s lifecycle, measured in CO₂e, from production to end-of-life disposal.
524
What industry contributes significantly to the global carbon footprint, according to the textbook?
The apparel and footwear industry, responsible for over 8% of global climate impact—more than the airline and shipping industries.
525
How does the thredUP fashion footprint calculator promote sustainability?
It helps consumers measure and reduce their carbon impact, promotes secondhand clothing, and raises awareness about fashion waste.
526
What are the environmental benefits of thrifting according to thredUP?
Thrifting reduces carbon, waste, and water footprints by 82%, helps divert clothing from landfills, and promotes mindful consumption.
527
What environmental issues concern environmentalists in marketing?
Global warming, waste, resource depletion, air/water pollution, and contamination from unsustainable consumption.
528
How do regulators and environmental groups influence marketing practices?
By setting emissions standards, assessing business practices, and educating consumers on sustainable choices.
529
What is “Make Water Work” and what does it promote?
A community-based BC program promoting water conservation, offering rebates and education on sustainable water usage.
529
What kinds of technologies does “Make Water Work” support through rebates?
Low-flow showerheads/toilets, water-efficient appliances, and irrigation controllers—covering up to 50% of cost (max $500).
530
How do marketing campaigns help support sustainability goals?
Companies like REI promote conscious consumption through campaigns like “Opt to Act,” encouraging small eco-friendly lifestyle changes.
531
What role did Tesla play in ocean waste reduction in Southeast Asia?
Elon Musk demanded environmentally safe nickel sourcing, prompting Indonesia to ban ocean dumping for new mining projects.
531
What often triggers public actions toward sustainability?
Citizen concerns about marketing practices lead to public attention and legislative proposals, resulting in laws covering competition, fair trade, environmental protection, product safety, advertising, consumer privacy, packaging, pricing, and selling.
532
What influences businesses to engage in sustainable marketing?
Legal/regulatory pressure and consumer/environmentalist influence drive companies to act, but many now proactively take their own actions toward social and environmental responsibility.
532
What are Corporate Social Sustainability Initiatives?
These are efforts by companies to engage in practices that improve society, which can lead to increased purchase intent, improved brand reputation, market share, and profitability.
533
How do sustainable practices benefit employer branding?
They create a strong internal culture that emphasizes purpose and "joy at work," attracting top talent, especially among millennial and post-millennial generations.
533
How have companies historically responded to environmental regulations?
Some resisted, citing costs and competitiveness, doing the minimum required and lobbying against new laws.
534
What is environmental sustainability in a business context?
It's the generation of profits while helping the planet. Companies embrace responsibility not out of regulation, but as the right thing for customers, growth, and the environment.
534
What does the Environmental Sustainability and Sustainable Value Grid illustrate?
It shows short-term internal/external greening activities (pollution prevention and product stewardship) vs. long-term strategies (new clean tech and sustainability vision).
534
What is pollution prevention?
Eliminating or minimizing waste before it is created through green product design, packaging, better pollution controls, and energy efficiency.
535
How does adidas integrate pollution prevention?
By designing low-waste products (e.g., Duramo shoes), avoiding harmful materials, and partnering with Parley for recycled ocean plastics.
535
What is carbon offsetting?
Allowing unavoidable emissions but taking actions to counteract them, such as planting trees or buying renewable energy credits.
536
How does TerraPass support carbon offsetting?
By helping companies calculate CO₂ emissions and providing renewable energy credits that fund green projects.
537
What is product stewardship?
Minimizing environmental impacts across a product’s lifecycle by reusing, recycling, or safely returning products to nature.
538
How does IBM implement product stewardship?
Through its Global Asset Recovery Services, IBM recycles electronics, reuses parts, and sends less than 1% to landfill/incineration.
538
What is new clean technology?
Innovative technologies that help reduce environmental harm, such as Siemens' commitment to be carbon neutral by 2030.
539
How does Siemens implement clean tech in Kalwa, India?
