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Marketing
Dynamics
CANADIAN EDITION
Canadian Authors: Greg Gregoriou and Jessica Pegis
Brenda Clark
•
Jennie Sobel
•
Cynthia Gendall Basteri
(Sample Chapters 5 & 9)
OXFORD
NEXT
Chapter XX Chapter Title
Contents
PART 1
MARKETING BASICS
The Functions and the Marketing
Concept 33
Profile: TD Canada Trust 34
4
Market Forces
37
Types of Economic Systems 38
Market Economy Features 40
Market Forces at Work 41
Supply and Demand 42
Profit 44
Competition 46
Role of the Customer 47
1
Marketing is Dynamic!
4
Marketing Defined 5
Marketing Is Dynamic 5
Marketing Is Customer-Focused 6
Marketing Is Relationships 7
Marketing Is International 7
Marketing Is the Four Ps 8
Marketing Is the Marketing Mix 12
Marketing Is the Marketing Plan 13
Is Marketing in Your Future? 15
2
Business Basics
The Marketing Concept
The Marketing Concept 30
The Functions of Marketing 31
MarketingDynamics_FM.indd 3
50
PART 2
REACHING YOUR
MARKET
18
Economic Needs and Wants 19
The Exchange 19
Money 20
What Is Business? 22
Making a Profit 22
Forms of Business Ownership 23
The Functions of Business 25
3
PART 1: Wrap-up
5
29
Targeting a Market
Marketing Strategy 55
Mass Marketing 57
Target Marketing 58
Choosing Your Target Market
54
60
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Contents
iv
PART 3
THE MARKETING MIX
Advantages and Disadvantages of
Targeting a Market 61
Segmenting a Market 62
Geographic Variables 63
Demographic Variables 64
Psychographic Variables 66
Behavioural Variables 67
Combining Variables 69
Market Segment Profile 69
6
Consumers and
Competition 73
Psychological Influences 74
Social Influences 76
Situational Influences 78
The Consumer Decision Process 79
Competition 80
Ways to Compete 81
Market Share 83
Why Is Market Share Important? 84
Competition Research 85
7
Marketing Research
11
101
Marketing for Not-for-Profit
Organizations 106
Information Technology
and Social Media 120
E-Commerce Basics 121
Marketing on the Internet 123
Business-to-Business on the Internet 123
Shopping on the Internet 124
Future of E-tailing 130
PART 2: Wrap-up
MarketingDynamics_FM.indd 4
134
138
Branding
156
What Is a Brand? 157
Branding and the Customer
Goals of Branding 161
Protecting a Brand 164
You as a Brand 166
Characteristics of Not-for-Profit
Organizations 107
The Importance of Marketing for NPOs 111
Marketing Strategies of NPOs 112
9
What Is a Product?
Types of Products 139
The Service Economy 140
Characteristics of Services 140
Product Elements 142
Product Strategy 147
Product Life Cycle 147
90
Types of Data 92
Collecting Primary Data 92
Sources of Secondary Data 96
Marketing Research Process 97
Trend Research 97
Sales Forecasting 100
Is Marketing Research Always Right?
Profile: Windigo Catering 102
8
10
12
What Is Price?
159
170
Types of Prices 171
Factors That Affect Price 172
Profile: WestJet Airlines Ltd. 180
13
Price Determination
Pricing Objectives 184
Effect of Price on Revenue
Establishing Prices 189
14
What Is Place?
183
188
194
Channels of Distribution 195
Role of Intermediaries 199
Physical Distribution 201
Activities of Physical Distribution 201
Components of Physical Distribution 202
Modes of Transportation 204
Distribution of Services and Ideas 206
The Distribution Process 206
Channel Management and Physical
Distribution 208
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v
Contents
15
What Is Promotion?
Promotion Is Marketing
Communication 213
Personal Promotion 218
Nonpersonal Promotion 218
AIDA: The Basic Promotional Strategy 224
Pull and Push Strategies 228
The Marketing Concept and Promotion 229
Integrated Marketing
Communications 229
16
The Sales Process
234
What Is Personal Selling? 235
Where Do Salespeople Work? 235
What Do Salespeople Do? 239
The Sales Process 241
Is There a Career for You in Sales? 241
PART 3: Wrap-up
Towards a Global Economy 269
Marketing Strategies for International
Markets 270
Globalization: Good or Bad? 272
Profile: Swiss Water Decaffeinated Coffee
Company Inc. 274
212
PART 4: Wrap-up
278
PART 5
ISSUES AND TRENDS
IN MARKETING
246
PART 4
GOVERNMENT, TRADE,
and marketing
19
Social Responsibility in
Marketing 282
What Is Social Responsibility? 283
Be Legal 284
Be Ethical 287
Be Philanthropic 290
Benefits of Social Responsibility 290
20
17
Role of Government
250
Federal Powers 251
Market Challenges 252
Government Economic Activities
18
254
International Trade and
Marketing 261
International Trade 262
Why Trade? 263
Exports and Imports 265
Foreign Exchange Rates 266
Regulation of International Trade
MarketingDynamics_FM.indd 5
Trends in Global
Marketing 294
Technology 295
Immigration 296
Multinational Corporations 296
Important International Markets 299
Challenges in Global Marketing 301
Profile: soleRebels Footwear 303
PART 5: Wrap-up
306
Glossary 308
Index 316
267
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54
5
Targeting a
Market
Why do you think marketers are
interested in teens as a market?
Marketing Terms
Learning Goals
n definebusinessopportunity
n explainthecomponentsofa
marketingstrategy
n describethefourqualitiesofa
targetmarket
n identifythefourstrategiesinthe
marketingmix
n definemassmarketingandtarget
marketingandstatetheadvantages
anddisadvantagesofeach
n explainhowsegmentationhelpsto
determinewhichmarkettotarget
n explaineachofthefoursegmentation
categoriesandlistthevariables
foreach
n describehowmarketerscreateand
useamarketsegmentprofile
MarketingDy_2-135_Ch1-9.indd 54
business opportunity
mass marketing
target marketing
market segmentation
segmentation variable
geographic segmentation
census
demographic information
demographic segmentation
generation
disposable income
discretionary income
psychographic segmentation
behavioural segmentation
80/20 rule
market segment or consumer profile
ThediversityoftheCanadianmarket
providesmanybusinessopportunities.An
opportunityisachanceforsuccess.What
isabusinessopportunity?Abusiness
opportunityoccurswhenyouseeaneed
thatyourcompanycanfulfill.Abusiness
opportunityisthechanceforsuccess
providedbythecombinationofaproduct
ideaandamarketthatiswillingandableto
buytheproduct.(Rememberthataproduct
canbeagood,aservice,oranidea.)
Manygreatbusinessideasstartwithone
personwhohasaneedorobservesaneed
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55
Chapter 5 Targeting a Market
marketersdevelopamarketingstrategy.As
youlearnedinChapter1,amarketingstrategy
consistsofthetargetmarketandallthe
decisionsinthemarketingmix.
TargetMarket+MarketingMix=Marketing
Strategy
5-1
Some people develop a business based on
a need they observe or a need they have
themselves. Many people develop business
ideas based on their hobbies or interests.
inothers.Forexample,supposeyouarea
hairdresser.Youobservethattherearemany
peoplewhocannotgetouttogethaircuts,
suchasolderadults.Youdevelopabusiness
thatgoestopeople’shomestocuttheirhair.
Manyproductideascomefrompersonal
hobbiesorinterests,5-1.Forexample,a
collegestudentenjoyedwatchingJapanese
animations.Hedevelopedabusinessselling
Japaneseanimationvideos,andtoys.
Marketing Strategy
Onceyoufindabusinessopportunity,
youneedtodevelopawaytoturnthe
opportunityintoasuccessfulbusiness.One
ofthefirststepsistodevelopabusinessplan
andamarketingplan.
Animportantpartofthemarketingplan
isthemarketingstrategy.Astrategyisaplan
developedtoreachagoal.Forbusinesses
thatfollowthemarketingconcept,the
overallgoalistomakeaprofitbysatisfying
customers’wants.Inordertoreachthatgoal,
MarketingDy_2-135_Ch1-9.indd 55
Marketersdevelopamarketingstrategy
byselectingatargetmarketanddeveloping
themarketingmixwiththetargetmarket
inmind.Supposeyouwanttopursueyour
ideaofprovidinghaircareservicestopeople
whohavelimitedmobility.Yourtarget
marketwouldbeseniorcitizensandpeople
withphysicalchallenges.Yourmarketing
mixwouldbeasfollows:product—haircare
servicessuchaswash,cut,colour,andstyle;
price—competitivewithlocalsalonsplusa
servicefee;place—customers’homesinyour
region;promotion—directmailandadsin
localnewspaper.
Target Market
Whenyoudevelopamarketingstrategy,
youmustfirstchooseyourtargetmarket.
Atargetmarketisthespecificgroupof
customerswhosewantsandneedsyou
willtrytomeetwithaspecificmarketing
mix.Atargetmarketshouldhavethe
followingfourqualities:
n clearlydefinedwantsandneedsthat
yourcompanycanmeet
n moneytobuyyourproduct
n willingnessandauthoritytobuyyour
product
n enoughcustomersinthemarkettobe
profitable
Choosingatargetmarketisoneofthe
mostimportantdecisionsamarketermakes,
5-2.Ifthetargetmarketdoesnotwant
orneedyourproduct,yourproductwill
notbesuccessful.Youmightalsomissthe
opportunitytobesuccessfulwithadifferent
targetmarket.Ifthetargetmarketdoesnot
havethemoneytobuyyourproduct,your
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56
Part 2 Reaching Your Market
Marketingmixdecisionsareoftencalled
marketingmixstrategies.Inotherwords,
foreachPintheFourPs,thereisastrategy.
Thesestrategieswillbeexploredinmore
detailinotherpartsofthistext.Hereisan
overviewofmarketingmixstrategies:
5-2
Identifying the target market is a key decision.
A marketer without a target market is working in
the dark.
productwillnotbesuccessful.Ifyourtarget
marketistoosmall,youwillnotsellenough
productstomakeaprofit.
3 Connect...
Think of your favourite store. Who do you think
the target market is for this store? Describe the
typical customer.
Marketing Mix
Themarketingmixconsistsofthe
decisionsmadeaboutproduct,place,price,
andpromotionforoneproduct.Onceyou
havedecidedonyourtargetmarket,youwill
makeyourmarketingmixdecisionswith
thattargetmarketinmind.Whenyouplan
yourmarketingmix,youwillthink,“How
willmytargetmarketrespondtothis?”What
happensifyoudonothaveatargetmarket?
