Exam 21: Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges

The Xtreme Football League (XFL) was launched in 2001 by Vince McMahon, chairman of World Wrestling Entertainment (WWE). It was designed to provide professional football to American sports fans in the months after the conclusion of the National Football League (NFL) season. In spite of heavy promotion, lots of advertising, and a national network television contract, the XFL was a classic product failure, largely because the quality of play was not good enough to satisfy most football fans. The league evaporated after one season. This type of failure refutes the frequent claim of critics that advertising:

MICRO-marketing will probably continue to cost too much as long as:

Consumerism has encouraged

In a marketing plan, which of the following would not be included in the Promotion area?

By developing and implementing more effective marketing strategies, a marketing manager can:

Use this information to answer the following questions that refer to the PSI case. Pump Systems, Inc. (PSI) produces two major kinds of water pumps. The smaller pumps range in price from $5-$30, and are used in drinking fountains and soft-drink machines. Most of these pumps are bought by manufacturers of these machines and built into their product. PSI also builds larger pumps used in swimming pools and reservoirs. The prices of these items range from $250-$500. These are usually purchased by contractors who build the pools and reservoirs. PSI sells nationally through sales reps located in the large industrial centers. These reps handle the selling function for PSI in their geographic areas and provide market information. They usually do the same thing for 10 to 20 similar manufacturers of noncompeting products--and are paid on a commission basis. There are no other producers of the smaller pumps in the United States--because PSI has patent protection. As a result of this, management has decided to follow a policy of pricing high--to maximize profits--while the patent lasts. Several competitors are in the market for the larger pumps. Industry prices and profits of these pumps have dropped in the past few years as a result of firms trying to increase their market shares. The product design has remained fairly stable over the last few years--and one firm dropped out as it saw that it would lose more money with its "me-too" product. Industry sales are increasing--but at a very slow rate. The price of these products is determined by adding a standard markup percentage to the variable cost of the items--to cover fixed costs and profit. For instance, pump Z has variable costs of $250 per unit, and a markup of 40 percent of this cost is added to the $250 to get its selling price. Management has estimated that fixed costs applicable to this product are $200,000 per year. PSI publishes a product catalog which is revised annually. Also, it exhibits in most trade shows. PSI follows a policy of charging the same price to all customers--so all will have the same costs at their own plants. All purchases are shipped directly from PSI's factory to its customers--and title passes at PSI's factory. -What kind of products are PSI's small pumps to most customers?

Good marketing managers put themselves in the customer's position.

A marketing manager who is willing to spend enough on persuasive promotion can usually get consumers to buy anything the company chooses to produce.

A marketing manager should

Use the following information to answer questions that refer to the Jewel Craft case. Jewel Craft, Inc. is a leading producer in the United States women's costume jewelry and accessories market. Its brands are well known and are sold by department stores and better women's stores. Several stores in a city may carry Jewel Craft's brands because most of Jewel Craft's customers will not consider any other brand. Jewel Craft's sales force calls on one wholesaler in each state. Gemco, Inc., of Boston, Massachusetts, is the Jewel Craft distributor in that state. Gemco stocks and sells women's accessories (noncompeting lines) for several manufacturers like Jewel Craft. Wholesalers are allowed a 20 percent markup by Jewel Craft--but pay the freight charges to their warehouses. Jewel Craft's policy of using one wholesaler per state comes from its desire to control its distribution. Jewel Craft uses national magazine advertising and also supports a cooperative ad program with retailers. Jewel Craft's prices allow for a 40 percent retail markup--an attractive percent when one considers that Jewel Craft's products require little in-store selling because of their well-established reputation. Recently, Jewel Craft was approached by a watch producer with the idea of expanding to watches under the Jewel Craft name. It was argued that although national watch sales have leveled off, Jewel Craft could enjoy growing sales for several years because of the fine reputation the company has achieved. If watches are added, Jewel Craft will use its present policies regarding distribution, pricing, and advertising. Further, it will offer the wholesalers and retailers an attractive "package" deal as an incentive to carry Jewel Craft watches. Intermediaries will be required to carry the watches if they wish to handle the jewelry and accessories. -The degree of brand familiarity for Jewel Craft products--among its present consumer buyers--is:

A good S.W.O.T. analysis helps a manager focus on a strategy that takes advantages of the firm's opportunities and strengths while avoiding its weaknesses and threats to its success.

Which of the following is NOT a trend that is affecting marketing strategy planning?

Offering a marketing mix that is like what is available from competitors usually

Most critics of marketing who argue that marketing managers help create monopoly or monopolistic competition feel this leads to:

Given the nature of marketing--and the kinds of criticism it typically gets--marketing should be evaluated:

Use this information to answer the following questions that refer to the EI (Electech Inc.) case. Electech, Inc. (EI) produces a line of semiconductors for electronics products manufacturers. These items range in price from $5-$100 and are used in products the buyer is producing. EI also designs and builds computer networking equipment. The prices of these items range form $5,000 to $100,000. These are used to control production equipment. Usually, they are custom-made to the specifications of the buyer--the firm which will use the product in its own production process. EI sells nationally through independent sales reps--paid on commission--who work in the large industrial centers across the country. EI is more concerned with the quality of these reps than with the number of them. All of them also sell other lines. EI also uses five full-time salaried salespeople who work out of its corporate headquarters under a sales manager. The home office salespeople are "technical specialists" who sell almost all the networking equipment, while the "reps" mostly sell the semiconductors. Sometimes, however, the reps will send in leads to customers who want networking equipment. EI also sells some of its semiconductors through a Los Angeles wholesaler who carries stock for West Coast customers. There are many producers and importers of semiconductors in the U.S.--but several firms have captured large shares of the networking equipment market. EI has held its own, and in fact, over the past five years has increased its market share of these products to over 25 percent--because of its better technical designs. Industry-wide prices of the more or less homogeneous semiconductors have been forced further and further down over the last seven years--as have industry profits. The price of networking equipment is set by adding a standard markup percent to the direct cost of the items--for overhead and for profit. Following industry practice, all prices are quoted at the seller's factory. EI publishes a catalog which is revised periodically. And it exhibits in most equipment trade shows. -What kind of distribution is EI seeking for its networking equipment?

Which of the following is an unethical behavior on the part of a consumer?

A firm usually has more different strategy possibilities than it can pursue, so it must use screening criteria to help eliminate those strategies not well-suited to the firm.

Blending the four Ps is easy since fully understanding the needs and attitudes of a target market is a straightforward process.

The job of integrating the four Ps strategy decisions is the responsibility of the company controller since the money to do so much must be available.