With solar panels, water recycling, and waste segregation facilities that save money and protect the environment.
539
What is a sustainability vision?
A long-term strategy showing how a company evolves in its policies and offerings to create sustainable value and environmental leadership.
540
Why is it important to focus on all quadrants of the sustainability grid?
Focusing on just one or two areas can be shortsighted. Full-spectrum focus prepares a company for future success and resilience.
541
What is Toyota’s Environmental Challenge 2050?
A plan with six goals to eliminate CO₂ emissions, promote recycling, protect water, and create net positive environmental impact.
542
How does Toyota view sustainability?
As both a moral duty and a business strategy that increases efficiency, profitability, and customer value.
543
What is marketing's role in reducing environmental harm?
Influencing decisions across the value chain from sourcing materials to product disposal, and reimagining every process for sustainability.
544
What is an example of reimagining material choices?
Replacing high-impact materials with PaperStone—an eco-friendly countertop made from recycled paper and natural resins.
545
What does sourcing from sustainable suppliers involve?
Partnering with certified suppliers like those from the Rainforest Alliance who support social, economic, and environmental sustainability.
546
What is the Rainforest Alliance certification seal?
It indicates a product was made using sustainable practices and helps build brand trust through campaigns like "Follow the Frog."
547
How can simplifying product design reduce harm?
By reducing waste and complexity. For example, LastObject’s reusable swabs and cotton pads are sustainable and user-friendly.
548
What are sustainable energy sources in production?
Alternatives to fossil fuels, such as General Mills using oat hulls to power plants, which reduces emissions and energy costs.
549
What are public actions toward sustainability?
Public actions toward sustainability involve laws and regulations passed in response to citizen concerns about marketing practices. These laws cover competition, fair trade, environmental protection, product safety, advertising truthfulness, consumer privacy, and marketing practices such as pricing, labeling, and selling.
550
What are business actions toward sustainable marketing?
Businesses respond to consumer and environmental pressures with social and environmental initiatives. While some are driven by regulation, many companies now proactively engage in socially responsible efforts to improve their image, brand loyalty, and profitability.
551
How can corporate social sustainability initiatives benefit a business?
These initiatives can boost short-term purchase intentions and long-term brand reputation, increasing market share and profitability. They also enhance employee engagement and attract top talent, particularly among millennials and post-millennials.
552
What is environmental sustainability in business?
It refers to generating profits while reducing environmental harm. Enlightened companies act not just for compliance, but for the long-term well-being of the planet and sustainable business growth.
552
What does the Environmental Sustainability Grid show?
It distinguishes between “Today: Greening” activities (pollution prevention and product stewardship) and “Tomorrow: Beyond Greening” (new clean technology and sustainability vision), across internal and external actions.
553
What is pollution prevention in sustainable marketing?
It involves reducing or eliminating waste before it is created. Companies focus on safer products, recyclable packaging, pollution control, and energy-efficient operations.
554
How does Adidas practice pollution prevention?
Adidas uses low-waste design, restricted substances, and recyclable materials. Their Parley line uses recycled ocean plastics, and they’ve set internal goals for reducing greenhouse gas emissions and consumption of energy, water, and paper.
555
What is carbon offsetting?
Carbon offsetting is when companies calculate their emissions and take steps like planting trees or purchasing renewable energy credits to neutralize their carbon footprint.
556
What is product stewardship?
It means minimizing a product’s environmental impact across its lifecycle through design for environment (DFE) and cradle-to-cradle practices, which prioritize reuse, recycling, or safe return to nature.
557
How does IBM apply product stewardship?
IBM reuses and recycles parts through its Global Asset Recovery Services. In a recent year, it processed over 58.5 million pounds of waste, recycling 99% of what it collected and diverting it from landfills.
558
What is a sustainability vision?
A long-term strategy that guides pollution control, product stewardship, and new technologies for sustainable value creation. It requires continuous innovation and company-wide evolution.
558
How does Siemens reduce its environmental footprint?