Imaginethatthemarketerisaquarterback.
Imaginethequarterbacktryingtothrowa
pass,butheisblindfolded!Thatishowa
marketerwithoutatargetmarketis.
MarketingDy_2-135_Ch1-9.indd 56
n Product Strategies.Thesestrategies
includeallthedecisionsmadeabout
whatproducttooffer.Keepinmind
thatthetermproductincludesgoods,
services,andideas.Productstrategies
includedecisionsaboutquality,quantity,
size,colour,features,technicalsupport,
packaging,warranties,brandname,
andimage.
n Price Strategies.Thesestrategiesinclude
allthedecisionsmadeaboutpricing
aproduct.Pricestrategiesinclude
decisionsmadeaboutprofit,discounts,
andthesellingprices.Pricingcanalso
haveanimpactontheimageofaproduct.
n Place Strategies.Thesestrategiesinclude
allthedecisionsmadeaboutwherethe
productwillbesold.Itincludesdecisions
abouthowtotransporttheproduct,
warehousing,inventorycontrol,and
orderprocessing,5-3.
n Promotion Strategies.Thesestrategies
includeallthedecisionsmadeabout
howtotellcustomersaboutthe
companyandtheproduct.Itincludes
decisionsaboutadvertising,suchasthe
typeofadsandwheretoplacethem.It
alsoincludesdecisionsaboutpersonal
selling,customerservice,publicity,
promotionalevents,anddesignand
layoutofstores.
Usually,marketingmixdecisionsare
interrelated,5-4.Inotherwords,adecision
madeforoneofthePswillaffectthe
decisionsmadefortheotherPs.Asaresult,
decisionsfortwoormoreofthePsmaybe
madeatthesametime.Forexample,ifthe
targetmarketwantslowprices,thenumber
ofproductfeaturesmayhavetobereduced
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57
Chapter 5 Targeting a Market
5-3
Place strategies include the decisions about how
to transport products from factory to warehouse
or warehouse to retail store.
sothatthecompanycanselltheproduct
atalowerprice.Productdecisions,suchas
brandnameandpackaging,areoftenchosen
becausetheywillworkwellinpromotions.
Mass Marketing
Amassmarketconsistsofallthe
customersforaspecifictypeofproduct.For
example,everyonewhowantsacarand
isableandwillingtobuyacarispartof
themassmarketforcars.Mass marketing
isthedevelopmentofonlyonemarketing
mixforaspecificproduct.Massmarketing
assumesthateveryonehasexactlythesame
wantsandneedsfortheproduct.Thistype
ofmarketingpresentstwoproblems.One
problemisrelatedtothenatureofconsumer
markets.Theotherisrelatedtoprofitability.
3 Connect...
Name a product for which there is a mass
market.
MarketingDy_2-135_Ch1-9.indd 57
5-4
Marketing mix decisions are interrelated. A
decision about one P affects decisions for the
other Ps.
Nature of Consumer Markets
Thenatureofconsumermarketsisthat
theyarediverse.Thatis,mostconsumer
marketsconsistofmanygroupsof
consumerswithmanydifferentneeds.Mass
marketinglooksatthemarketasamass.It
assumesthatallcustomershavethesame
needsandwantsfortheproduct.Inreality,
thereareveryfewconsumermassmarkets
inwhicheveryonehasthesameneedsand
wantsforaspecificproduct.
Thinkofthecurrentmarketforcars.
Canyouimagineacarmanufacturermaking
onecarthatwouldmeettheneedsof
everyoneinthemassmarketforcars?Think
ofthedifferentneedscustomershavefor
automobiles,5-5.Herearesomeexamples.
Onegroupofcarcustomerswantsan
expensiveluxurycar.Anothergroupwants
aminivantoholdateamofkidsandall
theirsoccergear.Anothergroupwantsthe
cheapestcarpossible.Anothergroupwants
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58
a pick-uptruck.Inmostconsumermarkets,
themassmarketismadeofcustomerswith
differentneedsfortheproduct.
3 Connect...
Name a product for which different groups of
consumers have different needs.
Profitability
Everybusinesswantstomakeaprofit.
Massmarketingisoftenveryinefficient
andexpensive.Forexample,advertising
toamassmarketthroughtelevision
Part 2 Reaching Your Market
commercialsisveryexpensive.Asaresult,
massmarketingmaynotresultinprofits.
Inaddition,everybusinesshaslimited
resources.Eachbusinesshastodecidewhere
itwillspenditslimitedresources.
Hereisahypotheticalexampleforthe
purposeofillustratingthepoint.Supposeyou
decidetostartahouse-cleaningbusiness.You
alsodecideonamassmarketapproach.Your
oneproductwillbefourhoursofcleaning.
Thepricewillbe$100.Youwilladvertiseon
TV.TVadvertisingisveryexpensive.Ifyou
advertiseonallshowsandatalltimes,your
costofadvertisingwillbeveryhigh.Youwill
bespendingmoneytoreachmanypeople
whoarenotpotentialcustomers.Youwill
spendmoreonadvertisingthanyouwould
everearnfromyourbusiness.
Target Marketing
5-5
Could one style of car meet the needs of
everyone in the market for a car?
MarketingDy_2-135_Ch1-9.indd 58
Asaresultofthesetwoproblems,
marketersdevelopedanapproachcalled
targetmarketing.Inthetargetmarketing
approach,marketersanalyzethemass
market.Theythensegment(divideup)the
marketbasedonthedifferentneedsand
wantsofthecustomersinthatmarket.The
companywillthenchooseoneofthose
segments.Itwilldevelopamarketingmix—
product,place,price,andpromotion—to
meettheuniquewantsandneedsofthat
marketsegment.Thedevelopmentofa
uniquemarketingmixforatargetmarketis
calledtarget marketing.Somecompanies
willchoosetwoormoresegmentstotarget,
butwilldevelopauniquemarketingmixfor
eachsegment.
Whatmakesamarketingmixunique?
OneormoreoftheFourPsarechanged
tomeetthetargetmarket’suniqueneeds
andwants.Theproductcanbechangedby
addingdifferentfeatures.Thepricecanbe
changedtomatchthenewleveloffeatures.
Theplacewhereaproductisofferedcanbe
changed;forexample,anInternetwebsite
canbeaddedasawayforcustomersto
obtaintheproduct.Lastbutnotleast,the
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Chapter 5 Targeting a Market
promotioncanbechangedtoappealtothe
targetmarket’suniquewantsandneeds.
Themodernautomobileindustry
segmentsandtargetsspecificmarkets,5-6.
Forexample,GeneralMotorshasdeveloped
manybrandsandmodelsofcarstomeetthe
needsofvariousmarketsegments.Herearea
fewexamples.TheChevroletSonicisasmall
economycarwithalowprice.Itistargeted
tofirst-timecarbuyersandpeoplewhodo
a lotofcitydriving.TheCadillacXTSisa
larger,high-performanceluxurysedanwith
ahighprice.Itstargetmarketiswealthy
adultswhowantaluxurycarthatisalso
astatussymbol.TheGMCSierra1500isa
pick-uptruckofmoderateprice.Itistargeted
atpeoplewhowantatruckwithsomeextra
featuresandperformance.
Howwouldtargetmarketingworkfor
yourhouse-cleaningbusiness?First,you
wouldanalyzethemarketforcleaning
services.Whatsegmentsarethere?Whatare
theirneeds?Whichsegmentofthemarket
wouldyouliketofocuson?Herearesome
Mass Marketing and Target Marketing
Mass Marketing
All Customers
All are considered to have
the same wants and needs
for a car.
Segmented Market
Segmented Customers
The customers are organized
into three market segments
based on wants for a specific
type of car:
Target Marketing
Target Market
One segment of the market
was chosen. This target
market consists of customers
who want luxury cars.
These customers have
similar wants in a car.
wants an economy car.
wants a luxury car.
wants a pick-up truck.
Legend:
= People who want economy cars
= People who want luxury cars
= People who want pick-up trucks
5-6
The automobile industry segments the market and then targets specific segments with specific types of
cars. This diagram shows a simplified version of the thought process for segmenting a market.
MarketingDy_2-135_Ch1-9.indd 59
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Part 2 Reaching Your Market
60
segments:seniorcitizenswhowantregular
heavycleaningbutnolightcleaningatthe
lowestprice;busyadultswhowantthorough
butreasonablypricedregularcleaning;and
luxuryhomeownerswhowanttheirlarge
homesthoroughlycleanedonaregularbasis
andarewillingtopayhigherprices.
Youdecideonthebusyadultssegment.
Youthenresearchthismarkettofindout
whattheyneedandarewillingtopayfor,so
thatyoucancustomizetheFourPstomeet
theirneeds.Youfindthatmostwantfourhourweeklycleaning.Youalsofindoutthat
theyarewillingtopaybetween$60and$100,
dependingonthesizeofthehome.Soyou
setupapricescaledependingonthetotal
areaofthehome.Youalsofindoutthatthese
busyadultslistentothelocalradiostation
ontheirwaytoworkandreadtheThursday
newspaperfortheads.Soyoudecideto
changeyourpromotiontoamorningradio
adplusanadintheThursdaylocalpaper,
whichappearsinprintandonline.
3 Connect...
Name another industry that segments and
targets markets. Give an example of two
products and their different features and
target markets.
n Target Market First.Averypopular
targetmarketisyoungpeople!Itisa
largemarketwithmoneytospend.In
Canada,therearemorethan4.5million
youngpeoplebetweentheagesof15and
24,manywithpart-timeorfull-timejobs.
Manycompaniesdecidefirstthatthey
wanttomarkettothisgroupofyoung
people.Theythendevelopnewproducts
ormodifyoldonestomeetyoung
people’swantsandneeds,5-7.
n Product Idea First.Inthe1940s,an
engineerresearchingasynthetic
substituteforrubbermixedabunch
ofchemicalstogether.Theresultwas
asortofliquid,sortofsolidgoothat
bouncedwhendropped.Everyone
thoughtthestuffwascool,butnoone
couldthinkofanindustrialorpractical
useforit.Amarketer,PaulHodgson,
sawtheinventionanddecidedithad
greatpotentialasatoy.Henamedit
“SillyPutty”andpackageditinaplastic
egg.SillyPuttybecameoneofthemost
popularNorthAmericantoyswith
hundredsofmillionsinsalessince1950.
Thetargetmarketforthattoyischildren.
Choosing Your
Target Market
Therearefourgeneralapproachesto
choosingatargetmarket:(1)decideon
thetargetmarketfirstandthendevelopa
product,(2)developagreatproductidea
andthenlookforatargetmarketthatwould
likeit,(3)developtheproductideaand
targetmarkettogether,and(4)takeacurrent
productwhosesalesarefallingandthenlook
foranewtargetmarketfortheproduct.Here
areseveralexamples.
MarketingDy_2-135_Ch1-9.indd 60
5-7
Many companies target the youth market,
especially teens and people in their early to
mid-twenties.
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Chapter 5 Targeting a Market
n Product and Target Market Together.
Productsareoftendevelopedwiththe
needsofaparticularmarketinmind.For
example,thecosmeticscompanyMВ·AВ·C
wasstartedinCanadawhenafashion
photographerandamake-upartist
realizedthatstagemake-upoftenfailed
underthebrightlightsofthestudio.
TheMВ·AВ·Ccosmeticlineoriginally
targetedprofessionalmake-upartists.
Onlylaterdiditbecomeafavourite
withconsumers.
n Old Product, New Target Market.
Volkswagenautomobileshavebeen
aroundforalongtime.However,in1997
VolkswageninNorthAmericawanted
totargetamarketcalled“GenerationX,”
thatis,peoplebornbetween1966and
1976. VolkswagenmodifiedtheirGolf
modelbyaddingacustomroofrack
andK2brandskisorsnowboard,and
namedtheneweditionGolfK2.They
alsodesignedapromotioncampaignthat
wouldappealtotheadventurousnessof
manyGenerationXers.
Advantages and
Disadvantages of
Targeting a Market
Forabusinesstobesuccessful,itdoes
nothavetoselltoeverycustomerinthe
massmarket.Businesseshavediscovered
thatwhentheytrytomeettheneedsof
a massmarketwithasinglemarketing
strategy,theymaysatisfyveryfew
customers.Suchbusinessesmaynotmake
aprofit.Manybusinesseshavediscovered
thatfocusingonaparticularmarket
segmentleadstomoresuccessandmore
profits.Byfocusingononesegmentof
themarket,thebusinesscandevelopa
marketingmixthatsatisfiestheneeds
ofmostofthecustomersinthatmarket
MarketingDy_2-135_Ch1-9.indd 61
61
segment.Aftergainingsuccesswithone
marketsegment,thebusinesscanthen
expandtoanothersegment.
Targetmarketingalsoenablessmall
businessestocompetewithlarger
companies.Thesmallbusinesslooksfor
asegmentofthemarketwhoseneedsare
notbeingmet.Often,asmallsegmentofa
marketcanbeveryprofitable,especiallyif
youhavealmostthatentiremarketsegment.
Thissmallmarketiscalledamarketniche.
Kaepa,Inc.,forexample,isasneaker
manufacturer.Inthe1980s,largercompanies
suchasNikeandReeboktookmostofits
salesaway.Kaepa’ssalesofsneakersfell
andthecompanywaslosingmoney.Then,
Kaepadecidedtofocusontheshoeneeds
ofcheerleaders.Kaepadevelopedshoes
thatmeetthespecificneedsofcheerleaders.
Forexample,theirshoeshavegroovesin
thesolesforthecheerleaders’fingerswhen
theymakehumanpyramids.Kaepaalso
makescustomshoeswithteamcoloursand
logos.Kaepa,Inc.,becameverysuccessfulby
targetingasmallsegmentoftheathleticshoe
market,andthenmeetingthatsegment’s
specificneeds,5-8.
Therearetwopotentialproblemswith
targetmarketing.First,youmaychoosea
marketthatistoosmall.Asaresult,there
arenotenoughcustomerstomakeyour
businessprofitable.Thesecondproblemwith
targetmarketingisthatyoumaychoosethe
wrongtargetmarket.Inthiscase,youalso
willnotmakeaprofit.Youmayalsomissthe
opportunitytomakeaprofitfromadifferent
targetmarketthatwouldbelargerand
moreprofitable.Thesetwoproblemscanbe
avoidedbyappropriatemarketsegmentation
andmarketingresearch.
Theotherpotentialproblemwithtarget
marketingoccurswhenallofthecompany’s
businessdependsononemarketsegment.
Supposethatmarketsegmentsuffers
financiallosses.Thatsegmentwillreduceor
stopbuyingproductsfromthecompany.The
companywillthenalsohavefinanciallosses.
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Part 2 Reaching Your Market
5-8
Small companies can compete by finding a niche market, that is, a small segment of the larger market
whose needs are not being served. Kaepa, an athletic shoe manufacturer, focuses on shoes for
cheerleaders and is very successful in this market niche.
Segmenting a Market
Asyouhavediscovered,marketershave
developedwaystoanalyzealargemass
marketandbreakitupintosegments,5-9.
Thisprocessofdividingalargemarketinto
smallerpartsiscalledmarket segmentation.
Eachmarketsegmentismadeofcustomers
withsimilarwantsandneedsforaspecific
product.Marketersoftensegmentthe
market,studythesegments,thenchoose
one(ormore)ofthesegmentsastheir
targetmarket.
Intheconsumermarket,marketersuse
characteristicsofcustomerstosegmentthe
market.Forexample,amarketermight
segmentamarketbasedontheageof
MarketingDy_2-135_Ch1-9.indd 62
thecustomers.Acustomercharacteristic
thatisusedtosegmentamarketis
calledasegmentation variable.Ageis
asegmentationvariable.Someother
segmentationvariablesareincomelevel
(howmuchmoneythecustomermakes)
andgender(whetherthecustomerismale
orfemale).Theassumptionisthatbasedon
thesevariables,thecustomersinthesegment
havesimilarwantsandneedsforproducts.
Thereareover25differentvariables
thatmarketerscommonlyusetosegment
theconsumermarket.Marketershave
organizedthesevariablesintofour
categories:(1)geographic,(2)demographic,
(3)psychographic,and(4)behavioural.
Businessmarketersalsosegmenttheirmarkets.
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63
Chapter 5 Targeting a Market
3
Connect...
Imagine that $100 are available to spend. How
might a teenaged male spend the money? A
teenaged female? A 30-year-old parent with
two children? A wealthy 40-year-old? A retired
person on a very small fixed income?
Geographic Variables
Segmentingamarketbasedonwhere
customersliveiscalledgeographic
segmentation.Commonlyusedgeographic
variablesincludelocation,climate,and
communitysize.
Location
Customers’needsforproductsoftenvary
basedonwheretheylive.Customerswho
liveinthesamecountryoftenneeddifferent
productsfromthosewholiveinadifferent
country.Forexample,Canadiancars—as
opposedtoAmericancars—mustusethe
metricsystemtoshowdistancetravelledand
gasconsumed.Soacompanythatproduces
carsfortheworldmarketwouldsegment
themarketbycountriesthatusethemetric
systemandthosethatdonot.
Climate
Climatehasahugeimpactonwhat
customersneed.Customerswholivein
climateswhereitnevergetscolderthan
15В°Cdonotneedwarmcoats.Customers
wholivewheretheaveragewinter
temperatureis–6˚Cneedwarmcoats.
Therefore,acoatmanufacturermight
segmentthemarketbasedonaverage
wintertemperatures,5-10.
5-9
Think about the people you see in the mall. How do their wants and needs differ? Marketers have
developed ways to analyze a large mass market and break it up into segments.
MarketingDy_2-135_Ch1-9.indd 63
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Part 2 Reaching Your Market
64
Demographic
Variables
5-10
Marketers of certain products, such as coats,
segment the market based on climate.
Community Size
Manymarketershavediscoveredthat
marketsizevarieswiththesizeofthe
community.Somecommunitiesaretoosmall
tobeprofitableforcertainbusinesses.For
example,onerestaurantchainwilllocate
restaurantsonlyincitiesof200000ormore
people.Smallercitiesdonotprovideenough
customersforthisparticularbusiness.Other
businessesprefertofocusontheneedsof
a smallcityortown.Walmartistheclassic
example.WhenWalmartstarted,itlocatedits
storesinsmalltowns.
3 Connect...
Choose a geographic variable. Think of a
product that can be segmented based on that
variable. Name the product and the geographic
variable. Then describe the market segment.
MarketingDy_2-135_Ch1-9.indd 64
Mostcountrieswanttoknowbasic
informationabouttheircitizens,suchas
howmanypeopleareineachagegroup.As
aresult,mostcountriescountthenumber
ofpeopleintheircountries.Acensusisa
countofthepeopleinacountrymadeby
thegovernmentonaregularbasis.Statistics
Canadaconductsacensuseveryfiveyears.
Acensuscollectsdemographic
information.Demographic information
consistsofstatistics(numbers)thatdescribe
thecharacteristicsofapopulation,for
example,theageofpeople.Itwillthen
compileagraphthatshowshowmany
peopleinthecountryareineachagegroup.
Thecategoriesthatthisinformationis
dividedintoarecalleddemographic variables.
Segmentingamarketbasedondemographic
variablesiscalleddemographic
segmentation.Demographicvariables
commonlyusedbymarketersincludeage,
gender,ethnicity,income,andfamilysize.
Age
Ageisacommonlyusedsegmentation
variablebecausepeopleatdifferentages
havedifferentneedsandwants.For
example,babiesrequirespecialfood,
soanumberofcompaniesspecializein
producingbabyfood.Clothingisanother
areawhereageaffectswantsandneeds.
Animportantvariablerelatedtoageis
generation.Agenerationisagroupofpeople
bornduringaparticularperiodofhistory.
Theperiodofhistorythatagroupofpeople
grewupinhasamajoreffectontheir
attitudes,wants,andneeds.Forexample,
peoplebornbetween1977and1994are
knownasthe“Millennials.”Millennialswere
thefirstgenerationtogrowupwitha
computerintheirhomeandusesocial
networking.BothGenerationY(1977–1994)
andGenerationZ(1995–present)
areMillennials.
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65
Chapter 5 Targeting a Market
Go Far.
Join the most modern oil sands operation in North America and watch your
career take off. Syncrude's Campus Recruitment Program for post-secondary
Aboriginal students is the perfect opportunity for you to gain valuable experience.
You'll be part of a team of employees and contractors working to secure
Canada's energy future.
Currently in the midst of a major expansion, our operation requires individuals in a
variety of trades and professional positions. From heavy equipment operators and
mechanics to engineers, process operators and technologists, just to name a few.
We are recognized as a top employer and pride ourselves on offering a dynamic,
team-oriented environment where you can share your ideas and grow your career.
The road is clear. Visit www.syncrude.com for additional information.
The Syncrude Project is a joint venture undertaking among Canadian Oil Sands Partnership #1, Imperial Oil Resources, Mocal Energy Limited, Murphy Oil Company Ltd., Nexen Oil Sands Partnership, Sinopec Oil Sands Partnership,
and Suncor Energy Ventures Partnership.