Siemens uses solar panels, high-tech water recycling, and waste segregation. These efforts save money and significantly reduce carbon and plastic waste.
558
What is “new clean technology” in environmental sustainability?
It refers to developing and using innovative tech that reduces environmental harm. For example, Siemens uses solar power and water recycling, aiming for full carbon neutrality by 2030.
559
What is Toyota’s Environmental Challenge 2050?
It’s a strategic framework with six goals, including eliminating CO₂ emissions, promoting electrified vehicles, and improving recycling, water conservation, and local partnerships for sustainability.
560
Why is Toyota’s sustainability strategy effective?
It balances doing the right thing with business success, improving operations, lowering waste, and enhancing profitability. Toyota ties sustainability to having a healthy planet and business.
561
What is the role of marketing in reducing environmental harm?
Marketing must consider material choices, product design, and consumer disposal, with an aim to reduce environmental impact and enhance sustainability throughout the value chain.
562
What does “reimagine material choices” mean in sustainability?
It means using low-impact, recyclable alternatives to traditional materials. For instance, PaperStone countertops are made from recycled paper and resins, offering low carbon impact and high usability.
563
How can sourcing from sustainable suppliers help?
Working with organizations like the Rainforest Alliance ensures products are sourced ethically, preserving forests and supporting social, economic, and environmental sustainability.
564
What does the Rainforest Alliance certification signify?
It means a product (or ingredient) was produced sustainably, promoting harmony between people and nature. The "Follow the Frog" campaign promotes these certifications to consumers.
565
How does LastObject promote sustainable product design?
By creating reusable swabs and cotton products that reduce waste, LastObject’s minimalist approach lowers environmental impact while offering functional alternatives to single-use products.
566
How does General Mills shift to sustainable energy sources?
Their oat milling plant uses oat hulls (a by-product) to generate power, reducing natural gas use by 90% and producing profits while cutting emissions.
567
How does Puma address overpackaging?
Puma’s “Clever Little Bag” replaces shoeboxes with a reusable red bag and light insert, reducing material use, emissions, and shipping weight while improving sustainability and customer appeal.
568
What is a closed-loop value chain?
It’s a system where used components are remanufactured instead of discarded. Caterpillar’s Cat Reman program reuses parts to reduce waste and offer cost savings to customers.
569
What are two key priorities for sustainability initiatives?
(1) Profitability—initiatives should increase returns. (2) Communication—strategic plans must be shared with internal teams and external stakeholders to enhance brand value.
570
What is a sustainable marketing organization?
A company that integrates sustainability into all aspects of its marketing, balancing consumer needs, societal interests, and shareholder returns through long-term ethical practices.
571
What are the five principles of sustainable marketing?
1. Market with ethics
2. Be consumer-centric
3. Build long-term customer value
4. Embrace a sense of mission
5. Do no harm
572
What is marketing with ethics?
It involves making morally sound marketing decisions, developing ethical guidelines for practices like advertising and pricing, and promoting decisions that benefit consumers and society long-term.
573
What are some moral dilemmas marketers face?
Examples include: misleading packaging claims, spying on competitors, accepting bribes, firing underperforming dealers, and promoting products with environmental contradictions.
574
what are two philosophies on marketing ethics?
1. The market system decides what’s right (legal = ethical).
2. Social conscience: managers uphold ethics regardless of legality.
575
What is the societal marketing concept?
It encourages ethical decisions based on personal integrity, long-term welfare, and trust, beyond what the legal system allows.
576
How did CVS embrace mission-driven marketing?
CVS stopped selling tobacco, changed its name to CVS Health, launched smoking cessation programs, and saw long-term revenue gains and stronger brand image.
577
What were the results of CVS’s decision to stop selling tobacco?
CVS lost $2B in revenue initially but gained new customers, saw a 10% revenue increase each year, and improved brand trust and health mission alignment.
578
What is the CMA’s mission in sustainable marketing?