5-11
This Syncrude Canada recruitment poster targets Aboriginal youth. Aboriginal
youth represent a growing target market for products and employers in Canada.
Aboriginalpeoplesrepresentagrowing
marketinCanada.AccordingtoStatistics
Canada,thepopulationofFirstNations,MГ©tis,
andInuitpeopleincreasedby47percent
between1996and2006—aboutsixtimesthe
rateofincreasefortherestofthepopulation.
Withrespecttoage,48percentof
Aboriginalpeoplesare25yearsofageor
under,comparedto31percentinthegeneral
population.Aboriginalyouthhavebecomean
importanttargetmarketforbusinesses
seekingtomarketproductsorrecruitthis
groupaspartnersoremployees,5-11.
3 Connect...
Name a product whose market is segmented
by age. Describe the different market
segments and describe how the product
differs for each age segment.
Gender
Menandwomendifferintheirwants
andneedsformanyproducts.Marketersuse
thesedifferencestodevelopproductsthat
meetthespecificneedsofmenorthespecific
MarketingDy_2-135_Ch1-9.indd 65
needsofwomen.Forexample,theLady
FootLockerstoresproviderunningshoes
andotherathleticequipmentthatmeetthe
specificneedsofwomen.
Ethnicity
Canadaiscomposedofpeoplefroma
varietyofethnicbackgrounds.Theneed
forjeansdoesnotvarybasedonaperson’s
ethnicbackground.However,needsforother
productsmayvarywithethnicheritage.For
example,peoplemaywantcertainproducts
becausetheycooktraditionaldisheswiththem.
Orpeoplemayenjoythecuisineofanother
ethnicgroup.Manymarketershavefound
successbysegmentingthemarketbasedon
ethnicity.Theythendevelopproductstomeet
theneedsofaspecificethnicgroupandthe
wantsofpeopleinterestedinthatethnicgroup.
Income
Incomelevelhasamajorinfluence
onwhatpeoplebuy,somarketersoften
segmentthemarketbasedonincomelevel.
Peoplewithsimilarincomelevelsoften
buysimilartypesofproducts.Peopleinthe
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Part 2 Reaching Your Market
66
lowerincomegroupstendtospendalarger
percentageoftheirincomesonnecessities,
suchasfood,clothing,andshelter.People
withhigherincomestendtospendrelatively
moreonrecreation,education,andluxuries.
Therearetwocategoriesofincome
thatmarketersareinterestedin:disposable
anddiscretionary.Disposable incomeis
theincomeapersonhasavailabletospend
(disposeof)aftertaxeshavebeentaken
out.Usually,thefirstthingsthatdisposable
incomeisspentonarethenecessitiesoflife—
food,clothing,shelter,andtransportation.
Discretionary incomeistheincomeleft
aftertaxesandafterthenecessitiesoflife
havebeenpaidfor.Discretionaryincomeis
themoneyapersoncanspendathisorher
discretion,thatis,howeverheorshewants.
Discretionaryincomeisoftenspenton
entertainment,vacations,restaurantmeals,
andsimilarproducts.
Somemarketersdecidetheywantto
focusonluxuryitems.Inordertobeableto
affordvariousluxuryitems,onemusthave
afairlyhighincome.Marketingresearchcan
determinewhichareasofthecountryhave
thehighestaverageincomes.Themarketers
ofluxuryitemscanthentargetadvertising
campaignstothoseareas.
Family Make-up
Marketershavediscoveredthata
householdconsistingofonepersonhas
quitedifferentneedsandwantsfroma
householdconsistingofoneortwoparents
andoneormorechildren.Inaddition,a
householdheadedbyanLGBT(lesbian,
gay,bisexual,ortransgendered)couple
mayhavedifferentneedsandwantsthana
householdheadedbyaheterosexualcouple.
LGBTcoupleshavehigherthanaverage
householdincomesandratesofemployment,
butonlyabout25percentofLGBTcouples
havechildren,5-12.Asaresult,marketers
oftensegmentthemarketbasedonfamily
composition,includingsize.Forexample,
manyconveniencefoodmanufacturers
havedevelopedsingle-servingpackaging
MarketingDy_2-135_Ch1-9.indd 66
tomeettheneedsofsingle-personortwopersonhouseholds.
3 Connect...
Choose a demographic variable. Think of
a product that can be segmented based on
that variable. Name the product and the
demographic variable. Describe each
market segment.
Psychographic
Variables
Customershavepsychologicaland
emotionalcharacteristicsthataffecttheir
needsandwantsforproducts.Segmentinga
marketbasedonpsychologicalcharacteristics
ofcustomersiscalledpsychographic
segmentation.Aspectsthatareconsidered
inpsychographicsegmentationarehobbies,
socialactivities,lifestyle,interests,and
attitudes.Psychographicinformationabout
targetmarketsisveryusefulwhenplanning
promotion.Ifyoushowthetargetmarketin
thead,peopleseethemselvesandcanrelate
bettertothepromotionalmessage.
5-12
There are an estimated 17 million LGBT persons in
Canada and the United States, a sizeable market.
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67
Chapter 5 Targeting a Market
Hobbies and Activities
Peoplewhoparticipateinthesame
activitiesorhavethesamehobbiestend
tohavesimilarbuyingpatterns.Examples
ofhobbiesincludephotography,building
modelplanesorboats,andstampcollecting.
Examplesofactivitiesincludealltypesof
sports,playingcomputergames,visiting
museums,andattendingconcerts.
Lifestyle
Lifestyleandvaluesareoftendifficultto
measureanddefine.Inordertogrouppeople
inthisway,somemarketingresearchers
administersurveysthataskparticipants
toagreeordisagreewithavarietyof
statementscalledAIO statements.AIO
standsforactivities,interests,andopinions.
Aconsultingcompanywell-knownforits
psychographicresearchanddataisStrategic
BusinessInsights(SBI).TheirVALSв„ўsystem
isbasedonpsychologicalcharacteristicsthat
correlatewithpurchasebehaviourandfour
keydemographics.Herearesomesample
statementsfromaVALSв„ўSurvey:
n Ifollowthelatesttrendsandfashions.
n Iwouldrathermakesomethingthan
buyit.
n Iconsidermyselfanintellectual.
VALSв„ўdividesadultconsumersinto
eightsegments,5-13.Eachsegmenthas
distinctiveconsumerpsychologythat
correlateswithbuyingbehaviour.These
segmentsareorganizedontheVALSв„ў
Framework.Thevariablefromtopto
bottomislevelofresources:hightolow,and
includeseducation,income,andwillingness
totakearisk.Thevariablefromlefttoright
isprimarymotivation:ideals,achievement,
andself-expression.Forexample,onegroup
iscalledAchievers.Thisgroupisconcerned
aboutstatusandaccomplishment,tends
tobuyprestigeproducts,andwatchesan
averageamountofTVandothermedia.
AnothergroupiscalledSurvivors.This
groupisconcernedaboutsafety,has
MarketingDy_2-135_Ch1-9.indd 67
relativelylittleincome,tendstobeloyalto
brands,andwatchesamore-than-average
amountofTVandothermedia.Marketers
wouldusetheinformationaboutthese
groupstochooseatargetmarket.They
wouldthencustomizethemarketingmix
tomeettheuniqueneedsofthemarket
theytargeted.AproductfortheAchievers
wouldhaveadifferentmarketingmixfrom
aproductforSurvivors.
3 Connect...
Choose a psychographic variable. Think
of a product that can be segmented based
on that variable. Name the product and
the psychographic variable. Describe each
market segment.
Behavioural Variables
Customersdifferinthewaytheyuse
products.Segmentingamarketbasedon
thewaycustomersuseaproductorbehave
towardaproductiscalledbehavioural
segmentation.Commonbehavioural
variablesincludefeaturesdesired,usagerate,
andbrandloyalty.
Features Desired
Customersvaryinthefeaturesthey
wantfromaproduct.Forexample,the
massmarketforhomepersonalcomputers
ishuge.However,onetypeofcomputer
willnotmeettheneedsofallcomputer
users.Somecomputeruserswanta
basiccomputerforwordprocessingand
e-mailonly.Othercomputeruserswant
acomputerwithafewmorefeaturesso
thattheycanplaygamesandsurftheNet.
Othercomputeruserswantadvanced
featuressothattheycaneditvideoand
havethree-dimensionalgraphics.Asa
result,homecomputermanufacturersoften
segmenttheirmarketbasedonthefeatures
thatthecustomerwants,5-14.
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Part 2 Reaching Your Market
68
VALSв„ў Consumer Segments
VALSв„ў Framework
INNOVATORS
High Resources
High Innovation
Primary Motivation
Ideals
Achievement
Self-Expression
THINKERS
ACHIEVERS
EXPERIENCERS
BELIEVERS
STRIVERS
MAKERS
Low Resources
Low Innovation
SURVIVORS
5-13
VALSв„ў divides adults into eight segments.
Usage Rate
Asamazingasitmightseem,research
showsthatformanybusinesses,80percent
ofthesalescomefrom20percentofthe
customers.Thisobservationiscalledthe
80/20 rule:themajorityofabusiness’sprofits
MarketingDy_2-135_Ch1-9.indd 68
comefromasmallnumberofcustomers.
Forthisreason,marketersoftensegmentthe
marketbasedonhowoftenthecustomer
usesorbuystheproduct(usage rate).Usage
ratecategoriesincludeheavy,moderate,
light,andnonuser.
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Chapter 5 Targeting a Market
Brand Loyalty
Customersvaryinhowloyaltheyareto
aparticularbrand.Thevalueofbrandloyalty
isrelatedtothe80/20rule.Loyalcustomers
oftenarethesourceofmostofacompany’s
sales.Asaresult,marketersoftensegment
themarketbasedondegreeofloyalty.For
example,airlineshavedevelopedfrequent
flyerprogramstorewardairlinecustomers
whousetheairlinefrequently.Thefrequent
flyerprogramsalsoencouragecustomersto
useoneairlineforalltheirtravelneeds.
3 Connect...
Choose a behavioural variable. Think of a
product that can be segmented based on
that variable. Name the product and
the behavioural variable. Describe each
market segment.
Combining Variables
Often,marketersfinditusefultotargeta
marketbasedontwoormoresegmentation
variables.Acommoncombinationis
geographiclocationwithademographic
variable,suchasincome.Marketersofluxury
productscangetthepostalcodesofpeople
withthehighestincomelevels.
Figure5-15providesanoverviewofthe
segmentationcategoriesandvariables.There
aremanyothervariablesthatdonotappear
inthisfigure.
3 Connect...
Think of a product that has a large market.
Think of two or more segmentation variables
for that market. Name the product. Then list
the segmentation variables and the market
segments based on them.
Market Segment Profile
5-14
Computer manufacturers may segment the
market based on the features that customers
want. Some customers want a basic computer.
Others want advanced features.
MarketingDy_2-135_Ch1-9.indd 69
Oncemarketershavedividedamarket
intosegments,theymustchoosethe
segmentorsegmentstotarget.Tohelpthem
makethisdecision,theyoftendevelopa
marketsegmentprofileforeachsegment.
Amarket segment profile,(sometimes
calledaconsumer profile),isadetailed
descriptionofthetypicalconsumerina
marketsegment.Thisprofilewillinclude
geographiclocation,demographics,
psychographics,andbehaviourrelevantto
theproduct.
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Part 2 Reaching Your Market
70
Thesegmentprofilescanthenbeused
whenthesegmentsarechosen.Inorderto
planamarketingmixthatmeetsthetarget
market’sneeds,themarketerneedstoknow
asmuchaspossibleaboutthecustomers
inthemarket.Themarketershouldbe
ableto“see”thetypicalcustomerinhisor
hermind.
Some Variables Used To Segment the Consumer Market
Category
Variable
Examples
Geographic
Location
•
•
Domestic/foreign
Local/regional/national
Climate
•
•
Warm/cold
Humid/dry
Community
Size
•
•
Under 200 000 population
Over 200 000 population
Age
•
Senior/adult/teen/child/infant
Generation
•
Baby Boomer/Generation X/Generation Y/Generation Z
Gender
•
Male/female
Ethnicity
•
•
•
First Nations, MГ©tis, Inuit, European, British Isles, African, Arab, Asian
Indo-Canadian, Chinese, Filipino, Vietnamese, Korean
Jamaican, Haitian, West Indian, Guyanese
Household
Income
•
•
Under $100 000 annual
Over $100 000 annual
Family Size &
Composition
•
•
•
One person/two people/three or more people
Children/no children
Same sex, heterosexual
Hobbies
•
Photography/model-making/stamp collecting
Sports
•
Basketball/bicycling/skiing/swimming
VALSв„ў
•
Innovator/thinker/believer/achiever/striver/experiencer/maker/survivor
Features
Desired
•
Basic features/one or two special features/advanced features
Usage Rate
•
Heavy/moderate/light/nonuser
Brand Loyalty
•
Totally loyal/mostly loyal/not loyal
Demographic
Psychographic
Behavioural
5-15
These are some of the segmentation variables that marketers use to segment a market.
MarketingDy_2-135_Ch1-9.indd 70
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71
Chapter 5 Review
n Marketersoftenusemorethanone
segmentationvariabletosegmenta
market.
4. Whatisthedifferencebetweenmass
marketingandtargetmarketing?
5. Whatistherelationshipbetween
segmentingamarketandtarget
marketing?
6. Listthefourgeneralapproachesto
choosingatargetmarket.
7. Explaintwopotentialproblemswith
targetmarketing.
8. Whatdoyoucalltheprocessofdividing
alargemarketintosmallerparts?
9. Whatdoyoucallacustomercharacteristic
usedtosegmentthemarket?
10. Listthreegeographicvariables.
11. Listfivedemographicvariables.
12. Whydomarketersusegenerationto
segmentamarket?
13. Whymightamarketersegmentthe
marketbasedonfamilysize?Givean
example.
14. Listfivepsychographicvariables.
15. Whymightamarketersegmentthe
marketbasedonhobbies?Givean
example.
16. Listthreebehaviouralvariables.
17. Howmightamarketersegmentamarket
basedonfeaturesdesired?
Knowledge & Understanding
Thinking
Key Learnings
n Abusinessopportunityoccurswhenyou
seeaneedthatyourcompanycanfulfill.
n Marketingstrategyistargetmarketplus
marketingmix.
n Afterchoosingatargetmarket,all
marketingdecisionsaremadewiththe
targetmarketinmind.
n Inmassmarketing,onemarketing
mixmaynotmeettheneedsofmany
customers.Asaresult,thebusinessmay
notmakeaprofit.
n Targetmarketinghelpscompaniesmeet
theneedsofthetargetmarket;however,
problemsmayoccurifyouchoosethe
wrongtargetmarketorbecometoo
dependent onit.
n Marketsegmentationisaprocessthat
helpsmarketersfindanappropriate
targetmarket.
n Consumermarketsareoftensegmented
basedonthefollowingfourcategoriesof
variables:(1)geographic,(2)demographic,
(3)psychographic,and(4)behavioural.
1. Whyisthetargetmarketpartofa
marketingstrategy?
2. Listthefourqualitiesthatatargetmarket
shouldhave.
3. Whyisthemarketingmixpartofa
marketingstrategy?
MarketingDy_2-135_Ch1-9.indd 71
1. Wherecanyoufindbusinessopportunities?Givereasonsforyouranswer.
2. Whyischoosingatargetmarketoneof
themostimportantmarketingdecisions?
3. Marketingmixdecisionsareinterrelated.
Explainwhatthismeans.
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72
Chapter 5 Review
4. Howdoestargetmarketingenablea
smallbusinesstocompetewithlarger
businesses?
5. Whydomarketerssegmentamarket?
6. Namethreeproductsforwhich
geographicsegmentationwouldhelp
determinetheappropriatetargetmarket.
7. “Marketersarestillinterestedin
marketingtoBabyBoomers—thepeople
bornbetween1946and1964.”Assess
howvalidthisstatementis.Givereasons
foryouranswer.
8. Namesixproductsthatarenotgenderspecific.
9. Howmightamarketeruseincome
informationtosegmentamarket?
10. Doyouthinkthatdeterminingatarget
marketcaneverleadtostereotypingor
excluding?Forexample,ifmarketers
concludethatable-bodiedpeopleplay
sports,couldtheybeexcludingathletes
withphysicalchallengesaspartofthe
targetmarket?
Application
1. Thinkofyourownpart-timejobora
businesswithwhichyouarefamiliar.
Whatisthebusiness’sproduct?Describe
itstargetmarket.
2. Visitagrocerystore.Studytheshelves
wherethecerealisdisplayed.Howis
thecerealmarketsegmented?Writea
descriptionofatleastthreesegments
inthecerealmarket.Describeeach
marketsegmentandthetypeofcerealthat
segmentprefers.Usethesegmentation
variablesinyourdescription.
3. Findanadinanewspaperor
magazine.Basedonthead,describe
MarketingDy_2-135_Ch1-9.indd 72
themarketsegmentthatthisadtargets.
Usethesegmentationvariablesin
yourdescription.
4. OldYorkFootwearhasbeenselling
men’spennyloafersforyears.These
shoes,availableinblack,brown,and
burgundy,arecomingbackinpopularity
andotherstoresarebeginningtocarry
them.Lately,however,OldYork’s
marketershavenoticedthatsalesare
down.Whichofthefourapproaches
totargetingamarketdidthecompany
use?Whatshouldthecompanydonow?
Supportyouranswer.
5. Createabriefprofileofamarketsegment
thatwouldincludeyou.Coveratleast
oneofeachofthefoursegmentation
variablesinyourprofile.
Communication
1. Visitthewebsiteofthecompanythat
developedtheVALSв„ўSurvey(SBI),or
gototheMarketing Dynamicsstudent
website.Takethesurvey.Whatisyour
VALSв„ўtype?Doyouseeyourselfthis
way?Createa“MyVALS™”summary
ofyourselfusingamediumofyour
choice—print,pictorial,audio,
orvideo.
2. UsethelibraryorInternettofindthe
storyofanentrepreneur.Howdidthis
personfindabusinessopportunity?How
didheorsheturnitintoasuccessful
business?Whatweretheproduct,the
targetmarket,andthemarketingmix?
Whatkindsofproblemsdidtheperson
encounter,andhowdidheorshe
overcomethem?Createabriefreportor
presentationofyourfindings.
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120
9
Information
Technology and
Social Media
You have the choice to
shop either online or shop in
stores for the rest of your life.
You cannot do both. Which
would you choose? Why?
Learning Goals
n explainthedifferencebetweenadot-com
andabricks-and-mortarbusiness
n describehowB2Bbusinessesusethe
Internet
n listthecomponentsofsuccessful
e-tailing
n describee-marketingandtheroleof
socialmediaine-marketing
n explainthechallengestoe-tailing
n outlineeightadvantagesandseven
disadvantagesofe-tailing
Marketing Terms
e-commerce
search engine
dot-com
bricks-and-mortar business
electronic data interchange (EDI)
information technology (IT)
e-tailing
social media
e-marketing
microblogging
nonsecure connection
encryption
secure connection
Imaginethatyouareateenagerliving
intheyear1990.Youwouldnote-mailyour
friends.Youwouldnotbuyanythingover
theInternet.Youwouldnotdoresearchfor
homeworkassignmentsontheWorldWide
Web.Whynot?Atthattime,theWorldWide
Webdidnotexist,andtheInternetwasnot
availabletothegeneralpublic.
MarketingDy_2-135_Ch1-9.indd 120
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121
Chapter 9 Information Technology and Social Media
TodaytheInternetandtheWorldWide
Webareavailabletothegeneralpublic
aroundtheworld.Allyouneedisan
Internet-enableddevicesuchasacomputer
orsmartphone,anInternetconnection,and
theappropriatesoftware.Youcane-mail
yourfriends,buyproducts,anddoresearch
foryourhomeworkviatheInternetandthe
WorldWideWeb.
TheInternetandtheWorldWideWebare
alsochanginghowcompaniesdobusiness.
E-commerce(shortforelectroniccommerce)is
businessactivitiesconductedviatheInternet.
Businessactivitiesincludebuying,selling,
promoting,productresearch,competition
research,andcustomerservice,9-1.
3 Connect...
How do you use the Internet? How old were
you when you first used the Internet?
E-Commerce Basics
E-commerceispossiblebecauseofthe
InternetandtheWorldWideWeb.The
Internetisacomputer-basedcommunications
network.ThewordInternetcomesfromthe
wordsinterconnectednetworks.TheInternetisa
powerfulmeansofcommunicationbecauseit
connectsmillionsofcomputersaroundthe
world.Computersfromindividuals,
businesses,organizations,andgovernments
areallconnected.TheInternetwasdeveloped
inthe1950sasaresearchandmilitarytool.
Nowitisusedbyalltypesofpeopleinall
walksoflife,almosteverywhere.