The Canadian Marketing Association fosters responsible marketing growth by promoting ethics, shaping policy, and supporting business conduct in the public interest.
579
What are key principles from the CMA Code of Ethics?
* Truthful communication
* Respect for personal information
* No exploitation of vulnerable groups
* Transparency in advertising and claims
* Ethical personal data management
* Respect in marketing content (no disguise, no disparagement)
580
What is the principle of Accountability under the CMA's privacy code?
It holds the organization responsible for personal information under its control and requires designating an individual accountable for compliance with privacy principles.
581
What does Identifying Purposes mean in privacy protection?
Organizations must identify the reasons for collecting personal info at or before the time it's collected.
582
What is the principle of Consent in data privacy?
Consent from the individual is required for collecting, using, or disclosing their personal data, except when inappropriate.
583
What does Limiting Collection refer to in privacy?
Organizations should only collect personal data necessary for their purpose, and collection should be fair and lawful.
584
What is meant by Limiting Use, Disclosure, and Retention?
Info must not be used beyond its original purpose unless consent is given or legally required; retention only as long as necessary.
585
What does the Accuracy principle mean in data privacy?
Personal data must be accurate, complete, and up to date for the purpose it's being used.
586
What are Safeguards in the context of privacy?
Organizations must protect personal information with security appropriate to its sensitivity.
587
What is meant by Openness in privacy practices?
Organizations must provide clear info to individuals about policies and practices for managing personal data.
588
What is Individual Access in data privacy?
Individuals have the right to access their data and request corrections.
589
What is Challenging Compliance in privacy rights?
Individuals can challenge an organization's compliance with privacy principles and expect a response.
590
What does Under Armour’s Code of Conduct emphasize?
"Protect the house—make the right call." Employees must always do what is ethically right and follow the law.
591
What actions does Under Armour recommend when facing an ethical issue?
Report concerns to management, HR, or anonymously via their hotline — “If it feels wrong, it probably is.”
592
What does Be Consumer-Centric mean?
View marketing from the consumer’s point of view. Sense, serve, and satisfy defined segments for long-term relationships.
592
Why must ethics be more than written codes?
Ethics must be part of the company’s culture, not just policies. Commitment from leadership is essential.
593
What happened in the Volkswagen emissions scandal?
VW cheated emissions tests to boost sales. It caused a $30B scandal, showing short-term gains can destroy long-term trust.
593
What does it mean to Build Long-Term Customer Value?
Focus on improving product value and customer engagement over time instead of quick sales wins.
594
What are key consumer trends driving sustainability?
70% value eco-friendly brands; 69% pay premiums for recycled goods; Gen Z researches a brand’s values before buying.
595
What is Pedigree’s mission-driven marketing strategy?
It’s about love and care for dogs. They donate meals, fund shelters, and work toward all dogs being safe and loved.
595
What does Embrace a Sense of Mission mean in marketing?
Define your mission in broad social terms to energize employees and guide long-term strategy.
596
Give examples of other brand missions.
Walmart (accessibility), 3M (innovation), Nike (emotion), Disney (happiness), TOMS (doing good + doing well).
596
What is Do No Harm in marketing?
Marketing should consider both consumer wants and long-term societal welfare. Minimize harm and find positive impact.
597
How can companies improve pleasing products?
Add long-term benefits without reducing short-term appeal, converting them into desirable products.
598
What is Method’s sustainable product strategy?
Use plant-based, nontoxic, biodegradable ingredients; recyclable packaging; renewable energy; avoid harm to people or planet.
599
What belief is foundational to marketing?
Companies that meet consumer needs while considering long-term consequences will thrive.
600
What trends are making sustainability urgent?
Societal well-being, electrification, and rising public demand for corporate responsibility.
601
What is a Sustainable Company?
One that creates value through socially, ethically, and environmentally responsible actions.
602
What does the Triple Bottom Line refer to?
People, Planet, and Profit — the foundation of sustainable success.
-
Key Links
-
Subjects
-
Company
-
Find Us
-