TheWorldWideWeb(Web)isthe
networkofinformationsourcesthatis
availableovertheInternet.TheWebwas
developedin1993.TheWebispartofthe
Internet.ThesoftwarefortheWebenables
userstoseetext,pictures,video,and
animationandhearsound.Onlineisthe
conditionofbeingconnectedtotheInternet
orbeingavailableontheInternet.For
MarketingDy_2-135_Ch1-9.indd 121
9-1
Consumer and business activities that take place
over the Internet are called e-commerce.
example,onlineshoppingisshoppingthatis
doneovertheWeb,9-2.
InformationontheWebisorganized
intowebpages.Awebpageisthesmallest
unitofinformationthatcanbeaccessedon
theWeb.Oneormorewebpagesfromthe
samesourceandconnectedbyhyperlinks
areawebsite.Individuals,companies,
organizations,governments,andthemilitary
canhavewebsites.Thefirstpageofawebsite
isthehomepage.
Hyperlinksareusedtoconnectthepages
ofawebsitetogether.Hyperlinksmakeit
easytonavigatethroughawebsiteandto
movefromonewebsitetootherwebsites.
Awebsiteisidentifiedandlocatedon
theWebbyauniquesetofletters,numbers,
andsymbols,calledawebaddress.The
formatforatypicalbusinesswebaddressis
www.companyname.ca.Theletters“www”
indicatethattheaddressisontheWeb.
(Somewebaddressesfunctionwithoutthe
“www.”)The“companyname”isaunique
setofwords,letters,wordsandnumbers,or
lettersandnumberschosenbythebusiness.
The“.ca”or“.com”indicatesthatthesource
isacommercialbusiness.Ifthesourceis
notabusiness,thereareotherlettersthat
appearafterthedotinsteadof“.ca”or
“.com.”Figure9-3showsseveraltypesof
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122
Part 2 Reaching Your Market
9-2
This web page is from the Roots online shopping site. There are several links on the page that take
you to more information about the items displayed.
webaddresses.Countrycodesarealso
available,forexample,UKforUnited
KingdomorJPforJapan.
Ifyoudonothavethespecificweb
addressforacompany,youcanfinditjust
likeyoudoinformationforschoolprojects—
byusingasearchengine.Asearch engine
issoftwarethatsearchestheWebtofind
websitesonyourtopic.Youtypeaname
orkeywordsintotheinputbox.Thesearch
MarketingDy_2-135_Ch1-9.indd 122
enginesearchestheWorldWideWeb,and
thendisplaysalistofwebaddressesforyou
tovisit.
3 Connect...
Name the search engine that you use most
often. Describe a search that you have
performed.
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Chapter 9 Information Technology and Social Media
Some Types of Web Addresses
Type
Code
Commercial organization (business)
.com
Colleges and universities
.edu
Government institutions and agencies
.gc
Organizations not included above, such as not-for-profit organizations
.org
9-3
The format of an Internet address can give you an idea of what type of organization it is.
Marketing on the
Internet
Twotypesofbusinessesusethe
Internet:dot-comsandbricks-and-mortar
businesses.Thetermdot-comcomesfrom
thefactthatthewebaddressesfor
commercialbusinessesintheUnitedStates
(wheretheInternetwasinvented)end
in“.com.”Adot-comisabusinessthat
conductsallofitssalesandmostofits
promotiononlineviaawebsite.Adot-com
hasnobuildingsthatcustomersphysically
visit.Forexample,Amazonisadot-com
thatsellsbooks,music,andothergoods.It
hasnobuildingsorstoreswherecustomers
cangotoseeandbuythebooksand
othergoods.
Abricks-and-mortar businessisa
businessthatservescustomersfroma
buildingorstore,9-4.Sometimesabricksand-mortarbusinessisreferredtoasa
traditional business.CanadianTireisa
bricks-and-mortarbusinessthatsells
sportinggoods,householdtools,andother
goods.TherearemanyCanadianTirestores
thatyoucangoto.Manybricks-and-mortar
businesseshaveaddedwebsitesandnow
alsodosomeoftheirsalesandmarketing
ontheInternet.
MarketingDy_2-135_Ch1-9.indd 123
9-4
A bricks-and-mortar business has a location
where customers can go to buy products.
3 Connect...
What bricks-and-mortar business do you know
that also has a website? Which do you do
more often—go into the store or buy from the
website? Why?
Business-to-Business
on the Internet
Business-to-businesscompanieswere
thefirsttousetheInternetextensively.For
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124
example,manybusinessesuse electronic
data interchange (EDI).EDIisabusinessto-businessexchangeofinformationvia
computerusingstandardformats.EDI
messagesusuallyconsistofinformationthat
wouldotherwisehavetobesentaspaper
documents.EDImessagesincludepurchase
orders,shippingnotices,invoices,credit
memos,andotherdocuments.
Whenbusinessesconnecttheircomputers
andloadtheappropriatesoftware,they
cancommunicatebyEDI—muchmore
efficientlythanfaxingormailingpaper.Some
inventorymanagementstrategiesalsorely
ontheInternet.Youwillreadaboutthese
strategiesinChapter14.Whenbusinessesuse
computertechnologytostoreandtransmit
information,theyareusingIT,whichstands
forinformation technology.
CompaniesalsousetheInternetand
theWebtoresearchandpurchaseitemsfor
theirbusinesses.Websitescontainproduct
information,similartoapapercatalogue.
Theadvantageofacatalogueonawebsite
isthatitcanbeupdatedquickly,more
informationcanbeprovided,andvideosor
animationscanbepresented.Forexample,a
manufacturercanfindoutthespecifications,
prices,andavailabilityofmaterialsitneeds
forproduction.Thatsamemanufacturercan
showitslineoffinishedgoodsonitsown
websitetointerestedretailers.
Companiesthathavefieldsales
representativesalsousetheInternet,9-5.
Salesrepresentativescanusetheircomputers
ortabletstocheckavailabilityofproducts
beforepromisingshipment.Orderscanalso
beplacedinstantlyfromanylocation.The
computerthencandeducttheneworders
frominventory,sothatthenextsalesperson
willhaveanaccuratecountofproducts
available.Salesrepresentativesandcustomer
servicerepresentativesalsousetheInternet
tolocateshipmentsandinformcustomers
whentoexpectshipmentarrival.
IThasrevolutionizedtheflowof
informationwithincompaniesandbetween
vendorsandcustomers.Differentdivisions
MarketingDy_2-135_Ch1-9.indd 124
9-5
The Internet is especially useful for businessto-business (B2B) sales. For example, a sales
representative visiting a client can use the
Internet and a computer or tablet to check on
product availability and place an order.
ofthesamecompanycancommunicate
viatheInternet.Data,suchasnew
productdesigns,salesresults,orfinancial
numbers,canbesentinstantly.Confidential
informationcanonlybeaccessedbypeople
whoknowthepassword.
Shopping on the
Internet
Today,consumerscanbuyalmost
anythingovertheInternet.Justenterthe
nameoftheitemyouwouldliketobuy
intoasearchengine.Thesearchenginewill
generatealistofwebsiteswhereyoucanbuy
thatitem.
Sellingproductstoconsumersover
theInternetiscallede-tailing,fromthe
wordselectronic retailing.Companiesthat
selltoconsumersonlineareoftenreferred
toase-tailers.E-tailingisalsocalledonline
retailing.Allaconsumerneedstoshoponline
isanInternet-enableddevice,anInternet
connectionandsoftware,andacreditcard.
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Chapter 9 Information Technology and Social Media
3
Connect...
Describe an experience you have had
purchasing a product over the Internet.
Successful E-tailing
Inorderfore-tailingtobesuccessful,
customershavetobeabletoeasilydothe
thingstheydoinabricks-and-mortarstore.
Businessesthatsellproductsonlinewant
toensurethatcustomersareabletolook
atandselectproducts,canreceiveproduct
promotions,willreturntopurchaseother
products,cangethelpiftheyneedit,and
canpayfortheproductsandreturnthemif
theyneedto.
Looking at Products
Thewebsitemustprovideinformation
abouttheproductsforsale.Sincethe
customercannottouchtheproducts,other
meansmustbeused.Manywebsitespresent
theirmerchandiseinaformatsimilarto
apapercatalogue.Thereisoftenalistof
producttypesfromwhichtochoose.Oncea
categoryischosen,photographsoftheitems
areshown,withwrittendescriptionsand
prices,9-6.Often,customerscanclickonthe
photographforanenlargedphotoandmore
detailedinformation.
9-6
E-tailing sites give descriptions and prices of items, along with photos that sometimes can be enlarged
or that show the item from different angles.
MarketingDy_2-135_Ch1-9.indd 125
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126
Evaluating Products
Another service that many websites
provideisreviewsorevaluationsoftheir
productsbyothercustomers.Forexample,
Amazonprovidesreviewsformanyofits
books,plusarankingbasedonhowmany
ofthattitlewerepurchasedbyAmazon
customers.Thesereviewswereoneofthe
firstexamplesofsocialmediabeingusedto
marketproducts.Social mediaareinteractive
formsofmediathatletuserscommunicate
witheachotheronline.Examplesinclude
FacebookandTwitter;onlinecommunities
suchasAmazon,Flickr,andRottenTomatoes;
andblogs,9-7.Socialmediaaredescribedin
moredetailonthenextpage.
Selecting Products
The website must have a way for
customerstoindicatewhichproducts
theywanttobuy.Manywebsitesusethe
metaphorofashoppingcartorashopping
bag.Thereisnoactualshoppingcartorbag
onawebsite;however,avirtualoneisused
tokeeptrackofthecustomer’sselections.
Thecustomerclicksonalinkthatsays
“Addtoshoppingcart”or“Addtobag.”
Thevirtualshoppingcartorbagkeepsa
9-7
A wide variety of social media are being used by
marketers to reach customers and create buzz
about products.
MarketingDy_2-135_Ch1-9.indd 126
Part 2 Reaching Your Market
listoftheitemsthecustomerhasselected.
Thecustomercanalsodeleteitemsfromthe
shoppingcart.
Promotions and Social Media
Today,customersexpecttobeas
engagedonawebsiteastheywouldbe
strollingthroughabricks-and-mortar
store.Asaresult,businessesneedmore
strategiestoretaintheircustomersand
persuadethemtoconsidertheirproducts.
Oneofthesestrategiesise-marketing.
E-marketingismarketingusingcomputer
technology,includingwebsites,e-mail,and
mobilephones.
Youmaywonderwhyabusinesswould
neede-marketingifitalreadyhasawebsite,
butawebsiteisjustaplatformforreaching
thecustomerthroughe-marketing.Onthe
website,thebusinessmayinvitecustomers
tosignupforweeklye-mailsthatpromote
productsofinterest.Usually,customerscan
selectwhichproductstheywouldliketo
hearaboutbycheckingabox.Thesee-mails
canalsobedirectedtoacustomer’smobile
phone.Thiskindofe-marketingisknownas
opt-inmarketingbecausethecustomeragrees
toit,unlikepop-upadsthatsuddenlyappear
onthewebsite.Marketershavelearnedthat
manycustomerspreferopt-inmarketing.
Oncecustomershaveshopped,the
websitemaypromptthemtocontinue
shoppingbysuggestingotherproductsof
interest.Theseproductsarechosenaccording
tothecharacteristicsoftheproductsthe
customerhasalreadyboughtorviewed.
Althoughitispossibletorecommend
productsinperson,theInternetallows
businessestosuggestmoreproductsmore
quickly,basedonmoreshoppingpreferences
thanonesalespersoncouldeversuggest
inperson.
Manybusinesseswithwebsitesalso
haveanaccompanyingFacebookpageand
Twitteraccount.Socialmediahelpbusinesses
reachouttocustomersinapersonalway
andcreateasenseofcommunityarounda
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Chapter 9 Information Technology and Social Media
brand.Withinthesecommunities,customers
cansharetheirexperiencesusingdifferent
productsandconnectwithotherswhohave
hadsimilarexperiences.
Socialmediaarealsoanexcellentway
forbusinessestogatheradditionalresearch
aboutcustomerneedsandwants.Ona
Facebookpage,forexample,abusinesscan
poseaquestiontocustomersorconducta
survey.Manybusinessesrunregularonline
conteststhattheyannounceonFacebookor
Twitterkeepingcustomersengagedwiththe
businessbrandanditsproducts.
Sometimesbusinessespaybloggersto
writeabouttheirproducts.Theymaysend
freesamplesinreturnforapositivereview,
hopingthatmanypotentialcustomers
willreadtheblogpostandtrytheir
product.ThemicrobloggingsiteTwitter
isusefulforupdatingcustomersabout
productdevelopmentsandevents,such
ascontests,giftideas,andstoreopenings.
Microbloggingisashort,immediate
formofblogging—usuallyabout20to25
words.Sometimesbusinesseshireasocial
mediaexperttomicroblogandsometimes
theycontracttheworkouttoavarietyof
loyalcustomers,9-8.
Getting Help
Whencustomersareshopping,they
mayhavequestionsabouttheproducts
andquestionsaboutusingthewebsite.
MostwebsiteshaveapageofFAQs,
whichstandsforfrequently asked questions.
Thepageprovidesanswerstothemost
commonquestionscustomershaveasked.
9-8
This is the Twitter feed of Chapters/Indigo. The bookstore chain tweets about new products,
promotions, and contests.
MarketingDy_2-135_Ch1-9.indd 127
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128
Mostwebsitesprovideane-mailaddress
fore-mailingquestionstothecompany.
Manywebsitesprovideatoll-freenumber
thatcustomerscancalltospeakwitha
customerrepresentative.
Somewebsitesprovidereal-timeonline
help.Specialsoftwareenablesthecustomer
tocommunicatewithalivecustomerservice
representative,whileonline.Onetypeof
softwarethatenablesthistypeofinteraction
isInstantMessaging.Thecustomertypesa
questioninaninputboxonthewebsite.The
questionappearsonthecomputerscreen
ofthecustomerservicerepresentative.The
customerservicerepresentativethentypes
ananswer,andsendsittothecustomerto
seeonhisorherscreen.
Paying for Products
Inabricks-and-mortarstore,the
customergoestothecheckoutcounterand
handsthecashiertheproductsselected.The
cashiertotalstheprices,addsinanytaxes
orothercharges,andthentellsthecustomer
thetotalowed.Thecustomerthenhands
thecashiercashoracreditordebitcard.
Thecashierhandsbackareceipt.Mailorder
cataloguesandTVshoppingchannelsuse
paperchequesoracredit/debitcardnumber,
providedeitherthroughthemailorover
thephone.
Howdoesanonlineshopper,sitting
inhisorherhome,providepaymentto
theonlineretailer?Manywebsiteshave
a virtualcheckout.Whenthecustomeris
doneshopping,heorshecanclickona
linkthatsays“Proceedtocheckout”orjust
“Checkout.”Thecheckoutscreenprovides
thelistofitemspurchased,theprices,and
anyadditionalcharges.Themostcommon
waytopayisthroughacreditcardnumber.
Someshoppersuseonlinepaymentservices,
suchasPayPal.Digitalcashsystemsand
digitalwalletsarealsoavailable.Afterthe
orderisconfirmedandpaymentisreceived,a
receiptisusuallysenttothecustomer’se-mail
address.Thecustomercanthenprintareceipt.
MarketingDy_2-135_Ch1-9.indd 128
Part 2 Reaching Your Market
Returning Merchandise
As with products ordered through the
mailorfromaTVshoppingchannel,the
goodsmightbedefectiveordamagedin
transit.Thegoodsmayalsonotbewhatthe
customerexpectedorwanted.Abusinesswith
awebsitemustprovideareasonablyeasyway
forgoodstobereturnedandtoensurethatthe
moneyisrefundedtothecustomer.
3 Connect...
Name an e-tailer with which you are familiar.
How does that e-tailer’s website accomplish
the above components?
Receiving Purchases Promptly
Moste-commercecustomersexpecttheir
onlineorderstobefilledimmediately.For
example,supposeyouordersomethingin
themiddleofthenight,buttheitemdoesnot
arrivefortwomonths.Inthissituation,the
Internetisnotmakingshoppingfasterand
moreconvenientforyou.Asaresult,you
mightdecidenottousethate-tailerorthe
Internetforshopping.
Finding the Website
Customersalsohavetoknowthatthe
businesswebsiteexistsandwheretofindit.
Manycompaniesadvertisetheirwebsites
throughtraditionalprint,radio,andtelevision
advertising.Manypeople’sbusinesscards
includethewebaddressofthecompany.
E-tailersalsoadvertiseonotherwebsites.
Challenges to E-tailing
WhenretailersbeganusingtheInternet
inthemid-1990s,retailersusedtheirwebsites
moreforpromotionthanselling.Anumber
ofconcernsdiscouragedconsumersfrom
actuallybuyingproductsovertheInternet.
Manyoftheseconcernshavebeenresolved
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Chapter 9 Information Technology and Social Media
129
tothesatisfactionofsomecustomers.Other
customersarestillreluctanttoactually
purchaseovertheWeb.Thesechallenges
includethefollowing:
customersareuneasyaboutacompany
havingthistypeofinformationaboutthem.
Manye-tailersdevelopapolicythatprotects
theprivacyofcustomers.
Moste-tailershavealinkontheirhome
pagescalled“Security”or“Security&
Privacy.”Clickingonthislinkwilltakethe
customertoawebpagethatdescribeshow
thatwebsiteensuressecurityandprivacy.
TheBetterBusinessBureauhas
developedaprogramtopromotetrustand
confidenceine-tailing.Theprogramhas
publishedacodeofonlinebusinesspractices,
andalsoprovidesreliabilityandprivacy
sealstobusinessesthatmeetitscriteria.
Security
Securityofpersonalfinancialandother
informationcontinuestobeaconcernfor
manyInternetshoppers.Typically,when
a personlogsontotheInternetandvisits
a website,anyinformationexchanged
canbeseenbyanyoneontheInternet.An
Internetconnectionoverwhichanyone
canseeanyoftheinformationiscalleda
nonsecure connection.
Inorderforane-tailertoreceivepayment,
thecustomermustsendacreditcardnumber
overtheInternet.Mailingaddress,phone
number,andotherpersonalinformation
areoftenrequested.Internetcustomers
donotwanttheircreditcardnumbersor
otherpersonalinformationtobegenerally
available.Toaddressthisconcern,Internet
providersandretailersdevelopedaprocess
calledencryption.Encryptionisaprocess
thatconvertsdataintoaformthatcanberead
onlybyapersonwithanauthorizedcode.
AnInternetconnectionthatusesencryption
iscalledasecure connection.Nooneelse
canseeyourinformationwhenyouusea
secureconnection.Whenyouareusinga
secureconnection,asmalliconofaclosed
lockappearsonthewebpage.SecureInternet
connectionsguaranteecustomersthattheir
personalfinancialinformationissafe.
Othersecuritytechnologiesarebeing
developed.Forexample,Visahasdeveloped
“VerifiedbyVisa.”Thistechnologyverifiesthat
theVisacardnumberisauthenticandonly
theauthorizedcardholderisplacingtheorder.
Privacy
Arelatedbutseparateconcernfrom
securityisprivacy.Whenapersonvisitsa
website,thetechnologycankeeprecords
ofeverypurchaseandeveryclick.Many
MarketingDy_2-135_Ch1-9.indd 129
Complaints
Whencustomersvisitane-tailing
websitethatmisrepresentsproductsor
collectstoomuchpersonalinformation,they
shouldbeabletolodgeacomplaint.Most
e-tailersdisplaya“ContactUs”buttonon
theirwebsitethatletscustomersconnect
withaCustomerServicedepartmentby
e-mailorphone.Whencustomersdonot
receiveasatisfactoryresponsefroman
e-taileraboutunacceptableproductsor
marketingactivities—whetheronlineorinstore—theycantaketheircomplainttothe
Consumers’AssociationofCanada.
Website Effectiveness
Therearemanycomponentstowebsite
effectiveness.Onetechnologicalrequirement
isthatthewebsiteloadquickly.
Thefirstpageofaretailwebsiteisoften
calledthestorefront.Thisfirstpagemustbe
designedtoattractcustomers.Thewebsite
mustalsobeeasytouse.Itmustbeeasyto
viewtheproducts,selectthem,andpurchase
them.Morethanhalfofonlineshoppers
leaveawebsitewithoutmakinganintended
purchase.Thereasonsareusuallyvariations
of“Ididnotunderstandwhattodo.”
Websitesshouldalsostrivetomake
theonlineshoppingexperiencepleasant
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130
andunique,9-9.Theonlineexperience
shouldprovidebenefitsnotavailablefrom
bricks-and-mortarshopping.Possible
benefitsincludespeedandeaseofpurchase,
customizednoticesofproductsonsale,
specialpricesoritemsavailableonlythrough
thewebsite,andnewslettersandother
informationrelatedtotheproduct.
Slow Connections
Slowandinconsistentconnections
interferewiththeonlineshopping
experience.Whenstorefrontstakealong
timetoload,customersgetimpatient.Ifan
Internetconnectionbreakswhilemakinga
complexpurchase,suchasanairlineticket,
thecustomergetsfrustrated.Inordertobuy
theticketonline,thecustomerwillhaveto
reconnectandgothroughtheselectionand
purchasingprocedureagain.Theavailability
ofhigh-speedInternetconnectionshas
reducedtheseproblems.
Preference for Traditional Stores
Some customers just prefer to go to a
traditionalbricks-and-mortarstoreorastore
withwhichtheyarefamiliar.Manycustomers
researchtheirpurchasesontheInternet,and
thenmaketheactualpurchaseinabricks-andmortarstore.Asbrandsofe-tailersestablish
goodreputations,morecustomerswillbe
willingtoshopandpurchaseonline.
3 Connect...
Describe at least one problem you have had
when buying something over the Internet.
Future of E-tailing
Thevolumeofpurchasesbyconsumers
hasgrownagreatdealsinceInternetshopping
firststartedinthemid-1990sandcontinues
togrowataveryfastpace.E-commerce
hasalsocreatedjobsandloweredexpenses
forbusinessesandconsumers.Websites
enablebusinessestoofferbettercustomer
serviceandinformation,eveniftheydonot
sellproductsonline.Todayconsumersexpect
thateveryrespectablebusinesswillhavea
websitethatatleastprovidesinformation.
Advantages
9-9
Websites need to make the online shopping
experience as enjoyable as the real-life one.
Customers are looking for efficient service,
but the whole experience must be pleasant
and memorable.
MarketingDy_2-135_Ch1-9.indd 130
E-commerceprovidesmanyadvan-
tages.Moreadvantageswilldevelopas
e-commercespecialistsimprovetechnology
anddevelopinnovations.
n Low Initial Investment.Ane-business
doesnothavetobuy,rent,orbuilda
buildingtogetstarted.Asaresult,itis
ofteneasierandlessexpensivetostart
ane-business.
n Worldwide Exposure.TheInternet
providesaccesstoprospectivecustomers
anywhereintheworld.
n Constant Availability.TheInternet
canbeaccessedatanytimeoftheday
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Chapter 9 Information Technology and Social Media
n
n
n
n
n
ornight.Informationcanbeadded
orchangedatanytime.Customers
canaccesstheInternetwheneveritis
convenientforthem.Internationaltime
zonedifferencesdonotmatter.
Instant Updating.Informationcanbe
updatedinstantly.Forexample,new
pricescanbeadded.Oldinformationcan
bedeletedinstantly.Thee-tailerdoesnot
havetoworrythatthecustomerisusing
anold,out-of-datecatalogue.
Equalized Market Access.Small
companies havethesameaccessto
potentialcustomersaslargecompanies.
Easy Information Access.Free
informationisavailableonwebsites
sponsoredbybusinesses,government
agencies,universities,andtrade
associations.Businessescangather
informationaboutcompetitorsand
customers.Customerscangather
informationaboutproductsandthe
companies thatofferthem.
Ability to Collect Customer
Information.Everytimeacustomer
visitsawebsite,informationabout
thatcustomercanbegatheredintoa
database.Informationisoftengathered
throughsiteregistration,questionnaires,
andasapartoftakinganorder.
Ability to Target Marketing Messages.
Theinformationgatheredabout
customerscanbeusedtotailorspecific
messagestospecifictypesofcustomers.
Forexample,somewebsitesgreetyou
bynamewhenyouopenthehomepage,
andlistpersonalizedproductsuggestions,
basedonyourpreviouspurchases.
Disadvantages
Therearesomedisadvantagesto
e-commerce,butthedevelopmentsin
technologyaredecreasingthedisadvantages.
n Security.Despitethedevelopmentof
encryptionandothersecuritytechnologies,
MarketingDy_2-135_Ch1-9.indd 131
131
manyconsumersarestillreluctantto
providecreditcardnumbersandother
personalinformationovertheInternet.
n Privacy.Despiteprivacypolicies,many
consumersdonottruste-tailersto
maintaincustomerprivacy.
n Cost of Website Setup and
Maintenance.Manybusinessesdonot
havetheexpertisetosetuptheirown
websites.Thesebusinessesoftenhire
outsidecontractorstodevelopand
maintaintheirwebsites.Thecostsof
settingupandmaintainingawebsite
mustbefiguredintothecompany’s
budgetandprofitcalculations.However,
manysmallbusinessesdosetupand
maintaintheirownwebsitesatrelatively
littleexpense.
n DistributionProblems.Manye-businesses
stillhavenotdevelopedgoodphysical
distributionsystems.Whencustomers
donotreceiveproductsinatimely
fashion,theyarediscouragedfromusing
thate-business.Youwillreadabout
distributioninChapter14.
n Product Quality Problems.Customers
canbedisappointedatthequalityofthe
productsreceivedfromane-business.
However,theseproblemsseemtobe
aboutequaltotheproblemsofdirectmailmarketersandTVmarketers.
Simplifiedmethodsforreturnsalsohelp
reducethisproblem.
n Consumer Reluctance.Manyconsumers
arestillreluctanttopurchaseover
theInternet,forsomeofthereasons
describedinthispassage.Inaddition,
someconsumersprefertogotoabricksand-mortarstorewheretheycanhandle
ortryoutthegoodstheyplantobuy.
Otherssimplyprefertousebricks-andmortarbusinessesthattheyarefamiliar
withandtrust.
Despitethesedisadvantages,e-tailing
remainsaviablemeansofsellinggoods.
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Chapter 9 Review
Key Learnings
Knowledge & Understanding
n Adot-comisabusinessthatdoesallof
itssellingontheInternet;itdoesnot
haveanactualstore.Abricks-and-mortar
businessservescustomersatastore;it
mayalsohaveawebsite.
n B2BbusinessesusetheInternetto
exchangeinformationandtomanage
informationinsystemssuchasinventory.
n Successfule-tailinghelpscustomerslook
atandselectproducts;encouragesthem
tocontinueshoppingorlearnaboutother
products;offershelp;providesawayto
payforproductsandgetareceipt;and
providesawaytoreturnmerchandise.
n Tobesuccessful,ane-tailermustalso
fulfillandshiporderspromptlyand
attractcustomerstothewebsite.
n Fivechallengestoe-tailingare:(1)security,
(2)privacy,(3)websiteeffectiveness,
(4)slowconnections,and(5)customer
preferencefortraditionalstores.
n E-marketingismarketingusing
computertechnology,includingwebsites,
e-mail,andmobilephones.
n Socialmediahelpbusinessesreachout
tocustomersinapersonalwayand
createasenseofcommunityarounda
brand.Withinsocialmediacommunities,
customerscansharetheirexperiences
usingdifferentproducts.
n Socialmediaarealsoanexcellentwayfor
businessestogatheradditionalresearch
aboutcustomerneedsandwants.
n Thereareadvantagesanddisadvantages
toe-tailingande-marketing.However,
mostcustomersexpectbusinessesto
haveawebsite.
1. Whatbusinessactivities cantakeplace
ontheWeb?
2. Whatisthedifferencebetweenadot-com
andabricks-and-mortarbusiness?
3. HowdoB2BbusinessesusetheInternet?
4. Whatcancustomersdoonawebsitefor
e-tailing?Listsixactions.
5. Whatdoesavirtualshoppingcartdo
forthecustomerwhoisshoppingona
website?
6. Whatisthemostcommonwayforan
onlineshoppertopayforproducts?
7. Howdoesanonlineshoppergetareceipt
forproductspurchasedonline?
8. Whydoonlineshopperswanttouse
secureconnectionsfortheirtransactions?
9. Listfiveproductsthatcanbedelivered
overtheInternet.
10. Definee-marketingandprovideexamples.
11. Describehowbusinessescanusesocial
mediatotheiradvantage.
12. Explaintwoadvantagesandtwo
disadvantagesofe-tailing.
MarketingDy_2-135_Ch1-9.indd 132
Thinking
1. Imaginethatyouaretheownerofa
companythatissettingupawebsite.
Whatwouldyouwantyourwebaddress
tobe?
2. Giveanexampleofhowyoumightusea
searchengine.
3. Compareandcontrastthehomepageof
ane-tailer’swebsitewiththestorefront
ofabricks-and-mortarretailstore.
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133
4. Whywouldabricks-and-mortarbusiness
wantawebsite?
5. “Thesedays,businessesmustusesocial
mediatoreachcustomers.”Agreeor
disagreewiththisstatement.Give
reasonsforyouropinion.
6. Whydoconsumersworryaboutsecurity
andprivacywhenvisitingawebsite?
Application
1. Talkwiththemanagerorownerofalocal
businessorstoredepartment.Findoutif
ithasawebsite.Howlonghasithadthe
website?Doessomeoneinthecompany
runthewebsite,orhasithiredanoutside
firmtodothis?Whatpercentageoftotal
salescomesfromthewebsite?
2. Imaginethatyouareawebmarketing
specialist.Youhavebeenhiredbya
business—abricks-and-mortarstore—to
improveitse-marketingactivitieson
itswebsite.
n Namethetypeofstorethathashired
you.Possibilitiesincludehairsalon;
book/musicstore;cardealership;
clothingstore;print/copyshop;or
restaurant.
n Describetheproductsoffered.
n Howcouldyougetcustomers’e-mail
addresses?
n Describehowyouwouldusee-mailto
getcustomersintothestoreandbuild
theirloyalty.Stateatleasttwothings
thatyouwoulddo.
MarketingDy_2-135_Ch1-9.indd 133
3. Youproposeaweeklye-mailpromotion
tocustomerswhooptin.
n Whatkindofinformationdoesthis
e-mailprovide?
n Howwouldyoumakeyourweekly
e-mailappealingsothatpeoplewillbe
happytogetitandeagertoopenit?
4. YouproposeaFacebookpagetothe
business.TheFacebooklinkwillappear
onthewebsiteandinthee-mail.
n HowwillyouusetheFacebookpageto
attractcustomers?
n Howwilltheinformationonthe
Facebookpagebedifferentfromthe
informationsentintheweeklye-mails?
Describeatleasttwodifferences.
Communication
1. Visitthewebsiteofalocalbusinessand
identifythewaysinwhichthebusiness
providessuccessfule-tailing.Preparea
visualdisplaytoshowyourfindings.
2. Fifteenyearsago,thecareerofwebsite
developerdidnotexist.Whatnewcareers
willbeavailableinthefuture?Uselibrary
andInternetresourcestofindout.Use
keywords“cybercareers”and“careersof
thefuture.”Presentyourinformationina
two-minuteoralreporttotheclass.
3. Holdaclassdiscussionordebateon
whethertheinstantaneousnatureof
e-tailingande-marketingresultsintoo
muchconsumerismandtoomanyfads.
13-02-27 8:09 AM
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